Tapestry ((TPR)) has held its Q3 earnings call. Read on for the main highlights of the call.
Tapestry’s latest earnings call revealed a strong performance, marked by record-breaking revenue and earnings. The company reported significant growth, particularly in its Coach brand, alongside robust global expansion. Despite facing challenges with Kate Spade and potential tariff impacts, Tapestry’s strategic initiatives and market positioning have contributed to a positive outlook.
Record Third Quarter Revenue and Earnings
Tapestry delivered record third quarter earnings per share, which increased by 27% compared to the prior year. The total revenue gains were 8% at constant currency, driven by a remarkable 15% growth at Coach. This impressive financial performance underscores the company’s ability to leverage its brand strength and operational efficiencies.
Strong Global Growth
The company experienced strong global growth, with international revenue rising by 8%. Notably, there was a 35% increase in Europe and a 5% increase in Greater China. North America also saw a 9% revenue increase, highlighting Tapestry’s successful expansion across key markets.
New Customer Acquisition
In North America, Tapestry acquired over 1.2 million new customers, with two-thirds belonging to the Gen Z and Millennial demographics. This group transacts at a higher average unit retail (AUR) than the rest of the customer base, indicating a promising trend for future revenue growth.
Coach Brand Performance
The Coach brand achieved a 15% top line increase, with significant gains in leather goods and handbags. This growth was accompanied by a nearly 100 basis point increase in margins, showcasing the brand’s strong market presence and consumer appeal.
Digital and Omnichannel Growth
Tapestry’s digital sales grew at a mid-teens rate, representing approximately 30% of total revenue. Additionally, global brick and mortar sales rose at a mid-single digit rate, reflecting the company’s successful omnichannel strategy.
Kate Spade Revenue Decline
Kate Spade’s revenue declined by 12% at constant currency, as the brand undergoes a strategic reset. The focus is on reducing promotional activity and prioritizing long-term growth, which may stabilize the brand’s performance in the future.
Japan Sales Decline
Sales in Japan declined by 2% due to a challenging market environment. This highlights the need for Tapestry to adapt its strategies to maintain competitiveness in this region.
Potential Tariff Impact
Tapestry is proactively taking actions to mitigate potential impacts from tariffs, with $900 million of cost of goods sold related to imports into the U.S. This strategic foresight aims to protect the company’s financial performance amidst global trade uncertainties.
Forward-Looking Guidance
During the conference call, Tapestry provided robust guidance following their record-breaking third quarter results. The company reported an 8% increase in total revenue at constant currency, driven by a 15% growth in the Coach brand and significant geographic gains. Tapestry raised their fiscal 2025 earnings outlook to approximately $5 per share, emphasizing brand building, customer acquisition, and innovative product offerings as key drivers of their success.
In conclusion, Tapestry’s earnings call highlighted a strong financial performance with record-breaking results and a positive outlook. The company’s strategic focus on brand strength, customer acquisition, and global expansion positions it well for continued success, despite challenges in certain areas. Investors and market watchers will be keen to see how Tapestry navigates potential headwinds and capitalizes on growth opportunities.