| Imagery Source: Tapestry, Inc |
| Information Source: Nasdaq |
| Achieved Record Third Quarter Revenue and EPS with Growth Exceeding Expectations |
- Delivered Revenue of $1.6 Billion, an Increase of 7% Versus Prior Year (+8% Constant Currency) Fueled by Coach Brand Growth of 13% (+15% Constant Currency)
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- Drove 140 Basis Points of Gross Margin Expansion Versus Prior Year
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- Achieved GAAP Diluted EPS of $0.95, up 60% Versus Prior Year, and non-GAAP Diluted EPS of $1.03, an Increase of 27% Versus Prior Year
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- Remain On Track to Return Over $2 Billion to Shareholders in Fiscal Year 2025
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- Raised Fiscal Year 2025 Revenue, Earnings, and Cash Flow Outlook
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| Tapestry, Inc. (NYSE: TPR), a house of iconic accessories and lifestyle brands consisting of Coach, Kate Spade, and Stuart Weitzman, today reported results for the fiscal third quarter ended March 29, 2025. |
| This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20250508162560/en/ |
| Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc., commented: |
| “Our third quarter outperformance reinforces our position of strength. We accelerated top and bottom-line growth and raised our outlook for the fiscal year, demonstrating the power of brand building and our connections with consumers around the world. Importantly, while the external backdrop is complex, our vision remains clear. We maintain a bias for action and will harness our competitive advantages, including our global scale, compelling value, and strong fundamentals, to adapt and win in any environment. We are confident in our future and the meaningful opportunity to deliver durable growth and shareholder value.” |
| Tapestry, Inc. Strategic & Financial Highlights |
| Tapestry advanced its strategic priorities throughout the quarter. Highlights included: |
| Build Lasting Customer Relationships |
- Acquired over 1.2 million new customers in North America, an increase versus the prior year, driven by a growing number of Gen Z and Millennial consumers, who represented approximately two-thirds of these new customers.
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| Power Global Growth |
- Achieved 8% revenue growth versus prior year on a constant currency basis, outperforming expectations, highlighted by constant currency gains in North America (+9%), Europe (+35%), and total APAC (+4%); led by 15% constant currency revenue growth at Coach;
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- Grew diluted EPS by 27% to $1.03 on a non-GAAP basis, which was more than $0.15 ahead of the Company’s outlook, including a $0.05 benefit related to an expense timing shift into the fiscal fourth quarter.
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| Deliver Compelling Omni-Channel Experiences |
- Increased direct-to-consumer revenue by 9% on a constant currency basis, which included a mid-teens percentage increase in Digital revenue and a mid-single-digit gain in global brick-and-mortar sales, with strong and increasing profitability across channels, powered by a blend of creativity and Tapestry’s data and analytics capabilities.
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| Fuel Fashion Innovation and Product Excellence |
- Drove strong handbag revenue growth and a mid-teens percentage rate AUR gain at Coach, reflecting compelling innovation and broad-based traction across the leather goods offering;
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- Expanded gross and non-GAAP operating margins by 140 basis points, reflecting the Company’s operational outperformance and discipline, which continued to fund incremental investments in brand marketing;
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- Leveraged Tapestry’s agile and globally scaled supply chain to deliver innovation and value to consumers, underpinning the Company’s accelerated growth, margin expansion, and diligent inventory management.
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| Shareholder Return Programs |
| Given Tapestry’s strong operational results, robust balance sheet, significant free cash flow generation, and growth outlook, the Company continues to expect to return more than $2 billion or over 100 per cent of its adjusted free cash flow in Fiscal 2025 to shareholders through dividends and share repurchases: |
- Dividend: The Company’s Board of Directors declared a quarterly cash dividend of $0.35 per common share payable on June 23, 202,5, to shareholders of record as of the close of business on June 6, 2025. In Fiscal 2025, as previously announced, Tapestry expects to maintain its annual dividend rate of $1.40 per common share.
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- Share Repurchases: As previously announced, in November, the Company executed a $2 billion Accelerated Share Repurchase program (‘ASR’), which remained underway during the fiscal third quarter. In addition to the ASR program, the Company has $800 million remaining under its previous share repurchase authorisation.
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| Overview of Fiscal 2025 Third Quarter Financial Results |
- Net sales totaled $1.58 billion, representing 7% growth versus prior year or 8% growth on a constant currency basis. FX represented a headwind of approximately 150 basis points in the quarter due to the appreciation of the U.S. Dollar.
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- Gross profit totalled $1.21 billion, while gross margin was 76.1%, driven by operational improvements of approximately 140 basis points. This compares to the prior year's gross profit of $1.11 billion, representing a gross margin of 74.7%.
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- SG&A expenses totalled $952 million and represented 60.1% of sales on a GAAP basis. On a non-GAAP basis, SG&A expenses totalled $929 million and represented 58.6% of sales. In the prior year period, SG&A expenses totalled $903 million and represented 60.9% of sales on a GAAP basis, and totalled $868 million and represented 58.6% of sales on a non-GAAP basis.
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- Operating income was $254 million on a GAAP basis, while operating margin was 16.0%. On a non-GAAP basis, operating income was $277 million, while operating margin was 17.5%. This compares to GAAP operating income of $204 million and a 13.8% operating margin, and non-GAAP operating income of $239 million and a 16.1% operating margin in the prior year period.
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- Net interest expense was $15 million, compared to prior year net interest expense of $32 million on a GAAP basis and net interest income of $1 million on a non-GAAP basis.
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- Other income was $1 million compared to other expenses of $3 million in the prior year.
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- Net income was $203 million, with earnings per diluted share of $0.95 on a GAAP basis. On a non-GAAP basis, net income was $220 million, with earnings per diluted share of $1.03. In the prior year period, net income was $139 million, with earnings per diluted share of $0.60 on a GAAP basis. On a non-GAAP basis, net income in the prior year was $190 million, with earnings per diluted share of $0.81. The tax rate for the quarter was 14.9% on a GAAP basis and 16.4% on a non-GAAP basis. In the prior year period, the tax rate was 17.7% on a GAAP basis and 19.9% on a non-GAAP basis.
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| Balance Sheet and Cash Flow Highlights |
- Cash, cash equivalents and short-term investments totalled $1.1 billion, and total borrowings outstanding were $2.7 billion, representing net debt of $1.6 billion. The Company’s leverage ratio, based on gross debt to adjusted EBITDA, was 1.6x as of the end of the fiscal quarter. In addition, after quarter-end, Tapestry repaid its April 2025 bonds at maturity, totalling $303 million, as anticipated.
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- Inventory was $874 million, as expected, which excluded $87 million of Stuart Weitzman inventory classified as Assets held for sale. This compared to the prior year’s total ending inventory of $824 million.
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- Cash flow from operating activities for the fiscal third quarter was an inflow of $144 million compared to an inflow of $98 million in the prior year. On a year-to-date basis, cash flow from operating activities was an inflow of $770 million compared to an inflow of approximately $1.0 billion in the prior year. Adjusted free cash flow for the fiscal third quarter was an inflow of $135 million compared to an inflow of $22 million in the prior year. On a year-to-date basis, adjusted free cash flow was an inflow of approximately $1.1 billion compared to an inflow of $946 million in the prior year.
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- CapEx and implementation costs related to Cloud Computing for the fiscal third quarter was $36 million versus $29 million a year ago. On a year-to-date basis, CapEx and implementation costs related to Cloud Computing was $105 million versus $88 million a year ago.
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| Non-GAAP Reconciliation |
| During the fiscal third quarter of 2025, Tapestry recorded certain items that decreased the Company’s pre-tax income by $24 million, net income by $17 million, and earnings per diluted share by $0.08. These items reflect Acquisition and Divestiture costs, resulting from the pending sale of the Stuart Weitzman brand, which is expected to close in the summer of 2025, subject to customary closing conditions, and to a lesser extent, non-recurring organisational efficiency costs. |
| Please refer to the Financial Schedules included herein for a full reconciliation of the Company’s reported GAAP to non-GAAP results. |
| Financial Outlook |
| Tapestry is raising its Fiscal 2025 outlook, which is provided on a non-GAAP basis. The Company now expects: |
- Revenue of approximately $6.95 billion, representing growth of 4% versus the prior year on a reported basis, including an expected currency headwind of nearly 50 basis points. This is ahead of the prior guidance of approximately 3% growth versus the prior year;
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- Operating margin expansion of approximately 100 basis points versus the prior year, consistent with prior guidance;
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- Net interest expense of approximately $25 million as compared to prior guidance of $35 million;
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- Tax rate of approximately 17.5% versus prior guidance of approximately 17% to 18%;
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- Weighted average diluted share count of approximately 223 million shares, consistent with prior guidance;
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- Earnings per diluted share in the area of $5.00, representing a high-teens percentage growth rate compared to the prior year, and exceeding the Company’s prior guidance of $4.85 to $4.90;
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- Adjusted free cash flow of approximately $1.3 billion, ahead of the prior guidance of $1.2 billion.
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| Please note this outlook: |
- Embeds the expectation for tariffs on goods imported into the United States by the latest trade policies as of April 10, 2025. This includes an anticipated additional 145% tariff on imports from China and an additional 10% tariff on all other global imports. These tariffs are expected to have an immaterial impact on Fiscal 2025 results due to the timing of sell-throughs and in-transits.
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- Embeds foreign currency exchange rates using spot rates at the time of forecast;
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- Embeds no material worsening of inflationary pressures or consumer confidence;
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- Excludes one-time transaction costs associated with the pending sale of Stuart Weitzman, which is expected to be completed during the summer of 2025, subject to customary closing conditions. The Fiscal 2025 outlook continues to incorporate the brand’s operations through the end of the fiscal year.
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- Excludes non-recurring costs associated with the Company’s organisational efficiency efforts, and
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- Excludes the net interest and earnings impact related to the terminated acquisition of Capri Holdings Limited.
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| Given the dynamic nature of these and other external factors, financial results could differ materially from the outlook provided. |
| Financial Outlook - Non-GAAP Adjustments: |
| The Company is not able to provide a full reconciliation of the non-GAAP financial measures to GAAP presented in this release and on the Company’s conference call because certain material items that impact these measures have not yet occurred and cannot be reasonably estimated at this time. Accordingly, a reconciliation of the Company’s non-GAAP financial measure guidance to the corresponding GAAP measure is not available without unreasonable effort. |
| For the full document, click the link below |
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Tapestry, Inc |
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