Tapestry Raises Outlook After Coach Lifts Q1 Sales 16%

Tapestry Inc. reported fiscal first-quarter net sales of $1.89 billion for the period ended Sept. 26, up 11% from a year earlier, and raised its full-year revenue, operating-margin and earnings outlook after Coach sales rose 16%, the New York-based company said in a Nov. 5 release.

On a pro forma basis that excludes prior-year Stuart Weitzman sales, net sales rose 12% on both a reported and constant-currency basis. GAAP diluted earnings per share were $1.76, up 38% from $1.28 a year earlier. Non-GAAP diluted EPS were $1.82, up 32% from $1.38.

Coach, Kate Spade and regional sales

Coach net sales were $1.66 billion, up 16% on a reported and constant-currency basis. Kate Spade net sales were $233 million, down 10% from $260 million a year earlier, according to the company’s sales detail.

By region on a pro forma constant-currency basis, North America revenue rose 4%, Europe rose 22%, and Greater China rose 39%, the release said. Direct-to-consumer revenue grew 9% on a pro forma basis, with store revenue up low-double digits and digital up mid-single digits; wholesale grew about 30%, driven by international markets.

Margins, cash return and guidance

GAAP operating income was $424 million, with an operating margin of 22.4%. Non-GAAP operating income was $439 million, up 24%, and non-GAAP operating margin was 23.2%, up about 230 basis points. Non-GAAP gross margin was 78.7%, up 220 basis points, the company said.

Tapestry returned about $700 million to shareholders in the quarter, including $600 million spent to repurchase about 4.6 million shares at an average cost of $130. It now expects to return about $2.0 billion in fiscal 2027, including $1.7 billion of share repurchases, up $350 million from prior guidance. The board declared a quarterly dividend of $0.4625 per share, payable Dec. 21 to holders of record Dec. 4.

The company raised its fiscal 2027 non-GAAP outlook to revenue of about $8.5 billion to $8.6 billion, or roughly 6% to 7% constant-currency growth; operating-margin expansion of about 100 basis points; and diluted EPS of $8.25 to $8.35, above prior guidance of $7.80 to $7.90. For the second quarter, it expects constant-currency revenue growth of about 5% to 6% and diluted EPS of about $3.05.

Sources: Tapestry Inc. investor relations, Business Wire