Tapestry beats fiscal 2Q18 top line expectations
Tapestry (TPR), formerly known as Coach, reported its fiscal 2Q18 results on February 6, 2018.
The company’s total sales rose 35% YoY (year-over-year) to $1.8 billion driven by organic growth as well as its Kate Spade acquisition. The company outdid analysts’ consensus expectations by $20 million.
“Our second quarter performance exceeded our expectations, driven by a return to growth for Coach, sales gains at Stuart Weitzman and the contribution of Kate Spade as we continued to make progress on the brand’s integration,” said Victor Luis, Tapestry’s CEO.
What drove Coach brand’s fiscal 2Q18 sales?
Tapestry’s Coach brand returned to growth in fiscal 2Q18 after falling 3% YoY in fiscal 1Q18. Its sales rose 2% to $1.2 billion during the quarter. This growth was primarily driven by a 3% rise in global comparable store sales compared to analysts’ expectations of a 2% rise.
“Coach comparable store sales rose globally, led by outperformance in North America, reflecting our strong holiday offering and improved inventory mix, all supported by festive marketing campaigns,” said Luis.
Kate Spade integration
Kate Spade sales totaled $435 million in the quarter, a fall of 7% compared to its pre-acquisition sales during the previous year’s comparable quarter. This fall primarily reflected Coach’s strategic decision to reduce Kate Spade’s wholesale disposition and online flash sales.
Global brick-and-mortar comps for the brand fell 3%, while total comps fell 7% mainly due to the planned reduction of online promotional sales.
Stuart Weitzman posts modest growth
Stuart Weitzman’s fiscal 2Q18 net sales improved 2% to $118 million driven by distribution growth and a healthy global e-commerce business.
Investors looking to invest in TPR through ETFs can choose to invest in the WisdomTree Dividend Ex-Financials ETF (DTN). Coach has a weight of ~1.3% in DTN.
Read the next article for a look at the company’s margins and profitability in fiscal 2Q18.