On May 7, Tapestry, Inc. (NYSE: TPR), the American accessible luxury group that owns Coach and Kate Spade, released its financial results for the third quarter of fiscal year 2026, ended March 28, 2026:
- Net sales increased 21% year-on-year to $1.92 billion (up 19% at constant currency), including a 61% year-on-year surge in Greater China to $432.2 million (up 55% at constant currency);
- Excluding the impact of the divestiture of Stuart Weitzman, net sales rose 25% year-on-year (up 23% at constant currency);
- Gross profit increased 22% year-on-year to $1.476 billion;
- Gross margin expanded by 80 basis points year-on-year to 76.9%, including approximately 190 basis points of operating improvements and a 70-basis-point benefit from the sale of Stuart Weitzman, partially offset by a 180-basis-point headwind from tariffs;
- Operating income increased 69% year-on-year to $427.5 million;
- Operating margin rose 630 basis points year-on-year to 22.3%;
- Net income totaled $344 million, with diluted earnings per share of $1.65.
Tapestry’s Chief Executive Officer, Joanne Crevoiserat, commented that “Our third quarter outperformance reflects the compounding benefits of our Amplify strategy, as we bring creativity, craftsmanship, and value to more consumers around the world. With disciplined execution and the consumer at the center of everything we do, we are translating insights into action at scale, fueling meaningful growth, expanding margins, and enduring brand desire. From this position of strength, we move confidently into the future with significant opportunity ahead. We are raising our outlook for the fiscal year, underscoring the power of Tapestry and our commitment to driving durable growth and long-term shareholder value.”
Supported by strong operating performance, a solid balance sheet, robust free cash flow, and positive growth expectations, the group now expects to return $1.6 billion to shareholders in fiscal 2026 through dividends and share repurchases, up from the previous $1.5 billion forecast. This includes a cash dividend of $0.40 per share, payable on June 22, 2026, as well as approximately $1.3 billion in share repurchases.
Following the earnings release, as of the market close on May 7 (U.S. Eastern Daylight Time), the company’s share price fell 3.57% from the previous trading day to $130.52 per share. However, the stock has risen 68.32% over the past year, with a latest market capitalization of approximately $26.43 billion.
Third-quarter highlights included:
Overall, both revenue and profit achieved double-digit growth;
More than 2.4 million new consumers were added globally, with Gen Z accounting for over 35%, an increase from the same period last year. Demand from existing customers also grew, enabling broad penetration across markets while continuing to attract and retain a new generation of consumers;
Growth accelerated in the core leather goods category, with strong handbag revenue at Coach. Unit sales increased by over 20%, while average selling prices rose by low double digits, reflecting diversified and healthy growth momentum, as well as the group’s strengths in scaled craftsmanship and value—its core competitive advantage;
Core markets delivered double-digit growth, exceeding expectations. At constant currency, North America grew 20%, Europe 21%, and Asia Pacific overall rose 30% (including 55% growth in Greater China). Coach brand net sales increased 29% at constant currency.
At constant currency, direct-to-consumer revenue increased 23%, including approximately 25% growth in digital channels. Global brick-and-mortar store sales rose by over 20%, with improved profitability across channels, demonstrating the strength of the group’s data-driven and agile operating model.
By brand:
- Coach brand net sales increased 31% year-on-year to $1.701 billion (up 29% at constant currency);
- Kate Spade brand net sales decreased 10% year-on-year to $219.6 million (down 11% at constant currency);
By region:
- North America net sales increased 20% year-on-year to $1.101 billion (up 20% at constant currency);
- Greater China net sales increased 61% year-on-year to $432.2 million (up 55% at constant currency);
- Japan net sales decreased 10% year-on-year to $123.9 million (down 10% at constant currency);
- Other Asia net sales increased 24% year-on-year to $116.3 million (up 16% at constant currency);
- Europe net sales increased 31% year-on-year to $118.6 million (up 21% at constant currency);
- Other regions net sales decreased 3% year-on-year to $27.9 million (up 21% at constant currency).
Updated full-year fiscal 2026 outlook:
- Revenue of approximately $7.95 billion, representing around 14% year-on-year growth (up 13% at constant currency);
- Operating margin of approximately 23%, an increase of about 300 basis points year-on-year, exceeding the previous target of around 180 basis points;
- Diluted earnings per share of approximately $6.95, representing growth of over 35% year-on-year, above the previous target range of $6.40 to $6.45.
| Source: Company financial report
| Image Credit: Company financial report
| Editor: Luxeplace
