Coach parent company in solid Q2; forecasts record sales
Tapestry reported second-quarter gains across its banners and hiked its fiscal 2022 guidance to what would be a “record level” of sales for the company.
"We are a different company than we were just 18 months ago, backed by the strength of our unique brands and the benefits of our multi-brand platform,” Joanne Crevoiserat, CEO, Tapestry, stated in a presentation on the company's second-quarter performance and outlook. Since 2018, Tapestry has transformed itself into a leaner and more responsive organization, reduced its SKU counts, improved assortment productivity and focused on digital growth.
The parent company of the Coach, Kate Spade and Stuart Weitzman brands posted net income of $318 million, with earnings per share of $1.15, for the quarter ended Jan. 1, compared to $311 million in the year-ago period.
Net sales rose 27% to $2.14 billion from $1.69 billion in the prior year. Sales increased 18% compared to pre-pandemic levels. Digital sales increased more than 30 % year-over-year and nearly tripled compared with pre-pandemic levels.
Coach, the company’s largest brand, achieved its highest quarter of revenue and profitably in nearly ten years. Sales rose 24% to approximately $1.5 billion in revenues for the quarter, up from $1.2 billion a year ago. Kate Spade sales increased 33% to roughly $500 million. At Stuart Weitzman, sales jumped 37% to $116 million.
Tapestry said that it acquired more than 3 million new customers in North America during the quarter and also drove higher retention rates with more repeat shoppers and a return of lapsed shoppers across its three banners.
“We delivered record sales this holiday quarter, highlighted by an inflection at Kate Spade, ongoing momentum at Coach, and a return to pre-pandemic revenue levels at Stuart Weitzman,” stated Crevoiserat, who took the reins as CEO in late 2020. “The combination of bold initiatives, compelling product, and effective execution enabled us to win with consumers across our brands. Based on these results, we are raising our revenue, operating income, and EPS guidance for the fiscal year.”
Tapestry now expects revenue of approximately $6.75 billion, up from its prior outlook of $6.6 billion. This represents growth of nearly 20% versus the prior year on a 52-week, comparable basis, which would mark a record level of sales for the company, Tapestry stated.
The company forecasts earnings per diluted share of $3.60 to $3.65, ahead of the prior guidance for $3.45 to $3.50.
Tapestry said it plans to buy back roughly $1.25 billion in common stock during the current fiscal year. The company ended the quarter with more than $1.6 billion in cash, cash equivalents and short-term investments and nearly $1.2 billion in long-term debt.
“Our performance over the last 18 months has demonstrated the advantages of our globally diversified, consumer-centric, and data-driven platform,” Crevoiserat said. “Through the Acceleration Program, we’ve made foundational changes that have successfully accelerated our growth at stronger margins, while making strategic investments to drive customer engagement and lifetime value. As we look ahead, we see significant growth opportunities and remain committed to creating value for all stakeholders.”
As of Jan. 1, Tapestry had 1,455 directly operated stores around the world. Its store count by brand was as follows: Coach, 954 stores (with 300 In North America); Kate Space 401 stores. (with 209 in North America); and Stuart Weitzman 100 stores (with 43 in North America).
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