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TAPESTRY, INC. (TPR)·Q1 2026 Earnings Summary

Executive Summary

  • Record Q1 FY26 results and a beat-and-raise: revenue $1.70B (+13% YoY; +12% cc), non-GAAP EPS $1.38 (+35% YoY), with gross margin expansion to 76.5% and non-GAAP operating margin to 20.9% . Consensus was $1.64B revenue and $1.26 EPS; both were exceeded*.
  • Coach led performance: +22% reported revenue (21% cc), broad-based strength across NA (+18% pro forma cc), Europe (+32%), Greater China (+19%), and DTC up mid-teens; Kate Spade declined 8% as reset continues .
  • Guidance raised: FY26 revenue to ~$7.3B (from “approach $7.2B”), non-GAAP EPS to $5.45–$5.60 (from $5.30–$5.45), gross margin decline improved to ~50bps (from ~70bps), while maintaining net interest ($65M) and tax (~18%) .
  • Capital return catalyst: buybacks increased to ~$1.0B (from $800M); $500M repurchased in Q1 at ~$106/share; dividend maintained at $1.60/year . Near-term Q2 shaping: pro forma sales +~7%, EPS ~$2.15, operating margin +~80bps despite tariff headwinds .

What Went Well and What Went Wrong

What Went Well

  • Coach momentum: +22% reported (+21% cc) to $1.43B, with mid-teens handbag AUR and unit growth, double-digit footwear, and strong Gen Z acquisition; “we're winning… driving sustainable compounding growth” (CEO) .
  • Margin leverage: non-GAAP gross margin 76.5% (+120bps YoY) and operating margin 20.9% (+200bps YoY), driven by operational improvements (+170bps) and Stuart Weitzman divestiture (+70bps) .
  • Strong DTC and new customers: pro forma DTC revenue +16% cc, mid-teens growth in digital and stores; 2.2M new customers globally, ~35% Gen Z share .

What Went Wrong

  • Tariff/duty headwinds: 230bps gross margin headwind embedded for FY26 ($170M impact), including de minimis elimination; mitigation plans underway but phased .
  • Kate Spade reset: revenue down 8%, with intentional discount reduction pressuring top-line; brand KPIs improving but turnaround will take time (profit loss expected for FY26) .
  • Japan softness: Q1 pro forma sales down 7–10% cc amid challenging consumer backdrop; FY26 guide embeds high-single-digit decline .

Financial Results

Quarterly trends (oldest → newest)

MetricQ3 2025Q4 2025Q1 2026
Revenue ($USD Billions)$1.5846*$1.7232*$1.7046
Non-GAAP Diluted EPS ($)$1.03 $1.04 $1.38
Gross Margin (%)76.1% 76.3% 76.5% (non-GAAP)

Values retrieved from S&P Global*

Q1 FY26 vs estimates

MetricConsensus*ActualSurprise
Revenue ($USD Billions)$1.6375*$1.7046 +$0.0671
Non-GAAP EPS ($)$1.2609*$1.38 +$0.12

Values retrieved from S&P Global*

Q1 FY26 income statement and cash metrics

MetricQ1 FY26Q1 FY25
Net Sales ($USD Billions)$1.7046 $1.5075
Gross Profit ($USD Billions)$1.3005 $1.1349
Gross Margin (%)76.3% (GAAP) 75.3% (GAAP)
SG&A ($USD Billions)$0.9723 $0.8829
Operating Income ($USD Millions)$328.2 (GAAP) $252.0 (GAAP)
Non-GAAP Operating Income ($USD Millions)$353.9 $285.4
GAAP Diluted EPS ($)$1.28 $0.79
Non-GAAP Diluted EPS ($)$1.38 $1.02
Operating Cash Flow ($USD Millions)$112.6 $119.5
Adjusted Free Cash Flow ($USD Millions)$102.7 $41.0

Segment breakdown (Q1 FY26)

BrandRevenue ($USD Millions)YoY % (reported)Notes
Coach$1,429.8 +22% +21% cc; led the quarter
Kate Spade$260.2 -8% Reset underway
Stuart Weitzman$14.6 -73% Divested Aug 4, 2025
Total Tapestry$1,704.6 +13% 12% cc

Pro forma revenue by region (ex-Stuart Weitzman, Q1 FY26)

RegionRevenue ($USD Millions)YoY % (reported)YoY % (cc)
North America$1,068.8 +18% +18%
Greater China$269.1 +20% +19%
Japan$108.5 -7% -10%
Other Asia$90.5 +4% +3%
Europe$125.2 +39% +32%
Other$27.9 +4% +4%
Tapestry Pro Forma$1,690.0 +16% +16%

KPIs and balance sheet (Q1 FY26)

KPIValue
New customers acquired (global)>2.2M; ~35% Gen Z
DTC growth (pro forma cc)+16%; mid-teens growth in digital and stores
Handbag AURMid-teens increase; North America-led
Cash & ST investments$743.2M
Total borrowings$2.64B (incl. $240M CP)
Net debt (CFO calc)~$1.9B
Leverage ratio1.5x (gross debt/TTM Adj. EBITDA)
Inventory$1.0186B (~-1% YoY)
CapEx + cloud costs$38M
Share repurchases$500M; >4.7M shares at ~$106 avg
Dividend$0.40/quarter; $1.60 annual
Diluted shares (quarter)215.5M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY26“Approach $7.2B”; pro forma mid-single-digit growth; FX tailwind ~80bps ~$7.3B; pro forma +7–8% nominal; FX tailwind ~70bps Raised (revenue); FX tailwind lowered
EPS (non-GAAP)FY26$5.30–$5.45 $5.45–$5.60 Raised
Operating marginFY26Above prior year ~+50bps vs prior year Clarified (maintained up)
Gross marginFY26~-70bps vs prior year ~-50bps vs prior year Raised (less decline)
Net interest expenseFY26~$65M ~$65M Maintained
Tax rateFY26~18% ~18% Maintained
Diluted share countFY26~213M ~212M Lowered
Adjusted FCFFY26“Approach $1.3B” ~$1.3B Slightly raised
Share repurchasesFY26~$800M ~$1,000M Raised
DividendFY26$1.60 annual $1.60 annual Maintained
Q2 revenueQ2 FY26N/APro forma +~7% (FX +~50bps) New
Q2 EPSQ2 FY26N/A~$2.15; tax ~20% New
Q2 marginsQ2 FY26N/AGM ~-50bps (tariffs); SG&A leverage >100bps; OM +~80bps New
RegionalFY26China high-single-digit; NA mid-single-digit; Europe ~20% China low-double-digit; NA mid-to-high single-digit; Europe ~20%; Japan -HSD; Other Asia +HSD China raised; NA raised

Earnings Call Themes & Trends

TopicQ3 FY25 (Prev)Q4 FY25 (Prev)Q1 FY26 (Current)Trend
AUR vs unitsMid-teens AUR; units rising; GM 76.1% Record GM 76.3%; AUR key lever; units to grow Mid-teens AUR with unit inflection; continued gains expected Strengthening
Tariffs/de minimisFY25 immaterial; supply chain agile FY26 headwind ~$160M; de minimis early end; mitigation plans FY26 headwind ~$170M (230bps); confidence in offset over time Headwinds known, mitigations progressing
Coach Europe expansion+35% in Q3; underpenetrated Deliberate wholesale pruning +39% reported (+32% cc); “tipping point” Accelerating
Kate Spade turnaroundGM expansion; discount reduction Non-cash impairment; FY26 profit loss -8% revenue; KPIs improving; sequential H2 improvement; profitable growth FY27 Early green shoots, top-line pressured
DTC omnichannelDigital ~30% of revenue; mid-teens growth Stores as profit centers; expansion ahead DTC +16% pro forma cc; profitability rising; mid-teens in digital and stores Sustained strength
One Coach strategySneakers unified pricing; outlet presentation More collection into outlet at full price Collection product in outlet expanding; lifts AUR globally Scaling
New customer acquisitionNA +1.2M in Q3; Gen Z focus QTD acceleration; higher Gen Z retention >2.2M global; 1.7M Coach; higher AUR & retention Compounding
Marketing investmentApproaching 10% of sales 13% in Q4; MAP spend rising ~11% of sales in Q1; sustained “spike & sustain” Elevated, targeted

Management Commentary

  • CEO: “Our first quarter outperformance marked a powerful start… achieving revenue and earnings increases ahead of expectations… we are raising our full year outlook” .
  • CFO: “Operating margin expanded 200 bps… adjusted EPS $1.38, +35%… confident in offsetting tariff/duty impacts fully over time” .
  • Coach CEO: “We feel very good about our growth potential… not only will we comp the comp, but the path to $10 billion is well within our sights” .

Q&A Highlights

  • Sustainability of Coach growth: structural advantages, new customer acquisition at higher AURs, unit inflection; prudent guide with potential upside if unit momentum persists .
  • Gross margin shape: FY guide improved by ~20bps; Q2 GM down ~50bps purely from tariffs; long-term confidence in GM growth into 2027 .
  • AUR moderation risk: multiple levers (innovation, discount discipline, One Coach outlet strategy) and AUC efficiency to protect margins even if AUR slows .
  • Europe opportunity: youth-led acquisition, compelling value positioning, strong margins; broad-based store/digital expansion .
  • Kate Spade: sequential improvement planned in H2; discount discipline intentionally pressures holiday top-line; profitability targeted in FY27 .

Estimates Context

PeriodRevenue Consensus ($USD Billions)*Revenue Actual ($USD Billions)EPS Consensus ($)*EPS Actual ($)
Q3 2025$1.5279*$1.5846*$0.8799*$1.03
Q4 2025$1.6767*$1.7232*$1.0186*$1.04
Q1 2026$1.6375*$1.7046 $1.2609*$1.38
FY 2026$7.3360*—$5.6068*—

Values retrieved from S&P Global*

Implication: Street underestimated top-line and EPS for three straight quarters; EPS revisions likely trend higher, particularly as guidance was raised and Q2 shaping suggests continued operating margin expansion .

Key Takeaways for Investors

  • Beat-and-raise quarter driven by Coach’s structural momentum; continued multi-quarter estimate beats suggest positive revision and potential multiple support .
  • Tariffs are the main headwind (~$170M; ~230bps GM drag), but mitigation plans and AUR/unit balance plus AUC efficiencies underpin margin resilience .
  • Capital return stepped up: $1.0B buybacks in FY26 vs $800M prior; Q1 repurchases of $500M at ~$106/share provide EPS accretion and share count tailwind .
  • Europe and Greater China are accelerating growth vectors; NA remains strong with Gen Z-led acquisition—broad-based geography diversification reduces risk .
  • Kate Spade reset is disciplined (lower promos, focused assortment); expect near-term top-line pressure, but improving KPIs and profitability in FY27 could re-rate brand value .
  • Near-term trading: Q2 set-up calls for ~7% pro forma sales, ~80bps OM expansion, ~$2.15 EPS—watch tariff flow-through vs holiday demand and DTC profitability .
  • Medium-term thesis: Amplify strategy targets mid-single digit revenue CAGR, OM >22% by FY28, and $4B capital returns—supports durable EPS compounding and FCF yield .