A 2 percent increase in net sales was reported by Tapestry, Inc., the parent company of Coach, Kate Spade, and Stuart Weitzman.
Despite currency headwinds of 370 basis points due to the strength of the U.S. dollar, revenue rose more than 5 percent from last year. An estimated USD 1.05 billion was generated by gross profit with a 70 percent gross margin.
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According to the company, further appreciation of the dollar will result in a headwind of USD 0.20 in earnings in fiscal 2023.
Despite a more challenging backdrop, Joanne Crevoiserat, CEO of Tapestry, Inc., said in a release: “Our results exceeded expectations despite the more challenging backdrop, demonstrating the strength of our iconic brands, the agility of our operating model, and the consistency of our global teams.”
According to the company, its quarterly operating income was USD 254 million, while its operating margin was 16.9 percent, down from USD 295 million and 19.9 percent in the prior year. Prior year operating income was USD 307 million on a non-GAAP basis, while operating margin was 20.7 percent.
Compared to the prior year period, the quarterly net income for the quarter was USD 195 million and earnings per diluted share were USD 0.79.
Prior to the quarter, non-GAAP net income was USD 235 million and earnings per diluted share were USD 0.82.
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Tapestry expects revenues of USD 6.5 billion to USD 6.6 billion in fiscal 2023. The reported decline was primarily caused by approximately 450 basis points of FX pressure versus prior year. Constant currency revenue growth is expected to range from 2 to 4 percent.
There is expected to be a mid-single digit increase in earnings per share compared to the prior year, despite approximately USD 0.50 of currency headwinds.