Tapestry is looking ahead to 2025.
The New York-based company, which owns Coach, Kate Spade, and Stuart Weitzman, announced a new three-year growth strategy at its 2022 Investor Day on Friday. According to the company, the new plan is aimed at driving sustainable, profitable growth and significant cash return to shareholders while building on the success of its Acceleration Program.
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“Over the last two years, we radically transformed our company, with a sharpened focus on the consumer and commitment to brand building, delivering standout results,” Joanne Crevoiserat, CEO of Tapestry, said in a statement. “From this strong foundation, we have tremendous runway and are poised to drive continued growth across each of our iconic brands.”
Crevoiserat added that given the ever-changing environment, Tapestry is ready to “move at the speed of the consumer” with agility and intention. “We are confident in our ability to fuel sustainable top and bottom-line gains and generate significant cash flow, creating meaningful value for all our stakeholders in the years to come,” the CEO added.
Among the new goals includes new financial targets for the years ahead. The company now expects to achieve revenue of $8 billion by fiscal year 2025, reflecting a three-year compound annual growth rate (CAGR) of 6% to 7%.
Of this growth, Coach is expected to see revenue growth at a mid-single-digit three-year CAGR to $5.7 billion, while maintaining an operating margin of 30%. At Kate Spade, revenue growth is expected at a high-single digit three-year CAGR to $1.9 billion, while expanding operating margin to mid-teens. The brand remains on track to achieve $2 billion in revenue and high-teens operating margin, the company said. And, at Stuart Weitzman revenue growth is expected at a low-double digit three-year CAGR to $450 million while expanding operating margin to high-single-digits.
Scott Roe, CFO and COO of Tapestry, added in a statement that the company has “powerful brands that participate in attractive and durable categories” with a business model that is both “proven and profitable.”
Roe also mentioned that Tapestry has a plan to return $3 billion to shareholders through fiscal year 2025, supported by its strong free cash flow. “Together, we believe this will drive significant total shareholder returns over our planning horizon,” Roe added.
These targets incorporate the company’s previously announced fiscal 2023 outlook, which was provided with its fourth quarter earnings results in mid-August.
Tapestry Inc. ended the fiscal year last month with record revenues fueled by gains across its portfolio, with each brand delivering double-digit sales increases.
The New York-based company reported last month that its net sales for the fiscal fourth quarter of 2022 were $1.62 billion, an increase of 1% over last year. Compared to pre-pandemic 2019, Tapestry grew 7%. Net income for Q4 was $189 million on a reported basis, with earnings per diluted share of 75 cents — down from $200 million and earnings per diluted share of 69 cents in the prior year period.
As for full-year 2022, Tapestry saw net sales of $6.68 billion, an increase of 16% from last year’s $5.75 billion total. Net income for the full year was $856 million on a reported basis, with earnings per diluted share of $3.17. This compared to net income of $834 million and earnings per diluted share of $2.95 in the prior year.
Looking ahead, Tapestry expects revenue in the area of $6.9 billion for fiscal 2023. This represents an increase of 3% to 4% on a reported basis.
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