Tapestry CEO Victor Luis attributes the company’s earnings and revenue beat to the “terrific” growth that the accessories category has seen in the last year, driven by consumers’ need to express themselves.
“The past year has seen really terrific growth with high single digit, low double digit growth globally, truly driven by the fact that accessories remain the most important category for how consumers express their individuality,” Luis told CNBC’s Jim Cramer on Tuesday.
The holding company of Coach, Kate Spade and Stuart Weitzmanbeat analysts expectations for its top and bottom lines for the fourth quarter. Tapestry earned 60 cents per share for the quarter, up 3 cents from the 57 cents per share expected by Wall Street. The company reported revenues of $1.48 billion, beating analysts’ estimates of $1.47 billion.
Its strong quarterly performance was driven in part by Kate Spade, which exceeded the company’s own expectations. Though the death of brand’s namesake founder in June stoked nostalgia and contributed to the rise in sales, Tapestry said that it does not expect the higher revenues to be ephemeral.
“Of course, very, very sad with the passing of the founder,” Luis said. “She has not been with the brand for the last decade, but of course we were very touched by the response we got on social media across the world to her passing.”
In addition to strong numbers from Kate Spade, Tapestry has also expanded its presence in China. Tapestry’s market there is worth more than $600 million, Luis said, presenting opportunities for Stuart Weitzman and Kate Spade to build brand recognition abroad.
But that doesn’t extend to its sourcing. Luis said the country only accounts for 2 to 3 percent of its sourcing, which means that the company doesn’t expect a big impact from President Trump’s tariffs on handbags imported from China.
Tapestry’s stock closed Tuesday up 12 percent.
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