Tapestry(US:TPR)2025-05-08 10:50Financial Performance - Net sales for the third quarter of fiscal 2025 reached $1,584.6 million, a 6.9% increase from $1,482.4 million in the same period of fiscal 2024[218]. - Gross profit for the third quarter of fiscal 2025 was $1,205.8 million, representing 76.1% of net sales, compared to 74.7% in the prior year[218]. - Operating income increased by 24.2% to $253.7 million in the third quarter of fiscal 2025, up from $204.3 million in the same quarter of fiscal 2024[218]. - Net income for the third quarter of fiscal 2025 was $203.3 million, a 45.9% increase from $139.4 million in the third quarter of fiscal 2024[218]. - Net sales increased by 6.9% or $102.2 million to $1.58 billion in Q3 fiscal 2025, with an 8.4% increase excluding currency impacts[228]. - Coach net sales rose by 12.9% or $147.9 million to $1.29 billion, driven by a $149.8 million increase in DTC sales[231]. - Gross profit increased by 8.9% or $98.4 million to $1.21 billion, with gross margin improving by 140 basis points to 76.1%[229]. - Operating income was reported at $253.7 million, an increase of 24.2% compared to the previous year[236]. - Net income for Q3 fiscal 2025 was $203.3 million, translating to $0.95 per diluted share[221]. - Net income rose 45.9% or $63.9 million to $203.3 million in Q3 FY2025 from $139.4 million in Q3 FY2024, with a diluted net income per share of $0.95[242][244]. Expenses and Charges - SG&A expenses rose by 5.4% or $49.0 million to $952.1 million, while as a percentage of net sales decreased to 60.1%[234]. - Acquisition and divestiture costs totaled $18.6 million, impacting operating income negatively by $23.6 million[223]. - SG&A expenses for Kate Spade decreased 7.6% or $13.2 million to $160.4 million in Q3 FY2025, while SG&A as a percentage of net sales increased 370 basis points to 65.5%[238]. - Corporate incurred charges affecting comparability of $109.0 million, leading to an 8.1% increase in SG&A expenses to $401.1 million[265]. - The company incurred total pre-tax charges of $268.4 million related to the terminated Capri Acquisition, impacting operating income and net income significantly[251]. Market and Economic Conditions - The macroeconomic environment remains challenging, with organizations revising global growth forecasts downwards due to trade tensions and geopolitical instability[210]. - Currency fluctuations resulted in a decrease of $22.5 million in net sales for the three months ended March 29, 2025, with a 20 basis point negative impact on operating margin[211]. Strategic Plans and Initiatives - The Company plans to focus on building lasting customer relationships and fueling fashion innovation as part of its 2025 growth strategy[203]. - The divestiture of the Stuart Weitzman Business is expected to generate $105.0 million in cash consideration, with the transaction anticipated to close in summer 2025[201]. - The company has a voluntary supply chain finance program to improve working capital efficiency, allowing suppliers to sell receivables on a non-recourse basis[297]. - The company expects total capital expenditures and cloud computing costs for fiscal 2025 to be approximately $160 million, with $35.7 million and $104.5 million spent during the three and nine months ended March 29, 2025, respectively[298]. Cash Flow and Financing - Net cash provided by operating activities decreased by $229.8 million to $769.8 million in the first nine months of fiscal 2025[283]. - Net cash provided by investing activities was $948.2 million in the first nine months of fiscal 2025, a $1.43 billion increase compared to a use of cash of $486.1 million in the same period of fiscal 2024[284]. - Net cash used in financing activities was $6.81 billion in the first nine months of fiscal 2025, a $12.54 billion increase compared to a source of cash of $5.73 billion in the same period of fiscal 2024[286]. - As of March 29, 2025, cash and cash equivalents decreased by $5.08 billion to $1.04 billion compared to $6.14 billion as of June 29, 2024[291]. - The company authorized a share repurchase program of up to $2.00 billion, with $800.0 million remaining from a previous program initiated in May 2022[299]. - The company completed an accelerated share repurchase agreement for $2.00 billion, receiving an initial delivery of 28,363,766 shares[300]. Brand Performance - Kate Spade net sales decreased by 12.7% or $35.8 million to $244.9 million, primarily due to lower DTC sales[231]. - Stuart Weitzman net sales fell by 17.7% or $9.9 million to $46.2 million, with a 17.2% decrease when excluding currency impacts[231]. - Coach's net sales rose by 8.5% or $328.5 million to $4.17 billion, driven by a $317.9 million increase in DTC sales[260]. - Kate Spade's net sales decreased by 9.6% or $99.8 million to $944.5 million, primarily due to a $105.5 million decline in DTC sales[260]. - Stuart Weitzman's net sales decreased by 11.2% or $21.3 million to $169.6 million, with SG&A expenses decreasing by 15.0% to $107.9 million[260][265]. Tax and Regulatory Considerations - The Company is committed to monitoring regulatory developments related to tax legislation, which may have a modest negative impact on its effective tax rate starting in fiscal 2026[214]. - The effective tax rate decreased to 14.9% in Q3 FY2025 from 17.7% in Q3 FY2024, with a non-GAAP effective tax rate of 16.4%[241].