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Tapestry 8-K Report, Financial Results (Feb 6, 2025)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed February 6, 2025
Period End
February 6, 2025
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 February 6, 2025. Cited figures are marked; the original filing is the authoritative source.

Tapestry, Inc. (NYSE: TPR) furnished this Form 8-K to report financial results for its fiscal second quarter ended December 28, 2024, with a press release (Exhibit 99.1) announcing record second-quarter revenue of $2.2 billiona, up 5% versus the prior year, driven by 10% growth at Coach.

Reported diluted EPS was $1.38b and non-GAAP diluted EPS was $2.00, with reported net income of $310 million. Reported gross margin was 74.4%, up from 71.6% a year earlier, and non-GAAP operating income was $548 million. The company recorded $120 million of loss on extinguishment of debt, primarily tied to redeeming acquisition-related debt after the termination of the merger agreement with Capri Holdings Limited.

Net debt was $1.7 billionc at quarter-end, with a leverage ratio of 1.6x. Tapestry raised its fiscal 2025 outlook. It now expects revenue of over $6.85 billion, non-GAAP diluted EPS of $4.85 to $4.90 (up from $4.50 to $4.55), and adjusted free cash flow of approximately $1.2 billion.

The company expects to return more than $2 billiond to shareholders in fiscal 2025 through dividends and share repurchases, including a $2 billion accelerated share repurchase program executed during the quarter. The board declared a quarterly dividend of $0.35 per share, payable March 24, 2025. The outlook excludes any impact from the terminated Capri acquisition and assumes no further U.S. Dollar appreciation.

The company also noted an expected additional 10% tariff on goods imported from China, which it characterized as immaterial to fiscal 2025 results. Investors should note that the reported figures include acquisition-related costs that reduced net income by $140 million, or $0.62 per diluted share.

02—Key points

Key Highlights

  1. Record fiscal Q2 2025 revenue of $2.2 billion (2,195.4 million), up 5% reported and in constant currency, with Coach up 11% reported and Kate Spade down 10%.
  2. Reported diluted EPS of $1.38 versus $1.39 a year earlier; non-GAAP diluted EPS of $2.00, with an operational outperformance contribution of $0.17 versus plan.
  3. Gross margin of 74.4%, up from 71.6%, reflecting 260 basis points of operational improvement and 20 basis points from lower freight expense.
  4. Loss on extinguishment of debt of $120 million tied to redemption of acquisition-related debt after the Capri Holdings merger agreement was terminated.
  5. Raised fiscal 2025 outlook: revenue of over $6.85 billion, EPS of $4.85 to $4.90 (from $4.50 to $4.55), and adjusted free cash flow of approximately $1.2 billion (from $1.1 billion).
  6. Capital returns of over $2 billion expected in fiscal 2025, including a $2 billion accelerated share repurchase program and a $0.35 quarterly dividend; $800 million remains under the prior repurchase authorization.
  7. Balance sheet: cash and short-term investments of $1.0 billion, total borrowings of $2.7 billion, net debt of $1.7 billion, and a 1.6x leverage ratio; April 2025 bonds of $303 million expected to be repaid at maturity.

03—Questions

Frequently Asked Questions

  1. How did Tapestry perform in its fiscal second quarter of 2025?

    Net sales were $2.20 billion, up 5% on both a reported and constant currency basis, with Coach up 11% reported and Kate Spade down 10%. Reported operating income was $493 million, a 22.4% operating margin, compared with $448 million a year earlier. Reported net income was $310 million, or $1.38 per diluted share.

  2. Why did reported earnings differ from non-GAAP results?

    The company recorded items affecting comparability, primarily acquisition costs related to debt extinguishment, expense reimbursement, financing, and professional fees. These items decreased pre-tax income by $198 million, net income by $140 million, and diluted EPS by $0.62. Non-GAAP diluted EPS was $2.00.

  3. What is the company's updated fiscal 2025 outlook?

    Tapestry expects revenue of over $6.85 billion, growth of approximately 3% reported, operating margin expansion of approximately 100 basis points, and non-GAAP EPS of $4.85 to $4.90, up from $4.50 to $4.55. Adjusted free cash flow is now expected to be approximately $1.2 billion. The outlook assumes no impact from the terminated Capri Holdings acquisition.

  4. How much is Tapestry returning to shareholders?

    The company expects to return more than $2 billion, or over 100% of its free cash flow, in fiscal 2025 through dividends and share repurchases. It executed a $2 billion accelerated share repurchase program during the quarter, received an initial delivery of 28.4 million shares, and declared a quarterly dividend of $0.35 per share payable March 24, 2025. It expects to maintain an annual dividend rate of $1.40 per share.

  5. What is the company's debt and liquidity position?

    At December 28, 2024, cash, cash equivalents and short-term investments totaled $1.0 billion and total borrowings were $2.7 billion, for net debt of $1.7 billion. The leverage ratio based on gross debt to adjusted EBITDA was 1.6x. The company expects to repay $303 million of April 2025 bonds at maturity.

04—Continue

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