Tapestry on Tuesday reported quarterly earnings and revenue that beat analysts' expectations, driven by strong performance of its Kate Spade brand.
Shares of the company rose more than 5 percent in premarket trading.
The company, formerly known as Coach, bought Kate Spade last year in a $2.4 billion deal but has struggled to rein in the heavy discounting that has eaten into the brand's sales. To help re-establish the quirky hand bag's position as affordable luxury, rather than a mass product, it has been focusing on selling more in department stores, rather than outlets.
Tapestry said Tuesday that Kate Spade's fourth-quarter results "exceeded" its expectations on the top and bottom lines. Same-store sales for the brand were down 3 percent, much less than an expected drop of 7.1 percent.
The death of the namesake founder in June stoked nostalgia for the brand.
Here's what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Thomson Reuters:
Earnings per share: 60 cents, adjusted, vs. 57 cents expectedRevenue: $1.48 billion vs. $1.47 billion expectedTapestry reported fiscal fourth-quarter net income of $211.7 million, or 73 cents per share, up from $151.7 million, or 53 cents per share a year earlier.
Excluding items, Tapestry earned 60 cents per share, topping the 57 cents per share expected by analysts surveyed by Thomson Reuters.
Net sales rose 31 percent to $1.48 billion, beating expectations of $1.47 billion.
Tapestry's biggest brand, Coach, reported net sales of $1.10 billion for the fourth quarter, up from $1.05 billion the same quarter a yearearlier. It reported same-store sales growth of 2 percent, less than the 2.1 percent estimated.
Its Stuart Weitzman brand continued to be plagued with execution issues like delivery delays, which the company had flagged last quarter. Sales for the unit were $73 million during quarter, down from $88 million a year earlier. On a full-year basis, sales were flat. The shoe business reported a loss of $21 million for the quarter.
Tapestry said Tuesday it expects the premium shoe brand to return to top-line growth in the second quarter of its next fiscal year.
For fiscal 2019, Tapestry said it expects to generate $6.1 billion to $6.2 billion in revenue, surpassing expectations of $6.08 billion.
