Tapestry(US:TPR)2022-11-10 17:05Financial Data and Key Metrics Changes - The company achieved record revenue of $1.5 billion in Q1 2023, with an 8% increase in EPS on a currency-neutral basis, despite facing FX headwinds and COVID disruptions in China [38][39][40] - Revenue rose over 5% on a constant currency basis, with international markets delivering 11% growth compared to the prior year [39][40] - Gross margin declined due to freight pressure and FX headwinds, but operational gross margin expanded versus the prior year [42][44] Business Line Data and Key Metrics Changes - Coach brand saw a 4% increase in revenue on a constant currency basis, driven by growth in core leather goods and successful product introductions [16][24] - Kate Spade's revenue rose 10% in constant currency, with a 7% gain in North America and 23% growth in international markets [24][25] - Stuart Weitzman experienced growth in North America, aided by strength in the wholesale channel, while facing challenges in Greater China due to COVID [32][33] Market Data and Key Metrics Changes - In North America, sales rose slightly, with a nearly 45% increase on a two-year basis, while digital sales remained over 3x ahead of pre-pandemic levels [41][42] - International markets showed strong growth, with Europe sales increasing by 24% and APAC revenue rising by 9% despite challenges in Greater China [39][40] - The company noted a decline of 11% in Greater China sales due to COVID-related headwinds, although this was an improvement from the previous quarter [40] Company Strategy and Development Direction - The company is focused on driving sustainable growth through a consumer-centric and data-driven approach, emphasizing agility and innovation [9][10] - There is a commitment to enhancing omnichannel experiences and building lasting customer relationships, with a focus on emotional storytelling and product innovation [11][12][19][30] - The company plans to maintain disciplined pricing strategies and manage promotional activities carefully to support brand health [74][75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating near-term challenges while remaining focused on long-term growth initiatives [37][58] - The outlook for fiscal 2023 has been tempered due to expectations of a delayed recovery in China, but the company remains optimistic about growth in other regions [48][50] - Management highlighted the importance of staying close to customers and adapting to changing market conditions [62][71] Other Important Information - The company plans to return approximately $1 billion to shareholders in fiscal 2023, including share repurchases and dividends [47][58] - Inventory levels were reported to be 39% above the prior year, with proactive measures taken to align inventory with updated revenue outlooks [45][46] Q&A Session Summary Question: Outlook heading into holiday - Management highlighted strong Q1 performance and expressed confidence in product offerings and inventory positioning for the holiday season, while maintaining realistic expectations given macro uncertainties [61][62] Question: Guidance details for North America and China - Management provided context on the guidance adjustments, noting a delay in the recovery for China and a modestly below-expectation performance in North America, while emphasizing ongoing investments in long-term growth [67][68][69] Question: Promotional and pricing strategy - Management discussed the focus on AUR increases and disciplined promotional strategies, noting no pushback from customers on recent price increases [74][75] Question: New customer acquisition trends - Management reported 1.4 million new customers in North America and emphasized the importance of omnichannel engagement, with customers shopping across both online and in-store channels [78][79] Question: Pricing analytics and SKU management - Management reiterated the focus on delivering value and innovation, with plans to continue driving AUR growth while managing promotional activities effectively [84][86]