Shares of the New York-based luxury goods company Tapestry Inc. (NYSE:TPR) sunk on Tuesday after the company released its most recent third-quarter financial results.
Tapestry, who owns iconic brands such as Kate Spade, Stuart Weitzman and Coach, saw a total increase in net sales by 33%, but was hit by several problems within its brands.
Stuart Weitzman was negatively affected by production delays, and other issues that the Tapestry’s CEO, Victor Luis, believes may continue into the Fall/Winter season.
Operating income for Stuart Weitzman fell by nearly USD $12 million, while the company’s operating margin went from 3.2% during the previous year to 13.9%.
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Tapestry Inc. also completed its acquisition of Kate Spade, which added a few more charges and costs to the company.
Global comparable sales for Kate Spade decreased by 9% due in part to the decline in global e-commerce and the company’s “strategic pullback in wholesale disposition and online flash sales,” which was “partially offset by the consolidation of the joint ventures for Mainland China, Hong Kong, Macau and Taiwan.”
According to the press release, Kate Spade and other charges associated with buybacks of Coach and Stuart Weitzman, the company’s Operational Efficiency Plan, and Tax Legislation decreased the quarter’s net income by $18 million.
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Tapestry hopes that Kate Spade will add at least $1.2 billion in revenue for fiscal 2018.
Luis has said that Tapestry’s “solid third quarter performance was consistent with [their] expectations.”
Tapestry Inc. is predicting that total revenue for 2018 will increase 30% compared to total revenue of the previous year.
The company’s shares fell nearly 12% after the results were released.
Compared to the company’s closing share value of $53.77 on Monday, Tapestry’s current value is hovering near $47.00.
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