I'm pleased to report that the strong momentum we saw throughout last year has accelerated further in the first quarter with our sales now 9% above pre-pandemic levels.
Our operating margin has improved 8.5 points compared to fiscal year '20 even as we've reinvested in key growth drivers for our business.
Our three unique brands are enabled by our talented teams, technology infrastructure, globally diversified supply chain and a 90% direct to consumer model.
In fact, we acquired approximately 1.6 million new customers across our direct channels in North America, an increase of 20% with growth in both stores and online.
As a result, retention improved year-over-year at each brand, including strong reengagement with the 4 million customers acquired last year in our North America digital channels.
Sales rose close to 50% with digital penetration now nearly 4 times pre-pandemic levels.
While I'll cover resurgences during the quarter, impacted traffic across the industry, we delivered sales growth of over 25%.
Compared to pre-pandemic levels, sales increased roughly 65% accelerating versus the prior quarter.
Revenue rose 27% representing an increase of 15% compared to pre-pandemic levels or a 13 point sequential improvement.
Operating margin expanded fueled by gross margin, which reached nearly 75%, the highest rate in any quarter in the last 10 years.
In the quarter, we acquired over 900,000 new customers across our North America channels, a high-teens increase compared to the prior year.
In addition, we are led by Stuart Vevers creative vision who is building on 80 years of iconic Coach codes, notably the Signature C and Horse and Carriage, both of which have supported increasing sales across all channels.
In the first quarter, e-commerce increased over 60% representing a sequential improvement on both a one and two-year basis underscoring the significant opportunity that this channel represents.
Sales rose over 25% compared to last year with improvements across stores and e-commerce as we diversify our approach to meet the customer where they want to shop.
And fifth, we outperformed in the men's business, in keeping with our ambition to deliver $1 billion in sales in the category over our planning horizon.
In the quarter, we maintained a consumer-centric approach in our execution acquiring over 650,000 new customers across channels in North America, a significant increase over last year.
And fifth, we utilized our already strong digital platform to continue to grow e-commerce sales, which rose over 15% in the quarter as we test, learn and scale innovative and new ways to engage the consumer online.
We have significant [Technical Issues] in our ability to achieve $2 billion in revenue at high teens operating margins over the planning horizon.
Our e-commerce channels rose over 30% globally driven by customer experience upgrade to improve conversion.
And in China, a market that remains a significant opportunity for the brand, revenue increased over 25%.
This was a key driver of the gross margin expansion of over 250 basis points.
Total sales increased 26% versus prior year and outperformed expectations.
Compared to pre-pandemic levels, revenue rose 19% representing an 8 point acceleration compared to the prior quarter fueled by improvements across all channels, stores, digital and wholesale.
Earnings per diluted share for the quarter was $0.82, an increase of 42% compared to the prior year and more than doubling pre-pandemic levels.
Now turning to our balance sheet and cash flow as well as an update to our capital deployment plans, we ended the quarter in a strong position with $1.7 billion in cash and investments and total borrowings of $1.6 billion.
As such, we now expect to return approximately $1.25 billion to shareholders in the fiscal year, a meaningful increase compared to our previous outlook to return $750 million to shareholders in fiscal '22.
This return reflects approximately $1 billion of share repurchases in the fiscal year which consist of $600 million to complete our existing program inclusive of the 250 million of shares already repurchased in the first quarter and we expect to utilize approximately $400 million under our new program in fiscal '22.
In addition, our shareholder return plans continue to forecast approximately $250 million returned through our dividend program.
In addition, we still intend to repay our July 2022 bonds totaling $400 million by the end of the fiscal year.
As Joanne mentioned we've acted early and boldly to maintain the momentum we're seeing across each of our brands, while we're not immune to external factors nor can we predict future challenges that may come, the bold actions we're taking to secure supply along with our experience at reacting with agility to a constantly changing landscape over the last 18 months or so, it gives us confidence to increase our annual guidance.
We now expect revenue to approach $6.6 billion which would mark a record for the Company.
Excluding this additional freight impact of approximately 200 basis points, we are driving continued underlying gross margin expansion through lower discounting, improved SKU productivity along with price increases that will be implemented for the balance of the year across brands.
We continue to expect about $300 million in structural gross run rate expense savings as a result of the acceleration program.
As previously shared, we are reinvesting these benefits to fuel growth including $90 million in higher marketing spend or approximately 3 percentage points higher than fiscal '19.
Net interest expense for the year is expected to be $65 million and the tax rate is estimated at 18.5% assuming a continuation of current tax laws.
We're now forecasting weighted average diluted share count to be in the area of 278 million shares incorporating a planned $1 billion in share repurchases.
So taken together, we now expect earnings per share to be in the range of $3.45 to $3.50 incorporating the first quarter's outperformance and an approximate $0.05 benefit from additional share repurchases.
We continue to expect capex to be about $220 million for the year.
Of this spend, we anticipate approximately 45% of it related to store development primarily in China, with the balance dedicated to our digital and IT initiatives.
Operating income is projected to be in the area of prior-year levels, which contemplates incremental airfreight of approximately $70 million in the quarter or roughly 350 basis points.
As a reminder, GST is expected to benefit the full year by almost 50 basis points.

Summary:
And fifth, we outperformed in the men's business, in keeping with our ambition to deliver $1 billion in sales in the category over our planning horizon.
Total sales increased 26% versus prior year and outperformed expectations.
Earnings per diluted share for the quarter was $0.82, an increase of 42% compared to the prior year and more than doubling pre-pandemic levels.
This return reflects approximately $1 billion of share repurchases in the fiscal year which consist of $600 million to complete our existing program inclusive of the 250 million of shares already repurchased in the first quarter and we expect to utilize approximately $400 million under our new program in fiscal '22.
We're now forecasting weighted average diluted share count to be in the area of 278 million shares incorporating a planned $1 billion in share repurchases.