Tapestry (TPR) Financials

Tapestry’s recent financial results show a substantial recovery from the impairment-driven loss reported in the fourth quarter of fiscal 2025. Revenue increased from $1.72 billion in Q4 2025 to $1.88 billion in Q4 2026, while net income improved from a $517.1 million loss to $347.8 million of profit. The latest quarter produced a 23.6% operating margin and an 18.5% net margin, supported by lower operating expenses and a significantly improved gross margin.

Fiscal 2026 revenue was seasonal, rising from $1.70 billion in Q1 to $2.50 billion in Q2 before moderating to $1.92 billion in Q3 and $1.88 billion in Q4. Net income remained positive in every quarter, ranging from $274.8 million to $561.3 million. This represents a marked improvement from fiscal 2025, when Q4 included a $517.1 million net loss and an $860.6 million noncash adjustment, likely reflecting impairment-related charges.

Cash generation improved but remained uneven. Operating cash flow was $522.2 million in Q4 2026, up from $262.6 million in Q3, and reached approximately $2.0 billion across the four reported fiscal 2026 quarters. However, large working-capital swings caused significant quarter-to-quarter volatility. Tapestry also spent $302.7 million on share repurchases and paid $80.5 million in dividends during Q4, contributing to a $71.8 million decline in cash for the quarter.

At the latest reported balance-sheet date, Tapestry held $1.05 billion in cash and equivalents against $2.38 billion of long-term debt. Its current ratio was approximately 1.8, indicating reasonable short-term liquidity, although total liabilities of $5.78 billion were substantially higher than shareholders’ equity of $682.4 million. Inventory declined to $843.9 million from $1.02 billion at the start of fiscal 2026, which is a positive working-capital trend, but retained earnings remained negative at $3.17 billion.

• Profitability recovered sharply: Q4 2026 net income was $347.8 million compared with a $517.1 million loss in Q4 2025.
• Operating margins strengthened: Q4 operating income reached $442.3 million, producing a 23.6% operating margin versus a substantial operating loss in the prior-year quarter.
• Gross margin improved: Gross profit was $1.56 billion on $1.88 billion of revenue, an approximately 83.3% gross margin, compared with about 76.3% in Q4 2025.
• Operating cash flow remained strong: Tapestry generated $522.2 million in operating cash flow during Q4 2026, more than enough to fund capital expenditures of $53.2 million.
• Inventory levels declined: Net inventory fell from $1.02 billion in Q1 2026 to $843.9 million in Q3, potentially reducing markdown and working-capital pressure.
• Share count is trending lower: Basic weighted-average shares declined from 207.6 million in Q1 2026 to 204.0 million in Q4, helped by substantial share repurchases.
• Cash flow is highly seasonal: Quarterly operating cash flow ranged from $112.6 million to $1.08 billion during fiscal 2026, making individual-quarter comparisons less reliable.
• Liquidity is adequate but concentrated in cash: The company had approximately $1.07 billion of cash and short-term investments against $2.38 billion of long-term debt at the latest balance-sheet date.
• Leverage remains elevated relative to equity: Total liabilities were $5.78 billion versus $682.4 million of equity, leaving the balance sheet sensitive to earnings setbacks or weaker consumer demand.
• Capital returns are consuming substantial cash: Tapestry repurchased roughly $1.55 billion of common stock and paid approximately $326 million in dividends across the four fiscal 2026 quarters, contributing to cash declines in multiple quarters.