TCF POST Report
NEW YORK — Tapestry, Inc. (NYSE: TPR), the New York-based house of iconic handbags and lifestyle accessories built around Coach and Kate Spade New York, closed fiscal 2026 with record net sales of roughly $8.0 billion, as a 23% full-year surge at Coach more than offset continued weakness at Kate Spade.
Company’s fiscal 2026 net sales increased 14% year over year on a reported basis and 17% on a pro forma constant-currency basis. Fourth-quarter revenue reached $1.9 billion, up 9% year over year, or 11% on a pro forma constant-currency basis. Gross margin and operating margin expanded in both the quarter and full year, putting the company comfortably ahead of its own guidance.
Tapestry CEO Joanne Crevoiserat said the company’s fourth-quarter outperformance capped a year of strong growth and enabled it to achieve key financial commitments established at its Investor Day two years ahead of plan. “Our success is by design,” Crevoiserat said, pointing to the company’s Amplify strategy, disciplined execution and focus on the consumer. She said those strengths have created a stronger and more focused organization capable of delivering creativity, value and relevance at scale while building long-term shareholder value.
Coach drives the performance, expands across handbags and footwear
Coach was the clear growth engine of the group, with pro forma fiscal 2026 sales of $6.91 billion, up 23%, compared with $1.07 billion at Kate Spade, where sales declined 11%. Tapestry’s total pro forma sales were $7.99 billion, up 17%. Coach’s operating margin reached 35.8%, compared with 23.4% for Tapestry overall. Kate Spade posted a 2.5% operating loss, reflecting the brand’s ongoing reset.
Coach’s constant-currency revenue rose 14% in the fourth quarter and 23% for the full year, with growth broad-based geographically. North America increased 10% in Q4, Greater China rose 30% and Europe increased 25%.
The brand added more than 2 million new customers during the quarter and nearly 9 million during the year, with Gen Z accounting for a disproportionate share.
Handbag average unit retail increased at a mid-teens rate, while unit volumes grew at a low-double-digit rate, suggesting that growth was driven by a combination of pricing, product demand and volume rather than price increases alone.
Footwear was another important growth contributor, with sales growing at a high-teens rate, led by the Soho and Margot families. Coach increased marketing investment by about 20% behind its “Explore Your Story” and “&COACH” campaigns and a WNBA partnership.
The brand is also continuing to expand its “Expressive Luxury” store concept, with a target of reaching 80% of store traffic by fiscal 2030.
Kate Spade pursues a deliberate reset
Kate Spade’s net sales declined 7% in the fourth quarter and 11% for the full fiscal year as the brand implements a phased strategy to streamline operations and rebuild its foundation.
Management nevertheless identified several positive developments, including improved handbag performance in the Margot, 454 and Duo families.
Kate Spade acquired roughly 2 million new customers in fiscal 2026, including more than 450,000 during the fourth quarter. These customers transacted at higher average unit retail than the existing customer base.
Light-touch store renovations also improved store conversion and average transaction value. The company has appointed Jonathan Saunders as Executive Creative Director to sharpen Kate Spade’s creative direction entering fiscal 2027.
Stores remain the dominant sales channel
Tapestry’s fiscal 2026 sales mix continued to be led by physical stores, which accounted for 56% of sales. Digital represented 31%, while wholesale and other channels contributed 13%.
China and Asia-Pacific emerge as a major growth engine
Greater China and the broader Asia-Pacific region were among Tapestry’s strongest growth markets in fiscal 2026, with total APAC delivering double-digit growth alongside North America and Europe.
Greater China — mainland China, Taiwan, Hong Kong SAR and Macao SAR — was the fastest-growing regional market in the portfolio, with sales up 35% for the full year and 28% in the fourth quarter. Growth was fueled by strong new-customer acquisition and broad-based performance across channels. Management described China as a key long-term opportunity supported by strong brand positioning.
Other Asia, including Australia, Malaysia, South Korea and Singapore, grew 13% for the year and 22% in the fourth quarter, led by South Korea and Australia.
Japan was the exception, with sales declining 7% for the year and 4% in the quarter. Management characterized the decline as an intentional pullback in promotional activity rather than evidence of weaker underlying demand.
Together, Greater China and Other Asia accounted for 28% of Tapestry’s fiscal 2026 net sales by geography, comprising 17% and 11%, respectively.
Diversified sourcing becomes a strategic advantage
Tapestry describes its supply chain as a competitive advantage rather than a back-office function, built around five principal pillars.
These include global scale in sourcing, manufacturing and distribution to protect product quality and availability; a diversified geographic footprint to reduce dependence on any single country and support international expansion; operational agility to respond to demand changes and shorten lead times; AI-powered data infrastructure for demand forecasting, inventory optimization and factory allocation; and long-standing supplier relationships that help secure manufacturing capacity.
The company is also optimizing its distribution network, including a transition of fulfillment operations from Ohio to a third-party facility in Pennsylvania, which generated related one-time costs during fiscal 2026.
Trade policy remains a key consideration. Tapestry’s fiscal 2027 guidance incorporates a mid-20% tariff rate on U.S. inventory receipts. Management expects the tariff impact to be neutral year over year compared with fiscal 2026, indicating confidence that its diversified sourcing base can absorb tariff pressure without creating new earnings hit.
Fiscal 2027 outlook: slower growth, continued margin expansion
After pulling its Investor Day targets forward by two years, Tapestry is entering fiscal 2027 with a more moderate but still positive growth outlook.
The company expects fiscal 2027 revenue of $8.4 billion to $8.5 billion, with pro forma revenue growth in the mid-single digits. Coach revenue is expected to grow at a high-single-digit rate, while Kate Spade revenue is expected to decline at a high-single-digit rate.
Tapestry expects gross margin to expand by approximately 30 basis points and operating margin by 50 basis points. Diluted adjusted EPS is projected at $7.80-$7.90, while free cash flow is expected to approach $1.7 billion.
For the first quarter, the company expects high-single-digit pro forma revenue growth, low-teens Coach revenue growth and a low-double-digit decline at Kate Spade. Gross margin is expected to expand by approximately 120 basis points, with diluted adjusted EPS of about $1.55.