Tapestry shares fall after earnings and sales beat expectations, but gross margin fell and outlook was gloomy

Tapestry Inc. TPR Shares,
+2.87%
fell 4.2% in premarket trading on Thursday, after Coach’s parent company Kate Spade and Stuart Weitzman, the luxury accessories brand, reported fiscal third-quarter earnings and sales that beat expectations, but a gross margin that contracted and provided an optimistic earnings outlook. Net income rose to $122.7 million, or 46 cents per share, from $91.7 million, or 32 cents per share, a year ago. Excluding one-time items, adjusted earnings per share of 51 cents beat the FactSet consensus of 41 cents. Sales rose 11.3% to $1.44 billion, above the FactSet consensus of $1.42 billion. Coach sales rose 11% to $1.07 billion, topping FactSet consensus of $1.06 billion, Kate Spade sales rose 19% to $301.5 million to top expectations of $286.5 million and Stuart Weitzman’s sales rose 11% to $63.6 million to miss expectations of $65.5 million. The cost of sales jumped 19.6% to reduce the gross margin to 69.9% against 71.6%, penalized by the increase in transport costs. For fiscal 2022, the company forecasts revenue of approximately $6.7 billion and EPS “in the range” $3.45, versus the FactSet consensus for revenue of $6.75 billion and EPS of $3.61. The stock plunged 34.7% year-to-date through Wednesday, while the S&P 500 SPX,
+2.39%
fell 17.4%.