In this articleA federal judge blocked Tapestry's acquisition of Capri on Thursday following a brief trial last month in New York. In her order, Judge Jennifer Rochon granted the Federal Trade Commission's motion for a preliminary injuction to block the proposed merger, which would marry America's two largest luxury houses. Tapestry's stock surged 14% after the order was made public while Capri's plunged more than 52%.This is breaking news. Please refresh for updates. ...

Company Overview - Tapestry, Inc., formerly known as Coach, Inc., was founded in 1941 and is headquartered in New York, specializing in the design and marketing of fine accessories and gifts for both men and women [7] - The company offers a range of lifestyle products, including handbags, accessories, footwear, jewelry, seasonal apparel, sunwear, travel bags, fragrances, and watches [7] - Tapestry operates under three segments: Coach brand (76.4% of fiscal 2024 sales), Kate Spade & Company (20% of sales), and Stuart Weitzman (3.6% of sales) [7] Investment Ratings - Tapestry holds a Zacks Rank of 2 (Buy) and has a VGM Score of A, indicating strong potential for investment [7][8] - The company has a Value Style Score of A, supported by attractive valuation metrics such as a forward P/E ratio of 9.96, making it appealing to value investors [7] Earnings Estimates - One analyst has revised Tapestry's earnings estimate higher in the last 60 days for fiscal 2025, with the Zacks Consensus Estimate increasing to $4.47 per share [8] - Tapestry has demonstrated an average earnings surprise of 10.3%, indicating a positive trend in earnings performance [8]

Have you evaluated the performance of Tapestry's (TPR) international operations for the quarter ending June 2024? Given the extensive global presence of this maker of high-end shoes and handbags, analyzing the patterns in international revenues is crucial for understanding its financial strength and potential for growth. In the modern, closely-knit global economic landscape, the capacity of a business to access foreign markets is often a key determinant of its financial well-being and growth path. Investors ...

Tom Werner Investment summary My recommendation for Tapestry, Inc. (NYSE:TPR) is a hold rating. Given the uncertainties and visible overhangs around the stock, I expect the share price and valuation to be range-bound in the near term. While there have been some positive developments so far, there are still a lot of grounds for management to cover and show growth recovery before I am convinced that revenue is set to accelerate. Business Overview TPR is a designer and retailer of handbags, footwear, and acces ...

Core Insights - The luxury market is experiencing a slowdown, particularly in China and the U.S., with most brands reporting declining sales, except for Hermès [1][2] - U.S. luxury consumers are cutting back on spending, with high-income spending down 5% in Q2 2024, the lowest since Q2 2020 [4][5] - The overall personal luxury goods market in the Americas saw an 8% decline in 2023 compared to 2022, with U.S. consumers accounting for approximately 30% of the nearly $400 billion market [3][6] Company Performance - LVMH reported a 1% drop in U.S. revenues for H1 2024, with its Fashion and Leather Goods segment down 8% to $3.7 billion [7][8] - Tapestry's revenues were flat year-over-year at $6.7 billion, with a 2% decline in Q4 revenues [11][12] - Capri Holdings experienced a 13% revenue decline in Q1 2025, totaling $1.1 billion, following an 8.4% drop in Q4 2024 [15][16] Market Trends - The U.S. luxury market is showing signs of weakness, with a broadening decline across various brands [6][19] - Multi-brand retailers are seeing a sharper decline in spending compared to direct-to-consumer channels, with a 15% drop in Q2 for multi-brand versus a 10% drop for single-brand DTC [19] - Affluent consumers are increasingly cautious, with 41% planning to spend the same and 35% expecting to spend less on luxury [25][26] Consumer Sentiment - A significant portion of affluent Americans (24%) believe the economy has entered a recession, impacting their willingness to spend on luxury [28][29] - The desire for luxury is fading, with over half of affluent consumers rarely or only occasionally selecting luxury options [29][30]

Sales Performance - Tapestry's total net sales for fiscal 2024 were significantly driven by the Coach brand, which represented 76.4% of total net sales[7] - Direct-to-consumer revenues accounted for approximately 87% of total net sales in fiscal 2024[11] - The wholesale business represented about 12% of total net sales for fiscal 2024[16] - Total net sales for fiscal 2024 reached $6,671.2 million, a slight increase from $6,660.9 million in fiscal 2023[19] - Coach brand accounted for 76.4% of total net sales in fiscal 2024, with women's handbags generating $2,495.7 million, representing 37.5% of total net sales[19] - Kate Spade's total net sales were $1,334.4 million, contributing 20.0% to total net sales, with women's handbags sales at $721.0 million, down from $779.6 million in fiscal 2023[19] - The Stuart Weitzman segment represented 3.6% of total net sales in fiscal 2024[7] Growth Strategy - The company introduced its 2025 growth strategy, focusing on building lasting customer relationships and fueling fashion innovation[8] - The company aims to prioritize growth in North America and China while exploring opportunities in Southeast Asia and Europe[10] Store Operations - Tapestry's total store count decreased by 1.9% from 1,429 in 2023 to 1,402 in 2024[12] - The average square footage for Tapestry's stores increased by 1.1% from 2,820 in 2023 to 2,850 in 2024[14] Marketing and Digital Strategy - Marketing expenses for fiscal 2024 were $616.8 million, representing over 9% of net sales, compared to $570.7 million (less than 9% of net sales) in fiscal 2023[24] - The company is focused on enhancing its e-commerce and digital strategies to adapt to changing retail trends[8] - The company continues to enhance its digital technology platforms to improve e-commerce capabilities and customer engagement[28] Supply Chain and Manufacturing - The Company operates complex supply chains through foreign trade zones and bonded logistic parks to maximize opportunities in international trade[33] - Tapestry's manufacturing strategy includes partnerships with vendors in Vietnam, Cambodia, and the Philippines, with no individual vendor providing over 10% of total inventory purchases for Coach and Kate Spade[25][26] - The Company maintains fulfillment centers in North America, including Florida, Nevada, and Ohio, and utilizes regional centers in China, the Netherlands, and the UK[27] Employee and Diversity Initiatives - The Company employs approximately 18,600 employees globally, with about 14,700 working in retail locations, including 6,100 part-time employees[41] - The Company ties 10% of leadership annual incentive plan compensation to Equity, Inclusion and Diversity (EI&D) goals on a global basis[36] - The Company aims to utilize 100% renewable energy in its operations globally and has set greenhouse gas emissions reduction targets validated by the Science Based Targets initiative[36] - The Company has established an Associate Relief Fund to provide emergency assistance for events considered a disaster or hardship in fiscal year 2024[47] - Approximately 2,400 employees received an annual long-term equity award in 2024, aligning employee interests with those of stockholders[45] - The Company has set goals for volunteer service hours completed by employees and financial donations to nonprofit organizations globally[37] - The Company is committed to building a diverse workforce and has been recognized by Forbes as one of the "Best Employers for Diversity"[44] Financial Risk Management - As of June 29, 2024, the total notional values of outstanding forward currency contracts designated as cash flow hedges were $764.6 million, down from $842.3 million as of July 1, 2023[174] - The total notional values of outstanding forward foreign currency contracts related to intercompany loans, payables, and receivables were $348.2 million as of June 29, 2024, compared to $272.3 million as of July 1, 2023[174] - The fair value of outstanding forward currency contracts included in current assets was $58.3 million as of June 29, 2024, up from $39.0 million as of July 1, 2023[174] - The aggregate notional amounts of fixed to fixed cross currency swap agreements for net investment hedges were $1.45 billion as of June 29, 2024, compared to $1.20 billion as of July 1, 2023[176] - A hypothetical 10% appreciation or depreciation of the U.S. Dollar against foreign currencies would result in a net change in the fair value of the derivative portfolio of approximately $55.0 million[176] - The estimated fair values of the senior unsecured notes as of June 29, 2024, included $1,042.9 million for the 7.700% Senior Notes due 2030 and $1,311.3 million for the 7.850% Senior Notes due 2033[177] - The interest rate margin for the Three-Year Term Loan Facility is initially set at 0.250% for base rate loans and 1.250% for SOFR loans[176] - The Company is exposed to interest rate risk primarily from the $2.00 billion Revolving Credit Facility and the Capri Acquisition Term Loan Facilities[176] - The fair values of the Capri Acquisition EUR Senior Notes are influenced by changes in the exchange rate of the U.S. Dollar against the Euro[177] - The primary objective of the Company's investment activities is the preservation of principal while maximizing interest income and minimizing risk[179] Competition - The Company faces intense competition in its product lines, competing on style, price, customer service, quality, and brand recognition[34] - The Company maintains an internal global trade, customs, and product compliance organization to manage import/export and regulatory affairs[33] Impact of Covid-19 - The Covid-19 pandemic did not materially impact the company's business or operating results in fiscal 2024, with improved trends observed in Greater China[32]

Financial Data and Key Metrics - Total revenue growth of 1% on a constant currency basis, driven by international growth of 6% [5] - Europe sales increased by 14%, Other Asia by 9%, and Japan by 5%, contributing to nearly 20% of Tapestry sales [5] - Greater China sales rose 3%, with declines in the second half due to strong growth in the previous year [5] - North America revenue declined 1%, but profit rose due to gross and operating margin expansion [5] - Record annual gross margin achieved, the highest in over 15 years [8] - EPS grew at a double-digit pace compared to the prior year, reaching $4.29 [27] Business Line Performance - Coach achieved record annual revenue surpassing $5 billion, with significant growth in handbags and AUR gains [7][11] - Kate Spade saw profit growth despite top-line challenges, driven by gross margin expansion and expense management [19] - Stuart Weitzman faced challenges in North America and Greater China but focused on brand-building initiatives [23] - Coach's Tabby family outperformed, with the Tabby Backpack contributing to strong sales [12] - Kate Spade expanded its core handbag offering and saw growth in jewelry, driven by Gen Z and Millennial recruitment [20][21] Market Performance - Europe grew 26%, Other Asia 12%, and Japan 2% in Q4, with Greater China declining 10% as expected [28] - North America sales declined 1% in Q4, but gross and operating margins improved [28] - Digital sales remained strong, representing nearly 30% of revenue, more than 3 times pre-pandemic levels [7] - Coach's global handbag AUR was flat in Q4, impacted by geographic mix, but North America AUR growth remained positive [14] Strategic Direction and Industry Competition - The company is focused on accelerating growth at Kate Spade and Stuart Weitzman while building on Coach's momentum [8] - Two key leadership changes were made: Sandeep Seth as Chief Growth Officer and Eva Erdmann as CEO of Kate Spade [9] - The pending acquisition of Capri is seen as a strategic fit, with plans to reinvigorate Capri's brands [10] - Coach's strategy includes deepening consumer connections, growing leather goods, and expanding lifestyle offerings [18] - Kate Spade's strategy focuses on brand heat, core handbag strengthening, and omnichannel growth [23] Management Commentary on Operating Environment and Future Outlook - The company expects mid-teens growth in Europe and mid-single-digit gains in Other Asia for FY25 [32] - Operating margin expansion of approximately 50 basis points is anticipated for FY25 [33] - EPS for FY25 is projected to be $4.45 to $4.50, representing mid-single-digit growth [34] - Free cash flow for FY25 is expected to be approximately $1.1 billion, with CapEx and cloud computing costs around $190 million [35] - The company remains confident in the long-term potential of China, despite short-term challenges [57][59] Other Important Information - Inventory levels at year-end were 10% below the prior year, with well-controlled and current inventory [31] - The company returned $321 million to shareholders through dividends, a 17% increase compared to last year [31] - The acquisition of Capri is expected to be accretive to EPS in year one, with compelling ROIC and cash flow benefits [38] Q&A Session Summary Question: Commitment to the Capri deal given its underperformance - The company remains committed to the Capri deal, viewing it as a strategic fit with significant value creation opportunities [41][42] - Synergies are expected to exceed initial estimates, with increasing conviction in the integration plans [43][44] Question: Plan B if the Capri deal does not go through - The company has multiple paths to value creation, including organic growth and potential share buybacks [48][49] Question: Health of the Coach brand in North America - Coach delivered slight growth in North America in Q4, with strong margins and a focus on product innovation and storytelling [52][53] Question: Gross margin drivers and AUR opportunities - Gross margin expansion is driven by operational improvements, AUR gains, and supply chain efficiencies [54][64] Question: Kate Spade's turnaround and investment needs - Kate Spade is focused on accelerating top-line growth while continuing to expand margins through brand-building and innovation [55] Question: China market outlook - The company remains bullish on China's long-term potential, with a focus on productivity gains and distribution expansion [57][59] Question: AUR and gross margin trends - AUR is supported by innovation and brand-building efforts, with structural drivers contributing to gross margin expansion [61][64] Question: Full price vs outlet trends at Coach - Coach is blurring the lines between full price and outlet channels, meeting consumer demand for key products like Tabby across all channels [66][67] Question: Brand investment priorities - The company will continue to invest in brand-building, particularly in Asia, while maintaining rigorous capital allocation processes [69][70] Question: Capri deal assumptions and margin expansion - The company remains confident in the Capri deal's long-term value creation, with moderated year-one accretion expectations due to Capri's recent performance [72][74] Question: Michael Kors turnaround and Coach pricing strategy - The company sees significant potential to reinvigorate Michael Kors through brand-building and leveraging Tapestry's platform [76] - Coach's pricing strategy focuses on innovation and value, with a strong position in the $200-$500 price range [78]

Core Insights - Tapestry, Inc. reported fourth-quarter fiscal 2024 results that exceeded revenue and earnings estimates despite a challenging consumer environment, although both metrics showed a year-over-year decline [1][2]. Financial Performance - Adjusted earnings for the fourth quarter were 92 cents per share, surpassing the Zacks Consensus Estimate of 88 cents but down from 95 cents in the prior year [2]. - Net sales reached $1,591.1 million, beating the consensus estimate of $1,572 million, but reflected a 2% year-over-year decline [2]. Customer Engagement - Throughout fiscal 2024, Tapestry attracted 6.5 million new customers in North America, with over 50% belonging to Gen Z and millennial demographics, indicating successful engagement strategies [3]. Brand Performance - Coach's net sales were $1,250.4 million, flat year-over-year; Kate Spade's sales were $290.1 million, down 6%; and Stuart Weitzman's sales totaled $50.6 million, down 19% [4]. - The Zacks Consensus Estimate for revenues from Coach, Kate Spade, and Stuart Weitzman was $1,224.4 million, $292.6 million, and $56 million, respectively [4]. Regional Sales Analysis - North America sales declined 1% year-over-year to $1,020.4 million; Greater China sales dropped 13% to $232.4 million; Japan sales decreased 9% to $127.4 million; while Other Asian markets saw a 9% increase to $86.2 million [5][6]. - European markets experienced a 26% increase in revenues to $92.3 million, driven by strong local consumer and tourist spending [6]. Margin and Operating Income - Consolidated gross profit was $1,191.2 million, up 1.6% year-over-year, with gross margin increasing by 250 basis points to 74.9% due to operational enhancements and reduced freight expenses [7]. - Adjusted operating income was $262 million, down from $273.6 million in the prior year, with adjusted operating margin contracting 40 basis points to 16.5% [8]. Store Operations - As of the end of the quarter, Tapestry operated 324 Coach stores, 197 Kate Spade outlets, and 34 Stuart Weitzman stores in North America, with international store counts at 606, 181, and 60, respectively [9]. Cash Flow and Financial Position - Tapestry ended the quarter with cash, cash equivalents, and short-term investments of $7,203.8 million, long-term debt of $6,937.2 million, and stockholders' equity of $2,896.9 million [10]. - Operating cash flow for fiscal 2024 was $1.26 billion, up from $975 million in the previous year, while free cash flow reached $1.15 billion compared to $791 million in the prior year [11]. Future Outlook - Tapestry anticipates fiscal 2025 revenues to be around $6.7 billion, indicating growth despite an estimated 50 basis points of currency headwinds, with a projected operating margin expansion of about 50 basis points [12]. - Management guided fiscal 2025 earnings between $4.45 and $4.50 per share, reflecting mid-single-digit growth from the prior year, including a 35 cents negative impact from the suspension of share repurchases [13].

Core Insights - Tapestry reported revenue of $1.59 billion for the quarter ended June 2024, a decrease of 1.8% year-over-year, with EPS at $0.92 compared to $0.95 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate by 1.20%, while EPS surpassed the consensus estimate by 4.55% [1] Revenue Performance - Coach's net sales were $1.25 billion, slightly above the estimated $1.22 billion, reflecting a year-over-year increase of 0.2% [3] - Stuart Weitzman's net sales were reported at $50.60 million, below the estimated $56.04 million, showing a significant year-over-year decline of 19.2% [4] - Kate Spade's net sales were $290.10 million, slightly below the estimated $292.62 million, representing a year-over-year decrease of 6.3% [5] Operating Income - Coach's operating income was $388.80 million, marginally below the average estimate of $389.27 million [6] - Kate Spade reported an operating income of $23.90 million, significantly above the average estimate of $11.76 million [7] - Stuart Weitzman had an operating loss of $9.30 million, worse than the average estimate of -$6.73 million [8] - Corporate operating loss was reported at -$168.40 million, exceeding the average estimate of -$133.55 million [9] Stock Performance - Tapestry's shares have declined by 10.9% over the past month, compared to a 2.9% decline in the Zacks S&P 500 composite [9] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [9]

Company Performance - Tapestry reported quarterly earnings of $0.92 per share, exceeding the Zacks Consensus Estimate of $0.88 per share, but down from $0.95 per share a year ago, representing an earnings surprise of 4.55% [1] - The company posted revenues of $1.59 billion for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 1.20%, although this is a decrease from year-ago revenues of $1.62 billion [2] - Over the last four quarters, Tapestry has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Outlook - Tapestry shares have increased approximately 3.1% since the beginning of the year, while the S&P 500 has gained 14.4% [3] - The company's current consensus EPS estimate for the coming quarter is $0.97 on revenues of $1.52 billion, and for the current fiscal year, it is $4.52 on revenues of $6.75 billion [7] Industry Context - The Retail - Apparel and Shoes industry, to which Tapestry belongs, is currently ranked in the bottom 29% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Tapestry's stock performance [5]