By Suzanne Kapner
Fewer promotions helped the makers of Coach handbags, Versace
dresses and Ralph Lauren polos boost profitability in the holiday
quarter, even as online gains were unable to make up for
pandemic-driven sales declines.
Faced with reduced demand as rising Covid-19 outbreaks forced
shoppers to continue sequestering at home, many brands scaled back
inventory, which helped them avoid the deep discounting of past
holiday seasons.
At Tapestry Inc., which owns the Coach and Kate Spade brands,
net income rose 4% to $311 million in the three months to Dec. 26
driven by reduced promotions and higher average prices. While
year-over-year profit declined at Ralph Lauren Corp., the average
price of items sold in the period rose 19% -- the third consecutive
quarter of gains.
Kohl's Corp., which is scheduled to report results in March,
said Thursday that it reached better-than-expected earnings for the
holiday quarter, reflecting less inventory and fewer promotions,
even as revenue fell about 10%.
And some retail chains are predicting that sales will snap back
this year. Nordstrom Inc. said Thursday it expects sales to rise
about 25% in the fiscal year that started this month. For the
recently completed holiday quarter, sales fell about 20%, the
company said.
"We continue to be disciplined in our approach to promotions,"
Tapestry CEO Joanne Crevoiserat told analysts on Thursday. Ms.
Crevoiserat said average prices for Coach's handbags rose about 15%
"during this traditionally promotional season."
Covid has created a divide among retailers, with those such as
Walmart Inc., Target Corp., Home Depot Inc. and Amazon.com Inc.
selling household essentials delivering strong sales gains, and
others that sell apparel and accessories posting declines.
Some companies in the latter category have fared better than
initially anticipated by holding the line on discounts. As a
result, they have a chance to exit from the pandemic healthier than
when it started.
"Covid was the catalyst that spurred companies to fix the
problems that they had faced for decades," namely a cycle of
overstocking and marking down excess goods, said Simeon Siegel, an
analyst with BMO Capital Markets. "They learned they can sell less,
charge more and earn more," he said.
It's unclear whether the newfound discipline will stick once
life returns to normal.
Retail CEOs said they were hopeful that some semblance of
normality would return this year as more people are vaccinated and
the virus abates, but the recovery won't happen as quickly as some
had expected.
"We now believe that the near term will be more challenging,"
John Idol, CEO of Michael Kors parent Capri Holdings Ltd., told
analysts on Wednesday. "The resurgence of the virus has led to
additional restrictions and store closures."
Mr. Idol said he expects the situation to improve later this
year. "Starting in September, October or November, there could be a
very strong rebound as people return to a different type of
normal," he said.
"I don't think there is a normal," Tapestry's Ms. Crevoiserat
said in an interview. "We expect that some of these shopping
behaviors that have emerged during the pandemic will stick,"
including the shift to online shopping. As a result, she said, the
physical store experience will need to evolve.
Ralph Lauren CEO Patrice Louvet said in an interview that
assuming vaccinations stay on track, he is expecting the economic
environment will improve this summer. "We really are working to
make sure we came out of this stronger than we came into it," he
said.
Canada Goose Holdings Inc. increased quarterly sales for the
first time since the onset of the pandemic, as shoppers snapped up
its down coats and other cold weather gear. Revenue totaled $474
million, up from $452 million a year ago, driven by a surge in
e-commerce sales, which climbed 39%.
With depressed foot traffic to physical stores in the U.S. and
renewed lockdowns in Europe, the companies are turning to their
digital businesses to pick up the slack.
Tapestry added nearly 350,000 square feet of distribution center
space heading into the holidays and diversified parcel carriers to
avoid bottlenecks, which helped it fulfill online orders. In North
America, e-commerce accounted for nearly half of holiday sales.
Tapestry's net sales fell 7% to $1.69 billion in the quarter.
Tapestry expects sales to return to growth in its current quarter
and for earnings to reach pre-Covid levels in the fiscal year that
ends in June.
Ralph Lauren's revenue decreased 18% to $1.4 billion in the
three months to Dec. 26. Revenue fell in North America and Europe,
but increased 14% in Asia. Net income was $120 million, compared
with $334 million a year ago.
Ralph Lauren expects revenue for its current quarter to fall by
mid- to high single digits, but it plans to reinstate its dividend
in the first half of the next fiscal year, which begins in
April.
"We are pulling away from -- especially in North America --
those discount-oriented customers," Ralph Lauren finance chief Jane
Nielsen said. "We're recruiting new customers at a higher gross
margin."
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com
(END) Dow Jones Newswires
February 04, 2021 14:35 ET (19:35 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Tapestry (NYSE:TPR)
Gráfica de Acción Histórica
De Jun 2024 a Jul 2024
Tapestry (NYSE:TPR)
Gráfica de Acción Histórica
De Jul 2023 a Jul 2024