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Tapestry Annual Report, Year Ended Jun 29, 2002

Filing Date
Filed September 20, 2002
Period End
June 29, 2002
Security
TPR
In the record · 2016–202610-K1110-Q328-K145

TPR filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 145 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Dec ’17Dec ’17
  2. Restructuring8-K · Apr ’20Apr ’20
  3. Material agreement8-K · Dec ’21Dec ’21
  4. Leadership change8-K · Sep ’25Sep ’25

01—Abstract

Summary

Summary of the 10-K filed September 20, 2002. Cited figures are marked; the original filing is the authoritative source.

Coach, Inc. (now Tapestry, Inc.) reported fiscal 2002 results for the year ended June 29, 2002, with net sales of $719.4 milliona, up 19.8% from $600.5 million in fiscal 2001.

Operating income rose 31.4% to $133.6 millionb, and net income increased 34.0% to $85.8 million, or $0.94 per diluted share after the two-for-one stock split in July 2002. Excluding reorganization costs, operating income was $137.0 million, or 19.0% of net sales. Gross margin expanded to 67.2% from 63.6%, driven mainly by the consolidation of Coach Japan and product mix shifts, while selling, general and administrative expenses rose to 48.1% of net sales from 45.9%.

The direct-to-consumer channel generated about 62% of total net sales, with 138 U.S. retail stores and 74 factory stores at year end. The indirect channel, which includes the Coach Japan joint venture with Sumitomo Corporation, grew 30.5% to $272.3 millionc, largely due to the shift from wholesale to retail pricing in Japan following the acquisitions of P.D.C. Co. Ltd. and J.

Osawa's distribution rights. Coach Japan operated 85 locations in Japan at year end. Balance sheet strength improved, with cash and cash equivalents of $94.0 milliond at June 29, 2002, up from $3.7 million, stockholders' equity of $260.4 million, and the Fleet revolving credit facility fully repaid from operating cash flow.

The company authorized an $80 million stock repurchase program in September 2001 and had spent approximately $60 million of it as of August 30, 2002. The filing also notes the company expects its effective tax rate to rise to approximately 37% in fiscal 2003 after the shutdown of its Lares, Puerto Rico, facility.

02—Key points

Key Highlights

  1. Net sales increased 19.8% to $719.4 million in fiscal 2002 from $600.5 million in fiscal 2001.
  2. Operating income rose 31.4% to $133.6 million; net income increased 34.0% to $85.8 million, or $0.94 per diluted share.
  3. Gross margin increased to 67.2% from 63.6%, driven by the consolidation of Coach Japan and product mix shifts.
  4. Indirect channel sales grew 30.5% to $272.3 million, mainly from Coach Japan's move to retail pricing and the acquisitions of PDC and J. Osawa distribution operations.
  5. Cash and cash equivalents rose to $94.0 million from $3.7 million; the Fleet revolving credit facility was fully repaid as of June 29, 2002.
  6. An $80 million stock repurchase program was authorized in September 2001; approximately $60 million had been spent as of August 30, 2002.
  7. Management expects the effective tax rate to increase to approximately 37% in fiscal 2003 following the shutdown of the Lares, Puerto Rico, facility, which eliminated Section 936 tax benefits.

03—Questions

Frequently Asked Questions

  1. How did Coach's profitability change in fiscal 2002?

    Operating income increased 31.4% to $133.6 million, and net income rose 34.0% to $85.8 million. Operating margin reached 18.6% of net sales versus 16.9% in fiscal 2001, supported by higher gross margin of 67.2%, partly offset by selling, general and administrative expenses rising to 48.1% of net sales.

  2. What drove the growth in Coach's sales?

    Direct sales increased 14.1% to $447.1 million, primarily from new store openings, with 20 new retail stores and six factory stores opened since the end of fiscal 2001. Indirect sales increased 30.5% to $272.3 million, driven primarily by the consolidation of Coach Japan, which contributed approximately $55 million of the increase.

  3. How strong is Coach's balance sheet and liquidity?

    At June 29, 2002, cash and cash equivalents were $93.96 million, up from $3.7 million, and stockholders' equity was $260.4 million, up from $148.3 million. Total assets were $440.6 million. The $100 million Fleet revolving credit facility was fully repaid from operating cash flow as of June 29, 2002, and remains available for seasonal needs.

  4. What are the main risks to Coach's business?

    The filing cites risks including failure to implement growth strategies, misjudging consumer demand and fashion trends, intense competition, economic downturns affecting discretionary luxury purchases, foreign exchange exposure through Coach Japan and international sales, dependence on key personnel, and seasonal fluctuations, with approximately 35% of annual sales and over 50% of operating income recognized in the second fiscal quarter over the past two years.

04—Continue

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