On August 13, Tapestry (NYSE:TPR) reported fiscal 2026 results that beat the three-year targets management set at its Investor Day, and did so two years ahead of schedule. Revenue climbed to $8 billion, up 17% on a pro forma constant currency basis, while earnings per share jumped 38% to $7.05. Handbags led the way, but the quarter also exposed a widening gap between Coach's momentum and Kate Spade's stalled turnaround, a split investors will be watching closely heading into fiscal 2027.
Tapestry's full-year numbers were not a one-quarter fluke. Operating margin expanded 340 basis points to more than 23%, and the company added 11 million new customers across its brands, with Gen Z shoppers leading the way. Those younger buyers tend to spend at higher average unit prices and stick around, which is why management keeps pointing to acquisition as the engine behind everything else.
Coach did the heavy lifting. Fourth-quarter constant currency revenue rose 14%, with North America up 10%, Greater China up 30%, and Europe up 25%. Handbag prices rose at a mid-teens rate for the full year while unit volumes also grew, a combination that shows the brand can raise prices without scaring off shoppers. Footwear grew at a high-teens clip in the quarter, and management still sees a path for Coach to become a $10 billion brand.
That growth is translating into cash. Tapestry returned $1.7 billion to shareholders in fiscal 2026 and plans to return the same amount in fiscal 2027, backed by a 16% dividend increase to an annualized $1.85 per share. Leverage sits at 1.1 times adjusted EBITDA, more than a full turn below the company's own 2.5 times ceiling, leaving room to keep buying back stock while it invests in stores.
Kate Spade remains the drag on the story. Management itself called the brand's top-line progress "more gradual than we planned," and unaided brand awareness still has not improved despite a marketing push. Guidance for fiscal 2027 calls for a high single-digit revenue decline at Kate Spade and a modest operating loss, with new hires in marketing and creative meant to fix a problem that has outlasted earlier attempts.
#fiscal #revenue #full
Tapestry's full-year numbers were not a one-quarter fluke. Operating margin expanded 340 basis points to more than 23%, and the company added 11 million new customers across its brands, with Gen Z shoppers leading the way. Those younger buyers tend to spend at higher average unit prices and stick around, which is why management keeps pointing to acquisition as the engine behind everything else.
Coach did the heavy lifting. Fourth-quarter constant currency revenue rose 14%, with North America up 10%, Greater China up 30%, and Europe up 25%. Handbag prices rose at a mid-teens rate for the full year while unit volumes also grew, a combination that shows the brand can raise prices without scaring off shoppers. Footwear grew at a high-teens clip in the quarter, and management still sees a path for Coach to become a $10 billion brand.
That growth is translating into cash. Tapestry returned $1.7 billion to shareholders in fiscal 2026 and plans to return the same amount in fiscal 2027, backed by a 16% dividend increase to an annualized $1.85 per share. Leverage sits at 1.1 times adjusted EBITDA, more than a full turn below the company's own 2.5 times ceiling, leaving room to keep buying back stock while it invests in stores.
Kate Spade remains the drag on the story. Management itself called the brand's top-line progress "more gradual than we planned," and unaided brand awareness still has not improved despite a marketing push. Guidance for fiscal 2027 calls for a high single-digit revenue decline at Kate Spade and a modest operating loss, with new hires in marketing and creative meant to fix a problem that has outlasted earlier attempts.
#fiscal #revenue #full
9 days ago
