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Tuesday, November 7, 2017

Tapestry (TPR) reported earnings on Tue 7 Nov 017 (b/o)

** charts after earnings **


Tapestry beats by $0.06, misses on revs; reaffirms FY18 guidance; increases FY19 synergy targets 
  • Reports Q1 (Sep) earnings of $0.42 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus of $0.36; revenues rose 24.2% year/year to $1.29 bln vs the $1.31 bln Capital IQ Consensus. 
    • Net sales for Coach totaled $924 million for the first fiscal quarter as compared to $950 million in the prior year, a decrease of 3%. On a constant currency basis, sales declined 2%. Global comparable store sales declined 2%, including a benefit of approximately 100 basis points driven by an increase in global e-commerce. Results include the negative impact associated with the shift in timing of the Chinese Mid-Autumn festival into October, exacerbated by the impact of inventory mix issues as well as natural disasters occurring in the quarter, notably hurricanes in North America and typhoons in Asia.
    • Net sales for Kate Spade totaled $269 million, reflecting, in part, the strategic pullback in wholesale disposition and online flash. Global comparable store sales declined 9%, including the negative impact of ~600 basis points basis points from a decline in global e-commerce, as projected.
  • Co reaffirms guidance for FY18, sees EPS of $2.35-2.40, excluding non-recurring items, vs. $2.36 Capital IQ Consensus Estimate; sees FY18 revs of $5.8-5.9 bln vs. $5.85 bln Capital IQ Consensus, with low-single digit organic growth and the acquisition of Kate Spade adding over $1.2 billion in revenue. In addition, the Company continues to project operating income growth of 22% to 25% versus fiscal 2017 driven by mid-single-digit organic growth, the acquisition of Kate Spade, and estimated synergies of $30 to $35 million. These synergies are expected to offset in part the reduction in profitability from the strategic and deliberate pullback of Kate Spade wholesale disposition and online flash sales channels. Taken together, the Kate Spade business and resulting synergies are expected to contribute ~$130 to $140 million to operating income. 
  • "While our Coach comparable store sales were impacted by both expected calendar shifts and inventory challenges as well as the effects of the unanticipated natural disasters -- we have returned to growth thus far in the second quarter and are well positioned for holiday...
  • After only a few months since the close of the Kate Spade acquisition, we're even more excited about the opportunities for the brand, both in terms of revenue growth, driven by distribution and productivity, and profitability improvements, as we leverage our scale across our supply chain, global business development organization and other corporate functions. Importantly, we now expect to achieve run-rate synergies of ~$100 to $115 million in fiscal 2019 versus our previous guidance of $50 million." 

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