Tapestry forecasts full-year profit below estimates on China hit

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A handbag is seen in a Kate Spade store, owned by Tapestry, Inc., in Manhattan, New York

(Reuters) -Tapestry forecast full-year earnings below estimates after reporting lower-than-expected quarterly revenue on Thursday, as lockdowns in China hurt sales of its designer handbags and apparel in the country.

The luxury retailer’s sales in the Greater China region plunged about 32% in the fourth quarter due to COVID-related disruptions.

Major Chinese cities have imposed multiple rounds of restrictions this year following Beijing’s “dynamic zero-COVID” policy of promptly stamping out all outbreaks at a time when much of the world co-exists with the virus.

Tapestry joins the likes of Gucci owner Kering SA, Ray-ban maker EssilorLuxottica and Ralph Lauren Corp in flagging a sales hit from China, a key growth market, after these measures left high-fashion companies with piles of unsold stock.

Shares of Tapestry, which also owns Kate Spade and Stuart Weitzman, fell 2.2% before the bell.

Tapestry forecast fiscal 2023 profit between $3.80 and $3.90 per share, lower than Wall Street expectations of $3.91.

The Coach handbag maker reported total revenue of $1.62 billion for the fourth quarter ended July 2, missing analysts’ average estimate of $1.64 billion, according to IBES data from Refinitiv.

Excluding items, the company earned 78 cents, marginally above estimates of 77 cents.

(Reporting by Mehr Bedi in Bengaluru; Editing by Maju Samuel)

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