“Our third quarter results significantly outpaced expectations, underscoring the power of the Acceleration Program and enthusiasm for our brands. Through a sharpened focus on the consumer, we fuelled new customer acquisition at Coach, Kate Spade, and Stuart Weitzman and delivered robust sales growth led by Digital and China. Importantly, for the third consecutive quarter, we achieved operating income gains – compared to both FY20 and FY19 – supported by a continued reduction in promotional activity, higher AUR, and disciplined expense management”, commented Joanne Crevoiserat, Chief Executive Officer of Tapestry.

“Building on this momentum, we are increasingly optimistic about our ability to generate sustainable top and bottom-line growth. Looking forward, while the environment remains volatile, we see encouraging signs of recovery as vaccination efforts progress, resulting in increased consumer confidence, strong demand for our categories, and improving in-store traffic trends. In this context, we remain focused on driving brand relevance and customer engagement through product innovation and compelling marketing, supported by data-driven insights and a digital-first mindset”, the CEO concluded.

Third Quarter Results

Net sales totaled 1.27 billion US dollars for the third quarter as compared to 1.07 billion US dollars in the prior year, representing a 19% increase. Operating income was 117 million US dollars on a reported basis, while operating margin was 9.2% versus an operating loss of 685 million US dollars and an operating margin of (63.9)% in the prior year. Net income for the quarter was 92 million US dollars on a reported basis, with earnings per diluted share of 0.32 US dollars. This compared to a net loss of 677 million US dollars with a loss per diluted share of 2.45 US dollars in the prior year period. The reported tax rate for the quarter was 3.8% compared to 4.0% in the prior year period.

Coach

Net sales for Coach reached 964 million US dollars for the fiscal third quarter as compared to approximately 772 million US dollars in the prior year, representing an increase of 25% and a return to pre-pandemic revenue levels. Gross profit for Coach totaled 718 million US dollars, while gross margin was 74.5% on a reported basis. This compared to prior year gross profit of 476 million US dollars and gross margin of 61.6% on a reported basis. Operating income for Coach was 251 million US dollars compared to reported operating income of 38 million US dollars in the prior year, while operating margin was 26.1% versus 4.9% a year ago.

Kate Spade

Net sales for Kate Spade totaled 252 million US dollars for the fiscal third quarter as compared to 250 million US dollars in the prior year, representing an increase of 1%, which included an impact related to a strategic pullback in lower margin wholesale disposition sales. Gross profit for Kate Spade totaled 160 million US dollars, while gross margin was 63.5% on a reported basis. This compared to gross profit of approximately 123 million US dollars and gross margin of 49.1% in the prior year on a reported basis. Operating loss for Kate Spade was 9 million US dollars on a reported basis, representing an operating margin of (3.4)%. This compared to an operating loss of 91 million US dollars and an operating margin of (36.6)% on a reported basis in the year ago period.

Stuart Weitzman

Net sales for Stuart Weitzman totaled 57 million US dollars for the fiscal third quarter compared to 51 million US dollars in the same period of the prior year, representing a 13% increase. These results included the negative impact of a North America wholesale timing shift into the fourth fiscal quarter. Gross profit for Stuart Weitzman totaled 34 million US dollars on a reported a basis, while gross margin for the quarter was 58.9%. This compared to prior year reported gross profit of 18 million US dollars and gross margin of 35.4%. Operating loss for Stuart Weitzman was approximately 18 million US dollars on a reported basis, compared to an operating loss of 531 million US dollars in the year ago period.