(Reuters) – Tapestry, which agreed to buy Capri last week, forecast fiscal 2024 profit and sales below estimates and reported lower-than-expected quarterly results on Thursday, as demand for its luxury handbags and accessories slows down in the United States.

Shares of the Coach parent were down 1% in premarket trading, as demand for the company’s products weakens in North America amid a higher cost of living and still-high inflation.

The weakness offsets a boost from solid demand recovery in China – which accounted for 15% of Tapestry (NYSE:TPR)’s revenue in 2022 – as shoppers snapped up its affordable luxury goods after COVID restrictions fell away late last year.

Luxury rivals Ralph Lauren (NYSE:RL), LVMH, Gucci-owner Kering (EPA:PRTP) and Canada Goose have also faced sales pressures from softening U.S. demand.

Last week, Tapestry said it would buy rival and Michael Kors owner Capri in a deal valued at $8.5 billion, in a bid to challenge larger European rivals for a bigger share of the global luxury market.

The company said sales in the fourth quarter were impacted by a strong dollar, with declines across its brands.

Revenues from Kate Spade and Stuart Weitzman dropped 10% and 13% over the last year, respectively. In comparison, analysts had expected 2.9% and 4.8% growth for the brands, as per Refinitiv IBES data.

“With more growth coming from overseas, Tapestry’s profitability was hurt somewhat by the strong dollar – an issue that continues to affect many U.S.-based brands and retailers,” Insider Intelligence analyst Rachel Wolff said.

Tapestry expects adjusted earnings in the range of $4.10 to $4.15 per share in fiscal 2024, compared to estimates of $4.24.

Tapestry said fiscal 2024 net sales were approaching $6.9 billion, compared to average analysts’ estimate of $6.93 billion.

The company’s adjusted per share was 78 cents in the fourth quarter ended July 1, missing analysts’ estimate of 97 cents.