- Reported Fourth Quarter GAAP EPS of $0.75, Representing a
Year-Over-Year Increase of 8%; Delivered Non-GAAP EPS of $0.78, Up
20% Versus Prior Year on a 13-Week Comparable Basis
- Achieved Record Annual Sales of $6.7 Billion, Over 15%
Growth Compared to Last Year
- Generated $2.0 Billion in Digital Revenue in the Fiscal
Year, an Increase of Approximately 25%
- Returned Approximately $1.9 Billion to Shareholders in
Fiscal 2022; Board of Directors Approves 20% Increase in
Dividend
Link to Download Tapestry’s Q4 and Full Year 2022 Earnings
Presentation, Including Brand Highlights
Tapestry, Inc. (NYSE: TPR), a leading New York-based house of
modern luxury accessories and lifestyle brands consisting of Coach,
Kate Spade, and Stuart Weitzman, today reported results for the
fiscal fourth quarter and year ended July 2, 2022.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20220818005188/en/
(Photo: Business Wire)
Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc.,
said, “We drove standout results this fiscal year and delivered
accelerated revenue and profit growth across our portfolio – a
direct reflection of the vibrancy of our brands and our team’s
successful execution of the Acceleration Program. Through an
unwavering focus on the consumer, supported by our transformed and
diversified business model, we increased AUR, reached $2 billion in
global Digital sales and acquired 7.7 million new customers in
North America alone in FY22.”
“Looking forward, we see significant runway for long-term growth
as we harness our powerful combination of iconic brands amplified
by a data-rich platform that enhances our ability to build lasting
customer relationships. Although the external environment is
challenging, we are well-positioned given the durability of our
category, the strength of our brands and the proven ability of our
teams to respond effectively to change. These competitive
advantages and established capabilities will enable us to fuel
sustained top and bottom-line gains and drive meaningful
shareholder value.”
Capital Deployment
Actions
In Fiscal 2022, Tapestry returned approximately $1.9 billion to
shareholders through a combination of share repurchases and
dividends:
- Share Repurchases: Tapestry repurchased $1.6 billion in
common stock or approximately 42 million shares at an average cost
of $38.08 per share. This included the purchase of $350 million in
common stock in the fourth quarter or approximately 11 million
shares at an average cost of $32.77 per share.
- Dividend Payments: The Board of Directors approved the
return of $264 million to shareholders in the fiscal year for an
annual dividend rate of $1.00 per share.
Looking ahead to Fiscal 2023, Tapestry expects to return
approximately $1.0 billion to shareholders in the year given the
Company’s robust balance sheet, significant free cash flow
generation and outlook for continued growth. This includes the
assumption for:
- Share Repurchases: Tapestry expects to buy back
approximately $700 million in common stock in the fiscal year under
its existing $1.5 billion share repurchase authorization.
- Dividend Payments: The Board of Directors approved a 20%
increase to the Company’s dividend, with a quarterly cash dividend
of $0.30 per common share payable on September 26, 2022 to
shareholders of record as of close of business on September 9, 2022
for an anticipated annual dividend rate of $1.20 per share.
Tapestry remains committed to increasing its dividend over time at
a faster rate than earnings growth.
53rd Week Impact – Fiscal
2021
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 2022 included 13 and 52 weeks, respectively. As
previously reported, the additional week in Fiscal 2021 contributed
$93 million to Tapestry’s revenue and $0.09 to earnings per diluted
share. For a complete reconciliation of revenue and operating
income by segment, please refer to Financial Schedules 4 and 6
included herein.
Fourth Quarter and Full Year 2022
Financial Highlights
Fourth Quarter 2022:
- Fueled a fourth quarter record $1.6 billion in revenue,
representing 7% growth over FY19 pre-pandemic levels;
- Drove double-digit sales increases versus prior year on a
13-week comparable basis across North America, Japan, Other Asia
and Europe, which offset a low-30% revenue decline in Greater China
due to Covid-related disruption, as anticipated;
- Achieved another quarter of Digital revenue gains with
high-single-digit year-over-year growth; and
- Delivered reported EPS increase of 8% on a 13-week versus
14-week basis; Achieved non-GAAP EPS growth of 20% versus prior
year on a comparable 13-week basis and 29% ahead of FY19
pre-pandemic levels.
Fiscal Year 2022:
- Achieved a record $6.7 billion in revenue, representing an
increase of over 15% compared to the prior year or 11% higher than
FY19 pre-pandemic levels;
- Delivered $2.0 billion in Digital sales, more than tripling
versus FY19 pre-pandemic and accounting for 30% of total
revenue;
- Reinvested structural SG&A savings to drive growth, notably
through increased marketing spend which accounted for 8% of total
revenue in the fiscal year; and
- Drove reported EPS growth of approximately 8% compared to the
prior year; Delivered non-GAAP EPS increase of 20% versus prior
year and growth of over 35% compared to FY19 pre-pandemic levels on
a comparable 52-week basis.
Fiscal 2022 Acceleration Program
Highlights
Throughout the fiscal year, Tapestry made meaningful progress
under its Acceleration Program by sharpening the Company’s focus on
the consumer, leveraging data to lead with a digital-first mindset
and transforming into a leaner and more responsive
organization:
- Recruited approximately 7.7 million new customers across
channels in North America, representing a 10% increase versus
prior year with growth in both stores and online;
- Maintained a consumer-centric lens and fostered emotional
connections with customers, resulting in higher average spend
per customer, increased retention rates and the continued
reactivation of lapsed customers across brands;
- Delivered global AUR gains at Coach, Kate Spade, and Stuart
Weitzman, reflecting brand heat and pricing power, the
increasing traction of our product offering and select price
increases, as well as continued benefits from structural changes to
lessen promotional activity;
- Advanced Digital capabilities through significant
investments in the channel, including in talent, to improve the
customer experience and drive conversion; achieved $2 billion in
Digital revenue in the fiscal year, representing 30% of total
sales; and
- Realized gross run-rate savings of approximately $300
million in FY22, which continues to fund investments in
brand-building activities.
Overview of Fourth Quarter 2022
Financial Results
- Net sales totaled $1.62 billion for the fourth quarter
compared to $1.62 billion in the prior year, representing a
year-over-year increase of approximately 1% on a reported basis. On
a comparable 13-week basis and excluding a two-point headwind from
currency due to the appreciation of the U.S. Dollar, revenue rose
9% against last year.
- Gross profit totaled $1.12 billion on a reported and
non-GAAP basis, while gross margin was 68.9%. As anticipated, the
Company’s gross margin was negatively impacted by incremental
freight expense, which totaled $36 million or 215 basis points.
This compared to prior year gross profit of $1.17 billion on a
reported basis, representing gross margin of 72.2%. On a non-GAAP
and 13-week comparable basis, gross profit in the prior year period
was $1.09 billion, while gross margin was 71.7%.
- SG&A expenses totaled $871 million on a reported
basis and represented 53.6% of sales. This compared to reported
SG&A expenses in the prior year of $906 million, which
represented 56.1% of sales. On a non-GAAP basis, SG&A expenses
were $860 million, or 52.9% of sales. On a non-GAAP and 13-week
comparable basis, SG&A expenses in the year ago quarter were
$850 million and 55.8% of sales.
- Operating income was $249 million on a reported basis,
while operating margin was 15.3%, which compares to operating
income of $260 million and operating margin of 16.1% in the prior
year. On a non-GAAP basis, operating income was $260 million, while
operating margin was 16.0%. This compares to non-GAAP and 13-week
operating income of $242 million and an operating margin of 15.9%
in the prior year.
- Net interest expense was $12 million in the quarter
compared to $16 million in the year ago period.
- Other expense was $8 million in the quarter, owing
primarily to an FX loss associated with the strengthening of the
U.S. Dollar. This compared to $1 million of other expense in the
prior year period.
- Net income was $189 million on a reported basis, with
earnings per diluted share of $0.75, which compares to net income
of $200 million and earnings per diluted share of $0.69 in the
prior year period. The reported tax rate for the quarter was 17.3%
compared to 17.5% in the prior year period. On a non-GAAP basis,
net income for the quarter was $197 million with earnings per
diluted share of $0.78. This compared to non-GAAP and 13-week net
income of $187 million with earnings per diluted share of $0.65 in
the prior year period. The non-GAAP tax rate for the quarter was
17.7% compared to 16.7% in the prior year period.
Overview of Full Year 2022 Financial
Results
- Net sales totaled $6.68 billion for the full year as
compared to $5.75 billion in the prior year, representing a
year-over-year increase of 16% on a reported basis. On a 52-week
comparable basis and excluding a 50-basis point headwind from
currency, revenue rose 19% against last year. Compared to
pre-pandemic FY19 levels, sales rose 11%.
- Gross profit totaled $4.65 billion on both a reported
and non-GAAP basis, while gross margin was 69.6%. As anticipated,
the Company’s gross margin was negatively impacted by incremental
freight expense, which totaled $178 million or 260 basis points. In
the prior year, reported gross profit was $4.08 billion, while
gross margin was 71.0%. On a non-GAAP and 52-week comparable basis,
gross profit in the prior year was $4.01 billion, while gross
margin was 70.9%.
- SG&A expenses totaled $3.47 billion on a reported
basis and represented 52.0% of sales compared to $3.11 billion and
54.2%, respectively, in the prior year. On a non-GAAP and 52-week
comparable basis, SG&A expenses were $3.43 billion and
represented 51.3% of sales as compared to $2.94 billion and 52.1%,
respectively, in the prior year.
- Operating income was $1.18 billion on a reported basis,
while operating margin was 17.6%. This compared to prior year
operating income of $968 million and an operating margin of 16.8%.
On a non-GAAP basis, operating income was $1.22 billion, while
operating margin was 18.2%, which compares to operating income of
$1.07 billion and an operating margin of 18.8% in the prior year on
a 52-week comparable basis.
- 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 $59 million as compared to $71
million in the prior year.
- Other expense was $16 million, which largely represented
an FX loss associated with the strengthening of the U.S. Dollar.
This compares to other income of $1 million in the prior year.
- Net income was $856 million on a reported basis, with
earnings per diluted share of $3.17. This compared to net income of
$834 million and earnings per diluted share of $2.95 in the prior
year. The reported tax rate for the year was 18.2% compared to 7.0%
in the prior year. On a non-GAAP basis, net income for the year was
$936 million with earnings per diluted share of $3.47. This
compared to non-GAAP net income of $816 million with earnings per
diluted share of $2.88 in the prior year on a 52-week comparable
basis. The non-GAAP tax rate for the full year was 18.1% compared
to 17.9% in the prior year.
Balance Sheet and Cash Flow
Highlights
- Cash, cash equivalents and short-term investments
totaled $953 million and total borrowings outstanding were
$1.69 billion.
- Inventory at year-end was $994 million versus ending
inventory of $735 million a year ago, with higher levels of
in-transits representing the largest driver of the year-over-year
increase.
- Free cash flow for the fiscal year was an inflow of $759
million compared to an inflow of $1.21 billion in the prior year.
CapEx and implementation costs related to Cloud
Computing for the year were $162 million versus $116 million in
Fiscal 2021.
Non-GAAP Reconciliation
During the fiscal fourth quarter of 2022, Tapestry recorded
certain items that decreased the Company’s pre-tax income by $11
million, net income by $8 million, and earnings per diluted share
by $0.03. On a full year basis, these charges lowered the Company’s
reported net income by $80 million or $0.30 per diluted share.
These items included:
- Acceleration Program: Pre-tax charges of $11 million and
$43 million in the fourth quarter and fiscal year, respectively,
primarily associated with share-based compensation and professional
fees incurred as a result of the development and execution of the
Company’s comprehensive strategic initiatives. As expected,
Tapestry incurred $219 million in charges over the life of the
Acceleration Program, which primarily consisted of
organization-related changes, driven by severance, professional
fees, store closure costs, and share-based compensation. The
Company does not expect any further charges associated with the
Acceleration Program in Fiscal 2023.
- Debt Extinguishment Costs: Pre-tax charges of $54
million in the fiscal year 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 2023 Outlook
Tapestry expects the following for Fiscal 2023:
- Revenue in the area of $6.9 billion. This represents an
increase of 3% to 4% on a reported basis, which includes roughly
300 basis points of FX pressure. On a constant currency basis,
revenue growth is expected to be approximately 6% to 7%.
- Net interest expense of approximately $35 million;
- Tax rate of approximately 21.0%;
- Weighted average diluted share count of approximately
242 million shares, incorporating approximately $700 million of
expected share repurchases;
- Earnings per diluted share of $3.80 to $3.90,
representing double-digit growth compared to the prior year.
This outlook assumes the following:
- No further appreciation of the USD; information provided based
on spot rates at the time of forecast;
- Continued gradual recovery in Greater China from Covid-related
disruption; no further significant lockdowns or incremental supply
chain pressures from the Covid-19 pandemic;
- No material worsening of inflationary pressures or consumer
confidence; and
- No benefit from the potential reinstatement of the Generalized
System of Preferences (GSP).
Given the dynamic nature of these and other external factors,
financial results could differ materially from the outlook
provided.
Conference Call Details
The Company will host a conference call to review these results
at 8:00 a.m. (ET) today, August 18, 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 4973027. 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
As previously announced, the Company plans to host an Investor
Day on September 9, 2022 to discuss its long-term strategic
initiatives and financial outlook.
In addition, the Company expects to report Fiscal 2023 first
quarter results on Thursday, November 10, 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 2023 Outlook,”
statements regarding the Company’s capital deployment plans,
including anticipated annual dividend rates, 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 due to
temporary closures of our manufacturing partners, price increases,
temporary store closures, as well as production, shipping and
fulfillment constraints, economic conditions, the ability
successfully execute our multi-year growth agenda under our
Acceleration Program, the ability to anticipate consumer
preferences and retain the value of our brands, including our
ability to execute on our e-commerce and digital strategies, the
effects of existing and new competition in the marketplace, 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, the impact of tax
and other legislation and the risks associated with climate change
and other corporate responsibility issues, 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: Consolidated Statement of Operations
TAPESTRY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters and Years Ended July 2,
2022 and July 3, 2021 (in
millions, except per share data)
(unaudited) (unaudited) (audited) QUARTER
ENDED YEAR ENDED July 2, 2022 July 3,
2021 July 2, 2022 July 3, 2021
Net sales
$
1,624.9
$
1,615.4
$
6,684.5
$
5,746.3
Cost of sales
505.7
449.3
2,034.1
1,664.4
Gross profit
1,119.2
1,166.1
4,650.4
4,081.9
Selling, general and administrative expenses
870.7
906.4
3,474.6
3,113.9
Operating income (loss)
248.5
259.7
1,175.8
968.0
Loss on extinguishment of debt
-
-
53.7
-
Interest expense, net
11.9
16.4
58.7
71.4
Other expense (income)
8.1
1.1
16.4
(0.7
)
Income before provision for income taxes
228.5
242.2
1,047.0
897.3
Provision for income taxes
39.7
42.4
190.7
63.1
Net income (loss)
$
188.8
$
199.8
$
856.3
$
834.2
Net income (loss) per share:
Basic
$
0.76
$
0.72
$
3.24
$
3.00
Diluted
$
0.75
$
0.69
$
3.17
$
2.95
Shares used in computing net income per share:
Basic
247.6
279.2
264.3
277.9
Diluted
252.3
287.6
270.1
283.0
Schedule 2: Detail to Net Sales
TAPESTRY, INC. DETAIL TO NET SALES For the Quarter and Year Ended July 2, 2022 and July 3,
2021 (in millions)
(unaudited) QUARTER
ENDED July 2, 2022 July 3, 2021 % Change vs.
FY21 Constant Currency %Change FY21 % change vs.FY21
AdjustedNet Sales %(1) % Change vs. FY19
Coach
$
1,209.0
$
1,188.9
2
%
4
%
8
%
10
%
Kate Spade
344.1
341.6
1
%
2
%
8
%
4
%
Stuart Weitzman
71.8
84.9
(15
)%
(15
)%
(12
)%
(16
)%
Total Tapestry
$
1,624.9
$
1,615.4
1
%
3
%
7
%
7
%
(1) The 'FY21 Adjusted Net Sales %' excludes the 14th
week for the fiscal fourth quarter 2021. Refer within Schedule 4 to
'Details to Impact of the 14th Week in Fiscal 2021', for the Fiscal
2021 adjusted net sales.
YEAR ENDED July 2,
2022 July 3, 2021 % Change vs. FY21 Constant
Currency %Change FY21 % change vs.FY21 AdjustedNet Sales
%(2) % Change vs. FY19
Coach
$
4,921.3
$
4,253.1
16
%
16
%
18
%
15
%
Kate Spade
1,445.5
1,210.0
20
%
20
%
22
%
6
%
Stuart Weitzman
317.7
283.2
12
%
11
%
13
%
(18
)%
Total Tapestry
$
6,684.5
$
5,746.3
16
%
17
%
18
%
11
%
(2) The 'FY21 Adjusted Net Sales %' excludes the 53rd
week for the full year 2021. Refer within Schedule 6 to 'Details to
Impact of the 53rd Week in Fiscal 2021', for the Fiscal 2021
adjusted net sales.
Schedule 3: Items Affecting Comparability – 4Q22
TAPESTRY, INC. GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Quarter Ended July 2, 2022 Items
Affecting Comparability GAAP Basis(As Reported)
Acceleration Program Non-GAAP Basis(Excluding Items)
Cost of sales
Coach
864.6
-
864.6
Kate Spade
215.4
-
215.4
Stuart Weitzman
39.2
-
39.2
Gross profit(1)
$
1,119.2
$
-
$
1,119.2
SG&A expenses
Coach
515.2
2.7
512.5
Kate Spade
189.2
1.7
187.5
Stuart Weitzman
42.9
0.4
42.5
Corporate
123.4
6.3
117.1
SG&A expenses
$
870.7
$
11.1
$
859.6
Operating
income (loss) Coach
349.4
(2.7
)
352.1
Kate Spade
26.2
(1.7
)
27.9
Stuart Weitzman
(3.7
)
(0.4
)
(3.3
)
Corporate
(123.4
)
(6.3
)
(117.1
)
Operating income (loss)
$
248.5
$
(11.1
)
$
259.6
Provision for income taxes
39.7
(2.7
)
42.4
Net income (loss)
$
188.8
$
(8.4
)
$
197.2
Net income (loss) per diluted common share
$
0.75
$
(0.03
)
$
0.78
(1) Adjustments within
Gross profit are recorded within Cost of sales.
Schedule 4: 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, Gross
Profit, SG&A Expenses and Operating Income by Segment:
TAPESTRY, INC. DETAILS TO IMPACT OF 14TH WEEK IN FISCAL 2021
(in millions) (unaudited) For the Quarter Ended
July 3, 2021 Non-GAAP Impact of 14thWeek
Adjusted Net Sales
Coach
$
1,188.9
$
67.7
$
1,121.2
Kate Spade
341.6
21.7
319.9
Stuart Weitzman
84.9
3.3
81.6
Total Net Sales
$
1,615.4
$
92.7
$
1,522.7
Cost of sales
Coach
$
889.9
$
50.3
$
839.6
Kate Spade
221.0
13.3
207.7
Stuart Weitzman
47.1
2.0
45.1
Total Gross Profit
$
1,158.0
$
65.6
$
1,092.4
SG&A expenses
Coach
$
518.6
$
21.7
$
496.9
Kate Spade
185.7
8.6
177.1
Stuart Weitzman
51.3
1.8
49.5
Corporate
129.9
3.5
126.4
Total SG&A expenses
$
885.5
$
35.6
$
849.9
Operating Income (Loss) 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)
$
272.5
$
30.0
$
242.5
Schedule 5: Items Affecting Comparability – FY22
TAPESTRY, INC. GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Fiscal Year Ended July 2, 2022
Items Affecting Comparability
GAAP Basis(As Reported)
AccelerationProgram DebtExtinguishment Non-GAAP
Basis(Excluding Items) Cost of
sales Coach
3,553.8
-
-
3,553.8
Kate Spade
912.0
-
-
912.0
Stuart Weitzman
184.6
-
-
184.6
Gross profit(1)
$
4,650.4
$
-
$
-
$
4,650.4
SG&A expenses
Coach
2,079.9
6.7
-
2,073.2
Kate Spade
754.6
5.9
-
748.7
Stuart Weitzman
182.8
3.6
-
179.2
Corporate
457.3
26.6
-
430.7
SG&A expenses
$
3,474.6
$
42.8
$
-
$
3,431.8
Operating income (loss) Coach
1,473.9
(6.7
)
-
1,480.6
Kate Spade
157.4
(5.9
)
-
163.3
Stuart Weitzman
1.8
(3.6
)
-
5.4
Corporate
(457.3
)
(26.6
)
-
(430.7
)
Operating income (loss)
$
1,175.8
$
(42.8
)
$
-
$
1,218.6
Loss on extinguishment of debt
53.7
-
53.7
-
Provision for income taxes
190.7
(3.4
)
(12.9
)
207.0
Net income (loss)
$
856.3
$
(39.4
)
$
(40.8
)
$
936.5
Net income (loss) per diluted common share
$
3.17
$
(0.15
)
$
(0.15
)
$
3.47
(1) Adjustments within Gross profit are recorded
within Cost of sales.
Schedule 6: 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 reflected 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, Gross
Profit, SG&A Expenses and Operating Income by Segment:
TAPESTRY, INC. DETAILS TO IMPACT OF 53RD WEEK IN FISCAL 2021
(in millions) (unaudited) For the Fiscal Year
Ended July 3, 2021 Non-GAAP Impact of 53rd
Week Adjusted Net Sales
Coach
$
4,253.1
$
67.7
$
4,185.4
Kate Spade
1,210.0
21.7
1,188.3
Stuart Weitzman
283.2
3.3
279.9
Total Net Sales
$
5,746.3
$
92.7
$
5,653.6
Cost of sales
Coach
$
3,140.9
$
50.3
$
3,090.6
Kate Spade
768.4
13.3
755.1
Stuart Weitzman
164.5
2.0
162.5
Total Gross Profit
$
4,073.8
$
65.5
$
4,008.3
SG&A expenses
Coach
$
1,794.6
$
21.7
$
1,772.9
Kate Spade
636.2
8.5
627.7
Stuart Weitzman
169.5
1.8
167.7
Corporate
378.2
3.5
374.7
Total SG&A expenses
$
2,978.5
$
35.6
$
2,942.9
Operating Income (Loss) 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)
$
1,095.3
$
30.0
$
1,065.3
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 Debt
Extinguishment and Acceleration Program costs for the fourth
quarter and full fiscal year 2022, as well as Impairment and
Acceleration Program costs for the fourth quarter and full fiscal
year 2021 and the effects of certain items related to the tax
benefit the Company received under the CARES Act for the full
fiscal year 2021. The financial information presented above has
also been presented both including and excluding the impact of the
14th and 53rd week for the fiscal fourth quarter and full 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 2019 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.
Schedule 7: Condensed Consolidated Balance Sheets
TAPESTRY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
At July 2, 2022 and July 3,
2021 (in millions)
(unaudited) (audited) July 2, 2022
July 3, 2021 ASSETS Cash, cash
equivalents and short-term investments
$
953.2
$
2,015.8
Receivables
252.3
200.2
Inventories
994.2
734.8
Other current assets
374.1
424.5
Total current assets
2,573.8
3,375.3
Property and equipment, net
544.4
678.1
Lease right-of-use assets
1,281.6
1,496.6
Other noncurrent assets
2,865.5
2,832.4
Total assets
$
7,265.3
$
8,382.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable
$
520.7
$
445.2
Accrued liabilities
628.2
661.2
Short-term lease liabilities
288.7
319.4
Current debt
31.2
-
Total current liabilities
1,468.8
1,425.8
Long-term debt
1,659.2
1,590.7
Long-term lease liabilities
1,282.3
1,525.9
Other liabilities
569.5
580.7
Stockholders' equity
2,285.5
3,259.3
Total liabilities and stockholders' equity
$
7,265.3
$
8,382.4
Schedule 8: Condensed Consolidated Statement of Cash
Flows
TAPESTRY, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended July 2, 2022 and July
3, 2021 (in
millions) (unaudited) (audited)
July 2, 2022 July 3, 2021 Cash Flows from
Operating Activities Net income (loss)
$
856.3
$
834.2
Adjustments to reconcile net income (loss) to net cash flows from
operating activities: Depreciation and
amortization
195.3
218.7
Covid-19 related impairment charges
-
45.8
Other non-cash items
168.4
(5.3
)
Changes in operating assets and liabilities
(366.8
)
230.3
Net cash provided by operating activities
853.2
1,323.7
Cash Flows from Investing
Activities Purchases of property and
equipment
(93.9
)
(116.0
)
Purchase of investments
(540.4
)
(0.7
)
Other items
380.7
25.7
Net cash provided by (used in) investing activities
(253.6
)
(91.0
)
Cash Flows from Financing
Activities Payment of dividends
(264.4
)
-
Repurchase of common stock
(1,600.0
)
-
Proceeds from debt, net of discount
998.5
-
Payment of debt extinguishment costs
(50.7
)
-
Repayment of debt
(900.0
)
(711.5
)
Other items
38.5
45.5
Net cash provided by (used in) financing activities
(1,778.1
)
(666.0
)
Effect of exchange rate on cash and cash equivalents
(39.4
)
14.7
Net (decrease) increase in cash and
cash equivalents
(1,217.9
)
581.4
Cash and cash equivalents at beginning of period
$
2,007.7
$
1,426.3
Cash and cash equivalents at end of period
$
789.8
$
2,007.7
Schedule 9: Store Count by Brand – 4Q22
TAPESTRY, INC. STORE COUNT At April
2, 2022 and July 2, 2022 (unaudited) As of As of
Directly-Operated Store Count:
April 2, 2022 Openings (Closures) July 2,
2022 Coach
North America
346
-
(3)
343
International
606
6
(10)
602
Kate Spade
North America
207
-
-
207
International
192
4
(5)
191
Stuart Weitzman
North America
40
-
(1)
39
International
57
4
-
61
Schedule 10: Store Count by Brand – FY22
TAPESTRY, INC. STORE COUNT At July
3, 2021 and July 2, 2022 (unaudited) As of As of
Directly-Operated Store Count:
July 3, 2021 Openings (Closures) July 2,
2022 Coach
North America
354
3
(14)
343
International
585
45
(28)
602
Kate Spade
North America
210
-
(3)
207
International
197
12
(18)
191
Stuart Weitzman
North America
48
-
(9)
39
International
56
5
-
61
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220818005188/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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