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Record Revenue at Coach, Strategic Global Expansion, and Continued Commitment to Sustainability
Financials
28 August, 2024
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Tapestry, Inc., the parent company of iconic brands Coach, Kate Spade, and Stuart Weitzman, released its financial results for the fourth quarter and full fiscal year 2024 on August 15, 2024. The company demonstrated resilience and strategic prowess by achieving significant financial milestones despite a challenging global economic landscape. This article delves into the company’s key financial indicators, brand performance, geographical reach, and commitment to environmental, social, and governance (ESG) initiatives.
Tapestry, Inc. reported annual net sales of $6,67 billion for fiscal year 2024, reflecting a slight increase from the previous year’s $6,66 billion. When adjusting for currency fluctuations, this translates to a 1% revenue growth on a constant currency basis. The company also achieved a gross profit of $4,89 billion, with a robust gross margin of 73,3%, a notable increase from the prior year’s 70,8%.
Operating income was $1,14 billion, with an operating margin of 17,1%, slightly down from $1,17 billion the previous year. However, on a non-GAAP basis, operating income was $1.25 billion, indicating a stronger underlying performance with an 18,7% operating margin.
The net income for the fiscal year stood at $816 million, translating to a reported diluted earnings per share (EPS) of $3,50. On a non-GAAP basis, net income was $1 billion, with a record EPS of $4,29, exceeding the company’s outlook.
In terms of geographical performance, Tapestry saw mixed results across its markets. The North American market, the company’s largest, saw a slight decline in sales by 1% compared to the previous year. Conversely, international markets performed better, with Europe leading the charge with a 14% increase in revenue, followed by strong performances in Other Asia (+9%) and Japan (+5%).
| Region | FY 2024 Revenue (EUR million) | FY 2023 Revenue (EUR million) | % Change |
|---|---|---|---|
| North America | 4,314 | 4.357,6 | -1% |
| Greater China | 1.012,6 | 1.012,6 | 0% |
| Japan | 554,4 | 577,7 | -4% |
| Other Asia | 348,5 | 325,5 | +7% |
| Europe | 326,6 | 279,1 | +17% |
| Other Regions | 115,1 | 110,7 | +4% |
| Total | 6.671,2 | 6.660,9 | 0% |
Sales by channel highlighted the strength of Tapestry’s omni-channel approach. Direct-to-consumer sales remained consistent with the previous year, while wholesale revenue saw an increase, particularly driven by international markets. The digital channel continues to be a significant contributor, with online sales remaining over three times higher than pre-pandemic levels, accounting for nearly 30% of total sales.
Tapestry’s portfolio of brands displayed varied performance in fiscal year 2024. Coach led the way with a record annual revenue surpassing $5 billion, marking a 3% increase from the previous year. This growth was driven by strong handbag sales and higher average unit retail prices.
Kate Spade, however, faced challenges, with a 6% decline in revenue. This was attributed to softer consumer demand and competitive pressures in key markets. Stuart Weitzman also struggled, with a 14% drop in sales, reflecting ongoing difficulties in the luxury footwear segment.
Tapestry, Inc. has made significant strides in its ESG efforts, reinforcing its commitment to sustainability and social responsibility. The company’s initiatives span across various aspects, including environmental impact reduction, ethical sourcing, and community engagement.
Environmental Initiatives: Tapestry has continued to work towards reducing its carbon footprint, with a focus on lowering greenhouse gas emissions across its global operations. The company has invested in renewable energy projects and implemented energy-efficient practices in its retail stores and distribution centers.
Ethical Sourcing and Circular Economy: The company has strengthened its commitment to responsible sourcing, ensuring that the materials used in its products are ethically sourced and environmentally sustainable. Tapestry is also exploring circular economy models, including product take-back schemes and recycling initiatives, to minimize waste and promote product longevity.
Social Responsibility and Inclusion: Tapestry’s social responsibility efforts include initiatives aimed at promoting diversity and inclusion within the company and the broader community. The company has made progress towards gender parity in leadership positions and has expanded its support for minority-owned businesses through strategic partnerships and investments.
Tapestry, Inc.’s fiscal year 2024 results reflect the company’s ability to navigate a complex global environment while continuing to drive growth and innovation. The company’s focus on brand strength, global expansion, and digital transformation has positioned it well for future success. Looking ahead, Tapestry remains committed to its long-term strategic goals, including the proposed acquisition of Capri Holdings Limited, which is expected to further enhance its portfolio of luxury brands and accelerate growth.
While Tapestry has shown resilience, the performance of Kate Spade and Stuart Weitzman highlights areas for potential improvement. A deeper analysis into consumer behaviour, competitive positioning, and market trends could provide insights to revitalise these brands. Moreover, the ongoing legal challenge surrounding the Capri Holdings acquisition presents a significant risk, warranting close monitoring.
As Tapestry continues to innovate and expand, its sustained focus on ESG will play a crucial role in ensuring long-term sustainability and value creation for shareholders and stakeholders alike.
Read the full Tapestry Company report Here.
Cover Image Courtesy: Coach Website