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Cisco revenue drops, Tapestry beats estimates

Yahoo Finance’s Emily McCormick joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss Cisco and Tapestry’s fourth-quarter earnings report.

Video Transcript

ALEXIS CHRISTOFOROUS: I want to turn now to just a couple of big earnings reports that are out this morning. Cisco reporting its first annual sales decline in about three years. We've also got the CFO, Kelly Kramer, retiring. And the stock, as I see here, taking a big hit in the premarket, down about 7%.

EMILY MCCORMICK: That's right, Alexis. And taking a look at Cisco's results, one of the big headlines coming out of it was the company announced plans to cut costs by a billion dollars on an annualized basis over the next few quarters, something that analysts hadn't been looking for, really coming as a surprise here during that earnings call yesterday. CEO Chuck Robbins saying that Cisco is really re-examining its business in light of the pandemic, focusing on accelerating its investments in cloud security and collaboration, education, health care, and automation. So a couple of new focus areas now for Cisco, potentially cutting back on some of these other areas as well to get to that $1 billion worth of cut costs.

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Taking a look at those fiscal fourth quarter results, we did have a beat on the top and bottom line. We have revenue of $12.2 billion, slightly better than expected, but still down 9% over last year. Although Cisco did guide towards yet another quarterly revenue decline on a year-over-year basis. The company seeing fiscal first quarter revenue as much as down 11%, much worse than the decline of 7% that had been expected, Alexis.

ALEXIS CHRISTOFOROUS: Now on the flip side, you've got Tapestry-- that's the company behind Coach and Kate Spade-- rallying here in the premarket after losing less money than expected in the latest quarter. What can you tell us there?

EMILY MCCORMICK: That's right, Alexis. So we did see Tapestry with a narrower-than-expected loss. That adjusted loss per share at $0.25 versus the $0.58 loss per share expected. Also saw net sales of $715 million-- down 53% year-over-year, but still better than expected.

And that was led by a decline in Stuart Weitzman. Those sales were down 61% over last year. The company also rolling out a new acceleration program to try and streamline the organization. With that, it's planning to incur total charges of up to $200 million.

But it expects it will realize about $300 million in gross runway expense savings from its initiatives. That's going to include store closures going to take place over the next several quarters and potentially several years and will include some brand revitalization for each of Coach, Kate Spade, and Stuart Weitzman.

Now taking a look at Tapestry, we do have that stock actually up just about 6% in premarket trading. So taking that better-than-expected results on the reported quarter and that guidance for the future revitalization plan in stride here.