Tapestry, Inc. reported net sales of 1.51 billion dollars for the fourth
quarter, an increase of 2 percent on a reported basis and 4 percent in
constant currency. However, according to Reuters it missed the average
analyst expectation of 1.53 billion dollars, as per IBES data from
Refinitiv. For the full year ended June 29, 2019, the company’s net sales
totalled 6.03 billion dollars, an increase of 3 percent on a reported basis
and 4 percent in constant currency. The company also announced a quarterly
cash dividend of 3375 cents per common share, maintaining an annual rate of
1.35 dollars, payable on September 30, 2019 to shareholders of record as of
the close of business on September 6, 2019.
Commenting on the fourth quarter and full year trading, Victor Luis,
Chief Executive Officer of Tapestry, Inc., said in a statement: “We
experienced ongoing strength in our business internationally, while
navigating a volatile backdrop in North America. Most broadly, we remain
steadfast in our strategic vision and focused on maximizing the benefits of
our global, multi-brand platform, while continuing to drive strength in our
core Coach brand. Our conviction is reflected, in part, by the 1 billion
dollars share repurchase program we established and began to implement in
the fourth fiscal quarter. Together with our annual dividend, this
underscores our confidence in driving long-term, sustainable growth and
commitment to returning capital to shareholders.”
Overview of Tapestry’s fourth quarter results
Gross profit for the quarter totalled 999 million dollars on a reported
basis, while gross margin of 66 percent compared to 1 billion dollars and
67.5 percent, respectively, in the prior year. On a non-GAAP basis, gross
profit totalled 1.02 billion dollars, while gross margin was 67.3 percent
compared to 1.01 billion dollars and 67.9 percent, respectively, in the
prior year.
Net income was 149 million dollars on a reported basis, with earnings
per diluted share of 51 cents compared to 212 million dollars with earnings
per diluted share of 73 cents in the prior year period. On a non-GAAP
basis, net income for the quarter totalled 175 million dollars, with
earnings per diluted share of 61 cents compared to 176 million dollars or
60 cents per diluted share in the prior year period.
Net sales for Coach were 1.10 billion dollars, even with the prior year
on a reported basis, or an increase of 2 percent on a constant currency
basis. Global comparable store sales increased 2 percent, including a
benefit of approximately 150 basis points driven by an increase in global
e-commerce. Net sales for Kate Spade totalled 332 million dollars, an
increase of 6 percent on a reported basis and 7 percent in constant
currency, but global comparable store sales declined 6 percent, including
the positive impact of approximately 600 basis points from global
e-commerce. Net sales for Stuart Weitzman were 85 million dollars, an
increase of 17 percent on a reported basis and 20 percent in constant
currency.
Highlights of Tapestry’s full year performance
Gross profit for the full year totalled 4.05 billion dollars on a
reported basis, while gross margin was 67.3 percent compared to 3.85
billion dollars and 65.5 percent, respectively, in the prior year. On a
non-GAAP basis, gross profit was 4.08 billion dollars, while gross margin
was 67.7 percent compared to 3.96 billion dollars and 67.4 percent,
respectively, in the prior year. Net income was 643 million dollars on a
reported basis, with earnings per diluted share of 2.21 dollars compared to
398 million dollars with earnings per diluted share of 1.38 dollars in the
prior year period. On a non-GAAP basis, net income totalled 749 million
dollars, with earnings per diluted share of 2.57 dollars compared to 760
million dollars with earnings per diluted share of 2.63 dollars in the
prior year.
Full year, net sales for Coach totalled 4.27 billion dollars, an
increase of 2 percent on a constant currency basis. Global comparable store
sales increased 2 percent, including a benefit of approximately 100 basis
points driven by an increase in global e-commerce. Net sales for Kate Spade
were 1.37 billion dollars, an increase of 6 percent on a reported basis and
7 percent in constant currency, while global comparable store sales
declined 7 percent, including the positive impact of approximately 400
basis points from global e-commerce. Net sales for Stuart Weitzman totalled
389 million dollars, an increase of 4 percent on a reported basis and 6
percent in constant currency.
Tapestry expects low-single-digit rise in FY20 net sales
The company expects revenues for fiscal 2020 to increase at a
low-single-digit rate from fiscal 2019. In addition, the company projects
earnings per diluted share to be approximately even with prior year. The
company said, primary change from the prior outlook is the expectation for
more modest topline growth at Kate Spade in North America, but it continues
to expects top and bottom line growth at Coach and profitability
improvements at Stuart Weitzman in fiscal 2020.
For the first quarter, the company projects revenues to be slightly
below prior year and earnings per diluted share to decline on a
year-over-year basis.
Picture credit: Kate Spade Facebook
