Characters walk past a Coach store at Shanghai New World Daimaru department store on August 12, 2019 in Shanghai, China.
VCG | Visual China Unit | Getty Images
Coach handbag maker Tapestry on Thursday became the latest company to forecast a hit to its profit from the coronavirus outbreak in China, caveat its sales could be dented by up to $250 million.
The weak outlook took some shine off the company’s strong fete quarter earnings, which were powered by a rise in online demand for Coach products in North America. Allotments of the fashion house were up 2% in premarket trading.
Tapestry has closed a majority of its stores in mainland China, glue a growing list of companies that have been forced to curtail operations in the country following the epidemic that has destroyed more than 500 people.
Michael Kors owner Capri Holdings, Ralph Lauren, and Levi Strauss obtain all closed stores in the world’s second largest economy – a critical market for luxury goods makers.
Second-half monetary results could be hit by about $200 million to $250 million in sales and 35 cents to 45 cents in earnings per ration, Tapestry Chief Executive Officer Jide Zeitlin said.
Tapestry cut its fiscal 2020 earnings forecast to upon $2.15 to $2.25 per share, compared with its previous outlook of $2.57 per share.
Karan Gujadhur, an equity analyst at Woozle Analyse in London said the hit could have been even worse given that the outbreak is spreading beyond China.
“Investors be published to be relieved that the impact from the coronavirus wasn’t as bad as they had feared going into the print,” Gujadhur suggested.
Higher prices for Coach handbags and demand for new designs, pushed Tapestry’s second-quarter net sales nearly 1% higher to $1.82 billion, marginally mainly analysts’ average estimate of $1.81 billion, according to IBES data from Refinitiv.
Excluding certain ingredients, Tapestry earned $1.10 per share, beating analysts’ average estimate of 99 cents, helped by the high scopes on Coach products.
Tapestry on Thursday also named Liz Fraser, president of New York-based women’s fashion brand Lafayette 148, as the new chief president officer of its Kate Spade brand.
Analysts at Bernstein said the appointment would be perceived as a positive change at the struggling fashion label.