Tapestry, Inc. (TPR), the parent company behind popular accessories and lifestyle brands like Coach, Kate Spade, and Stuart Weitzman, is celebrating a successful fourth quarter. The company surpassed analyst expectations, reporting adjusted earnings per share of 92 cents, exceeding the predicted 88 cents. Revenue also came in higher than anticipated, reaching $1.59 billion, slightly above the estimated $1.58 billion. This positive performance is attributed, in part, to Tapestry’s successful customer engagement strategy, particularly in North America. The company acquired over 6.5 million new customers during the year, with more than half of them belonging to the Gen Z and Millennial demographics. This significant increase in customer base demonstrates Tapestry’s ability to connect with younger consumers.
Beyond revenue, Tapestry also reported healthy financial metrics. Gross profit reached $1.19 billion, while gross margin climbed to 74.9%, fueled by operational improvements and lower freight expenses. On a non-GAAP basis, operating income stood at $262 million, resulting in an operating margin of 16.5%. The company maintains a strong financial position, with $7.20 billion in cash and equivalents and short-term investments, against $7.24 billion in outstanding borrowings.
Tapestry’s effective inventory control is evident in the reduced inventory levels. The company reported an inventory of $825 million, surpassing expectations and significantly lower than last year’s $920 million. This indicates a shift in receipt timing towards the first quarter of fiscal 2025, demonstrating strategic inventory management. The company also plans to maintain its annual dividend rate of $1.40 per common share and has declared a quarterly cash dividend of 35 cents per share, payable on September 23.
Looking ahead, Tapestry anticipates a strong fiscal 2025, projecting revenue of around $6.7 billion, slightly below the estimated $6.8 billion. Earnings per share are expected to be between $4.45 and $4.50, compared to the $4.49 estimate. This positive outlook is a testament to Tapestry’s commitment to continued growth and its ability to navigate the dynamic retail landscape.
Investors have responded positively to the strong earnings report, with TPR shares rising by 8.01% to $41.00 in premarket trading on Thursday. This surge reflects market confidence in Tapestry’s ability to deliver on its growth strategy and maintain its position as a leading player in the luxury accessories and lifestyle market.
