Tapestry(US:TPR)2024-08-15 20:01Sales 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]