Tapestry Inc. (Ticker: $TPR), the luxury fashion company that owns brands like Coach, Kate Spade, and Stuart Weitzman, reported its financial results for the first quarter of the fiscal year. While the company achieved growth in revenue and earnings, it faced headwinds from the Asia and US markets.

In terms of revenue, Tapestry delivered over $1.5 billion in net sales. The reported revenue fell slightly short of analyst estimates at $1.54 billion. The company achieved international revenue growth of 7% at constant currency, driven by gains of 12% in Japan and 9% in Greater China. However, North America revenue remained approximately in line with the prior year due to a challenging consumer demand environment.

One positive aspect of Tapestry's performance was the improvement in gross margin. The company saw a 250 basis point increase compared to the previous year, indicating effective cost management and pricing strategies. Additionally, adjusted earnings per diluted share experienced high-teens growth, surpassing expectations.

Tapestry's direct-to-consumer revenue, supported by data and analytics capabilities, increased by 1% at constant currency. This growth was driven by a low-single-digit increase in stores and continued strength in digital channels. Digital sales accounted for nearly 25% of the company's revenue, maintaining its strong positioning in the online market.

Looking ahead, Tapestry provided its financial outlook for the full fiscal year 2024. The company expects revenue of approximately $6.7 billion, representing a slight increase from its prior target on a reported basis. Excluding the impact of foreign exchange (FX), Tapestry anticipates constant currency revenue growth of 2% to 3% compared to the prior year. The company also forecasts earnings per diluted share of $4.10 to $4.15, reflecting a 6% to 7% growth rate.

Despite the positive performance and outlook, Tapestry acknowledges the challenges it faces from foreign exchange headwinds, particularly in Asia. The company expects these FX headwinds to have a $100 million impact on full-year sales.

 Shares of TPR are up 3% in reaction to the report. The stock has put in a bottoming pattern over the past two months. Investors are braced for a poor holiday season for the retailers which does open up the potential for some upside surprises. The move in TPR suggests some of the bad news may be priced into shares. This will be an important move for traders to track as we head into retail earnings season next week.