Tapestry(US:TPR)2022-02-10 17:21Financial Data and Key Metrics Changes - Revenue increased by 27% compared to the prior year, with an 18% rise against pre-pandemic levels, reflecting a 9-point sequential acceleration driven by improved store trends and continued strength in the digital channel [42] - Earnings per diluted share for the quarter was $1.33, an increase of 15% compared to the prior year and over 20% versus FY '20 [45] - The company ended the quarter with $1.65 billion in cash and investments, and total borrowings of $1.6 billion [46] Business Line Data and Key Metrics Changes - Coach achieved 24% sales growth compared to last year, with revenue trends accelerating 20% above pre-pandemic levels [18] - Kate Spade sales grew 33% compared to last year, with an 18-point sequential acceleration against pre-pandemic levels [29] - Stuart Weitzman drove 37% revenue growth compared to last year, returning to pre-pandemic sales levels [35] Market Data and Key Metrics Changes - North America delivered over 35% revenue growth compared to last year, accelerating to 25% growth on a 2-year basis [42] - Sales in Greater China rose high single digits, including a mid-single-digit increase in Mainland China, with nearly 35% growth compared to 2 years ago [43][16] - Digital sales represented one-third of total business, with a 30% increase compared to last year, nearly tripling pre-pandemic levels [13] Company Strategy and Development Direction - The company is focused on a consumer-centric approach, leveraging data to enhance engagement and drive customer lifetime value [11] - Significant investments in digital capabilities are aimed at improving customer experience and driving conversion [13] - The company anticipates continued growth in China, viewing it as a meaningful long-term opportunity across brands [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of the multi-brand portfolio despite near-term volatility due to the pandemic [57] - The company expects revenue to reach approximately $6.75 billion, marking a record for the company, with strong double-digit growth anticipated across all brands [51] - Management acknowledged supply chain constraints but emphasized strong consumer demand and the ability to navigate challenges [50] Other Important Information - The company plans to return over $1.5 billion to shareholders in fiscal '22, an increase from the prior outlook of $1.25 billion [48] - The gross margin contracted due to investments in freight to maintain product flow, but it remains nearly 150 basis points ahead of pre-pandemic levels [44] Q&A Session Summary Question: Can you elaborate on the inflection at Kate Spade and its long-term potential? - Management highlighted a significant inflection in Kate Spade with 33% sales growth and strong operating margins, aiming to build it into a $2 billion brand [60][61] Question: Can you provide more details on the inventory dynamics and expected revenue headwinds? - Management indicated that strong demand outpaced supply, particularly for Kate Spade, which may moderate growth rates in the short term but is not reflective of brand strength [64][66] Question: What is the outlook for digital sales and its impact on store fleet? - Management noted that digital sales are expected to reach $2 billion, representing a margin benefit, while also emphasizing the importance of stores as touchpoints for consumers [72][74] Question: How is the current environment in China affecting growth? - Management reported growth in China, with a focus on digital engagement and strong brand affinity, despite some near-term COVID-related pressures [77][78] Question: What are the company's strategies regarding pricing and sustainability? - Management expressed confidence in maintaining pricing power while focusing on sustainability initiatives, including a commitment to net zero by 2050 [84][91]