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(State or Other Jurisdiction
of Incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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TAPESTRY, INC.
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By:
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/s/ David E. Howard
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David E. Howard
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General Counsel and Secretary
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Link to Download Tapestry’s Q3 2022 Earnings Presentation, Including Brand Highlights
NEW YORK--(BUSINESS WIRE)--May 12, 2022--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 third quarter ended April 2, 2022.
Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc., said, “Our third quarter results significantly exceeded expectations led by continued strong growth in North America. We drove increased customer demand at Coach, Kate Spade and Stuart Weitzman, reflecting the vibrancy of each of our brands, the power of our platform and our team’s successful execution of our strategic initiatives.”
“Our performance reinforces the meaningful runway ahead across our portfolio. We are harnessing our unique blend of magic and logic – distinctive brands amplified by an agile and data-rich platform. These differentiators enable us to deliver the continuous innovation necessary to build lasting customer relationships in the context of a rapidly evolving landscape. We remain confident in our long-term growth opportunities and steadfast in our commitment to enhance value for our customers and shareholders.”
Capital Deployment
Given Tapestry’s year-to-date outperformance, robust balance sheet, significant free cash flow generation, and outlook for growth, the Company now expects to return approximately $1.9 billion to shareholders in Fiscal 2022, an increase from the prior outlook of over $1.5 billion. In addition, the Company’s Board of Directors has approved a new $1.5 billion share repurchase program.
Third Quarter 2022 Financial Highlights
Third Quarter 2022 Acceleration Program Highlights
In the third quarter, Tapestry continued to make 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:
Overview of Third Quarter 2022 Financial Results
Balance Sheet and Cash Flow Highlights
Non-GAAP Reconciliation
During the fiscal third quarter of 2022, Tapestry recorded certain items that decreased the Company’s pre-tax income by $6 million, net income by $14 million, and earnings per diluted share by $0.05. These items included:
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 modifying its Fiscal 2022 outlook due to (i) an estimated headwind of $0.25 to $0.30 due to incremental Covid-related pressure in China and (ii) an anticipated negative impact of approximately $0.17 based on the current expectation that the Generalized System of Preferences (‘GSP’) with retroactive benefit will not be adopted in the Company’s current fiscal year. Excluding these external factors, the Company’s projection would have been $0.25 to $0.30 ahead of its prior outlook driven primarily by healthy underlying momentum in the rest of the world, notably North America, and inclusive of a $0.04 contribution from additional share repurchase activity. The following outlook replaces all previous guidance:
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 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, May 12, 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 2898477. 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 fourth quarter and full year results on Thursday, August 18, 2022.
In addition, the Company plans to host an Investor Day in September 2022 to discuss its long-term strategic initiatives and financial outlook.
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 Nine Months Ended April 2, 2022 and March 27, 2021 | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
QUARTER ENDED | NINE MONTHS ENDED | |||||||||||||||
April 2, 2022 | March 27, 2021 | April 2, 2022 | March 27, 2021 | |||||||||||||
Net sales |
$ |
1,437.5 |
$ |
1,273.3 |
$ |
5,059.6 |
$ |
4,130.9 |
|
|||||||
Cost of sales |
|
432.4 |
|
361.4 |
|
1,528.4 |
|
1,215.1 |
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|||||||
Gross profit |
|
1,005.1 |
|
911.9 |
|
3,531.2 |
|
2,915.8 |
|
|||||||
Selling, general and administrative expenses |
|
835.6 |
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795.2 |
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2,603.9 |
|
2,207.5 |
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|||||||
Operating income (loss) |
|
169.5 |
|
116.7 |
|
927.3 |
|
708.3 |
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|||||||
Loss on extinguishment of debt |
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- |
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- |
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53.7 |
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- |
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|||||||
Interest expense, net |
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14.8 |
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16.9 |
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46.8 |
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55.0 |
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|||||||
Other expense (income) |
|
3.0 |
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4.4 |
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8.3 |
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(1.8 |
) |
|||||||
Income before provision for income taxes |
|
151.7 |
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95.4 |
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818.5 |
|
655.1 |
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|||||||
Provision for income taxes |
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29.0 |
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3.7 |
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151.0 |
|
20.7 |
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|||||||
Net income (loss) |
$ |
122.7 |
$ |
91.7 |
$ |
667.5 |
$ |
634.4 |
|
|||||||
Net income (loss) per share: | ||||||||||||||||
Basic |
$ |
0.47 |
$ |
0.33 |
$ |
2.47 |
$ |
2.29 |
|
|||||||
Diluted |
$ |
0.46 |
$ |
0.32 |
$ |
2.42 |
$ |
2.25 |
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|||||||
Shares used in computing net income per share: | ||||||||||||||||
Basic |
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259.9 |
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278.2 |
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269.7 |
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277.5 |
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Diluted |
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265.5 |
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285.6 |
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275.9 |
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281.5 |
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Schedule 2: Detail to Net Sales
TAPESTRY, INC. | |||||||||||||||||
DETAIL TO NET SALES | |||||||||||||||||
For the Quarter and Nine Months Ended April 2, 2022 and March 27, 2021 | |||||||||||||||||
(in millions) | |||||||||||||||||
(unaudited) | |||||||||||||||||
QUARTER ENDED | |||||||||||||||||
April 2, 2022 | March 27, 2021 | % Change vs. FY21 | Constant Currency % Change FY21 |
% Change vs. FY19 | |||||||||||||
Coach |
$ |
1,072.4 |
$ |
963.5 |
11 |
% |
12 |
% |
11 |
% |
|||||||
Kate Spade |
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301.5 |
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252.4 |
19 |
% |
21 |
% |
7 |
% |
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Stuart Weitzman |
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63.6 |
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57.4 |
11 |
% |
10 |
% |
(25 |
)% |
|||||||
Total Tapestry |
$ |
1,437.5 |
$ |
1,273.3 |
13 |
% |
14 |
% |
8 |
% |
|||||||
NINE MONTHS ENDED | |||||||||||||||||
April 2, 2022 | March 27, 2021 | % Change vs. FY21 | Constant Currency % Change FY21 |
% Change vs. FY19 | |||||||||||||
Coach |
$ |
3,712.3 |
$ |
3,064.2 |
21 |
% |
21 |
% |
17 |
% |
|||||||
Kate Spade |
|
1,101.4 |
|
868.4 |
27 |
% |
27 |
% |
6 |
% |
|||||||
Stuart Weitzman |
|
245.9 |
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198.3 |
24 |
% |
22 |
% |
(19 |
)% |
|||||||
Total Tapestry |
$ |
5,059.6 |
$ |
4,130.9 |
22 |
% |
22 |
% |
12 |
% |
Schedule 3: Items Affecting Comparability – 3Q22
TAPESTRY, INC. | ||||||||||||
GAAP TO NON-GAAP RECONCILIATION | ||||||||||||
(in millions, except per share data) | ||||||||||||
(unaudited) | ||||||||||||
For the Quarter Ended April 2, 2022 | ||||||||||||
Items Affecting Comparability | ||||||||||||
GAAP Basis (As Reported) |
Acceleration Program | Non-GAAP Basis (Excluding Items) |
||||||||||
Cost of sales | ||||||||||||
Coach |
|
780.0 |
|
|
- |
|
|
780.0 |
|
|||
Kate Spade |
|
189.4 |
|
|
- |
|
|
189.4 |
|
|||
Stuart Weitzman |
|
35.7 |
|
|
- |
|
|
35.7 |
|
|||
Gross profit(1) |
$ |
1,005.1 |
|
$ |
- |
|
$ |
1,005.1 |
|
|||
SG&A expenses | ||||||||||||
Coach |
|
494.5 |
|
|
1.5 |
|
|
493.0 |
|
|||
Kate Spade |
|
179.1 |
|
|
0.7 |
|
|
178.4 |
|
|||
Stuart Weitzman |
|
42.0 |
|
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(0.1 |
) |
|
42.1 |
|
|||
Corporate |
|
120.0 |
|
|
4.2 |
|
|
115.8 |
|
|||
SG&A expenses |
$ |
835.6 |
|
$ |
6.3 |
|
$ |
829.3 |
|
|||
Operating income (loss) | ||||||||||||
Coach |
|
285.5 |
|
|
(1.5 |
) |
|
287.0 |
|
|||
Kate Spade |
|
10.3 |
|
|
(0.7 |
) |
|
11.0 |
|
|||
Stuart Weitzman |
|
(6.3 |
) |
|
0.1 |
|
|
(6.4 |
) |
|||
Corporate |
|
(120.0 |
) |
|
(4.2 |
) |
|
(115.8 |
) |
|||
Operating income (loss) |
$ |
169.5 |
|
$ |
(6.3 |
) |
$ |
175.8 |
|
|||
Provision for income taxes |
|
29.0 |
|
|
7.3 |
|
|
21.7 |
|
|||
Net income (loss) |
$ |
122.7 |
|
$ |
(13.6 |
) |
$ |
136.3 |
|
|||
Net income (loss) per diluted common share |
$ |
0.46 |
|
$ |
(0.05 |
) |
$ |
0.51 |
|
|||
(1) Adjustments within Gross profit are recorded within Cost of sales. |
Schedule 4: Items Affecting Comparability – 3Q21
TAPESTRY, INC. | ||||||||||||||||
GAAP TO NON-GAAP RECONCILIATION | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
(unaudited) | ||||||||||||||||
For the Quarter Ended March 27, 2021 | ||||||||||||||||
Items Affecting Comparability | ||||||||||||||||
GAAP Basis (As Reported) |
Acceleration Program | Impairment | Non-GAAP Basis (Excluding Items) |
|||||||||||||
Cost of sales | ||||||||||||||||
Coach |
|
718.0 |
|
|
- |
|
|
- |
|
|
718.0 |
|
||||
Kate Spade |
|
160.2 |
|
|
- |
|
|
- |
|
|
160.2 |
|
||||
Stuart Weitzman |
|
33.7 |
|
|
- |
|
|
- |
|
|
33.7 |
|
||||
Gross profit(1) |
$ |
911.9 |
|
$ |
- |
|
$ |
- |
|
$ |
911.9 |
|
||||
SG&A expenses | ||||||||||||||||
Coach |
|
466.6 |
|
|
4.7 |
|
|
20.4 |
|
|
441.5 |
|
||||
Kate Spade |
|
168.9 |
|
|
0.9 |
|
|
19.3 |
|
|
148.7 |
|
||||
Stuart Weitzman |
|
51.2 |
|
|
3.4 |
|
|
6.1 |
|
|
41.7 |
|
||||
Corporate |
|
108.5 |
|
|
11.4 |
|
|
- |
|
|
97.1 |
|
||||
SG&A expenses |
$ |
795.2 |
|
$ |
20.4 |
|
$ |
45.8 |
|
$ |
729.0 |
|
||||
Operating income (loss) | ||||||||||||||||
Coach |
|
251.4 |
|
|
(4.7 |
) |
|
(20.4 |
) |
|
276.5 |
|
||||
Kate Spade |
|
(8.7 |
) |
|
(0.9 |
) |
|
(19.3 |
) |
|
11.5 |
|
||||
Stuart Weitzman |
|
(17.5 |
) |
|
(3.4 |
) |
|
(6.1 |
) |
|
(8.0 |
) |
||||
Corporate |
|
(108.5 |
) |
|
(11.4 |
) |
|
- |
|
|
(97.1 |
) |
||||
Operating income (loss) |
$ |
116.7 |
|
$ |
(20.4 |
) |
$ |
(45.8 |
) |
$ |
182.9 |
|
||||
Provision for income taxes |
|
3.7 |
|
|
(3.2 |
) |
|
(9.8 |
) |
|
16.7 |
|
||||
Net income (loss) |
$ |
91.7 |
|
$ |
(17.2 |
) |
$ |
(36.0 |
) |
$ |
144.9 |
|
||||
Net income (loss) per diluted common share |
$ |
0.32 |
|
$ |
(0.06 |
) |
$ |
(0.13 |
) |
$ |
0.51 |
|
||||
(1) Adjustments within Gross profit are recorded within Cost of sales. |
Schedule 5: Items Affecting Comparability – 3Q22 YTD
TAPESTRY, INC. | ||||||||||||||||
GAAP TO NON-GAAP RECONCILIATION | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
(unaudited) | ||||||||||||||||
For the Nine Months Ended April 2, 2022 | ||||||||||||||||
Items Affecting Comparability | ||||||||||||||||
GAAP Basis (As Reported) |
Debt Extinguishment |
Acceleration Program |
Non-GAAP Basis (Excluding Items) |
|||||||||||||
Cost of sales | ||||||||||||||||
Coach |
|
2,689.2 |
|
|
- |
|
|
- |
|
|
2,689.2 |
|
||||
Kate Spade |
|
696.6 |
|
|
- |
|
|
- |
|
|
696.6 |
|
||||
Stuart Weitzman |
|
145.4 |
|
|
- |
|
|
- |
|
|
145.4 |
|
||||
Gross profit(1) |
$ |
3,531.2 |
|
$ |
- |
|
$ |
- |
|
$ |
3,531.2 |
|
||||
SG&A expenses | ||||||||||||||||
Coach |
|
1,564.7 |
|
|
- |
|
|
4.0 |
|
|
1,560.7 |
|
||||
Kate Spade |
|
565.4 |
|
|
- |
|
|
4.2 |
|
|
561.2 |
|
||||
Stuart Weitzman |
|
139.9 |
|
|
- |
|
|
3.2 |
|
|
136.7 |
|
||||
Corporate |
|
333.9 |
|
|
- |
|
|
20.3 |
|
|
313.6 |
|
||||
SG&A expenses |
$ |
2,603.9 |
|
$ |
- |
|
$ |
31.7 |
|
$ |
2,572.2 |
|
||||
Operating income (loss) | ||||||||||||||||
Coach |
|
1,124.5 |
|
|
- |
|
|
(4.0 |
) |
|
1,128.5 |
|
||||
Kate Spade |
|
131.2 |
|
|
- |
|
|
(4.2 |
) |
|
135.4 |
|
||||
Stuart Weitzman |
|
5.5 |
|
|
- |
|
|
(3.2 |
) |
|
8.7 |
|
||||
Corporate |
|
(333.9 |
) |
|
- |
|
|
(20.3 |
) |
|
(313.6 |
) |
||||
Operating income (loss) |
$ |
927.3 |
|
$ |
- |
|
$ |
(31.7 |
) |
$ |
959.0 |
|
||||
Loss on extinguishment of debt |
|
53.7 |
|
|
53.7 |
|
|
- |
|
|
- |
|
||||
Provision for income taxes |
|
151.0 |
|
|
(12.9 |
) |
|
(0.7 |
) |
|
164.6 |
|
||||
Net income (loss) |
$ |
667.5 |
|
$ |
(40.8 |
) |
$ |
(31.0 |
) |
$ |
739.3 |
|
||||
Net income (loss) per diluted common share |
$ |
2.42 |
|
$ |
(0.15 |
) |
$ |
(0.11 |
) |
$ |
2.68 |
|
||||
(1) Adjustments within Gross profit are recorded within Cost of sales. |
Schedule 6: Items Affecting Comparability – 3Q21 YTD
TAPESTRY, INC. | ||||||||||||||||||||
GAAP TO NON-GAAP RECONCILIATION | ||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
For the Nine Months Ended March 27, 2021 | ||||||||||||||||||||
Items Affecting Comparability | ||||||||||||||||||||
GAAP Basis (As Reported) |
CARES Act Tax Impact | Acceleration Program |
Impairment | Non-GAAP Basis (Excluding Items) |
||||||||||||||||
Cost of sales | ||||||||||||||||||||
Coach |
|
2,251.0 |
|
|
- |
|
|
- |
|
|
- |
|
|
2,251.0 |
|
|||||
Kate Spade |
|
547.4 |
|
|
- |
|
|
- |
|
|
- |
|
|
547.4 |
|
|||||
Stuart Weitzman |
|
117.4 |
|
|
- |
|
|
- |
|
|
- |
|
|
117.4 |
|
|||||
Gross profit(1) |
$ |
2,915.8 |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
2,915.8 |
|
|||||
SG&A expenses | ||||||||||||||||||||
Coach |
|
1,317.6 |
|
|
- |
|
|
21.2 |
|
|
20.4 |
|
|
1,276.0 |
|
|||||
Kate Spade |
|
474.1 |
|
|
- |
|
|
4.3 |
|
|
19.3 |
|
|
450.5 |
|
|||||
Stuart Weitzman |
|
123.0 |
|
|
- |
|
|
(1.3 |
) |
|
6.1 |
|
|
118.2 |
|
|||||
Corporate |
|
292.8 |
|
|
- |
|
|
44.5 |
|
|
- |
|
|
248.3 |
|
|||||
SG&A expenses |
$ |
2,207.5 |
|
$ |
- |
|
$ |
68.7 |
|
$ |
45.8 |
|
$ |
2,093.0 |
|
|||||
Operating income (loss) | ||||||||||||||||||||
Coach |
|
933.4 |
|
|
- |
|
|
(21.2 |
) |
|
(20.4 |
) |
|
975.0 |
|
|||||
Kate Spade |
|
73.3 |
|
|
- |
|
|
(4.3 |
) |
|
(19.3 |
) |
|
96.9 |
|
|||||
Stuart Weitzman |
|
(5.6 |
) |
|
- |
|
|
1.3 |
|
|
(6.1 |
) |
|
(0.8 |
) |
|||||
Corporate |
|
(292.8 |
) |
|
- |
|
|
(44.5 |
) |
|
- |
|
|
(248.3 |
) |
|||||
Operating income (loss) |
$ |
708.3 |
|
$ |
- |
|
$ |
(68.7 |
) |
$ |
(45.8 |
) |
$ |
822.8 |
|
|||||
Provision for income taxes |
|
20.7 |
|
|
(95.0 |
) |
|
(15.4 |
) |
|
(9.8 |
) |
|
140.9 |
|
|||||
Net income (loss) |
$ |
634.4 |
|
$ |
95.0 |
|
$ |
(53.3 |
) |
$ |
(36.0 |
) |
$ |
628.7 |
|
|||||
Net income (loss) per diluted common share |
$ |
2.25 |
|
$ |
0.27 |
|
$ |
(0.15 |
) |
$ |
(0.10 |
) |
$ |
2.23 |
|
|||||
(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 costs for the third quarter and first nine months of fiscal year 2022 and Debt Extinguishment costs for the first nine months of fiscal year 2022, as well as Impairment and Acceleration Program costs for the third quarter and first nine months of fiscal year 2021 and the effects of certain items related to the tax benefit the Company received under the CARES Act for the first nine 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 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.
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 first nine months of fiscal 2022 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 April 2, 2022 and July 3, 2021 | ||||||||
(in millions) | ||||||||
(unaudited) | (audited) | |||||||
April 2, 2022 | July 3, 2021 | |||||||
ASSETS | ||||||||
Cash, cash equivalents and short-term investments |
$ |
1,073.0 |
$ |
2,015.8 |
||||
Receivables |
|
242.9 |
|
200.2 |
||||
Inventories |
|
913.0 |
|
734.8 |
||||
Other current assets |
|
329.7 |
|
424.5 |
||||
Total current assets |
|
2,558.6 |
|
3,375.3 |
||||
Property and equipment, net |
|
576.6 |
|
678.1 |
||||
Lease right-of-use assets |
|
1,359.7 |
|
1,496.6 |
||||
Other noncurrent assets |
|
2,843.3 |
|
2,832.4 |
||||
Total assets |
$ |
7,338.2 |
$ |
8,382.4 |
||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Accounts payable |
$ |
478.9 |
$ |
445.2 |
||||
Accrued liabilities |
|
547.7 |
|
661.2 |
||||
Short-term lease liabilities |
|
306.7 |
|
319.4 |
||||
Current debt |
|
400.0 |
|
- |
||||
Total current liabilities |
|
1,733.3 |
|
1,425.8 |
||||
Long-term debt |
|
1,189.8 |
|
1,590.7 |
||||
Long-term lease liabilities |
|
1,356.2 |
|
1,525.9 |
||||
Other liabilities |
|
523.9 |
|
580.7 |
||||
Stockholders' equity |
|
2,535.0 |
|
3,259.3 |
||||
Total liabilities and stockholders' equity |
$ |
7,338.2 |
$ |
8,382.4 |
Schedule 8: Condensed Consolidated Statement of Cash Flows
TAPESTRY, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||
For the Nine Months Ended April 2, 2022 and March 27, 2021 | ||||||||
(in millions) | ||||||||
(unaudited) | (unaudited) | |||||||
April 2, 2022 | March 27, 2021 | |||||||
Cash Flows from Operating Activities | ||||||||
Net income (loss) |
$ |
667.5 |
|
$ |
634.4 |
|
||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||||||||
Depreciation and amortization |
|
148.1 |
|
|
167.2 |
|
||
Loss on extinguishment of debt |
|
53.7 |
|
|
- |
|
||
Other non-cash items |
|
71.5 |
|
|
(38.3 |
) |
||
Changes in operating assets and liabilities |
|
(324.4 |
) |
|
181.3 |
|
||
Net cash provided by operating activities |
|
616.4 |
|
|
944.6 |
|
||
Cash Flows from Investing Activities | ||||||||
Purchases of property and equipment |
|
(75.1 |
) |
|
(68.9 |
) |
||
Purchase of investments |
|
(523.4 |
) |
|
(0.5 |
) |
||
Other items |
|
261.0 |
|
|
25.8 |
|
||
Net cash provided by (used in) investing activities |
|
(337.5 |
) |
|
(43.6 |
) |
||
Cash Flows from Financing Activities | ||||||||
Dividend payments |
|
(202.8 |
) |
|
- |
|
||
Repurchase of common stock |
|
(1,249.8 |
) |
|
- |
|
||
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 |
|
- |
|
|
(700.0 |
) |
||
Other items |
|
36.5 |
|
|
22.9 |
|
||
Net cash provided by (used in) financing activities |
|
(1,468.3 |
) |
|
(688.6 |
) |
||
Effect of exchange rate on cash and cash equivalents |
|
(12.3 |
) |
|
13.0 |
|
||
Net (decrease) increase in cash and cash equivalents |
|
(1,201.7 |
) |
|
225.4 |
|
||
Cash and cash equivalents at beginning of period |
$ |
2,007.7 |
|
$ |
1,426.3 |
|
||
Cash and cash equivalents at end of period |
$ |
806.0 |
|
$ |
1,651.7 |
|
Schedule 9: Store Count by Brand – 3Q22
TAPESTRY, INC. | ||||||||
STORE COUNT | ||||||||
At January 1, 2022 and April 2, 2022 | ||||||||
(unaudited) | ||||||||
As of | As of | |||||||
Directly-Operated Store Count: | January 1, 2022 | Openings | (Closures) | April 2, 2022 | ||||
Coach | ||||||||
North America |
354 |
- |
(8) |
346 |
||||
International |
600 |
15 |
(9) |
606 |
||||
Kate Spade | ||||||||
North America |
209 |
- |
(2) |
207 |
||||
International |
192 |
5 |
(5) |
192 |
||||
Stuart Weitzman | ||||||||
North America |
43 |
- |
(3) |
40 |
||||
International |
57 |
- |
- |
57 |
Schedule 10: Store Count by Brand – 3Q22 YTD
TAPESTRY, INC. | ||||||||
STORE COUNT | ||||||||
At July 3, 2021 and April 2, 2022 | ||||||||
(unaudited) | ||||||||
As of | As of | |||||||
Directly-Operated Store Count: | July 3, 2021 | Openings | (Closures) | April 2, 2022 | ||||
Coach | ||||||||
North America |
354 |
3 |
(11) |
346 |
||||
International |
585 |
39 |
(18) |
606 |
||||
Kate Spade | ||||||||
North America |
210 |
- |
(3) |
207 |
||||
International |
197 |
9 |
(14) |
192 |
||||
Stuart Weitzman | ||||||||
North America |
48 |
- |
(8) |
40 |
||||
International |
56 |
1 |
- |
57 |
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