Strong Operating Income & EPS Growth
Demonstrates Progress on Acceleration Program
- Gross Margin Increased By More Than 300 Basis Points And
SG&A Declined Significantly, Driving Over 700 Basis Points of
Operating Margin Expansion Year-Over-Year
- GAAP Operating Income was $202 Million vs. $52 Million a
Year Ago; Non-GAAP Operating Income was $229 Million vs. $167
Million a Year Ago
- GAAP EPS was $0.83 vs. $0.07 a Year Ago; Non-GAAP EPS was
$0.58 vs. $0.40 a Year Ago
Tapestry, Inc. (NYSE: TPR), a leading New York-based house of
modern luxury accessories and lifestyle brands, today reported
results for the fiscal first quarter ended September 26, 2020.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20201029005394/en/
(Photo: Business Wire)
Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc.,
said, “We are very pleased with our first quarter results, which
exceeded expectations and demonstrated the bold actions we are
implementing as part of our Acceleration Program. We delivered
strong profit growth across our portfolio of brands in the face of
an unprecedented and challenging backdrop. We drove a meaningful
sequential improvement in topline trends, supported by strength in
Digital and China. At the same time, we expanded gross margin by
deliberately reducing promotional activity and raising AUR, while
also tightly controlling SG&A expense. Taken together, we
achieved a significant increase in EPS and generated positive free
cash flow.”
Ms. Crevoiserat continued, “Our performance underscores the
power of our brands, the agility of our talented teams and the
competitive advantage of Tapestry’s enabling platform. Importantly,
it also reinforces the potential of our Acceleration Program.
Guided by an unwavering focus on the consumer and supported by new
ways of working, we are positioning the Company to successfully
navigate the dynamic environment and drive long-term, sustainable
growth.”
Tapestry, Inc. Fiscal First Quarter
2021 Highlights
- Delivered top and bottom line results materially ahead of
expectations
- Achieved sequential improvement in revenue trends across all
brands
- Drove a second consecutive quarter of triple-digit e-commerce
growth versus prior year, while simultaneously improving global
store sales trends
- Posted double-digit year-over-year revenue growth in Mainland
China
- Significantly expanded gross margins by over 300 basis points
driven in part by lower, more disciplined promotional activity
- Realized substantial decline in SG&A of 27% on a reported
basis and 20% on a non-GAAP basis, reflecting effective expense
management and previously announced actions to transform the
Company’s operating model, including a 20% reduction in Tapestry’s
run-rate corporate headcount costs
- Increased operating margin by over 700 basis points on a GAAP
and non-GAAP basis
- Tightly managed inventories, which declined 8% from prior year
and are well-positioned heading into the holiday quarter
- Generated positive free cash flow of $64 million as compared to
an outflow of $66 million in the prior year
- Ended the quarter with $1.5 billion in cash and
equivalents
Acceleration Program
Highlights
In the first fiscal quarter, the Company made meaningful
progress against its previously announced Acceleration Program to
sharpen its focus on the consumer, leverage data to lead with a
digital-first mindset and transform into a leaner and more
responsive organization:
- Recruited nearly 800,000 new customers across brands in
North America through our e-commerce channels, meeting
consumers where they choose to shop and leveraging marketing
capabilities to drive engagement and enhance the customer’s digital
journey;
- Drove significant growth in China through compelling
product assortments, enhanced marketing and expanded reach across
direct channels and third party online distribution; Coach is the
number one ranked handbag brand on Tmall;
- Leveraged data and analytics to optimize marketing
messaging, assortment planning and promotional levels to support
higher AUR;
- Made further progress in creating an agile and scalable
operating model, with a streamlined organizational structure
and empowered teams, while optimizing our global fleet with
15 net store closures in the first fiscal quarter representing a
net decrease of 50 stores from the prior year; Remain on track to
achieve gross run-rate savings of $300 million, including gross
savings of $200 million in fiscal 2021.
Through these initiatives, the Company is better meeting the
needs of each of its brands' unique customers to drive engagement
and desire for its products among new and existing customers,
creating a strong foundation for profitable expansion.
Overview of First Quarter 2021
Tapestry, Inc. Results
- Net sales totaled $1.17 billion for the fiscal first
quarter as compared to $1.36 billion in the prior year,
representing a 14% decline.
- Gross profit totaled $830 million, while gross margin
was 70.8%, on a reported and non-GAAP basis. This compared to prior
year reported gross profit of approximately $914 million and gross
margin of 67.3%. On a non-GAAP basis, gross profit in the year ago
period totaled $919 million with gross margin of 67.6%.
- SG&A expenses totaled $628 million on a reported
basis and represented 53.6% of sales compared to $863 million and
63.5%, respectively, in the year ago quarter. On a non-GAAP basis,
SG&A expenses were $601 million and represented 51.3% of sales
as compared to $752 million and 55.4%, respectively, in the year
ago period.
- Operating income was $202 million on a reported basis,
while operating margin was 17.3% versus operating income of $52
million and an operating margin of 3.8% in the prior year. On a
non-GAAP basis, operating income was $229 million, while operating
margin was 19.5% versus operating income of $167 million and an
operating margin of 12.3% in the prior year.
- Net interest expense was $19 million in the quarter as
compared to $12 million in the year ago period.
- Other income was $3 million versus an expense of $13
million in the prior year.
- Net income for the quarter was $232 million on a
reported basis, with earnings per diluted share of $0.83. This
compared to net income of $20 million with earnings per diluted
share of $0.07 in the prior year period. The reported tax rate for
the quarter was (25.0)%, reflecting the benefit under the
Coronavirus Aid, Relief and Economic Security (“CARES”) Act, most
notably the Net Operating Loss (“NOL”) carryback claim. This
compared to the prior year reported tax rate of 24.8%. On a
non-GAAP basis, net income for the quarter was $161 million with
earnings per diluted share of $0.58. This compared to non-GAAP net
income of $114 million with earnings per diluted share of $0.40 in
the prior year period. The non-GAAP tax rate for the quarter, which
excludes the tax impact under the CARES Act, was 24.1% compared to
19.6% in the prior year.
- Inventory was $811 million at the end of quarter versus
ending inventory of $880 million in the year ago period.
Fiscal first quarter results by brand were as follows:
Coach First Quarter 2021
Results
- Net sales for Coach totaled $875 million for the fiscal
first quarter as compared to $966 million in the prior year,
representing a decline of 9%.
- Gross profit for Coach totaled $645 million, while gross
margin was 73.7% on a reported and non-GAAP basis. This compared to
prior year gross profit of $678 million on a reported and non-GAAP
basis, while gross margin was 70.1% and 70.2% on a reported and
non-GAAP basis, respectively.
- SG&A expenses for Coach were $375 million on a
reported basis and represented 42.8% of sales compared to $478
million and 49.5%, respectively, in the year ago period. On a
non-GAAP basis, SG&A expenses were $364 million and represented
41.6% of sales compared to expenses of $436 million or 45.2% of
sales in the prior year.
- Operating income for Coach was $270 million compared to
reported operating income of approximately $200 million in the
prior year, while operating margin was 30.8% versus 20.7% a year
ago. On a non-GAAP basis, operating income was $281 million
compared to $241 million in the prior year, while operating margin
was 32.1% versus 25.0% a year ago.
Kate Spade First Quarter 2021
Results
- Net sales for Kate Spade totaled $240 million for the
fiscal first quarter as compared to $306 million in the prior year,
representing a decline of 21%, which included the impact related to
a strategic pullback in lower margin wholesale disposition
sales.
- Gross profit for Kate Spade totaled $154 million on both
a reported basis and non-GAAP basis, while gross margin was 64.1%.
This compared to reported gross profit and margin in the prior year
of $192 million and 62.7%, respectively. On a non-GAAP basis, prior
year gross profit was $193 million, while gross margin was
63.1%.
- SG&A expenses for Kate Spade were $131 million on a
reported basis and represented 54.5% of sales. This compared to
reported SG&A expenses of $199 million in the year ago period,
which represented 65.0% of sales. On a non-GAAP basis, SG&A
expenses were $130 million and represented 54.0% of sales. This
compared to SG&A expenses of $173 million or 56.7% of sales on
a non-GAAP basis in the previous year.
- Operating income for Kate Spade was $23 million on a
reported basis, representing an operating margin of 9.6%. This
compared to an operating loss of $7 million and an operating margin
of (2.4)% on a reported basis in the year ago period. On a non-GAAP
basis, operating income was $24 million, while operating margin was
10.1%. This compared to operating income of $19 million and an
operating margin of 6.3% on a non-GAAP basis in the previous
year.
Stuart Weitzman First Quarter 2021
Results
- Net sales for Stuart Weitzman totaled $56 million for
the fiscal first quarter compared to $87 million in the same period
of the prior year, representing a 35% decline.
- Gross profit for Stuart Weitzman totaled $31 million on
both a reported and non-GAAP basis, while gross margin for the
quarter was 55.3%. This compared to prior year reported gross
profit of $45 million and gross margin of 52.5%. On a non-GAAP
basis, prior year gross profit was $48 million, while gross margin
was 55.7%.
- SG&A expenses for Stuart Weitzman were $31 million
on a reported basis and represented 55.2% of sales. This compared
to reported SG&A expenses of $65 million in the year ago
period, which represented 74.8% of sales. On a non-GAAP basis,
SG&A expenses were approximately $34 million and represented
59.5% of sales as compared to $58 million or 67.2% of sales in the
prior year period.
- Operating profit was breakeven on a reported basis,
representing an operating margin of 0.0%, compared to an operating
loss of $19 million and operating margin of (22.2)% in the year ago
period. On a non-GAAP basis, the operating loss was approximately
$2 million or a (4.2)% operating margin versus an operating loss of
$10 million and operating margin of (11.5)% in the prior year.
Non-GAAP Reconciliation
During the first fiscal quarter of 2021, the Company recorded
the following on a reported basis:
- CARES Act Tax Impact: $92 million of tax benefits under
the CARES Act, most notably the NOL carryback claim. This reflects
the Company’s provisional estimate and is subject to adjustment as
estimation approaches are refined.
- Acceleration Program: $27 million of pre-tax charges
primarily associated with professional fees incurred as a result of
the development and execution of the Company’s comprehensive
strategic initiatives, as well as actions to streamline the
Company's organization, which includes severance. The Company
continues to expect to incur total charges of $185 to $200 million
over the life of the Acceleration Program, including $75 to $90
million in remaining charges. The majority of these future costs
are estimated to be cash and recorded primarily in fiscal
2021.
Taken together, on a reported basis, these items decreased the
Company’s operating income by $27 million, while increasing net
income and earnings per diluted share by $71 million and $0.25,
respectively. Please refer to the financial tables included herein
for a detailed reconciliation of the Company’s reported to non-GAAP
results.
Conclusion
Ms. Crevoiserat continued, “We are confident in the strong
foundation we’re building and our ability to create long-term value
for our stakeholders. As we enter the holiday season, our teams
continue to focus on the factors within our control. We are putting
the consumer first, delivering innovative, relevant and beautifully
crafted product, while staying true to the unique purpose of each
of our brands. We are also leaning into the opportunity to evolve
with the changing landscape and shifting consumer needs and
preferences. Given the strength of the first quarter, we are
increasingly optimistic in our ability to drive sustainable top and
bottom line growth over our planning horizon.”
Fiscal Year 2021 Outlook
Due to the dynamic nature of the Covid-19 crisis and lack of
visibility, the potential financial impact to our business cannot
be accurately projected. Therefore, the Company is not providing
detailed guidance for fiscal 2021. However, given the strong start
to the fiscal year and assuming a continued steady recovery
emerging from the pandemic, the Company continues to expect a
topline inflection in the second half of the fiscal year, with both
revenue and bottom line growth now projected for fiscal 2021.
The Company also notes that fiscal 2021 includes a 53rd week in
its fourth fiscal quarter.
Conference Call Details
The Company will host a conference call to review these results
at 7:30 a.m. (ET) today, October 29, 2020. Interested parties may
listen to the conference call via live webcast by accessing
www.tapestry.com/investors on the Internet or calling
1-877-510-8087 or 1-862-298-9015 and providing the Conference ID
9406188. A telephone replay will be available starting at 12:00
p.m. (ET) today, for a period of five business days. To access the
telephone replay, call 1-800-585-8367 or 1-404-537-3406 and enter
the Conference ID 9406188. A webcast replay of the earnings
conference call will also be available for five business days on
the Tapestry website. Presentation slides have also been posted to
the Company’s website at www.tapestry.com/investors.
Upcoming Events
The Company expects to report fiscal 2021 second quarter results
on Thursday, February 4, 2021. To receive notification of future
announcements, please register at www.tapestry.com/investors
("Subscribe to E-Mail Alerts").
Tapestry, Inc. is a New York-based house of modern luxury
lifestyle brands. The Company’s portfolio includes Coach, Kate
Spade and Stuart Weitzman. Our Company and our brands are founded
upon a creative and consumer-led view of luxury that stands for
inclusivity and approachability. Each of our brands are unique and
independent, while sharing a commitment to innovation and
authenticity defined by distinctive products and differentiated
customer experiences across channels and geographies. To learn more
about Tapestry, please visit www.tapestry.com. The Company’s common
stock is traded on the New York Stock Exchange under the symbol
TPR.
This information to be made available in this press release may
contain forward-looking statements based on management's current
expectations. Forward-looking statements include, but are not
limited to, the statements under “Fiscal Year 2021 Outlook,” and
statements regarding the Acceleration Program, including future
charges under and future impacts of this program, the potential
impact of the Covid-19 pandemic and success of mitigating actions,
and statements that can be identified by the use of forward-looking
terminology such as "may," "will," “can,” "should," "expect,"
"intend," "estimate," "continue," "project," "guidance,"
"forecast," “outlook,” “roadmap,” "anticipate," “excited,”
“moving,” “leveraging,” “sharpening,” transforming,” “deepening,”
“creating,” accelerating,” “enhancing,” leaning into,”
“strengthening,” “developing,” “drive,” “targeting,” “assume,”
“plan,” “build,” “pursue,” “maintain,” “progress,” “future,”
“emerge,” “assure,” “on track,” “well positioned to,” “look forward
to,” “looking ahead,” “to acquire,” “achieve,” “strategic vision,”
“strategic agenda,” “long-term objectives,” “steady recovery,”
“growth opportunities,” “view,” or comparable terms. Future results
may differ materially from management's current expectations, based
upon a number of important factors, including risks and
uncertainties such as the impact of the Covid-19 pandemic, the
ability to control costs and successfully execute our growth
strategies, expected economic trends, the ability to anticipate
consumer preferences, risks associated with operating in
international markets, our ability to achieve intended benefits,
cost savings and synergies from acquisitions, the risk of
cybersecurity threats and privacy or data security breaches, and
the impact of legislation, etc. Please refer to the Company’s
latest Annual Report on Form 10-K, quarterly report on 10-Q and its
other filings with the Securities and Exchange Commission for a
complete list of risks and important factors. The Company assumes
no obligation to revise or update any such forward-looking
statements for any reason, except as required by law.
TAPESTRY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters Ended September 26, 2020
and September 28, 2019 (in
millions, except per share data)
(unaudited) QUARTER ENDED September
26, 2020 September 28, 2019 Net sales
$
1,172.2
$
1,357.9
Cost of sales
342.0
443.4
Gross profit
830.2
914.5
Selling, general and administrative expenses
628.0
862.9
Operating income (loss)
202.2
51.6
Interest expense, net
19.4
12.3
Other expense (income)
(2.6)
12.7
Income (loss) before provision for income taxes
185.4
26.6
Provision for income taxes
(46.3)
6.6
Net income (loss)
$
231.7
$
20.0
Net income (loss) per share:
Basic
$
0.84
$
0.07
Diluted
$
0.83
$
0.07
Shares used in computing net income per share:
Basic
276.8
284.4
Diluted
277.9
285.7
TAPESTRY, INC.
DETAIL TO NET SALES
For the Quarters Ended September 26, 2020
and September 28, 2019 (in
millions) (unaudited)
QUARTER ENDED
September 26, 2020
September 28, 2019
% Change
Constant Currency %
Change
Coach
$
875.4
$
965.9
(9)%
(10)%
Kate Spade
240.4
305.5
(21)%
(21)%
Stuart Weitzman
56.4
86.5
(35)%
(35)%
Total Tapestry
$
1,172.2
$
1,357.9
(14)%
(14)%
TAPESTRY, INC.
GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Quarter Ended September 26,
2020 Items Affecting Comparability GAAP
Basis(As Reported) CARES Act TaxImpact
AccelerationProgram Non-GAAP Basis(Excluding Items)
Cost of sales Coach
644.9
-
-
644.9
Kate Spade
154.1
-
-
154.1
Stuart Weitzman
31.2
-
-
31.2
Gross profit(1)
$
830.2
$
-
$
-
$
830.2
SG&A expenses Coach
374.9
-
10.7
364.2
Kate Spade
130.9
-
1.0
129.9
Stuart Weitzman
31.2
-
(2.4)
33.6
Corporate
91.0
-
17.3
73.7
SG&A expenses
$
628.0
$
-
$
26.6
$
601.4
Operating income (loss) Coach
270.0
-
(10.7)
280.7
Kate Spade
23.2
-
(1.0)
24.2
Stuart Weitzman
-
-
2.4
(2.4)
Corporate
(91.0)
-
(17.3)
(73.7)
Operating income (loss)
$
202.2
$
-
$
(26.6)
$
228.8
Provision for income taxes
(46.3)
(91.7)
(5.8)
51.2
Net income (loss)
$
231.7
$
91.7
$
(20.8)
$
160.8
Net income (loss) per diluted common share
$
0.83
$
0.33
$
(0.08)
$
0.58
(1) Adjustments within Gross profit are recorded
within Cost of sales.
TAPESTRY, INC. GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Quarter Ended September 28,
2019 Items Affecting Comparability GAAP
Basis(As Reported) ERP Implementation
Organization-related &Integration costs
Impairment Non-GAAP Basis(Excluding Items)
Cost of sales Coach
677.6
-
(0.1)
-
677.7
Kate Spade
191.5
-
(1.2)
-
192.7
Stuart Weitzman
45.4
-
(2.8)
-
48.2
Gross profit(1)
$
914.5
$
-
$
(4.1)
$
-
$
918.6
SG&A expenses Coach
478.1
-
0.3
41.5
436.3
Kate Spade
198.7
-
0.1
25.2
173.4
Stuart Weitzman
64.7
-
(2.4)
8.9
58.2
Corporate
121.4
14.5
22.7
-
84.2
SG&A expenses
$
862.9
$
14.5
$
20.7
$
75.6
$
752.1
Operating income (loss) Coach
199.5
-
(0.4)
(41.5)
241.4
Kate Spade
(7.2)
-
(1.3)
(25.2)
19.3
Stuart Weitzman
(19.3)
-
(0.4)
(8.9)
(10.0)
Corporate
(121.4)
(14.5)
(22.7)
-
(84.2)
Operating income (loss)
$
51.6
$
(14.5)
$
(24.8)
$
(75.6)
$
166.5
Provision for income taxes
6.6
(3.5)
(5.4)
(12.1)
27.6
Net income (loss)
$
20.0
$
(11.0)
$
(19.4)
$
(63.5)
$
113.9
Net income (loss) per diluted common share
$
0.07
$
(0.04)
$
(0.07)
$
(0.22)
$
0.40
(1) Adjustments within Gross profit are recorded
within Cost of sales.
The Company reports information in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP"). The Company's
management does not, nor does it suggest that investors should,
consider non-GAAP financial measures in isolation from, or as a
substitute for, financial information prepared in accordance with
GAAP. Further, the non-GAAP measures utilized by the Company may be
unique to the Company, as they may be different from non-GAAP
measures used by other companies. The financial information
presented above, as well as gross margin, SG&A expense ratio,
and operating margin, have been presented both including and
excluding the effect of certain items related to the tax benefit
the Company received under the CARES Act and the Acceleration
Program for the first quarter of fiscal year 2021 and ERP
Implementation, Organization-related & Integration Costs and
Impairment for the first quarter of fiscal year 2020.
The Company operates on a global basis and reports financial
results in U.S. dollars in accordance with GAAP. Percentage
increases/decreases in net sales for the Company and each segment
have been presented both including and excluding currency
fluctuation effects from translating foreign-denominated sales into
U.S. dollars and compared to the same periods in the prior quarter
and fiscal year. The Company calculates constant currency net sales
results by translating current period net sales in local currency
using the prior year period’s currency conversion rate.
Net sales changes for the Company and each segment are based on
absolute sales dollar changes and are not presented in accordance
with the Company’s comparable sales definition utilized
historically due to the uncertain business environment resulting
from the impact of the Covid-19 pandemic.
Management utilizes these non-GAAP and constant currency
measures to conduct and evaluate its business during its regular
review of operating results for the periods affected and to make
decisions about Company resources and performance. The Company
believes presenting these non-GAAP measures, which exclude items
that are not comparable from period to period, is useful to
investors and others in evaluating the Company’s ongoing operating
and financial results in a manner that is consistent with
management’s evaluation of business performance and understanding
how such results compare with the Company’s historical performance.
Additionally, the Company believes presenting these metrics on a
constant currency basis will help investors and analysts to
understand the effect of significant year-over-year foreign
currency exchange rate fluctuations on these performance measures
and provide a framework to assess how business is performing and
expected to perform excluding these effects.
TAPESTRY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
At September 26, 2020 and June 27,
2020 (in millions)
(unaudited) (audited)
September 26, 2020 June 27, 2020 ASSETS
Cash, cash equivalents and short-term investments
$
1,522.4
$
1,434.4
Receivables
251.1
193.3
Inventories
811.2
736.9
Other current assets
260.8
188.5
Total current assets
2,845.5
2,553.1
Property and equipment, net
753.0
775.2
Lease right-of-use assets
1,692.6
1,757.0
Other noncurrent assets
2,842.3
2,838.9
Total assets
$
8,133.4
$
7,924.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable
$
296.0
$
130.8
Accrued liabilities
470.1
511.0
Short-term lease liabilities
341.4
388.8
Current debt
711.5
711.5
Total current liabilities
1,819.0
1,742.1
Long-term debt
1,588.6
1,587.9
Long-term lease liabilities
1,739.9
1,799.8
Other liabilities
455.8
518.0
Stockholders' equity
2,530.1
2,276.4
Total liabilities and stockholders' equity
$
8,133.4
$
7,924.2
TAPESTRY, INC.
STORE COUNT At June 27, 2020 and September 26, 2020
(unaudited)
As of As
of Directly-Operated Store
Count: June 27,
2020 Openings
(Closures)
September 26, 2020
Coach North
America
375
-
(1)
374
International
583
13
(13)
583
Kate
Spade North America
213
3
-
216
International
207
6
(5)
208
Stuart
Weitzman North America
58
-
(3)
55
International
73
3
(18)
58
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201029005394/en/
Tapestry, Inc. Analysts & Media: Andrea Shaw Resnick Interim
Chief Financial Officer Global Head of Investor Relations and
Corporate Communications 212/629-2618 aresnick@tapestry.com
Christina Colone Vice President, Investor Relations 212/946-7252
ccolone@tapestry.com
Tapestry (NYSE:TPR)
Gráfica de Acción Histórica
De Jun 2024 a Jul 2024
Tapestry (NYSE:TPR)
Gráfica de Acción Histórica
De Jul 2023 a Jul 2024