Tapestry, Inc. · NYSE:TPR
Tapestry — Q3 FY2019 Earnings Presentation
71 slides from Tapestry's earnings presentation, May 9, 2019
Slide 1: Tapestry: Coach, Kate Spade, Stuart Weitzman
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, the information provided on the slide entitled “Fiscal 2019 Financial Outlook”, as well as statements which can be identified by the
Slide 3: Highlights from the Quarter
highlights QUARTER from the
Slide 4: Third quarter highlights by brand
Delivered sales growth and gross margin expansion in each of our brands on a constant currency basis.Drove continued positive global comparable store sales growth at Coach led by international markets ande-commerce channels. Generated eight-point sequential improvement in comparable store sales grow
Slide 5: FY19 Third Quarter & Year-to-Date Financial Snapshot
Note: Non-GAAP Financials. Non-GAAP reconciliation in Appendix. FY19 YTD as of the nine months ended March 30, 2019. DELIVERED TOPLINE growth & EXPECTED synergies FY19 THIRD QUARTER & YEAR-TO-DATE: FINANCIAL SNAPSHOT $0.42 FY19 3Q $1.33B $141M $0.42 $0.42 FY19 YTD $4.51B $725M $1.97 revenue operatin
Slide 6: $1B Share Repurchase Authorization
share repurchaseauthorization $1B UNDERSCORING confidence IN DRIVING LONG-TERM, SUSTAINABLE GROWTH BOARD APPROVED $1B SHARE REPURCHASE PROGRAM 6 through this program, we will: optimize our capital deployment enhance shareholder return maintain financial and strategic flexibility
Slide 7: Longstanding Capital Allocation Priorities
LONGSTANDING CAPITAL ALLOCATION PRIORITIES 7 Invest in our current brands and business Acquire new brands on a strategic and opportunistic basis Return capital to shareholders through our dividend and recently announced share repurchase authorization 3 2 1 SUPPORTED BY STRONG BALANCE SHEET & CASH FL
Slide 8: Fiscal 2019 Financial Outlook
8 FOCUS ON execution FISCAL 2019 FINANCIAL OUTLOOK Note: Non-GAAP Financials. $2.55 to $2.60 low-to-mid single digit growth We are focused on harnessing the power of our multi-brand model, unlocking the full potential of the strategic investments, to drive a return to double-digit operating income a
Slide 9: Company Overview
company OVERVIEW
Slide 10: A global house of brands
DEFINED BY INCLUSIVITY RATHER THAN EXCLUSIVITY, we area 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 for p
Slide 11: CEO quote: a different kind of company
“We’re a different kind of company. We have a collection of brands that have very specific and unique identities. All of our brands are based on great design, quality and craftsmanship. At the end of the day, all of our teams are focused on providing tremendous value for customers.” VICTOR LUIS, ceo
Slide 12: Our values
values our OPTIMISTICINNOVATIVEINCLUSIVE
Slide 13: Our principles
principles BRAND-LEDCONSUMER-CENTRIC MERITOCRACY our
Slide 14: Our brands
brands our GLOBAL&UNIQUEDIFFERENTIATED
Slide 15: Our model
model our SHARED&SCALABLEDISCIPLINED
Slide 16: Fiscal 2019 Strategic Priorities
FOCUS ON execution HARNESS thePOWER ofMULTIBRAND FUELBRANDINNOVATION DRIVEGLOBALGROWTH INVEST inDIGITAL& DATA Capture full benefit of multi-brand structure and synergies Provide opportunities for talent movement across brands, regions and functions Accelerate product newness acrossall brands Maximiz
Slide 17: Leadership Team
Leadership Team Andrea Shaw ResnickInterim CFO and Global Head of Investor Relations & Corporate Communications Peter CharlesGlobal Head of Supply Chain Adrianne KirsznerGlobal Head of Inventory Management & Merchandise Planning Michael BraineChief Information Officer Anna BakstCEO and Brand Preside
Slide 18: Corporate Responsibility
corporate RESPONSIBILITY
Slide 19: 2025 Corporate 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 contributing to a world that is inclusive, susta
Slide 20: Three strategic pillars
CORPORATE SOCIAL RESPONSIBILITY OUR PROGRAM IS FOCUSED ON THREE strategic pillars OUR PEOPLE Having individuals from different backgrounds with different experiences around the table creates a diversity of perspectives that enrich our organization. 1 OURPLANET Tapestry is dedicated to reducing its e
Slide 21: Our People: 2025 goals
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 Employee Inclusion Index scores from our Employee E
Slide 22: Our People: recent milestones
RECENTMILESTONES Expanded our maternity leave in 2018 in the United States. Donated approximately $500,000 in fiscal 2018 to organizations that our employees are passionate about through our matching gift programs. Achieved a score of 100 for the fifth consecutive year on the Human Rights Campaign C
Slide 23: Our Planet: 2025 goals
CORPORATE SOCIAL RESPONSIBILITY our planet 2 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 su
Slide 24: Our Planet: recent milestones
RECENTMILESTONES CORPORATE SOCIAL RESPONSIBILITY our planet 2 Achieved a 4.4% reduction in absolute Scope 1 and 2CO2e emissions across Tapestry in fiscal 2018 over a2017 baseline. Provided in-person compliance and anti-corruption training to over 120 suppliers and manufacturers infiscal 2017 and ear
Slide 25: Our Communities: 2025 goals
CORPORATE SOCIAL RESPONSIBILITY our communities 3 2025GOALS Dedicate 100,000 volunteer service hours completed by our employees around the globe.Give $75,000,000 in financial and product donations to nonprofit organizations globally.Provide 50,000 people crafting Coach, kate spade new york and Stuar
Slide 26: Our Communities: recent milestones
RECENTMILESTONES CORPORATE SOCIAL RESPONSIBILITY our communities 3 Donated over $48 million through The Coach Foundation since its inception in 2008 and launched the “Dream It Real” initiative which supports young people as they pursue their dreams.Employed and empowered 162 women in Masoro, Rwanda
Slide 27: Fiscal 2018
fiscal2018
Slide 28: FY18 Milestones
Successfully completed the acquisition of Kate Spade and evolved into a true house of brands, establishing Tapestry as our new corporate identity. Strengthened our executive and creative leadership across our brands with a clear focus on executing our strategic vision. Brought fresh perspectives to
Slide 29: FY18 Financial Overview: Revenue
FY18 FINANCIAL OVERVIEW: REVENUE STRONG RESULTS DRIVEN BY KATE SPADE ACQUISITION AND ORGANIC GROWTH FY18 $5.9B FY17 $4.5B +31% GROWTH 29
Slide 30: FY18 Financial Overview: Operating Income
FY18 FINANCIAL OVERVIEW: OPERATING INCOME STRONG RESULTS DRIVEN BY KATE SPADE ACQUISITION AND ORGANIC GROWTH $813M $992M FY17 FY18 +22% GROWTH Note: Non-GAAP Financials. Non-GAAP reconciliation in Appendix. 30
Slide 31: FY18 Financial Overview: Earnings per Diluted Share
FY18 FINANCIAL OVERVIEW: EARNINGS PER DILUTED SHARESTRONG RESULTS DRIVEN BY KATE SPADE ACQUISITION AND ORGANIC GROWTH $2.15 $2.63 FY17 FY18 +22% GROWTH Note: Non-GAAP Financials. Non-GAAP reconciliation in Appendix. 31
Slide 32: Opportunity in the global premium handbag, footwear and outerwear market
OPPORTUNITY ACROSS BRANDS IN THE ATTRACTIVE AND GROWING GLOBAL PREMIUM HANDBAG AND ACCESSORIES, FOOTWEAR AND OUTERWEAR MARKET Handbag & Accessories Footwear Outerwear Source: Tapestry Global Market Sizing Model, Euromonitor, Public Filings, Analyst Reports, NPD and Yano.Note: Growth noted is constan
Slide 33: ~70 countries, 6 continents
~70 COUNTRIES6 CONTINENTS As of FY18.
Slide 34: 1,400+ directly operated locations
1;400+ DIRECTLY OPERATED LOCATIONS
Slide 35: Slide 35
Slide 36: C:\Users\Robert Feliciano\Documents\Coach\Coach Brand 2019\FINAL ASSSETS X PR\FINAL ASSSETS X PR\Composed JPEGS - RGB…
C:\Users\Robert Feliciano\Documents\Coach\Coach Brand 2019\FINAL ASSSETS X PR\FINAL ASSSETS X PR\Composed JPEGS - RGB for digital only
Slide 37: The Shops at Hudson Yards, New York City
The shopsAt Hudson yardsNew York city
Slide 38: Coach Create pop-up, Isetan Shinjuku, Tokyo
COACH CREATE POP-UPTHE stage at isetan ShinjukuTokyo, japan
Slide 39: Coach CEO quote
“For over 75 years, Coach has been part of the American landscape. As we write our next chapter, we’re building on our heritage of craftsmanship and confident New York style to deliver a complete lifestyle brand formodern lives.” Joshua Schulman, CEO & Brand President, Coach 40
Slide 40: Coach: our vision
Coach inspires the dreamer in all of us, connecting our modern lives with the spirit of the open road. our vision 41
Slide 41: Coach key facts as of FY18
As of FY18. 13,500EMPLOYEES 987DIRECTLY OPERATED STORES $4.22BANNUAL REVENUE 42
Slide 42: Coach Fiscal 2018 Milestones
COACH FISCAL 2018 MILESTONES Successfully reinvigorated the $300-$400 handbagprice segment.Stuart Vevers created new expression of Signature and the customer immediately embraced his iteration of thisbrand icon.Grew categories outside of Women’s bags and small leathergoods–notably footwear, ready-to
Slide 43: Coach product & geographic breakdown
coach product & geographic breakdownDIVERSIFIED ACROSS PRODUCT CATEGORIES AND GEOGRAPHIES 44 As of FY18.
Slide 44: Coach Fiscal 2019 Strategic Priorities
COACH FISCAL 2019 STRATEGIC PRIORITIES Cascade Leathergoods Innovation DRIVE GrowthBeyondbags Balance Fashion Authority & Universal Appeal in Marketing Modernize, Customize & Personalize Fuel Digital Innovation & Ecommerce Growth 45
Slide 45: Coach Fiscal 2019 Strategic Priorities
COACH FISCAL 2019 STRATEGIC PRIORITIES BALANCE FASHION rs FUEL DIGITAL MODERNIZE, y Y & 7. & LEATHERGOODS BEYOND a CUSTOMIZE & ey Ne TA GS SA SON! O C) INNOVATION BAG! APPEAL IN PERSONALIZE GROWTH MARKETING DRIVE GROWTH
Slide 46: Kate Spade New York
® kate spade NEW YORK
Slide 47: The Shops at Hudson Yards, New York City
THE SHOPSAT HUDSON YARDSNEW YORK CITY
Slide 48: Kate Spade CEO quote
“Kate Spade has tremendous opportunity across product categories, channels and geographies. We are leveraging the brand’s global potential, bringing its unique and empowering feminine positioning to women around the world.” Anna Bakst, CEO & Brand President, Kate Spade 49
Slide 49: Kate Spade: our vision
OUR VISION A globally admired aspirational life & style brand, delivering brand-enhancing profitable growth,where people — our customers and teams — areat the center of everything we do.
Slide 50: Kate Spade key facts as of FY18
As of FY18. 5,500EMPLOYEES 342DIRECTLY OPERATED STORES $1.28B ANNUAL REVENUE 51
Slide 51: Kate Spade Fiscal 2018 Milestones
Kate spade FISCAL 2018 Milestones Built the foundation to support global growth with significant progress integrating the brand onto the Tapestry platform.Executed strategies to ensure long-term brand relevance, including the deliberate pullback in promotional flash and disposition sales.Strengthene
Slide 52: Kate Spade product & geographic breakdown
KATE SPADE product & geographic breakdownOpportunity to expand internationally and develop clear global positioning 53 As of FY18.
Slide 53: Kate Spade Fiscal 2019 Strategic Priorities
KATE SPADE FISCAL 2019 STRATEGIC PRIORITIES 54 LAUNCH lifestyle-focused branding CREATE immersive channel experiences EXPAND globally:think global,act local INTRODUCE exceptional and inspiring products 54 LEVERAGE TAPESTRY PLATFORM
Slide 54: Kate Spade Fiscal 2019 Strategic Priorities
KATE SPADE FISCAL 2019 STRATEGIC PRIORITIES INTRODUCE, LAUNCH CREA E PTIONAL LIFESTY IMMERSIVE THINK GLOBAL, AND INSPIRING FOCUS NN BEVERAGE ACT LOCAL PRODUCTS BRANDING
Slide 55: Stuart Weitzman
STUART WEITZMAN
Slide 56: The Shops at Hudson Yards, New York City
THE SHOPSAT HUDSON YARDSNEW YORK CITY
Slide 57: Stuart Weitzman CEO quote
“Stuart Weitzman footwear has long represented quality, style and the beautiful combination of form and fit. We are building on this foundation as we evolve into a global, multi-channel and multi-category fashion brand.” ERALDO POLETTO, CEO & Brand President, Stuart Weitzman 58
Slide 58: Stuart Weitzman: our vision
Our vision STUART WEITZMAN IS ON A JOURNEY TO EVOLVE INTO A GLOBALMULTI-CATEGORY ACCESSORIES BRAND. LOOKING FORWARD, THE BRANDWILL PRODUCE INNOVATIVE ACCESSORIES BASED ON A FOUNDATION OF WARDROBE ESSENTIALS THAT FOSTER AN EMOTIONAL CONNECTION WITH WOMEN OF ALL AGES. THE GOAL IS TO ESTABLISH STUART W
Slide 59: Stuart Weitzman key facts as of FY18
As of FY18. 940EMPLOYEES 103DIRECTLY OPERATED STORES $374MANNUAL REVENUE 60
Slide 60: Stuart Weitzman Fiscal 2018 Milestones
Stuart Weitzman FISCAL 2018 Milestones ACQUIRED STUART WEITZMAN NORTHERN CHINA BUSINESS FROM DISTRIBUTOR PARTNER. APPOINTED ERALDO POLETTO, CEO & BRAND PRESIDENT, EDMUNDO CASTILLO, HEAD OF PRODUCT DESIGN, AND FRANCESCA BERTONCINI, HEAD MERCHANT, TO EXECUTE THE LONG-TERM VISION.GAINED TRACTION IN EVO
Slide 61: Stuart Weitzman Fiscal 2019 Strategic Priorities
Stuart weitzman FISCAL 2019 STRATEGIC priorities Expand Globally,with Focus on China Grow Beyond Footwear: Establish Handbag Business Maintain Boot & Sandal Authority while Expanding our Footwear Expression Drive Consumer Desire & Elevate Relationship with the Customer ResetSupply Chain Organization
Slide 62: Stuart Weitzman product & geographic breakdown
STUART WEITZMAN product & geographic breakdownOpportunity to expand the brand internationally and across categories 63 As of FY18. Product breakdown penetration figures for Direct businesses (excluding China).
Slide 63: Stuart Weitzman product & geographic breakdown
STUART WEITZMAN PRODUCT & GEOGRAPHIC BREAKDOWN OPPORTUNITY TO EXPAND THE BRAND INTERNATIONALLY AND ACROSS CATEGORIES HANDBAGS & OTHER FOOTWEAR NORTH AMERICA 98% 64% STUART WEITZMAN As of FYT8, Product breakdown penetration figures for Direct businesses (excluding China).
Slide 64: CEO quote: a company employees love and investors believe in
“We want Tapestry to be a company where employees love to work, great brands aspire to be part of and investors believe in.” VICTOR LUIS, ceo 65
Slide 65: CEO quote: a company employees love and investors believe in
“We want Tapestry to be a company where employees love to work, great brands aspire to be part of and investors believe in.” VICTOR LUIS, CEO tapestry
Slide 66: Non-GAAP financial measures
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 67: GAAP to non-GAAP Reconciliation: Quarters Ended March 2019 and 2018
GAAP to non-GAAP ReconciliationFor the Quarters Ended MARCH 30, 2019 and march 31, 2018 Amounts as of March 30, 2019 represent technology implementation costs.Amounts as of March 30, 2019 and March 31, 2018 represent charges primarily attributable to acquisition and integration costs related to the
Slide 68: GAAP to non-GAAP Reconciliation: Nine Months Ended March 2019 and 2018
GAAP to non-GAAP ReconciliationFor the NINE Months Ended MARCH 30, 2019 and MARCH 31, 2018 Amounts as of March 30, 2019 represent technology implementation costs.Amounts as of March 30, 2019 and March 31, 2018 represent charges primarily attributable to acquisition and integration costs related to t
Slide 69: GAAP to non-GAAP Reconciliation: Years Ended June 2018 and July 2017
GAAP to non-GAAP ReconciliationFor the Years Ended June 30, 2018 and July 1, 2017 (in millions, except per share data) GAAP BASIS(AS REPORTED) OPERATIONAL EFFICIENCY PLAN(1) INTEGRATION & ACQUISITION(2) IMPACT OF TAX LEGISLATION(3) NON-GAAP BASIS(EXCLUDING ITEMS) Gross profit $ 3,848.5 $— $ (116.4)
Slide 70: GAAP to non-GAAP Reconciliation: Years Ended June 2018 and July 2017
GAAP TO NON-GAAP RECONCILIATION FOR THE YEARS ENDED JUNE 30, 2018 AND JULY 1, 2017 GAAP BASIS OPERATIONAL INTEGRATION & —IMPACTOF TAX _NON-GAAP BASIS. {in millions, except per share data) (ASREPORTED) EFFICIENCY PLAN") ACQUISITION ——_LEGISLATION® (EXCLUDING ITEMS) Gross profit $3,8485 = $016.4) i $3
Slide 71: Tapestry: Coach, Kate Spade, Stuart Weitzman
tapestry COACH | kate spade | STUART WEITZMAN