Victor Luis, Chief Executive Officer of Tapestry, commented: “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 (...) 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... 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 (...) 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".

Fourth Quarter Results

Tapestry's net sales totalled 1.51 billion US dollars for the fourth fiscal quarter as compared to 1.48 billion US dollars in the prior year, an increase of 2% on a reported basis and 4% in constant currency. Net income for the period was 149 million US dollars on a reported basis, with earnings per diluted share of 0.51 US dollars. This compares to net income of 212 million US dollars with earnings per diluted share of 0.73 US dollars in similar period last year.

Coach
Net sales for Coach amounted to 1.10 billion US dollars for the fourth fiscal quarter even with the prior year on a reported basis or an increase of 2% on a constant currency basis. Global comparable store sales increased by 2%, including a benefit of approximately 150 basis points driven by an increase in global e-commerce. Operating income for Coach totaled 300 million US dollars compared to reported operating income of 291 million US dollars in the prior year. Operating margin was 27.3% versus 26.4% a year ago.

Kate Spade
Net sales for this segment totalled 332 million US dollars as compared to 312 million US dollars in similar period last fiscal year, an increase of 6% on a reported basis and 7% in constant currency. Global comparable store sales declined by 6%, including the positive impact of approximately 600 basis points from global e-commerce. Operating income for Kate Spade was 26 million US dollars on a reported basis, representing an operating margin of 7.8%. This compared to operating income of 33 million US dollars and an operating margin of 10.6% on a reported basis.

Stuart Weitzman
Net sales for the Stuart Weitzman brand amounted to 85 million US dollars compared to 73 million US dollars reported in the same period of the prior year, an increase of 17% on a reported basis and 20% in constant currency. Operating income for Stuart Weitzman was a loss of 30 million US dollars on a reported basis, while operating margin was (35.7)% versus a loss of 20 million US dollars and (27.5)%, respectively, in the prior year.

Full Year Results

Net sales for the Tapestry group totalled 6.03 billion US dollars for the full year 2019 as compared to 5.88 billion US dollars in the prior year, an increase of 3% on a reported basis and 4% in constant currency. Net income totaled 643 million US dollars on a reported basis, with earnings per diluted share of 2.21 US dollars. This compared to net income of 398 million US dollars with earnings per diluted share of 1.38 in the prior year.

Coach
Net sales for the Coach brand amounted to 4.27 billion US dollars as compared to 4.22 billion US dollars in the prior year on a reported basis, or an increase of 2% on a constant currency basis. Global comparable store sales increased by 2%, including a benefit of approximately 100 basis points driven by an increase in global e-commerce. Operating income for Coach totaled 1.15 billion US dollars compared to reported operating income of 1.12 billion US dollars in the prior year, while operating margin was 26.9% versus 26.5% a year ago.

Kate Spade
Net sales for the Kate Spade segment reached a total of 1.37 billion US dollars as compared to 1.28 billion US dollars in the prior year, an increase of 6% on a reported basis and 7% in constant currency. Global comparable store sales declined by 7%, including the positive impact of approximately 400 basis points from global e-commerce. Operating income for Kate Spade was 166 million US dollars on a reported basis, representing an operating margin of 12.1%. This compared to operating loss of 23 million US dollars and an operating margin of (1.8)% on a reported basis a year ago.

Stuart Weitzman
Net sales for Stuart Weitzman totalled 389 million US dollars compared to 374 million US dollars reported in the previous year, an increase of 4% on a reported basis and 6% in constant currency. Operating income for this segment was a loss of 51 million US dollars on a reported basis, while operating margin was (13.1)%. This compared to a slight operating loss or margin of (0.1)% on a reported basis in the prior year.

2020 Outlook

Tapestry now expects revenue 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.