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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Tapestry Inc | NYSE:TPR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.15 | -0.35% | 42.52 | 42.99 | 42.41 | 42.64 | 2,592,964 | 22:21:44 |
Announces $1 Billion Share Repurchase Authorization
Tapestry, Inc. (NYSE: TPR), a leading New York-based house of modern luxury accessories and lifestyle brands, today reported third quarter results for the period ended March 30, 2019.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190509005239/en/
(Photo: Business Wire)
Discussion of Financial Results:
Victor Luis, Chief Executive Officer of Tapestry, Inc., said, “We are pleased with our third quarter performance, highlighted by increases in sales and gross margin on a constant currency basis in each of our three brands. Most notably, we again drove positive comps at Coach and generated a significant sequential comp improvement at Kate Spade with Nicola Glass’s new collection resonating with consumers globally. Further, we continued to make key investments across our portfolio and to realize meaningful synergies from the successful integration of Kate Spade as we harness the power of our multi-brand model. Taken together, adjusted EPS was in-line with our expectations for the quarter.”
Share Repurchase Authorization:
The Company announced its Board of Directors has authorized the repurchase of up to $1 billion of its outstanding common stock. Pursuant to this program, purchases of shares of the Company's common stock will be made subject to market conditions and at prevailing market prices, through open market purchases. Repurchased shares of common stock will become authorized but unissued shares. These shares may be issued in the future for general corporate and other purposes. In addition, the Company may terminate or limit the stock repurchase program at any time.
Mr. Luis continued, “We’re also excited to announce the approval of a $1 billion share repurchase authorization, demonstrating our confidence in driving long-term, sustainable growth and value. Through this program we will optimize our capital deployment and enhance shareholder return, while maintaining our financial and strategic flexibility. Importantly, we remain committed to our longstanding capital allocation priorities supported by our strong balance sheet and free cash flow: investing in our brands and business, pursuing strategic acquisitions on an opportunistic basis and maintaining our dividend.”
Non-GAAP Reconciliation:
During the fiscal third quarter, the Company recorded certain charges associated with its Integration and Acquisition activities and ERP implementation efforts as well as the benefit of Tax Legislation changes. Taken together, these items decreased the Company’s third quarter reported net income by approximately $4 million or about $0.02 per diluted share. Please refer to the financial tables included herein for a detailed reconciliation of the Company’s reported to non-GAAP results.
Overview of Third Quarter 2019 Tapestry, Inc. Results:
Third fiscal quarter results in each of the Company’s reportable segments were as follows:
Coach Third Quarter of 2019 Results:
Kate Spade Third Quarter of 2019 Results:
Stuart Weitzman Third Quarter of 2019 Results:
Mr. Luis added, “As we look ahead, we are committed to executing our strategic plan and achieving our near-term and long-range financial targets. This includes our expectation of delivering positive comps at both Coach and Kate Spade along with profitability improvements at Stuart Weitzman, both in the fourth fiscal quarter and in the years ahead. As such, we are maintaining our EPS guidance for fiscal 2019 and our outlook for double-digit operating income and EPS growth in fiscal 2020.”
“We are confident in the clarity of our vision, the strength of our team and the benefits of our global, multi-brand platform. Our model is distinctive – we are brand-led and consumer-centric – with a culture built upon the values of optimism, innovation and inclusivity. Each of our brands have differentiated attitudes, bringing diversification to our portfolio. At the same time, each can leverage Tapestry’s core capabilities and infrastructure to drive meaningful synergies. Taken together, we are uniquely positioned to capture the vast opportunities within the attractive and growing global accessories, footwear and outerwear markets,” Mr. Luis concluded.
Fiscal Year 2019 Outlook
The following fiscal 2019 outlook is provided on a non-GAAP basis and replaces all previous guidance.
The Company expects revenues for fiscal 2019 to increase at a low-to-mid-single-digit rate from fiscal 2018.
In addition, the Company projects earnings per diluted share in the range of $2.55 to $2.60. This guidance continues to reflect cost savings resulting from expected synergies related to the Kate Spade acquisition of $100 to $115 million as well as the impact of distributor consolidations and buybacks and systems investments. This guidance includes the expectation for net interest expense to be in the area of $50 million for the year. Further, the full year fiscal 2019 tax rate is projected at about 18%.
Fiscal Year 2019 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, such as the timing and exact amount of charges related to Integration and Acquisition and the costs associated with the Company’s ERP implementation have not yet occurred. Accordingly, a reconciliation of our non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort. Where possible, the Company has identified the estimated impact of the items excluded from its fiscal 2019 guidance.
This fiscal 2019 non-GAAP guidance excludes (1) expected pre-tax charges of approximately $35 million attributable to the Company’s ERP implementation efforts; (2) estimated pre-tax Integration and Acquisition charges of approximately $80 to $90 million (of which approximately $15 million is estimated to be non-cash); and (3) the impact of Tax Legislation of $9 million incurred in the second and third quarters of fiscal 2019. The Company continues to refine its integration plan and estimates for the ERP implementation efforts.
Conference Call Details:
The Company will host a conference call to review these results at 8:30 a.m. (ET) today, May 9, 2019. Interested parties may listen to the conference call via live webcast by accessing www.tapestry.com/investors on the Internet or calling 1-877-510-8087 or 1-862-298-9015 and providing the Conference ID 9287715. A telephone replay will be available starting at 12:00 p.m. (ET) today, for a period of five business days. To access the telephone replay, call 1-800-585-8367 or 1-404-537-3406 and enter the Conference ID 9287715. A webcast replay of the earnings conference call will also be available for five business days on the Tapestry website. Presentation slides have also been posted to the Company’s website at www.tapestry.com/investors.
The Company expects to report fiscal 2019 fourth quarter and full year financial results on Thursday August 15, 2019. To receive notification of future announcements, please register at www.tapestry.com/investors ("Subscribe to E-Mail Alerts").
Tapestry, Inc. is a New York-based house of modern luxury lifestyle brands. The Company’s portfolio includes Coach, Kate Spade and Stuart Weitzman. Our Company and our brands are founded upon a creative and consumer-led view of luxury that stands for inclusivity and approachability. Each of our brands are unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across channels and geographies. To learn more about Tapestry, please visit www.tapestry.com. The Company’s common stock is traded on the New York Stock Exchange under the symbol TPR.
This information to be made available in this press release may contain forward-looking statements based on management's current expectations. Forward-looking statements include, but are not limited to, the statements under “Fiscal Year 2019 Outlook,” as well as statements that can be identified by the use of forward-looking terminology such as "may," "will," “can,” "should," "expect," "intend," "estimate," "continue," "project," "guidance," "forecast," “outlook,” "anticipate," “excited,” “moving,” “leveraging,” “capitalizing,” “developing,” “drive,” “targeting,” “assume,” “plan,” “build,” “pursue,” “maintain,” “on track,” “well positioned to,” “look forward to,” “looking ahead,” “to acquire,” “achieve,” “strategic vision,” “growth opportunities” or comparable terms. Future results may differ materially from management's current expectations, based upon a number of important factors, including risks and uncertainties such as expected economic trends, the ability to anticipate consumer preferences, the ability to control costs and successfully execute our ERP implementation and growth strategies, our ability to achieve intended benefits, cost savings and synergies from acquisitions, the risk of cybersecurity threats and privacy or data security breaches, and the impact of tax legislation, etc. Please refer to the Company’s latest Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission for a complete list of risks and important factors. The Company assumes no obligation to revise or update any such forward-looking statements for any reason, except as required by law.
TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters and Nine Months Ended March 30, 2019 and March 31, 2018
(in millions, except per share data)
(unaudited) (unaudited) QUARTER ENDED NINE MONTHS ENDED March 30,2019
March 31,2018
March 30,2019
March 31,2018
Net sales $ 1,331.4 $ 1,322.4 $ 4,513.4 $ 4,396.3 Cost of sales 415.5 414.8 1,458.9 1,549.6 Gross profit 915.9 907.6 3,054.5 2,846.7 Selling, general and administrative expenses 810.1 748.6 2,410.3 2,363.1 Operating income 105.8 159.0 644.2 483.6 Interest expense, net 10.6 16.9 36.9 59.6 Income before provision for income taxes 95.2 142.1 607.3 424.0 Provision for income taxes (22.2 ) 1.8 112.8 238.2 Net income $ 117.4 $ 140.3 $ 494.5 $ 185.8 Net income per share: Basic $ 0.40 $ 0.49 $ 1.71 $ 0.65 Diluted $ 0.40 $ 0.48 $ 1.70 $ 0.65 Shares used in computing net income per share: Basic 290.0 286.2 289.5 284.7 Diluted 290.9 290.1 291.2 287.8TAPESTRY, INC.
GAAP TO NON-GAAP RECONCILIATION
For the Quarters Ended March 30, 2019 and March 31, 2018
(in millions, except per share data)
(unaudited)
March 30, 2019GAAP Basis(As Reported)
ERPImplementation(1)
Integration &Acquisition(2)
Impact of TaxLegislation(3)
Non-GAAP Basis(Excluding Items)
Gross profit $ 915.9 $ - $ (5.0 ) $ - $ 920.9 Selling, general and administrative expenses 810.1 14.7 15.6 - 779.8 Operating income 105.8 (14.7 ) (20.6 ) - 141.1 Income before provision for income taxes 95.2 (14.7 ) (20.6 ) - 130.5 Provision for income taxes (22.2 ) (3.7 ) (2.4 ) (24.9 ) 8.8 Net income 117.4 (11.0 ) (18.2 ) 24.9 121.7 Diluted net income per share 0.40 (0.05 ) (0.06 ) 0.09 0.42 March 31, 2018GAAP Basis(As Reported)
OperationalEfficiency Plan(4)
Integration &Acquisition(2)
Impact of TaxLegislation(3)
Non-GAAP Basis(Excluding Items)
Gross profit $ 907.6 $ - $ (4.1 ) $ - $ 911.7 Selling, general and administrative expenses 748.6 2.9 18.3 - 727.4 Operating income 159.0 (2.9 ) (22.4 ) - 184.3 Income before provision for income taxes 142.1 (2.9 ) (22.4 ) - 167.4 Provision for income taxes 1.8 (1.0 ) (12.1 ) 5.4 9.5 Net income 140.3 (1.9 ) (10.3 ) (5.4 ) 157.9 Diluted net income per share 0.48 - (0.04 ) (0.02 ) 0.54 (1) Amounts as of March 30, 2019 represent technology implementation costs. (2) Amounts as of March 30, 2019 and March 31, 2018 represent charges primarily attributable to acquisition and integration costs related to the purchase of Kate Spade & Company, certain distributors for the Coach and Stuart Weitzman brands and assumed operational control of Kate Spade joint ventures. These charges include:- Organization-related costs
- Limited life purchase accounting adjustments
- Professional fees
(3) Amounts as of March 30, 2019 represent a tax benefit primarily due to the transition tax related to foreign earnings deemed to be repatriated. Amounts as of March 31, 2018 represent charges due to the transition tax related to foreign earnings deemed to be repatriated partially offset by the re-measurement of deferred tax assets and liabilities. (4) Amounts as of March 31, 2018 represent technology infrastructure costs.TAPESTRY, INC.
GAAP TO NON-GAAP RECONCILIATION
For the Nine Months Ended March 30, 2019 and March 31, 2018
(in millions, except per share data)
(unaudited)
March 30, 2019GAAP Basis(As Reported)
ERPImplementation(1)
Integration &Acquisition(2)
Impact of TaxLegislation (3)
Non-GAAP Basis(Excluding Items)
Gross profit $ 3,054.5 $ - $ (9.1 ) $ - $ 3,063.6 Selling, general and administrative expenses 2,410.3 25.1 46.2 - 2,339.0 Operating income 644.2 (25.1 ) (55.3 ) - 724.6 Income before provision for income taxes 607.3 (25.1 ) (55.3 ) - 687.7 Provision for income taxes 112.8 (6.3 ) (4.5 ) 9.2 114.4 Net income 494.5 (18.8 ) (50.8 ) (9.2 ) 573.3 Diluted net income per share 1.70 (0.06 ) (0.17 ) (0.04 ) 1.97 March 31, 2018GAAP Basis(As Reported)
OperationalEfficiency Plan(4)
Integration &Acquisition(2)
Impact of TaxLegislation (3)
Non-GAAP Basis(Excluding Items)
Gross profit $ 2,846.7 $ - $ (110.9 ) $ - $ 2,957.6 Selling, general and administrative expenses 2,363.1 9.5 160.4 - 2,193.2 Operating income 483.6 (9.5 ) (271.3 ) - 764.4 Income before provision for income taxes 424.0 (9.5 ) (271.3 ) - 704.8 Provision for income taxes 238.2 (3.1 ) (79.3 ) 199.6 121.0 Net income 185.8 (6.4 ) (192.0 ) (199.6 ) 583.8 Diluted net income per share 0.65 (0.02 ) (0.67 ) (0.69 ) 2.03 (1) Amounts as of March 30, 2019 primarily represent technology implementation costs. (2) Amounts as of March 30, 2019 and March 31, 2018 represent charges primarily attributable to acquisition and integration costs related to the purchase of Kate Spade & Company, certain distributors of the Coach and Stuart Weitzman brands and assumed operational control of Kate Spade joint ventures. These charges include:- Limited life purchase accounting adjustments
- Professional fees
- Severance and other costs related to contractual payments with certain Kate Spade executives
- Organization-related costs
- Inventory reserves established for the destruction of inventory
(3) Amounts as of March 30, 2019 represent charges primarily due to the transition tax related to foreign earnings deemed to be repatriated. Amounts as of March 31, 2018 represent charges due to the transition tax related to foreign earnings deemed to be repatriated partially offset by the re-measurement of deferred tax assets and liabilities. (4) Amounts as of March 31, 2018 primarily represent technology infrastructure costs.TAPESTRY, INC.
GAAP TO NON-GAAP RECONCILIATION - FOR SEGMENT RESULTS
For the Quarters Ended March 30, 2019 and March 31, 2018
(in millions)
(unaudited)
March 30, 2019 GAAP Coach Kate Spade Stuart Weitzman Corporate Non-GAAP Cost of sales Integration & Acquisition - (4.3 ) (0.7 ) - Gross profit $ 915.9 $ - $ (4.3 ) $ (0.7 ) $ - $ 920.9 SG&A expenses Integration & Acquisition 5.5 3.0 0.1 7.0 ERP Implementation - - - 14.7 SG&A expenses $ 810.1 $ 5.5 $ 3.0 $ 0.1 $ 21.7 $ 779.8 Operating income $ 105.8 $ (5.5 ) $ (7.3 ) $ (0.8 ) $ (21.7 ) $ 141.1 March 31, 2018 GAAP Coach Kate Spade Stuart Weitzman Corporate Non-GAAP Cost of sales Integration & Acquisition (1.0 ) (1.0 ) (2.1 ) - Gross profit $ 907.6 $ (1.0 ) $ (1.0 ) $ (2.1 ) $ - $ 911.7 SG&A expenses Integration & Acquisition 0.2 9.1 4.7 4.3 Operational Efficiency Plan - - - 2.9 SG&A expenses $ 748.6 $ 0.2 $ 9.1 $ 4.7 $ 7.2 $ 727.4 Operating income $ 159.0 $ (1.2 ) $ (10.1 ) $ (6.8 ) $ (7.2 ) $ 184.3TAPESTRY, INC.
GAAP TO NON-GAAP RECONCILIATION - FOR SEGMENT RESULTS
For the Nine Months Ended March 30, 2019 and March 31, 2018
(in millions)
(unaudited)
March 30, 2019 GAAP Coach Kate Spade Stuart Weitzman Corporate Non-GAAP Cost of sales Integration & Acquisition (2.0 ) (5.4 ) (1.7 ) - Gross profit $ 3,054.5 $ (2.0 ) $ (5.4 ) $ (1.7 ) $ - $ 3,063.6 SG&A expenses Integration & Acquisition 5.5 10.1 12.2 18.4 ERP Implementation - - - 25.1 SG&A expenses $ 2,410.3 $ 5.5 $ 10.1 $ 12.2 $ 43.5 $ 2,339.0 Operating income $ 644.2 $ (7.5 ) $ (15.5 ) $ (13.9 ) $ (43.5 ) $ 724.6 March 31, 2018 GAAP Coach Kate Spade Stuart Weitzman Corporate Non-GAAP Cost of sales Integration & Acquisition (1.0 ) (106.4 ) (3.5 ) - Gross profit $ 2,846.7 $ (1.0 ) $ (106.4 ) $ (3.5 ) $ - $ 2,957.6 SG&A expenses Integration & Acquisition 0.2 106.6 6.5 47.1 Operational Efficiency Plan - - - 9.5 SG&A expenses $ 2,363.1 $ 0.2 $ 106.6 $ 6.5 $ 56.6 $ 2,193.2 Operating income $ 483.6 $ (1.2 ) $ (213.0 ) $ (10.0 ) $ (56.6 ) $ 764.4The Company reports information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). The Company's management does not, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Further, the non-GAAP measures utilized by the Company may be unique to the Company, as they may be different from non-GAAP measures used by other companies. The financial information presented above, as well as gross margin, SG&A expense ratio, and operating margin, have been presented both including and excluding the effect of certain items related to Integration & Acquisition-Related Costs and ERP Implementation-Related costs for Tapestry, Inc. and separately by segment and the impact of tax legislation for Tapestry, Inc.
The Company operates on a global basis and reports financial results in U.S. dollars in accordance with GAAP. Percentage increases/decreases in net sales for the Company and each segment and gross margin for the Stuart Weitzman segment have been presented both including and excluding currency fluctuation effects from translating foreign-denominated sales into U.S. dollars and compared to the same periods in the prior quarter and fiscal year. The Company calculates constant currency revenue results by translating current period revenue in local currency using the prior year period’s currency conversion rate.
Guidance for certain financial information for the fiscal year ending June 29, 2019 has also been presented on a non-GAAP basis.
Management utilizes these non-GAAP and constant currency measures to conduct and evaluate its business during its regular review of operating results for the periods affected and to make decisions about Company resources and performance. The Company believes presenting these non-GAAP measures, which exclude items that are not comparable from period to period, is useful to investors and others in evaluating the Company’s ongoing operating and financial results in a manner that is consistent with management’s evaluation of business performance and understanding how such results compare with the Company’s historical performance. Additionally, the Company believes presenting these metrics on a constant currency basis will help investors and analysts to understand the effect of significant year-over-year foreign currency exchange rate fluctuations on these performance measures and provide a framework to assess how business is performing and expected to perform excluding these effects.
TAPESTRY, INC.
SEGMENT INFORMATION
For the Quarters and Nine Months Ended March 30, 2019 and March 31, 2018
(in millions)
(unaudited)
Coach Kate Spade Stuart Weitzman Corporate TotalThree Months Ended March 30, 2019
Net sales $ 965.0 $ 281.1 $ 85.3 $ - $ 1,331.4 Gross profit 691.7 177.9 46.3 - 915.9 Operating income (loss) 239.5 6.1 (13.6 ) (126.2 ) 105.8 Income (loss) before provision for income taxes 239.5 6.1 (13.6 ) (136.8 ) 95.2Three Months Ended March 31, 2018
Net sales $ 969.3 $ 269.3 $ 83.8 $ - $ 1,322.4 Gross profit 691.3 171.0 45.3 - 907.6 Operating income (loss) 250.4 12.7 (11.0 ) (93.1 ) 159.0 Income (loss) before provision for income taxes 250.4 12.7 (11.0 ) (110.0 ) 142.1Nine Months Ended March 30, 2019
Net sales $ 3,174.3 1,034.9 $ 304.2 $ - $ 4,513.4 Gross profit 2,231.5 658.0 165.0 - 3,054.5 Operating income (loss) 848.9 140.1 (20.8 ) (324.0 ) 644.2 Income (loss) before provision for income taxes 848.9 140.1 (20.8 ) (360.9 ) 607.3Nine Months Ended March 31, 2018
Net sales $ 3,122.6 $ 972.8 $ 300.9 $ - $ 4,396.3 Gross profit 2,169.4 502.6 174.7 - 2,846.7 Operating income (loss) 826.7 (55.8 ) 19.7 (307.0 ) 483.6 Income (loss) before provision for income taxes 826.7 (55.8 ) 19.7 (366.6 ) 424.0TAPESTRY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
At March 30, 2019 and June 30, 2018
(in millions)
(unaudited) (audited) March 30,2019
June 30,2018
ASSETS Cash, cash equivalents and short-term investments $ 1,337.3 $ 1,250.0 Receivables 285.7 314.1 Inventories 811.1 673.8 Other current assets 228.3 194.7 Total current assets 2,662.4 2,432.6 Property and equipment, net 921.6 885.4 Other noncurrent assets 3,385.9 3,360.3 Total assets $ 6,969.9 $ 6,678.3 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 260.6 $ 264.3 Accrued liabilities 735.3 673.2 Current debt 0.7 0.7 Total current liabilities 996.6 938.2 Long-term debt 1,601.5 1,599.9 Other liabilities 840.6 895.6 Stockholders' equity 3,531.2 3,244.6 Total liabilities and stockholders' equity $ 6,969.9 $ 6,678.3TAPESTRY, INC.
STORE COUNT
At December 29, 2018 and March 30, 2019
(unaudited)
As of As of Directly-Operated Store Count: December 29, 2018 Openings (Closures) March 30, 2019Coach
North America 399 1 (8) 392 International 585 11 (7) 589Kate Spade
North America 218 1 (7) 212 International 176 7 (2) 181Stuart Weitzman
North America 68 3 (1) 70 International 50 8 - 58
View source version on businesswire.com: https://www.businesswire.com/news/home/20190509005239/en/
Tapestry, Inc.Analysts & Media:Andrea Shaw ResnickInterim Chief Financial OfficerGlobal Head of Investor Relations and Corporate Communications212/629-2618Christina ColoneVice President, Investor Relations212/946-7252
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