Shares of Tapestry Inc. slid 4.2% in premarket trading Thursday, after the parent of Coach, Kate Spade and Stuart Weitzman branded luxury accessories reported fiscal third-quarter profit and sales that beat expectations, but gross margin that contracted and provided a downbeat earnings outlook. Net income rose to $122.7 million, or 46 cents a share, from $91.7 million, or 32 cents a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of 51 cents beat the FactSet consensus of 41 cents. Sales grew 11.3% to $1.44 billion, above the FactSet consensus of $1.42 billion. Coach sales rose 11% to $1.07 billion, topping the FactSet consensus of $1.06 billion, Kate Spade sales increased 19% to $301.5 million to beat expectations of $286.5 million and Stuart Weitzman sales rose 11% to $63.6 million to miss expectations of $65.5 million. Cost of sales jumped 19.6% to lower gross margin to 69.9% from 71.6%, hurt by increased freight costs. For fiscal 2022, the company expects revenue of approximately $6.7 billion and EPS “in the area of” $3.45, compared with the FactSet consensus for revenue of $6.75 billion and EPS of $3.61. The stock has plunged 34.7% year to date through Wednesday, while the S&P 500 has dropped 17.4%.
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