Tapestry, Inc. (TPR) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a positive outlook with strong financial metrics, despite Kate Spade's decline. Operating margin and EPS growth are robust, and Coach's growth and innovation strategies are promising. The Q&A section highlights management's confidence in sustainable growth and effective strategies for customer acquisition and retention. Positive factors like increased shareholder returns and a focus on marketing investments further support a positive sentiment. However, lack of specific market cap data limits precise prediction, but overall, the stock is likely to see a positive movement of 2% to 8%.
Key Financial Performance
Pro Forma Revenue Grew 23% at constant currency year-over-year. This growth was attributed to the Amplify strategy, which focuses on consumer insights and actions at scale.
Operating Margin Expanded by 490 basis points year-over-year. This was driven by disciplined growth and structural advantages.
Earnings Per Share (EPS) Increased by 62% year-over-year. This growth exceeded expectations and was supported by strong operational performance.
Coach Revenue Increased by 29% at constant currency year-over-year. Growth was driven by customer acquisition, particularly among Gen Z, and strong performance in core leather goods.
North America Revenue Increased by 20% year-over-year, with Coach revenue growing by 27%. Growth was fueled by market share gains and operating margin expansion.
Greater China Revenue Increased by 55% year-over-year. Growth was driven by accelerated customer acquisition and strong performance during the Chinese New Year holiday.
Europe Revenue Increased by 21% year-over-year. Growth was driven by strong new customer acquisition, particularly among Gen Z, and local consumer spending.
Gross Margin Improved by 80 basis points year-over-year to 76.9%. This was driven by operational expansion and the divestiture of Stuart Weitzman, offsetting tariff and duty headwinds.
Marketing Spend Increased by approximately 50% year-over-year. This investment focused on brand building and customer acquisition, particularly among Gen Z.
Kate Spade Revenue Declined by 11% year-over-year. The decline was attributed to a strategic pullback in promotions at retail.
Footwear Growth Increased by approximately 20% year-over-year. Growth was driven by the success of the Soho family sneakers.
Inventory Levels Decreased by 3% year-over-year. Inventory remains current and well-positioned globally.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Fashion innovation and product excellence: Coach accelerated growth in core leather goods, with higher AUR and unit volume. The Tabby franchise and New York family (Brooklyn, Empire, Chelsea) drove strong Gen Z acquisition. Footwear growth of 20% was fueled by sneakers, particularly the Soho family.
Handbag blockbusters: Kate Spade's Duo and Margot handbags outperformed, with strong Gen Z recruitment and higher AUR. The Duo Mini, seen on Kendall Jenner, sold out in stores and online.
Global growth: Double-digit gains in North America, Greater China, and Europe, with market share growth in each region. Greater China revenue rose 55%, North America 20%, and Europe 21%.
Customer acquisition: Tapestry acquired 2.4 million new customers globally, with a significant increase in Gen Z. Coach welcomed 2 million new customers, and Kate Spade added 400,000 new customers.
Direct-to-consumer (DTC) model: DTC sales grew 23%, with digital sales up 25% and brick-and-mortar sales up over 20%. This model enabled strong profitability and customer insights.
Marketing investments: Marketing spend increased by 50%, focusing on top-of-funnel brand building. Campaigns like 'Explore Your Story' and collaborations with CLOT in China drove cultural relevance and customer acquisition.
Brand desirability and retail experiences: Coach rolled out new expressive luxury store concepts globally, opened Coach play stores, and expanded Coach coffee shops. These efforts increased traffic and engagement, especially with Gen Z.
Operational discipline and profitability: Operating margin expanded 490 basis points, with gross margin at 76.9%. Tapestry raised its fiscal year outlook, expecting revenue of $7.95 billion and EPS of $6.95.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Middle East Disruption: The ongoing disruption in the Middle East, while currently representing less than 1% of sales, is being closely monitored for potential impacts on the business.
Tariff and Duty Headwinds: Tariffs and duties are creating a significant headwind, with a 150 basis point negative impact on Coach's gross margin and a 440 basis point negative impact on Kate Spade's gross margin.
Kate Spade Performance: Kate Spade experienced an 11% revenue decline in Q3, with top-line trends falling below expectations. The brand is undergoing a turnaround, which is taking time and facing challenges in execution and scaling marketing efforts.
Japan Market Decline: Sales in Japan declined by 10%, driven by an intentional pullback in promotions, which could impact market share and revenue growth.
Marketing Investments: Increased marketing spend, while necessary for brand building, represents a significant cost and could pressure margins if not yielding expected returns.
Regulatory and Trade Policy Risks: The business is exposed to risks from U.S. trade policies and potential changes in tariffs, which could further impact costs and profitability.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Revenue Expectations: Tapestry raised its full-year revenue guidance to approximately $7.95 billion, representing 16% pro forma growth in constant currency. By region, North America is expected to grow mid-teens, Europe by 20%, Greater China by over 30%, Japan to decline high single digits, and Other Asia to grow low double digits. By brand, Coach is expected to grow over 20%, while Kate Spade is expected to decline low double digits.
Operating Margin Projections: The company expects an operating margin of approximately 23% for fiscal 2026, up 300 basis points from last year and 120 basis points above prior guidance.
Gross Margin Projections: Gross margin is expected to increase by approximately 110 basis points, driven by operational expansion and improvements in AUR, offsetting tariff and FX headwinds.
EPS Guidance: Earnings per share (EPS) is projected to be approximately $6.95 for fiscal 2026, representing over 35% growth compared to last year.
Capital Expenditures: CapEx and cloud computing costs are expected to be around $200 million, with 60% allocated to store openings, renovations, and relocations, and the remainder for IT and digital investments.
Free Cash Flow: Adjusted free cash flow is anticipated to approach $1.6 billion for fiscal 2026.
Marketing Investments: Marketing expenses are expected to increase by 190 basis points, approaching 13% of revenue, to support long-term growth and brand building.
Coach Brand Projections: Coach is expected to achieve over 20% growth, with a focus on leather goods, footwear, and Gen Z customer acquisition. The brand aims to become a $10 billion brand over time with best-in-class margins.
Kate Spade Brand Projections: Kate Spade is expected to experience a low double-digit revenue decline in fiscal 2026 but is focused on long-term sustainable growth through marketing, product innovation, and omnichannel experiences.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Quarterly Dividend: Declared a quarterly cash dividend of $0.40 per common share, representing $81 million in dividend payments for the quarter.
Annual Dividend: Expected to return over $300 million in dividend payments for fiscal '26, with an annual rate of $1.60 per share.
Share Repurchase Program: Repurchased $150 million worth of stock in the third quarter, totaling $1.05 billion year-to-date, with an average stock price of approximately $112.
Fiscal '26 Share Repurchase Plan: Increased share repurchase outlook to $1.3 billion from $1.2 billion, aiming to return approximately $1.6 billion to shareholders through dividends and share repurchases.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Can you help us think about the growth trajectory for FY '27 and beyond?
A:Joanne Crevoiserat emphasized that Tapestry is just getting started, with a focus on durable growth defined as mid-single-digit revenue growth as a floor. She highlighted the company's transformation into a consumer-obsessed organization, investments in product innovation, marketing, and new store formats, and structural advantages such as high margins and strong free cash flow. She expressed confidence in achieving long-term growth opportunities.
Q:What are the growth expectations for Coach next year and beyond?
A:Scott Roe stated confidence in mid-single-digit growth at the Tapestry level, underpinned by at least mid-single-digit growth at Coach. He cited AUR growth, new customer acquisition, and new door expansions as key drivers. Todd Kahn added that Coach's strategies, including targeting Gen Z and Gen Alpha, product innovation, and significant marketing investments, position the brand for sustainable growth and achieving a $10 billion goal at best-in-class margins.
Q:Could you elaborate on the compounding flywheel effect of new customer acquisition at the Coach brand?
A:Joanne Crevoiserat explained that new customer acquisition is fueling growth, with higher retention rates and increased frequency of purchases. She highlighted the importance of capturing first luxury bag purchases, driving higher lifetime value, and the reverse influence of younger generations on all demographics. This compounding effect drives brand heat, higher gross margins, and reinvestment in marketing and store experiences.
Q:What does 'we're just getting started' mean for operational gross margin drivers?
A:Scott Roe discussed drivers such as AUR growth, innovative product offerings, and efficient supply chain operations. He emphasized structural advantages like international growth and the One Coach initiative. He also highlighted operational margin leverage through significant marketing investments and efficient cost management.
Q:How do you balance innovation with core franchises in a dynamic environment?
A:Todd Kahn emphasized the importance of consumer-focused design, data-driven insights, and amplifying major product families like the Tabby and New York franchises. He highlighted intentional product drops and the stability of the creative team as key factors in balancing innovation with core franchises.
Q:What is driving growth in Europe for Coach?
A:Todd Kahn attributed growth in Europe to the brand's expressive luxury positioning, authenticity, and consumer engagement strategies. He highlighted the success of initiatives like the Rexy mascot celebration at Selfridges and the potential for further expansion across European markets.
Q:What drives the deceleration in Coach's growth from high 20s to low teens quarter-to-date?
A:Scott Roe explained that the deceleration is due to calendar dynamics, including the earlier timing of Lunar New Year and Easter, as well as the exceptional sell-through of new seasonal products like the pink signature collection in Q3, which shifted some sales from Q4 to Q3. Despite this, the company raised its guidance for Q4.
Q:What does the North America algorithm look like as Gen Z becomes a larger share of the existing customer base?
A:Joanne Crevoiserat stated that the compounding benefits of new customer acquisition and higher retention rates among Gen Z will continue to power growth. She emphasized the importance of staying close to consumer preferences and maintaining a focus on new customer acquisition to drive long-term growth.
Q:What are you seeing in terms of inflation and its impact on pricing?
A:Scott Roe noted modest cost pressures from fuel surcharges but no significant inflation in raw materials like leather. He stated that the company is monitoring the situation closely but has not seen major impacts on pricing.
Q:What are the results of the expressive luxury store concept?
A:Todd Kahn reported increased productivity in stores with the expressive luxury format, which includes features like craftsmanship bars and coffee shops. These elements enhance customer engagement and linger time, contributing to higher overall store performance.
Q:Review of Unclear Management Responses
A:No questions were identified where management avoided giving a direct answer or lacked clarity in their responses.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AUR Mini
AUR currency
America Greater
Amplify consumer
CEO standout
CLOT world
Chelsea Gen
China Europe
China celebration
Coach core
Coach leather
Coach relevancy
Coach visibility
DTC model
Elle Fanning
Gen acquisition
Gen consumer
activation
advantage future
advantage strength
blend
community
compounding benefit
concept
consumer insight
content
core leather
creativity value
customer base
desire
engagement
focus consumer
handbag blockbuster
increase Gen
lift
location Coach
passion
potential
relationship
shop
spade
strength brand
traction
understanding
unit volume
TPR Transcript
Tapestry, Inc. (TPR) Q3 2026 Earnings Call Transcript
Positive5-7
The earnings call presents a positive outlook with strong financial metrics, despite Kate Spade's decline. Operating margin and EPS growth are robust, and Coach's growth and innovation strategies are promising. The Q&A section highlights management's confidence in sustainable growth and effective strategies for customer acquisition and retention. Positive factors like increased shareholder returns and a focus on marketing investments further support a positive sentiment. However, lack of specific market cap data limits precise prediction, but overall, the stock is likely to see a positive movement of 2% to 8%.
Tapestry, Inc. (TPR) Q2 2026 Earnings Call Transcript
Positive2-5
The earnings call summary highlights strong financial performance, with significant revenue growth in key regions and brand momentum. The Q&A section reveals management's confidence in sustaining growth through strategic initiatives like AI implementation and customer acquisition. Despite some unclear responses, the overall sentiment is positive, supported by increased shareholder returns and operational discipline. The positive guidance and strong regional performance suggest a favorable stock price movement in the short term.
Tapestry, Inc. (TPR) Q1 2026 Earnings Call Transcript
Positive11-6
The earnings call reflects a positive outlook with strong financial metrics, optimistic guidance, and strategic growth plans. Revenue and EPS are projected to grow, operating margins are expected to expand, and there is a significant shareholder return plan. The Q&A section reinforces confidence in sustained growth, especially for Coach, despite some uncertainties in market penetration and discounting impacts. Overall, the positive elements outweigh the concerns, suggesting a positive stock price movement.
Tapestry, Inc. (TPR) Q4 2025 Earnings Call Transcript
Positive8-14
The earnings call reveals a positive sentiment with strong financial performance, customer acquisition, and strategic brand development. Despite tariff challenges, management is confident in their mitigation strategies and operating margin expansion. Positive guidance on EPS and share repurchase plans further enhance investor sentiment. However, the lack of detailed plans for tariff impact mitigation and reliance on general confidence could temper enthusiasm slightly. Overall, the combination of strong growth, optimistic guidance, and shareholder returns suggest a likely positive stock price reaction.
TPR Slides
Tapestry Q2 2026 slides: Coach powers 18% revenue growth, outlook raised2026-02-05
Tapestry Q1 FY26 slides: Record revenue and raised outlook, stock falls despite results2025-11-06
Tapestry FY25 slides: Record results amid Coach strength, Kate Spade challenges2025-08-14
Tapestry Q3 FY25 slides: Coach drives 8% revenue growth, guidance raised2025-05-08
TPR Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
