(Reuters). -Tapestry announced Thursday that China’s strict COVID-19 regulations were causing a decline in luxury handbag sales and clothing orders in China. The decision prompted Kate Spade owners to decrease their annual profit projections.

This dour view is similar to warnings given by Gucci owners Kering (EPA) SA, Ray-ban producer EssilorLuxottica. It also highlights Beijing’s zero COVID policy which has also clogged the roads, stranded people and closed factories.

Tapestry (NYSE.) is the most vulnerable company in crisis because it has the largest number of employees. Coach Made in Asia, especially Vietnam and China, Kate Spade products are available.

Full-year profits are expected to be $3.45 per share, up from its previous estimate of $3.60-3.65 per share. The company also has higher costs due to China lockdowns, which worsen the supply chain crisis that has plagued the industry for over a year.

In the April quarter, mainland China sales fell by about a third of a percent.

Tapestry saw a rise in prices, and there was a strong demand in North America for luxury goods. Tapestry posted a 13% increase in net sales to $1.44billion. Refinitiv IBES data shows that the sales figure exceeded $1.42 trillion, which was an analyst average.

European luxury counterparts, such as Louis Vuitton’s owner LVMH have also benefited greatly from strong North American demand, posting significant sales growth.

Tapestry made a profit on an adjusted basis of 51c per share, surpassing estimates of 41c.