Maryland
|
1-16153
|
52-2242751
|
(State of Incorporation)
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
10 Hudson Yards, New York, NY 10001
|
(Address of principal executive offices) (Zip Code)
|
(212) 946-8400
|
(Registrant’s telephone number, including area code)
|
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value |
TPR |
New York Stock Exchange
|
5.350% Senior Notes due 2025 |
TPR25A |
New York Stock Exchange |
5.375% Senior Notes due 2027 |
TPR27A |
New York Stock Exchange
|
5.875% Senior Notes due 2031 |
TPR31 |
New York Stock Exchange
|
Item 2.02 |
Results of Operations and Financial Condition.
|
Item 9.01 |
Financial Statements and Exhibits.
|
99.1
|
Text of Press Release, dated November 7, 2024
|
Dated: November 7, 2024
|
|||
TAPESTRY, INC.
|
|||
By:
|
/s/ David E. Howard
|
||
David E. Howard
|
|||
General Counsel and Secretary
|
Text of Press Release, dated November 7, 2024
|
|
• |
Delivered Revenue and Earnings Ahead of the Company’s Outlook led by Growth at Coach
|
|
• |
Achieved Diluted EPS of $0.79 and Record non-GAAP Diluted EPS of $1.02
|
|
• |
Fueled 280 Basis Points of Gross Margin Expansion and Strong Operating and Free Cash Flow
|
|
• |
Drove customer engagement across brands, acquiring approximately 1.4 million new customers in North America alone, of which over half were Gen Z and Millennials.
|
|
• |
Delivered revenue approximately in-line with prior year on a reported and constant currency basis,
ahead of the Company’s outlook; drove topline growth at Coach, which continued to outpace expectations at increasing
profitability;
|
|
• |
Achieved International topline gains of 2% at constant currency, which included strength in Europe (+27%), partially offset, as expected, by a decrease in revenue in total APAC (-2%);
|
|
• |
Realized a 1% sales decline in North America, which included
the planned decrease in wholesale; delivered higher operating margin and profit dollars in the region compared to last year driven by gross margin expansion;
|
|
• |
Drove double-digit adjusted earnings per diluted share growth, ahead of expectations, while making ongoing strategic investments in brand-building, notably through marketing;
|
|
• |
Generated strong cash flow from operating activities of
$120 million and free cash flow of $94 million, fueling the Company’s long-term growth agenda and shareholder return program via its dividend.
|
|
• |
Provided unique and seamless omni-channel experiences, with a focus on driving brand desire,
consumer connections, and cultural relevance, underpinned by Tapestry’s data-driven, customer engagement platform;
|
|
• |
Achieved direct-to-consumer sales in-line with prior year on a constant currency basis, which included a high-single digit increase in Digital revenue and a low-single digit decline in global brick and mortar sales.
|
|
• |
Delivered strong innovation to consumers, highlighted by
Coach, which drove handbag revenue growth and AUR gains;
|
|
• |
Remained disciplined brand-builders and operators, underscored by significant gross margin
expansion of 280 basis points, which included operational outperformance, lower freight expense, and FX tailwinds;
|
|
• |
Leveraged Tapestry’s agile supply chain to deliver creativity, value, and craftsmanship globally,
while enabling diligent inventory management against a rapidly shifting landscape.
|
|
• |
Net sales totaled $1.51 billion, approximately in-line with
prior year on both a reported and constant currency basis. FX represented a 40-basis point headwind in the quarter due to the appreciation of the U.S. Dollar.
|
|
• |
Gross profit totaled $1.13 billion, while gross margin was
75.3%, driven by operational improvements of 180 basis points, as well as a benefit of 60 basis points from lower freight expense, as well as FX tailwinds. This
compared to prior year gross profit of $1.10 billion, representing a gross margin of 72.5%.
|
|
• |
SG&A expenses totaled $883 million and represented 58.6%
of sales on a reported basis. On a non-GAAP basis, SG&A expenses totaled $850 million and represented 56.4% of sales. In the prior year period, SG&A expenses totaled $845 million and represented 55.8% of sales on a reported
basis and totaled $825 million and represented 54.5% of sales on a non-GAAP basis.
|
|
• |
Operating income was $252 million on a reported basis, while
operating margin was 16.7%. On a non-GAAP basis, operating income was $285 million, while operating margin was 18.9%. This compares to reported operating income of $253 million and a 16.7% operating margin and non-GAAP operating income
of $273 million and an 18.0% operating margin in the prior year period.
|
|
• |
Net interest was an expense of $31 million on a reported
basis and income of $7 million on a non-GAAP basis. This compared to net interest expense in the prior year of $13 million on a reported basis and $7 million on a non-GAAP basis.
|
|
• |
Other income was $4 million as compared to other expense of
$1 million in the prior year period.
|
|
• |
Net income was $187 million, with earnings per diluted
share of $0.79. On a non-GAAP basis, net income was $242 million, with earnings per diluted share of $1.02. In the prior year period, net income was $195 million, with earnings per diluted share of $0.84. On a non-GAAP basis, net
income in the prior year was $216 million, with earnings per diluted share of $0.93. On a reported basis, the tax rate for the quarter was 17.3% or 18.5% on a non-GAAP basis. In the prior year period, the tax rate was 18.2% or 18.3% on
a non-GAAP basis.
|
% Change
|
||||||||||||
Quarter Ended
September 28, 2024
|
Reported
|
Constant Currency
|
||||||||||
Brand
|
(in millions)
|
|||||||||||
Coach
|
$
|
1,170.6
|
1
|
%
|
2
|
%
|
||||||
Kate Spade
|
283.2
|
-7
|
%
|
-6
|
%
|
|||||||
Stuart Weitzman
|
53.7
|
2
|
%
|
2
|
%
|
|||||||
Region
|
||||||||||||
North America
|
948.2
|
-1
|
%
|
-1
|
%
|
|||||||
Greater China (1)
|
234.1
|
-4
|
%
|
-5
|
%
|
|||||||
Japan
|
117.1
|
-8
|
%
|
-4
|
%
|
|||||||
Other Asia (2)
|
86.8
|
11
|
%
|
10
|
%
|
|||||||
Europe
|
94.3
|
27
|
%
|
27
|
%
|
|||||||
Other (3)
|
27.0
|
2
|
%
|
2
|
%
|
|||||||
Tapestry
|
$
|
1,507.5
|
0
|
%
|
0
|
%
|
(1)
|
Greater China includes mainland China, Taiwan, and Hong Kong SAR and Macao SAR.
|
(2)
|
Other Asia includes Malaysia, Australia, New Zealand, South Korea, Singapore, and other countries within Asia.
|
(3)
|
Other primarily represents royalties earned from the Company's licensing partners and sales in the Middle East.
|
|
• |
Cash, cash equivalents and short-term investments totaled
$7.31 billion and total borrowings outstanding were $7.31 billion, reflecting $6.1 billion
in senior notes issued in November 2023 to fund the proposed acquisition of Capri Holdings Limited.
|
|
• |
Inventory was $1.03 billion compared to the prior year’s
ending inventory of $943 million, reflecting a higher level of in-transits, consistent with expectations.
|
|
• |
Cash flow from operating activities for the first fiscal
quarter was an inflow of $120 million compared to an inflow $75 million in the prior year. Free cash flow was an inflow of $94 million compared to an inflow of $54 million in the prior year. This included CapEx and implementation costs related to Cloud Computing of $30 million versus $29 million a year ago.
|
|
• |
Revenue of over $6.75 billion, representing growth of
approximately 1% to 2% versus prior year on a reported and constant currency basis, and ahead of prior guidance for slight growth on reported basis and approximately 1% on a constant currency basis;
|
|
• |
Operating margin expansion over 50 basis points compared to
prior year;
|
|
• |
Net interest income of approximately $20 million;
|
|
• |
Tax rate of approximately 19%;
|
|
• |
Weighted average diluted share count of approximately 238
million shares;
|
|
• |
Earnings per diluted share of $4.50 to $4.55, representing
mid-single digit growth compared to the prior year, and an increase from the Company’s prior guidance of $4.45 to $4.50;
|
|
• |
Free cash flow of approximately $1.1 billion, excluding
deal-related costs.
|
|
• |
No revenue, net interest, or earnings impact related to the proposed acquisition of Capri Holdings Limited;
|
|
• |
No impact from any potential future share repurchase activity in the Fiscal Year;
|
|
• |
No further appreciation of the U.S. Dollar; information provided based on spot rates at the time of forecast;
|
|
• |
No material worsening of inflationary pressures or consumer confidence;
|
|
• |
No benefit from the potential reinstatement of the Generalized System of Preferences (“GSP”); and
|
|
• |
No impact related to any potential policy changes resulting from the outcome of U.S. Presidential election in November 2024.
|
(unaudited)
|
||||||||
QUARTER ENDED
|
||||||||
September 28, 2024
|
September 30, 2023
|
|||||||
Net sales
|
$
|
1,507.5
|
$
|
1,513.2
|
||||
Cost of sales
|
372.6
|
415.5
|
||||||
Gross profit
|
1,134.9
|
1,097.7
|
||||||
Selling, general and administrative expenses
|
882.9
|
844.5
|
||||||
Operating income (loss)
|
252.0
|
253.2
|
||||||
Interest expense, net
|
30.7
|
13.3
|
||||||
Other expense (income)
|
(4.4
|
)
|
1.4
|
|||||
Income (loss) before provision for income taxes
|
225.7
|
238.5
|
||||||
Provision (benefit) for income taxes
|
39.1
|
43.5
|
||||||
Net income (loss)
|
$
|
186.6
|
$
|
195.0
|
||||
Net income (loss) per share:
|
||||||||
Basic
|
$
|
0.81
|
$
|
0.85
|
||||
Diluted
|
$
|
0.79
|
$
|
0.84
|
||||
Shares used in computing net income (loss) per share:
|
||||||||
Basic
|
231.5
|
228.3
|
||||||
Diluted
|
235.9
|
232.5
|
QUARTER ENDED
|
||||||||||||||||
September 28, 2024
|
September 30, 2023
|
% Change
|
Constant Currency %
Change
|
|||||||||||||
Coach
|
$
|
1,170.6
|
$
|
1,157.4
|
1
|
%
|
2
|
%
|
||||||||
Kate Spade
|
283.2
|
303.2
|
(7
|
)%
|
(6
|
)%
|
||||||||||
Stuart Weitzman
|
53.7
|
52.6
|
2
|
%
|
2
|
%
|
||||||||||
Total Tapestry
|
$
|
1,507.5
|
$
|
1,513.2
|
—
|
%
|
—
|
%
|
For the Quarter Ended September 28, 2024
|
||||||||||||
Items Affecting Comparability
|
||||||||||||
GAAP Basis
(As Reported) |
Acquisition Costs
|
Non-GAAP Basis
(Excluding Items) |
||||||||||
Gross Profit
|
||||||||||||
Coach
|
916.1
|
—
|
916.1
|
|||||||||
Kate Spade
|
189.6
|
—
|
189.6
|
|||||||||
Stuart Weitzman
|
29.2
|
—
|
29.2
|
|||||||||
Gross profit
|
$
|
1,134.9
|
$
|
—
|
$
|
1,134.9
|
||||||
SG&A expenses
|
||||||||||||
Coach
|
529.5
|
—
|
529.5
|
|||||||||
Kate Spade
|
162.6
|
—
|
162.6
|
|||||||||
Stuart Weitzman
|
36.6
|
—
|
36.6
|
|||||||||
Corporate
|
154.2
|
33.4
|
120.8
|
|||||||||
SG&A expenses
|
$
|
882.9
|
$
|
33.4
|
$
|
849.5
|
||||||
Operating income (loss)
|
||||||||||||
Coach
|
386.6
|
—
|
386.6
|
|||||||||
Kate Spade
|
27.0
|
—
|
27.0
|
|||||||||
Stuart Weitzman
|
(7.4
|
)
|
—
|
(7.4
|
)
|
|||||||
Corporate
|
(154.2
|
)
|
(33.4
|
)
|
(120.8
|
)
|
||||||
Operating income (loss)
|
$
|
252.0
|
$
|
(33.4
|
)
|
$
|
285.4
|
|||||
Interest expense, net
|
30.7
|
37.4
|
(6.7
|
)
|
||||||||
Provision for income taxes
|
39.1
|
(15.8
|
)
|
54.9
|
||||||||
Net income (loss)
|
$
|
186.6
|
$
|
(55.0
|
)
|
$
|
241.6
|
|||||
Net income (loss) per diluted common share
|
$
|
0.79
|
$
|
(0.23
|
)
|
$
|
1.02
|
For the Quarter Ended September 30, 2023
|
||||||||||||
Items Affecting Comparability
|
||||||||||||
GAAP Basis
(As Reported) |
Acquisition Costs
|
Non-GAAP Basis
(Excluding Items) |
||||||||||
Gross Profit
|
||||||||||||
Coach
|
867.6
|
—
|
867.6
|
|||||||||
Kate Spade
|
198.9
|
—
|
198.9
|
|||||||||
Stuart Weitzman
|
31.2
|
—
|
31.2
|
|||||||||
Gross profit
|
$
|
1,097.7
|
$
|
—
|
$
|
1,097.7
|
||||||
SG&A expenses
|
||||||||||||
Coach
|
496.3
|
—
|
496.3
|
|||||||||
Kate Spade
|
172.3
|
—
|
172.3
|
|||||||||
Stuart Weitzman
|
39.8
|
—
|
39.8
|
|||||||||
Corporate
|
136.1
|
19.6
|
116.5
|
|||||||||
SG&A expenses
|
$
|
844.5
|
$
|
19.6
|
$
|
824.9
|
||||||
Operating income (loss)
|
||||||||||||
Coach
|
371.3
|
—
|
371.3
|
|||||||||
Kate Spade
|
26.6
|
—
|
26.6
|
|||||||||
Stuart Weitzman
|
(8.6
|
)
|
—
|
(8.6
|
)
|
|||||||
Corporate
|
(136.1
|
)
|
(19.6
|
)
|
(116.5
|
)
|
||||||
Operating income (loss)
|
$
|
253.2
|
$
|
(19.6
|
)
|
$
|
272.8
|
|||||
Interest expense, net
|
13.3
|
6.7
|
6.6
|
|||||||||
Provision for income taxes
|
43.5
|
(5.0
|
)
|
48.5
|
||||||||
Net income (loss)
|
$
|
195.0
|
$
|
(21.3
|
)
|
$
|
216.3
|
|||||
Net income (loss) per diluted common share
|
$
|
0.84
|
$
|
(0.09
|
)
|
$
|
0.93
|
(unaudited)
|
(audited)
|
|||||||
September 28, 2024
|
June 29, 2024
|
|||||||
ASSETS
|
||||||||
Cash, cash equivalents and short-term investments
|
$
|
7,305.2
|
$
|
7,203.8
|
||||
Receivables
|
279.0
|
228.2
|
||||||
Inventories
|
1,030.8
|
824.8
|
||||||
Other current assets
|
530.5
|
546.9
|
||||||
Total current assets
|
9,145.5
|
8,803.7
|
||||||
Property and equipment, net
|
513.0
|
514.7
|
||||||
Operating lease right-of-use assets
|
1,293.6
|
1,314.4
|
||||||
Other assets
|
2,776.8
|
2,763.5
|
||||||
Total assets
|
$
|
13,728.9
|
$
|
13,396.3
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Accounts payable
|
$
|
544.0
|
$
|
452.2
|
||||
Accrued liabilities
|
708.6
|
656.3
|
||||||
Current portion of operating lease liabilities
|
297.8
|
299.7
|
||||||
Current debt
|
303.4
|
303.4
|
||||||
Total current liabilities
|
1,853.8
|
1,711.6
|
||||||
Long-term debt
|
7,008.3
|
6,937.2
|
||||||
Long-term operating lease liabilities
|
1,196.0
|
1,224.2
|
||||||
Other liabilities
|
688.9
|
626.4
|
||||||
Stockholders' equity
|
2,981.9
|
2,896.9
|
||||||
Total liabilities and stockholders' equity
|
$
|
13,728.9
|
$
|
13,396.3
|
(unaudited)
|
(unaudited)
|
|||||||
September 28, 2024
|
September 30, 2023
|
|||||||
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
||||||||
Net income (loss)
|
$
|
186.6
|
$
|
195.0
|
||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
40.9
|
44.3
|
||||||
Amortization of cloud computing arrangements
|
14.0
|
13.4
|
||||||
Other non-cash items
|
0.5
|
49.7
|
||||||
Changes in operating assets and liabilities
|
(122.5
|
)
|
(227.1
|
)
|
||||
Net cash provided by (used in) operating activities
|
119.5
|
75.3
|
||||||
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
||||||||
Purchases of property and equipment
|
(25.6
|
)
|
(20.9
|
)
|
||||
Purchases of investments
|
(1,479.2
|
)
|
(1.9
|
)
|
||||
Proceeds from maturities and sales of investments
|
1,694.9
|
—
|
||||||
Net cash provided by (used in) investing activities
|
190.1
|
(22.8
|
)
|
|||||
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
||||||||
Payment of dividends
|
(81.4
|
)
|
(80.2
|
)
|
||||
Other items
|
6.9
|
(69.2
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(74.5
|
)
|
(149.4
|
)
|
||||
Effect of exchange rate on cash and cash equivalents
|
85.8
|
(7.1
|
)
|
|||||
Net (decrease) increase in cash and cash equivalents
|
320.9
|
(104.0
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
$
|
6,142.0
|
$
|
726.1
|
||||
Cash and cash equivalents at end of period
|
$
|
6,462.9
|
$
|
622.1
|
Directly-Operated Store Count:
|
As of
June 29, 2024
|
Openings
|
(Closures)
|
As of
September 28, 2024
|
||||||||||||
Coach
|
||||||||||||||||
North America
|
324
|
2
|
(1
|
)
|
325
|
|||||||||||
International
|
606
|
4
|
(16
|
)
|
594
|
|||||||||||
Kate Spade
|
||||||||||||||||
North America
|
197
|
3
|
(3
|
)
|
197
|
|||||||||||
International
|
181
|
3
|
(6
|
)
|
178
|
|||||||||||
Stuart Weitzman
|
||||||||||||||||
North America
|
34
|
—
|
—
|
34
|
||||||||||||
International
|
60
|
2
|
(2
|
)
|
60
|