Tapestry Inc, the parent company behind luxury fashion brands like Coach, Kate Spade, and Stuart Weitzman, has raised its full-year revenue and profit forecast due to the surge in demand for high-end handbags and apparel in the United States and Europe. This trend has also benefited competitors such as Capri, Ralph Lauren, and LVMH.

As COVID-19 restrictions ease and consumers look forward to attending social events and returning to the office, there has been an uptick in demand for luxury fashion. Responding to this resurgence, Tapestry has increased its share buyback target for the year to $1.25 billion, up from $1 billion.

While the luxury goods industry has faced challenges such as rising costs, labor shortages, increased freight charges, and inflation, Tapestry and its peers have successfully managed to raise prices to counterbalance these pressures. Companies have learned during the pandemic that they can sell fewer items at higher prices, resulting in increased profitability. Tapestry has implemented strategies to drive up prices and enhance its brand to mitigate the impact of supply chain issues.

However, the company’s gross margin has been affected by higher freight costs, standing at 68.1% for the second quarter. Despite this, Tapestry has incurred these expenses to ensure a smooth flow of products and meet consumer demands.

For fiscal 2022, Tapestry now expects revenue of approximately $6.75 billion, up from its previous estimate of nearly $6.6 billion. It also anticipates an annual profit of $3.60 to $3.65 per share, compared to its earlier projection of $3.45 to $3.50 per share.

In the second quarter ending on January 1, Tapestry’s total revenue increased by an impressive 27% to $2.14 billion, surpassing analysts’ average estimate of $2 billion. On an adjusted basis, the company earned $1.33 per share, exceeding the expected $1.18 per share.

Tapestry’s ability to capitalize on the current luxury boom and successfully navigate the challenges posed by the pandemic has solidified its position as a key player in the industry. By strategically managing prices and upholding a strong brand image, the company has been able to navigate the supply chain pressures impacting the luxury goods market.

With the ongoing impact of the pandemic shaping consumer behavior and disrupting supply chains, the luxury goods industry will need to remain adaptable and innovative to sustain its growth. Tapestry’s success in navigating this challenging landscape serves as a testament to its strategic approach and ability to meet the evolving demands of consumers.

Linked articles:
1. Forbes – Tapestry Inc Refreshes Itself
2. Business of Fashion – A Look Behind the Menger’s Price Increase Machine