Tapestry reports 19 percent sales increase, returns to profit
Net sales at Tapestry Inc. totalled 1.27 billion dollars for the third quarter compared to 1.07 billion dollars in the prior year, representing a 19 percent increase.
Commenting on the third quarter results, Joanne Crevoiserat, chief executive officer of Tapestry, said: “Through a sharpened focus on the consumer, we fueled new customer acquisition at Coach, Kate Spade, and Stuart Weitzman and delivered robust sales growth led by digital and China. Importantly, for the third consecutive quarter, we achieved operating income gains – compared to both FY20 and FY19.”
The company said, gross profit totalled 912 million dollars, while gross margin was 71.6 percent on both reported and non-GAAP basis compared to prior year reported gross profit of 616 million dollars and gross margin of 57.4 percent. On a non-GAAP basis, prior year gross profit was 720 million dollars, while gross margin was 67.1 percent.
Tapestry records gains in operating income and earnings
Operating income for the quarter was 117 million dollars on a reported basis, while operating margin was 9.2 percent versus an operating loss of 685 million dollars and an operating margin of negative 63.9 percent in the prior year. On a non-GAAP basis, operating income was 183 million dollars, while operating margin was 14.4 percent, which compares to an operating loss of 32 million dollars and an operating margin of negative 2.9 percent in the prior year.
The company added that net income was 92 million dollars on a reported basis, with earnings per diluted share of 32 cents compared to net loss of 677 million dollars with loss per diluted share of 2.45 dollars in the prior year period. On a non-GAAP basis, net income was 145 million dollars with earnings per diluted share of 51 cents compared to non-GAAP net loss of 76 million dollars with loss per diluted share of 27 cents in the prior year period.
Tapestry’s Q3 performance across core brands
Net sales for Coach were 964 million dollars for the fiscal third quarter compared to approximately 772 million dollars in the prior year, representing an increase of 25 percent and a return to pre-pandemic revenue levels.
Net sales for Kate Spade totalled 252 million dollars compared to 250 million dollars in the prior year, representing an increase of 1 percent, which included an impact related to a strategic pullback in lower margin wholesale disposition sales.
The company further said that net sales for Stuart Weitzman were 57 million dollars compared to 51 million dollars in the same period of the prior year, representing a 13 percent increase. These results, Tapestry said, included the negative impact of a North America wholesale timing shift into the fourth fiscal quarter. Given Tapestry’s better-than-anticipated results year-to-date, and assuming a continued recovery emerging from the pandemic, the company now expects revenue for the fiscal year to increase at a mid-teens rate compared to the prior year. This outlook now includes the expectation for operating income and earnings per diluted to share to increase versus fiscal year 2019.