Tapestry, Inc, the parent company of Coach, Kate Spade, and Stuart Weitzman, has reported a net sales increase of 5 per cent year-over-year to $2.20 billion for the fiscal 2025 second quarter (FY25 Q2), ended December 28, 2024.

Tapestry, Inc reported a 5 per cent year-over-year sales increase to $2.20 billion in FY25 Q2, with gross profit of $1.63 billion and a 74.4 per cent margin.
Net income was $310 million ($450 million non-GAAP).
Strong cash flow and balance sheet led to an increased FY25 outlook, projecting revenue over $6.85 billion and EPS of $4.85–$4.90.
The company remains confident in long-term growth.

Gross profit reached $1.63 billion, with a gross margin of 74.4 per cent, reflecting operational improvements and lower freight expenses. Operating income grew to $493 million on a reported basis, with an operating margin of 22.4 per cent, while on a non-GAAP basis, operating income stood at $548 million, with a 24.9 per cent margin.

Net income in Q2 was reported at $310 million, with earnings per diluted share (EPS) of $1.38. On a non-GAAP basis, net income was $450 million, with EPS of $2.00, up from $1.63 in the prior year. The company incurred a $120 million charge related to the redemption of acquisition-related debt following the terminated merger agreement with Capri Holdings Limited. Adjusted free cash flow for the quarter was $891 million, slightly up from $859 million in the prior year, the company said in a press release.

Tapestry maintained a strong balance sheet, with cash and short-term investments totalling $1.0 billion and net debt at $1.7 billion, representing a leverage ratio of 1.6x. The company also announced plans to repay its $303 million April 2025 bonds at maturity. Inventory levels stood at $937 million at the end of Q2, up from $825 million in the prior year, as expected.

“Our strong second quarter outperformance is a testament to our exceptional teams and our collective commitment to disciplined brand building. During the important holiday season, we meaningfully advanced our growth agenda, bringing innovation and craftsmanship to consumers around the world. Our success is clearly reflected in the accelerated top and bottom-line gains we achieved, resulting in record quarterly revenue and adjusted earnings per share,” said Joanne Crevoiserat, chief executive officer of Tapestry, Inc.

Following the strong quarter, Tapestry raised its fiscal 2025 outlook, now expecting revenue to exceed $6.85 billion, reflecting approximately 3 per cent growth versus the prior year. The company also anticipates an operating margin expansion of around 100 basis points, a net interest expense of approximately $35 million, and a tax rate of 17 to 18 per cent. EPS are projected between $4.85 and $4.90, representing 13 to 14 per cent growth compared to the prior year, surpassing the company’s previous guidance of $4.50 to $4.55. Adjusted free cash flow is now expected to reach $1.2 billion, up from the prior estimate of $1.1 billion.

Tapestry’s outlook assumes no revenue or earnings impact from the terminated Capri Holdings acquisition, no further appreciation of the US dollar, no material worsening of inflationary pressures or consumer confidence, and no policy changes resulting from the upcoming US Presidential Administration shift. The forecast also includes the anticipated 10 per cent tariff on goods imported from China into the US beginning February 4, 2025, though the company expects this to have an immaterial impact on fiscal 2025 results.

“Further, we raised our outlook for the year, harnessing our position of strength to deliver superior results, while making strategic investments to extend our competitive advantages and power durable growth. We remain confident in Tapestry’s bright future and the compelling opportunity for continued, significant value creation,” Joanne added.

Fibre2Fashion News Desk (HU)