Luxury goods company Tapestry Inc., formerly known as Coach Inc., said Feb. 6 that it is lifting its fiscal full-year 2018 EPS guidance, thanks in part to recent tax reform legislation in the United States.
The company said it now expects its adjusted diluted EPS for the fiscal year ending in June to come between $2.52 to $2.60, up from the previous quarter's guidance range for EPS of $2.35 to $2.40.
The new EPS outlook now assumes growth of approximately 17% to 21% from the prior year, including mid- to high-single-digit accretion from its acquisition of Kate Spade & Co.
Tapestry kept its full-year sales guidance, stating that it expects sales to increase 30% on the year to a range of $5.8 billion to $5.9 billion, where the purchase of Kate Spade will add more than $1.2 billion in revenue. It also maintained its previous forecast for full-year operating income growth coming between 22% and 25%.
Victor Luis, CEO of Tapestry, said in a statement that the company is on track to meet these targets thanks to a combination of an anticipated 5% reduction in its tax rate related to tax reform legislation and the fact that the company used excess cash to pay down $1.1 billion in debt in January.
The company said its earnings per diluted share for the fiscal second quarter ended Dec. 30, 2017, came in at 22 cents, below S&P Capital IQ's consensus for 87 cents. Net income fell to $63.2 million from $199.7 million as the company incurred a one-time $194 million increase in provision for income taxes due to transition charges related to the repatriation of foreign earnings and a remeasurement of deferred tax assets and liabilities. It also booked approximately $61 million in integration and acquisition costs related to the integration of Kate Spade. Sales for the quarter rose 35% to $1.79 billion from $1.32 billion.
For the six months ended Dec. 30, 2017, diluted EPS fell to 16 cents from $1.13 a year ago. Net profit fell to $45.5 million from $317.1 million. Sales rose to $3.07 billion from $2.36 billion.
