August 20, 2019 - United States Of America
August 20, 2019 - United States Of America
For the full year 2019, net sales totaled $6.03 billion as compared to $5.88 billion in the prior year, an increase of 3 per cent on a reported basis and 4 per cent in constant currency. Net income totaled $643 million on a reported basis, with earnings per diluted share of $2.21. This compared to net income of $398 million with earnings per diluted share of $1.38 in the prior year period, said Tapestry in a press release.
The company’s portfolio includes brands like Coach,
Net sales for Coach totaled $1.10 billion for the fourth fiscal quarter even with the prior year on a reported basis, or an increase of 2 per cent on a constant currency basis. Net sales for Kate Spade totaled $332 million for the fourth fiscal quarter as compared to $312 million in the prior year, an increase of 6 per cent on a reported basis and 7 per cent in constant currency. Net sales for Stuart Weitzman totaled $85 million for Q4 compared to $73 million reported in the same period of the prior year, an increase of 17 per cent on a reported basis and 20 per cent in constant currency.
"Fiscal 2019 was a year of meaningful evolution for Tapestry. We experienced ongoing strength in our business internationally, while navigating a volatile backdrop in North America. Importantly, we made significant progress on our strategic initiatives, most notably building the foundation of our distinctive multi-brand platform. We generated the anticipated synergies from the successful integration of Kate Spade into our portfolio, which funded, in part, material investments in systems as well as our international development through distributor acquisitions and new store openings in key regions. We also made key additions to Tapestry's leadership team. Taken together, we believe these actions will underpin our near and long term growth objectives," said Victor Luis, chief executive officer of Tapestry, Inc.
"Coach - our largest and most globally diversified brand - had a strong year, driven by growth in our international and digital channels, while outperforming the direct competition in North America. We understand that driving sustainable growth at Coach is essential to the success of Tapestry overall and are proud of the brand's performance, highlighted by seven consecutive quarters of positive comparable store sales, added Luis.
"In addition, we made important advancements at Stuart Weitzman, across people, processes and product to address the challenges in the business, driving a return to topline growth in fiscal 2019. We've also successfully expanded the brand internationally through regional distributor acquisitions and new store openings, with a focus on China, where we are just beginning to tap into this tremendous growth opportunity for the brand.
At Kate Spade, the most significant milestone of the year was the debut of Nicola Glass's creative vision, reimagining the brand while staying true to its unique positioning, heritage and DNA. We are incredibly confident in this vision, supported by the emerging positive signs we are seeing, notably in the new brand codes and evolved product in the full price business. That said, the brand’s financial results did not meet our expectations and more time is required to drive a positive inflection in the business, particularly in light of the traffic-challenged and competitive retail environment in North America. We acknowledge that there are opportunities to improve performance and we are addressing those areas with a sense of urgency.
Most broadly, we remain steadfast in our strategic vision and focused on maximising the benefits of our global, multi-brand platform, while continuing to drive strength in our core Coach brand. Our conviction is reflected, in part, by the $1 billion share repurchase programme we established and began to implement in the fourth fiscal quarter. Together with our annual dividend, this underscores our confidence in driving long-term, sustainable growth and commitment to returning capital to shareholders.
Looking ahead, we are revising our outlook for fiscal 2020 to reflect the current trends in our business, notably at Kate Spade. We believe this is prudent, particularly in light of the uncertain environment in North America, and as we build the brand's global awareness. That said, we understand it's critical to act swiftly and decisively, applying our learnings, to drive positive change. As part of this strategy, we are deliberately pulling back on the number of new store openings for the brand while we seek to focus on maximizing productivity.
Importantly, with continued momentum at the Coach brand, our top priority is to fuel an acceleration in our acquired businesses to unlock the power of our multi-brand platform. Therefore, while our long-term vision is unchanged, we are modifying our capital allocation policy in fiscal 2020, dedicating our resources to driving organic growth, and do not expect to pursue strategic acquisitions. In addition, we plan to increase the capital we return to shareholders, repurchasing approximately $300 million of common stock while maintaining our annual dividend, resulting in a total payout of nearly $700 million. Overall, we remain confident in the potential of our brands and the operating model we’ve built."
The company expects revenues for fiscal 2020 to increase at a low-single-digit rate from fiscal 2019. In addition, the company projects earnings per diluted share to be approximately even with prior year. The primary change from the prior outlook is the expectation for more modest topline growth at Kate Spade in North America, impacting the company's ability to leverage its strategic investments and fixed costs. Importantly, the company continues to expect top and bottom line growth at Coach and profitability improvements at Stuart Weitzman in fiscal 2020.
For the first fiscal quarter, the company projects revenues to be slightly below prior year and earnings per diluted share to decline on a year-over-year basis. The outlook for the first fiscal quarter includes the continued impact of the company's foundational strategic initiatives, including investments in new stores openings, distributor buybacks as well as systems. (PC)