Tapestry, Inc. — Fiscal 2027 First Quarter Earnings Summary

Financial Performance:

• Net sales totaled $1.894 billion, an 11% increase on a reported basis and 11% on a constant currency basis versus the prior year; pro forma net sales increased 12% on both reported and constant currency bases.
• Gross profit was $1.488 billion on a GAAP basis (78.6% margin), up 14% from the prior year; non-GAAP gross profit was $1.490 billion with a 78.7% margin, representing a 220 basis point expansion.
• Operating income was $424 million on a GAAP basis (22.4% margin), up 29% from the prior year; non-GAAP operating income was $439 million (23.2% margin), up 24% from the prior year.
• GAAP diluted earnings per share (EPS) were $1.76, a 38% increase year-over-year; non-GAAP diluted EPS were $1.82, a 32% increase year-over-year.
• SG&A expenses were $1.064 billion on a GAAP basis and $1.051 billion on a non-GAAP basis, representing 55.5% of sales.
• Net interest expense was $13 million, consistent with the prior year.
• Cash flow from operating activities was an inflow of $197 million compared to $113 million in the prior year; adjusted free cash flow was an inflow of $56 million compared to $103 million in the prior year.
• Total borrowings outstanding were $2.56 billion, resulting in a leverage ratio of 1.1x based on gross debt to adjusted EBITDA.
• Inventory was $1.06 billion as of the quarter end.

Guidance and Future Outlook:

• Fiscal 2027 revenue guidance raised to $8.5 billion to $8.6 billion, representing 6% to 7% growth on a constant currency basis.
• Fiscal 2027 operating margin expansion guidance raised to approximately 100 basis points versus prior year.
• Fiscal 2027 non-GAAP EPS guidance raised to $8.25 to $8.35, representing 17% to 18% growth versus prior year.
• Fiscal 2027 adjusted free cash flow guidance remains approaching $1.7 billion.
• Fiscal 2027 second quarter revenue growth guidance is approximately 5% to 6% on a constant currency basis; non-GAAP EPS guidance is approximately $3.05.
• Full-year outlook assumes a 53rd week in Fiscal 2027 contributing an additional percentage point to revenue growth and a low-to-mid-20% tariff rate on U.S. inventory receipts.

Business Segments and Product Lines:

• Coach brand revenue grew 16% on a reported basis, driven by strong new customer acquisition and handbag revenue gains with low-double-digit AUR growth and low-single-digit unit growth.
• Kate Spade brand revenue declined 10% on a reported basis.
• Direct-to-Consumer revenue grew 9% on a pro forma basis, with store revenue growing low-double-digits and digital growing mid-single-digits; wholesale growth was approximately 30%, driven by international markets.
• The company welcomed 2.6 million new consumers globally in the quarter, with approximately 35% being Gen Z.
• Store count for Coach increased to 983 (up 10 net), while Kate Spade decreased to 318 (down 8 net).
• The Stuart Weitzman business was excluded from pro forma results following its sale on August 4, 2025.

Market and Competitive Landscape:

• Greater China revenue grew 43% on a reported basis (39% constant currency).
• Europe revenue grew 20% on a reported basis (22% constant currency).
• North America revenue grew 4% on a reported basis (4% constant currency).
• Other Asia revenue grew 26% on a reported basis (23% constant currency).
• The company reported broad-based growth across regions, gaining market share and expanding the overall category.

Risks and Challenges:

• The outlook embeds a low-to-mid-20% tariff rate on U.S. inventory receipts.
• The company notes risks related to economic conditions, inflationary pressures, international trade disputes, currency fluctuations, and changes in consumer confidence.
• Operational challenges include the need to anticipate consumer preferences and respond to changing fashion trends.

Management Commentary and Tone:

• CEO Joanne Crevoiserat described the quarter as a "powerful start" with growth ahead of expectations and strength around the world.
• Management expressed confidence in the durability of growth driven by the "Amplify" strategy, emphasizing deep consumer understanding, data-driven approaches, and global scale.
• Management highlighted advantages that compound over time, reinforcing conviction that the greatest opportunities are ahead.

Other Key Points:

• Fiscal 2027 capital return outlook increased to $2.0 billion, driven by incremental share repurchases; approximately $700 million was returned to shareholders in the first quarter.
• The Board declared a quarterly cash dividend of $0.4625 per share, with an anticipated annual dividend of $1.85 per share for Fiscal 2027.
• Share repurchase guidance for Fiscal 2027 increased to $1.7 billion; the company spent $600 million in the first quarter to repurchase approximately 4.6 million shares at an average cost of $130 per share.
• The company recorded $15 million in charges related to distribution network optimization initiatives, which decreased operating income by $15 million and diluted EPS by $0.06.
• Fiscal 2027 second quarter results are expected to be reported on February 4, 2027.