Tapestry Group the owner of the Coach, Kate Spade and Stuart Weitzman brands posted weaker-than-expected sales for its fiscal fourth quarter and offered soft guidance. The company said it had net income of $149 million, or 51 cents a share, in its fiscal fourth quarter to June 29, down from $212 million, or 73 cents a share, in the year-earlier period.
Sales came to $1.51 billion, up from $1.48 billion, but slightly below the $1.53 billion FactSet consensus. Chief Executive Victor Luis said Coach had a strong year, driven by growth in digital and international, while Kate Spade “did not meet our expectations and more time is required to drive a positive inflection in the business, particularly in light of the traffic-challenged and competitive retail environment in North America. We acknowledge that there are opportunities to improve performance and we are addressing those areas with a sense of urgency.”
The company is now expecting revenue to rise at a low-single-digit rate in fiscal 2020 and for EPS to be about even with fiscal 2019, with both estimates below FactSet consensus numbers. “The primary change from the prior outlook is the expectation for more modest topline growth at Kate Spade in North America, impacting the company’s ability to leverage its strategic investments and fixed costs,” the company said.
It still expects growth at Coach and profitability improvements at Stuart Weitzman. For the first quarter, it expects revenue to fall slightly and for EPS to decline. Shares have fallen 26% in 2019, while the S&P 500SPX, +0.25% has gained 13.3%.
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