On November 9, 2023, Tapestry Inc (TPR, Financial), the parent company of Coach, Kate Spade, and Stuart Weitzman, announced its earnings for the fiscal first quarter ended September 30, 2023. The company delivered a record first quarter revenue exceeding $1.5 billion, demonstrating growth from the prior year and achieving a gross margin increase of 250 basis points. Diluted EPS on a reported basis was $0.84, up by 6% compared to last year, and $0.93 on a non-GAAP basis, up by 18%, exceeding expectations.
Financial and Strategic Highlights
Tapestry Inc (TPR, Financial) continued to advance its strategic priorities, building lasting customer relationships and driving global growth. The company acquired over 1.2 million new customers in North America, with approximately half belonging to the Gen Z and Millennial demographics. International revenue grew by 7% at constant currency, with notable gains in Japan and Greater China. North America revenue remained approximately in line with the prior year, despite a challenging consumer demand environment.
Income Statement and Balance Sheet Summary
Net sales for the quarter totaled $1.51 billion, with a slight increase over the prior year. Gross profit reached $1.10 billion, and the gross margin stood at 72.5%, reflecting benefits from lower freight expense and operational improvements. Selling, general, and administrative (SG&A) expenses were reported at $845 million, representing 55.8% of sales. Operating income was reported at $253 million with an operating margin of 16.7%. Net income remained stable at $195 million, with earnings per diluted share of $0.84.
Cash Flow and Dividend Declaration
Cash flow from operating activities for the quarter was an inflow of $75 million, compared to an outflow of $170 million in the prior year. The company declared a quarterly cash dividend of $0.35 per common share, payable on December 26, 2023, to shareholders of record as of December 8, 2023. Tapestry continues to expect to return approximately $325 million to shareholders through dividend payments, marking a 17% increase from the previous year.
Acquisition of Capri Holdings Limited
Tapestry Inc (TPR, Financial) announced a definitive agreement to acquire Capri Holdings Limited on August 10, 2023. This strategic move is expected to expand the company's portfolio reach and diversification, leveraging Tapestry’s consumer engagement platform to drive direct-to-consumer opportunities and unlock significant cost synergies. The transaction is expected to deliver strong double-digit EPS accretion on an adjusted basis and compelling return on invested capital (ROIC).
Financial Outlook
Tapestry Inc (TPR, Financial) is maintaining its Fiscal 2024 earnings per share and operating cash flow outlook, expecting stronger margin improvement to fully offset a more modest revenue growth projection. The company now expects revenue of approximately $6.7 billion for Fiscal 2024, with earnings per diluted share of $4.10 to $4.15, representing approximately 6% to 7% growth compared to the prior year.
For detailed financial schedules and reconciliations of GAAP to non-GAAP measures, please refer to the financial tables provided in the earnings release. Tapestry Inc (TPR, Financial) will host a conference call to review these results and has made the presentation slides available on the company’s website at www.tapestry.com/investors.
Investors and analysts are encouraged to review Tapestry Inc (TPR, Financial)'s detailed financial results and join the conference call for further insights into the company's performance and strategic direction.
Explore the complete 8-K earnings release (here) from Tapestry Inc for further details.
