Aug 13 - Tapestry delivered quarterly adjusted earnings that topped analyst estimates and provided an upbeat profit outlook for the fiscal year, driven mainly by sustained demand for Coach handbags among affluent and younger shoppers.
The New York-based fashion group said it expects to repurchase $1.35 billion of its stock during the fiscal year and signaled that both revenue and earnings for the current quarter will come in above Wall Street forecasts. Management has reduced promotional activity and refocused marketing toward younger consumers as part of a strategy to expand Coach's market share.
Newer product lines, notably the Tabby and the Belted Ergo shoulder bags, were cited as contributors to the brand's growth. By contrast, Kate Spade continued to report weak sales relative to other parts of the portfolio.
Regionally, revenue gains were broad-based. North America, Tapestry's largest market, posted a 7% increase on a constant currency basis. China produced a 28% rise and Europe recorded a 19% increase versus the prior year.
"The North American consumer remains resilient and constructive, and it’s a big part of our business and one of our relative strengths," finance chief Scott Roe said.
For the fiscal year ending June 2027, Tapestry set an earnings-per-share range of $7.80 to $7.90. The midpoint of that range sits slightly above analysts’ consensus of $7.84 per share, according to data compiled by LSEG. For the first quarter, the company sees revenue growing in the high single digits and anticipates profit of about $1.55 per share, compared with analysts’ estimates of 5.5% revenue growth and $1.49 per share.
Tapestry’s gross margin widened by 180 basis points to 78.1% in the quarter, a change the company attributed in part to sequential price increases taken in prior quarters.
On a per-share basis, adjusted earnings for the fourth quarter were $1.32, beating consensus estimates of $1.28. Quarterly sales rose 8.9% to $1.88 billion from a year earlier, which matched analysts’ expectations.
Annual revenue guidance was set in a band of $8.4 billion to $8.5 billion; the midpoint of that range is slightly below the $8.46 billion analysts had projected.
Context and implications
- Management is reducing promotional activity and reallocating marketing to younger demographics to accelerate share gains for Coach.
- Product innovation such as the Tabby and Belted Ergo lines has supported the brand’s momentum; however, Kate Spade remains a relative underperformer.
- Regional strength, particularly in China and Europe, supplemented a resilient North American consumer base to drive quarterly results.