Tapestry Reports Double-Digit Sales Gains Across Brands, Increases Digital Business in Fiscal 2022

Tapestry Inc. ended the fiscal year with record revenues fueled by gains across its portfolio, with each brand delivering double-digit sales increases.

The New York-based company reported on Thursday that its net sales for the fiscal fourth quarter of 2022 were $1.62 billion, an increase of 1% over last year. Compared to pre-pandemic 2019, Tapestry grew 7%. Net income for Q4 was $189 million on a reported basis, with earnings per diluted share of 75 cents — down from $200 million and earnings per diluted share of 69 cents in the prior year period.

As for full-year 2022, Tapestry saw net sales of $6.68 billion, an increase of 16% from last year’s $5.75 billion total. Net income for the full year was $856 million on a reported basis, with earnings per diluted share of $3.17. This compared to net income of $834 million and earnings per diluted share of $2.95 in the prior year.

By brand, Coach delivered 18% top-line growth, or an increase of 15% over fiscal 2019 pre-pandemic levels, as it recruited over 4 million new customers in North America while driving momentum with its existing customers. Coach also invested in its digital business in 2022, which led to a low double-digit revenue increase in the quarter. As of fiscal year-end, e-commerce represented nearly 30% of sales for the brand, a material increase compared to the high single-digit penetration pre-pandemic.

On the company’s earnings call on Thursday, CEO Joanne Crevoiserat said that the recent Tabby bag expansion in men’s delivered “outsized gains” overall in the men’s category as well as across its lifestyle assortment, specifically footwear. Going forward, Crevoiserat said these categories will be important growth vehicles for Coach by “increasing brand heat and top-line momentum to drive customer recruitment, purchase frequency and overall basket size.”

Moving to Kate Spade, the brand delivered record revenue of over $1.4 billion in the fiscal year, representing growth of 22%, while expanding operating margin. Crevoiserat said on the call that Kate Spade experienced double-digit growth across ready-to-wear, footwear and jewelry. The label also made investments in digital, with online revenue representing one-third of total sales, well ahead of the brand’s 20% penetration just three years ago.

As for Stuart Weitzman, Crevoiserat said the brand maintained a “focused strategy” to drive growth, improving execution while remaining nimble. The success of these actions resulted in double-digit sales gains for the fiscal year and a return to profitability despite managing through challenging external dynamics, notably COVID-related pressures in China.

Sandals were a key category for Stuart Weitzman as the company capitalized on the increased consumer need for occasion wear, Crevoiserat said. This included a standout performance from the label’s Nudist collection, which accounted for five of its top 10 styles.

As for the brand’s digital business, for the fiscal year, online represented over 20% of revenue — a significant increase from a low double-digit penetration pre-pandemic.

Looking ahead, Tapestry expects revenue in the area of $6.9 billion for fiscal 2023. This represents an increase of 3% to 4% on a reported basis.

Given the volatile environment and last year’s atypical comparisons, Tapestry CFO and COO Scott Roe warned analysts on the call that the company expects significant variability by quarter in 2023.

“Specifically, we expect revenue and earnings growth versus prior year to be back half weighted, helped by the sequential improvement planned in China as we move throughout the year,” Roe said on the call. “In addition, we will anniversary the substantial incremental headwinds from freight beginning in the second fiscal quarter of the year, providing a tailwind to margin.”

For the first quarter, Tapestry expects revenue to increase mid-single digits in constant currency, which includes a decline of approximately 15% projected in Greater China. On a reported basis, the company anticipates global sales to increase slightly, including a negative impact of approximately 350 basis points from foreign exchange rates, with earnings per share in the area of 75 cents.

“As we embark on a new fiscal year, the environment remains challenging and continues to rapidly evolve,” Crevoiserat added. “However, the foundation we’ve built positions us to be nimble and responsive to change, balancing near-term headwinds with our long-term ambition.”

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