Key Highlights

  • Fourth-quarter EPS of $1.32 beat the $1.26 estimate by 4.76 percent, on Revenue of $1.9 billion that essentially matched the $1.9 billion estimate.
  • Fiscal 2026 revenue reached $8 billion, up 17 percent on a pro forma constant currency basis, with Operating Margin expanding 340 basis points to over 23 percent and EPS rising 38 percent to $7.05.
  • Coach delivered 14 percent constant currency revenue growth in the quarter, adding over 2 million new customers, with Greater China up 30 percent and Europe up 25 percent.
  • The board approved a 16 percent Dividend increase to $1.85 annualized per share, alongside a planned $1.35 billion in share repurchases for fiscal 2027.

Coach's Global Momentum Carries the Quarter

Tapestry Inc. (NYSE:TPR) closed fiscal 2026 by clearing the three-year revenue, operating margin, and EPS targets it set at its last Investor Day two full years ahead of schedule, a milestone management repeatedly emphasized reflects the strength of the underlying Business rather than a single strong quarter. Fourth-quarter revenue grew 11 percent on a constant currency basis, with Coach once again doing the heavy lifting through 14 percent constant currency growth and continued profitability gains.

Regional strength was broad-based, with North America up 10 percent, Greater China up 30 percent, and Europe up 25 percent, driven by new customer Acquisition skewed toward Gen Z consumers who transact at higher average unit retail prices than the existing customer base. Coach welcomed roughly 2 million new customers in the quarter and nearly 9 million for the full year, a scale of acquisition management argues extends Brand relevance across generations rather than being confined to younger shoppers alone.

Margin Expansion Continues Despite Tariff Pressure

Gross margin reached 78.1 percent in the quarter, up 180 basis points year over year, aided by operational efficiency gains and a favorable mix shift from the Stuart Weitzman divestiture, which together more than offset a roughly 60 basis point tariff and duty headwind. Operating margin expanded 250 basis points, driving a 25 percent increase in Operating Income that exceeded the company's own expectations heading into the quarter.

Marketing spend rose approximately 20 percent year over year to roughly 14 percent of sales, reflecting a deliberate shift toward brand-building campaigns such as the Four Letters platform rather than pure customer acquisition tactics. That Investment level, management noted, still delivered Leverage elsewhere in the cost structure, though sustaining double-digit Marketing growth alongside margin expansion will require continued execution as tariff rates are expected to remain in the mid-20s percent range through fiscal 2027.

Kate Spade Progress Remains Gradual

Kate Spade's turnaround continued at a slower pace than the rest of the portfolio, with management describing fiscal 2026 top-line progress as more gradual than planned even as the brand welcomed roughly 450,000 new customers in the quarter transacting at higher average unit retail prices. The company brought on a new chief marketing officer and executive creative director during the year, signaling continued investment in brand rebuilding rather than a near-term pivot to aggressive growth.

For fiscal 2027, guidance embeds a high single-digit revenue decline at Kate Spade alongside a modest operating loss, reflecting management's stated priority of strengthening brand desirability and product assortment before scaling the business further. That contrasts with Coach's expected high single-digit growth and operating margin near 36 percent, underscoring how uneven the two brands' trajectories remain within the same portfolio.

Fiscal 2027 Guidance Reflects Confidence From a Higher Base

Tapestry guided fiscal 2027 revenue to $8.4 billion to $8.5 billion, representing mid-single-digit growth, with EPS expected between $7.80 and $7.90, a low double-digit increase. Management indicated Coach's first-quarter guidance of low-teens revenue growth does not need to be sustained for the full year to hit annual targets, suggesting the company is building in a deliberately conservative cadence for the back half against tougher comparisons. The outlook assumes a roughly net-neutral tariff impact after mitigating actions and continued investment in the store fleet, including 40 to 50 net new Coach doors globally. Execution risk centers on whether international growth in China and Europe can continue at its current pace as those markets mature, and whether Kate Spade's brand-rebuilding investments begin translating into stabilized top-line performance beyond the near-term decline embedded in guidance.