Tapestry Q4 Earnings Call Highlights

Tapestry NYSE: TPR said fiscal 2026 revenue rose 17% on a pro forma constant-currency basis to a record $8 billion, while operating margin expanded 340 basis points to more than 23% and earnings per share increased 38% to $7.05. Chief Executive Officer Joanne Crevoiserat said the company reached the revenue, operating-margin and EPS commitments established at its investor day two years ahead of schedule.

The company added 11 million new customers during the year, led by Gen Z consumers, according to Crevoiserat. She said growth included both average-unit-retail, or AUR, gains and unit growth in core leather goods, while results were broad-based across regions and channels.

For the fourth quarter, Tapestry reported pro forma constant-currency revenue growth of 11%. Operating income increased 25%, operating margin expanded 250 basis points, and EPS rose 28% to $1.32, exceeding the company’s guidance despite a tax-related headwind of more than $0.05 per share, Chief Financial Officer and Chief Operating Officer Scott Roe said.

Coach Drives Growth Across Regions

Coach posted 14% constant-currency revenue growth in the fourth quarter, supported by customer acquisition and demand for core handbag lines. The brand added more than 2 million customers during the quarter and nearly 9 million during fiscal 2026.

Coach’s North America revenue increased 10% in the fourth quarter, while Greater China revenue rose 30% and European revenue climbed 25%, Crevoiserat said. In the quarter, handbag AUR increased at a mid-teens rate while unit volumes were roughly flat from a year earlier. The company attributed the unit performance to its deliberate reduction in promotional activity, as well as timing shifts in promotional events and strong third-quarter sell-through.

Todd Kahn, CEO and Brand President of Coach, said the brand does not intend to pursue unit growth at the expense of margins or brand health. He highlighted the company’s “One Coach” strategy, which combines the retail and outlet approaches and offers collection merchandise at full price in outlet locations. Kahn said the strategy has supported higher AURs and customer acquisition.

Coach’s New York family of bags, including Brooklyn, Empire and Chelsea, as well as the Tabby and Teri lines, helped drive growth and Gen Z acquisition. Footwear revenue increased at a high-teens rate in the quarter, fueled by sneaker demand including the Soho and Margot families.

Management said Coach has a path to becoming a $10 billion brand, supported by international expansion, product innovation and investment in physical retail. The brand plans to expand its expressive luxury store concept to affect about 80% of traffic by fiscal 2030. Tapestry expects Coach to add 40 to 50 net doors in fiscal 2027, with about 75% of those openings outside North America.

Kate Spade Continues Its Brand Rebuild

Kate Spade’s top-line progress was slower than management had planned, though Crevoiserat said the company is continuing its phased effort to streamline the business, strengthen its foundation and prepare it for future growth.

The brand added more than 450,000 customers in the fourth quarter and about 2 million during the year. Its Margot 454 and Duo handbag families contributed to improved handbag trends and customer acquisition, particularly among Gen Z consumers, according to the company.

Kate Spade also reported improved brand consideration among Gen Z consumers in its U.S. brand health tracker following marketing efforts, though unaided brand awareness has not yet improved. The company appointed Allison Badea as chief marketing officer and Jonathan Saunders as executive creative director as it works to strengthen product and storytelling.

For fiscal 2027, Tapestry expects Kate Spade revenue to decline at a high-single-digit rate and forecasts a modest operating loss as it continues investing in the brand.

Margins, Capital Returns and Fiscal 2027 Outlook

Tapestry’s fourth-quarter gross margin was 78.1%, up 180 basis points from a year earlier. Roe said operational gains of about 250 basis points and a 50-basis-point benefit from the Stuart Weitzman divestiture more than offset an approximately 60-basis-point tariff and duty headwind.

SG&A expenses increased 8% in the quarter but leveraged 80 basis points. Marketing spending rose about 20% year over year and represented 14% of quarterly sales. For the full year, the company said demand-creation spending represented 12% of sales, or about $1 billion.

Tapestry returned $1.7 billion to shareholders during fiscal 2026, including $326 million in dividends and $1.35 billion in share repurchases. The company repurchased about 11.5 million shares at an average price of $118. For fiscal 2027, it plans to return another $1.7 billion, including approximately $1.35 billion in repurchases, and its board approved a 16% increase in the annualized dividend to $1.85 per share.

• Fiscal 2027 revenue guidance: $8.4 billion to $8.5 billion, representing mid-single-digit growth.
• Coach revenue outlook: high-single-digit growth overall, with low-single-digit North America growth and mid-teens growth expected in Europe and Greater China.
• Operating margin outlook: expansion of 50 basis points to nearly 24%.
• EPS outlook: $7.80 to $7.90, representing low-double-digit growth.
• Adjusted free cash flow outlook: approaching $1.7 billion.

For the first quarter, Tapestry expects high-single-digit revenue growth, including low-teens growth at Coach and a low-double-digit decline at Kate Spade. The company forecast first-quarter EPS of approximately $1.55, an increase in the low-teens percentage range from the prior year.

About Tapestry (NYSE:TPR)

Tapestry, Inc is a New York City–based house of fashion brands that designs, produces and distributes a range of accessible luxury and lifestyle products. The company manages a portfolio led by Coach, along with Kate Spade New York and Stuart Weitzman, each offering distinct product lines that include handbags and leather goods, footwear, ready-to-wear apparel, accessories, small leather goods, jewelry and lifestyle items. Tapestry's operations encompass product design, marketing, wholesale partnerships, retail store operations and digital commerce.

Historically, the Coach brand traces its roots to a leather workshop in New York dating to the mid-20th century.

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