Coach handbag maker Tapestry Inc has revised its sales and profit forecasts for the year upwards, thanks to a surge in demand for luxury goods. Despite global supply chain bottlenecks that could potentially result in product shortages, Tapestry has witnessed a rebound in sales as consumers revert to their pre-pandemic spending habits.

The luxury goods industry has experienced a notable recovery in 2021, with consumers eagerly returning to socializing and investing in their wardrobes once again. Competitors of Tapestry, including Ralph Lauren Corp and Capri Holdings Ltd, have also raised their sales predictions in recent weeks, indicating the overall strength of the luxury market.

Tapestry, which owns renowned brands like Coach and Kate Spade, has announced a $1 billion share repurchase program in addition to its revised forecasts. Unlike many European luxury brands that manufacture their products domestically, Tapestry heavily relies on sourcing a significant portion of its handbags from Asia. Consequently, the company is more vulnerable to shipping delays and factory closures in the region.

To tackle the challenges presented by the global supply chain, Tapestry is making significant investments in airfreight to ensure timely delivery of its products to store shelves for the crucial holiday season. The company is also increasing prices to offset higher shipping and commodity costs. CEO Joanne Crevoiserat underlined the importance of meeting consumer demand and adapting to ongoing supply chain issues.

Based on its optimistic outlook, Tapestry has adjusted its revenue forecast for fiscal 2022 to nearly $6.6 billion, up from the previous estimate of $6.4 billion. The company has also raised its range for adjusted earnings per share to $3.45 to $3.50, compared to the previous range of $3.30 to $3.35.

In the first quarter of the fiscal year, Tapestry reported a 26% rise in net sales, reaching $1.48 billion. This figure exceeded the average estimate of analysts, which was $1.44 billion. It indicates strong performance and resilience in the face of supply chain challenges.

Overall, Tapestry’s positive sales and profit forecasts reflect the robust demand for luxury goods, despite ongoing disruptions in the supply chain. The strategies employed by the company, such as increased usage of airfreight and higher prices, showcase its determination to meet customer needs and maximize profitability. As the holiday season approaches, Tapestry aims to sustain its momentum and fulfill the growing appetite for luxury fashion.

Useful links:
Business of Fashion
Reuters