How did Tapestry perform in its fiscal first quarter 2025?

Net sales were $1.51 billion, approximately in line with the prior year on both reported and constant currency bases. Reported diluted EPS was $0.79, and non-GAAP diluted EPS was $1.02, a record according to the company. The company said results were ahead of its outlook, led by growth at Coach.

What drove the improvement in gross margin?

Gross margin was 75.3% compared with 72.5% in the prior year. The filing attributes the increase to operational improvements of 180 basis points, a 60 basis point benefit from lower freight expense, and FX tailwinds.

How did each brand perform?

Coach revenue rose 1% reported and 2% at constant currency to $1.17 billion. Kate Spade declined 7% reported to $283.2 million, and Stuart Weitzman increased 2% to $53.7 million.

What was the impact of the Capri acquisition costs on results?

The company recorded items that decreased pre-tax income by $71 million, net income by $55 million, and diluted EPS by $0.23. These relate primarily to financing and professional fees associated with the proposed Capri acquisition.

TPR 8-K: Earnings & Results

Q: What changed in the fiscal 2025 outlook?

Tapestry raised non-GAAP diluted EPS guidance to $4.50 to $4.55 from $4.45 to $4.50 and expects revenue of over $6.75 billion, representing growth of approximately 1% to 2%. The outlook assumes no revenue, net interest, or earnings impact from the proposed Capri Holdings acquisition.

01—Abstract

Summary

Summary of the 8-K filed November 7, 2024. Cited figures are marked; the original filing is the authoritative source.

Tapestry, Inc. (NYSE: TPR) furnished an 8-K on November 7, 2024 announcing results for its fiscal first quarter 2025 ended September 28, 2024.

Net sales were $1.51 billion^a, approximately in line with the prior year on both reported and constant currency bases, which the company described as ahead of its outlook. Gross margin was 75.3% versus 72.5% a year earlier, driven by operational improvements of 180 basis points, a 60 basis point benefit from lower freight expense, and FX tailwinds. Reported diluted EPS was $0.79, while non-GAAP diluted EPS was $1.02 (versus $0.93 non-GAAP in the prior-year period).

Reported net income was $186.6 million^b, and the reconciliation shows $55.0 million of after-tax acquisition costs, primarily financing and professional fees tied to the proposed acquisition of Capri Holdings Limited. By brand, Coach revenue rose 1% reported to $1.17 billion, Kate Spade declined 7% to $283.2 million, and Stuart Weitzman rose 2% to $53.7 million. Europe grew 27%, North America declined 1%, and Japan declined 8% reported.

Operating cash flow was $120 million^c and free cash flow was $94 million. Cash, cash equivalents and short-term investments totaled $7.31 billion, against total borrowings of $7.31 billion, reflecting $6.1 billion in senior notes issued in November 2023 to fund the Capri acquisition. Tapestry raised its fiscal 2025 outlook.

Non-GAAP EPS guidance is now $4.50 to $4.55^d, up from $4.45 to $4.50, and revenue guidance is over $6.75 billion, representing growth of approximately 1% to 2%. The guidance excludes any impact from the proposed Capri acquisition, and the company declared a quarterly dividend of $0.35 per share.

02—Key points

Key Highlights

Fiscal Q1 2025 net sales of $1.51 billion, approximately flat versus prior year on both reported and constant currency bases, described as ahead of the company's outlook.
Gross margin expanded to 75.3% from 72.5%, including 180 basis points of operational improvement and a 60 basis point benefit from lower freight expense.
Reported diluted EPS of $0.79 versus $0.84 a year earlier; non-GAAP diluted EPS of $1.02 versus $0.93, with $0.23 per share of acquisition-related costs excluded.
Coach revenue grew 1% to $1.17 billion, while Kate Spade fell 7% to $283.2 million and Stuart Weitzman rose 2% to $53.7 million.
Fiscal 2025 non-GAAP EPS outlook raised to $4.50 to $4.55 from $4.45 to $4.50, with revenue guidance of over $6.75 billion.
Cash and short-term investments of $7.31 billion equal total borrowings of $7.31 billion, which reflect $6.1 billion in senior notes issued in November 2023 to fund the proposed Capri Holdings acquisition.
Quarterly dividend of $0.35 per share declared, payable December 23, 2024; the company expects about $325 million in dividends for fiscal 2025.

03—Questions

Frequently Asked Questions

How did Tapestry perform in its fiscal first quarter 2025?
Net sales were $1.51 billion, approximately in line with the prior year on both reported and constant currency bases. Reported diluted EPS was $0.79, and non-GAAP diluted EPS was $1.02, a record according to the company. The company said results were ahead of its outlook, led by growth at Coach.
What drove the improvement in gross margin?
Gross margin was 75.3% compared with 72.5% in the prior year. The filing attributes the increase to operational improvements of 180 basis points, a 60 basis point benefit from lower freight expense, and FX tailwinds.
How did each brand perform?
Coach revenue rose 1% reported and 2% at constant currency to $1.17 billion. Kate Spade declined 7% reported to $283.2 million, and Stuart Weitzman increased 2% to $53.7 million.
What changed in the fiscal 2025 outlook?
Tapestry raised non-GAAP diluted EPS guidance to $4.50 to $4.55 from $4.45 to $4.50 and expects revenue of over $6.75 billion, representing growth of approximately 1% to 2%. The outlook assumes no revenue, net interest, or earnings impact from the proposed Capri Holdings acquisition.
What was the impact of the Capri acquisition costs on results?
The company recorded items that decreased pre-tax income by $71 million, net income by $55 million, and diluted EPS by $0.23. These relate primarily to financing and professional fees associated with the proposed Capri acquisition.

04—Continue

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