Tapestry (TPR) Q4 2024 earnings summary

Executive summary

• Achieved record FY24 non-GAAP EPS of $4.29, double-digit growth year-over-year, with revenue of $6.7 billion and record annual sales at Coach, driven by international growth and operational excellence.

• Gross margin expanded by 250 basis points to the highest level in over 15 years, with robust cash flow generation and digital sales now nearly 30% of revenue.

• Over 6.5 million new customers were acquired in North America, with more than half being Gen Z and millennials, supporting the strategy to attract younger consumers.

• International revenue grew 6% at constant currency, led by Europe (+14%), Other Asia (+9%), Japan (+5%), and Greater China (+3%), while North America saw a 1% revenue decline but higher profit.

• Announced definitive agreement to acquire Capri Holdings Limited, with FTC lawsuit pending; management remains confident in closing in 2024 and realizing synergy potential.

Financial highlights

• FY24 revenue reached $6.67B, up 1% year-over-year on a constant currency basis; record non-GAAP EPS of $4.29, up 11%.

• Gross margin expanded to 73.3% for the group, with operating income at $1.25B (18.7% margin) and free cash flow exceeding $1.1B.

• Q4 gross margin expanded 250 basis points year-over-year, with operational outperformance and FX tailwinds.

• Dividend payout increased 17% to $1.40 per share, totaling $321 million returned to shareholders; payout ratio at 39%.

• Inventory levels ended 10% below prior year at $825M.

Outlook and guidance

• FY25 revenue expected at ~$6.7B, up ~1% constant currency, with mid-teens growth in Europe and mid-single-digit growth in Other Asia.

• Operating margin expansion of 50 basis points and gross margin expansion of 40 basis points anticipated.

• Non-GAAP EPS guidance of $4.45–$4.50, reflecting mid-single-digit growth, with free cash flow projected at ~$1.1B.

• CapEx and cloud computing costs expected at $190M, with two-thirds allocated to store investments.

• Guidance assumes no Capri accretion and incorporates currency and share repurchase headwinds.