Tapestry beats sales estimates on demand for Kate Spade bags

Tapestry Inc, formerly Coach, beat Wall Street’s estimates for first-quarter sales on Tuesday, helped by higher demand for its Kate Spade handbags.

The maker of Coach handbags and Stuart Weitzman footwear said it reported net income of $122.3 million, or 42 cents per share, in the first quarter ended Sept. 29, compared with a loss of $17.7 million, or 6 cents per share, a year earlier. The company benefited from a lower tax rate in the quarter.

Net sales rose to $1.38 billion, beating the average analyst estimate of $1.36 billion.

Tapestry CEO Victor Luis said: “At the one year anniversary of establishing Tapestry as our new corporate identity, our results continue to reflect the benefits of our diversified multi-brand model. First quarter performance was consistent with our expectations as we achieved strong increases in sales and operating income, while earnings per share gains were further enhanced by a favorable tax rate.”

“Results were driven by continued growth at Coach, where global comparable store sales rose 4%... Kate Spade contributed to our overall performance.

“At Stuart Weitzman, trends improved from the prior quarter, though results, as anticipated, continued to be negatively impacted by development and delivery delays which pressured sales and margins.

“Across Tapestry, we remain focused on executing our strategic priorities. To this end, during September and October we completed the buybacks of the Kate Spade operations in Singapore, Malaysia and Australia as well as the Stuart Weitzman business in Southern China. We are also excited to announce an agreement to acquire the Stuart Weitzman business in Australia from our distribution partner, which is expected to close next summer.”