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Tapestry posts strong results

Sep 28, 2018 United States
Tapestry posts strong results
The New York-based house of modern luxury accessories and lifestyle brands reported results for the fourth quarter of the fiscal year marked by strong revenue performance
“Our strong fourth quarter results capped an excellent FY18 performance for Tapestry which demonstrated the power of our multi-brand model. We achieved our annual sales and operating income guidance, driving significant growth while earnings per share outpaced our forecast. It was also a year of many milestones, as we completed the acquisition of Kate Spade and evolved into a true House of Brands, establishing Tapestry as our new corporate identity. Our company is built on shared values and a common operating platform while our brands retain their distinctive personalities, individual narratives and unique positioning”, commented Victor Luis, Chief Executive Officer of Tapestry, Inc.

Fourth quarter highlights

In the period, net sales for the Tapestry group totaled 1.48 billion US dollars for the fourth fiscal quarter as compared to 1.13 billion US dollars in the prior year, an increase of 31% on a reported basis. On a constant currency basis, net sales increased by 29%.

Net income for the quarter totaled 212 million US dollars on a reported basis, with earnings per diluted share of 0.73 US dollars. This compared to reported net income of 152 million US dollars with earnings per diluted share of 0.53 US dollarsin the prior year period. On a non-GAAP basis, net income for the quarter totaled 176 million US dollars, with earnings per diluted share of 0.60 US dollars. This compared to non-GAAP net income of 142 million US dollars with earnings per diluted share of 0.50 US dollarsin the prior year period.


Sales by segment

Net sales for the Coach business totaled 1.10 billion US dollars fin the fourth fiscal quarter as compared to 1.05 billion US dollars in the prior year, an increase of 5% on a reported basis and 3% on a constant currency basis. Global comparable store sales rose 2% in aggregate, including e-commerce, as well as for bricks and mortar stores.

Net sales for Kate Spade reached 312 million US dollars, reflecting, in part, the strategic pullback in wholesale disposition and online flash sales, partially offset by the consolidation of the joint ventures for Mainland China, Hong Kong, Macau and Taiwan. Global comparable store sales declined 3%, including the negative impact of approximately half a point from a decline in global e-commerce due to the reduction in online flash sales, as noted.

The Stuart Weitzman business generated revenue of 73 million US dollars in the fourth fiscal quarter compared to 88 million US dollars reported in the same period of the prior year.
 

Overview of full year 2018

Net sales for fiscal year 2018 totaled 5.88 billion US dollars as compared to 4.49 billion US dollars in the prior year, an increase of 31% on reported basis. On a constant currency basis, total sales increased by 30%. Gross profit totaled 3.85 billion US dollars on a reported basis, while gross margin was 65.5% on a reported basis compared to 68.6% in the prior year. On a non-GAAP basis, gross profit totaled 3.97 billion US dollars, while gross margin was 67.5% as compared to 68.7% in the prior year.

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