Significant Actions Underway to Mitigate the
Impact of Covid-19
Tapestry, Inc. (NYSE: TPR), a leading New York-based house of
modern luxury accessories and lifestyle brands, today reported
results for the fiscal third quarter ended March 28, 2020.
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the full release here:
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Jide Zeitlin, Chairman and Chief Executive Officer of Tapestry,
Inc., said, “We entered the calendar year with strong underlying
momentum. As the novel coronavirus expanded across the globe, our
results materially weakened. In navigating this unprecedented
crisis, we are guided by our values and have continued to
prioritize our community – our people, their families, and our
customers. I am incredibly proud of our teams around the world and
the resilience they have shown in facing events that have impacted
every aspect of how we live our lives and manage our business.”
“No one is immune to the effects of this one hundred year
storm. We are taking aggressive actions to assure that Tapestry
emerges a strong company when conditions normalize. We have
powerful brands with deep consumer connections and a long history
of successfully navigating global challenges and macroeconomic
shocks. In addition, we have a strong balance sheet, we benefit
from a multi-channel international distribution model with only
modest exposure to wholesale, and a diversified supply chain.”
“We are building on our strengths and moving swiftly to adapt to
the current environment with a focus on preserving liquidity and
enhancing financial flexibility. We are accelerating key elements
of the transformational work we began prior to the crisis, notably
driving outsized growth in digital and creating a more streamlined
and data-driven organization.”
Distribution Network
During the quarter, 90% of Tapestry’s stores were either closed
or operating on shortened hours. We have seen a degree of normalcy
return in certain areas first impacted, including Mainland China
and Korea, and expect to apply lessons learned as, over time,
additional countries and regions reopen. Across all brands, our
network was impacted as follows:
- China: Approximately 90% of stores on the Mainland were
closed as of early February. By the end of the quarter, the vast
majority of stores had re-opened, though traffic remained muted. As
of mid-April, all stores were open and we have continued to
experience a gradual improvement in the business week-to-week.
- North America and Europe: All stores were closed as of
mid-March and the vast majority remain closed today. However,
beginning on May 1st, in accordance with state and local
guidelines, utilizing heightened health and safety precautions, the
Company will reopen approximately 40 stores in North America for
contactless curbside or storefront pickup service only. In Europe,
we have opened five locations in Germany and Austria. The Company
is planning a phased approach to welcome shoppers back into safety
enhanced stores where teams will be equipped with gloves and masks,
offer sanitizers and wipes at the cash wrap, and limit the number
of customers to align with recommended social distancing
practices.
- Japan: The vast majority of stores were operating on
shortened hours as of mid-March. As of mid-April, all stores were
closed in compliance with local government requirements.
- South Korea: The majority of stores were operating on
shortened hours as of mid-March and as of early April, all stores
had resumed normal operating hours.
- Other Asia Pacific: The majority of stores in Malaysia,
Singapore, Australia and New Zealand were operating under shortened
hours as of mid-March and by early April were closed. Most remain
closed today, however, in Australia, Tapestry has reopened twelve
locations.
- Global Wholesale: Similar to the Company’s directly
operated stores, the majority of its travel retail and
distributor-run locations as well as international and North
America department stores and multi-brand shops were closed over
the quarter and remain closed today.
- Digital: Tapestry’s e-commerce platforms and related
distribution centers across all brands and regions remained
operational almost continuously during the quarter. The Company’s
brand teams distorted marketing investment towards digital, driving
engagement with customers and generating significant overall
e-commerce sales gains. Because the Company’s digital business is
smaller than the revenues generated in physical stores, the strong
digital growth did not offset the loss of revenue due to store
closures.
Supply Chain
Tapestry’s supply chain continued to operate effectively over
the third quarter given its globally diversified manufacturing and
sourcing base, with relatively limited exposure to China.
Subsequent to quarter-end, the Company has been successfully
working with its service providers to balance changing levels of
supply and demand.
Mitigating Actions
As previously announced, the Company moved quickly to mitigate
the impact of Covid-19, reinforcing its liquidity and financial
flexibility. Tapestry has also accelerated its transformational
work to position the Company for recovery and long-term, profitable
growth:
- Driving SG&A savings by eliminating non-essential
operating costs, such as marketing, across all key areas of spend
and reducing corporate compensation;
- Tightly managing inventories by reflowing late spring
and early summer product introductions and cancelling inventory
receipts for late summer/early fall 2020, which is expected to
result in over $500 million of working capital savings;
- Reducing Capex by at least $100 million in fiscal 2021
as compared to its run-rate spend of approximately $275 million.
The Company is delaying or cancelling new store openings, while
prioritizing investment in high-return projects aligned with the
multi-year growth agenda, notably in digital.
- Drawing down $700 million from its $900 million revolving
credit facility, funded after quarter end, to add to cash
balances;
- Suspending both its quarterly cash dividend and share
repurchase programs saving approximately $700 million annually
as compared to fiscal 2020.
In addition, the Company is taking additional actions to further
streamline its organization, including reductions in its corporate
and retail workforce. In aggregate, the Company expects to incur
pre-tax charges associated with these actions of approximately
$55-$70 million, primarily related to cash severance costs, which
will be reflected beginning in the fourth quarter of fiscal 2020,
and are expected to be completed by the end of fiscal 2021. These
charges will be recorded within SG&A expenses. These actions
position Tapestry to emerge as a global, consumer-centric company,
with a more agile organizational structure. Being more responsive
to the rapidly changing retail environment enables Tapestry’s
multi-year growth agenda.
Outlook
“The impact of the Covid-19 pandemic transcends near-term
results. Consumer behaviors are changing and secular trends are
accelerating. In this environment, we are planning conservatively
while acting decisively to transform the way we operate and engage
with our customers. The saliency of our brands plus the strong
financial position of our company will enable us to successfully
manage through this crisis, as we become a more consumer-centric,
data-driven, and agile organization," Mr. Zeitlin concluded.
Overview of Third Quarter 2020
Tapestry, Inc. Results
The following results include the impact of the coronavirus.
Please note the Company is not providing comparable store sales
figures, as the Company believes this will not be a valuable
measure given the current business environment and number of store
closures during the quarter.
- Net sales totaled $1.07 billion for the fiscal third
quarter as compared to $1.33 billion in the prior year.
- Gross profit totaled $616 million on a reported basis,
while gross margin for the quarter was 57.4% compared to $916
million and 68.8%, respectively, in the prior year. On a non-GAAP
basis, gross profit totaled $720 million, while gross margin was
67.1% as compared to $921 million and 69.2%, respectively, in the
prior year.
- SG&A expenses totaled $1.30 billion on a reported
basis and represented 121.3% of sales compared to $806 million and
60.6%, respectively, in the year ago quarter. On a non-GAAP basis,
SG&A expenses were $752 million and represented 70.1% of sales
as compared to $776 million and 58.3%, respectively, in the year
ago period.
- Operating loss was approximately $685 million on a
reported basis, while operating margin was (63.9)% versus operating
income of $110 million and an operating margin of 8.2% in the prior
year. On a non-GAAP basis, operating loss was $32 million, while
operating margin was (2.9)% versus operating income of $145 million
and an operating margin of 10.9% in the prior year.
- Net interest expense was approximately $13 million in
the quarter as compared to $11 million in the year ago period.
- Other expense was $6 million versus $4 million in the
prior year.
- Net loss for the quarter was $677 million on a reported
basis, with earnings per diluted share of ($2.45). This compared to
net income of $117 million with earnings per diluted share of $0.40
in the prior year period. The reported tax rate for the quarter of
4.0% compared to the prior year reported rate of (23.4)%. On a
non-GAAP basis, net loss for the quarter was $76 million with
earnings per diluted share of ($0.27). This compared to non-GAAP
net income of $122 million with earnings per diluted share of $0.42
in the prior year period. The non-GAAP tax rate for the quarter was
(48.2)% compared to 6.8% in the prior year.
- Inventory was $853 million at the end of quarter versus
ending inventory of $811 million in the year ago period.
Fiscal third quarter results by brand were as follows:
Coach Third Quarter 2020
Results
- Net sales for Coach totaled approximately $772 million
for the fiscal third quarter as compared to $965 million in the
prior year.
- Gross profit for Coach totaled $476 million on a
reported basis, while gross margin was 61.6%. This compared to
reported gross profit and margin in the prior year of $692 million
and 71.7%, respectively. On a non-GAAP basis, gross profit was $538
million, while gross margin was 69.6%, which compared with $692
million and 71.7% in the prior year’s third quarter.
- SG&A expenses for Coach were $438 million on a
reported basis and represented 56.6% of sales compared to $453
million and 46.9%, respectively, in the year ago period. On a
non-GAAP basis, SG&A expenses were $421 million and represented
54.5% of sales compared to expenses of $447 million or 46.3% of
sales in the prior year.
- Operating income for Coach totaled $38 million compared
to reported operating income of $239 million in the prior year,
while operating margin was 4.9% versus 24.8% a year ago. On a
non-GAAP basis, operating income was $116 million compared to $244
million in the prior year, while operating margin was 15.1% versus
25.3% a year ago.
Kate Spade Third Quarter 2020
Results
- Net sales for Kate Spade totaled approximately $250
million for the fiscal third quarter as compared to $281 million in
the prior year.
- Gross profit for Kate Spade totaled approximately $123
million on a reported basis, while gross margin was 49.1%. This
compared to reported gross profit and margin in the prior year of
$178 million and 63.3%, respectively. On a non-GAAP basis, gross
profit was $155 million, while gross margin was 62.0%, which
compared with $182 million and 64.8% in the prior year’s third
quarter.
- SG&A expenses for Kate Spade were $214 million on a
reported basis and represented 85.7% of sales. This compared to
reported SG&A expenses of $171 million in the year ago period,
which represented 60.8% of sales. On a non-GAAP basis, SG&A
expenses were $172 million and represented 68.9% of sales. This
compared to expenses of $168 million or 59.8% of sales on a
non-GAAP basis in the previous year.
- Operating loss for Kate Spade was $91 million on a
reported basis, representing an operating margin of (36.6)%. This
compared to operating income of $7 million and an operating margin
of 2.5% on a reported basis in the year ago period. On a non-GAAP
basis, operating loss was $17 million, while operating margin was
(6.9)%. This compared to operating income of $14 million and an
operating margin of 5.0% on a non-GAAP basis in the previous
year.
Stuart Weitzman Third Quarter 2020
Results
- Net sales for Stuart Weitzman totaled $51 million for
the fiscal third quarter compared to $85 million reported in the
same period of the prior year.
- Gross profit for Stuart Weitzman totaled $18 million on
a reported basis, while gross margin for the quarter was 35.4% as
compared to $46 million and 54.3%, respectively, in the prior year.
On a non-GAAP basis, gross profit was $28 million, while gross
margin was 54.7% as compared to $47 million and 55.2%,
respectively, in the year ago period.
- SG&A expenses for Stuart Weitzman were $549 million
on a reported basis as compared to $60 million in the prior year’s
third quarter. On a non-GAAP basis, SG&A expenses were $63
million as compared to $60 million.
- Operating loss for Stuart Weitzman was $531 million on a
reported basis versus an operating loss of $14 million in the prior
year. On a non-GAAP basis, the operating loss was $35 million
versus an operating loss of $13 million in the prior year.
Non-GAAP Reconciliation
In the third quarter of fiscal 2020, the Company recorded
certain items that increased its pre-tax loss by $654 million and
its net loss by $601 million or about $2.18 per diluted share.
Please refer to the financial tables included herein for a detailed
reconciliation of the Company’s reported to non-GAAP results. These
items included:
Impairments:
In the third quarter of fiscal 2020, the Company recorded $267
million of impairment charges to indefinite-lived brand intangible
assets and $211 million of impairment charges to goodwill for the
Stuart Weitzman reporting unit. These charges were as a result of a
decline in both current and future expected cash flows, exacerbated
by the Covid-19 pandemic, which resulted in a decline in sales
driven by closures of a significant portion of stores and traffic
declines globally. In addition, the Company recorded $104 million
related to an increase in inventory reserves, and $66 million of
impairment charges in store assets, including the lease assets
recorded in connection with the adoption of the new lease
accounting standard. These charges were primarily a result of
decreased net sales and cash flow projections associated with
Covid-19.
ERP Implementation and Organization-related & Integration
Costs:
In addition, the Company recorded $6 million in pre-tax charges
associated with its ERP and Organization-related and Integration
activities.
Fiscal Year 2020 Outlook
Given the dynamic nature of the Covid-19 crisis and lack of
visibility, the potential financial impact to our business cannot
be accurately projected. Therefore, the Company is not providing
guidance for its fiscal fourth quarter and full year 2020.
Conference Call Details
The Company will host a conference call to review these results
at 8:30 a.m. (ET) today, April 30, 2020. 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
2376079. 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 2376079. 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.
Upcoming Events
The Company expects to report fiscal 2020 fourth quarter and
full year results on Thursday August 13, 2020. To receive
notification of future announcements, please register at
www.tapestry.com/investors ("Subscribe to E-Mail Alerts").
The Company intends to host an analyst and investor day at its
headquarters in New York City in the summer of 2020 to discuss
strategic initiatives. More details, including webcast
registration, will be provided in the future.
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 “Outlook” and “Fiscal Year 2020
Outlook,” statements regarding the potential impact of the Covid-19
pandemic and success of mitigating actions, the Company’s
multi-year growth agenda and 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,” “roadmap,”
"anticipate," “excited,” “moving,” “leveraging,” “capitalizing,”
“developing,” “drive,” “targeting,” “assume,” “plan,” “build,”
“pursue,” “maintain,” “progress,” “future,” “emerge,” “assure,” “on
track,” “well positioned to,” “look forward to,” “looking ahead,”
“to acquire,” “achieve,” “strategic vision,” “ongoing headwinds,”
“growth opportunities,” “view,” 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 the impact of the Covid-19 pandemic, the
ability to control costs and successfully execute our growth
strategies, expected economic trends, the ability to anticipate
consumer preferences, risks associated with operating in
international markets, 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 the CARES Act and other legislation, etc. Please
refer to the Company’s latest Annual Report on Form 10-K, quarterly
report on 10-Q 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 Quarter and
Nine Months Ended March 28, 2020 and March 30, 2019
(in millions, except per share
data) (unaudited) (unaudited)
QUARTER ENDED NINE MONTHS ENDED March 28, 2020
March 30, 2019 March 28, 2020 March 30, 2019
Net sales
$ 1,072.7
$ 1,331.4
$ 4,246.6
$ 4,513.4
Cost of sales
456.5
415.5
1,506.2
1,458.9
Gross profit
616.2
915.9
2,740.4
3,054.5
Selling, general and administrative expenses
1,301.7
806.1
3,011.2
2,405.9
Operating income (loss)
(685.5)
109.8
(270.8)
648.6
Interest expense, net
13.5
10.6
39.8
36.9
Other expense (gain)
6.0
4.0
12.8
4.4
Income before provision for income taxes
(705.0)
95.2
(323.4)
607.3
Provision for income taxes
(27.9)
(22.2)
34.9
112.8
Net income (loss)
$ (677.1)
$ 117.4
$ (358.3)
$ 494.5
Net income (loss) per share: Basic
$ (2.45)
$ 0.40
$ (1.28)
$ 1.71
Diluted
$ (2.45)
$ 0.40
$ (1.28)
$ 1.70
Shares used in computing net income (loss) per share:
Basic
276.1
290.0
279.4
289.5
Diluted
276.6
290.9
280.2
291.2
TAPESTRY, INC.
DETAIL TO NET SALES
For the Quarter and Nine Months Ended
March 28, 2020 and March 30, 2019 (in millions) (unaudited) QUARTER ENDED
March 28, 2020 March 30, 2019 % Change
Constant Currency %Change Coach
$ 772.5
$ 965.0
(20)%
(20)%
Kate Spade
249.5
281.1
(11)%
(11)%
Stuart Weitzman
50.7
85.3
(40)%
(40)%
Total Tapestry
$ 1,072.7
$ 1,331.4
(19)%
(19)%
NINE MONTHS ENDED March 28, 2020
March 30, 2019 % Change Constant Currency
%Change Coach
$ 3,008.3
$ 3,174.3
(5)%
(5)%
Kate Spade
985.4
1,034.9
(5)%
(5)%
Stuart Weitzman
252.9
304.2
(17)%
(16)%
Total Tapestry
$ 4,246.6
$ 4,513.4
(6)%
(6)%
TAPESTRY, INC.
GAAP TO NON-GAAP RECONCILIATION
(in millions, except per share
data) (unaudited)
For the Quarter Ended March 28, 2020 Items
Affecting Comparability GAAP Basis(As Reported)
ERP Implementation Organization-related &Integration
Costs Impairment Non-GAAP Basis(Excluding Items)
Cost of sales Coach
475.7
-
-
(61.9)
537.6
Kate Spade
122.5
-
-
(32.3)
154.8
Stuart Weitzman
18.0
-
-
(9.8)
27.8
Gross profit(1)
$ 616.2
$ -
$ -
$ (104.0)
$ 720.2
SG&A expenses Coach
437.6
-
-
16.4
421.2
Kate Spade
213.8
-
0.3
41.5
172.0
Stuart Weitzman
548.7
-
0.2
485.8
62.7
Corporate
101.6
2.8
2.9
-
95.9
SG&A expenses
$ 1,301.7
$ 2.8
$ 3.4
$ 543.7
$ 751.8
Operating income (loss) Coach
38.1
-
-
(78.3)
116.4
Kate Spade
(91.3)
-
(0.3)
(73.8)
(17.2)
Stuart Weitzman
(530.7)
-
(0.2)
(495.6)
(34.9)
Corporate
(101.6)
(2.8)
(2.9)
-
(95.9)
Operating income (loss)
$ (685.5)
$ (2.8)
$ (3.4)
$ (647.7)
$ (31.6)
Provision for income taxes
(27.9)
(0.7)
(2.5)
(49.4)
24.7
Net income (loss)
$ (677.1)
$ (2.1)
$ (0.9)
$ (598.3)
$ (75.8)
Net income (loss) per diluted common share
$ (2.45)
$ (0.01)
$ -
$ (2.17)
$ (0.27)
(1) Adjustments within Gross profit are recorded within Cost
of sales.
TAPESTRY,
INC. GAAP TO NON-GAAP
RECONCILIATION (in millions,
except per share data) (unaudited) For the Nine Months
Ended March 28, 2020 Items Affecting Comparability
GAAP Basis(As Reported) ERP Implementation
Organization-related &Integration Costs
Impairment Non-GAAP Basis(Excluding Items)
Cost of sales Coach
2,030.6
-
(0.1)
(61.9)
2,092.6
Kate Spade
576.4
-
(1.2)
(32.3)
609.9
Stuart Weitzman
133.4
-
(4.3)
(9.8)
147.5
Gross profit(1)
$ 2,740.4
$ -
$ (5.6)
$ (104.0)
$ 2,850.0
SG&A expenses Coach
1,410.2
-
(0.1)
57.9
1,352.4
Kate Spade
607.0
-
1.1
66.7
539.2
Stuart Weitzman
673.8
-
(1.9)
494.7
181.0
Corporate
320.2
23.6
27.4
-
269.2
SG&A expenses
$ 3,011.2
$ 23.6
$ 26.5
$ 619.3
$ 2,341.8
Operating income (loss) Coach
620.4
-
-
(119.8)
740.2
Kate Spade
(30.6)
-
(2.3)
(99.0)
70.7
Stuart Weitzman
(540.4)
-
(2.4)
(504.5)
(33.5)
Corporate
(320.2)
(23.6)
(27.4)
-
(269.2)
Operating income (loss)
$ (270.8)
$ (23.6)
$ (32.1)
$ (723.3)
$ 508.2
Provision for income taxes
34.9
(5.7)
(11.9)
(61.5)
114.0
Net income (loss)
$ (358.3)
$ (17.9)
$ (20.2)
$ (661.8)
$ 341.6
Net income (loss) per diluted common share
$ (1.28)
$ (0.06)
$ (0.07)
$ (2.37)
$ 1.22
(1) Adjustments within Gross profit are recorded within Cost
of sales.
TAPESTRY,
INC. GAAP TO NON-GAAP
RECONCILIATION (in millions,
except per share data) (unaudited) For the Quarter Ended
March 30, 2019 Items Affecting Comparability
GAAP Basis(As Reported) ERP Implementation
Integration &Acquisition Impact of TaxLegislation
Non-GAAP Basis(Excluding Items) Cost of sales
Coach
691.7
-
-
-
691.7
Kate Spade
177.9
-
(4.3)
-
182.2
Stuart Weitzman
46.3
-
(0.7)
-
47.0
Gross profit(1)
$ 915.9
$ -
$ (5.0)
$ -
$ 920.9
SG&A expenses Coach
452.8
-
5.5
-
447.3
Kate Spade
170.8
-
3.0
-
167.8
Stuart Weitzman
60.4
-
0.1
-
60.3
Corporate
122.1
14.7
7.0
-
100.4
SG&A expenses
$ 806.1
$ 14.7
$ 15.6
$ -
$ 775.8
Operating income (loss) Coach
238.9
-
(5.5)
-
244.4
Kate Spade
7.1
-
(7.3)
-
14.4
Stuart Weitzman
(14.1)
-
(0.8)
-
(13.3)
Corporate
(122.1)
(14.7)
(7.0)
-
(100.4)
Operating income (loss)
$ 109.8
$ (14.7)
$ (20.6)
$ -
$ 145.1
Provision for income taxes
(22.2)
(3.7)
(2.4)
(24.9)
8.8
Net income (loss)
$ 117.4
$ (11.0)
$ (18.2)
$ 24.9
$ 121.7
Net income (loss) per diluted common share
$ 0.40
$ (0.05)
$ (0.06)
$ 0.09
$ 0.42
(1) Adjustments within Gross profit are recorded within Cost
of sales.
TAPESTRY,
INC. GAAP TO NON-GAAP
RECONCILIATION (in millions,
except per share data) (unaudited) For the Nine Months
Ended March 30, 2019 Items Affecting Comparability
GAAP Basis(As Reported) ERP Implementation
Integration &Acquisition Impact of TaxLegislation
Non-GAAP Basis(Excluding Items) Cost of sales
Coach
2,231.5
-
(2.0)
-
2,233.5
Kate Spade
658.0
-
(5.4)
-
663.4
Stuart Weitzman
165.0
-
(1.7)
-
166.7
Gross profit(1)
$ 3,054.5
$ -
$ (9.1)
$ -
$ 3,063.6
SG&A expenses Coach
1,383.1
-
5.5
-
1,377.6
Kate Spade
517.9
-
10.1
-
507.8
Stuart Weitzman
186.9
-
12.2
-
174.7
Corporate
318.0
25.1
18.4
-
274.5
SG&A expenses
$ 2,405.9
$ 25.1
$ 46.2
$ -
$ 2,334.6
Operating income (loss) Coach
848.4
-
(7.5)
-
855.9
Kate Spade
140.1
-
(15.5)
-
155.6
Stuart Weitzman
(21.9)
-
(13.9)
-
(8.0)
Corporate
(318.0)
(25.1)
(18.4)
-
(274.5)
Operating income (loss)
$ 648.6
$ (25.1)
$ (55.3)
$ -
$ 729.0
Provision for income taxes
112.8
(6.3)
(4.5)
9.2
114.4
Net income (loss)
$ 494.5
$ (18.8)
$ (50.8)
$ (9.2)
$ 573.3
Net income (loss) per diluted common share
$ 1.70
$ (0.06)
$ (0.17)
$ (0.04)
$ 1.97
(1) Adjustments within Gross profit are recorded within Cost
of sales.
The 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 the Company’s
Impairment, ERP Implementation and Organization-related and
Integration Costs for the third quarter of fiscal year 2020 and ERP
Implementation and Integration & Acquisition-Related Costs and
the Impact of Tax Legislation for the third quarter of fiscal year
2019.
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
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.
Due to fact that 90% of the Company’s stores were closed or
operating under shortened operating hours over the course of
quarter, net sales changes for the Company and each segment are
based on absolute sales dollar changes and are not presented in
accordance with the Company’s comparable sales definition utilized
in prior quarters.
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.
CONDENSED CONSOLIDATED BALANCE
SHEETS At March 28, 2020 and
June 29, 2019 (in
millions) (unaudited) (audited)
March 28, 2020 June 29, 2019 ASSETS
Cash, cash equivalents and short-term investments
$ 898.2
$ 1,233.8
Receivables
190.4
298.1
Inventories
852.9
778.3
Other current assets
190.4
246.6
Total current assets
2,131.9
2,556.8
Property and equipment, net
818.7
938.8
Lease right-of-use assets
1,970.9
-
Other noncurrent assets
2,821.5
3,381.7
Total assets
$ 7,743.0
$ 6,877.3
LIABILITIES AND STOCKHOLDERS' EQUITY Accounts
payable
$ 200.1
$ 243.6
Accrued liabilities
573.9
673.6
Short-term lease liabilities
353.4
-
Current debt
11.5
0.8
Total current liabilities
1,138.9
918.0
Long-term debt
1,587.2
1,601.9
Long-term lease liabilities
1,897.3
-
Other liabilities
566.5
844.0
Stockholders' equity
2,553.1
3,513.4
Total liabilities and stockholders' equity
$ 7,743.0
$ 6,877.3
TAPESTRY, INC.
STORE COUNT At December 28, 2019 and March 28, 2020
(unaudited) As of
As of Directly-Operated Store
Count: December 28,
2019 Openings
(Closures) March 28, 2020 Coach North America
393
-
(12)
381
International
596
4
(9)
591
Kate Spade North America
222
3
(5)
220
International
205
8
(9)
204
Stuart Weitzman North
America
72
-
(1)
71
International
87
-
-
87
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200430005276/en/
Tapestry, Inc. Analysts & Media: Andrea Shaw Resnick Global
Head of Investor Relations and Corporate Communications
212/629-2618 aresnick@tapestry.com Christina Colone Vice President,
Investor Relations 212/946-7252 ccolone@tapestry.com
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