Tapestry(US:TPR)2022-05-12 16:45Financial Data and Key Metrics Changes - Revenue rose 13% compared to the prior year, with double-digit growth at each brand [55] - Earnings per diluted share for the quarter was $0.51, in line with the prior year and well ahead of expectations [61] - Gross margin improved due to higher full-price sell-throughs and lower discounting, despite $63 million pressure from incremental freight [59] Business Line Data and Key Metrics Changes - Coach achieved a sales increase of 11% compared to the prior year, with nearly 20% growth in North America [19] - Kate Spade's revenue rose 19%, including a 25% increase in North America [32] - Stuart Weitzman delivered significant operating margin expansion, with AUR growth over 20% in North America [44][46] Market Data and Key Metrics Changes - North America fueled results with 22% growth, while sales in Greater China declined at a low-teens rate [55] - Europe saw nearly 60% sales growth compared to last year, while Japan experienced mid-single-digit growth [57] - Digital sales grew over 20%, representing approximately 30% of total business [15][29] Company Strategy and Development Direction - The company is focused on building lasting relationships with customers to increase lifetime value through continuous innovation [10] - Emphasis on digital leadership and leveraging consumer data to enhance customer connections and execution [11] - The Acceleration Program has brought in nearly 13 million new customers over 21 months, with a focus on driving sustainable growth [14][18] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the resilience of the Chinese consumer and long-term growth opportunities despite near-term COVID-related headwinds [17] - The company expects to achieve $2 billion in digital revenue in fiscal '22, with further runway ahead [15] - Confidence in the ability to maintain margins and drive growth through pricing power and brand strength [88] Other Important Information - The company plans to return approximately $1.9 billion to shareholders in fiscal 2022, including $1.6 billion in share repurchases [64][77] - Inventory at quarter end was 30% above the prior year, primarily due to elevated in-transits amid supply chain challenges [62] Q&A Session Summary Question: Headwinds in China and positive trends elsewhere - Management noted strong growth in all regions outside of China, with North America delivering 22% growth, offsetting challenges in China due to COVID [80][82] Question: GSP potential and fiscal year outlook - Management highlighted strong brand momentum and consumer engagement, indicating confidence in future growth despite not providing explicit guidance [85][89] Question: Average unit retail momentum and promotional activity - Management confirmed pricing power across brands, with no consumer pushback on price increases, and emphasized the importance of maintaining brand value [92][94] Question: Demand deceleration in North America - Management observed strong consumer engagement and increasing acquisition metrics, indicating continued demand across categories [101] Question: Shanghai distribution center reopening and freight costs - Management provided insights on the slow reopening of the Shanghai distribution center and anticipated improvements in freight costs moving forward [110][116]