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Link to Download Tapestry’s Q4 and Fiscal Year 2023 Earnings Presentation, Including Brand Highlights
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230817769329/en/
(Photo: Business Wire)
“Building on our strong foundation, we are focused on the future. We remain steadfast in our commitment to deliver revenue and profit gains across our current portfolio where our runway is significant. Further, last week, we announced that we entered into a definitive agreement to acquire Capri Holdings Limited, establishing a new powerful global house of luxury and fashion brands that expands our portfolio reach across consumer segments, geographies, and product categories. Importantly, the acquisition is expected to be immediately accretive to adjusted earnings and support enhanced cash flow and financial returns. By bringing together six iconic brands with a heritage in design and craftsmanship, and leveraging our modern consumer engagement platform, we will drive greater innovation, consumer connectivity, and cultural relevance, creating superior value for our consumers, employees, communities, and shareholders around the world.”
Throughout the fiscal year, the Company advanced its strategic priorities to:
Build Lasting Customer Relationships
Power Global Growth
Deliver Compelling Omni-Channel Experiences
Fuel Fashion Innovation and Product Excellence
Overview of Fiscal 2023 Fourth Quarter Financial Results
Overview of Fiscal 2023 Full Year Financial Results
Balance Sheet and Cash Flow Highlights
Shareholder Return Programs
In Fiscal 2023, as anticipated, Tapestry returned approximately
In Fiscal 2024, as previously announced, the Board of Directors approved a quarterly cash dividend of
Financial Outlook
The following details of the Company’s fiscal year 2024 outlook are provided on a non-GAAP basis:
Please note this outlook assumes the following:
Given the dynamic nature of these and other external factors, financial results could differ materially from the outlook provided.
Financial 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 acquisition, financing, purchase accounting and integration-related charges and Company costs associated with the acquisition of Capri Holdings Limited have not yet occurred and cannot be reasonably estimated at this time. Accordingly, a reconciliation of the Company’s non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort.
Conference Call Details
The Company will host a conference call to review these results at
Upcoming Events
The Company expects to report Fiscal 2024 first quarter results on
To receive notification of future announcements, please register at www.tapestry.com/investors ("Subscribe to E-Mail Alerts").
About
Our global house of brands unites the magic of Coach, kate spade new york and
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 “Financial Outlook,” statements regarding long term performance, statements regarding the Company’s capital deployment plans, including anticipated annual dividend rates and share repurchase plans, and statements that can be identified by the use of forward-looking terminology such as "may," "will," “can,” "should," "expect," “expectation,” “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,” “view,” “we can stretch 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 economic conditions, the impact of the Covid-19 pandemic, 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 ability to successfully implement the initiatives under our 2025 growth strategy, our ability to control costs, the effects of existing and new competition in the marketplace, risks associated with operating in international markets and our global sourcing activities, the risk of cybersecurity threats and privacy or data security breaches, the impact of tax and other legislation our ability to achieve intended benefits, cost savings and synergies from acquisitions including our proposed acquisition of Capri Holdings Limited (“Capri”), risks related to the availability of funding for our bridge loan facility associated with our proposed acquisition of Capri, the impact of pending and potential future legal proceedings, 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 and its other filings with the
Schedule 1: Consolidated Statement of Operations
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
For the Quarters and Years Ended |
|||||||||||||
(in millions, except per share data) | |||||||||||||
(unaudited) | (unaudited) | (audited) | |||||||||||
QUARTER ENDED | YEAR ENDED | ||||||||||||
2023 |
2022 |
2023 |
2022 |
||||||||||
Net sales |
$ |
1,619.5 |
$ |
1,624.9 |
$ |
6,660.9 |
$ |
6,684.5 |
|||||
Cost of sales |
|
446.8 |
|
505.7 |
|
1,946.0 |
|
2,034.1 |
|||||
Gross Profit |
|
1,172.7 |
|
1,119.2 |
|
4,714.9 |
|
4,650.4 |
|||||
Selling, general and administrative expenses |
|
899.1 |
|
870.7 |
|
3,542.5 |
|
3,474.6 |
|||||
Operating income |
|
273.6 |
|
248.5 |
|
1,172.4 |
|
1,175.8 |
|||||
Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
53.7 |
|||||
Interest expense, net |
|
6.2 |
|
11.9 |
|
27.6 |
|
58.7 |
|||||
Other expense (income) |
|
0.6 |
|
8.1 |
|
1.7 |
|
16.4 |
|||||
Income before provision for income taxes |
|
266.8 |
|
228.5 |
|
1,143.1 |
|
1,047.0 |
|||||
Provision for income taxes |
|
42.7 |
|
39.7 |
|
207.1 |
|
190.7 |
|||||
Net income |
$ |
224.1 |
$ |
188.8 |
$ |
936.0 |
$ |
856.3 |
|||||
Net income per share: | |||||||||||||
Basic |
$ |
0.97 |
$ |
0.76 |
$ |
3.96 |
$ |
3.24 |
|||||
Diluted |
$ |
0.95 |
$ |
0.75 |
$ |
3.88 |
$ |
3.17 |
|||||
Shares used in computing net income (loss) per share: | |||||||||||||
Basic |
|
230.2 |
|
247.6 |
|
236.4 |
|
264.3 |
|||||
Diluted |
|
235.4 |
|
252.3 |
|
241.3 |
|
270.1 |
Schedule 2: Detail to
DETAIL TO |
|||||||||
For the Quarters and Years Ended |
|||||||||
(in millions) | |||||||||
(unaudited) | |||||||||
QUARTER ENDED | |||||||||
2023 |
2022 |
% Change vs. FY22 | Constant Currency % Change vs. FY22 |
||||||
Coach |
$ |
1,247.4 |
$ |
1,209.0 |
3 % |
5 % |
|||
|
309.5 |
|
344.1 |
(10)% |
(9)% |
||||
|
62.6 |
|
71.8 |
(13)% |
(11)% |
||||
Total Tapestry |
$ |
1,619.5 |
$ |
1,624.9 |
— % |
1 % |
|||
YEAR ENDED | |||||||||
2023 |
2022 |
% Change vs. FY22 | Constant Currency % Change vs. FY22 |
||||||
Coach |
$ |
4,960.4 |
$ |
4,921.3 |
1 % |
4 % |
|||
|
1,418.9 |
|
1,445.5 |
(2)% |
— % |
||||
|
281.6 |
|
317.7 |
(11)% |
(9)% |
||||
Total Tapestry |
$ |
6,660.9 |
$ |
6,684.5 |
— % |
3 % |
Schedule 3: Condensed Consolidated Segment Data and Items Affecting Comparability
CONSOLIDATED SEGMENT DATA | |||||
(in millions, except per share data) | |||||
(unaudited) | |||||
Quarter Ended | Year Ended | ||||
GAAP Basis(1) (As Reported) |
GAAP Basis(1) (As Reported) |
||||
2023 |
2023 |
||||
Gross profit | |||||
Coach |
|
936.4 |
|
3,647.1 |
|
|
199.1 |
|
900.1 |
||
|
37.2 |
|
167.7 |
||
Gross profit |
$ |
1,172.7 |
$ |
4,714.9 |
|
SG&A expenses | |||||
Coach |
|
541.1 |
|
2,117.2 |
|
|
184.3 |
|
785.1 |
||
|
40.3 |
|
174.4 |
||
Corporate |
|
133.4 |
|
465.8 |
|
SG&A expenses |
$ |
899.1 |
$ |
3,542.5 |
|
Operating income (loss) | |||||
Coach |
|
395.3 |
|
1,529.9 |
|
|
14.8 |
|
115.0 |
||
|
(3.1) |
|
(6.7) |
||
Corporate |
|
(133.4) |
|
(465.8) |
|
Operating income (loss) |
$ |
273.6 |
$ |
1,172.4 |
|
Provision for income taxes |
|
42.7 |
|
207.1 |
|
Net income (loss) |
$ |
224.1 |
$ |
936.0 |
|
Net income (loss) per diluted common share |
$ |
0.95 |
$ |
3.88 |
|
(1) There were no items affecting comparability in the quarter and fiscal year ended on |
CONSOLIDATED SEGMENT DATA, AND | |||||||||||||||
GAAP TO NON-GAAP RECONCILIATION | |||||||||||||||
(in millions, except per share data) | |||||||||||||||
(unaudited) | |||||||||||||||
For the Quarter Ended |
|
For the Year Ended |
|||||||||||||
Items Affecting Comparability |
|
Items Affecting Comparability |
|||||||||||||
GAAP Basis
|
Acceleration
|
Non-GAAP Basis
|
|
GAAP Basis
|
Debt
|
Acceleration
|
Non-GAAP Basis
|
||||||||
Gross Profit | |||||||||||||||
Coach |
|
864.6 |
|
- |
|
864.6 |
|
3,553.8 |
|
- |
|
- |
|
3,553.8 |
|
|
215.4 |
|
- |
|
215.4 |
|
912.0 |
|
- |
|
- |
|
912.0 |
||
|
39.2 |
|
- |
|
39.2 |
|
184.6 |
|
- |
|
- |
|
184.6 |
||
Gross profit |
|
1,119.2 |
|
- |
|
1,119.2 |
|
4,650.4 |
|
- |
|
- |
|
4,650.4 |
|
SG&A expenses | |||||||||||||||
Coach |
|
515.2 |
|
2.7 |
|
512.5 |
|
2,079.9 |
|
- |
|
6.7 |
|
2,073.2 |
|
|
189.2 |
|
1.7 |
|
187.5 |
|
754.6 |
|
- |
|
5.9 |
|
748.7 |
||
|
42.9 |
|
0.4 |
|
42.5 |
|
182.8 |
|
- |
|
3.6 |
|
179.2 |
||
Corporate |
|
123.4 |
|
6.3 |
|
117.1 |
|
457.3 |
|
- |
|
26.6 |
|
430.7 |
|
SG&A expenses |
|
870.7 |
|
11.1 |
|
859.6 |
|
3,474.6 |
|
- |
|
42.8 |
|
3,431.8 |
|
Operating income (loss) | |||||||||||||||
Coach |
|
349.4 |
|
(2.7) |
|
352.1 |
|
1,473.9 |
|
- |
|
(6.7) |
|
1,480.6 |
|
|
26.2 |
|
(1.7) |
|
27.9 |
|
157.4 |
|
- |
|
(5.9) |
|
163.3 |
||
|
(3.7) |
|
(0.4) |
|
(3.3) |
|
1.8 |
|
- |
|
(3.6) |
|
5.4 |
||
Corporate |
|
(123.4) |
|
(6.3) |
|
(117.1) |
|
(457.3) |
|
- |
|
(26.6) |
|
(430.7) |
|
Operating income (loss) |
|
248.5 |
|
(11.1) |
|
259.6 |
|
1,175.8 |
|
- |
|
(42.8) |
|
1,218.6 |
|
Loss on extinguishment of debt |
— |
— |
— |
$ |
53.7 |
$ |
53.7 |
$ |
— |
|
— |
||||
Provision for income taxes |
|
39.7 |
|
(2.7) |
|
42.4 |
|
190.7 |
|
(12.9) |
|
(3.4) |
|
207.0 |
|
Net income (loss) |
$ |
188.8 |
$ |
(8.4) |
$ |
197.2 |
$ |
856.3 |
$ |
(40.8) |
$ |
(39.4) |
$ |
936.5 |
|
Net income (loss) per diluted common share |
$ |
0.75 |
$ |
(0.03) |
$ |
0.78 |
$ |
3.17 |
$ |
(0.15) |
$ |
(0.15) |
$ |
3.47 |
Management utilizes 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.
The Company reports information in accordance with
The Company operates on a global basis and reports financial results in
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.
The segment gross profit and segment SG&A expenses presented in the Condensed Consolidated Segment Data, and GAAP to non-GAAP Reconciliation Table above, as well as SG&A expense ratio, and operating margin, are considered non-GAAP measures. These measures have been presented both including and excluding Acceleration Program costs for the quarter and fiscal year ended on
There were no items affecting comparability in the quarter and fiscal year ended on
The Company also presents free cash flow, which is a non-GAAP measure. Free cash flow is calculated by taking the “Net cash flows provided by (used in) operating activities” less “Purchases of property and equipment” from the Condensed Consolidated Statement of Cash Flows. The Company believes that free cash flow is an important liquidity measure of the cash that is available after capital expenditures for operational expenses and investment in our business. The Company believes that free cash flow is useful to investors because it measures the Company’s ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet, invest in future growth and return capital to stockholders.
Schedule 4: Condensed Consolidated Balance Sheets
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
At |
||||||
(in millions) | ||||||
(unaudited) | (audited) | |||||
2023 |
2022 |
|||||
ASSETS | ||||||
Cash, cash equivalents and short-term investments |
$ |
741.5 |
$ |
953.2 |
||
Receivables |
|
211.5 |
|
252.3 |
||
Inventories |
|
919.5 |
|
994.2 |
||
Other current assets |
|
491.0 |
|
374.1 |
||
Total current assets |
|
2,363.5 |
|
2,573.8 |
||
Property and equipment, net |
|
564.5 |
|
544.4 |
||
Lease right-of-use assets |
|
1,378.7 |
|
1,281.6 |
||
Other noncurrent assets |
|
2,810.1 |
|
2,865.5 |
||
Total assets |
|
7,116.8 |
|
7,265.3 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Accounts payable |
|
416.9 |
|
520.7 |
||
Accrued liabilities |
|
547.1 |
|
628.2 |
||
Short-term lease liabilities |
|
297.5 |
|
288.7 |
||
Current debt |
|
25.0 |
|
31.2 |
||
Total current liabilities |
|
1,286.5 |
|
1,468.8 |
||
Long-term debt |
|
1,635.8 |
|
1,659.2 |
||
Long-term lease liabilities |
|
1,333.7 |
|
1,282.3 |
||
Other liabilities |
|
583.0 |
|
569.5 |
||
Stockholders' equity |
|
2,277.8 |
|
2,285.5 |
||
Total liabilities and stockholders' equity |
|
7,116.8 |
|
7,265.3 |
Schedule 5: Condensed Consolidated Statement of Cash Flows
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
For the fiscal years ended |
|||||||
(in millions) | |||||||
(unaudited) | (audited) | ||||||
2023 |
2022 |
||||||
Cash Flows from Operating Activities | |||||||
Net income (loss) |
$ |
936.0 |
$ |
856.3 |
|||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||||||
Depreciation and amortization |
|
182.2 |
|
195.3 |
|||
Other non-cash items |
|
73.8 |
|
168.4 |
|||
Changes in operating assets and liabilities |
|
(216.8) |
|
(366.8) |
|||
Net cash provided by (used in) operating activities |
|
975.2 |
|
853.2 |
|||
Cash Flows from Investing Activities | |||||||
Purchases of property and equipment |
|
(184.2) |
|
(93.9) |
|||
Purchases of investments |
|
(6.7) |
|
(540.4) |
|||
Other items |
|
196.6 |
|
380.7 |
|||
Net cash provided by (used in) investing activities |
|
5.7 |
|
(253.6) |
|||
Cash Flows from Financing Activities | |||||||
Dividend payments |
|
(283.3) |
|
(264.4) |
|||
Repurchase of common stock |
|
(703.5) |
|
(1,600.0) |
|||
Proceeds from issuance of debt, net of discount |
|
— |
|
998.5 |
|||
Payment of debt extinguishment costs |
|
— |
|
(50.7) |
|||
Repayment of debt |
|
(31.2) |
|
(900.0) |
|||
Other items |
|
(17.9) |
|
38.5 |
|||
Net cash provided by (used in) financing activities |
|
(1,035.9) |
|
(1,778.1) |
|||
Effect of exchange rate on cash and cash equivalents |
|
(8.7) |
|
(39.4) |
|||
Net (decrease) increase in cash and cash equivalents |
|
(63.7) |
|
(1,217.9) |
|||
Cash and cash equivalents at beginning of year |
$ |
789.8 |
$ |
2,007.7 |
|||
Cash and cash equivalents at end of year |
$ |
726.1 |
$ |
789.8 |
Schedule 6: Store Count by Brand
STORE COUNT | ||||
At |
||||
(unaudited) | ||||
As of | As of | |||
Directly-Operated Store Count: | Openings | (Closures) | ||
Coach | ||||
330 |
2 |
(2) |
330 |
|
International |
604 |
14 |
(9) |
609 |
206 |
— |
(1) |
205 |
|
International |
193 |
3 |
(4) |
192 |
36 |
— |
— |
36 |
|
International |
59 |
— |
(2) |
57 |
STORE COUNT | ||||
At |
||||
(unaudited) | ||||
As of | As of | |||
Directly-Operated Store Count: | Openings | (Closures) | ||
Coach | ||||
343 |
4 |
(17) |
330 |
|
International |
602 |
38 |
(31) |
609 |
207 |
2 |
(4) |
205 |
|
International |
191 |
15 |
(14) |
192 |
39 |
— |
(3) |
36 |
|
International |
61 |
4 |
(8) |
57 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230817769329/en/
Media:
Chief Communications Officer
212/629-2618
aresnick@tapestry.com
Analysts and Investors:
Global Head of Investor Relations
212/946-7252
ccolone@tapestry.com
212/946-8183
Director of Investor Relations
kmueller@tapestry.com
Source: