Tapestry(US:TPR)2022-08-17 16:00Sales and Revenue - In fiscal 2022, Coach represented 73.6% of total net sales, Kate Spade accounted for 21.6%, and Stuart Weitzman made up 4.8%[20]. - Tapestry, Inc. reported net sales of $6,684.5 million for fiscal 2022, a 16.3% increase compared to $5,746.3 million in fiscal 2021[211]. - Digital revenue reached $2 billion in fiscal 2022, accounting for 30% of total sales[200]. - Total net sales for Stuart Weitzman in fiscal 2022 were $317.7 million, maintaining a 5% share of total net sales[43]. - The wholesale segment accounted for approximately 34% of total net sales for Stuart Weitzman in fiscal 2022, with around 900 wholesale locations globally[40]. - The wholesale business for Coach comprised approximately 10% of total segment net sales for fiscal 2022, with products sold in over 1,700 locations globally[28]. - Kate Spade's wholesale business accounted for approximately 11% of total segment net sales for fiscal 2022, with products sold in around 1,000 locations[34]. Store Operations - The total number of Coach directly-operated locations was 945 in fiscal 2022, with a net change of 6 stores compared to the prior year[26]. - Kate Spade had 398 directly-operated locations in fiscal 2022, reflecting a net decrease of 9 stores from the previous year[32]. - In fiscal 2022, Stuart Weitzman operated 100 stores globally, a net decrease of 4 stores compared to the previous year, representing a 3.8% decline[38]. - The Company expects minimal change in overall store count in fiscal 2023, with reductions primarily in North America and Japan, offset by increases in Greater China[26][32]. - The company expects a modest increase in store count and square footage in mainland China for fiscal 2023, while anticipating a slight reduction in North America[38]. Financial Performance - Gross profit for fiscal 2022 was $4,650.4 million, representing 69.6% of net sales, down from 71.0% in fiscal 2021[211]. - Operating income for fiscal 2022 was $1,175.8 million, a 21.5% increase from $968.0 million in fiscal 2021[211]. - Net income for fiscal 2022 was $856.3 million, a slight increase of 2.7% from $834.2 million in fiscal 2021[211]. - The company achieved gross run-rate savings of approximately $300 million in fiscal 2022, funding investments in brand-building activities[200]. - Marketing expenses for the company in fiscal 2022 were $551.6 million, approximately 8% of net sales, an increase from $395.2 million or 7% of net sales in fiscal 2021[51]. E-commerce and Digital Strategy - The Company has e-commerce sites for Coach in multiple regions, including the U.S., Canada, Japan, and mainland China, enhancing direct customer access[27]. - E-commerce sales are available in the U.S., Canada, and mainland China, enhancing product accessibility for consumers[39]. - The company is increasingly focused on digital engagement, with a shift towards social media and online marketing to connect with consumers[132]. - The success of the company’s growth strategies hinges on the effective execution of digital and e-commerce priorities, as well as the introduction of new products[113]. Corporate Responsibility and Employee Engagement - The Company aims to utilize 100% renewable energy in its operations by 2025 and has set goals for environmentally responsible sourcing and waste reduction[76]. - The Company ties 10% of leadership annual incentive compensation to equity, inclusion, and diversity (EI&D) goals on a global level[74]. - The Company has committed to a $15 U.S. minimum wage for hourly employees as part of its compensation strategy[87]. - The Company maintains a corporate responsibility framework focused on three pillars: Our People, Our Planet, and Our Communities[74]. - The Company has established an Inclusion Council and various employee resource groups to promote equity, inclusion, and diversity[83]. Challenges and Risks - The ongoing Covid-19 pandemic has led to significant global business disruptions, prompting the Company to reinforce its liquidity and financial flexibility[18]. - The company continues to face supply chain challenges, including increased freight costs and logistic constraints due to the pandemic[100]. - The company is facing significant disruptions in shipments due to port congestion and logistics carrier disruptions, leading to increased inbound freight costs and longer in-transit times[18]. - The company’s business is subject to risks associated with international operations, including political instability and changes in macroeconomic conditions[107]. - Cybersecurity threats pose significant risks, with potential impacts on customer relationships and business operations due to data breaches or system disruptions[147]. Shareholder Returns and Stock Performance - The Company reinstated its quarterly cash dividend at $0.25 per common share for an annual rate of $1.00, returning approximately $260 million to shareholders in fiscal 2022[166]. - During fiscal 2022, the Company repurchased 42.0 million shares of common stock for $1.60 billion and plans to repurchase approximately $700 million worth of stock in fiscal 2023[166]. - The Company’s stock performance over the five-year period ending July 2, 2022, showed a cumulative total return of $74.54 for Tapestry, compared to $172.67 for the S&P 500[185]. - The Company’s share repurchase program was authorized for up to $1.00 billion in November 2021, with an additional $1.50 billion authorized in May 2022[186]. International Operations - Approximately 37.6% of the company's net sales came from operations outside of the United States as of the end of fiscal year 2022[107]. - The company’s international expansion efforts may face challenges due to varying operational characteristics and consumer preferences in different markets[114]. - The company is exposed to foreign currency exchange rate fluctuations, which could negatively impact sales and profitability[159]. Supply Chain and Fulfillment - The company utilizes fulfillment centers in multiple countries, including the U.S., mainland China, and Europe, to optimize product distribution[62]. - E-commerce sales growth has necessitated additional fulfillment capacity, including a new multi-brand fulfillment facility in Las Vegas, Nevada, to enhance capabilities[111]. - The company relies on a limited number of fulfillment and sourcing centers, and any shutdowns could result in substantial inventory loss and delivery disruptions[110].