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Tapestry Annual Report, Year Ended Jun 28, 2003

Filing Date
Filed September 18, 2003
Period End
June 28, 2003
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 18, 2003. Cited figures are marked; the original filing is the authoritative source.

Coach, Inc. (now Tapestry, Inc.) reported fiscal 2003 (year ended June 28, 2003) net sales of $953.2 milliona, up 32.5% from $719.4 million in fiscal 2002, and operating income of $243.8 million, up 82.4% from $133.6 million.

Net income rose 70.8% to $146.6 millionb, and diluted EPS was $1.58 versus $0.94. Gross margin expanded to 71.1% from 67.2%, driven by product mix, sourcing initiatives and channel mix. Direct-to-consumer sales represented approximately 59% of total sales, while the indirect channel, including Coach Japan, contributed about 41%.

The company operated 156 U.S. retail stores and 76 U.S. factory stores at year-end, plus 93 Coach Japan locations, and planned to open at least 20 new U.S. retail stores per year in each of the next two years. Coach Japan, a 50% joint venture with Sumitomo Corporation that is consolidated, drove much of the indirect growth, with Coach Japan net sales up $89.4 millionc. All fiscal 2003 product requirements were sourced from independent manufacturers.

Balance sheet strength improved: cash and cash equivalents rose to $229.2 milliond, stockholders' equity reached $426.9 million, and the Fleet revolving facility had no outstanding borrowings at year-end. The company repurchased 1.9 million shares at an average cost of $25.89 and had about $120 million remaining under its repurchase program. The board also authorized a two-for-one stock split to be distributed October 1, 2003, and the filing notes that the company has never paid cash dividends.

02—Key points

Key Highlights

  1. Net sales increased 32.5% to $953.2 million in fiscal 2003, with direct sales up 25.1% to $559.5 million and indirect sales up 44.6% to $393.7 million.
  2. Operating income increased 82.4% to $243.8 million, and net income increased 70.8% to $146.6 million.
  3. Gross margin rose to 71.1% from 67.2%, attributed to product mix, sourcing cost initiatives and channel mix.
  4. Direct-to-consumer channels represented approximately 59% of fiscal 2003 sales; the company operated 156 U.S. retail stores and 76 U.S. factory stores.
  5. Coach Japan (50% joint venture with Sumitomo, consolidated) operated 93 retail and department store locations, and its net sales rose $89.4 million over the prior year.
  6. Cash rose to $229.2 million and the Fleet revolver had no borrowings outstanding at June 28, 2003; $120 million remained under the stock repurchase program.
  7. Board authorized a two-for-one stock split to be distributed October 1, 2003.

03—Questions

Frequently Asked Questions

  1. How much did Coach's sales and profits grow in fiscal 2003?

    Net sales rose 32.5% to $953.2 million from $719.4 million, operating income rose 82.4% to $243.8 million, and net income rose 70.8% to $146.6 million, with diluted EPS of $1.58 compared with $0.94 in fiscal 2002.

  2. What drove the improvement in gross margin?

    The filing attributes the gross margin increase from 67.2% to 71.1% primarily to a shift in product mix toward newer fabric and leather collections (about 140 basis points), sourcing cost initiatives (about 120 basis points), and a shift in channel mix (about 100 basis points).

  3. How is the company planning to grow its U.S. store base?

    Coach opened 20 new U.S. retail stores in both fiscal 2003 and fiscal 2002 and plans to open at least 20 new stores per year in each of the next two years, primarily in high-volume markets. It also expects about 20 U.S. factory locations and at least 20 U.S. department store locations to be remodeled or opened in the new store design by June 2004.

  4. What are the main risks the filing highlights for investors?

    The filing cites risks including the ability to implement growth strategies, responding to fashion trends, excess inventory from misjudged demand, intense competition, economic downturns affecting discretionary luxury purchases, foreign exchange exposure, and dependence on key management. Seasonality is also significant, with approximately 33% of annual sales and 47% of operating income recognized in the second fiscal quarter over the past two years.

  5. Is Coach paying dividends or buying back stock?

    Coach has never paid cash dividends and does not plan to pay regular cash dividends; the Fleet facility also restricts dividends. During fiscal 2003 it repurchased 1.9 million shares at an average cost of $25.89, and about $120 million remained under its repurchase program as of June 28, 2003.

04—Continue

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