01—Abstract
Summary
Summary of the 8-K filed August 15, 2024. Cited figures are marked; the original filing is the authoritative source.
Tapestry, Inc. (NYSE: TPR) reported results for its fourth quarter and full fiscal year ended June 29, 2024.
For the full year, net sales were $6.67 billiona versus $6.66 billion in the prior year, with revenue up 1% excluding a roughly 110 basis point currency headwind. Reported gross margin rose to 73.3% from 70.8%, reflecting a 130 basis point benefit from lower freight expense along with operational improvements and FX tailwinds. Reported diluted EPS was $3.50 and non-GAAP diluted EPS was $4.29, compared with $3.88 in the prior year.
Coach was the standout brand, with full-year sales of $5.10 billionb, while Kate Spade ($1.33 billion) and Stuart Weitzman ($241.5 million) declined. Fourth-quarter net sales were $1.59 billion, down 2% on a reported basis but roughly flat excluding currency. Reported operating income was $235 million, versus $274 million a year earlier, and was weighed down by costs tied to the proposed acquisition of Capri Holdings Limited, including financing charges and professional fees.
Reported net interest expense rose to $125 millionc for the year, reflecting debt issued to finance the deal. Cash, cash equivalents and short-term investments totaled $7.20 billion against total borrowings of $7.24 billion. Operating cash flow was $1.26 billion and free cash flow was $1.15 billion for the year.
The Federal Trade Commission filed a lawsuit on April 22, 2024 seeking to block the Capri acquisition, which the company says it will contest. Tapestry's fiscal 2025 outlook assumes no contribution from Capri and projects non-GAAP EPS of $4.45 to $4.50d and revenue in the area of $6.7 billion. The company also maintained its annual dividend rate of $1.40 per share and declared a quarterly dividend of $0.35.
02—Key points
Key Highlights
- Full-year fiscal 2024 net sales were $6.67 billion, up 1% at constant currency, with Coach reaching $5.10 billion in sales, a record year for the brand.
- Reported gross margin expanded to 73.3% from 70.8%, with a 130 basis point benefit from lower freight expense.
- Reported diluted EPS was $3.50 and non-GAAP diluted EPS was $4.29, versus $3.88 in fiscal 2023; acquisition-related items reduced full-year EPS by approximately $0.79.
- Fourth-quarter net sales were $1.59 billion, down 2% reported and roughly flat excluding currency, with reported operating margin of 14.8%.
- Operating cash flow was $1.26 billion and free cash flow was $1.15 billion for the year; the company held $7.20 billion in cash and short-term investments against $7.24 billion of borrowings.
- Fiscal 2025 non-GAAP guidance calls for revenue around $6.7 billion and diluted EPS of $4.45 to $4.50, assuming no Capri Holdings contribution.
- The FTC's April 2024 lawsuit to block the Capri Holdings acquisition remains pending, and the company is targeting closing in calendar 2024.
03—Questions
Frequently Asked Questions
How did Tapestry perform in fiscal 2024?
Net sales were $6.67 billion, essentially flat reported and up 1% at constant currency. Gross margin rose to 73.3% from 70.8%, and reported diluted EPS was $3.50 versus $3.88 in fiscal 2023. Non-GAAP diluted EPS was $4.29.
What is the status of the proposed Capri Holdings acquisition?
The FTC filed a lawsuit on April 22, 2024 to block the deal. Tapestry says it is confident in its legal arguments and is working to close the transaction in calendar 2024. Acquisition-related costs, mainly financing charges and professional fees, reduced fiscal 2024 EPS by about $0.79.
What is the outlook for fiscal 2025?
Tapestry expects revenue of about $6.7 billion, operating margin expansion of about 50 basis points, and non-GAAP diluted EPS of $4.45 to $4.50. The outlook excludes any Capri contribution and includes a $0.35 negative impact from suspended share repurchases. Free cash flow is expected to be about $1.1 billion, excluding deal-related costs.
How are shareholders being compensated?
The company returned $321 million in dividends in fiscal 2024, at an annual rate of $1.40 per share, up 17% from the prior year. It expects to maintain that rate in fiscal 2025 and declared a quarterly dividend of $0.35 per share payable September 23, 2024.
How did individual brands perform?
Coach delivered full-year sales of $5.10 billion, up 3% reported and 4% at constant currency, and generated a record year. Kate Spade fell 6% to $1.33 billion, and Stuart Weitzman fell 14% to $241.5 million. In the fourth quarter, Coach sales were flat reported and up 2% at constant currency, while Kate Spade fell 6% and Stuart Weitzman fell 19%.
04—Continue