Tapestry's Q1 Earnings Manages To Beat Street View; Cuts Annual Guidance On FX Pressure

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.
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