Tapestry, Inc. · NYSE:TPR
Tapestry — Q3 FY2021 Earnings Presentation
57 slides from Tapestry's earnings presentation, May 6, 2021
Slide 1: Tapestry
tapestry GOACH | kate spade | SIUART WHIZMAN
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: Tapestry values, principles, brands and model
tapestry optimistic, innovative, inclusive OUR VALUES: brand-led, consumer-centric meritocracy OUR PRINCIPLES: global, unique & differentiated OUR BRANDS: disciplined, shared & scalable OUR MODEL: *
Slide 4: Brand establishment dates and attributes
established 1941 INCLUSIVE AUTHENTIC COURAGEOUS established 1986 SOPHISTICATED STYLISH CONFIDENT established 1993 COLORFUL JOYFUL OPTIMISTIC *
Slide 5: Tapestry product, geographic and channel breakdown
TAPESTRY PRODUCT, GEOGRAPHIC & CHANNEL BREAKDOWNGLOBAL HOUSE OF BRANDS WITH STRONG DIRECT-TO-CONSUMER DISTRIBUTION * As of FY20.
Slide 6: Leadership Team
LEADERSHIP TEAM Todd KahnCEO and Brand President, Coach Giorgio SarnéCEO and Brand President,Stuart Weitzman Liz FraserCEO and Brand President,Kate Spade Joanne CrevoiseratChief Executive Officer Andrea Shaw ResnickInterim Chief Financial Officer; Global Head of Investor Relations & Corporate Commun
Slide 7: Update 3Q21
update 3Q21
Slide 8: Operating income exceeded pre-pandemic levels
OPERATING INCOME EXCEEDED PRE-PANDEMIC LEVELS Delivered sequential improvement in topline trends and drove robust sales growth, led by Digital and ChinaFueled new customer acquisition and drove improved purchase frequency rates across brands through a sharpened focus on the consumerGenerated operati
Slide 9: Third quarter results highlight the power of our brands
THIRD QUARTER RESULTS HIGHLIGHT THE power OF OUR BRANDS & THE Mainland China revenue increased vs. FY19 and rose significantly vs. FY20 40% * vs. both FY20 and FY19 improvedsequentially Revenue trends Delivered brick & mortar operating margin despite continued traffic pressures above FY19 Drove cont
Slide 10: Continued operating income growth as revenue trends improved
* Teneo Studio to check alignment Non-GAAP Financials. The Company has provided comparisons to certain fiscal year 2019 results, which the Company believes is useful to investors and others in evaluating the Company’s results, due to the significant impact of the Covid-19 pandemic on the Company’s o
Slide 11: Financial outlook
* Non-GAAP Financials. In FY21, we will continue to focus on driving profitability through a sharpened focus on the consumer drive efficiency-led profit growth As we continue to emerge from the pandemic, we expect to deliver top and bottom-line growth over our planning horizon create a flywheel Give
Slide 12: Capital allocation priorities
NEAR-TERM Generated $876 million of free cash flow year-to-date, underscoring our financial strength and flexibility Paid down revolver in full in JanuaryContinue to preserve our cash-on-hand while re-investing in the business * CAPITAL ALLOCATION PRIORITIES LONG-TERM Return to sustainable top and b
Slide 13: Acceleration Program
PROGRAM acceleration
Slide 14: We are accelerating
* acceleration noun /akˌseləˈrāSH(ə)n/ the act of accelerating; increase of speed or velocity. we are accelerating growth & profitability we are accelerating our focus on the consumer we are accelerating with agility & urgency together
Slide 15: Acceleration Program focus areas
* SHARPEN OUR FOCUS ON THE CONSUMER Operate with a clearly defined purpose and strategy for each brand and an unwavering focus on the consumer at the core of everything we do LEVERAGE DATA & LEAD WITH A DIGITAL-FIRST MINDSET Build significant data and analytics capabilities to drive decision-making
Slide 16: Acceleration Program third quarter highlights
acceleration program THIRD QUARTER HIGHLIGHTS Non-GAAP Financials. Recruited approximately 700,000 new customers through our e-commerce channels in North America, a meaningful increase versus prior year Delivered an increase in purchase frequency versus prior year through enhanced and consistent bra
Slide 17: Foundational changes, sustainable gains
* foundational changes sustainable gains Reduced total SKU counts by 30-50% across brandsImplemented tighter inventory management; Inventory turn now tied to compensationRaised profitability threshold of stores; closed 94 net locations over the past yearSimplified organizational structure & reduced
Slide 18: Flywheel for sustainable revenue and profit growth
INCREASING RETENTION AND LIFETIME VALUE OF EACH CUSTOMER DRIVING RECRUITMENT OF NEW CUSTOMERS REVENUE & PROFIT GROWTH * …WE ARE NOW TRANSITIONING TO A PERIOD OF sustainable, demand- driven REVENUE AND PROFIT GROWTH TO FULLY UNLOCK THE FLYWHEEL PURPOSE-LEDACCESSIBLE LUXURY DESIGN-FORWARDFOCUSED ASSOR
Slide 19: Tapestry's differentiated platform
tapestry’s differentiated platform provides: CONSUMERINSIGHTS ACCESS TO GLOBAL TALENT DIGITAL INFRASTRUCTURE & CAPABILITIES GLOBALLY DIVERSIFIED SUPPLY CHAIN TAPESTRY IS AN enabling platform THAT ENHANCES OPPORTUNITIES FOR OUR BRANDS *
Slide 20: CEO quote on long-term growth
* “We are increasingly optimistic about our ability to generate long-term top and bottom-line growth, building on our strong performance to date. The changes we have made through our Acceleration Program are foundational – as we embed a consumer-centric approach into our organization, unlock new way
Slide 21: Overview by Brand
OVERVIEWbyBRAND
Slide 22: Coach
tri COACH NEW YORK
Slide 23: Slide 23
Slide 24: Coach vision
Coach inspires the dreamer in all of us, connecting our modern lives with the spirit of the open road. OUR VISION *
Slide 25: Coach employees, countries and stores
11,000+EMPLOYEES 55+COUNTRIES 958DIRECTLY OPERATED STORES * As of FY20.
Slide 26: Coach product, geographic and channel breakdown
COACH PRODUCT, GEOGRAPHIC & CHANNEL BREAKDOWNDIRECT-TO-CONSUMER FOCUSED WITH DIVERSIFIED PRODUCT CATEGORIES & GEOGRAPHIES * As of FY20.
Slide 27: Coach multi-year growth strategies
COACH MULTI-YEAR GROWTH STRATEGIES * Enhance brand & cultural relevance DEEPEN ENGAGEMENT WITH CONSUMERS CREATE INNOVATIVE & COMPELLING PRODUCT DRIVE DIGITAL SALES & NEW CUSTOMER RECRUITMENT ACCELERATE GROWTH IN CHINA ENHANCE PROFITABILITY Exceed the expectations of our target consumers by geography
Slide 28: Todd Kahn quote on Coach
* “We’re ready to reignite the accessible luxury segment by evolving our message from one rooted in high fashion imagery to one that is inclusive, culturally relevant and consumer-centric. We will focus on authentic communications that are grounded in our values and embody the courageous spirit of N
Slide 29: Kate Spade New York
& kate spade NEW YORK
Slide 30: Bie
v S oe a0 Bie os 22 3 ad
Slide 31: Kate Spade vision
OUR VISION A globally admired aspirational life & style brand, where people — our customers and teams — areat the center of everything we do.
Slide 32: Kate Spade employees, countries and stores
3,900+EMPLOYEES 35+COUNTRIES 420DIRECTLY OPERATED STORES * As of FY20.
Slide 33: Kate Spade product, geographic and channel breakdown
KATE SPADE PRODUCT, GEOGRAPHIC & CHANNEL BREAKDOWNOPPORTUNITY TO REENERGIZE & GROW HANDBAGS, WHILE FOCUSING ON MARKETS WITH HIGH BRAND AWARENESS * As of FY20. OTHER ASIA12%
Slide 34: Kate Spade multi-year growth strategies
KATE SPADE MULTI-YEAR GROWTH STRATEGIES * Fulfill our promise as a lifestyle brand representing joy, optimism and colorAmplify brand messages through unique, best-in-class storytelling on a multi-category lifestyle platform CRYSTALLIZE BRAND PURPOSE & RETURN TO A POSITION OF STRENGTH INSTILL A LASER
Slide 35: Liz Fraser quote on Kate Spade
* “I am incredibly optimistic about the long-term potential for Kate Spade. We have a brand that has a universal language of Joy, Optimism and Color. Our customers have historically deeply connected to our brand emotionally. If we embed this language in our product, marketing and customer experience
Slide 36: Stuart Weitzman
STUART WEITZMAN
Slide 37: Stuart Weitzman
STUART WEITZMAN
Slide 38: Stuart Weitzman vision
OUR VISION STUART WEITZMAN IS THE EMBODIMENT OF STRENGTH IN FEMININITY – EMPOWERING AND INSPIRING WOMEN TO TAKE ON THE WORLD IN FASHIONABLE AND FUNCTIONAL FOOTWEAR. *
Slide 39: Stuart Weitzman employees, countries and stores
950+EMPLOYEES 40+COUNTRIES 131DIRECTLY OPERATED STORES As of FY20. *
Slide 40: Stuart Weitzman product, geographic and channel breakdown
STUART WEITZMAN PRODUCT, GEOGRAPHIC & CHANNEL BREAKDOWNOPPORTUNITY TO FOCUS ON KEY GEOGRAPHIES & CHANNELS WITH A COMPELLING FOOTWEAR ASSORTMENT * REST OF WORLD 14% As of FY20.
Slide 41: Stuart Weitzman multi-year growth strategies
* Listen and respond to our customers’ needs in order to design beautiful and on-trend shoes RENEW REPUTATION FOR FIT, COMFORT & QUALITY GROW KEY CATEGORIES RESTORE PROFITABILITY STRENGTHEN RELATIONSHIP WITH WHOLESALE PARTNERS ESTABLISH A ROBUST DIGITAL PRESENCE Build a leading presence in boots, bo
Slide 42: Giorgio Sarné quote on Stuart Weitzman
* “For nearly 35 years, Stuart Weitzman has empowered women to feel confident, stylish and sophisticated through its unmatched combination of fit, comfort and quality. Looking ahead, our long-term strategy centers on one principle: focus. Focus on the customer. Focus on tightening the product offeri
Slide 43: Social Fabric: our corporate responsibility
social fabric our corporate responsibility
Slide 44: 2025 corporate responsibility strategy and 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, sustai
Slide 45: Corporate social responsibility strategic pillars
OUR SOCIAL FABRIC: CORPORATE SOCIAL RESPONSIBILITY THE 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 dedicate
Slide 46: Our people 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 47: Our people progress
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 the seventh consecutive year on the Human Rights
Slide 48: Our planet goals
OUR SOCIAL FABRIC 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 supply chain.Ens
Slide 49: Our planet progress
OUR SOCIAL FABRIC our planet 2 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 handbags, representi
Slide 50: Our communities goals
OUR SOCIAL FABRIC our communities 3 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 products access to e
Slide 51: Our communities progress
OUR SOCIAL FABRIC our communities 3 Donated $22M in fiscal 2019 via grants from the Coach Foundation and kate spade new york Foundation, as well as through brand product donations.Engaged our employees to volunteer over 5,750 hours, serving our communities globally.Made $429,000 in charitable donati
Slide 52: Tapestry
tapestry
Slide 53: Appendix
APPENDIX
Slide 54: 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 55: GAAP to non-GAAP reconciliation, third quarter fiscal 2021
in millions, except per share data; unaudited GAAP BASIS(AS REPORTED) ACCELERATION PROGRAM IMPAIRMENT NON-GAAP BASIS(EXCLUDING ITEMS) Coach $718.0 $— $— $718.0 Kate Spade 160.2 — — 160.2 Stuart Weitzman 33.7 — — 33.7 Gross profit(1) 911.9 — — 911.9 Coach 466.6 4.7 20.4 441.5 Kate Spade 168.9 0.9 19.
Slide 56: GAAP to non-GAAP reconciliation, third quarter fiscal 2020
in millions, except per share data; unaudited GAAP BASIS(AS REPORTED) ERP IMPLEMENTATION ORGANIZATION-RELATED & INTEGRATION COSTS IMPAIRMENT NON-GAAP BASIS(EXCLUDING ITEMS) Coach $475.7 $— $— ($61.9) $537.6 Kate Spade 122.5 — — (32.3) 154.8 Stuart Weitzman 18.0 — — (9.8) 27.8 Gross profit(1) 616.2 —
Slide 57: Tapestry
tapestry GOACH | kate spade | SIUART WHIZMAN