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TAPESTRY, INC. (TPR)·Q4 2025 Earnings Summary

Executive Summary

  • Record Q4 results: revenue $1.72B (+8% YoY), non-GAAP EPS $1.04 (+12% YoY), gross margin 76.3% (+140 bps), led by Coach (+14% revenue) and strength in North America, Europe, and Greater China .
  • Beat vs consensus: revenue and EPS exceeded Wall Street estimates; dividend raised 14% to $0.40/quarter; FY26 EPS guided to $5.30–$5.45 despite ~$0.60 tariff/duty headwind; planned $800M buyback in FY26 .
  • Strategic actions: completed sale of Stuart Weitzman; impairment of Kate Spade ($855M) resets the brand for long-term growth; management confident in tariff mitigation over time .
  • Stock narrative catalysts: durable Coach outperformance, gross margin expansion, capital returns (dividend + buybacks), and prudent FY26 guidance with explicit tariff impact and mitigation roadmap .

What Went Well and What Went Wrong

What Went Well

  • Coach momentum: Q4 brand revenue $1.43B (+14% reported/+13% cc), double-digit growth across North America (+16%), Europe (+12%), and China (+22%) with mid-teens handbag AUR gains; “Coach is redefining what's possible… translating into compounding and durable growth” (CEO) .
  • Gross margin expansion and profitability: Q4 gross margin 76.3% (+140 bps) on operational outperformance, with non-GAAP operating margin 16.8% and Q4 EPS $1.04 above guidance; “record fourth quarter gross margin” (CFO) .
  • Customer acquisition and DTC: ~1.5M new customers in NA in Q4 (60% Gen Z/Millennial); DTC +6% cc with mid-teens Digital growth and low-single-digit brick-and-mortar growth; “our modern technology platform… data-driven insights” (CEO) .

What Went Wrong

  • Kate Spade impairment and reset: $855M impairment (brand intangible + goodwill) drove GAAP loss; brand revenue down 13% in Q4; near-term pressure as investments rise; “a non-cash impairment charge of over $850,000,000” (CFO) .
  • Tariff/duty headwinds: FY26 outlook embeds ~$160M (~230 bps) margin headwind; de minimis (Section 321) elimination accelerated, increasing US e-commerce duty costs; “about a third of the $0.60… from de minimis ending” (CFO) .
  • Japan softness and wholesale pruning: Japan -7% reported (-11% cc) in Q4; Europe Q4 growth slower than earlier quarters due to intentional wholesale rationalization to align accounts with brand positioning .

Financial Results

Quarterly progression (oldest → newest)

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Billions)$2.1954 $1.5846 $1.7232
Gross Margin %74.4% 76.1% 76.3%
Operating Margin % (non-GAAP)24.9% 17.5% 16.8%
Diluted EPS (non-GAAP, $)$2.00 $1.03 $1.04
Diluted EPS (GAAP, $)$1.38 $0.95 ($2.49)

Q4 2025 vs prior year and vs estimates

MetricQ4 2024Q4 2025 ActualYoY ChangeQ4 2025 ConsensusSurprise
Revenue ($USD Billions)$1.5911 $1.7232 +8% $1.6767*+$0.0465B*
Diluted EPS (non-GAAP, $)$0.92 $1.04 +12% $1.019*+$0.021*
EBITDA ($USD Millions)N/A$345.5*N/A$330.6*+$14.9*
  • Bold beats: revenue and EPS were above consensus.
  • Note: EBITDA actual/consensus via S&P Global; company did not report quarterly EBITDA in filings.

Segment breakdown – Q4 2025

SegmentRevenue ($USD Millions)Reported YoYConstant Currency YoY
Coach1,425.1 +14% +13%
Kate Spade252.6 (13%) (13%)
Stuart Weitzman45.5 (10%) (10%)
Total Tapestry1,723.2 +8% +8%

Regional breakdown – Q4 2025

RegionRevenue ($USD Millions)Reported YoYConstant Currency YoY
North America1,103.2 +8% +8%
Greater China273.9 +18% +18%
Japan118.3 (7%) (11%)
Other Asia86.4 0% (1%)
Europe104.2 +13% +10%
Other37.2 +14% +13%

KPIs and balance sheet

KPIQ4 2025Commentary
New customers (NA)~1.5M ~60% Gen Z/Millennial
DTC revenue+6% cc Digital mid-teens; stores low-single-digit
Gross margin delta+140 bps Operational +200 bps; FX headwind >50 bps
Handbag AURMid-teens growth Led by North America
Inventory ($USD MM)$861 Excludes $92MM assets held for sale
Net debt ($USD MM)$1,270 Leverage 1.4x TTM adj. EBITDA
Adjusted FCF ($USD MM)$424.4 (Q4) $1,354.5 (FY)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY26N/A (initiated)~$7.2B; pro-forma mid-single-digit growth; FX tailwind ~80 bps Initiated
Operating marginFY26N/AAbove prior year; underlying +250 bps, offset by 230 bps tariff/duty headwind ($160MM) Initiated (explicit tariff impact)
EPS (diluted)FY26N/A$5.30–$5.45; includes >$0.60 tariff/duty headwind Initiated
Net interest expenseFY26N/A~$65MM Initiated
Tax rateFY26N/A~18% Initiated
Diluted sharesFY26N/A~213MM Initiated
Adjusted free cash flowFY26N/A~$1.3B Initiated
DividendFY26$0.35/quarter (FY25) $0.40/quarter (annual $1.60) Raised
Share repurchasesFY26$800MM authorization remaining (FY25) Plan to repurchase $800MM FY26; complete ASR settlement (~$200MM est.) Maintained/Specified
Gross margin shapingFY26FY25: ~+100 bps expansion guided FY26: gross margin decline ~70 bps; operational +120 bps, FX (20 bps), Stuart Weitzman disposal +60 bps, tariffs (230 bps) Lower vs FY25 (tariffs)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
Tariffs/de minimisImmaterial FY25 impact; supply chain agile; imports ~$900MM COGS Raised FY25 outlook with tariff mitigation; imports ~$900MM COGS context FY26 headwind ~$160MM (230 bps); de minimis early termination drives ~⅓ of $0.60 EPS impact Headwind increasing; mitigation underway
Supply chain agilityDiverse footprint (VN/Cambodia/Philippines ~70% production); optimizing AUC Pulled forward inventory; working with providers to unlock efficiencies “Never sacrifice service”; “best at playing the game” re tariffs; Q1 GM +~100 bps expected Strong, proactive
AI/data analyticsUsing AI for price elasticity; data-driven pricing Data insights fueling marketing effectiveness and DTC profitability “Blend of creativity and data & analytics”; continued pricing/AUR gains Execution strengthening
Product & brand heatTabby/New York families; Cherry bag charm; High Line sneaker Kisslock bag sell-outs; Soho sneaker; Coach Play experiences Kisslock demand queue (81k US notifications); lower promotions with unit gains Accelerating
Regional trendsChina returned to growth; Europe +42% (Q2) Europe +35% (Q3); China +5% (Q3) China +18%; Europe +10% (Q4); Japan -11% cc China acceleration; Japan pressured
Portfolio actionsCapri termination; ASR launched Pending Stuart Weitzman sale Stuart Weitzman sale closed Aug 4 Portfolio simplified

Management Commentary

  • CEO on FY25 performance: “Fiscal 2025 was a breakout year… delivering over $5 in adjusted earnings per share and returning more than $3 billion cumulatively to shareholders” .
  • CFO on tariffs: “The total expected impact… $160,000,000 representing approximately two thirty basis points of margin headwind… we have massive underlying strength even in our gross margins” .
  • Coach brand president on brand heat: “We are killing it with bag charms… young customers come back more frequently… special sauce in selling” .
  • CEO on China: “We’re not seeing signs of anti-American sentiment… strong engagement… continued new customer acquisition and growth in China” .

Q&A Highlights

  • Tariffs and de minimis: Early termination of de minimis (Section 321) materially increased duty costs for US e-commerce shipments; ~⅓ of the $0.60 EPS headwind tied to this, with mitigation plans underway and no sacrifice of service levels .
  • Coach acceleration & pricing: Lower promotions with rising units, sustained mid/high-single-digit AUR growth projected; one-price strategy across channels (e.g., sneakers) supports One Coach execution .
  • SG&A leverage: Expect ~160 bps operational SG&A leverage in FY26 (ex tariff impacts), with focused brand investments (marketing >11% of revenue) and efficiencies elsewhere .
  • Store growth: Reaccelerating physical store openings in North America driven by Gen Z preference for experiential retail (Coach Play, coffee concepts) .
  • Europe wholesale pruning: Q4 growth slightly slower due to intentional account rationalization to preserve brand positioning; not indicative of demand slowdown .

Estimates Context

  • Q4 beats: Revenue $1.723B vs $1.677B consensus; non-GAAP EPS $1.04 vs $1.02 consensus; EBITDA $345.5MM vs $330.6MM consensus (all beats) .
  • FY26 framing: EPS $5.30–$5.45 guided despite ~$0.60 tariff/duty headwind; as mitigation actions take hold, estimate revisions could reflect stronger underlying margin trajectory even as gross margin faces tariff phasing (first-half tailwind, second-half pressure) .
MetricQ4 2025 ConsensusQ4 2025 Actual
Revenue ($USD Billions)1.6767*1.7232
Diluted EPS (non-GAAP, $)1.019*1.04
EBITDA ($USD Millions)330.6*345.5*

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Coach remains the core growth engine with broad-based demand, rising AURs, and improving unit trends, underpinning durable gross margin strength and operating leverage .
  • Q4 revenue and EPS beats, plus a 14% dividend increase and $800M FY26 buyback plan, reinforce a shareholder-friendly capital return profile supported by robust FCF (~$1.3B FY26) .
  • FY26 guidance prudently embeds ~$160M tariff headwind (230 bps), with clear mitigation plans and expected gross margin phasing (stronger H1, pressured H2) — watch for policy evolution and execution on supply chain shifts .
  • China acceleration (+18% Q4) and Europe growth (+10% cc) highlight international runway; Japan remains a watch item amid macro softness .
  • Kate Spade reset is a multi-quarter journey; near-term profit pressure (post-impairment) is deliberate to rebuild brand heat and icons, with gross margin progress as promotions are reduced .
  • Portfolio simplification (Stuart Weitzman sale) adds structural margin tailwinds and expense benefits; focus remains on organic execution before any future M&A .
  • Near-term trading: beats plus dividend/buyback support; medium-term thesis: Coach’s expressive luxury strategy, data-driven operating model, and supply chain agility to offset external headwinds over time .

Footnote: Values marked with * were retrieved from S&P Global.