-=Tapestry (TPR) reported earnings on Tue 6 Feb 2018 (BMO)

Tapestry beats by $0.19, reports revs in-line; raises FY18 EPS guidance, sees FY 18 revs in-line

• Reports Q2 (Dec) earnings of $1.07 per share, $0.19 better than the Capital IQ Consensus of $0.88; revenues rose 35.1% year/year to $1.78 bln vs the $1.77 bln Capital IQ Consensus.
  • Net sales for Coach totaled $1.23 billion, +2% Y/Y
    • Global comps +3%
  • Net sales for Kate Spade totaled $435 million, reflecting, in part, the strategic pullback in wholesale disposition and online flash sales.
    • global comps -7%, including the negative impact of approximately 400 basis points from a decline in global e-commerce
  • Net sales for Stuart Weitzman totaled $121 million, +2% Y/Y
• Co issues upside guidance for FY18 EPS, sees EPS of $2.52-2.60 vs. $2.40 Capital IQ Consensus Estimate; sees FY18 revs of $5.8-5.9 bln vs. $5.83 bln Capital IQ Consensus Estimate.
  • Previous guidance was for FY 18 EPS of $2.35-2.40
  • Co continues to expect 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 approximately $130 to $140 million to operating income.