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Category: Stock Market and Tapestry Inc.
Date: 17 September 2019 Stock Price: $25.14 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Tapestry the owner of fashion brands such as Coach and Kate Spade
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About Tapestry Inc
Tapestry, Inc. is a New York-based house of modern luxury lifestyle brands. Our company’s portfolio includes the Coach, Kate Spade New York, and Stuart Weitzman brands. Our company and our brands are founded upon a consumer-led view of luxury that stands for inclusivity and approachability.
The image below shows high level business highlights for Tapestry Inc.
The image below shows high level business highlights for Tapestry Inc.
Overview of Tapestry's latest earnings report
The numbers we are interested in (for the quarter):
- Total revenue: $1.513 billion (up from $1.483 billion from the same quarter of the previous year)
- Revenues increased by 2.02% over the last 12 months
- Cost of Sales: $514.5 million (up from $481.9 million for the same quarter of the previous year)
- Cost of revenues increased by 6.76% over the last 12 months
- Net income: $148.9 million (down from $211.7 million loss for the same quarter of the previous year)
- Diluted earnings per share: $0.51 (down from $0.73 for the same quarter of the previous year)
- Dividends declared for full year: $1.35
- Dividend yield: 5.36%
- Dividend yield: 5.36%
- Diluted weighted-average shares outstanding: 289.8 million (up from 291.3 million for the same quarter of the previous year)
- Cash and cash equivalents: $1.233 billion
- Cash and cash equivalents per share: $4.25
- Cash and cash equivalents makes up 16.92% of Tapestry's market capital
- Cash and cash equivalents makes up 17.9% of Tapestry's total assets
- Receivables: $298.1 million
- Receivables makes up 4.3% of Tapestry's total assets
- Inventories: $778 million
- Inventories makes up 11.3% of Tapestry's total assets
Tapestry Inc's management commentary on the results and earnings guidance
NEW YORK--(BUSINESS WIRE)--Aug. 15, 2019-- Tapestry, Inc. (NYSE: TPR), a leading New York-based house of modern luxury accessories and lifestyle brands, today reported results for the fiscal fourth quarter and year ended June 29, 2019.
Victor Luis, Chief Executive Officer of Tapestry, Inc., said, “Fiscal 2019 was a year of meaningful evolution for Tapestry. We experienced ongoing strength in our business internationally, while navigating a volatile backdrop in North America. Importantly, we made significant progress on our strategic initiatives, most notably building the foundation of our distinctive multi-brand platform. We generated the anticipated synergies from the successful integration of Kate Spade into our portfolio, which funded, in part, material investments in systems as well as our international development through distributor acquisitions and new store openings in key regions. We also made key additions to Tapestry’s leadership team. Taken together, we believe these actions will underpin our near and long term growth objectives.”
“Coach - our largest and most globally diversified brand - had a strong year, driven by growth in our international and digital channels, while outperforming the direct competition in North America. We understand that driving sustainable growth at Coach is essential to the success of Tapestry overall and are proud of the brand’s performance, highlighted by seven consecutive quarters of positive comparable store sales.”
“In addition, we made important advancements at Stuart Weitzman, across people, processes and product to address the challenges in the business, driving a return to topline growth in Fiscal 2019. We’ve also successfully expanded the brand internationally through regional distributor acquisitions and new store openings, with a focus on China, where we are just beginning to tap into this tremendous growth opportunity for the brand.”
“At Kate Spade, the most significant milestone of the year was the debut of Nicola Glass’s creative vision, reimagining the brand while staying true to its unique positioning, heritage and DNA. We are incredibly confident in this vision, supported by the emerging positive signs we are seeing, notably in the new brand codes and evolved product in the full price business. That said, the brand’s financial results did not meet our expectations and more time is required to drive a positive inflection in the business, particularly in light of the traffic-challenged and competitive retail environment in North America. We acknowledge that there are opportunities to improve performance and we are addressing those areas with a sense of urgency.”
“Most broadly, we remain steadfast in our strategic vision and focused on maximizing the benefits of our global, multi-brand platform, while continuing to drive strength in our core Coach brand. Our conviction is reflected, in part, by the $1 billion share repurchase program we established and began to implement in the fourth fiscal quarter. Together with our annual dividend, this underscores our confidence in driving long-term, sustainable growth and commitment to returning capital to shareholders.”
Returning Capital to Shareholders:
During the fourth fiscal quarter, the Company commenced its share buyback program, repurchasing approximately 3.4 million shares of its common stock at an average cost of $29.31 for a total of approximately $100 million. Therefore, for the fiscal year, the Company returned approximately $490 million to shareholders through dividends and share repurchases. At the end of the period, $900 million remained under the Company's current repurchase authorization. The Company plans to return approximately $700 million to shareholders in Fiscal 2020 through dividends and share repurchases.
The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.3375 per common share, maintaining an annual rate of $1.35. The dividend is payable on September 30, 2019 to shareholders of record as of the close of business on September 6, 2019.
Fiscal Year and First Quarter 2020 Outlook
The following outlook is provided on a non-GAAP basis and replaces all previous guidance.
The Company expects revenues for Fiscal 2020 to increase at a low-single-digit rate from Fiscal 2019. In addition, the Company projects earnings per diluted share to be approximately even with prior year. The primary change from the prior outlook is the expectation for more modest topline growth at Kate Spade in North America, impacting the Company’s ability to leverage its strategic investments and fixed costs. Importantly, the Company continues to expect top and bottom line growth at Coach and profitability improvements at Stuart Weitzman in Fiscal 2020. Net interest expense for the year is expected to be $45 to $50 million and the full year Fiscal 2020 tax rate is projected to be in the area of 17.5%.
For the first fiscal quarter, the Company projects revenues to be slightly below prior year and earnings per diluted share to decline on a year-over-year basis. The outlook for the first fiscal quarter includes the continued impact of the Company’s foundational strategic initiatives, including investments in new stores openings, distributor buybacks as well as systems.
Victor Luis, Chief Executive Officer of Tapestry, Inc., said, “Fiscal 2019 was a year of meaningful evolution for Tapestry. We experienced ongoing strength in our business internationally, while navigating a volatile backdrop in North America. Importantly, we made significant progress on our strategic initiatives, most notably building the foundation of our distinctive multi-brand platform. We generated the anticipated synergies from the successful integration of Kate Spade into our portfolio, which funded, in part, material investments in systems as well as our international development through distributor acquisitions and new store openings in key regions. We also made key additions to Tapestry’s leadership team. Taken together, we believe these actions will underpin our near and long term growth objectives.”
“Coach - our largest and most globally diversified brand - had a strong year, driven by growth in our international and digital channels, while outperforming the direct competition in North America. We understand that driving sustainable growth at Coach is essential to the success of Tapestry overall and are proud of the brand’s performance, highlighted by seven consecutive quarters of positive comparable store sales.”
“In addition, we made important advancements at Stuart Weitzman, across people, processes and product to address the challenges in the business, driving a return to topline growth in Fiscal 2019. We’ve also successfully expanded the brand internationally through regional distributor acquisitions and new store openings, with a focus on China, where we are just beginning to tap into this tremendous growth opportunity for the brand.”
“At Kate Spade, the most significant milestone of the year was the debut of Nicola Glass’s creative vision, reimagining the brand while staying true to its unique positioning, heritage and DNA. We are incredibly confident in this vision, supported by the emerging positive signs we are seeing, notably in the new brand codes and evolved product in the full price business. That said, the brand’s financial results did not meet our expectations and more time is required to drive a positive inflection in the business, particularly in light of the traffic-challenged and competitive retail environment in North America. We acknowledge that there are opportunities to improve performance and we are addressing those areas with a sense of urgency.”
“Most broadly, we remain steadfast in our strategic vision and focused on maximizing the benefits of our global, multi-brand platform, while continuing to drive strength in our core Coach brand. Our conviction is reflected, in part, by the $1 billion share repurchase program we established and began to implement in the fourth fiscal quarter. Together with our annual dividend, this underscores our confidence in driving long-term, sustainable growth and commitment to returning capital to shareholders.”
Returning Capital to Shareholders:
During the fourth fiscal quarter, the Company commenced its share buyback program, repurchasing approximately 3.4 million shares of its common stock at an average cost of $29.31 for a total of approximately $100 million. Therefore, for the fiscal year, the Company returned approximately $490 million to shareholders through dividends and share repurchases. At the end of the period, $900 million remained under the Company's current repurchase authorization. The Company plans to return approximately $700 million to shareholders in Fiscal 2020 through dividends and share repurchases.
The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.3375 per common share, maintaining an annual rate of $1.35. The dividend is payable on September 30, 2019 to shareholders of record as of the close of business on September 6, 2019.
Fiscal Year and First Quarter 2020 Outlook
The following outlook is provided on a non-GAAP basis and replaces all previous guidance.
The Company expects revenues for Fiscal 2020 to increase at a low-single-digit rate from Fiscal 2019. In addition, the Company projects earnings per diluted share to be approximately even with prior year. The primary change from the prior outlook is the expectation for more modest topline growth at Kate Spade in North America, impacting the Company’s ability to leverage its strategic investments and fixed costs. Importantly, the Company continues to expect top and bottom line growth at Coach and profitability improvements at Stuart Weitzman in Fiscal 2020. Net interest expense for the year is expected to be $45 to $50 million and the full year Fiscal 2020 tax rate is projected to be in the area of 17.5%.
For the first fiscal quarter, the Company projects revenues to be slightly below prior year and earnings per diluted share to decline on a year-over-year basis. The outlook for the first fiscal quarter includes the continued impact of the Company’s foundational strategic initiatives, including investments in new stores openings, distributor buybacks as well as systems.
Tapestry Inc. (NYSE:TPR) stock price history
The image below, obtained from Google, shows the stock price history of Tapestry Inc (NYSE: TPR) for the last 5 years. And its not been a good time for stockholders of Tapestry. 5 years ago the stock was trading around $37 and its currently trading at $25.10. That's a 32.2% loss for Tapestry stockholders over the last 5 years. Tapestry stock is also trading at a lot closer to its 52 week low of $18.54 than it is to its 52 week high of $51.29, a clear indication that short term momentum and sentiment towards the stock of Tapestry is negative.
Recent coverage Tapestry
The extract below discusses Tapestry in more detail, as obtained from Zacks.
It has been about a month since the last earnings report for Tapestry (TPR - Free Report) . Shares have added about 29.5% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Tapestry due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Tapestry’s Q4 Earnings Meet, Revenues Miss Estimates
Tapestry came out with its fourth-quarter fiscal 2019 results. While earnings came in line, net sales fell short of the Zacks Consensus Estimate. Also, soft first-quarter fiscal 2020 view was not well perceived by investors. We note that the company posted adjusted quarterly earnings of 61 cents a share, which met the Zacks Consensus Estimate but came in a penny higher than the year-ago period.
Net sales of this New York-based company came in at $1,513.7 million, up 2% year over year on a reported and 4% on a constant currency basis. Sales increase at Kate Spade and Stuart Weitzman contributed to the top-line growth. However, net sales came below the Zacks Consensus Estimate of $1,534 million. This was the third straight quarter that the company’s top line missed the estimates. Consolidated adjusted gross profit came in at $1,017.9 million, up 1% from the prior-year quarter. However, gross margin contracted 60 basis points to 67.3%. Further, adjusted operating income of $220.8 million fell 3% from the prior-year quarter figure, while operating margin shrunk 70 basis points to 14.6%. We note that adjusted SG&A expenses increased 2% to $797.1 million, while as a percentage of net sales, the same increased 10 basis points to 52.7%.
Read the full article here
It has been about a month since the last earnings report for Tapestry (TPR - Free Report) . Shares have added about 29.5% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Tapestry due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Tapestry’s Q4 Earnings Meet, Revenues Miss Estimates
Tapestry came out with its fourth-quarter fiscal 2019 results. While earnings came in line, net sales fell short of the Zacks Consensus Estimate. Also, soft first-quarter fiscal 2020 view was not well perceived by investors. We note that the company posted adjusted quarterly earnings of 61 cents a share, which met the Zacks Consensus Estimate but came in a penny higher than the year-ago period.
Net sales of this New York-based company came in at $1,513.7 million, up 2% year over year on a reported and 4% on a constant currency basis. Sales increase at Kate Spade and Stuart Weitzman contributed to the top-line growth. However, net sales came below the Zacks Consensus Estimate of $1,534 million. This was the third straight quarter that the company’s top line missed the estimates. Consolidated adjusted gross profit came in at $1,017.9 million, up 1% from the prior-year quarter. However, gross margin contracted 60 basis points to 67.3%. Further, adjusted operating income of $220.8 million fell 3% from the prior-year quarter figure, while operating margin shrunk 70 basis points to 14.6%. We note that adjusted SG&A expenses increased 2% to $797.1 million, while as a percentage of net sales, the same increased 10 basis points to 52.7%.
Read the full article here
Tapestry (NYSE: TPR) latest stock valuation
So based on the earnings report of Tapestry Inc (NYSE: TPR) and what do we value Tapestry Inc. (TPR) stock at? Based on the earnings reported and the fiscal guidance provided by the group our valuation model provides a target (full value) price for Tapestry at $35.40 a stock. We therefore believe the Tapestry is undervalued and the current price offers long term fundamental or value investors a good opportunity to buy Tapestry stock at a good price.