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- Tapestry Inc TPR reported first-quarter FY23 sales growth of 2% year-on-year to $1.507 billion, marginally above the consensus of $1.500 billion.
- EPS of $0.79 beat the analyst consensus of $0.75.
- Gross profit fell 1.3% Y/Y to $1.05 billion, with the margin contracting nearly 220 basis points to 70%.
- The company's gross margin was negatively impacted by incremental freight expense as well as an FX headwind.
- The operating margin contracted 300 basis points to 16.9%, and operating income for the quarter decreased 13.8% to $254 million.
- Tapestry held $557.1 million in cash and equivalents as of October 1, 2022.
- Inventory at the end of Q1 rose 39.3% to $1.14 billion.
- Tapestry expects to return $1.0 billion to shareholders in FY23. It plans to buy back $700 million in common stock in the fiscal year.
- TPR continues to anticipate paying an annual dividend of $1.20 per share, representing a 20% increase compared to prior year, totaling approximately $300 million.
- Outlook: Tapestry sees FY23 EPS of $3.60 - $3.70 (prior view $3.80 - $3.90) versus the consensus of $3.82.
- The company expects FY23 sales of $6.5 billion - $6.6 billion (prior view ~$6.9 billion) versus the consensus of $6.88 billion. This represents a slight decline versus the prior year on a reported basis due entirely to 450 basis points of FX pressure.
- In addition, TPR reiterated its 2025 strategic growth plan and financial targets as provided at its September 2022 Investor Day.
- Price Action: TPR shares are trading higher by 2.85% at $32.11 on the last check Thursday.
- Photo Via Company
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