Tapestry, Inc. · NYSE:TPR
Tapestry — Q4 FY2021 Earnings Presentation
64 slides from Tapestry's earnings presentation, Aug 19, 2021
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Slide 2: Forward-looking statements
© 2021 Tapestry, Inc. 2 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,” "s
Slide 3: Stretch What's Possible
3 © 2021 Tapestry, Inc. Stretch What’s Possible STRETCH speaks to how tensions challenge and pull us in new directions. These tensions compel us to look beyond ourselves and embrace new perspectives, experiences and ideas. WHAT’S POSSIBLE refers to what happens when we embrace the creative tensions
Slide 4: Our values
© 2021 Tapestry, Inc. 4 DEDICATED TO THE DREAM HOLD TO HIGH STANDARDS EMBRACE DIFFERENCE BY DESIGN BREAK THROUGH WITH MAGIC AND LOGIC STAND TALLER TOGETHER Built by go-getters who saw unseen needs and took daring leaps, we channel that same passion today, doing what it takes to make the dream happen
Slide 5: Our brands
5 established 1986STYLISH, CONFIDENT, SOPHISTICATED established 1941AUTHENTIC, COURAGEOUS, INCLUSIVE © 2021 Tapestry, Inc. established 1986STYLISH, CONFIDENT, SOPHISTICATED established 1941AUTHENTIC, COURAGEOUS, INCLUSIVE established 1993JOYFUL, OPTIMISTIC, COLORFUL
Slide 6: Tapestry Revenue Breakdown
© 2021 Tapestry, Inc. 6 Tapestry Revenue Breakdown Global house of brands with strong direct to consumer distribution Figures as of FY21.
Slide 7: Leadership Team
7 Leadership Team © 2021 Tapestry, Inc. JOANNE CREVOISERATChief Executive Officer TODD KAHNCEO & Brand President, Coach LIZ FRASERCEO & Brand President, Kate Spade GIORGIO SARNÉCEO & Brand President, Stuart Weitzman ANDREA SHAW RESNICKChief Communications Officer TOM GLASERChief Operations Officer N
Slide 8: FY21 Overview & FY22 Outlook
FY21 Overview & FY22 Outlook © 2021 Tapestry, Inc. 8
Slide 9: Fourth quarter results exceeded expectations
9 Fourth quarter results exceeded expectations, building on recent momentum Announced reinstatement of capital return programs, with a plan to return over $750 million to shareholders through dividends and share repurchases in FY22Ended the year with a strong balance sheet and cash positionInitiated
Slide 10: Fourth Quarter Highlights
10 © 2021 Tapestry, Inc. 80 bps GROSS MARGIN EXPANDED BY VS. FY20 AND 450 BPS VS. FY19, SUPPORTED BY HIGHER AUR 900,000 IN NORTH AMERICA, RECRUITED OVER NEW CUSTOMERS ACROSS BRANDS THROUGH E-COMMERCE CHANNELS 113% DELIVERED Q4 REVENUE GROWTH OF AGAINST FY20, EXCEEDING PRE-PANDEMIC SALES 35% DROVE GL
Slide 11: Four consecutive quarters of operating income growth
© 2021 Tapestry, Inc. 11 Delivered four consecutive quarters of operating income growth vs. FY20 and FY19, as revenue trends continued to improve sequentially OPERATING INCOME (% GROWTH) VS. FY20 REVENUE (% GROWTH) Non-GAAP financials. Historical results include the headwinds associated with Covid-1
Slide 12: Coach: 4Q Highlights
12 Realized revenue growth of 117% versus prior year, representing an increase of 2% compared to pre-pandemic levelsDrove over 55% Digital growth on top of the prior year’s triple-digit increaseRecruited approximately 600,000 new customers through e-Commerce channels in North AmericaAchieved high si
Slide 13: Kate Spade: 4Q Highlights
© 2021 Tapestry, Inc. 13 Realized sequential improvement in revenue – growing 95% vs. prior year – fueled by improvements in the Direct business (excluding wholesale), which outpaced pre-pandemic levelsReactivated 550,000 customers in North America Digital channels, an increase of nearly 35% compare
Slide 14: Stuart Weitzman: 4Q Highlights
14 Realized a revenue increase of 146% compared to prior yearDrove engagement with new and younger customers through innovative takes on our iconic familiesIncreased penetration of dress styles as in-person socialization began to returnFueled continued momentum in China – growing over 50% compared t
Slide 15: 4Q P&L Overview By Brand
© 2021 Tapestry, Inc. 15 TAPESTRY COACH KATE SPADE STUART WEITZMAN NET REVENUE $1.52B+113% vs. LY $1.12B+117% vs. LY $320M+95% vs. LY $82M146% vs. LY GROSS PROFIT $1.09B71.7% margin $840M74.9% margin $208M64.9% margin $45M55.2% margin SG&A EXPENSES $850M55.8% of sales $497M44.3% of sales $177M55.4%
Slide 16: FY21 Highlights
16 © 2021 Tapestry, Inc. 300 bps GROSS MARGIN EXPANDED BY OVER AGAINST BOTH FY20 AND FY19 4M IN NORTH AMERICA, RECRUITED NEARLY NEW CUSTOMERS ACROSS BRANDS THROUGH E-COMMERCE CHANNELS 60% DROVE CONTINUED STRENGTH IN MAINLAND CHINA, AS SALES GREW VERSUS FY20, OR +40% COMPARED TO PRE-PANDEMIC LEVELS $
Slide 17: Reinstatement of Returns Programs
© 2021 Tapestry, Inc. 17 Anticipated annual dividend rate of $1.00 per shareGoal to increase dividend at a faster rate than earnings growth over time Reinstatement of Returns Programs Announced a plan to return over $750M to shareholders in FY22, underscoring conviction in our ability to drive long-
Slide 18: Capital Allocation Priorities
© 2021 Tapestry, Inc. 18 Capital Allocation Priorities Committed to driving organic growth, profitability and shareholder value over the long-term to support strong returns and long-term profitable growth REINVEST IN THE BUSINESS through dividends and share repurchases RETURN CAPITAL TO SHAREHOLDERS
Slide 19: Financial Outlook
19 REVENUE Mid-teens growth to ~$6.4B GROSS MARGIN Sustained strong margins SG&A EXPENSE Growth relatively in-line with sales, reflecting further investments, notably in marketing & Digital OPERATING MARGIN Modest expansion vs. prior year; mid-teens operating income growth NET INTEREST EXPENSE Appro
Slide 20: Acceleration Program
Acceleration Program © 2021 Tapestry, Inc. 20
Slide 21: Acceleration
21 © 2021 Tapestry, Inc. acceleration we are accelerating growth & profitabilitywe are accelerating our focus on the consumerwe are accelerating with agility & urgency together /akˌseləˈrāSH(ə)n/noun the act of accelerating; increase of speed or velocity.
Slide 22: The Acceleration Program is focused on better meeting customer needs
22 © 2021 Tapestry, Inc. Build significant data and analytics capabilities to drive decision-making and increase efficiencyOffer immersive customer experiences across our e-commerce and social channels Reevaluate the role of stores with an intent to optimize our fleet Move with greater agilitySimpli
Slide 23: Acceleration Program: 4Q Highlights
23 © 2021 Tapestry, Inc. Acceleration Program: 4Q Highlights Non-GAAP Financials. Continued to deliver an increase in number of repeat transactions versus prior year and reactivated lapsed customers across brands Drove high-single digit revenue gains with Chinese consumers globally compared to pre-p
Slide 24: Sustainable gains and foundational changes
SUSTAINABLE GAINSSustainably higher AUR and significant gross margin expansionImproved SKU productivity, in turn increasing inventory turn and providing clearer messages to consumers$300M in gross run-rate SG&A savings targeted for FY22, which, will help to fund investments in high-growth areas FOUN
Slide 25: Transitioning to sustainable, demand-driven growth
© 2021 Tapestry, Inc. 25 …and we are transitioning to a period of sustainable, demand-driven revenue and profit growth to fully unlock the flywheel Channels Products Brands DRIVING RECRUITMENT OF NEW CUSTOMERS INCREASING RETENTION AND LIFETIME VALUE OF EACH CUSTOMER Revenue & Profit Growth Purpose-l
Slide 26: Tapestry's differentiated platform
© 2021 Tapestry, Inc. 26 CONSUMER INSIGHTS GLOBALLY DIVERSIFIED SUPPLY CHAIN DIGITAL INFRASTRUCTURE & CAPABILITIES ACCESS TO GLOBAL TALENT TAPESTRY’S DIFFERENTIATED PLATFORM PROVIDES: Tapestry is an enabling platform that enhances opportunities for our brands
Slide 27: CEO quote
© 2021 Tapestry, Inc. 27 “We delivered standout results in Fiscal 2021 – a transformational year for Tapestry. Through our Acceleration Program, we sharpened our focus on the consumer, leaned into digital and data and became a more agile organization. Overall, we remain confident in our ability to a
Slide 28: Overview by Brand
Overview by Brand © 2021 Tapestry, Inc. 28
Slide 29: Coach
®.. ~S j q hosts COACH NEW YORK
Slide 30: © 2021 Tapestry, Inc.
© 2021 Tapestry, Inc.
Slide 31: Coach vision
© 2021 Tapestry, Inc. Being genuine and real has always been part of our ethos and part of the impact we make. Today, our customers seek meaningful connection and something real. This can only happen when they feel like they can be their true selves. Over time, we’ve learned that courage is contagio
Slide 32: Coach key facts
© 2021 Tapestry, Inc. 32 As of FY21. FY21 revenue figure excludes the impact of the additional week in Q4 (full reconciliation in the appendix). 50+ COUNTRIES 9,900 EMPLOYEES DIRECTLY OPERATED STORES 939 NET SALES $4.2B
Slide 33: Coach Revenue Breakdown
© 2021 Tapestry, Inc. 33 Coach Revenue Breakdown As of FY21. Direct to consumer focused brand with diversified product categories & geographies Women’s handbags
Slide 34: Coach FY22 Growth Strategies
© 2021 Tapestry, Inc. 34 Coach FY22 Growth Strategies GROW MEN’S Expand lifestyleBuild brand awarenessIncrease presence in AsiaDeliver revenue of $1B in the category over the planning horizon CONTINUE TO DRIVE GROWTH IN CHINA Capitalize on market trends of the emerging middle class and increased dig
Slide 35: © 2021 Tapestry, Inc. 35
© 2021 Tapestry, Inc. 35
Slide 36: kate spade new york
kate spade NEW YORK
Slide 37: Kate Spade vision
© 2021 Tapestry, Inc. JOY COLORS LIFESince its launch in 1993 with a collection of six essential handbags, Kate Spade New York has always been colorful, bold and optimistic. Today it is a global lifestyle brand that designs extraordinary things for the everyday, delivering seasonal collections of ha
Slide 38: Kate Spade key facts
38 40+ COUNTRIES 4,000 EMPLOYEES DIRECTLY OPERATED STORES 407 NET SALES $1.2B As of FY21. FY21 revenue figure excludes the impact of the additional week in Q4 (full reconciliation in the appendix).
Slide 39: Kate Spade Revenue Breakdown
© 2021 Tapestry, Inc. 39 Kate Spade Revenue Breakdown As of FY21. Opportunity to build out handbag offering, while maximizing positioning as a lifestyle brand
Slide 40: Kate Spade FY22 Growth Strategies
© 2021 Tapestry, Inc. 40 Kate Spade FY22 Growth Strategies MAXIMIZE LIFESTYLE POSITIONING Strengthen the foundation of ready-to-wear, footwear and jewelry GROW DIGITAL Improve omni-channel experience and store productivityElevate strong digital platform to engage customers through a full brand expre
Slide 41: © 2021 Tapestry, Inc. 41
© 2021 Tapestry, Inc. 41
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Slide 43: Stuart Weitzman vision
© 2021 Tapestry, Inc. 43 Stuart Weitzman shoes are designed for high fashion and high function. Known for over 35 years for its artisanal Spanish craftsmanship and precisely-engineered fit, the luxury footwear brand inspires women around the world to shine with confidence with every step. OUR VISION
Slide 44: Stuart Weitzman key facts
44 30+ COUNTRIES 800 EMPLOYEES DIRECTLY OPERATED STORES 104 NET SALES $280M As of FY21. FY21 revenue figure excludes the impact of the additional week in Q4 (full reconciliation in the appendix).
Slide 45: Stuart Weitzman Revenue Breakdown
© 2021 Tapestry, Inc. 45 As of FY21. Remain focused on key geographies & channels with a compelling footwear assortment STUART WEITZMAN REVENUE BREAKDOWN
Slide 46: Stuart Weitzman FY22 Growth Strategies
© 2021 Tapestry, Inc. 46 STUART WEITZMAN FY22 GROWTH STRATEGIES FUEL CONTINUED GROWTH IN CHINA Expand our footprint and further invest in digitalIncrease cultural relevance with dedicated capsules ACCELERATE WHOLESALE PARTNERSHIPS Build upon momentum in FY21Continue to expand footprint in key accoun
Slide 47: Our Social Fabric: Corporate Responsibility Strategy & 2025 Goals
Our Social FabricCorporate Responsibility Strategy & 2025 Goals © 2021 Tapestry, Inc. 47
Slide 48: Corporate Responsibility Strategy & Goals
Corporate Responsibility Strategy & Goals Built on our values, our 2025 Corporate Responsibility strategy & 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 contribu
Slide 49: Introduced New, Bold ESG Commitments
49 Introduced New, Bold ESG Commitments Combating climate change and advancing equity and opportunity through newly established $50 million Tapestry Foundation Tying 10% of Tapestry leadership’s annual incentive compensation to equity, inclusion and diversity goals beginning in FY22 Providing all gl
Slide 50: Our People: 2025 Goals
© 2021 Tapestry, Inc. 50 2025 GOALSBuild 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 Employee Inclusi
Slide 51: Our People: Recent Milestones
51 RECENT MILESTONESBeginning in September 2021, all U.S. Tapestry employees will earn a wage of at least $15 per hour. Established four Employee Resource Groups (ERGs), including our newest ERG, The Asian Heritage Alliance. Maintained a Board of Directors with ethnic, gender and nationality diversi
Slide 52: Our Planet: 2025 Goals
52 2025 GOALSAchieve 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 supply chain.Ensure that 90% of le
Slide 53: Our Planet: Recent Milestones
53 RECENT MILESTONESInitiated supply chain mapping and began working towards achieving 95% traceability and mapping of raw materials.Achieved 87% landfill diversion for corporate and distribution center locations.Sourced 67% of leather from Leather Working Group Silver- and Gold-rated tanneries, wit
Slide 54: Our Communities: 2025 Goals
© 2021 Tapestry, Inc. 54 2025 GOALSDedicate 100,000 volunteer service hours completed by our employees around the globe.Give $75M in financial and product donations to nonprofit organizations globally.Provide 100,000 people crafting Coach, kate spade new york and Stuart Weitzman products access to e
Slide 55: Our Communities: Recent Milestones
55 RECENT MILESTONESCommitted more than $28 million in charitable giving from Tapestry, its brands, the Coach Foundation and the kate spade new york foundation in fiscal 2020, which included over $10.5 million for Covid-19 global relief and recovery efforts. In FY21, employees volunteered over 31,00
Slide 56: Tapestry
tapestry
Slide 57: Appendix
Appendix © 2021 Tapestry, Inc. 57
Slide 58: Non-GAAP financial measures
© 2021 Tapestry, Inc. 58 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
Slide 59: GAAP to non-GAAP reconciliation: quarter ended July 3, 2021
© 2021 Tapestry, Inc. 59 GAAP to non-GAAP reconciliation For the quarter ended July 3, 2021 in millions, except per share data; unaudited GAAP BASIS(AS REPORTED) IMPAIRMENT ACCELERATION PROGRAM NON-GAAP BASIS(EXCLUDING ITEMS) Coach $898.0 $8.1 $— $889.9 Kate Spade 221.0 — — 221.0 Stuart Weitzman 47.
Slide 60: FY21 14th Week Impact on Q4 Results
© 2021 Tapestry, Inc. 60 in millions, except per share data; unaudited NON-GAAP BASIS(EXCLUDING ITEMS) COACH KATE SPADE STUART WEITZMAN CORPORATE NON-GAAP BASIS(EXCLUDING ITEMS & 14TH WEEK) Net revenue $1,615.4 $67.7 $21.7 $3.3 $— $1,522.7 Gross profit 1,158.0 50.3 13.3 2.0 — 1,092.4 Selling, genera
Slide 61: GAAP to non-GAAP reconciliation: year ended July 3, 2021
© 2021 Tapestry, Inc. 61 GAAP to non-GAAP reconciliation For the year ended July 3, 2021 (1) Adjustments within Gross profit are recorded within Cost of sales. in millions, except per share data; unaudited GAAP BASIS(AS REPORTED) CARES ACT TAX IMPACT IMPAIRMENT ACCELERATION PROGRAM NON-GAAP BASIS(EX
Slide 62: GAAP to non-GAAP reconciliation: quarter ended June 27, 2020
© 2021 Tapestry, Inc. 62 GAAP to non-GAAP reconciliation For the quarter ended June 27, 2020 (1) Adjustments within Gross profit are recorded within Cost of sales. in millions, except per share data; unaudited GAAP BASIS(AS REPORTED) ERP IMPLEMENTATION ORGANIZATION-RELATED & INTEGRATION COSTS IMPAIR
Slide 63: GAAP to non-GAAP reconciliation: year ended June 27, 2020
© 2021 Tapestry, Inc. 63 GAAP to non-GAAP reconciliation For the year ended June 27, 2020 (1) Adjustments within Gross profit are recorded within Cost of sales. in millions, except per share data; unaudited GAAP BASIS(AS REPORTED) ERP IMPLEMENTATION ORGANIZATION-RELATED & INTEGRATION COSTS IMPAIRMEN
Slide 64: Tapestry: Coach, Kate Spade, Stuart Weitzman
an | ia tapestry COACH | kate spade | STUART WEITZMAN i @