Tapestry reports strong Q2 results, raises FY24 outlook

In a vibrant showcase of resilience and strategic acumen, Tapestry, Inc. (NYSE: TPR), the esteemed parent company of iconic fashion brands such as Coach, Kate Spade, and Stuart Weitzman, has announced its financial achievements for the fiscal second quarter ending December 30, 2023. The company marked a 3% year-over-year revenue increase, reaching $2.1 billion, attributed to robust international growth and meticulous execution throughout the holiday season. Notably, Tapestry's gross margin saw a significant expansion of 300 basis points over the previous year, with operating profit climbing by 7% on a reported basis and an impressive 14% on a non-GAAP basis. Furthermore, earnings per share (EPS) rose to $1.39, a 3% increment, and $1.63 on a non-GAAP basis, showcasing a 20% uplift. The period also witnessed Tapestry generating over $800 million in free cash flow, an achievement that eclipses the prior year's performance.

A standout highlight was the 12% increase in international revenue at constant currency, spearheaded by a remarkable 19% growth in Greater China, underscoring the global allure of Tapestry's brands and the company's adeptness in leveraging international market growth opportunities.

Bolstered by these compelling results, Tapestry has upgraded its fiscal 2024 EPS outlook to a range of $4.20 to $4.25, forecasting 8% to 9% growth. The company also plans to return approximately $325 million to shareholders through dividends, underscoring its commitment to shareholder value.

Amidst this financial vigor, Tapestry's acquisition of Capri Holdings Limited, the umbrella brand for Michael Kors, Versace, and Jimmy Choo, promises to enrich Tapestry's brand portfolio and catalyze future growth. This transaction is on track, with regulatory approvals advancing and an anticipated closing in calendar 2024.

CEO Joanne Crevoiserat expressed optimism about Tapestry's trajectory, praising the company's strategic foresight and dedication to long-term growth and shareholder value. Our second quarter results exceeded expectations, highlighting the power of brand building and disciplined execution. Based on these results, we are raising our EPS outlook for the fiscal year, Crevoiserat remarked.

Tapestry's robust Q2 performance and optimistic outlook affirm the company's foundational strength and strategic growth path. With a focus on international expansion and strategic acquisitions like that of Capri Holdings Limited, Tapestry is poised for continued success in the dynamic fashion industry. The company's unwavering commitment to sustainable growth and delivering consistent financial results solidifies its position as a compelling investment choice for those seeking exposure to the global fashion sector.

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