Tapestry, Inc. · NYSE:TPR
Tapestry — Q3 2020 Earnings Presentation
51 slides from Tapestry's earnings presentation, Apr 30, 2020
Slide 1: Tapestry
tapestry COACH | kate spade | STUART WEITZMAN
Slide 2: Forward-looking statements
This presentation contains certain “forward-looking statements” based on management’s current expectations. Forward-looking statements include, but are not limited to statements which can be identified by the use of forward-looking terminology such as "may," "will," “can,” "should," "expect," "inten
Slide 3: Our values, principles, brands and model
O U R V A L U E S : optimistic, innovative, inclusive O U R P R I N C I P L E S : b ra n d - l e d , c o n s u m e r- c e n t r i c m e r i t o c ra c y OUR B R A N D S : g l o b a l , u n i q u e & d i f fe re n t i a t e d O U R M O D E L : d i s c i p l i n e d , s h a re d & s c a l a b l e 3
Slide 4: Defined by inclusivity rather than exclusivity, a global house of brands
DEFINED BY INCLUSIVITY RATHER THAN EXCLUSIVITY, we are a global house of brands that embraces the exploration of individuality. We believe that true luxury is a freedom of expression that ignites confidence and authenticity. Approachable and inviting, we celebrate brands that create joy every day fo
Slide 5: Brand attributes and founding dates
established 1941 established 1986 established 1993 C O N F I D E N T P O L I S H E D F E M I N I N E M O D E R N S O P H I S T I CAT E D OPTIMISTIC A U T H E N T I C EMPOWERED J O Y F U L 5
Slide 6: Leadership Team
LEADERSHIP TEAM Jide Zeitlin Chairman and Chief Executive Officer Todd Kahn Liz Fraser Giorgio Sarné President, Chief Administrative Officer CEO and Brand President, CEO and Brand President, and Company Secretary Kate Spade Stuart Weitzman Joanne Crevoiserat Tom Glaser Noam Paransky Chief Financial
Slide 7: Update
update
Slide 8: Effectively navigate the pandemic
BALANCING THE SHORT-TERM NEEDS OF THE BUSINESS WHILE BUILDING THE FRAMEWORK FOR LONG-TERM SUSTAINABLE GROWTH • Entered calendar year with significant momentum, but the world shifted as Covid-19 pandemic spread EFFECTIVELY • Guided by our values, we are prioritizing our people, their families and our
Slide 9: Covid-19 response: acting swiftly to reinforce liquidity & financial flexibility
COVID-19 RESPONSE: ACTING SWIFTLY TO REINFORCE liquidity & financial flexibility SUSPEND SUPPORT DRIVE TIGHTLY DRAW REDUCE DIVIDEND & REVENUE SG&A MANAGE DOWN CAPEX SHARE GROWTH SAVINGS INVENTORY REVOLVER REPURCHASE • Digital • Eliminate non- • Reflow late spring • Delay or cancel • Drew down • Appr
Slide 10: Covid-19 response: remain dedicated to our communities
COVID-19 RESPONSE: REMAIN DEDICATED TO our communities COMMITTED $2,000,000 through the Coach Foundation to support NYC Department of Small Business Services’ Small Business Continuity Fund for businesses affected by Covid-19 SUPPORTING FRONTLINE WORKERS via donations through the kate spade new york
Slide 11: Capital allocation priorities
CAPITAL ALLOCATION PRIORITIES • In FY20, as anticipated, we returned $700M to shareholders and were our commitment to on track to deliver organic sales growth. driving organic • However, due to the impact of Covid-19, we have suspended our dividend and share repurchase programs while drawing down on
Slide 12: Quote from Jide Zeitlin, Chairman & CEO
“The saliency of our brands and the strong financial position of our company will enable us to successfully manage through this crisis while accelerating work to become a more consumer-centric, data-driven and agile organization.” JIDE ZEITLIN, CHAIRMAN & CEO 12 12
Slide 13: Corporate Responsibility
corporate RESPONSIBILITY
Slide 14: 2025 Corporate Responsibility Strategy & Goals
2025 CORPOR ATE RESPONSIBILITY STRATEGY & GOALS Built on our values of Optimism, Innovation and Inclusivity, these goals solidify our commitment to responsible citizenship, as we recognize our role as a leader in our industry to effect real, measurable change. Addressing pressing global issues and c
Slide 15: Three strategic pillars
CORPORATE SOCIAL RESPONSIBILITY OUR PROGRAM IS FOCUSED ON THREE strategic pillars 1 Having individuals from different backgrounds with OUR different experiences around the table creates a diversity PEOPLE of perspectives that enrich our organization. 2 OUR Tapestry is dedicated to reducing its envir
Slide 16: Our people: goals
CORPORATE SOCIAL RESPONSIBILITY 1 our people Build diversity in North America Tapestry and brand leadership teams by increasing the number of North America-based ethnic minority leaders to better reflect the company’s general corporate population. Reduce gender and ethnicity differences in the Emplo
Slide 17: Our people: progress
CORPORATE SOCIAL RESPONSIBILITY 1 our people Established an Inclusion Council to ensure that people with diverse perspectives and backgrounds are included in business decisions. Recognized on the Forbes Diversity & Inclusion List in 2019 for the third consecutive year. Achieved a score of 100 for th
Slide 18: Our planet: goals
CORPORATE SOCIAL RESPONSIBILITY 2 our planet Achieve a 20% reduction in absolute Scope 1 & Scope 2 CO2e emissions & 20% reduction in absolute Scope 3 emissions from freight shipping over a 2017 baseline. Attain a 95% traceability & mapping of our raw materials to ensure a transparent & responsible s
Slide 19: Our planet: progress
CORPORATE SOCIAL RESPONSIBILITY 2 our planet Reduced our 2019 carbon footprint by 2.4% from 2018 and a total of 6.7% from our 2017 baseline. Commercialized five different lining textiles and purchased an aggregate one million pounds of REPREVE® recycled polyester for use in kate spade new york handb
Slide 20: Our communities: goals
CORPORATE SOCIAL RESPONSIBILITY 3 our communities Dedicate 100,000 volunteer service hours completed by our employees around the globe. Give $75M in financial and product donations to nonprofit organizations globally. Provide 50,000 people crafting Coach, kate spade new york and Stuart Weitzman prod
Slide 21: Our communities: progress
CORPORATE SOCIAL RESPONSIBILITY 3 our communities Donated $22 million in fiscal 2019 through the Coach and kate spade new york Foundations. Engaged our employees to volunteer over 5,750 hours, serving our communities globally. Made $429,000 in charitable donations matched through our Foundations’ em
Slide 22: Highlights
highlights from
Slide 23: Revenue, operating margin and stores by company and brand
$6.0B $4.3B $1.4B $389M revenue revenue revenue revenue 15.8% 2 7. 1 % 13.6% (4.3%) operating margin operating margin operating margin operating margin 1,540 986 407 147 stores stores stores stores As of FY19. Non-GAAP Financials. As of Fiscal 2020, foreign currency gains and losses previously repor
Slide 24: Tapestry product, geographic & channel breakdown
TAPESTRY PRODUCT, GEOGRAPHIC & CHANNEL BREAKDOWN GLOBAL HOUSE OF MODERN LUXURY BRANDS WITH FOCUS ON INTERNATIONAL GROWTH & DIRECT-TO-CONSUMER DISTRIBUTION Rest of Men's World Wholesale 14% 7% 11% Greater China 15% Footwear & Other Lifestyle Women's Categories Handbags 18% 50% Other Asia North 17% Am
Slide 25: Opportunity in global premium handbag, footwear and outerwear markets
OPPORTUNITY ACROSS BRANDS IN THE ATTRACTIVE AND GROWING GLOBAL PREMIUM HANDBAG & ACCESSORIES, FOOTWEAR AND OUTERWEAR MARKETS FY19 FY18 Outerwear Outerwear $13B $12B +7% GROWTH Handbags & Handbags & $91B Accessories $95B Accessories Footwear Footwear $50B $48B $31B $32B Source: Tapestry proprietary g
Slide 26: Overview by Brand
OVERVIEW by
Slide 27: Coach New York
NN a A) : rey wD COACH NEW YORK
Slide 28: ‘ agai) be,
‘ agai) be, falda any Me | Ute § 8 ¢ i % i rt & q 3 a a See Jennifer Lopez, Hutton Bag, High Line, New York City Seulptare: Simone Leigh, Brice Houze
Slide 29: The Shops at Hudson Yards, New York City
THE SHOPS AT HUDSON YARDS N E W YO R K C I T Y
Slide 30: Our Vision
OUR VISION Coach inspires the dreamer in all of us, connecting our modern lives with the spirit of the open road. 30
Slide 31: Coach: annual revenue, stores, employees
$4.27B ANNUAL REVENUE 986 DIRECTLY OPERATED STORES 13,500 EMPLOYEES As of FY19. 31
Slide 32: Coach product, geographic & channel breakdown
COACH PRODUCT, GEOGRAPHIC & CHANNEL BREAKDOWN DIRECT-TO-CONSUMER FOCUSED WITH DIVERSIFIED PRODUCT CATEGORIES & GEOGRAPHIES Other Lifestyle Rest of Categories World Wholesale 9% 6% 8% Greater Women's China Accessories 18% 18% Women's Handbags North 53% America Other Asia 56% Men's 20% Direct-to- 20%
Slide 33: kate spade new york
& kate spade NEW YORK
Slide 34: Slide 34
Slide 35: The Shops at Hudson Yards, New York City
THE SHOPS AT HUDSON YARDS NEW YORK CITY
Slide 36: Our Vision
OUR VISION A globally admired aspirational life & style brand, delivering brand-enhancing profitable growth, where people — our customers and teams — are at the center of everything we do. 36
Slide 37: kate spade: annual revenue, stores, employees
$1.37B ANNUAL REVENUE 407 DIRECTLY OPERATED STORES 4,800 EMPLOYEES As of FY19. 37
Slide 38: kate spade product, geographic & channel breakdown
KATE SPADE PRODUCT, GEOGRAPHIC & CHANNEL BREAKDOWN OPPORTUNITY TO EXPAND INTERNATIONALLY WITH UNIQUE AND GLOBALLY-RELEVANT POSITIONING GREATER REST OF CHINA WORLD 4% 6% WHOLESALE OTHER ASIA WOMEN'S 13% 12% ACCESSORIES 21% WOMEN'S OTHER HANDBAGS LIFESTYLE 56% CATEGORIES NORTH 23% AMERICA DIRECT-TO- 7
Slide 39: Stuart Weitzman
STUART WEITZMAN
Slide 40: : eae ‘
: eae ‘ ET i ait
Slide 41: The Shops at Hudson Yards, New York City
THE SHOPS AT HUDSON YARDS N E W YO R K C I T Y
Slide 42: Our Vision
OUR VISION STUART WEITZMAN IS THE EMBODIMENT OF STRENGTH IN FEMININITY – EMPOWERING AND INSPIRING WOMEN TO TAKE ON THE WORLD IN FASHION AND FUNCTIONAL FOOTWEAR & ACCESSORIES. 42
Slide 43: Stuart Weitzman: annual revenue, stores, employees
$389M ANNUAL REVENUE 147 DIRECTLY OPERATED STORES 1,100EMPLOYEES As of FY19. 43
Slide 44: Stuart Weitzman product, geographic & channel breakdown
S T U A RT W E I T Z M A N P R O D U C T, G E O G R A P H I C & C H A N N E L B R E A K D OW N O P P O RT U N I T Y T O E X P A N D I N T E R N AT I O N A L LY W I T H A S O P H I S T I C AT E D F O O T W E A R & ACCESSORIES OFFERING COMBINING FUNCTION AND FIT HANDBAGS & OTHER OTHER ASIA 2% 6% REST
Slide 45: Tapestry
tapestry
Slide 46: Quote from Jide Zeitlin, Chairman & CEO
“We are stewards of three powerful brands and we believe we have the leadership team and the means to effect significant and positive change to define the next chapter of sustainable growth at our company.” JIDE ZEITLIN, CHAIRMAN & CEO 46 46
Slide 47: Appendix
APPENDIX
Slide 48: Non-GAAP financial measures note
The Company reports information in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). The Company's management does not, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in a
Slide 49: GAAP to non-GAAP reconciliation
GAAP TO NON-GAAP RECONCILIATION FOR THE YEAR ENDED JUNE 29, 2019 GAAP BASIS ERP INTEGRATION & IMPACT OF TAX NON-GAAP BASIS in millions, except per share data; unaudited (AS REPORTED) IMPLEMENTATION ACQUISITION LEGISLATION (EXCLUDING ITEMS) Coach $2,996.4 $— $(1.9) $— $2,998.3 Kate Spade 863.6 — (6.3
Slide 50: Fiscal 2019 foreign exchange gain/loss recast by quarter
FISCAL 2019 FOREIGN EXCHANGE GAIN/LOSS RECAST BY QUARTER in millions; Non-GAAP financials 1Q19 2Q19 3Q19 4Q19 FY19 Coach $448.8 $481.6 $446.7 $463.8 $1,840.9 (as previously FY19 SG&A reported) Kate Spade 159.5 179.5 168.8 175.6 683.4 Stuart Weitzman 54.6 59.2 59.8 56.3 229.9 Corporate 91.6 84.4 104.
Slide 51: Tapestry
tapestry COACH | kate spade | STUART WEITZMAN