Tapestry's Q4 Sales Beat Expectations, Stock Surges 14.6%

Tapestry, Inc. (NYSE: TPR), a leading luxury accessories and lifestyle brands company, reported better-than-expected sales for the fourth quarter of fiscal 2024, driving its stock price up by 14.6%. The company's strong performance was driven by several key factors, as highlighted in the provided materials.

Tapestry's revenues for the quarter ended June 29 slipped 2 percent to $1.59 billion, better than the $1.57 billion analysts forecast. The company's Coach brand held steady with flat sales at $1.3 billion, while Kate Spade fell 6 percent to $290.1 million and Stuart Weitzman was off 19 percent to $50.6 million. Joanne Crevoiserat, chief executive officer of Tapestry, said in a statement that the fourth quarter capped "a successful year" against a "dynamic backdrop." She also expressed the company's commitment to driving growth and shareholder value for years to come.



Tapestry's strong performance in the fourth quarter was driven by several key factors:

1. Strong Performance of the Coach Brand: The Coach brand held steady with flat sales at $1.3 billion, while the other brands saw declines. This consistent performance contributed significantly to Tapestry's overall sales.
2. International Revenue Growth: Tapestry's international sales grew by 6% at constant currency in FY24, with increases across key markets such as Europe (+14%), Other Asia (+9%), Japan (+5%), and Greater China (+3%). This international growth helped offset declines in North America.
3. Direct-to-Consumer Sales: Tapestry maintained strong direct-to-consumer sales, which were in-line with the prior year on a constant currency basis in FY24. This indicates a robust online presence and customer engagement.
4. Gross Margin Expansion: Tapestry expanded its gross margin by 250 basis points in the fiscal year, driven by lower freight expense, operational outperformance, and favorable foreign exchange rates. This improved profitability contributed to the company's overall financial performance.

Tapestry's strategic focus on digital growth and omnichannel experiences has also significantly impacted its financial performance. The company has maintained strong positioning in Digital, with revenue more than three times above pre-pandemic levels, or nearly 30% of sales in the fiscal year. In the fourth quarter, direct-to-consumer sales increased by 2% at constant currency, including a low-single-digit gain in stores. Tapestry has launched immersive retail experiences and new concepts globally, which helped to drive awareness and engagement among younger customer cohorts. This has contributed to global brick and mortar sales growth at constant currency in FY24, fueled by higher productivity per square foot.

Tapestry's recent acquisition of Capri Holdings, which includes the brands Michael Kors, Versace, and Jimmy Choo, is expected to significantly enhance the company's long-term growth prospects and market position. The acquisition will expand Tapestry's portfolio reach across consumer segments, geographies, and product categories. This diversification will help the company tap into new markets and customer bases, driving revenue growth. Capri Holdings brings a strong international business and expertise, which Tapestry can leverage to further grow its global presence. The acquisition is expected to be immediately accretive to adjusted earnings, supporting enhanced cash flow and financial returns.

In conclusion, Tapestry's better-than-expected sales in the fourth quarter, driven by the strong performance of the Coach brand, international revenue growth, direct-to-consumer sales, and gross margin expansion, have contributed to the company's stock price surge of 14.6%. The company's strategic focus on digital growth and omnichannel experiences, as well as its recent acquisition of Capri Holdings, positions Tapestry for long-term growth and success in the luxury accessories and lifestyle brands market.