Key drivers for Kate Spade
Tapestry’s (TPR) net sales of $1.33 billion grew 0.7% on a year-over-year basis in the third quarter of fiscal 2019, which ended on March 30. The company’s Kate Spade brand drove the top-line growth as customers connected well with the new collection of the brand’s creative director Nicola Glass.
Sales of Kate Spade increased 4.4% to $281 million on a reported basis and 5% on a constant currency basis. The brand’s top line also gained from new store distribution and the company’s acquisition of Kate Spade’s operations in Singapore, Malaysia, and Australia. However, Kate Spade’s same-store sales fell 3% despite a 700-basis-point contribution from e-commerce sales. However, the same-store sales growth rate improved compared to the 11% same-store sales decline in the second quarter. Based on its strategic initiatives, Tapestry is confident that its Kate Spade brand will deliver positive same-store sales in the fourth quarter.
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Performance of Coach brand
Sales of Tapestry’s Coach brand declined 0.4% to $965 million in the third quarter. Excluding the impact of currency fluctuations, the brand’s sales grew 1%. The brand’s same-store sales grew 1%, including 100 basis points of growth driven by e-commerce sales. The brand’s top-line growth was driven by the company’s international business. However, sales in North America were adversely impacted by the shift in the timing of Easter and lower tourist spending. Management expects low-single-digit same-store sales growth in the fourth quarter.
Stuart Weitzman’s sales
Stuart Weitzman’s sales grew 1.8% to $85.3 billion on a reported basis and 4% on a constant currency basis. The company’s strategic initiatives, including the expansion of the footwear offering of the Stuart Weitzman brand and growth in handbags, drove the top line in the third quarter. The brand is focused on its international expansion, particularly in China.
Overall, Tapestry expects its net sales to grow in the low-to-mid-single-digit range in fiscal 2019. Analysts now expect Tapestry’s net sales to rise 2.9% to $6.1 billion in fiscal 2019.