Tapestry posts double-digit growth in China

Published:  30 October, 2020

The New York headquartered fashion Group, owner of the Coach, Kate Spade and Stuart Weitzman brands, said the results for its fiscal first quarter ended September 26, 2020, exceeded its expectations.

Tapestry’s net sales totaled US$1.17 billion for its fiscal first quarter, down from US$1.36 billion in the prior year (-14%). Gross profit totalled US$830 million, while gross margin was 70.8%, on a reported and non-GAAP basis, compared with a reported gross profit of approximately US$914 million and gross margin of 67.3% in the same quarter of the previous fiscal year. Operating income was US$202 million on a reported basis, while operating margin was 17.3% versus operating income of US$52 million and an operating margin of 3.8% in the prior year. Net income for the quarter came in at US$232 million (Q1 FY2019: US$20 million) with earnings per diluted share of US$0.83 (Q1 FY2019: US$0.07).

Net sales for Coach totaled US$875 million for the fiscal first quarter, compared with US$966 million in the prior year (-9%). Kate Spade net sales totalled US$240 million, down from US$306 million (-21%), and net sales for the Stuart Weitzman brand amounted to US$56 million; a sharp decline from the US$87 million recorded in the same period of the prior year, down 35%.

Tapestry said it “drove significant growth in China through compelling product assortments, enhanced marketing and expanded reach across direct channels and third-party online distribution.” It streamlined its organisational structure and optimised its global fleet with 15 net store closures in the first fiscal quarter, representing a net decrease of 50 stores from the prior year. The Group said it remains on track to achieve gross run-rate savings of US$300 million, including gross savings of US$200 million in fiscal 2021.