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2022-05-12 17:30

Tapestry Inc. stock closed up 15% on Thursday after the company reported its third quarter fiscal 2022 financial results that topped Street expectations.

Tapestry is a premium fashion holding corporation based in the United States. Its headquarters are in New York City, and it owns three key brands: Coach New York, Kate Spade New York, and Stuart Weitzman.

Important figures in the earnings report

For the third quarter fiscal 2022 the net sales were $1.44 billion relative to $1.27 billion in the same period of previous year whereas the company has recorded a gross profit of $1.01 billion for the third quarter of fiscal 2022 for reported as well as non-GAAP basis while the gross margin was 69.9%.

On a reported basis, SG&A expenses reached $836 million, or 58.1% of sales, opposed to $795 million and 62.5%, respectively, in the prior quarter. SG&A expenses were $829 million and 57.7% of sales on a non-GAAP basis, relative to $729 million and 57.3%, respectively, in the third quarter of 2021.

On a reported basis, operating income was $169 million, with an operating margin of 11.8%, whereas for the third quarter of previous year the operating income was $117 million and a 9.2% operating margin. Operating income was $176 million on a non-GAAP basis, with an operating margin of 12.2 percent. This compares to $183 million in operational income and a 14.4% operating margin the previous year.

Net interest expense for the third quarter of fiscal 2022 was $15 million, down from $17 million the year before. Other expenses were $3 million in the quarter, down from $4 million the year before. On a reported basis, net income for the third quarter of fiscal 2022 was $123 million, with earnings per diluted share of $0.46, compared to $92 million and $0.32 in the third quarter of 2021.

Tapestry’s future expectations

The company has provided its fiscal 2022 guidance as follows:

The business anticipates revenue of roughly $6.7 billion, representing a high-teens growth rate on a 52-week, comparable basis over the preceding year and a new high for the company. Whereas the company is looking forward to approximately $62 million in net interest expense.

If existing tax laws are followed, the company forecasts a tax rate of around 18.0 percent in fiscal year 2022.While the business has estimated a weighted average diluted share count of about 271 million shares for Fiscal 2022, this does not include the expected $1.6 billion in share repurchase activity.

The $8.07 billion company that trades at a PE multiple of 10.36 is still down 20% in the stock market for the year.