Tapestry, Inc. · NYSE:TPR
Tapestry — Q2 FY2020 Earnings Presentation
64 slides from Tapestry's earnings presentation, Feb 6, 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: 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: 3
Slide 4: Global house of brands defined by inclusivity
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 5: Brands established 1941, 1986, 1993
established 1941 AUTHENTIC CONFIDENT MODERN established 1986 EMPOWERED POLISHED SOPHISTICATED established 1993 JOYFUL FEMININE OPTIMISTIC 5
Slide 6: Brand revenue, operating margin and stores
6 As of FY19. Non-GAAP Financials. As of Fiscal 2020, foreign currency gains and losses previously reported in SG&A expenses are reflected in Other Expense/(Income). Prior year results have been recast for comparability. Store counts reflect directly operated locations. revenue $6.0B operating margi
Slide 7: Tapestry product, geographic and channel breakdown
TAPESTRY PRODUCT, GEOGRAPHIC & CHANNEL BREAKDOWNGLOBAL HOUSE OF MODERN LUXURY BRANDS WITH FOCUS ON INTERNATIONAL GROWTH &DIRECT-TO-CONSUMER DISTRIBUTION 7 As of FY19.
Slide 8: Global premium handbag, footwear and outerwear markets
OPPORTUNITY ACROSS BRANDS IN THE ATTRACTIVE AND GROWING GLOBAL PREMIUM HANDBAG & ACCESSORIES, FOOTWEAR AND OUTERWEAR MARKETs Handbags & Accessories Footwear Outerwear $95B FY19 Handbags & Accessories Footwear Outerwear $91B FY18 8 +7% GROWTH Source: Tapestry proprietary global market sizing model &
Slide 9: Leadership Team
Leadership Team Sarah DunnGlobal Human Resources Officer Joanne CrevoiseratChief Financial Officer Joshua SchulmanCEO and Brand President,Coach Zeynep SchoenwaelderGlobal Head of Strategy & Data Labs Todd KahnPresident, Chief Administrative Officer and Chief Legal Officer Andrea Shaw ResnickGlobal H
Slide 10: Overview 2020
overview 2020
Slide 11: Fiscal 2020 Strategic Priorities
INNOVATION AND EXCELLENCE IN execution FUELBRANDINNOVATION DRIVEGLOBALGROWTH INVEST inDIGITAL& DATA HARNESS the POWER of MULTI-BRAND Accelerate product newnessBuild brand connections through cultural relevance Maximize the opportunity with the Chinese consumer globally and across brands Increase pow
Slide 12: Fiscal 2020 Capital Allocation Priorities
12 we are dedicated to driving organic growth, rather than pursuing strategic acquisitions, while returning capital to shareholders. ORGANIC GROWTH FISCAL 2020 CAPITAL ALLOCATION PRIORITIES With continued momentum at Coach, our main priority is to fuel an acceleration in our acquired businesses to u
Slide 13: Recent Highlights
RECENT HIGHLIGHTS Pleased with our holiday quarter performance, which outperformed plan.Drove continued momentum at Coach – the largest brand of our house – highlighted by the ninth consecutive quarter of positive comparable store sales growth.Realized sequential improvement at Kate Spade as we furt
Slide 14: Highlights from 2019
highlights 2019 from
Slide 15: Fiscal 2019 Milestones
15 A YEAR OF meaningful evolution FISCAL 2019 MILESTONES Achieved ongoing strength in our businesses internationally, while navigating a challenging retail backdrop in North America.Advanced our strategic initiatives, most notably building the foundation of our multi-brand platform, as we generated
Slide 16: Fiscal 2019 P&L Overview by Brand
16 Non-GAAP Financials. Tapestry includes Corporate segment SG&A expenses of $376M (not shown). As of Fiscal 2020, foreign currency gains and losses previously reported in SG&A expenses are reflected in Other Expense/(Income). Prior year results have been recast for comparability. FISCAL 2019 P&L OV
Slide 17: Fiscal 2019 Capital Allocation Milestones
FISCAL 2019 CAPITAL ALLOCATION MILESTONES 17 share repurchase program. $1B Board of Directors approved to shareholders through dividends & share repurchases. $490M Company returned RETURNED 95% of free cash flow TO SHAREHOLDERS THROUGH DIVIDEND &SHARE REPURCHASE PROGRAM
Slide 18: Overview by Brand
OVERVIEWbyBRAND
Slide 19: Coach New York
a yor COACH NEW YORK
Slide 20: Slide 20
Slide 21: The Shops at Hudson Yards, New York City
THE SHOPSAT HUDSON YARDSNEW YORK CITY
Slide 22: Horse & carriage pop-up, Zhengzhou, China
Horse & carriage pop-up at david plazaZhengzhou, china
Slide 23: Rexy float at Macy's Thanksgiving Day Parade
Rexy float at MACY’S THANKSGIVING DAY PARADENEW YORK CITY
Slide 24: 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 24
Slide 25: Coach vision and key facts
Coach inspires the dreamer in all of us, connecting our modern lives with the spirit of the open road. our vision 25 13,500EMPLOYEES 986DIRECTLY OPERATED STORES $4.27BANNUAL REVENUE 26 As of FY19.
Slide 26: g | Be
27B 6 $4 9 ey 2 a | w: g | 4 Be ey Q
Slide 27: Coach Fiscal 2019 Milestones
COACH FISCAL 2019 MILESTONES Achieved seven consecutive quarters of global comparable store sales increases and gross margin expansion for the fiscal year.Delivered strong international growth and outperformed accessible luxury peers in North America; drove e-commerce gains globally.Cascaded leather
Slide 28: Coach product, geographic and channel breakdown
coach product, geographic & channel breakdownDirect-to-consumer focused with diversified product categories & geographies 28 As of FY19.
Slide 29: Coach Fiscal 2020 Strategic Priorities
COACH FISCAL 2020 STRATEGIC PRIORITIES DRIVE product innovation & disruption enforce Fashion Authority through cultural relevance Inject excitement into stores Fuel Digital Innovation & E-commerce Growth 29
Slide 30: Kate Spade New York
& kate spade NEW YORK
Slide 31: Slide 31
Slide 32: The Shops at Hudson Yards, New York City
THE SHOPSAT HUDSON YARDSNEW YORK CITY
Slide 33: Kate Spade creative director quote
“Since our founding, our brand has inspired generations of women to live their lives with substance, sophistication and a smile. Today, we continue to offer a distinct and positive point of view through a combination of pragmatic and witty designs, color and a unique celebratory approach to living.
Slide 34: 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 35: Kate Spade employees, stores, revenue
4,800EMPLOYEES 407DIRECTLY OPERATED STORES $1.37B ANNUAL REVENUE 35 As of FY19.
Slide 36: Kate Spade Fiscal 2019 Milestones
Kate spade FISCAL 2019 Milestones Debuted Nicola Glass’s creative vision with new & iconic brand elements, garnering a positive response; identified clear learnings to inform go-forward strategy.Maintained unique brand positioning with leadership in attributes of Fun, Fashionable & Feminine per U.S.
Slide 37: Kate Spade product, geographic and channel breakdown
KATE SPADE product, geographic & channel breakdownOpportunity to expand internationally with unique and globally-relevant positioning 37 As of FY19. OTHER ASIA12%
Slide 38: Kate Spade Fiscal 2020 Strategic Priorities
KATE SPADE FISCAL 2020 STRATEGIC PRIORITIES 38 Solidify brand authority INTRODUCE exceptional and inspiring products Enhance omni-channel platform globally CREATE immersive channel experiences Engage with Chinese consumers globally
Slide 39: Stuart Weitzman
STUART WEITZMAN
Slide 40: Slide 40
Slide 41: The Shops at Hudson Yards, New York City
THE SHOPSAT HUDSON YARDSNEW YORK CITY
Slide 42: Stuart Weitzman CEO quote
“Stuart Weitzman footwear has long represented quality, style and the beautiful combination of fashion and function. We are building on this foundation as we evolve into a global, multi-channel and multi-category brand.” ERALDO POLETTO, CEO & Brand President, Stuart Weitzman 42
Slide 43: Stuart Weitzman 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. 43
Slide 44: Stuart Weitzman employees, stores, revenue
1,100EMPLOYEES 147DIRECTLY OPERATED STORES $389MANNUAL REVENUE 44 As of FY19.
Slide 45: Stuart Weitzman Fiscal 2019 Milestones
Stuart Weitzman FISCAL 2019 Milestones DELIVERED TOP-LINE GROWTH, ADDRESSING AREAS OF OPPORTUNITY EXITING FISCAL 2018.FOCUSED ON PRODUCT FIT AND CONSTRUCTION, CREATING FOUNDATIONAL PIECES CONSISTENT WITH THE BRAND’S DNA.GAINED FURTHER CREDIBILITY IN HANDBAGS AND LEATHERGOODS, A CONTINUED AREA OF OPP
Slide 46: Stuart Weitzman Fiscal 2020 Strategic Priorities
Stuart weitzman FISCAL 2020 STRATEGIC priorities 46 ENHANCE SYSTEMS AND PROCESSES Maintain Boot & Sandal Authority while Expanding Footwear Expression DRIVE CREDIBILITY IN HANDBAGS FUEL CONSUMER DESIRE & BRAND AWARENESS Expand Globally,with Focus on China
Slide 47: Stuart Weitzman product, geographic and channel breakdown
STUART WEITZMAN product, geographic & channel breakdownOpportunity to expand internationally WITH SOPHISTICATED FOOTWEAR & ACCESSORIES OFFERING COMBINING FUNCTION AND FIT 47 REST OF WORLD18% As of FY19.
Slide 48: Corporate Responsibility
corporate RESPONSIBILITY
Slide 49: 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, sustai
Slide 50: 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 51: 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 52: Our People recent milestones
RECENTMILESTONES Expanded our maternity leave in 2018 in the United States. Donated approximately $500K in fiscal 2018 to organizations that our employees are passionate about through our matching gift programs. Achieved a score of 100 for the sixth consecutive year on the Human Rights Campaign Corp
Slide 53: 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 54: 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 100 suppliers and manufacturers infiscal 2019.Signed
Slide 55: Our Communities 2025 goals
CORPORATE SOCIAL RESPONSIBILITY 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 emp
Slide 56: Our Communities recent milestones
RECENTMILESTONES CORPORATE SOCIAL RESPONSIBILITY our communities 3 Donated over $48M 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 through
Slide 57: Tapestry
tapestry
Slide 58: Chairman and CEO closing quote
JIDE ZEITLIN, CHAIRMAN & CEO 58 “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.”
Slide 59: Appendix
APPENDIX
Slide 60: Non-GAAP financial measures notes
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 61: GAAP to non-GAAP Reconciliation FY2019
GAAP to non-GAAP ReconciliationFor the Year Ended June 29, 2019 in mi llions, except per share data; unaudited GAAP BASIS(AS REPORTED) ERP IMPLEMENTATION INTEGRATION & ACQUISITION IMPACT OF TAX LEGISLATION NON-GAAP BASIS(EXCLUDING ITEMS) Coach $2,996.4 $— $(1.9) $— $2,998.3 Kate Spade 863.6 — (6.3)
Slide 62: GAAP to non-GAAP Reconciliation FY2018
GAAP to non-GAAP ReconciliationFor the Year Ended June 30, 2018 in millions, except per share data; unaudited GAAP BASIS(AS REPORTED) OPERATIONAL EFFICIENCY PLAN INTEGRATION & ACQUISITION IMPACT OF TAX LEGISLATION NON-GAAP BASIS(EXCLUDING ITEMS) Coach $2,931.5 $— $(4.1) $— $2,935.6 Kate Spade 705.7
Slide 63: 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 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 84.4 104.5 101.4 381.9 Selling, general and
Slide 64: Tapestry
tapestry COACH | kate spade | STUART WEITZMAN