The New York-based luxury house has announced third quarter results. Sales increased by 1% in the period, consolidating previous sales growth, and the management continues pleased with the results achieved.
Victor Luis, Chief Executive Officer of Tapestry, commented: “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.”
Net sales totalled 1.33 billion US dollars for the third fiscal quarter as compared to 1.32 billion US dollars in the prior year, an increase of 1% on a reported basis and 2% in constant currency. Net income for the quarter was 117 million US dollars on a reported basis, with earnings per diluted share of 0.40 US dollars. This compared to net income of 140 million US dollars with earnings per diluted share of 0.48 US dollars in the prior year period.
Net sales for Coach reached 965 million US dollars for the third fiscal quarter, as compared to 969 million US dollars in the prior year on a reported basis, or an increase of 1% on a constant currency basis. Global comparable store sales increased by 1%, including a benefit of approximately 100 basis points driven by an increase in global e-commerce. Operating income for Coach stood at 239 million US dollars compared to reported operating income of 250 million US dollars in the prior year, while operating margin was 24.8% versus 25.8% a year ago.
Kate Spade Results
Net sales for Kate Spade totalled 281 million US dollars for the third fiscal quarter as compared to 269 million US dollars in the prior year, an increase of 4% on a reported basis and 5% in constant currency. Global comparable store sales declined 3%, including the positive impact of approximately 700 basis points from global e-commerce. Operating income for Kate Spade was 6 million US dollars on a reported basis, representing an operating margin of 2.2%. This compared to operating income of 13 million US dollars and an operating margin of 4.7% on a reported basis in the year ago period.
Stuart Weitzman Results
Net sales for Stuart Weitzman totaled 85 million US for the third fiscal quarter compared to 84 million US dollars reported in the same period of the prior year, an increase of 2% on a reported basis and 4% in constant currency. Operating income for Stuart Weitzman was a loss of 14 million US dollars on a reported basis, while operating margin was (15.9)% versus a loss of 11 million US dollars and (13.2)%, respectively, in the prior year.
Mr. Luis concluded: “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 (…) 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”.
Fiscal Year 2019 Outlook
Tapestry 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 US dollars to 2.60 US dollars. This guidance continues to reflect cost savings resulting from expected synergies related to the Kate Spade acquisition of 100 US dollars to 115 million US dollars as well as the impact of distributor consolidations and buybacks and systems investments.
Image credits: Tapestry