Yahoo Finance Tapestry just gained 1.5 million new customers, some buying $4,200 handbags: CEO
The turnaround underway at accessories maker Tapestry (TPR) added a new wrinkle in the company’s latest quarter shared with investors this week.
A ton of new customers shopping the brand, 1.5 million to be exact. The influx of new customers are shopping online for everything from $4,200 alligator Coach handbags to more affordable sub-$500 handbags, Tapestry’s CEO Joanne Crevoiserat told Yahoo Finance Live.
Online sales surged by about 100% in the quarter in large part to those splurging for leather goods to brighten their days during the COVID-19 pandemic. “Our business has been strong,” Crevoiserat said.
Here is how Tapestry performed compared to Wall Street estimates.
Net Sales: $1.69 billion versus $1.63 billion estimate
Adjusted Diluted EPS: $1.15 versus $1.00 estimate
Full Year Outlook:
Net Sales: nearly 10% growth
Profits: “Strong” bottom line growth for second half of the year
Crevoiserat took over as Tapestry’s CEO in October 2020, and has moved quickly to cut costs via store closures and corporate headcount reductions. She has also sharpened how new accessories are brought to market by leveraging into the company’s treasure trove of data — doing so has helped keep inventory under control and margins solid.
In total, the company expects to realize $300 million in cost savings from its recent restructuring efforts — some $200 million is seen being achieved in the current fiscal year.
The efforts led to strong gains in operating margins at Coach, Kate Spade and Stuart Weitzman in the most recent quarter, despite sales falling at each. Crevoiserat says the margins gains are sustainable — the Street is banking on it.
“The Tapestry portfolio is beginning to turn a corner. Coach is in the strongest position while Kate Spade and Stuart Weitzman are improving their margins. Overall, the entity is showing strong execution and expense discipline which is yielding better profits and rising free cash flow. Numbers have an upward bias ahead and so do the shares,” said Jefferies analyst Randal Konik.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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