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Strong Operating Income & EPS Growth Demonstrates Progress on Acceleration Program
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20201029005394/en/
(Photo: Business Wire)
Acceleration Program Highlights
In the first fiscal quarter, the Company made meaningful progress against its previously announced Acceleration Program to sharpen its focus on the consumer, leverage data to lead with a digital-first mindset and transform into a leaner and more responsive organization:
Through these initiatives, the Company is better meeting the needs of each of its brands' unique customers to drive engagement and desire for its products among new and existing customers, creating a strong foundation for profitable expansion.
Overview of First Quarter 2021
Fiscal first quarter results by brand were as follows:
Coach First Quarter 2021 Results
Kate Spade First Quarter 2021 Results
Stuart Weitzman First Quarter 2021 Results
Non-GAAP Reconciliation
During the first fiscal quarter of 2021, the Company recorded the following on a reported basis:
Taken together, on a reported basis, these items decreased the Company’s operating income by
Conclusion
Fiscal Year 2021 Outlook
Due to the dynamic nature of the Covid-19 crisis and lack of visibility, the potential financial impact to our business cannot be accurately projected. Therefore, the Company is not providing detailed guidance for fiscal 2021. However, given the strong start to the fiscal year and assuming a continued steady recovery emerging from the pandemic, the Company continues to expect a topline inflection in the second half of the fiscal year, with both revenue and bottom line growth now projected for fiscal 2021.
The Company also notes that fiscal 2021 includes a 53rd week in its fourth fiscal quarter.
Conference Call Details
The Company will host a conference call to review these results at
Upcoming Events
The Company expects to report fiscal 2021 second quarter 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 2021 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, and 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,” “roadmap,” "anticipate," “excited,” “moving,” “leveraging,” “sharpening,” transforming,” “deepening,” “creating,” accelerating,” “enhancing,” leaning into,” “strengthening,” “developing,” “drive,” “targeting,” “assume,” “plan,” “build,” “pursue,” “maintain,” “progress,” “future,” “emerge,” “assure,” “on track,” “well positioned to,” “look forward to,” “looking ahead,” “to acquire,” “achieve,” “strategic vision,” “strategic agenda,” “long-term objectives,” “steady recovery,” “growth opportunities,” “view,” 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, 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, 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 legislation, etc. Please refer to the Company’s latest Annual Report on Form 10-K, quarterly report on 10-Q and its other filings with the
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CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
For the Quarters Ended |
||||||
(in millions, except per share data) | ||||||
(unaudited) | ||||||
QUARTER ENDED | ||||||
Net sales |
$ |
1,172.2 |
$ |
1,357.9 |
||
Cost of sales |
|
342.0 |
|
443.4 |
||
Gross profit |
|
830.2 |
|
914.5 |
||
Selling, general and administrative expenses |
|
628.0 |
|
862.9 |
||
Operating income (loss) |
|
202.2 |
|
51.6 |
||
Interest expense, net |
|
19.4 |
|
12.3 |
||
Other expense (income) |
|
(2.6) |
|
12.7 |
||
Income (loss) before provision for income taxes |
|
185.4 |
|
26.6 |
||
Provision for income taxes |
|
(46.3) |
|
6.6 |
||
Net income (loss) |
$ |
231.7 |
$ |
20.0 |
||
Net income (loss) per share: | ||||||
Basic |
$ |
0.84 |
$ |
0.07 |
||
Diluted |
$ |
0.83 |
$ |
0.07 |
||
Shares used in computing net income per share: | ||||||
Basic |
|
276.8 |
|
284.4 |
||
Diluted |
|
277.9 |
|
285.7 |
||
DETAIL TO |
||||||||||
For the Quarters Ended |
||||||||||
(in millions) | ||||||||||
(unaudited) | ||||||||||
QUARTER ENDED |
||||||||||
|
|
% Change |
Constant Currency %
|
|||||||
Coach |
$ |
875.4 |
$ |
965.9 |
(9)% |
(10)% |
||||
|
240.4 |
|
305.5 |
(21)% |
(21)% |
|||||
|
56.4 |
|
86.5 |
(35)% |
(35)% |
|||||
Total Tapestry |
$ |
1,172.2 |
$ |
1,357.9 |
(14)% |
(14)% |
||||
GAAP TO NON-GAAP RECONCILIATION | ||||||||||||
(in millions, except per share data) | ||||||||||||
(unaudited) | ||||||||||||
For the Quarter Ended |
||||||||||||
Items Affecting Comparability | ||||||||||||
GAAP Basis (As Reported) |
CARES Act Tax Impact |
Acceleration Program |
Non-GAAP Basis (Excluding Items) |
|||||||||
Cost of sales | ||||||||||||
Coach |
|
644.9 |
|
- |
|
- |
|
644.9 |
||||
|
154.1 |
|
- |
|
- |
|
154.1 |
|||||
|
31.2 |
|
- |
|
- |
|
31.2 |
|||||
Gross profit(1) |
$ |
830.2 |
$ |
- |
$ |
- |
$ |
830.2 |
||||
SG&A expenses | ||||||||||||
Coach |
|
374.9 |
|
- |
|
10.7 |
|
364.2 |
||||
|
130.9 |
|
- |
|
1.0 |
|
129.9 |
|||||
|
31.2 |
|
- |
|
(2.4) |
|
33.6 |
|||||
Corporate |
|
91.0 |
|
- |
|
17.3 |
|
73.7 |
||||
SG&A expenses |
$ |
628.0 |
$ |
- |
$ |
26.6 |
$ |
601.4 |
||||
Operating income (loss) | ||||||||||||
Coach |
|
270.0 |
|
- |
|
(10.7) |
|
280.7 |
||||
|
23.2 |
|
- |
|
(1.0) |
|
24.2 |
|||||
|
- |
|
- |
|
2.4 |
|
(2.4) |
|||||
Corporate |
|
(91.0) |
|
- |
|
(17.3) |
|
(73.7) |
||||
Operating income (loss) |
$ |
202.2 |
$ |
- |
$ |
(26.6) |
$ |
228.8 |
||||
Provision for income taxes |
|
(46.3) |
|
(91.7) |
|
(5.8) |
|
51.2 |
||||
Net income (loss) |
$ |
231.7 |
$ |
91.7 |
$ |
(20.8) |
$ |
160.8 |
||||
Net income (loss) per diluted common share |
$ |
0.83 |
$ |
0.33 |
$ |
(0.08) |
$ |
0.58 |
||||
(1) Adjustments within Gross profit are recorded within Cost of sales. | ||||||||||||
|
GAAP TO NON-GAAP RECONCILIATION | |||||||||||||||
(in millions, except per share data) | |||||||||||||||
(unaudited) | |||||||||||||||
For the Quarter Ended |
|||||||||||||||
Items Affecting Comparability | |||||||||||||||
GAAP Basis (As Reported) |
ERP Implementation | Organization-related & Integration costs |
Impairment | Non-GAAP Basis (Excluding Items) |
|||||||||||
Cost of sales | |||||||||||||||
Coach |
|
677.6 |
|
- |
|
(0.1) |
|
- |
|
677.7 |
|||||
|
191.5 |
|
- |
|
(1.2) |
|
- |
|
192.7 |
||||||
|
45.4 |
|
- |
|
(2.8) |
|
- |
|
48.2 |
||||||
Gross profit(1) |
$ |
914.5 |
$ |
- |
$ |
(4.1) |
$ |
- |
$ |
918.6 |
|||||
SG&A expenses | |||||||||||||||
Coach |
|
478.1 |
|
- |
|
0.3 |
|
41.5 |
|
436.3 |
|||||
|
198.7 |
|
- |
|
0.1 |
|
25.2 |
|
173.4 |
||||||
|
64.7 |
|
- |
|
(2.4) |
|
8.9 |
|
58.2 |
||||||
Corporate |
|
121.4 |
|
14.5 |
|
22.7 |
|
- |
|
84.2 |
|||||
SG&A expenses |
$ |
862.9 |
$ |
14.5 |
$ |
20.7 |
$ |
75.6 |
$ |
752.1 |
|||||
Operating income (loss) | |||||||||||||||
Coach |
|
199.5 |
|
- |
|
(0.4) |
|
(41.5) |
|
241.4 |
|||||
|
(7.2) |
|
- |
|
(1.3) |
|
(25.2) |
|
19.3 |
||||||
|
(19.3) |
|
- |
|
(0.4) |
|
(8.9) |
|
(10.0) |
||||||
Corporate |
|
(121.4) |
|
(14.5) |
|
(22.7) |
|
- |
|
(84.2) |
|||||
Operating income (loss) |
$ |
51.6 |
$ |
(14.5) |
$ |
(24.8) |
$ |
(75.6) |
$ |
166.5 |
|||||
Provision for income taxes |
|
6.6 |
|
(3.5) |
|
(5.4) |
|
(12.1) |
|
27.6 |
|||||
Net income (loss) |
$ |
20.0 |
$ |
(11.0) |
$ |
(19.4) |
$ |
(63.5) |
$ |
113.9 |
|||||
Net income (loss) per diluted common share |
$ |
0.07 |
$ |
(0.04) |
$ |
(0.07) |
$ |
(0.22) |
$ |
0.40 |
|||||
(1) Adjustments within Gross profit are recorded within Cost of sales. | |||||||||||||||
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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.
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.
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CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
At |
||||||
(in millions) | ||||||
(unaudited) | (audited) | |||||
ASSETS | ||||||
Cash, cash equivalents and short-term investments |
$ |
1,522.4 |
$ |
1,434.4 |
||
Receivables |
|
251.1 |
|
193.3 |
||
Inventories |
|
811.2 |
|
736.9 |
||
Other current assets |
|
260.8 |
|
188.5 |
||
Total current assets |
|
2,845.5 |
|
2,553.1 |
||
Property and equipment, net |
|
753.0 |
|
775.2 |
||
Lease right-of-use assets |
|
1,692.6 |
|
1,757.0 |
||
Other noncurrent assets |
|
2,842.3 |
|
2,838.9 |
||
Total assets |
$ |
8,133.4 |
$ |
7,924.2 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Accounts payable |
$ |
296.0 |
$ |
130.8 |
||
Accrued liabilities |
|
470.1 |
|
511.0 |
||
Short-term lease liabilities |
|
341.4 |
|
388.8 |
||
Current debt |
|
711.5 |
|
711.5 |
||
Total current liabilities |
|
1,819.0 |
|
1,742.1 |
||
Long-term debt |
|
1,588.6 |
|
1,587.9 |
||
Long-term lease liabilities |
|
1,739.9 |
|
1,799.8 |
||
Other liabilities |
|
455.8 |
|
518.0 |
||
Stockholders' equity |
|
2,530.1 |
|
2,276.4 |
||
Total liabilities and stockholders' equity |
$ |
8,133.4 |
$ |
7,924.2 |
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STORE COUNT | ||||||||
At |
||||||||
(unaudited) | ||||||||
As of | As of | |||||||
Directly-Operated Store Count: | Openings | (Closures) | ||||||
Coach | ||||||||
375 |
- |
(1) |
374 |
|||||
International |
583 |
13 |
(13) |
583 |
||||
213 |
3 |
- |
216 |
|||||
International |
207 |
6 |
(5) |
208 |
||||
58 |
- |
(3) |
55 |
|||||
International |
73 |
3 |
(18) |
58 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20201029005394/en/
Analysts & Media:
Interim Chief Financial Officer
Global Head of Investor Relations and Corporate Communications
212/629-2618
aresnick@tapestry.com
Vice President, Investor Relations
212/946-7252
ccolone@tapestry.com
Source: