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Announces
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190509005239/en/
(Photo: Business Wire)
Discussion of Financial Results:
Share Repurchase Authorization:
The Company announced its Board of Directors has authorized the repurchase of up to
Mr. Luis continued, “We’re also excited to announce the approval of a
Non-GAAP Reconciliation:
During the fiscal third quarter, the Company recorded certain charges associated with its Integration and Acquisition activities and ERP implementation efforts as well as the benefit of Tax Legislation changes. Taken together, these items decreased the Company’s third quarter reported net income by approximately
Overview of Third Quarter 2019
Third fiscal quarter results in each of the Company’s reportable segments were as follows:
Coach Third Quarter of 2019 Results:
Kate Spade Third Quarter of 2019 Results:
Stuart Weitzman Third Quarter of 2019 Results:
Mr. Luis added, “As we look ahead, we are committed to executing our strategic plan and achieving our near-term and long-range financial targets. This includes our expectation of delivering positive comps at both Coach and
“We are confident in the clarity of our vision, the strength of our team and the benefits of our global, multi-brand platform. Our model is distinctive – we are brand-led and consumer-centric – with a culture built upon the values of optimism, innovation and inclusivity. Each of our brands have differentiated attitudes, bringing diversification to our portfolio. At the same time, each can leverage Tapestry’s core capabilities and infrastructure to drive meaningful synergies. Taken together, we are uniquely positioned to capture the vast opportunities within the attractive and growing global accessories, footwear and outerwear markets,” Mr. Luis concluded.
Fiscal Year 2019 Outlook
The following fiscal 2019 outlook is provided on a non-GAAP basis and replaces all previous guidance.
The Company expects revenues for fiscal 2019 to increase at a low-to-mid-single-digit rate from fiscal 2018.
In addition, the Company projects earnings per diluted share in the range of
Fiscal Year 2019 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 Integration and Acquisition and the costs associated with the Company’s ERP implementation have not yet occurred. 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 2019 guidance.
This fiscal 2019 non-GAAP guidance excludes (1) expected pre-tax charges of approximately
Conference Call Details:
The Company will host a conference call to review these results at
The Company expects to report fiscal 2019 fourth quarter and full year financial results on
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 2019 Outlook,” as well as statements that can be identified by the use of forward-looking terminology such as "may," "will," “can,” "should," "expect," "intend," "estimate," "continue," "project," "guidance," "forecast," “outlook,” "anticipate," “excited,” “moving,” “leveraging,” “capitalizing,” “developing,” “drive,” “targeting,” “assume,” “plan,” “build,” “pursue,” “maintain,” “on track,” “well positioned to,” “look forward to,” “looking ahead,” “to acquire,” “achieve,” “strategic vision,” “growth opportunities” 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 expected economic trends, the ability to anticipate consumer preferences, the ability to control costs and successfully execute our ERP implementation and growth strategies, our ability to achieve intended benefits, cost savings and synergies from acquisitions, the risk of cybersecurity threats and privacy or data security breaches, and the impact of tax legislation, etc.Please refer to the Company’s latest Annual Report on Form 10-K and its other filings with the
TAPESTRY, INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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For the Quarters and Nine Months Ended March 30, 2019 and March 31, 2018 |
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(in millions, except per share data) |
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(unaudited) | (unaudited) | ||||||||||||||||
QUARTER ENDED | NINE MONTHS ENDED | ||||||||||||||||
March 30,
2019 |
March 31,
2018 |
March 30,
2019 |
March 31,
2018 |
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Net sales | $ | 1,331.4 | $ | 1,322.4 | $ | 4,513.4 | $ | 4,396.3 | |||||||||
Cost of sales | 415.5 | 414.8 | 1,458.9 | 1,549.6 | |||||||||||||
Gross profit | 915.9 | 907.6 | 3,054.5 | 2,846.7 | |||||||||||||
Selling, general and administrative expenses | 810.1 | 748.6 | 2,410.3 | 2,363.1 | |||||||||||||
Operating income | 105.8 | 159.0 | 644.2 | 483.6 | |||||||||||||
Interest expense, net | 10.6 | 16.9 | 36.9 | 59.6 | |||||||||||||
Income before provision for income taxes | 95.2 | 142.1 | 607.3 | 424.0 | |||||||||||||
Provision for income taxes | (22.2 | ) | 1.8 | 112.8 | 238.2 | ||||||||||||
Net income | $ | 117.4 | $ | 140.3 | $ | 494.5 | $ | 185.8 | |||||||||
Net income per share: | |||||||||||||||||
Basic | $ | 0.40 | $ | 0.49 | $ | 1.71 | $ | 0.65 | |||||||||
Diluted | $ | 0.40 | $ | 0.48 | $ | 1.70 | $ | 0.65 | |||||||||
Shares used in computing net income per share: | |||||||||||||||||
Basic | 290.0 | 286.2 | 289.5 | 284.7 | |||||||||||||
Diluted | 290.9 | 290.1 | 291.2 | 287.8 | |||||||||||||
TAPESTRY, INC. |
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GAAP TO NON-GAAP RECONCILIATION |
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For the Quarters Ended March 30, 2019 and March 31, 2018 |
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(in millions, except per share data) |
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(unaudited) |
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March 30, 2019 | ||||||||||||||||||||||||
GAAP Basis |
ERP |
Integration & |
Impact of Tax |
Non-GAAP Basis |
||||||||||||||||||||
Gross profit | $ | 915.9 | $ | - | $ | (5.0 | ) | $ | - | $ | 920.9 | |||||||||||||
Selling, general and administrative expenses | 810.1 | 14.7 | 15.6 | - | 779.8 | |||||||||||||||||||
Operating income | 105.8 | (14.7 | ) | (20.6 | ) | - | 141.1 | |||||||||||||||||
Income before provision for income taxes | 95.2 | (14.7 | ) | (20.6 | ) | - | 130.5 | |||||||||||||||||
Provision for income taxes | (22.2 | ) | (3.7 | ) | (2.4 | ) | (24.9 | ) | 8.8 | |||||||||||||||
Net income | 117.4 | (11.0 | ) | (18.2 | ) | 24.9 | 121.7 | |||||||||||||||||
Diluted net income per share | 0.40 | (0.05 | ) | (0.06 | ) | 0.09 | 0.42 | |||||||||||||||||
March 31, 2018 | ||||||||||||||||||||||||
GAAP Basis |
Operational |
Integration & |
Impact of Tax |
Non-GAAP Basis |
||||||||||||||||||||
Gross profit | $ | 907.6 | $ | - | $ | (4.1 | ) | $ | - | $ | 911.7 | |||||||||||||
Selling, general and administrative expenses | 748.6 | 2.9 | 18.3 | - | 727.4 | |||||||||||||||||||
Operating income | 159.0 | (2.9 | ) | (22.4 | ) | - | 184.3 | |||||||||||||||||
Income before provision for income taxes | 142.1 | (2.9 | ) | (22.4 | ) | - | 167.4 | |||||||||||||||||
Provision for income taxes | 1.8 | (1.0 | ) | (12.1 | ) | 5.4 | 9.5 | |||||||||||||||||
Net income | 140.3 | (1.9 | ) | (10.3 | ) | (5.4 | ) | 157.9 | ||||||||||||||||
Diluted net income per share | 0.48 | - | (0.04 | ) | (0.02 | ) | 0.54 |
(1) Amounts as of March 30, 2019 represent technology implementation costs. | |
(2) Amounts as of March 30, 2019 and March 31, 2018 represent charges primarily attributable to acquisition and integration costs related to the purchase of Kate Spade & Company, certain distributors for the Coach and Stuart Weitzman brands and assumed operational control of Kate Spade joint ventures. These charges include: | |
- Organization-related costs - Limited life purchase accounting adjustments - Professional fees |
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(3) Amounts as of March 30, 2019 represent a tax benefit primarily due to the transition tax related to foreign earnings deemed to be repatriated. | |
Amounts as of March 31, 2018 represent charges due to the transition tax related to foreign earnings deemed to be repatriated partially offset by the re-measurement of deferred tax assets and liabilities. | |
(4) Amounts as of March 31, 2018 represent technology infrastructure costs. | |
TAPESTRY, INC. |
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GAAP TO NON-GAAP RECONCILIATION |
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For the Nine Months Ended March 30, 2019 and March 31, 2018 |
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(in millions, except per share data) |
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(unaudited) |
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March 30, 2019 | ||||||||||||||||||||||||
GAAP Basis |
ERP |
Integration & |
Impact of Tax |
Non-GAAP Basis |
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Gross profit | $ | 3,054.5 | $ | - | $ | (9.1 | ) | $ | - | $ | 3,063.6 | |||||||||||||
Selling, general and administrative expenses | 2,410.3 | 25.1 | 46.2 | - | 2,339.0 | |||||||||||||||||||
Operating income | 644.2 | (25.1 | ) | (55.3 | ) | - | 724.6 | |||||||||||||||||
Income before provision for income taxes | 607.3 | (25.1 | ) | (55.3 | ) | - | 687.7 | |||||||||||||||||
Provision for income taxes | 112.8 | (6.3 | ) | (4.5 | ) | 9.2 | 114.4 | |||||||||||||||||
Net income | 494.5 | (18.8 | ) | (50.8 | ) | (9.2 | ) | 573.3 | ||||||||||||||||
Diluted net income per share | 1.70 | (0.06 | ) | (0.17 | ) | (0.04 | ) | 1.97 | ||||||||||||||||
March 31, 2018 | ||||||||||||||||||||||||
GAAP Basis |
Operational |
Integration & |
Impact of Tax |
Non-GAAP Basis |
||||||||||||||||||||
Gross profit | $ | 2,846.7 | $ | - | $ | (110.9 | ) | $ | - | $ | 2,957.6 | |||||||||||||
Selling, general and administrative expenses | 2,363.1 | 9.5 | 160.4 | - | 2,193.2 | |||||||||||||||||||
Operating income | 483.6 | (9.5 | ) | (271.3 | ) | - | 764.4 | |||||||||||||||||
Income before provision for income taxes | 424.0 | (9.5 | ) | (271.3 | ) | - | 704.8 | |||||||||||||||||
Provision for income taxes | 238.2 | (3.1 | ) | (79.3 | ) | 199.6 | 121.0 | |||||||||||||||||
Net income | 185.8 | (6.4 | ) | (192.0 | ) | (199.6 | ) | 583.8 | ||||||||||||||||
Diluted net income per share | 0.65 | (0.02 | ) | (0.67 | ) | (0.69 | ) | 2.03 | ||||||||||||||||
(1) Amounts as of March 30, 2019 primarily represent technology implementation costs. |
(2) Amounts as of March 30, 2019 and March 31, 2018 represent charges primarily attributable to acquisition and integration costs related to the purchase of Kate Spade & Company, certain distributors of the Coach and Stuart Weitzman brands and assumed operational control of Kate Spade joint ventures. These charges include: |
- Limited life purchase accounting adjustments - Professional fees - Severance and other costs related to contractual payments with certain Kate Spade executives - Organization-related costs - Inventory reserves established for the destruction of inventory |
(3) Amounts as of March 30, 2019 represent charges primarily due to the transition tax related to foreign earnings deemed to be repatriated. |
Amounts as of March 31, 2018 represent charges due to the transition tax related to foreign earnings deemed to be repatriated partially offset by the re-measurement of deferred tax assets and liabilities. |
(4) Amounts as of March 31, 2018 primarily represent technology infrastructure costs. |
TAPESTRY, INC. |
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GAAP TO NON-GAAP RECONCILIATION - FOR SEGMENT RESULTS |
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For the Quarters Ended March 30, 2019 and March 31, 2018 |
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(in millions) |
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(unaudited) |
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March 30, 2019 | |||||||||||||||||||||||
GAAP | Coach | Kate Spade | Stuart Weitzman | Corporate | Non-GAAP | ||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Integration & Acquisition | - | (4.3 | ) | (0.7 | ) | - | |||||||||||||||||
Gross profit | $ | 915.9 | $ | - | $ | (4.3 | ) | $ | (0.7 | ) | $ | - | $ | 920.9 | |||||||||
SG&A expenses | |||||||||||||||||||||||
Integration & Acquisition | 5.5 | 3.0 | 0.1 | 7.0 | |||||||||||||||||||
ERP Implementation | - | - | - | 14.7 | |||||||||||||||||||
SG&A expenses | $ | 810.1 | $ | 5.5 | $ | 3.0 | $ | 0.1 | $ | 21.7 | $ | 779.8 | |||||||||||
Operating income | $ | 105.8 | $ | (5.5 | ) | $ | (7.3 | ) | $ | (0.8 | ) | $ | (21.7 | ) | $ | 141.1 | |||||||
March 31, 2018 | |||||||||||||||||||||||
GAAP | Coach | Kate Spade | Stuart Weitzman | Corporate | Non-GAAP | ||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Integration & Acquisition | (1.0 | ) | (1.0 | ) | (2.1 | ) | - | ||||||||||||||||
Gross profit | $ | 907.6 | $ | (1.0 | ) | $ | (1.0 | ) | $ | (2.1 | ) | $ | - | $ | 911.7 | ||||||||
SG&A expenses | |||||||||||||||||||||||
Integration & Acquisition | 0.2 | 9.1 | 4.7 | 4.3 | |||||||||||||||||||
Operational Efficiency Plan | - | - | - | 2.9 | |||||||||||||||||||
SG&A expenses | $ | 748.6 | $ | 0.2 | $ | 9.1 | $ | 4.7 | $ | 7.2 | $ | 727.4 | |||||||||||
Operating income | $ | 159.0 | $ | (1.2 | ) | $ | (10.1 | ) | $ | (6.8 | ) | $ | (7.2 | ) | $ | 184.3 | |||||||
TAPESTRY, INC. |
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GAAP TO NON-GAAP RECONCILIATION - FOR SEGMENT RESULTS |
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For the Nine Months Ended March 30, 2019 and March 31, 2018 |
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(in millions) |
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(unaudited) |
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March 30, 2019 | |||||||||||||||||||||||
GAAP | Coach | Kate Spade | Stuart Weitzman | Corporate | Non-GAAP | ||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Integration & Acquisition | (2.0 | ) | (5.4 | ) | (1.7 | ) | - | ||||||||||||||||
Gross profit | $ | 3,054.5 | $ | (2.0 | ) | $ | (5.4 | ) | $ | (1.7 | ) | $ | - | $ | 3,063.6 | ||||||||
SG&A expenses | |||||||||||||||||||||||
Integration & Acquisition | 5.5 | 10.1 | 12.2 | 18.4 | |||||||||||||||||||
ERP Implementation | - | - | - | 25.1 | |||||||||||||||||||
SG&A expenses | $ | 2,410.3 | $ | 5.5 | $ | 10.1 | $ | 12.2 | $ | 43.5 | $ | 2,339.0 | |||||||||||
Operating income | $ | 644.2 | $ | (7.5 | ) | $ | (15.5 | ) | $ | (13.9 | ) | $ | (43.5 | ) | $ | 724.6 | |||||||
March 31, 2018 | |||||||||||||||||||||||
GAAP | Coach | Kate Spade | Stuart Weitzman | Corporate | Non-GAAP | ||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Integration & Acquisition | (1.0 | ) | (106.4 | ) | (3.5 | ) | - | ||||||||||||||||
Gross profit | $ | 2,846.7 | $ | (1.0 | ) | $ | (106.4 | ) | $ | (3.5 | ) | $ | - | $ | 2,957.6 | ||||||||
SG&A expenses | |||||||||||||||||||||||
Integration & Acquisition | 0.2 | 106.6 | 6.5 | 47.1 | |||||||||||||||||||
Operational Efficiency Plan | - | - | - | 9.5 | |||||||||||||||||||
SG&A expenses | $ | 2,363.1 | $ | 0.2 | $ | 106.6 | $ | 6.5 | $ | 56.6 | $ | 2,193.2 | |||||||||||
Operating income | $ | 483.6 | $ | (1.2 | ) | $ | (213.0 | ) | $ | (10.0 | ) | $ | (56.6 | ) | $ | 764.4 | |||||||
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 Integration & Acquisition-Related Costs and ERP Implementation-Related costs for
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 and gross margin for the Stuart Weitzman 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 revenue results by translating current period revenue in local currency using the prior year period’s currency conversion rate.
Guidance for certain financial information for the fiscal year ending
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.
TAPESTRY, INC. |
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SEGMENT INFORMATION |
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For the Quarters and Nine Months Ended March 30, 2019 and March 31, 2018 |
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(in millions) |
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(unaudited) |
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Coach | Kate Spade | Stuart Weitzman | Corporate | Total | |||||||||||||||
Three Months Ended March 30, 2019 |
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Net sales | $ | 965.0 | $ | 281.1 | $ | 85.3 | $ | - | $ | 1,331.4 | |||||||||
Gross profit | 691.7 | 177.9 | 46.3 | - | 915.9 | ||||||||||||||
Operating income (loss) | 239.5 | 6.1 | (13.6 | ) | (126.2 | ) | 105.8 | ||||||||||||
Income (loss) before provision for income taxes | 239.5 | 6.1 | (13.6 | ) | (136.8 | ) | 95.2 | ||||||||||||
Three Months Ended March 31, 2018 |
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Net sales | $ | 969.3 | $ | 269.3 | $ | 83.8 | $ | - | $ | 1,322.4 | |||||||||
Gross profit | 691.3 | 171.0 | 45.3 | - | 907.6 | ||||||||||||||
Operating income (loss) | 250.4 | 12.7 | (11.0 | ) | (93.1 | ) | 159.0 | ||||||||||||
Income (loss) before provision for income taxes | 250.4 | 12.7 | (11.0 | ) | (110.0 | ) | 142.1 | ||||||||||||
Nine Months Ended March 30, 2019 |
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Net sales | $ | 3,174.3 | 1,034.9 | $ | 304.2 | $ | - | $ | 4,513.4 | ||||||||||
Gross profit | 2,231.5 | 658.0 | 165.0 | - | 3,054.5 | ||||||||||||||
Operating income (loss) | 848.9 | 140.1 | (20.8 | ) | (324.0 | ) | 644.2 | ||||||||||||
Income (loss) before provision for income taxes | 848.9 | 140.1 | (20.8 | ) | (360.9 | ) | 607.3 | ||||||||||||
Nine Months Ended March 31, 2018 |
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Net sales | $ | 3,122.6 | $ | 972.8 | $ | 300.9 | $ | - | $ | 4,396.3 | |||||||||
Gross profit | 2,169.4 | 502.6 | 174.7 | - | 2,846.7 | ||||||||||||||
Operating income (loss) | 826.7 | (55.8 | ) | 19.7 | (307.0 | ) | 483.6 | ||||||||||||
Income (loss) before provision for income taxes | 826.7 | (55.8 | ) | 19.7 | (366.6 | ) | 424.0 | ||||||||||||
TAPESTRY, INC. |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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At March 30, 2019 and June 30, 2018 |
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(in millions) |
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(unaudited) | (audited) | ||||||
March 30,
2019 |
June 30,
2018 |
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ASSETS | |||||||
Cash, cash equivalents and short-term investments | $ | 1,337.3 | $ | 1,250.0 | |||
Receivables | 285.7 | 314.1 | |||||
Inventories | 811.1 | 673.8 | |||||
Other current assets | 228.3 | 194.7 | |||||
Total current assets | 2,662.4 | 2,432.6 | |||||
Property and equipment, net | 921.6 | 885.4 | |||||
Other noncurrent assets | 3,385.9 | 3,360.3 | |||||
Total assets | $ | 6,969.9 | $ | 6,678.3 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Accounts payable | $ | 260.6 | $ | 264.3 | |||
Accrued liabilities | 735.3 | 673.2 | |||||
Current debt | 0.7 | 0.7 | |||||
Total current liabilities | 996.6 | 938.2 | |||||
Long-term debt | 1,601.5 | 1,599.9 | |||||
Other liabilities | 840.6 | 895.6 | |||||
Stockholders' equity | 3,531.2 | 3,244.6 | |||||
Total liabilities and stockholders' equity | $ | 6,969.9 | $ | 6,678.3 | |||
TAPESTRY, INC. |
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STORE COUNT |
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At December 29, 2018 and March 30, 2019 |
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(unaudited) |
||||||||
As of | As of | |||||||
Directly-Operated Store Count: | December 29, 2018 | Openings | (Closures) | March 30, 2019 | ||||
Coach |
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North America | 399 | 1 | (8) | 392 | ||||
International | 585 | 11 | (7) | 589 | ||||
Kate Spade |
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North America | 218 | 1 | (7) | 212 | ||||
International | 176 | 7 | (2) | 181 | ||||
Stuart Weitzman |
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North America | 68 | 3 | (1) | 70 | ||||
International | 50 | 8 | - | 58 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190509005239/en/
Source:
Tapestry, Inc.
Analysts & Media:
Andrea Shaw Resnick
Interim Chief Financial Officer
Global Head of Investor Relations and Corporate Communications
212/629-2618
Christina Colone
Vice President, Investor Relations
212/946-7252