Loading...
01/11 04:03
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue Tapestry delivered $7 billion in revenue for fiscal 2025, representing a 5% year-over-year growth. Coach, a key brand, achieved a 10% increase in revenue, with notable growth in North America (16%), China (22%), and Europe (12%). The growth was driven by strong customer acquisition, particularly among Gen Z and millennials, and increased sales in leather goods and footwear.
Operating Margin The operating margin for fiscal 2025 was 20%, showing improvement due to operational efficiencies and increased average unit retail (AUR). AUR growth contributed to approximately two-thirds of the margin improvement, while the rest came from cost reductions.
Earnings Per Share (EPS) Adjusted EPS for fiscal 2025 was $5.10, reflecting a 19% year-over-year increase. This growth was attributed to revenue growth, gross margin expansion, and disciplined expense management.
Gross Margin The gross margin for the fourth quarter was 76.3%, an increase of 140 basis points year-over-year. This improvement was driven by AUR growth and operational efficiencies.
Customer Acquisition Tapestry acquired over 6.8 million new customers in North America during fiscal 2025, with Coach alone adding 4.6 million new customers. Approximately 70% of these new customers were Gen Z and millennials, who demonstrated higher retention rates and higher AUR.
Kate Spade Revenue Kate Spade's revenue decreased by 13% in the fourth quarter of fiscal 2025. The decline was attributed to the brand's ongoing reset and strategic reinvestments in marketing and product innovation.
Free Cash Flow Adjusted free cash flow for fiscal 2025 was $1.35 billion, supported by strong operational performance and disciplined capital allocation.
Inventory Levels Inventory levels at the end of fiscal 2025 were 4% higher than the previous year, excluding $92 million of Stuart Weitzman inventory. This increase was due to strategic pull-forward of receipts in response to trade dynamics.
Coach's product innovation: Coach introduced new styles within the New York family, expanded the Brooklyn and Empire collections, and grew the Coach Originals collection with a Large Kisslock bag priced at $695, which sold out quickly.
Handbag and accessories growth: Coach achieved mid-teens handbag AUR growth globally, with strong performance in North America. The Tabby family and New York family were key drivers.
Footwear business: Coach's sneakers, particularly the High Line and Soho families, grew mid-single digits, appealing to Gen Z consumers.
Global growth: Tapestry achieved $7 billion in revenue, with strong performance in North America, China, and Europe. Coach's revenue grew 10%, with double-digit growth in these regions.
Customer acquisition: Coach acquired over 4.6 million new customers in North America, with 70% being Gen Z and millennials.
Omnichannel experiences: Tapestry enhanced direct-to-consumer growth through digital and brick-and-mortar channels, leveraging a modern technology platform.
Gross margin improvement: Achieved a record gross margin of 76.3% in Q4, driven by operational efficiencies and AUR growth.
Kate Spade turnaround: Focused on resetting the brand for durable growth by simplifying handbag offerings, reducing styles by 30%, and targeting Gen Z with campaigns featuring Ice Spice and Charli D'Amelio.
Stuart Weitzman sale: Completed the sale of Stuart Weitzman to Caleres, aligning with portfolio management strategy.
Macroeconomic Uncertainty: The company acknowledges operating in a rapidly evolving and uncertain macroeconomic landscape, which could impact consumer spending and overall business performance.
Tariff and Duty Impacts: The company faces significant profit headwinds from tariffs and duties, with an expected $160 million impact on profitability in fiscal year 2026. This represents a 230 basis point margin headwind.
Kate Spade Turnaround Challenges: Kate Spade is undergoing a brand reset, which is expected to pressure revenue and profitability in fiscal year 2026. The brand also faces outsized impacts from tariffs and duties, as the majority of its business is in the U.S.
Consumer Behavior in Japan: Sales in Japan declined by 11% due to a challenging consumer backdrop, which could continue to affect performance in this region.
Inventory Management: The company has strategically pulled forward inventory receipts due to trade landscape uncertainties, which could lead to potential overstock or inefficiencies.
Regulatory and Policy Changes: The earlier-than-expected ending of de minimis exemptions has added to tariff-related challenges, increasing operational complexity and costs.
Brand Investment Risks: Increased marketing expenses and investments in brand-building, particularly for Kate Spade, may not yield immediate returns, adding pressure to short-term financial performance.
Revenue Growth: Tapestry expects revenue to approach $7.2 billion in fiscal 2026, representing mid-single-digit growth on both a nominal and constant currency basis. By region, North America is expected to grow mid-single digits, Europe by approximately 20%, Greater China by high single digits, Japan to decline by high single digits, and other Asia to grow by high single digits.
Brand-Specific Projections: Coach is expected to achieve high single-digit growth at constant currency, while Kate Spade is projected to see a high single-digit revenue decline with sequential improvement in the second half of the year.
Operating Margin: Operating margins are expected to expand, with gross margin anticipated to decline by 70 basis points due to a 230 basis point headwind from tariffs and duties. Operational gross margin is expected to expand by 120 basis points, offset by FX headwinds and tariff impacts.
Earnings Per Share (EPS): EPS is projected to be between $5.30 and $5.45, representing 4% to 7% growth compared to last year, despite over $0.60 of tariff and duty headwinds.
Capital Allocation: Tapestry plans to return over $1 billion to shareholders in fiscal 2026, including $800 million in share repurchases and a 14% increase in the quarterly dividend to an annual rate of $1.60 per share.
Free Cash Flow and CapEx: Adjusted free cash flow is expected to approach $1.3 billion, with CapEx and cloud computing costs projected at $200 million, primarily for store openings, renovations, and IT/digital investments.
Tariff and Duty Mitigation: The company is addressing $160 million in tariff and duty headwinds through supply chain optimization and efficiency improvements, with a goal to mitigate 30% of the annualized run rate of $235 million.
First Quarter Projections: For Q1 fiscal 2026, revenue is expected to grow by low double digits, with gross margins increasing by approximately 100 basis points and EPS forecasted to grow by more than 20% to approximately $1.25.
Dividend Payments: In fiscal '25, Tapestry returned $300 million to shareholders through dividend payments.
Dividend Increase: The Board authorized a 14% quarterly dividend increase for fiscal '26, with an anticipated annual rate of $1.60 per share.
Share Repurchase Program: Tapestry executed a $2 billion accelerated share repurchase program in fiscal '25, with an average purchase price of about $78 per share.
Future Share Repurchase Plans: The company plans to repurchase $800 million in shares during fiscal '26.
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.
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.
The earnings call shows strong financial performance with revenue and EPS exceeding expectations, and significant shareholder returns through dividends and buybacks. Despite competitive and regulatory challenges, the company’s strategic focus on Gen Z and Millennials, and robust brand performance, particularly Coach, are positive. The optimistic guidance and strategic initiatives like the One Coach strategy further bolster sentiment. However, some uncertainty remains due to unclear responses on tariff impacts. Overall, the positive elements outweigh the negatives, suggesting a potential 2% to 8% stock price increase.
The earnings call summary indicates strong financial performance with an 8% revenue increase, 27% EPS growth, and a robust cash flow, despite a few challenges such as competitive pressures and brand performance risks. The optimistic guidance, increased shareholder returns, and strategic brand initiatives contribute to a positive sentiment. The Q&A section provided additional insights into strong performance drivers and strategic mitigations, reinforcing a positive outlook. Although some uncertainties remain, the overall sentiment is positive, suggesting a potential stock price increase of 2% to 8% over the next two weeks.
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.
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.
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.
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.
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.
