Coach-parent Tapestry posts loss for Q4 and full year

Net sales at Coach-parent Tapestry Inc totalled 715 million dollars for the fourth quarter compared to 1.51 billion dollars in the prior year. The company said in a statement that gross profit totalled 499 million dollars on a reported basis, while gross margin for the quarter was 69.8 percent compared to 999 million dollars and 66 percent, respectively, in the prior year. Net loss for the quarter was 294 million on a reported basis, with loss per diluted share of 1.06 dollars compared to net income of 149 million dollars with earnings per diluted share of 51 cents in the prior year period.

Commenting on the trading results, Joanne Crevoiserat, Interim Chief Executive Officer of Tapestry, Inc., said: “This performance exceeded internal expectations, demonstrating the power of our unique brands and the decisive actions taken to adapt our business to the rapidly evolving environment and enhance financial flexibility. While the backdrop remains volatile, it has not changed our long-term objectives. Rather, it has been a catalyst to accelerate our strategic agenda.”

Review of Tapestry’s fourth quarter performance

On a non-GAAP basis, gross profit for the fourth quarter was 507 million dollars, while gross margin was 71 percent compared to 1.02 billion dollars and 67.3 percent, respectively, in the prior year. Operating loss was approximately 280 million dollars on a reported basis, while operating margin was negative 39.2 percent versus operating income of 171 million dollars and an operating margin of 11.3 percent in the prior year. On a non-GAAP basis, operating loss was 70 million dollars, while operating margin was negative 9.8 percent versus operating income of 222 million dollars and an operating margin of 14.7 percent in the prior year.

On a non-GAAP basis, net loss for the quarter was 70 million dollars with loss per diluted share of 25 cents compared to non-GAAP net income of 175 million dollars with earnings per diluted share of 61 cents in the prior year period.

Net sales for Coach reached around 517 million dollars for the quarter compared to 1.10 billion dollars in the prior year. Gross profit for Coach totalled 381 million dollars, while gross margin was 73.6 percent on a reported and non-GAAP basis compared to gross profit and margin in the prior year of 765 million dollars and 69.7 percent, respectively, on both a reported and non-GAAP basis. Operating loss for Coach was 31 million dollars compared to reported operating income of 300 million dollars in the prior year, while operating margin was negative 6 percent versus 27.4 percent a year ago. On a non-GAAP basis, operating income was 47 million dollars compared to 302 million dollars in the prior year, while operating margin was 9.1 percent versus 27.5 percent a year ago.

Net sales for Kate Spade were 164 million dollars compared to 332 million dollars in the prior year, while gross profit totalled approximately 107 million dollars on a reported basis and non-GAAP basis and gross margin was 64.9 percent compared to reported gross profit and margin in the prior year of 206 million dollars and 62 percent, respectively. On a non-GAAP basis, prior year gross profit was 206 million dollars, while gross margin was 62.2 percent.

Operating loss for Kate Spade was approximately 69 million dollars on a reported basis, representing an operating margin of negative 41.8 percent compared to operating income of 26 million dollars and an operating margin of 7.7 percent on a reported basis in the year ago period. On a non-GAAP basis, operating loss was approximately 30 million dollars, while operating margin was negative 18.2 percent compared to operating income of approximately 31 million dollars and an operating margin of 9.2 percent on a non-GAAP basis in the previous year.

Net sales for Stuart Weitzman totalled 33 million dollars for the quarter compared to 85 million dollars in the same period of the prior year. Gross profit totalled 11 million dollars on a reported basis, while gross margin for the quarter was 34.2 percent as compared to 29 million dollars and 33.7 percent, respectively, in the prior year. On a non-GAAP basis, gross profit was 20 million dollars, while gross margin was 59.4 percent compared to 47 million dollars and 54.8 percent, respectively, in the year ago period. Operating loss for Stuart Weitzman was 81 million dollars on a reported basis versus an operating loss of approximately 30 million dollars in the prior year. On a non-GAAP basis, the operating loss was 23 million dollars versus an operating loss of 9 million dollars in the prior year.

Review of Tapestry’s full year results

For the full year, net sales at Tapestry were 4.96 billion dollars compared to 6.03 billion dollars in the prior year. Gross profit totalled 3.24 billion dollars on a reported basis, while gross margin for the year was 65.3 percent compared to 4.05 billion dollars and 67.3 percent, respectively, in the prior year. On a non-GAAP basis, gross profit totalled 3.36 billion dollars, while gross margin was 67.7 percent compared to 4.08 billion dollars and 67.7 percent, respectively, in the prior year.

Net loss for the year was 652 million dollars on a reported basis, with loss per diluted share of 2.34 dollars compared to net income of 643 million dollars with earnings per diluted share of 2.21 dollars in the prior year. On a non-GAAP basis, net income was 271 million dollars with earnings per diluted share of 97 cents compared to non-GAAP net income of 749 million dollars with earnings per diluted share of 2.57 dollars in the prior year.

Net sales for Coach brand totalled 3.53 billion dollars for the full year compared to 4.27 billion dollars in the prior year. Gross profit for Coach reached 2.41 billion dollars on a reported basis, while gross margin for the year was 68.4 percent. On a non-GAAP basis, gross profit totalled 2.47 billion dollars, while gross margin was 70.2 percent compared to 3 billion dollars and 70.2 percent, respectively, in the prior year on both a reported and non-GAAP basis. Operating income for Coach was 589 million dollars compared to 1.15 billion dollars in the prior year, while operating margin was 16.7 percent versus 26.9 percent a year ago. On a non-GAAP basis, operating income was 787 million dollars compared to 1.16 billion dollars in the prior year, while operating margin was 22.3 percent versus 27.1 percent a year ago.

Net sales for Kate Spade totalled 1.15 billion dollars compared to 1.37 billion dollars in the prior year, while gross profit reached 683 million dollars on a reported basis with gross margin of 59.4 percent compared to reported gross profit and margin in the prior year of 864 million dollars and 63.2 percent, respectively. On a non-GAAP basis, gross profit was 716 million dollars, while gross margin was 62.3 percent compared with 870 million dollars and 63.6 percent in the prior year. Operating loss for Kate Spade was 99 million dollars on a reported basis, representing an operating margin of negative 8.6 percent compared to operating income of approximately 165 million dollars and an operating margin of 12.1 percent on a reported basis a year ago. On a non-GAAP basis, operating income was approximately 41 million dollars, while operating margin was 3.6 percent compared to operating income of 186 million dollars and an operating margin of 13.6 percent on a non-GAAP basis in the previous year.

Net sales for Stuart Weitzman were 286 million dollars compared to 389 million dollars reported in the same period of the prior year. Gross profit was 145 million dollars on a reported basis, while gross margin for the year was 50.6 percent compared to 194 million dollars and 49.8 percent, respectively, in the prior year. On a non-GAAP basis, gross profit was 167 million dollars, while gross margin was 58.5 percent compared to 213 million dollars and 54.8 percent, respectively, in the year ago period. Operating loss for Stuart Weitzman was 621 million dollars on a reported basis versus an operating loss of approximately 51 million dollars in the prior year. On a non-GAAP basis, the operating loss was 57 million dollars versus an operating loss of 17 million dollars in the prior year.

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