Tapestry (TPR) Q4 Earnings call transcript Aug 15, 2024

Tapestry, the luxury lifestyle group that owns brands like Coach, Kate Spade, and Stuart Weitzman, recently held its earnings call for the fiscal year ending in March 2023. The call highlighted a successful year marked by revenue growth, strategic investments, and a focus on innovation and brand building. Here's a closer look at the key takeaways from the call.

Strong Performance and Strategic Direction

Tapestry reported a solid year with total revenue growth of 1% on a constant currency basis, driven by international growth of 6%. The company's flagship brand, Coach, achieved record annual revenue, reflecting the power of its expressive luxury positioning and the success of its product offerings. The company also reported strong gross margin delivery, with the highest annual gross margin in over 15 years, underscoring its operational excellence and focus on profitability.

Investing in Growth and Innovation

Tapestry is not resting on its laurels. The company is investing in its brands and business to drive sustainable growth. It has expanded its consumer base, particularly in North America, with over 6.5 million new customers, including over half who are Gen Z and millennials. Tapestry's digital business is also thriving, with sales more than 3x pre-pandemic levels, representing nearly 30% of revenue at accretive margins. The company has also made strategic moves to strengthen its executive leadership team, with the appointment of a new CEO and Brand President for Kate Spade.

Challenges and Opportunities

Despite the challenges faced, particularly in the Greater China market, Tapestry remains optimistic about its future. The company is investing in its brands and platforms to support long-term strategic growth in the region, positioning itself for long-term profitable growth. It is also exploring new opportunities in digital marketing and retail experiences to meet consumers where they are.

Looking Ahead

As Tapestry enters a new fiscal year, it is focused on deepening its connection with consumers, growing leather goods, fueling gains across lifestyle, and leading with purpose-led storytelling. The company is also exploring the acquisition of Capri, which it believes is an exceptional strategic fit, despite the challenges faced by the Capri business. Tapestry is confident in its ability to execute its integration plans and strategies, and sees significant value creation opportunities under its ownership.

In conclusion, Tapestry's earnings call underscores a year of success and strategic moves. The company's focus on innovation, brand building, and consumer centricity has paid off, with strong financial results and a clear path to future growth. As it navigates the challenges and opportunities ahead, Tapestry is poised to continue its journey as a leading player in the luxury lifestyle space.