Achieved Record Annual Operating Income and
Margin as Tapestry, Inc.;
Announces Reinstatement of Dividend and
Share Repurchase Programs with a Plan to Return Over $750 Million
to Shareholders in Fiscal 2022
- Delivered Q4 Revenue of $1.62 Billion, Growing 126% vs.
Prior Year and Outpacing FY19 Pre-Pandemic Levels
- Reported Q4 GAAP EPS of $0.69 and non-GAAP EPS of $0.74,
Significantly Ahead of Both FY20 and FY19
- Generated Triple-Digit Global Digital Gains in FY21 to Reach
Approximately $1.6 Billion in E-Commerce Sales Fueled by New
Customer Acquisition
- Achieved Full Year Operating Income and EPS Increases
Compared to Both FY20 and FY19 Driven by Over 300 Basis Points of
Gross Margin Expansion
- Initiates Financial Outlook for Accelerated Growth and
Profitability in FY22
Link to Download Q4 and Full Year 2021 Earnings Presentation,
Including Brand Highlights
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20210819005260/en/
(Photo: Business Wire)
Tapestry, Inc. (NYSE: TPR), a leading New York-based house of
modern luxury accessories and lifestyle brands, today reported
results for the fiscal fourth quarter and year ended July 3,
2021.
Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc.,
said, “We delivered standout results in Fiscal 2021 – a
transformational year for Tapestry. Through our Acceleration
Program, we sharpened our focus on the consumer, leaned into
digital and data and became a more agile organization. We reached
customers in new ways and adapted to a rapidly changing
environment, fueled by the power of our brands and passionate
teams. Importantly, the traction of our strategy is clearly
evidenced by our financial performance. We achieved a record annual
operating margin as Tapestry, outperforming our expectations across
Coach, Kate Spade and Stuart Weitzman, while investing for our
future. The year was capped by a successful fourth quarter,
highlighted by revenue exceeding pre-pandemic levels led by Digital
and China – two areas of significant opportunity.”
“Building on this momentum and the increasing demand for our
categories, we are focused on driving our next phase of growth. We
are in a position of strength, supported by our clear strategy,
compelling brands and differentiated platform. We believe these
competitive advantages will enable us to win with consumers and
capture market share. Our conviction is underscored by the plans
announced today to return over $750 million to shareholders in
Fiscal 2022 alone. Overall, we remain confident in our ability to
accelerate growth and profitability across our portfolio long-term,
enhancing value for all stakeholders.”
Capital Deployment
Given the Company’s results, including its robust balance sheet
and strong free cash flow generation, as well as its outlook for
growth, the Board of Directors approved the reinstatement of the
Company’s shareholder return programs.
The Board declared a quarterly cash dividend of $0.25 per common
share payable on September 27, 2021 to shareholders of record as of
the close of business on September 7, 2021, with an anticipated
annual dividend rate of $1.00 per share. Over time, the Company
intends to increase its dividend at a faster rate than earnings
growth. Further, the Company intends to repurchase approximately
$500 million worth of stock in Fiscal 2022 under its current
authorization. Taken together, Tapestry plans to deploy over $750
million to shareholders in Fiscal 2022 through dividends and share
repurchases, reflecting a balanced approach to shareholder returns.
The Company and its Board of Directors will evaluate its dividend
and share repurchase programs on a regular basis with a target of
increasing the overall level of returns upon more visibility into a
normalization in the external environment.
In addition, the Company intends to repay its July 2022 bonds,
totaling $400 million, at the end of Fiscal 2022. This is
consistent with the Company’s goal to reduce leverage through a
combination of organic profit growth and debt repayment.
These actions underscore the Company’s conviction in its ability
to drive long-term, sustainable growth and commitment to enhancing
value for its stakeholders.
53rd Week Discussion
The results for the fourth quarter and fiscal year ending July
3, 2021 included 14 and 53 weeks, respectively, while the same
periods in Fiscal 2020 included 13 and 52 weeks, respectively. The
additional week contributed $93 million to Tapestry’s revenue and
$0.09 to earnings per diluted share in Fiscal 2021. For a complete
reconciliation of revenue and operating income by segment, please
refer to Financial Schedules 3 and 4 included herein.
The following financial information is presented inclusive of
the 14th and 53rd week for the fiscal fourth quarter and full year
2021, respectively, unless otherwise noted. In addition, due to the
significant impact of Covid-19 on prior-year figures, this release
will also include comparisons to Fiscal 2019 (‘pre-pandemic’) for
additional context.
Tapestry, Inc. Fiscal Fourth Quarter
and Full Year 2021 Highlights
Fourth Quarter 2021:
- Increased revenue by 126% compared to last year, exceeding
pre-pandemic levels, driven by growth at Coach
- Maintained strength in Digital, which grew over 35% versus
prior year and over 200% as compared to pre-pandemic levels, while
improving sequential revenue trends in-stores on both a one and
two-year basis
- Posted strong trends in Mainland China, with sales growth of
approximately 60% compared to FY20 and over 40% versus pre-pandemic
levels; realized continued topline momentum in North America,
rising approximately 165% versus FY20 and a high-teens percentage
against FY19
- Expanded overall gross margin through deliberate actions to
lower promotional activity and raise AUR
- Re-invested structural SG&A savings in the business through
higher marketing spend; achieved increased payout under the
Company’s Annual Incentive Plan given its outperformance; actioned
purpose-led initiatives, including a contribution of $25 million
towards the endowment of the newly established Tapestry
Foundation
- Delivered operating income growth and margin expansion – ahead
of both FY20 and FY19 – for the fourth consecutive quarter
Full Year 2021:
- Outperformed internal expectations at each brand across
revenue, gross margin, and operating income metrics
- Achieved $1.6 billion in Digital sales, representing
triple-digit growth versus prior year; Increased Digital sales by
$1 billion since FY19
- Realized peak operating income and operating margin as
Tapestry, Inc.
- Generated $1.21 billion of free cash flow, which funded
investments in the business and the full pay down of the Company’s
$700 million revolver
Acceleration Program
Highlights
In the fiscal fourth quarter, the Company continued to make
meaningful progress against its 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 over 900,000 new customers through the Company’s
e-commerce channels in North America in the fourth quarter,
resulting in nearly 4 million new customers for the fiscal
year, representing an increase versus prior year;
- Continued to deliver an increase in number of repeat
transactions versus prior year and reactivated lapsed
customers across brands;
- Drove high-single digit revenue gains with Chinese consumers
globally compared to pre-pandemic levels;
- Effectively reduced SKU counts by approximately 40% and
improved assortment productivity, supported by data and
analytics, resulting in stronger overall AUR and gross margin
through higher IMUs and lower promotional activity and increased
inventory turn for the fiscal year;
- Optimized global fleet with 59 net closures in FY21
compared to FY20, representing a net decrease of 90 doors over the
past two years; Achieved $200 million of gross expense savings
in Fiscal 2021 through a streamlined organization and operating
structure and remain on track to realize gross run-rate savings
of $300 million in FY22.
Overview of Fourth Quarter 2021
Tapestry, Inc. Results
- Net sales totaled $1.62 billion for the fourth quarter
as compared to $715 million in the prior year, representing a 126%
increase. On a 13-week basis, net sales increased 113% versus prior
year and rose 1% as compared to pre-pandemic levels.
- Gross profit totaled $1.17 billion on a reported basis,
while gross margin was 72.2%. This compared to prior year reported
gross profit of $499 million and gross margin of 69.8%. On a
non-GAAP basis, gross profit was $1.16 billion, while gross margin
was 71.7%, as compared to prior year gross profit of $507 million
and gross margin of 71.0%.
- SG&A expenses totaled $906 million on a reported
basis and represented 56.1% of sales compared to $779 million and
109.0%, respectively, in the year ago quarter. On a non-GAAP basis,
SG&A expenses were $886 million and represented 54.8% of sales
as compared to $577 million and 80.8%, respectively, in the year
ago period. SG&A expenses for the fourth quarter of fiscal 2021
included a $25 million contribution associated with the
establishment of the Tapestry Foundation as recently
announced.
- Operating income was $260 million on a reported basis,
while operating margin was 16.1% versus an operating loss of $280
million and an operating margin of (39.2)% in the prior year. On a
non-GAAP basis, operating income was approximately $272 million,
while operating margin was 16.9%, which compares to an operating
loss of $70 million and an operating margin of (9.8)% in the prior
year.
- Net interest expense was $16 million in the quarter as
compared to approximately $20 million in the year ago period.
- Other expense was $1 million versus approximately $500
thousand in the prior year.
- Net income for the quarter was $200 million on a
reported basis, with earnings per diluted share of $0.69. This
compared to a net loss of $294 million with a loss per diluted
share of $1.06 in the prior year period. The reported tax rate for
the quarter was 17.5% compared to 2.3% in the prior year period. On
a non-GAAP basis, net income for the quarter was $212 million with
earnings per diluted share of $0.74. On a 13-week basis, non-GAAP
earnings per diluted share was $0.65. This compared to a non-GAAP
net loss of $70 million with a loss per diluted share of $0.25 in
the prior year period. The non-GAAP tax rate for the quarter was
16.7% compared to 22.3% in the prior year.
Overview of Full Year 2021 Tapestry,
Inc. Results
- Net sales totaled $5.75 billion for the full year 2021
as compared to $4.96 billion in the prior year, representing a 16%
increase. On a 52-week basis, net sales increased 14% versus prior
year and declined 6% as compared to fiscal 2019 pre-pandemic
levels.
- Gross profit totaled $4.08 billion on a reported basis,
while gross margin was 71.0%. This compared to prior year reported
gross profit of $3.24 billion and gross margin of 65.3%. On a
non-GAAP basis, gross profit was $4.07 billion, while gross margin
was 70.9%, as compared to prior year gross profit of $3.36 billion
and gross margin of 67.7%.
- SG&A expenses totaled $3.11 billion on a reported
basis and represented 54.2% of sales compared to $3.79 billion and
76.4%, respectively, in the prior year. On a non-GAAP basis,
SG&A expenses were $2.98 billion and represented 51.8% of sales
as compared to $2.92 billion and 58.8%, respectively, in the prior
year.
- Operating income was $968 million on a reported basis,
while operating margin was 16.8% versus an operating loss of $551
million and an operating margin of (11.1)% in the prior year. On a
non-GAAP basis, operating income was $1.10 billion, while operating
margin was 19.1%, which compares to operating income of $438
million and an operating margin of 8.8% in the prior year.
- Net interest expense was $71 million for the full year
as compared to $60 million in the prior year.
- Other income was $1 million versus an expense of $13
million in the prior year.
- Net income for the year was $834 million on a reported
basis, with earnings per diluted share of $2.95. This compared to a
net loss of $652 million with a loss per diluted share of
approximately $2.34 in the prior year. The reported tax rate for
the year was 7.0% compared to (4.5)% in the prior year. On a
non-GAAP basis, net income for the year was $841 million with
earnings per diluted share of $2.97. On a 52-week basis, non-GAAP
earnings per diluted share was $2.88. This compared to non-GAAP net
income of $271 million with earnings per diluted share of $0.97 in
the prior year. The non-GAAP tax rate for the full year was 17.9%
compared to 25.7% in the prior year.
Balance Sheet and Cash Flow
Highlights
- Cash, cash equivalents and short-term investments
totaled $2.02 billion and total borrowings outstanding were
$1.59 billion.
- Inventory at year-end was $735 million versus ending
inventory of $737 million a year ago.
- Free cash flow was an inflow of $1.21 billion in Fiscal
2021 as compared to $202 million in the prior year; CapEx
was $116 million in Fiscal 2021 versus $205 million in Fiscal
2020.
Non-GAAP Reconciliation
During the fiscal fourth quarter of 2021, the Company recorded
certain items that decreased the Company’s net income and earnings
per diluted share by $13 million and approximately $0.05,
respectively. On a full year basis, these charges lowered the
Company’s reported net income by $7 million or $0.02 per diluted
share. Please refer to the financial schedules 3, 4, 5 and 6
included herein for a detailed reconciliation of the Company’s
reported to non-GAAP results. These items included:
- Impairment: $8 million of pre-tax benefits in the fourth
quarter reflecting a reversal of raw material reserves, which was
established in fiscal 2020 as a result of the projected impact of
Covid-19. For the fiscal year, the Company recorded $38 million of
pre-tax charges related mainly to impairment of store assets,
primarily as a result of the continued impact of Covid-19.
- Acceleration Program: $21 million of pre-tax charges in
the fourth quarter and $90 million of pre-tax charges in the full
year. These charges were primarily associated with professional
fees incurred as a result of the development and execution of the
Company’s comprehensive strategic initiatives, share-based
compensation, as well as actions to streamline the Company's
organization, which include severance. The Company continues to
expect to incur total pre-tax charges of $205 to $220 million over
the life of the Acceleration Program, including $30 to $45 million
in remaining charges, primarily consisting of professional fees and
share-based compensation.
- CARES Act Tax Impact: $95 million of tax benefits
recorded in the full year, with no benefit recorded in the fourth
quarter. These credits were primarily related to the Coronavirus
Aid, Relief, and Economic Securities Act, most notably the NOL
carryback claim.
Fiscal Year 2022 Outlook
The Company’s Fiscal 2022 outlook is provided on a non-GAAP
basis and excludes anticipated Acceleration Program charges as
described in the “Fiscal Year 2022 Outlook - Non-GAAP Adjustments”
section of this press release.
Based on current strong underlying business trends, the Company
expects the following:
- Revenue of approximately $6.4 billion, representing
mid-teens growth versus the prior year on a 52-week, comparable
basis, which would mark a record level of sales for the
Company.
- Net interest expense of approximately $65 million. The
Company anticipates paying down its July 2022 bonds at the end of
Fiscal 2022.
- Tax rate of approximately 18.5% assuming a continuation
of current tax laws.
- Weighted average diluted share count in the area of 283
million, approximately even with prior year, with share repurchase
activity expected to offset dilution.
- Earnings per diluted share of $3.30 to $3.35,
reflecting leverage to the bottom line.
Please note due to the ongoing dynamic nature of the Covid-19
crisis and lack of visibility, financial results could differ
materially from the current outlook due to a number of external
events, including the potential for more widespread resurgences of
the pandemic globally and resulting pressure on store traffic
trends, as well as further supply chain disruptions, including
potential continued production and distribution delays as well as
increased costs, not contemplated in the Company’s estimates.
Conference Call Details
The Company will host a conference call to review these results
at 8:00 a.m. (ET) today, August 19, 2021. Interested parties may
listen to the conference call via live webcast by accessing
www.tapestry.com/investors or calling 1-866-847-4217 or
1-203-518-9845 and providing the Conference ID 6727129. 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
1-800-283-4641 or 1-402-220-0851. 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 2022 first quarter results
on Thursday, November 11, 2021. To receive notification of future
announcements, please register at www.tapestry.com/investors
("Subscribe to E-Mail Alerts").
About Tapestry, Inc.
Our global house of brands unites the magic of Coach, kate spade
new york and Stuart Weitzman. 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. We use our
collective strengths to move our customers and empower our
communities, to make the fashion industry more sustainable, and to
build a company that’s equitable, inclusive, and diverse.
Individually, our brands are iconic. Together, we can stretch
what’s possible. To learn more about Tapestry, please visit
www.tapestry.com. For important news and information regarding
Tapestry, visit the Investor Relations section of our website at
www.tapestry.com/investors. In addition, investors should continue
to review our news releases and filings with the SEC. We use each
of these channels of distribution as primary channels for
publishing key information to our investors, some of which may
contain material and previously non-public information. 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 2022 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,
statements regarding the Company’s capital deployment plans, and
statements that can be identified by the use of forward-looking
terminology such as "may," "will," “can,” "should," "expect,"
“potential,” "intend," "estimate," "continue," "project,"
"guidance," "forecast," “outlook,” "anticipate," “goal,”
“leveraging,” “sharpening,” transforming,” “creating,”
accelerating,” “enhancing,” leaning into,” “innovation,” “drive,”
“targeting,” “assume,” “plan,” “progress,” “optimistic,”
“confident,” “conviction,” “future,” “uncertain backdrop,”
“emerge,” “on track,” “positioned to,” “look forward to,” “looking
ahead,” “to acquire,” “achieve,” “strategic,” “steady recovery,”
“growth,” “view,” “stretching what’s possible,” 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 and our global sourcing
activities, our ability to achieve intended benefits, cost savings
and synergies from acquisitions, the risk of cybersecurity threats
and privacy or data security breaches, the impact of pending and
potential future legal proceedings, 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.
Schedule 1: Consolidated Statement of Operations
TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS For the Quarters and
Years Ended July 3, 2021 and June 27, 2020
(in millions, except per share
data)
(unaudited)
(unaudited)
(audited)
QUARTER ENDED
YEAR ENDED
July 3, 2021
June 27, 2020
July 3, 2021
June 27, 2020
Net sales
$
1,615.4
$
714.8
$
5,746.3
$
4,961.4
Cost of sales
449.3
215.9
1,664.4
1,722.1
Gross Profit
1,166.1
498.9
4,081.9
3,239.3
Selling, general and administrative expenses
906.4
778.9
3,113.9
3,790.1
Operating income (loss)
259.7
(280.0)
968.0
(550.8)
Interest expense, net
16.4
20.3
71.4
60.1
Other expense (gain)
1.1
0.5
(0.7)
13.3
Income before provision for income taxes
242.2
(300.8)
897.3
(624.2)
Provision for income taxes
42.4
(7.0)
63.1
27.9
Net income (loss)
$
199.8
$
(293.8)
$
834.2
$
(652.1)
Net income (loss) per share: Basic
$
0.72
$
(1.06)
$
3.00
$
(2.34)
Diluted
$
0.69
$
(1.06)
$
2.95
$
(2.34)
Shares used in computing net income (loss) per share:
Basic
279.2
276.2
277.9
278.6
Diluted
287.6
276.2
283.0
278.6
Schedule 2: Detail to Net Sales
TAPESTRY, INC.
DETAIL TO NET SALES
For the Quarters and Years Ended July 3,
2021 and June 27, 2020 (in
millions) (unaudited)
QUARTER ENDED
July 3, 2021
June 27, 2020
% Change vs. FY20
Constant Currency % Change vs.
FY20
% Change vs. FY19
Coach
$
1,188.9
$
517.4
130 %
125 %
8 %
Kate Spade
341.6
164.1
108 %
106 %
3 %
Stuart Weitzman
84.9
33.3
156 %
146 %
- %
Total Tapestry
$
1,615.4
$
714.8
126 %
122 %
7 %
YEAR ENDED
July 3, 2021
June 27, 2020
% Change vs. FY20
Constant Currency % Change vs.
FY20
% Change vs. FY19
Coach
$
4,253.1
$
3,525.7
21 %
19 %
- %
Kate Spade
1,210.0
1,149.5
5 %
5 %
(11)%
Stuart Weitzman
283.2
286.2
(1)%
(3)%
(27)%
Total Tapestry
$
5,746.3
$
4,961.4
16 %
14 %
(5)%
Schedule 3: Items Affecting Comparability – 4Q21
TAPESTRY, INC.
GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Quarter Ended July 3,
2021
Items Affecting
Comparability
GAAP Basis (As
Reported)
Impairment
Acceleration Program
Non-GAAP Basis (Excluding
Items)
Cost of sales Coach
898.0
8.1
-
889.9
Kate Spade
221.0
-
-
221.0
Stuart Weitzman
47.1
-
-
47.1
Gross profit(1)
$
1,166.1
$
8.1
$
-
$
1,158.0
SG&A expenses Coach
519.3
-
0.7
518.6
Kate Spade
185.8
-
0.1
185.7
Stuart Weitzman
50.1
-
(1.2)
51.3
Corporate
151.2
-
21.3
129.9
SG&A expenses
$
906.4
$
-
$
20.9
$
885.5
-
Operating income (loss) Coach
378.7
8.1
(0.7)
371.3
Kate Spade
35.2
-
(0.1)
35.3
Stuart Weitzman
(3.0)
-
1.2
(4.2)
Corporate
(151.2)
-
(21.3)
(129.9)
Operating income (loss)
$
259.7
$
8.1
$
(20.9)
$
272.5
Provision for income taxes
42.4
2.0
(2.2)
42.6
Net income (loss)
$
199.8
$
6.1
$
(18.7)
$
212.4
Net income (loss) per diluted common share
$
0.69
$
0.02
$
(0.07)
$
0.74
(1) Adjustments within Gross profit are recorded within Cost
of sales.
The amounts reflected above include the impact of the additional
week on the fourth quarter of Fiscal 2021. The following table
quantifies the impact of the additional week on Net Sales and
Operating Income by Segment:
TAPESTRY, INC.
DETAILS TO IMPACT OF 14TH WEEK
(in millions) (unaudited)
For the Quarter Ended July 3,
2021
As Reported
Impact of 14th Week
Adjusted
Adjusted Net Sales % Change
vs. FY20
Adjusted Net Sales % Change
vs. FY19
Net Sales Coach
$
1,188.9
$
67.7
$
1,121.2
117 %
2 %
Kate Spade
341.6
21.7
319.9
95 %
(4)%
Stuart Weitzman
84.9
3.3
81.6
146 %
(4)%
Total Net Sales
$
1,615.4
$
92.7
$
1,522.7
113 %
1 %
Operating Income (Loss) - Non-GAAP Coach
$
371.3
$
28.6
$
342.7
Kate Spade
35.3
4.7
30.6
Stuart Weitzman
(4.2)
0.2
(4.4)
Corporate
(129.9)
(3.5)
(126.4)
Total Operating Income (Loss) - Non-GAAP
$
272.5
$
30.0
$
242.5
Schedule 4: Items Affecting Comparability – FY21
TAPESTRY, INC.
GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Fiscal Year Ended July
3, 2021
Items Affecting
Comparability
GAAP Basis (As
Reported)
CARES Act Tax Impact
Impairment
Acceleration Program
Non-GAAP Basis (Excluding
Items)
Cost of sales Coach
3,149.0
-
8.1
-
3,140.9
Kate Spade
768.4
-
-
-
768.4
Stuart Weitzman
164.5
-
-
-
164.5
Gross profit(1)
$
4,081.9
$
-
$
8.1
$
-
$
4,073.8
SG&A expenses Coach
1,836.9
-
20.4
21.9
1,794.6
Kate Spade
659.9
-
19.3
4.4
636.2
Stuart Weitzman
173.1
-
6.1
(2.5)
169.5
Corporate
444.0
-
-
65.8
378.2
SG&A expenses
$
3,113.9
$
-
$
45.8
$
89.6
$
2,978.5
Operating income (loss) Coach
1,312.1
-
(12.3)
(21.9)
1,346.3
Kate Spade
108.5
-
(19.3)
(4.4)
132.2
Stuart Weitzman
(8.6)
-
(6.1)
2.5
(5.0)
Corporate
(444.0)
-
-
(65.8)
(378.2)
Operating income (loss)
$
968.0
$
-
$
(37.7)
$
(89.6)
1,095.3
Provision for income taxes
63.1
(95.0)
(7.8)
(17.6)
183.5
Net income (loss)
$
834.2
$
95.0
$
(29.9)
$
(72.0)
$
841.1
Net income (loss) per diluted common share
$
2.95
$
0.31
$
(0.10)
$
(0.23)
$
2.97
(1) Adjustments within Gross profit are recorded within Cost
of sales.
The amounts presented above include the impact of the additional
week within the full year of Fiscal 2021. The following table
quantifies the impact of the additional week on Net Sales and
Operating Income by Segment:
TAPESTRY, INC.
DETAILS TO IMPACT OF 53RD WEEK
(in millions) (unaudited)
For the Fiscal Year Ended July
3, 2021
As Reported
Impact of 53rd Week
Adjusted
Adjusted Net Sales % Change
vs. FY20
Adjusted Net Sales % Change
vs. FY19
Net Sales Coach
$
4,253.1
$
67.7
$
4,185.4
19 %
(2)%
Kate Spade
1,210.0
21.7
1,188.3
3 %
(13)%
Stuart Weitzman
283.2
3.3
279.9
(2)%
(28)%
Total Net Sales
$
5,746.3
$
92.7
$
5,653.6
14 %
(6)%
Operating Income (Loss) - Non-GAAP Coach
$
1,346.3
$
28.6
$
1,317.7
Kate Spade
132.2
4.7
127.5
Stuart Weitzman
(5.0)
0.2
(5.2)
Corporate
(378.2)
(3.5)
(374.7)
Total Operating Income (Loss) - Non-GAAP
$
1,095.3
$
30.0
$
1,065.3
Schedule 5: Items Affecting Comparability – 4Q20
TAPESTRY, INC.
GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Quarter Ended June 27,
2020
Items Affecting
Comparability
GAAP Basis (As
Reported)
ERP Implementation
Organization-related &
Integration Costs
Impairment
Acceleration Program
Non-GAAP Basis (Excluding
Items)
Cost of sales Coach
381.0
-
-
-
-
381.0
Kate Spade
106.5
-
-
-
-
106.5
Stuart Weitzman
11.4
-
-
-
(8.4)
19.8
Gross profit(1)
$
498.9
$
-
$
-
$
-
$
(8.4)
$
507.3
SG&A expenses Coach
412.0
-
0.6
58.8
18.5
334.1
Kate Spade
175.2
-
(1.0)
26.2
13.6
136.4
Stuart Weitzman
92.4
-
(0.1)
32.0
17.6
42.9
Corporate
99.3
4.9
1.8
-
28.9
63.7
SG&A expenses
$
778.9
$
4.9
$
1.3
$
117.0
$
78.6
$
577.1
Operating income (loss) Coach
(31.0)
-
(0.6)
(58.8)
(18.5)
46.9
Kate Spade
(68.7)
-
1.0
(26.2)
(13.6)
(29.9)
Stuart Weitzman
(81.0)
-
0.1
(32.0)
(26.0)
(23.1)
Corporate
(99.3)
(4.9)
(1.8)
-
(28.9)
(63.7)
Operating income (loss)
$
(280.0)
$
(4.9)
$
(1.3)
$
(117.0)
$
(87.0)
$
(69.8)
Provision for income taxes
(7.0)
(0.3)
15.7
6.2
(8.4)
(20.2)
Net income (loss)
$
(293.8)
$
(4.6)
$
(17.0)
$
(123.2)
$
(78.6)
$
(70.4)
Net income (loss) per diluted common share
$
(1.06)
$
(0.02)
$
(0.06)
$
(0.45)
$
(0.28)
$
(0.25)
(1) Adjustments within Gross profit are recorded within Cost
of sales.
Schedule 6: Items Affecting Comparability – FY20
TAPESTRY, INC.
GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Fiscal Year Ended June
27, 2020
Items Affecting
Comparability
GAAP Basis (As
Reported)
ERP Implementation
Organization-related &
Integration Costs
Impairment
Acceleration Program
Non-GAAP Basis (Excluding
Items)
Cost of sales Coach
2,411.6
-
(0.1)
(61.9)
-
2,473.6
Kate Spade
682.9
-
(1.2)
(32.3)
-
716.4
Stuart Weitzman
144.8
-
(4.3)
(9.8)
(8.4)
167.3
Gross profit(1)
$
3,239.3
$
-
$
(5.6)
$
(104.0)
$
(8.4)
$
3,357.3
SG&A expenses Coach
1,822.2
-
0.5
116.7
18.5
1,686.5
Kate Spade
782.2
-
0.1
92.9
13.6
675.6
Stuart Weitzman
766.2
-
(2.0)
526.7
17.6
223.9
Corporate
419.5
28.5
29.2
-
28.9
332.9
SG&A expenses
$
3,790.1
$
28.5
$
27.8
$
736.3
$
78.6
$
2,918.9
Operating income (loss) Coach
589.4
-
(0.6)
(178.6)
(18.5)
787.1
Kate Spade
(99.3)
-
(1.3)
(125.2)
(13.6)
40.8
Stuart Weitzman
(621.4)
-
(2.3)
(536.5)
(26.0)
(56.6)
Corporate
(419.5)
(28.5)
(29.2)
-
(28.9)
(332.9)
Operating income (loss)
$
(550.8)
$
(28.5)
$
(33.4)
$
(840.3)
$
(87.0)
$
438.4
Provision for income taxes
27.9
(6.0)
3.8
(55.3)
(8.4)
93.8
Net income (loss)
$
(652.1)
$
(22.5)
$
(37.2)
$
(785.0)
$
(78.6)
$
271.2
Net income (loss) per diluted common share
$
(2.34)
$
(0.08)
$
(0.13)
$
(2.82)
$
(0.28)
$
0.97
(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, the Acceleration Program
and Impairment costs for the fourth quarter and full fiscal year
2021 and ERP Implementation, Organization-related & Integration
Costs, Impairment costs and the Acceleration Program for the fourth
quarter and full fiscal year 2020. The Company has also presented
the impact of the 53rd week for fiscal year 2021 on revenue and
operating income for the Company and each segment, and earnings per
diluted share for the Company.
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.
In addition to these non-GAAP measures, the Company has provided
comparisons to certain fiscal year 2019 results and trends, which
the Company believes is useful to investors and others in
evaluating the Company’s results, due to the significant impact of
the Covid-19 pandemic on the Company’s operations and financial
results, notably in the second half of fiscal year 2020. The
Company has also included statements regarding the Company reaching
peak operating income and operating margin as Tapestry, which
refers to the period since Fiscal 2018, the year in which the
Company established its current house of brands and changed its
corporate name.
Fiscal Year 2022 Outlook - Non-GAAP
Adjustments:
The Company is not able to provide a full reconciliation of the
non-GAAP financial measures to GAAP presented in this release and
on the Company’s conference call because certain material items
that impact these measures, such as the timing and exact amount of
charges related to the Acceleration Program, which have not yet
occurred or are out of the Company’s control. Accordingly, a
reconciliation of our non-GAAP financial measure guidance to the
corresponding GAAP measures is not available without unreasonable
effort. Where possible, the Company has identified the estimated
impact of the items excluded from its Fiscal 2022 guidance.
This Fiscal 2022 non-GAAP guidance excludes $30 to $45 million
in Acceleration Program charges, primarily consisting of
professional fees and share-based compensation.
Schedule 7: Condensed Consolidated Balance Sheets
TAPESTRY, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS At July 3, 2021 and June
27, 2020 (in
millions)
(unaudited)
(audited)
July 3, 2021
June 27, 2020
ASSETS Cash, cash equivalents and short-term
investments
$
2,015.8
$
1,434.4
Receivables
200.2
193.3
Inventories
734.8
736.9
Other current assets
424.5
188.5
Total current assets
3,375.3
2,553.1
Property and equipment, net
678.1
775.2
Lease right-of-use assets
1,496.6
1,757.0
Other noncurrent assets
2,832.4
2,838.9
Total assets
$
8,382.4
$
7,924.2
LIABILITIES AND STOCKHOLDERS' EQUITY Accounts
payable
$
445.2
$
130.8
Accrued liabilities
661.2
511.0
Short-term lease liabilities
319.4
388.8
Current debt
-
711.5
Total current liabilities
1,425.8
1,742.1
Long-term debt
1,590.7
1,587.9
Long-term lease liabilities
1,525.9
1,799.8
Other liabilities
580.7
518.0
Stockholders' equity
3,259.3
2,276.4
Total liabilities and stockholders' equity
$
8,382.4
$
7,924.2
Schedule 8: Condensed Statement of Cash Flows
TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS For the fiscal years
ended July 3, 2021 and June 27, 2020 (in millions)
(unaudited)
(audited)
July 3, 2021
June 27, 2020
Cash Flows from Operating Activities Net income
(loss)
$
834.2
$
(652.1)
Adjustments to reconcile net income (loss) to net cash flows from
operating activities: Depreciation and amortization
218.7
248.3
Impairment charges
45.8
813.5
Other non-cash items
(5.3)
77.6
Changes in operating assets and liabilities
230.3
(80.3)
Net cash provided by operating activities
1,323.7
407.0
Cash Flows from Investing Activities Purchases
of property and equipment
(116.0)
(205.4)
Other items
25.0
249.7
Net cash provided by investing activities
(91.0)
44.3
Cash Flows from Financing Activities Dividend
payments
-
(380.3)
Proceeds from revolver
-
700.0
Repayment of debt
(711.5)
-
Repurchase of common stock
-
(300.0)
Other items
45.5
(13.8)
Net cash provided by financing activities
(666.0)
5.9
Effect of exchange rate on cash and cash equivalents
14.7
(0.1)
(Decrease) increase in cash and cash equivalents
581.4
457.1
Cash and cash equivalents at beginning of year
$
1,426.3
$
969.2
Cash and cash equivalents at end of year
$
2,007.7
$
1,426.3
Schedule 9: Store Count by Segment – 4Q21
TAPESTRY, INC.
STORE COUNT At March 27, 2021 and July 3, 2021
(unaudited)
As of
As of
Directly-Operated Store Count:
March
27, 2021
Openings
(Closures)
July 3,
2021
Coach North America
357
1
(4)
354
International
587
6
(8)
585
Kate Spade North America
211
1
(2)
210
International
202
2
(7)
197
Stuart Weitzman North
America
49
-
(1)
48
International
54
2
-
56
Schedule 10: Store Count by Segment – FY21
TAPESTRY, INC.
STORE COUNT At June 27, 2020 and July 3, 2021
(unaudited)
As of
As of
Directly-Operated Store Count:
June 27,
2020
Openings
(Closures)
July 3,
2021
Coach North America
375
2
(23)
354
International
583
34
(32)
585
Kate Spade North America
213
4
(7)
210
International
207
11
(21)
197
Stuart Weitzman North
America
58
1
(11)
48
International
73
10
(27)
56
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210819005260/en/
Tapestry, Inc. Media: Andrea Shaw Resnick Chief Communications
Officer 212/629-2618 aresnick@tapestry.com Analysts and Investors:
Christina Colone Global Head of Investor Relations 212/946-7252
ccolone@tapestry.com
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