By Imani Moise
Shares of Tapestry Inc. jumped 7.1% to $48/17 during premarket trading after the maker of Coach and Kate Spade bags reported earnings for its second quarter. Here's what you need to know:
EARNINGS: Changes in tax policy sent earnings down to 22 cents a share from 71 cents a share. Excluding this impact and other items, earnings rose to $1.07 a share from 75 cents a share. Analysts polled by Thomson Reuters had forecast earnings of 89 cents a share.
REVENUE: Sales jumped 35% to $1.79 billion, topping the consensus of $1.77 billion in sales. Revenue growth was largely driven by the addition of the Kate Spade brand which the company acquired last year.
OUTLOOK: The company raised its 2018 earnings forecast due to lower interest expenses after using extra cash to pay down $1.1 billion in the current quarter in addition the future tax benefits. Tapestry now expects earnings of $2.52 a share to $2.50 a share compared with earlier guidance of up to $2.40 a share.
TAX WATCH: The company recorded a net charge of $213 million in during the quarter related to the repatriation tax and the re-measurement of deferred tax assets. On an adjusted basis, the company expects its 2018 tax rate to be lowered by 5%.
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