10:35 AM EDT, 08/15/2024 (MT Newswires) -- Tapestry (TPR) reported better-than-expected fiscal fourth-quarter results on Thursday, while the luxury fashion company anticipates 2025 earnings to be higher than the prior full year.

The operator of luxury brands Coach, Kate Spade and Stuart Weitzman posted adjusted earnings of $0.92 per share for the quarter ended June 29, down from $0.95 the year before but ahead of the Capital IQ-polled consensus of $0.88. Sales declined 2% to $1.59 billion, but topped the Street's view for $1.57 billion.

"Our fourth-quarter results exceeded expectations, capping a successful year," Chief Executive Joanne Crevoiserat said in a statement. "We meaningfully advanced our strategic agenda in fiscal year 2024, delivering strong financial results against a dynamic backdrop."

Revenue in the Coach brand remained nearly flat at $1.25 billion, while Kate Spade decreased 6% to $290.1 million. Stuart Weitzman fell to $50.6 million from $62.6 million in the 2023 quarter, Tapestry said.

Sales in North America ticked down 1% amid a "challenging consumer backdrop," Chief Financial Officer Scott Roe said on an earnings call, according to a Capital IQ transcript. China declined 10% at constant currencies, as the company lapped last year's 50% growth and "continued to navigate a more challenging consumer backdrop in the region," according to Roe. European sales jumped 26% reflecting factors including "higher spend from local consumers and tourists," Roe said on the call.

For fiscal 2025, Tapestry expects adjusted EPS to be in a range of $4.45 to $4.50, reflecting mid-single-digit growth on a yearly basis. The guidance includes a negative $0.35 impact related to a share repurchase suspension amid the company's proposed acquisition of Michael Kors parent Capri (CPRI), as well as a foreign-exchange headwind of $0.20. The Street is looking for normalized EPS of $4.49 for the year.

Adjusted revenue is pegged at around $6.7 billion for the ongoing fiscal year, including roughly 50 basis points of currency pressure. The outlook represents growth versus fiscal 2024's reported topline of $6.67 billion, according to the company.

"We've taken a prudent approach to our outlook, balancing the realities of the external environment with the opportunities we see for our business," Roe told analysts. "Touching on shaping for the year, we expect constant currency sales to be flat in the first half of the year with modest growth planned in the back half."

Tapestry said it's "working expeditiously" to complete its purchase of Capri in the 2024 calendar year. In April, the Federal Trade Commission filed a lawsuit to block the $8.5 billion deal, which was agreed between the companies last year.

The Capri transaction is expected to be the "primary near-term input" for Tapestry's stock, Evercore ISI said in an emailed client note. "Recent reads on the case have been mixed, and (Capri's) trends continue to deteriorate badly," according to the investment banking advisory firm. "Both together reduce the certainty that a deal will close (or that it will close without some adjustment)."

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