(Reuters) -Coach handbag maker Tapestry cut its annual sales forecast after missing third-quarter revenue estimates on Thursday, on signs that demand for its handbags and accessories would remain weak in the face of high inflation.
Shares of the Kate Spade owner, which have risen about 6% this year, fell 4% before the bell.
Reduced discretionary spending in North America owing to rising prices and a fragile post-COVID recovery in China have led to sagging sales for Tapestry’s leather handbags and footwear brands.
Its net sales came in at $1.48 billion in the quarter ended March 30, compared to analysts’ average estimate of $1.50 billion, according to LSEG data.
The company’s proposed $8.5 billion buyout of Michael Kors owner Capri is facing hurdles as the U.S. Federal Trade Commission has sued to block it on grounds that the deal would eliminate “direct head-to-head competition” between the flagship brands of the two luxury handbag makers.
Tapestry said it was “confident in the merits and pro-competitive, pro-consumer nature of this transaction and … working expeditiously to close the transaction in calendar year 2024”.
It now expects fiscal 2024 revenue of over $6.6 billion, from prior expectations of about $6.7 billion.
(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)
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