Tapestry Shares Soar On Strength In Coach Brand, FY24 EPS Outlook Raised

Tapestry, Inc. TPR shares traded higher on Thursday after the company announced its second-quarter results.

The company delivered quarterly revenue of $2.085 billion, representing a 3% growth compared to the prior year and beating the street view of $2.05 billion. The company reported adjusted earnings per share of $1.63, beating the analyst consensus of $1.46.

Coach brand sales gained 6%, Kate Spade fell 6%, and Stuart Weitzman slumped 4% in the quarter under review.

The gross profit totaled $1.49 billion, compared to the prior year’s $1.39 billion. The quarterly gross margin was 71.6%, reflecting a benefit of 170 basis points from lower freight expense and operational improvements.

Non-GAAP operating income was $476 million, higher than $418 million a year ago. The second quarter operating margin was 22.8%, compared with the 20.6% operating margin in the prior year period.

Cash and equivalents totaled $7.46 billion, and total borrowings outstanding were $7.74 billion.

Tapestry declared a quarterly cash dividend of 35 cents per common share, payable on March 25, 2024, to shareholders of record on March 8, 2024.

In the fiscal year, Tapestry plans to return approximately $325 million to shareholders through dividend payments. This represents an anticipated annual dividend rate of $1.40 per share, an increase of 17% from the prior year.

Outlook: Tapestry raised 2024 adjusted earnings per share guidance from $4.10-$4.15 to $4.20-$4.25 (estimate: $4.12).

The company reaffirmed 2024 sales guidance of $6.70 billion versus the $6.73 billion estimate.

Price Action: TPR shares are trading higher by 8.66% to $43.85 on the last check Thursday.

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