Tapestry Inc (NYSE:TPR) stock rose 1.42% (As on May 12, 11:04:11 AM UTC-4, Source: Google Finance) after the company raised its annual profit forecast, betting that price increases, strong demand for its Coach handbags and a sharp rebound in China would shield it from a wider slowdown in U.S. luxury purchases. It has also surpassed market estimates for third-quarter results, with a 20% jump in China revenue after lockdowns lifted in the major luxury market. Credit-card data from Citi had also shown that U.S. luxury spending in March fell to the lowest monthly rate in nearly three years, but Tapestry managed to outperform as its Coach handbags – which typically sell for less than $1,000 – attracted more Gen Z and millennial consumers. It added 400,000 new customers in North America – its biggest market – while spend per customer also increased.

TPR in the third quarter of FY 23 has reported the adjusted earnings per share of 78 cents, beating the analysts’ estimates for the adjusted earnings per share of 59 cents. The company had reported the adjusted revenue of $2.48 billion in the third quarter of FY 23, beating the analysts’ estimates for revenue of $2.47 billion. The company has delivered approximately 10% Direct-to-Consumer revenue growth at constant currency, led by a low-teens increase in stores and mid-single-digit gain in Digital, with both expanding operating margin compared to the prior year;

Tapestry remains on track to repurchase approximately $700 million in common stock in the current fiscal year. During the first nine months of Fiscal 2023, Tapestry spent $500 million to repurchase 13.1 million shares of its common stock at an average cost of $38.16 per share, including $200 million spent in the third quarter to repurchase 4.7 million shares of its common stock at an average cost of $42.49. The Company remains committed to its plan to pay shareholders an annual dividend of $1.20 per share in the current fiscal year, representing a 20% increase compared to prior year, totaling approximately $300 million.

Tapestry now expects fiscal 2023 per-share earnings of $3.85 to $3.90, compared with $3.70 to $3.75 estimated earlier. The company also raised its annual revenue forecast to near $6.7 billion, from about $6.6 billion. Tapestry expects a mid-single-digit decline in fourth-quarter North America sales. It also tightened inventories significantly, with end-quarter levels just 2% above last year.