(Sharecast News) - Shares in Coach and Kate Spade owner Tapestry dropped sharply in New York despite the company beating forecasts with record first-quarter sales, with the market seemingly underwhelmed with an upgraded full-year outlook.
Group revenues were up 13% year-on-year at $1.70bn over the fiscal first quarter ended 27 September, rising 16% on a pro forma basis. This was led by a 22% adjusted sales increase at Coach to $1.43bn, offsetting an 8% decline at Kate Spade to $260m.

Growth was largely attributed to an acceleration in the leathergoods category, with strong handbag revenues at Coach helped by a mid-teens percentage price increase.

Strong growth from the Gen Z market also bolstered the first-quarter performance, with the category now representing 35% of the 2.2m new customers acquired during the period.

First-quarter operating profits were 30% higher at $328m, helped by a 260 basis point improvement in the operating margin to 19.3%.

"From this position of strength, we are raising our full-year outlook, reinforcing that our advantages are structural and sustainable," said chief executive Joanne Crevoiserat. "We remain confident in our bright future, with a proven track record and an unwavering commitment to deliver compounding growth and long-term shareholder value."

Tapestry said it now expects full-year revenues to grow 4-5% on a reported basis to $7.3bn, some $100m ahead of previous guidance, while earnings per share guidance was lifted to $5.45-5.60 from $5.30-5.45.

However, Tapestry shares were down nearly 13% at $95.41 by 1019 EST, with market reports citing some disappointment from analysts who had expected a bigger upgrade to full-year forecasts.

The pullback in the stock could also reflect profit taking, following a 67% surge in the share price since the start of the year, as of Wednesday's closing bell.

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