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Coach parent Tapestry reports 126 percent growth in Q4 sales

By Prachi Singh

19 Aug 2021

Business

Image: Kate Spade, Business Wire

Fourth quarter net sales at Tapestry totaled 1.62 billion dollars, representing a 126 percent increase. On a 13-week basis, the company’s net sales increased 113 percent versus prior year and rose 1 percent as compared to pre-pandemic levels.

The company said, net income for the quarter was 200 million dollars on a reported basis, with earnings per diluted share of 69 cents compared to a net loss of 294 million dollars with a loss per diluted share of 1.06 dollars in the prior year period.

On a non-GAAP basis, net income was 212 million dollars with earnings per diluted share of 74 cents. On a 13-week basis, non-GAAP earnings per diluted share was 65 cents. This compared to a non-GAAP net loss of 70 million dollars with a loss per diluted share of 25 cents in the prior year period.

“We achieved a record annual operating margin as Tapestry, outperforming our expectations across Coach, Kate Spade and Stuart Weitzman, while investing for our future. The year was capped by a successful fourth quarter, highlighted by revenue exceeding pre-pandemic levels led by digital and China – two areas of significant opportunity,” said Joanne Crevoiserat, chief executive officer of Tapestry, Inc.

Review of Tapestry’s fourth quarter results

Gross profit for the quarter totaled 1.17 billion dollars on a reported basis, while gross margin was 72.2 percent compared to prior year reported gross profit of 499 million dollars and gross margin of 69.8 percent. On a non-GAAP basis, gross profit was 1.16 billion dollars, while gross margin was 71.7 percent compared to prior year gross profit of 507 million dollars and gross margin of 71 percent.

Operating income was 260 million dollars on a reported basis, while operating margin was 16.1 percent versus an operating loss of 280 million dollars and an operating margin of 39.2 percent in the prior year. On a non-GAAP basis, operating income was approximately 272 million dollars, while operating margin was 16.9 percent, which compares to an operating loss of 70 million dollars and an operating margin of negative 9.8 percent in the prior year.

Highlights of Tapestry’s full year results

For the full year, Tapestry’s net sales totaled 5.75 billion dollars, representing a 16 percent increase. On a 52-week basis, net sales increased 14 percent versus prior year and declined 6 percent as compared to fiscal 2019 pre-pandemic levels.

Gross profit for the year totaled 4.08 billion dollars on a reported basis, while gross margin was 71 percent compared to prior year reported gross profit of 3.24 billion dollars and gross margin of 65.3 percent. On a non-GAAP basis, gross profit was 4.07 billion dollars, while gross margin was 70.9 percent compared to prior year gross profit of 3.36 billion dollars and gross margin of 67.7 percent.

Operating income for the year was 968 million dollars on a reported basis, while operating margin was 16.8 percent versus an operating loss of 551 million dollars and an operating margin of negative 11.1 percent in the prior year. On a non-GAAP basis, operating income was 1.10 billion dollars, while operating margin was 19.1 percent, which compares to operating income of 438 million dollars and an operating margin of 8.8 percent in the prior year.

The company added that net income for the year was 834 million dollars on a reported basis, with earnings per diluted share of 2.95 dollars. This compared to a net loss of 652 million dollars with a loss per diluted share of approximately 2.34 dollars in the prior year.

On a non-GAAP basis, net income was 841 million dollars with earnings per diluted share of 2.97 dollars. On a 52-week basis, non-GAAP earnings per diluted share was 2.88 dollars. This compared to non-GAAP net income of 271 million dollars with earnings per diluted share of 97 cents in the prior year.

Based on current strong underlying business trends, the company expects revenue of approximately 6.4 billion dollars, representing mid-teens growth versus the prior year on a 52-week, comparable basis. Earnings per diluted share are expected to reach 3.30 dollars to 3.35 dollars.