Tapestry Hits Investor-Day Targets Two Years Early
Fourth-quarter sales were $1.88 billion, up 9%, as the company met 2028 revenue, margin and EPS goals and set a $8.4 billion to $8.5 billion 2027 outlook.
Tapestry, Inc. (TPR), a house of iconic accessories and lifestyle brands consisting of Coach and Kate Spade New York, said it achieved the revenue, operating-margin and earnings-per-share targets it set at a September 2025 Investor Day two years ahead of plan, after a fiscal 2026 in which annual sales reached $8.0 billion.
The defining turn of the year was a step-down in the pace of growth in the fiscal fourth quarter ended June 27, 2026, after two quarters of faster expansion. Pro forma net sales, which exclude the divested Stuart Weitzman business, rose 12% on a reported basis and 11% in constant currency, down from 25% and 23% in the third quarter and 18% in the second. Reported net sales were $1.88 billion, up 9% from a year earlier.
Coach, the larger of the two brands, posted $1.64 billion of pro forma sales, up 15% reported and 14% in constant currency, after 31% and 29% growth in the third quarter and 25% in the second. Coach delivered double-digit revenue growth in every quarter of fiscal 2026. Kate Spade pro forma revenue was $235.1 million, down 7%, a milder decline than the 10% drop in the third quarter and 14% in the second.
Regions showed the same deceleration. North America pro forma sales were $1.15 billion, up 7%, after 20% growth in the third quarter. Greater China sales were $352.2 million, up 33% reported and 28% in constant currency, after 61% and 55% in the third quarter. Europe was $122.6 million, up 22% reported and 19% in constant currency. Japan was $105.0 million, down 11% reported and 4% in constant currency. Other Asia was $109.0 million, up 26% reported and 22% in constant currency.
Profitability still expanded. GAAP gross margin was 83.3% in the fourth quarter. Non-GAAP gross margin was 78.1%, up 180 basis points versus the year-ago quarter, attributed to about 170 basis points of operational improvement, a 60-basis-point favorable effect from the Stuart Weitzman divestiture, and a 60-basis-point negative tariff and duty impact. Non-GAAP operating margin was 19.3%, up 250 basis points, including a 50-basis-point favorable Stuart Weitzman effect. GAAP operating income was $442 million, versus an operating loss of $583 million a year earlier. Non-GAAP diluted earnings were $1.32 a share, up 28%; GAAP diluted earnings were $1.68 a share.
For the full fiscal year, net sales were $8.00 billion, up 14% reported and 13% in constant currency. Excluding Stuart Weitzman, pro forma net sales rose 18% reported and 17% in constant currency. Coach full-year pro forma sales were $6.91 billion, up 24% reported and 23% in constant currency. Kate Spade full-year pro forma sales were $1.07 billion, down 10% reported and 11% in constant currency. Non-GAAP operating margin for the year was 23.4%, up about 340 basis points. Non-GAAP diluted earnings were $7.05 a share, up 38%; GAAP diluted earnings were $7.27 a share.
More than 2.5 million new consumers joined in the fourth quarter and about 11.0 million in fiscal 2026, with about 35% of new customers Gen Z. Handbag average unit revenue at Coach increased at a mid-teens rate in both the quarter and the full year. Direct-to-consumer revenue rose 11% in the fourth quarter and 16% for the year on a pro forma constant-currency basis.
Cash flow from operations for the fiscal year was an inflow of $1.98 billion. Adjusted free cash flow was an inflow of $1.86 billion. Cash, cash equivalents and short-term investments totaled $1.15 billion at year-end; total borrowings were $2.38 billion. The company returned $1.7 billion to shareholders in fiscal 2026 through dividends and buybacks, including $1.35 billion of share repurchases. The board approved a 16% dividend increase to an anticipated $1.85 a share annually.
Tapestry is initiating a fiscal 2027 non-GAAP outlook of $8.4 billion to $8.5 billion of revenue, representing mid-single-digit growth, about 50 basis points of operating-margin expansion, and earnings of $7.80 to $7.90 a share, or low-double-digit growth. It expects adjusted free cash flow approaching $1.7 billion. For the first quarter of 2027, it expects high-single-digit revenue growth and earnings of about $1.55 a share. The outlook is consistent with its long-term commitments from the September 2025 Investor Day.