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Coach owner Tapestry cuts profit outlook as China lockdowns dent demand


Shoppers pass by the Coach department store in Shanghai New World Daimaru on August 12, 2019, Shanghai, China.

VCG | Visual China Group | Getty Images

Coach owner TapestryOn Thursday, the company lowered its outlook on profit for fiscal 2022 due to lockdowns in China that could reduce consumer demand for its luxury purses and accessories.

Now, the retailer sees annual earnings of $3.45 per share. This is compared to an earlier estimate of $3.60 to $3.65 per shared. According to the retailer, there is an anticipated headwind of between 25 and 30 cents from Covid-related China pressures.

Tapestry joins a growing list of companiesFrom Estee Lauder to Apple, many businesses have raised concerns about the effects of China’s Covid restrictions on their operations. China’s mainland China has used swift travel restrictions and lockdowns to combat an outbreak of the Omicron Variant since March. This not only reduces demand but also causes manufacturing to be hampered.

Tapestry shares increased 3% in premarket traded as Tapestry’s third-quarter profit and revenue exceeded Wall Street expectations. The retailer was fueled in part by North America’s double-digit sales growth.

According to Tapestry, it had “healthy underpinning momentum” outside China. Tapestry owns Kate Spade as well as Stuart Weitzman.

Tapestry reported adjusted earnings per share of 51 cents for the three months ended April 2. This was on revenue of $1.44 million. According to Refinitiv, analysts had expected earnings per share at 41 cents for sales of $1.42 trillion.

According to the company, sales in North America rose by 22% in quarters compared with a year ago, partially compensating a decline of China in mid-teens.

Tapestry projects that revenues will reach $6.7 Billion for fiscal 2020. That’s a large jump of nearly 10% from fiscal 2021. Analysts predict revenue in the range of $6.75 billion.

Tapestry shares have fallen by 35% since Wednesday’s close of the market.