Gross profit for the quarter rose significantly to $1.49 billion, with the gross margin reaching 71.6 per cent. This improvement was attributed to a 170 basis points benefit from reduced freight expense and operational enhancements, comparing favourably to the prior year’s gross profit of $1.39 billion and a gross margin of 68.6 per cent, Tapestry said in a press release.
Tapestry reported Q2 FY24 net sales of $2.08 billion, up 3 per cent YoY, with a gross margin increase to 71.6 per cent.
Operating income rose to $448 million, and net income reached $322 million.
International revenue grew by 12 per cent, with significant gains in Greater China and Europe.
The company’s inventory was reduced to $825 million.
Selling, general, and administrative expenses were reported at $1.05 billion, accounting for 50.2 per cent of sales. On a non-GAAP basis, selling, general, and administrative expenses were slightly lower at $1.02 billion, or 48.7 per cent of sales. This represents an increase from the previous year, where selling, general, and administrative expenses totalled $971 million, or 47.9 per cent of sales.
Operating income showed robust growth, reaching $448 million on a reported basis with an operating margin of 21.5 per cent. Non-GAAP figures were even stronger, with operating income at $476 million and an operating margin of 22.8 per cent, improving from last year’s $418 million and a 20.6 per cent operating margin.
Net income for the quarter was $322 million, translating to earnings per diluted share of $1.39. Non-GAAP net income was higher at $377 million, with earnings per diluted share of $1.63, demonstrating significant progress from the prior year’s net income of $330 million and earnings per diluted share of $1.36.
Tapestry also highlighted its strong international performance, with revenue growth of 12 per cent at constant currency across key regions. Notably, Greater China’s revenue saw a 19 per cent increase, Japan was up 6 per cent, other Asia was up 9 per cent, and Europe was up 11 per cent. Additionally, direct-to-consumer revenue grew by 4 per cent at constant currency, fuelled by mid-single-digit growth in both stores and digital channels.
The company ended the quarter with an inventory of $825 million compared to the prior year’s $976 million.
“Our second quarter results exceeded expectations, highlighting the power of brand building and disciplined execution. During the key holiday season, our passionate teams delivered for our customers, fuelling brand magic through innovative product, engaging storytelling, and operational excellence. Importantly, we drove record revenue and EPS, while advancing our strategic agenda. Based on these results, we are raising our EPS outlook for the fiscal year,” said Joanne Crevoiserat, chief executive officer of tapestry.
Fibre2Fashion News Desk (DP)
