Tapestry beats estimates in its first quarter
Tapestry (formerly known as Coach) is starting off its fiscal year on a high note.
Net income hit $122 million, with earnings per share of 42 cents for the period ended Sept. 29. This compared to a reported net loss of $18 million with earnings per share of 6 cents in the same period last year. Adjusted earnings were 48 cents a share, which beat analyst estimates of 45 cents.
Net revenue rose 7% to $1.38 billion for the quarter, compared to $1.29 billion in the prior year. This also beat analyst expectations of $1.35 billion.
Coach, Tapestry’s biggest brand, had net sales of $961 million for the first quarter, up from $924 million last year. Same-store sales at Kate Spade were up 21%, hitting $325 million for the quarter, compared to $269 million last year. Net sales at Stuart Weitzman totaled $95 million, down slightly from $96 million last year.
“Our first quarter performance and progress on our strategic priorities to date, give us confidence in our ability to achieve the goals we’ve set out for fiscal 2019,” said Victor Luis, CEO of Tapestry.
“Results were driven by continued growth at Coach, where global comparable store sales rose 4%, led by outperformance in digital, and reflected our compelling offering across categories and channels,” he added. “Further, we drove leverage to the operating income line through significant gross margin expansion.”
The company also continues to make investments to support its “long-term vision and drive a return to both double-digit operating income and earnings per share growth in fiscal 2020,” Luis continued. “We will continue to harness the power of our multi-brand model, fuel innovation across brands, drive global growth, and advance our digital and data analytics capabilities.”
Looking ahead to fiscal 2019, the company continues to expect revenues to increase at a mid-single-digit rate from fiscal 2018 to $6.1 billion to $6.2 billion. Tapestry is also maintaining its guidance for the operating income growth rate to exceed the revenue growth rate, reflecting the organic growth of the business, the realization of incremental synergies from the Kate Spade acquisition as well as the impact of distributor consolidations and buybacks and systems investments. As previously announced, the company also expects that cost savings resulting from synergies related to the Kate Spade acquisition will total $100 million to $115 million in fiscal year 2019.
The company is also raising its guidance as it now expects earnings per share to be in the range of $2.75 to $2.80, up from the previous guidance range of $2.70 to $2.80.
Net income hit $122 million, with earnings per share of 42 cents for the period ended Sept. 29. This compared to a reported net loss of $18 million with earnings per share of 6 cents in the same period last year. Adjusted earnings were 48 cents a share, which beat analyst estimates of 45 cents.
Net revenue rose 7% to $1.38 billion for the quarter, compared to $1.29 billion in the prior year. This also beat analyst expectations of $1.35 billion.
Coach, Tapestry’s biggest brand, had net sales of $961 million for the first quarter, up from $924 million last year. Same-store sales at Kate Spade were up 21%, hitting $325 million for the quarter, compared to $269 million last year. Net sales at Stuart Weitzman totaled $95 million, down slightly from $96 million last year.
“Our first quarter performance and progress on our strategic priorities to date, give us confidence in our ability to achieve the goals we’ve set out for fiscal 2019,” said Victor Luis, CEO of Tapestry.
“Results were driven by continued growth at Coach, where global comparable store sales rose 4%, led by outperformance in digital, and reflected our compelling offering across categories and channels,” he added. “Further, we drove leverage to the operating income line through significant gross margin expansion.”
The company also continues to make investments to support its “long-term vision and drive a return to both double-digit operating income and earnings per share growth in fiscal 2020,” Luis continued. “We will continue to harness the power of our multi-brand model, fuel innovation across brands, drive global growth, and advance our digital and data analytics capabilities.”
Looking ahead to fiscal 2019, the company continues to expect revenues to increase at a mid-single-digit rate from fiscal 2018 to $6.1 billion to $6.2 billion. Tapestry is also maintaining its guidance for the operating income growth rate to exceed the revenue growth rate, reflecting the organic growth of the business, the realization of incremental synergies from the Kate Spade acquisition as well as the impact of distributor consolidations and buybacks and systems investments. As previously announced, the company also expects that cost savings resulting from synergies related to the Kate Spade acquisition will total $100 million to $115 million in fiscal year 2019.
The company is also raising its guidance as it now expects earnings per share to be in the range of $2.75 to $2.80, up from the previous guidance range of $2.70 to $2.80.