Tapestry flags weak annual profit, misses qtrly sales on softer U.S. demand

(Reuters) -Tapestry, which agreed to buy Capri last week, forecast fiscal 2024 profit below estimates and reported lower-than-expected quarterly sales on Thursday, as demand for its luxury handbags and accessories slows down in the United States.

Shares of the Coach parent were down 1.7% in premarket trading, with demand in North America weakening amid a higher cost of living and still-high inflation.

Luxury rivals Ralph Lauren (NYSE:), LVMH, Gucci-owner Kering (EPA:) and Canada Goose have also faced sales pressures from softening U.S. demand.

Last week, Tapestry (NYSE:) said it would buy rival and Michael Kors owner Capri in a deal valued at $8.5 billion, in a bid to challenge larger European rivals for a bigger share of the global luxury market.

The company said sales in the fourth quarter were impacted by a strong dollar, with declines across its brands.

Revenues from Kate Spade and Stuart Weitzman dropped 10% and 13% over the last year, respectively. In comparison, analysts had expected 2.9% and 4.8% growth for the brands, as per Refinitiv IBES data.

Tapestry said fiscal 2024 net sales were approaching $6.9 billion, compared to average analysts’ estimate of $6.93 billion, according to Refinitiv IBES data.

Adjusted earnings for the year is expected to be in the range of $4.10 to $4.15 per share for fiscal 2024, compared to estimates of $4.24.

The company’s net sales of $1.62 billion in the fourth quarter ended July 1 were flat from last year. Analysts on average had expected $1.65 billion.