Tapestry(TPR) - 2025 Q4 - Annual Results

Revenue Performance - Achieved record fourth quarter revenue of $1.7 billion, an increase of 8% versus prior year, led by a 14% gain at the Coach brand[2] - Delivered record annual revenue of $7.0 billion in fiscal year 2025, an increase of 5% versus prior year, fueled by 10% Coach brand growth[2] - Tapestry's net sales for the quarter ended June 28, 2025, were $1,723.2 million, compared to $1,591.1 million for the same quarter in the previous year, representing a year-over-year increase[37] - For the quarter ended June 28, 2025, Tapestry reported total revenue of $1,723.2 million, an increase of 8% compared to $1,591.1 million in the same quarter of the previous year[39] - For the year ended June 28, 2025, total revenue reached $7,010.7 million, a 5% increase from $6,671.2 million in the prior year[39] Profitability and Margins - Drove gross margin expansion of 210 basis points in fiscal year 2025, reaching a gross margin of 75.4%[16] - Net income for fiscal year 2025 was $183 million, with earnings per diluted share of $0.82 on a GAAP basis[17] - The gross profit for the year ended June 28, 2025, was $5,288.9 million, up from $4,889.5 million in the prior year[37] - Gross profit for the quarter was $1,315.1 million, with a gross margin of approximately 76.3%[41] - The company reported a significant impairment cost related to the Kate Spade brand, contributing to the net loss[42] - Tapestry's operating income for the quarter was $(583.5) million, indicating challenges in maintaining profitability across segments[41] Shareholder Returns - Returned $2.3 billion to shareholders in fiscal year 2025, including a 14% increase in dividends[11] - The company expects to continue strong capital return programs in fiscal year 2026, supported by robust cash flow generation[12] - The company repurchased $1,718.7 million in common stock during the fiscal year, reflecting a strategic move to enhance shareholder value[51] Customer Acquisition and Market Trends - Acquired approximately 1.5 million new customers in North America for the quarter, with Gen Z and Millennial consumers representing approximately 60% of new customers[4] - Increased direct-to-consumer revenue by 6% for the quarter and 5% for the year on a constant currency basis[7] - Achieved a mid-teens percentage rate AUR gain for handbag revenue at Coach for the quarter[8] Future Projections - Tapestry is projecting revenue of approximately $7.2 billion for Fiscal 2026, indicating low-single-digit growth compared to the prior year, with mid-single-digit growth expected when excluding Stuart Weitzman[18] - The company anticipates an operating margin improvement of over 250 basis points, despite a negative impact from tariffs and duties estimated at approximately 230 basis points or $160 million[18] - Earnings per diluted share are expected to be between $5.30 and $5.45, reflecting a growth of 4% to 7% year-over-year, which includes a negative impact of over $0.60 from tariffs and duties[18] - Adjusted free cash flow is projected to approach $1.3 billion for Fiscal 2026[18] Cash Flow and Financial Position - Cash flow from operating activities for the fiscal year was an inflow of $1.22 billion[17] - Total assets decreased from $13,396.3 million as of June 29, 2024, to $6,580.5 million as of June 28, 2025, representing a decline of approximately 51.1%[49] - Cash and cash equivalents at the end of the period decreased to $1,100.0 million from $6,142.0 million, a decline of approximately 82.1%[51] - Operating cash flow for the year was $1,216.6 million, slightly down from $1,255.6 million in the previous year, a decrease of about 3.1%[51] - The company reported a net cash used in financing activities of $(7,175.2) million, compared to $5,214.4 million in the previous year, indicating a significant shift in cash flow management[51] Strategic Initiatives - Tapestry plans to host an Investor Day on September 10, 2025, to discuss long-term strategic initiatives and financial outlook[23] - The company expects to report its Fiscal 2026 first quarter results on November 6, 2025[24] - The company will exclude one-time costs related to the sale of Stuart Weitzman, which closed on August 4, 2025, from its financial outlook[22] Challenges and Losses - The company reported a net loss of $517.1 million for the quarter ended June 28, 2025, compared to a net income of $159.3 million for the same quarter in the previous year[37] - The net loss for the quarter was $517.1 million, resulting in a net loss per diluted share of $(2.49)[41] - Tapestry incurred acquisition and divestiture costs of $5.1 million during the quarter, impacting overall profitability[41] - Impairment charges for the fiscal year were $854.8 million, significantly impacting net income[51] - Net income for the fiscal year ended June 28, 2025, was $183.2 million, down from $816.0 million for the previous year, indicating a decrease of about 77.6%[51]