Coach owner Tapestry shares were up more than 8% on Thursday, as the high-end handbag owner hiked its revenue forecast for the year and said shoppers shouldn’t worry about finding shelves bare this holiday season.
Chief financial officer Scott Roe said the retailer plans to spend roughly $70 million on air freight in its fiscal second quarter to speed up the delivery of merchandise in time for Christmas. Its hope is to avoid backlogged ports where some container ships have been left, waiting to be unloaded, for weeks on end. The global supply chain issues have put retailer in a precarious position ahead of the holidays.
“We’re taking deliberate steps to accelerate inventory growth, and we feel comfortable in our inventory positioning to meet demand,” Roe said on an earnings conference call.
Tapestry raised its fiscal 2022 sales outlook to $6.6 billion from a previous forecast of $6.4 billion. It also hiked its outlook for adjusted earnings per share range to a range of $3.45 to $3.50, from $3.30 to $3.35.
Analysts had been looking for adjusted earnings of $3.36 on revenue of $6.42 billion, according to Refinitiv data.
The company’s board also approved a $1 billion stock buyback program.
Retail rivals including Ralph Lauren and Michael Kors owner Capri Holdings have also raised annual sales predictions in recent days, citing a rebound in social outings driving up demand for luxury goods.
Jefferies analyst Randal Konik applauded Tapestry’s fiscal first-quarter report, but said that Capri remains a stronger house of brands.
“While overall results are commendable, Coach is fairly mature, Kate remains underwhelming, and we question why the Stuart brand remains in the portfolio,” Konik said about Tapestry’s latest results. “We don’t see substantial share upside.”
Including Thursday’s gains, Tapestry shares are up more than 50% year to date. Its market cap is about $13 billion. Capri, which has a market cap of $9.8 billion, has watched its shares rally about 53% this year.
In its first quarter, Tapestry’s net income fell to $226.9 million, or 80 cents per share, from $231.7 million, or 83 cents a share, a year ago. Excluding one-time items, the company earned 82 cents, beating estimates for 70 cents.
Sales in the quarter rose to $1.48 billion, from $1.17 billion a year ago. That topped expectations for $1.44 billion.
Find the full earnings press release from Tapestry here.