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Tapestry 8-K Report, Financial Results (May 9, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed May 9, 2024
Period End
May 9, 2024
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 · Aug ’18Aug ’18
  2. Restructuring8-K · Aug ’20Aug ’20
  3. Material agreement8-K · May ’22May ’22
  4. Leadership change8-K · Apr ’26Apr ’26

01—Abstract

Summary

Summary of the 8-K filed May 9, 2024. Cited figures are marked; the original filing is the authoritative source.

Tapestry, Inc. (NYSE: TPR) reported results for its fiscal third quarter ended March 30, 2024, with net sales of $1.48 billiona, compared with $1.51 billion in the prior-year period, a 2% decline on a reported basis.

Sales were approximately even with the prior year excluding a currency headwind of about 160 basis points. Gross margin rose to 74.7% from 72.8%, supported by lower freight expense, FX tailwinds and operational improvements. Reported operating income was $204 millionb (13.8% margin), while non-GAAP operating income was $239 million (16.1% margin), compared with $226 million in the prior-year quarter.

Reported diluted EPS was $0.60c, and non-GAAP diluted EPS was $0.81, versus $0.78 a year earlier. Results exclude acquisition-related costs of $68 million pre-tax, primarily professional fees and financing charges tied to the proposed acquisition of Capri Holdings Limited. The company maintained its fiscal 2024 EPS outlook of $4.20 to $4.25 on a non-GAAP basis, which it stated replaces all previous guidance.

Management expects revenue of over $6.6 billiond, approximately in line with the prior year on a reported basis, and free cash flow of approximately $1.1 billion excluding deal-related costs. Year-to-date free cash flow was $937 million, compared with approximately $425 million a year earlier. Total borrowings were $7.70 billion at quarter end, including $6.1 billion of senior notes issued in November 2023 to fund the Capri acquisition.

The Federal Trade Commission filed a lawsuit on April 22, 2024 to block the acquisition, which the company says it intends to contest while working to close the transaction in calendar 2024. The Board declared a quarterly cash dividend of $0.35 per share, payable June 24, 2024, and the company continues to expect an anticipated annual dividend rate of $1.40 per share.

Greater China sales declined 2% and North America sales declined 3%, while International revenue grew 3% at constant currency. Investors should weigh the strong cash generation and margin gains against the regulatory risk to the pending Capri transaction.

02—Key points

Key Highlights

  1. Net sales of $1.48 billion, down 2% reported and approximately flat excluding a roughly 160 basis point currency headwind.
  2. Gross margin expanded 190 basis points to 74.7%, benefiting from lower freight expense, FX tailwinds and operational improvements.
  3. Non-GAAP diluted EPS of $0.81 versus $0.78 in the prior-year quarter; reported diluted EPS was $0.60.
  4. Year-to-date free cash flow of $937 million versus approximately $425 million in the prior year.
  5. Fiscal 2024 non-GAAP EPS outlook maintained at $4.20 to $4.25, with revenue expected to be over $6.6 billion.
  6. FTC filed a lawsuit on April 22, 2024 to block the proposed acquisition of Capri Holdings Limited; Tapestry expects to close the deal in calendar 2024.
  7. Quarterly dividend of $0.35 per share declared, payable June 24, 2024, with an anticipated annual rate of $1.40 per share.

03—Questions

Frequently Asked Questions

  1. How did Tapestry perform in the fiscal third quarter of 2024?

    Net sales were $1.48 billion, down 2% on a reported basis from $1.51 billion, and about even excluding currency. Reported operating income was $204 million and non-GAAP operating income was $239 million. Reported diluted EPS was $0.60, and non-GAAP diluted EPS was $0.81, compared with $0.78 in the prior-year quarter.

  2. What is the status of the Capri Holdings acquisition?

    On April 22, 2024, the Federal Trade Commission filed a lawsuit to block the proposed acquisition. Tapestry says it is confident in the transaction's merits and intends to present its legal arguments in court while working expeditiously to close the deal in calendar year 2024. The company has issued $6.1 billion of senior notes to finance the deal.

  3. What guidance did Tapestry provide for fiscal 2024?

    On a non-GAAP basis, Tapestry expects revenue of over $6.6 billion, approximately in line with the prior year on a reported basis, and diluted EPS of $4.20 to $4.25, representing 8% to 9% growth. It also expects free cash flow of approximately $1.1 billion, excluding deal-related costs. The guidance assumes no contribution from the Capri acquisition.

  4. Is the dividend changing?

    Tapestry's Board declared a quarterly cash dividend of $0.35 per common share, payable June 24, 2024, to shareholders of record as of June 7, 2024. The company continues to expect an anticipated annual dividend rate of $1.40 per share, which it describes as an increase of 17% from the prior year.

04—Continue

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