Coach parent Tapestry posts 7 percent drop in Q2 sales

Coach parent Tapestry Net sales at Tapestry Inc. totalled 1.69 billion dollars for the second quarter compared to 1.82 billion dollars in the prior year, representing a 7 percent decline. Net income for the quarter was 311 million dollars on a reported basis, with earnings per diluted share of 1.11 dollars. This compared to net income of 299 million dollars with earnings per diluted share of 1.08 dollars in the prior year period. On a non-GAAP basis, net income for the quarter was 323 million dollars with earnings per diluted share of 1.15 dollars. Commenting on the company’s performance, Joanne Crevoiserat, Chief Executive Officer of Tapestry said: “For the second consecutive quarter, we generated strong operating income growth supported by a reduction in promotional activity and higher AUR, as well as disciplined inventory and expense management. Further, we delivered this profit growth in the face of unprecedented Covid-related external headwinds, including pressured bricks and mortar traffic, store closures and capacity limits, as well as higher freight costs and shipping constraints.” Review of Tapestry labels in the second quarter Net sales for Coach totalled 1.23 billion dollars for the second quarter compared to 1.27 billion dollars in the prior year, representing a decline of 4 percent. The company added that gross profit for Coach totalled 888 million dollars, while gross margin was 72.5 percent on a reported and non-GAAP basis compared to prior year gross profit of 877 million dollars and gross margin of 69.1 percent on a reported and non-GAAP basis. The company further said, net sales for Kate Spade totalled 376 million dollars for the second quarter compared to 430 million dollars in the prior year, representing a decline of 13 percent, which included the impact related to a strategic pullback in lower margin wholesale disposition sales. Gross profit for Kate Spade totalled 233 million dollars, while gross margin was 62.1 percent on a reported and non-GAAP basis compared to gross profit of 262 million dollars and gross margin of 61 percent in the prior year on a reported and non-GAAP basis. Net sales for Stuart Weitzman totalled 85 million dollars for the second quarter compared to 116 million dollars in the same period of the prior year, representing a 27 percent decline. Gross profit for Stuart Weitzman totalled 53 million dollars on both a reported and non-GAAP basis, while gross margin for the quarter was 62.2 percent. The company said, given Tapestry’s better-than-anticipated results in the fiscal first half, and assuming a continued recovery emerging from the pandemic, the company now expects revenue for the fiscal year to increase at a high-single digit rate on a 52-week basis and in the area of 10 percent on 53-week basis. This outlook continues to include the expectation for a topline inflection and strong bottom line growth during the second half of the fiscal year. Picture credit:Business Wire
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