Coach performance propels Tapestry to double-digit annual sales and profit growth

US luxury group Tapestry, Inc. (Tapestry), the parent company of Coach and Kate Spade New York achieved double-digit top- and bottom-line growth across fourth quarter and full year. The performance for the period ending June 27, 2026, was driven by strong handbag demand at flagship brand Coach and international expansion across Asia and Europe.

For the full fiscal year 2026, net sales reached 8 billion dollars, representing a 14 percent increase on a reported basis and 13 percent in constant currency. Excluding Stuart Weitzman, which was divested during the fiscal year, pro forma net sales rose 18 percent on a reported basis and 17 percent in constant currency.

Joanne Crevoiserat, chief executive officer of Tapestry, stated: “Our fourth quarter outperformance capped a year of strong growth, as we meaningfully exceeded expectations and achieved key financial commitments we established at our Investor Day two years ahead of plan. Our success is by design, demonstrating the power of our Amplify strategy.”

Direct-to-consumer expansion and regional momentum

During the fiscal year, Tapestry added approximately 11 million new customers, with approximately 35 percent belonging to Gen Z. Direct-to-consumer (D2C) revenue increased 16 percent on a pro forma constant currency basis for the full year and 11 percent in the fourth quarter. Digital sales grew at a high-teens rate over the 52-week period, while physical store sales recorded mid-teens growth.

Leather goods performance was led by Coach, where handbag average unit retail (AUR) increased at a mid-teens percentage rate in both the fourth quarter and full year. Coach delivered double-digit revenue growth in every quarter of fiscal 2026, expanding 14 percent in the fourth quarter and 23 percent for the full year.

Geographically, on a pro forma constant currency basis, full year sales grew 15 percent in North America, 23 percent in Europe, and 19 percent across the Asia-Pacific (APAC) region. Within APAC, Greater China net sales expanded 35 percent for the full year and 28 percent in the fourth quarter.

Gross profit for the full year reached 6.23 billion dollars on a GAAP basis, compared to 5.29 billion dollars in the prior fiscal year. On a non-GAAP basis, full year gross profit stood at 6.12 billion dollars, while gross margin expanded 120 basis points to 76.6 percent. Full year operating income totaled 1.91 billion dollars on a GAAP basis. On a non-GAAP basis, operating income rose 33 percent to 1.87 billion dollars, with operating margin expanding approximately 340 basis points to 23.4 percent.

Full year GAAP earnings per diluted share stood at 7.27 dollars, compared to 0.82 dollars in fiscal year 2025. Non-GAAP earnings per diluted share reached 7.05 dollars, marking a 38 percent year-over-year (YoY) increase.

Fourth quarter operational review

In the fourth quarter of fiscal 2026, net sales totaled 1.88 billion dollars, representing an 9 percent increase on a reported basis and 8 percent in constant currency. Excluding Stuart Weitzman, pro forma net sales rose 12 percent on a reported basis and 11 percent in constant currency.

Fourth quarter GAAP gross profit reached 1.56 billion dollars. On a non-GAAP basis, gross profit reached 1.47 billion dollars, yielding a gross margin of 78.1 percent, up 180 basis points YoY. Operating income for the quarter stood at 442 million dollars on a GAAP basis, recovering from an operating loss of 583 million dollars in the prior-year quarter. Non-GAAP operating income rose 25% to 362 million dollars, with operating margin reaching 19.3 percent. GAAP diluted earnings per share for the quarter were 1.68 dollars, while non-GAAP diluted earnings per share reached 1.32 dollars, up 28 percent YoY.

Fiscal 2027 outlook

Initiating its outlook for fiscal year 2027, Tapestry projects revenue to be in the range of 8.4 billion dollars to 8.5 billion dollars, representing mid-single-digit growth on a nominal and constant currency basis; operating margin expansion of approximately 50 basis points YoY; and earnings per diluted share in the range of 7.80 dollars to 7.90 dollars, representing low-double-digit growth YoY.

For the first quarter of fiscal 2027, the group anticipates high-single-digit revenue growth on a nominal and constant currency basis against prior-year pro forma revenue, alongside diluted earnings per share of approximately 1.55 dollars.

The board of directors approved a 16 percent increase to the quarterly dividend to 0.4625 dollars per share, payable on September 21, 2026, bringing the anticipated annual dividend rate to 1.85 dollars per share. Tapestry also plans to repurchase 1.35 billion dollars of common stock under its existing authorization during fiscal 2027.