|Tapestry predicts China troubles will start to ease over summer|
Coach parent company Tapestry saw its shares rise nearly 16% on Thursday, after the retailer said it expects lockdowns in China to lift in the months ahead. Greater China revenue for Tapestry is expected to decline 35% in the fourth quarter, assuming lockdowns in Shanghai end at the start of June. That pushed the company to lower its full-year profit projection to $3.45 per share, from a prior estimate of $3.60-$3.65 per share. However, chief executive Joanne Crevoiserat said the company expected a gradual recovery in the market and was well-positioned to drive growth. "The Chinese consumer is incredibly resilient, we've seen that throughout the pandemic," she said. In the third quarter, which ended April 2nd, Tapestry's adjusted earnings came in at 51 cents per share, on revenue of $1.42bn. Analysts had been looking for earnings per share of 41 cents on sales of $1.42bn, according to a Refinitiv survey. Sales in North America rose 22% in the quarter from a year earlier, fully offsetting a mid-teens decline in China, the company said. Tapestry has tried to protect its margins against higher raw material costs by raising prices, and says it believes there is room for further increases. "While core customers at all Tapestry brands are affected by inflation their income and financial profile means they can cope with its impacts much better than the average consumer", commented GlobalData managing director Neil Saunders.