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Tapestry: sales fall by 7% in holiday quarter

Feb 5, 2021 United States
Tapestry: sales fall by 7% in holiday quarter
The New York-based house of modern luxury accessories and lifestyle brands reported results for the fiscal second quarter ended on the 26th of December 2020. Tapestry, the owner of Coach, Kate Spade and Stuart Weitzman registered a 7% decline in sales during the last quarter of the year
“Our results significantly outpaced expectations driven by the successful execution of our Acceleration Program. Our sharpened focus on the consumer fueled new customer acquisition across all brands with notable sales gains in Digital and China. Importantly, for the second consecutive quarter, we generated strong operating income growth supported by a reduction in promotional activity and higher AUR, as well as disciplined inventory and expense management. Further, we delivered this profit growth in the face of unprecedented Covid-related external headwinds, including pressured bricks and mortar traffic, store closures and capacity limits, as well as higher freight costs and shipping constraints. I’m incredibly proud of our teams around the world for their unwavering passion, agility, and resilience this holiday season”, commented Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc.

Second Quarter Results

Net sales of the Tapestry Group in the second quarter totalled 1.69 billion US dollars, as compared to 1.82 billion US dollars in the prior year, representing a 7% decline. Gross profit totaled 1.17 billion US dollars, while gross margin was 69.6%. This compared to prior year gross profit of approximately 1.21 billion US dollars and gross margin of 66.6%. Operating income was 389 million US dollars on a reported basis, while operating margin was 23.1% versus operating income of 363 million US dollars and an operating margin of 20.0% in the prior year. Net income for the quarter was 311 million US dollars on a reported basis, with earnings per diluted share of 1.11 US dollars. This compared to net income of 299 million US dollars with earnings per diluted share of 1.08 US dollars in the prior year period.


Coach Results

Net sales for Coach totaled 1.23 billion US dollars for the fiscal second quarter as compared to 1.27 billion US dollars in the prior year, representing a decline of 4%. Gross profit for Coach totaled 888 million US dollars, while gross margin was 72.5%, which compares to prior year gross profit of 877 million US dollars and gross margin of 69.1%. Operating income for Coach was 412 million US dollars compared to reported operating income of approximately 383 million US dollars in the prior year, while operating margin was 33.6% versus 30.1% a year ago.

Kate Spade Results

Net sales for Kate Spade totalled 376 million US dollars for the fiscal second quarter as compared to 430 million US dollars in the prior year, representing a decline of 13%, which included the impact related to a strategic pullback in lower margin wholesale disposition sales. Gross profit for Kate Spade totaled 233 million US dollars, while gross margin was 62.1%, as compares to gross profit of 262 million US dollars and gross margin of 61.0% in the prior year on a reported and non-GAAP basis. Operating income for Kate Spade was 59 million US dollars on a reported basis, representing an operating margin of 15.7%. This compared to operating income of 68 million US dollars and an operating margin of 15.8% on a reported basis in the year ago period.

Stuart Weitzman Results

Net sales for Stuart Weitzman totalled 85 million US dollars for the fiscal second quarter compared to 116 million US dollars in the same period of the prior year, representing a 27% decline. Gross profit for Stuart Weitzman totaled 53 million US dollars, while gross margin for the quarter was 62.2%. This compared to prior year reported gross profit of 70 million US dollars and gross margin of 60.5%. Operating income was 12 million US dollars on a reported basis, representing an operating margin of 14.1%, compared to operating income of 10 million US dollars and operating margin of 8.2% in the year ago period.

Image credits: fashionela.net

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