"Our third quarter results significantly exceeded expectations led by continued strong growth in North America. We drove increased customer demand at Coach, Kate Spade and Stuart Weitzman, reflecting the vibrancy of each of our brands, the power of our platform and our team’s successful execution of our strategic initiatives. Our performance reinforces the meaningful runway ahead across our portfolio. We are harnessing our unique blend of magic and logic – distinctive brands amplified by an agile and data-rich platform. These differentiators enable us to deliver the continuous innovation necessary to build lasting customer relationships in the context of a rapidly evolving landscape. We remain confident in our long-term growth opportunities and steadfast in our commitment to enhance value for our customers and shareholders”, commented Joanne Crevoiserat, Chief Executive Officer of Tapestry.

Third Quarter Results

In the third quarter of fiscal 2022, Tapestry’s net sales increased by 13%, totalling 1.43 billion US dollars, on a comparable basis to the same period last year. The company highlighted that it "delivered global sales ahead of expectations despite a challenging external environment": revenue growth of 22% in North America fully compensated for the mid-teens decline in Mainland China due to the resurgence of COVID-19. Overall, digital sales rose by 20%, as compared to similar period in the prior year.

Net sales for Coach in this period reached 1.07 billion US dollars, as compared to net sales of 963.5 million US dollars in the same quarter of the previous year. Kate Spade posted net sales of 301.5 million US dollars, as compared to net sales of 252.4 million US dollars in similar period of fiscal 2021. Net sales for Stuart Weitzman in the third quarter amounted to 63.6 million US dollars, as compared to net sales of 57.4 million US dollars in the third quarter of the prior fiscal year.

Gross profit in the third quarter of the current fiscal year added to 1.01 billion US dollars, while the gross margin was 69.9%. The company noted that it was negatively impacted by incremental freight expense to maintain product flow to meet consumer demand.  

Net income for the quarter ended on the 2^nd of April corresponded to 123 million US dollars on a reported basis, with earnings per diluted share of 0.46 US dollars, on a comparable basis to net income of 92 million US dollars and earnings per diluted share of 0.32 US dollars in the same quarter of fiscal 2021.

Fiscal 2022 Outlook

The company reduced its fiscal 2022 outlook thanks to "an estimated headwind of 0.25 US dollars to 0.30 US dollars due to incremental COVID-related pressure in China" and to the anticipated negative impact of approximately 0.17 US dollars based on the current expectation that the Generalized System of Preferences (‘GSP’) with retroactive benefit will not be adopted in the Company’s current fiscal year".

Tapestry is now expecting earnings per diluted share in the area of 3.45 US dollars, as compared to the previous outlook of earnings per diluted share in the range of 3.60 US dollars to 3.65 US dollars.