Achieves Record Holiday Revenue and
Increases Full Year Guidance
- Drove Revenue Growth of 27% Compared to Prior Year; Revenue
Increased 18% Versus FY20 Pre-Pandemic Levels, a 9-Point Sequential
Improvement
- Realized AUR Growth Versus Last Year Across Brands
- Reported GAAP EPS of $1.15; Delivered Non-GAAP EPS of $1.33,
Significantly Outpacing Expectations
Link to Download Tapestry’s Q2 2022 Earnings Presentation,
Including Brand Highlights
Tapestry, Inc. (NYSE: TPR), a leading New York-based house of
modern luxury accessories and lifestyle brands including Coach,
Kate Spade, and Stuart Weitzman, today reported results for the
fiscal second quarter ended January 1, 2022.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20220210005156/en/
(Photo: Business Wire)
Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc.,
said, “We delivered record sales this holiday quarter, highlighted
by an inflection at Kate Spade, ongoing momentum at Coach, and a
return to pre-pandemic revenue levels at Stuart Weitzman. The
combination of bold initiatives, compelling product, and effective
execution enabled us to win with consumers across our brands. Based
on these results, we are raising our revenue, operating income, and
EPS guidance for the fiscal year.”
“Our performance over the last 18 months has demonstrated the
advantages of our globally diversified, consumer-centric, and
data-driven platform. Through the Acceleration Program, we’ve made
foundational changes that have successfully accelerated our growth
at stronger margins, while making strategic investments to drive
customer engagement and lifetime value. As we look ahead, we see
significant growth opportunities and remain committed to creating
value for all stakeholders.”
Capital Deployment
Given Tapestry’s second quarter performance, robust balance
sheet, significant free cash flow generation, and outlook for
growth, the Company now expects to return over $1.5 billion to
shareholders in Fiscal 2022, an increase from the prior outlook of
$1.25 billion. This reflects higher than previously anticipated
share repurchases under the Company’s current buy-back program.
- Share Repurchases: Tapestry now forecasts the repurchase
of $1.25 billion in common stock in the fiscal year, an increase
from the prior outlook of $1 billion. In the fiscal second quarter,
the Company deployed $500 million to buy-back approximately 12
million shares of its common stock at an average cost of $42.54 per
share. During the first six months of fiscal 2022, Tapestry has
repurchased 18 million shares of its common stock for $750 million,
or an average cost of $42.02 per share. As of quarter-end, $850
million remained on the current authorization.
- Dividend Payments: The Company continues to anticipate
an annual dividend rate of $1.00 per share, or approximately $270
million returned to shareholders in the fiscal year. Tapestry
remains committed to increasing its dividend at a faster rate than
earnings growth over time.
- Debt Repayment: In addition, Tapestry continues to
expect to repay its July 2022 bonds, totaling $400 million, by the
end of Fiscal 2022 reflecting the Company’s goal to reduce leverage
through a combination of organic profit growth and debt
repayment.
Second Quarter 2022 Financial
Highlights
- Drove revenue growth of 18% against pre-pandemic levels, a
significant sequential acceleration fueled by Kate Spade and Coach;
Outperformed expectations across brands;
- Achieved another quarter of strong sales growth in Digital,
which rose approximately 30% versus last year and nearly tripled
compared to pre-pandemic levels; Improved store revenue trends on
both a one and two-year basis;
- Delivered over 35% revenue growth in North America compared to
FY21 and increased over 25% compared to FY20; Drove a
mid-single-digit sales increase versus FY21 in Mainland China,
rising over 35% against pre-pandemic levels;
- Reinvested structural SG&A savings in the business,
including higher spend on growth-oriented marketing initiatives;
and
- Grew operating income and expanded operating margin compared to
pre-pandemic levels, reflecting the foundational changes to the
business achieved through the Acceleration Program.
Second Quarter 2022 Acceleration
Program Highlights
In the second quarter, we continued to make meaningful progress
under Tapestry’s Acceleration Program by sharpening the Company’s
focus on the consumer, leveraging data to lead with a digital-first
mindset and transforming Tapestry into a leaner and more responsive
organization:
- Recruited nearly 3 million new customers across channels in
North America, representing a low double-digit increase versus
prior year, with growth in both stores and online;
- Drove higher retention rates, increased repeat
transactions and reactivated lapsed customers across
brands;
- Realized low-single-digit revenue gains with Chinese
consumers globally compared to pre-pandemic levels;
- Increased global AUR across Coach, Kate Spade and Stuart
Weitzman, reflecting strong brand momentum, increasing traction
of core products, and structural changes to lessen promotional
activity and improve assortment productivity;
- Leveraged the Company’s diverse and agile supply chain
network to expedite inventory to satisfy growing demand despite
industry-wide disruption;
- Advanced Digital capabilities through significant
investments in the channel, including in talent, to improve the
customer experience and drive conversion; and
- Remain on track to realize gross run-rate savings of $300
million in FY22.
Overview of Second Quarter 2022
Financial Results
- Net sales totaled $2.14 billion for the second quarter
compared to $1.69 billion in the prior year, representing a 27%
increase. Sales rose 18% compared to pre-pandemic levels.
- Gross profit totaled $1.46 billion on both a reported
and non-GAAP basis, while gross margin was 68.1%. As anticipated,
the Company’s gross margin was negatively impacted by incremental
freight expense in order to maintain product flow to meet consumer
demand, which totaled 320 basis points. This compared to prior year
gross profit of $1.17 billion and gross margin of 69.6% on both a
reported and non-GAAP basis.
- SG&A expenses totaled $995 million on a reported
basis and represented 46.5% of sales compared to $784 million and
46.5%, respectively, in the year ago quarter. On a non-GAAP basis,
SG&A expenses were $981 million and represented 45.8% of sales
compared to $763 million and 45.2%, respectively, in the year ago
period.
- Operating income was $463 million on a reported basis,
while operating margin was 21.6%, which compares to operating
income of $389 million and operating margin of 23.1% in the prior
year. On a non-GAAP basis, operating income was $476 million, while
operating margin was 22.2%. This compared to operating income of
$411 million and an operating margin of 24.4% in the prior
year.
- Extinguishment of debt was a loss of $54 million on a
reported basis, which related to the premiums, amortization, and
fees associated with the $500 million cash tender completed in the
second quarter of fiscal 2022.
- Net interest expense was $16 million in the quarter
compared to $19 million in the year ago period.
- Other expense was $3 million in the quarter compared to
income of $4 million in the prior year period.
- Net income for the quarter was $318 million on a
reported basis, with earnings per diluted share of $1.15, which
compares to $311 million and earnings per diluted share of $1.11 in
the prior year period. The reported tax rate for the quarter was
18.5% compared to 16.9% in the prior year period. On a non-GAAP
basis, net income for the quarter was $368 million with earnings
per diluted share of $1.33. This compared to non-GAAP net income of
$323 million with earnings per diluted share of $1.15 in the prior
year period. The non-GAAP tax rate for the quarter was 19.5%
compared to 18.5% in the prior year period.
Balance Sheet and Cash Flow
Highlights
- Cash, cash equivalents and short-term investments
totaled $1.65 billion and total borrowings outstanding were
$1.59 billion. In the quarter, Tapestry issued $500 million in
ten-year senior unsecured notes due 2032 at a coupon of 3.050% to
be used to fund the concurrent partial tender offer of the 4.250%
2025 notes and the 4.125% 2027 notes. The tender offer resulted in
$500 million tender acceptance, a leverage neutral
transaction.
- Inventory at quarter-end was $750 million versus ending
inventory of $632 million a year ago.
- Free cash flow year-to-date was an inflow of $596
million compared to an inflow of $697 million in the prior year.
CapEx year-to-date was $72 million versus $50 million in the
year ago period.
Non-GAAP Reconciliation
During the fiscal second quarter of 2022, Tapestry recorded
certain items that decreased the Company’s pre-tax income by $67
million, net income by $50 million, and earnings per diluted share
by $0.18. These items included:
- Acceleration Program: Pre-tax charges of $13 million
primarily associated with professional fees and share-based
compensation incurred as a result of the development and execution
of the Company’s comprehensive strategic initiatives. Tapestry
expects to incur total pre-tax charges of approximately $215
million to $220 million over the life of the Acceleration Program,
including approximately $15 million in remaining charges in Fiscal
2022, primarily consisting of share-based compensation and
professional fees.
- Debt Extinguishment Costs: Pre-tax charges of $54
million related to the premiums, amortization, and fees associated
with the $500 million cash tender of notes due in 2025 and
2027.
Please refer to Financial Schedules 3 – 6 included herein for a
detailed reconciliation of the Company’s reported to non-GAAP
results.
Fiscal Year 2022 Outlook
Tapestry’s Fiscal 2022 outlook is provided on a non-GAAP basis
and excludes Acceleration Program and debt extinguishment charges
as described in the “Fiscal Year 2022 Outlook - Non-GAAP
Adjustments” section of this press release.
The Company is increasing its outlook for Fiscal 2022 and now
expects the following:
- Revenue of approximately $6.75 billion, an increase from
the prior outlook of $6.6 billion. This represents growth of nearly
20% versus the prior year on a 52-week, comparable basis, which
would mark a record level of sales for the Company.
- Net interest expense now forecasted to be approximately
$60 to $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 is now expected to
be approximately 274 million shares, incorporating the anticipated
$1.25 billion in share repurchase activity throughout Fiscal
2022.
- Earnings per diluted share of $3.60 to $3.65,
ahead of the prior guidance for $3.45 to $3.50.
Please note, due to the ongoing dynamic nature of the Covid-19
pandemic, 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, February 10, 2022. 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 9674276. 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 third quarter results
on Thursday, May 12, 2022. 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,” “commit,” "anticipate," “goal,”
“leveraging,” “sharpening,” transforming,” “creating,”
accelerating,” “enhancing,” “innovation,” “drive,” “targeting,”
“assume,” “plan,” “progress,” “confident,” “future,” “uncertain,”
“on track,” “achieve,” “strategic,” “growth,” “we see significant
growth opportunities,” “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 , including impacts on our supply chain, 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. In addition,
purchases of shares of the Company’s common stock will be made
subject to market conditions and at prevailing market prices.
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: Condensed Consolidated Statement of
Operations
TAPESTRY, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS For the Quarter and
Six Months Ended January 1, 2022 and December 26, 2020
(in millions, except per share
data) (unaudited) (unaudited)
QUARTER ENDED SIX MONTHS ENDED January 1, 2022
December 26, 2020 January 1, 2022 December 26,
2020 Net sales
$
2,141.2
$
1,685.4
$
3,622.1
$
2,857.6
Cost of sales
683.8
511.7
1,096.0
853.7
Gross profit
1,457.4
1,173.7
2,526.1
2,003.9
Selling, general and administrative expenses
994.6
784.3
1,768.3
1,412.3
Operating income (loss)
462.8
389.4
757.8
591.6
Loss on extinguishment of debt
53.7
-
53.7
-
Interest expense, net
15.9
18.7
32.0
38.1
Other expense (income)
3.1
(3.6)
5.3
(6.2)
Income (loss) before provision for income taxes
390.1
374.3
666.8
559.7
Provision (benefit) for income taxes
72.2
63.3
122.0
17.0
Net income (loss)
$
317.9
$
311.0
$
544.8
$
542.7
Net income (loss) per share: Basic
$
1.17
$
1.12
$
1.98
$
1.96
Diluted
$
1.15
$
1.11
$
1.94
$
1.94
Shares used in computing net income (loss) per share: Basic
271.1
277.5
274.5
277.1
Diluted
277.2
281.0
281.0
279.4
Schedule 2: Detail to Net Sales
TAPESTRY, INC. DETAIL TO NET SALES For the Quarter and Six Months Ended January 1, 2022 and
December 26, 2020 (in
millions) (unaudited) QUARTER ENDED January 1,
2022 December 26, 2020 % Change vs. FY21
Constant Currency %Change FY21 % Change vs. FY20
Coach
$
1,525.0
$
1,225.3
24 %
24 %
20 %
Kate Spade
500.4
375.6
33 %
33 %
16 %
Stuart Weitzman
115.8
84.5
37 %
35 %
0 %
Total Tapestry
$
2,141.2
$
1,685.4
27 %
27 %
18 %
SIX MONTHS ENDED January 1, 2022
December 26, 2020 % Change vs. FY21 Constant
Currency %Change FY21 % Change vs. FY20 Coach
$
2,639.9
$
2,100.7
26 %
25 %
18 %
Kate Spade
799.9
616.0
30 %
30 %
9 %
Stuart Weitzman
182.3
140.9
29 %
27 %
(10)%
Total Tapestry
$
3,622.1
$
2,857.6
27 %
26 %
14 %
Schedule 3: Items Affecting Comparability – 2Q22
TAPESTRY, INC. GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Quarter Ended January 1, 2022 Items
Affecting Comparability GAAP Basis(As Reported) Debt
Extinguishment AccelerationProgram Non-GAAP
Basis(Excluding Items) Cost of sales Coach
1,078.2
-
-
1,078.2
Kate Spade
308.0
-
-
308.0
Stuart Weitzman
71.2
-
-
71.2
Gross profit(1)
$
1,457.4
$
-
$
-
$
1,457.4
SG&A expenses Coach
604.9
-
1.1
603.8
Kate Spade
224.3
-
2.1
222.2
Stuart Weitzman
57.9
-
2.9
55.0
Corporate
107.5
-
7.2
100.3
SG&A expenses
$
994.6
$
-
$
13.3
$
981.3
Operating income (loss) Coach
473.3
-
(1.1)
474.4
Kate Spade
83.7
-
(2.1)
85.8
Stuart Weitzman
13.3
-
(2.9)
16.2
Corporate
(107.5)
-
(7.2)
(100.3)
Operating income (loss)
$
462.8
$
-
$
(13.3)
$
476.1
Loss on extinguishment of debt
53.7
53.7
-
-
Provision for income taxes
72.2
(12.9)
(4.1)
89.2
Net income (loss)
$
317.9
$
(40.8)
$
(9.2)
$
367.9
Net income (loss) per diluted common share
$
1.15
$
(0.15)
$
(0.03)
$
1.33
(1) Adjustments within Gross profit are recorded within Cost
of sales.
Schedule 4: Items Affecting Comparability – 2Q21
TAPESTRY, INC. GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Quarter Ended December 26, 2020 Items
Affecting Comparability GAAP Basis(As Reported) CARES
Act Tax Impact Acceleration Program Non-GAAP
Basis(Excluding Items) Cost of sales Coach
888.1
-
-
888.1
Kate Spade
233.1
-
-
233.1
Stuart Weitzman
52.5
-
-
52.5
Gross profit(1)
$
1,173.7
$
-
$
-
$
1,173.7
SG&A expenses Coach
476.1
-
5.8
470.3
Kate Spade
174.3
-
2.4
171.9
Stuart Weitzman
40.6
-
(2.3)
42.9
Corporate
93.3
-
15.8
77.5
SG&A expenses
$
784.3
$
-
$
21.7
$
762.6
Operating income (loss) Coach
412.0
-
(5.8)
417.8
Kate Spade
58.8
-
(2.4)
61.2
Stuart Weitzman
11.9
-
2.3
9.6
Corporate
(93.3)
-
(15.8)
(77.5)
Operating income (loss)
$
389.4
$
-
$
(21.7)
$
411.1
Provision for income taxes
63.3
(3.3)
(6.4)
73.0
Net income (loss)
$
311.0
$
3.3
$
(15.3)
$
323.0
Net income (loss) per diluted common share
$
1.11
$
0.01
$
(0.05)
$
1.15
(1) Adjustments within Gross profit are recorded within Cost
of sales.
Schedule 5: Items Affecting Comparability – 2Q22
YTD
TAPESTRY, INC. GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Six Months Ended January 1, 2022 Items
Affecting Comparability GAAP Basis(As Reported) Debt
Extinguishment Acceleration Program Non-GAAP
Basis(Excluding Items) Cost of sales Coach
1,909.2
-
-
1,909.2
Kate Spade
507.2
-
-
507.2
Stuart Weitzman
109.7
-
-
109.7
Gross profit(1)
$
2,526.1
$
-
$
-
$
2,526.1
SG&A expenses Coach
1,070.2
-
2.5
1,067.7
Kate Spade
386.3
-
3.5
382.8
Stuart Weitzman
97.9
-
3.3
94.6
Corporate
213.9
-
16.1
197.8
SG&A expenses
$
1,768.3
$
-
$
25.4
$
1,742.9
Operating income (loss) Coach
839.0
-
(2.5)
841.5
Kate Spade
120.9
-
(3.5)
124.4
Stuart Weitzman
11.8
-
(3.3)
15.1
Corporate
(213.9)
-
(16.1)
(197.8)
Operating income (loss)
$
757.8
$
-
$
(25.4)
$
783.2
Loss on extinguishment of debt
53.7
53.7
-
-
Provision for income taxes
122.0
(12.9)
(8.0)
142.9
Net income (loss)
$
544.8
$
(40.8)
$
(17.4)
$
603.0
Net income (loss) per diluted common share
$
1.94
$
(0.15)
$
(0.06)
$
2.15
(1) Adjustments within Gross profit are recorded within Cost
of sales.
Schedule 6: Items Affecting Comparability – 2Q21 YTD
TAPESTRY, INC. GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Six Months Ended December 26, 2020 Items
Affecting Comparability GAAP Basis(As Reported) CARES
Act Tax Impact Acceleration Program Non-GAAP
Basis(Excluding Items) Cost of sales Coach
1,533.0
-
-
1,533.0
Kate Spade
387.2
-
-
387.2
Stuart Weitzman
83.7
-
-
83.7
Gross profit(1)
$
2,003.9
$
-
$
-
$
2,003.9
SG&A expenses Coach
851.0
-
16.5
834.5
Kate Spade
305.2
-
3.4
301.8
Stuart Weitzman
71.8
-
(4.7)
76.5
Corporate
184.3
-
33.1
151.2
SG&A expenses
$
1,412.3
$
-
$
48.3
$
1,364.0
Operating income (loss) Coach
682.0
-
(16.5)
698.5
Kate Spade
82.0
-
(3.4)
85.4
Stuart Weitzman
11.9
-
4.7
7.2
Corporate
(184.3)
-
(33.1)
(151.2)
Operating income (loss)
$
591.6
$
-
$
(48.3)
$
639.9
Provision for income taxes
17.0
(95.0)
(12.2)
124.2
Net income (loss)
$
542.7
$
95.0
$
(36.1)
$
483.8
Net income (loss) per diluted common share
$
1.94
$
0.34
$
(0.13)
$
1.73
(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 SG&A expense ratio, and operating
margin, have been presented both including and excluding
Acceleration Program and Debt Extinguishment costs for the second
quarter and first six months of fiscal year 2022 and the effects of
certain items related to the tax benefit the Company received under
the CARES Act and Acceleration Program costs for the second quarter
and first six months of fiscal year 2021.
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 2020 results and trends,
referred to as pre-pandemic levels, 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, starting in the second
half of fiscal year 2020.
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 $40 to $45 million
in Acceleration Program charges, primarily consisting of
share-based compensation and professional fees, as well as $54
million in Debt Extinguishment costs incurred in the second quarter
related to the premiums, amortization, and fees associated with the
$500 million cash tender of senior notes due in 2025 and 2027.
Schedule 7: Condensed Consolidated Balance Sheets
TAPESTRY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
At January 1, 2022 and July 3,
2021 (in millions)
(unaudited) (audited) January 1, 2022
July 3, 2021 ASSETS Cash, cash equivalents and
short-term investments
$
1,647.7
$
2,015.8
Receivables
292.7
200.2
Inventories
750.0
734.8
Other current assets
368.1
424.5
Total current assets
3,058.5
3,375.3
Property and equipment, net
647.7
678.1
Lease right-of-use assets
1,403.6
1,496.6
Other noncurrent assets
2,819.6
2,832.4
Total assets
$
7,929.4
$
8,382.4
LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable
$
468.2
$
445.2
Accrued liabilities
667.5
661.2
Short-term lease liabilities
308.0
319.4
Current debt
400.0
-
Total current liabilities
1,843.7
1,425.8
Long-term debt
1,189.1
1,590.7
Long-term lease liabilities
1,414.8
1,525.9
Other liabilities
554.4
580.7
Stockholders' equity
2,927.4
3,259.3
Total liabilities and stockholders' equity
$
7,929.4
$
8,382.4
Schedule 8: Condensed Consolidated Statement of Cash
Flows
TAPESTRY, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended January 1, 2022
and December 26, 2020 (in
millions) (unaudited) (unaudited)
January 1, 2022 December 26, 2020 Cash Flows from
Operating Activities Net income (loss)
$
544.8
$
542.7
Adjustments to reconcile net income to net cash flows from
operating activities: Depreciation and amortization
99.6
102.4
Loss on extinguishment of debt
53.7
-
Other non-cash items
49.6
(118.4)
Changes in operating assets and liabilities
(79.6)
219.6
Net cash provided by operating activities
668.1
746.3
Cash Flows from Investing Activities Purchases of
property and equipment
(71.7)
(49.7)
Purchase of investments
(502.3)
(0.2)
Other items
118.3
24.1
Net cash used in investing activities
(455.7)
(25.8)
Cash Flows from Financing Activities Dividend
payments
(137.5)
-
Repurchase of common stock
(750.0)
-
Proceeds from issuance of debt, net of discount
498.5
-
Payment of debt extinguishment costs
(50.7)
-
Repayment of debt
(500.0)
(11.5)
Repayment of revolving credit facility
-
(500.0)
Other items
(12.4)
(7.4)
Net cash used in financing activities
(952.1)
(518.9)
Effect of exchange rate on cash and cash equivalents
(10.6)
14.7
Net (decrease) increase in cash and cash equivalents
(750.3)
216.3
Cash and cash equivalents at beginning of period
$
2,007.7
$
1,426.3
Cash and cash equivalents at end of period
$
1,257.4
$
1,642.6
Schedule 9: Store Count by Brand – 2Q22
TAPESTRY, INC. STORE COUNT At
October 2, 2021 and January 1, 2022 (unaudited) As of As of
Directly-Operated Store Count:
October 2, 2021 Openings (Closures) January 1,
2022 Coach North
America
355
-
(1)
354
International
583
19
(2)
600
Kate Spade North America
209
-
-
209
International
193
1
(2)
192
Stuart Weitzman North
America
44
-
(1)
43
International
57
-
-
57
Schedule 10: Store Count by Brand – 2Q22 YTD
TAPESTRY, INC. STORE COUNT At July
3, 2021 and January 1, 2022 (unaudited) As of As of
Directly-Operated Store Count:
July 3, 2021 Openings (Closures) January 1,
2022 Coach North
America
354
3
(3)
354
International
585
24
(9)
600
Kate Spade North America
210
-
(1)
209
International
197
3
(8)
192
Stuart Weitzman North
America
48
-
(5)
43
International
56
1
-
57
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220210005156/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 Kelsey Mueller 212/946-8183 Director of
Investor Relations kmueller@tapestry.com
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