Fashion conglomerate Tapestry has reported sales of US$1.62 billion for the fourth quarter ended July 1, a modest 1 per cent increase compared to last year, falling short of earnings expectations. 

“The fact that prior year numbers were extremely weak makes the slowdown particularly concerning,” said Neil Saunders, MD of GlobalData. 

The underwhelming performance was affected by North America sales, which dropped 8 per cent during the quarter as consumers cut back on luxury. Operating income stood at $274 million while operating margin was 16.9 per cent.

“In our view this is part of a wider retrenchment among shoppers, which has now reached the luxury end of the market,” Saunders said. 

Meanwhile, the group’s international sales surged 22 per cent, with Greater China accounting for the highest increase rate at 50 per cent, followed by Japan with 12 per cent. Elsewhere in Asia reported a 7 per cent jump, while in Europe, sales were down 13 per cent year on year.

While Coach is chugging along nicely, the other two brands in Tapestry’s stable are going backward. Sales at Kate Spade tumbled by 10.1 per cent and sales at Stuart Weitzman plunged by 12.8 per cent.

Earlier this month, the group entered into a definitive agreement to acquire luxury fashion giant Capri Holdings, bringing together six fashion brands – Michael Kors, Jimmy Choo, Versace, Coach, Kate Spade and Stuart Weitzman – under the same roof. 

“We drove revenue gains at constant currency, significant gross margin expansion, and double-digit EPS growth despite a rapidly shifting backdrop,” said Joanne Crevoiserat, CEO of Tapestry. 

“Building on our strong foundation, we are focused on the future. We remain steadfast in our commitment to deliver revenue and profit gains across our current portfolio where our runway is significant.”