Evan Kris
May 12, 2023
Tapestry's revenue exceeded expectations in 3Q23, and they adjusted the future plan.
On the morning of May 12th, Tapestry, Inc., an American affordable luxury group that owns brands such as Coach, Kate Spade and Stuart Weitzman, announced its financial data for the third quarter of fiscal 2023 as of April 1: net sales year-on-year growth of 5% to $1.51 billion (+9% in constant currency), with all brands growing in constant currency. Benefiting from lower freight costs and strong operating performance, despite headwinds from currency movements, gross margin increased 290 basis points year-over-year to 72.8%, higher than expected.
Group Chief Executive Officer Joanne Crevoiserat said: "Our strong third quarter results significantly exceeded expectations and demonstrated the power of brand building, customer focus and our flexible operating model. We delivered solid revenue growth and expanded gross and operating margins, and drove strong earnings growth. Importantly, we continued to advance our strategic agenda to build lasting customer relationships globally through product innovation and compelling omni-channel experiences – evidenced by the ingenuity of our team.”
After the financial report was released, the share price of Tapestry Group rose accordingly. As of the close on May 12, the group's stock price rose by about 8.3% compared with the previous trading day, and the current market value is about 9.8 billion US dollars.
In terms of market segments, revenue in the international market grew by nearly 20% at constant exchange rates, with China recording a growth of about 20%, which exceeded expectations; Japan and other Asian regions increased by more than 20%, and Europe increased by 4%. In addition, benefiting from better-than-expected sales, the North American region also achieved low-single-digit revenue growth.
In terms of channels, sales in the DTC channel increased by approximately 10% in constant currency, driven by revenue growth in stores and digital channels.
In the third quarter, Tapestry Group continued to advance its strategic priorities, including building lasting customer relationships, driving fashion innovation and product excellence, providing a unique omni-channel experience, and achieving global growth.
The main highlights during the period are as follows:
Promoting the interaction between customers and brands: during the period, the group acquired more than 1.2 million new customers in North America alone, about half of whom are Generation Z and Millennial consumers.
Average unit retail sales (AUR) of handbags increased, supported by pricing actions, promotional activities and the group's data analytics capabilities.
Maintain strict inventory control: At the end of the quarter, the group's inventory level was 2% higher than the same period last year; Given the excellent performance in the third quarter and the continued focus on inventory turnover, it is expected that the inventory position at the end of this financial year will be flat compared to last year.
Shareholder Return Program: Returned $270 million to shareholders this quarter and $714 million year-to-date through a combination of share repurchases and dividends. The group expects to return approximately US$1 billion to shareholders in fiscal year 2023.
As of April 1, 2023, the main financial data of Tapestry Group for the third quarter are as follows:
"Looking ahead, we are well positioned to deliver sustainable, profitable growth against a backdrop of volatility. We are building on the strength of our iconic brand and further enhancing it through our direct-to-consumer, globally diversified and data-driven platform. At the same time, we will continue to invest in energizing the brand and enabling us to accelerate today and in the years to come. We remain firmly committed to driving long-term growth and shareholder value,” concluded Joanne Crevoiserat.
