Key financial results
- Revenue: Tapestry reported first quarter revenue of $1.9 billion, representing a 12% increase on a pro forma basis.
revenue by 12% on a pro forma basis to $1.9 billion
- Operating Margin: Operating margin expanded by 230 basis points to over 23%.
expanded operating margin by 230 basis points to over 23%
- EPS: Earnings per share increased by 32% to $1.82, exceeding guidance by approximately $0.27.
increased earnings per share by 32% to $1.82
- Gross Margin: Gross margin was 78.7%, up 220 basis points versus last year, driven by operational expansion, lower tariffs and duties, and foreign exchange benefits.
delivered a first quarter gross margin of 78.7%, up 220 basis points versus last year
Business segment results
- Coach: Coach delivered constant currency revenue growth of 16%, with increasing gross margin and profitability.
Coach delivered another strong quarter with constant currency revenue growth of 16%
- Coach North America: Coach North America sales rose 7% at constant currency, exceeding expectations and driving the company beat.
North America up 7%
- Coach Greater China: Coach Greater China revenue rose 41% at constant currency.
Greater China up 41%
- Coach Europe: Coach Europe revenue grew 27% at constant currency.
Europe, up 27%
- Coach Japan: Coach Japan returned to growth with a 5% increase at constant currency.
Japan returning to growth with a 5% increase
- Coach Footwear: Coach footwear revenue grew over 20% in the quarter, driven by the Margot family and sneakers.
- Kate Spade: Kate Spade revenue declined 10%, consistent with guidance, while gross margin expanded 190 basis points.
revenue declined 10%, consistent with guidance, while gross margin expanded 190 basis points
Capital allocation
- Shareholder Returns: Tapestry returned approximately $700 million to shareholders in the first quarter, including $600 million in share repurchases and over $90 million in dividends.
returned approximately $700 million to shareholders, including $600 million in share repurchases and over $90 million in dividends
- Full Year Return Outlook: The company increased expected fiscal 2027 shareholder returns to approximately $2 billion, including $1.7 billion in share repurchases and an expected annual dividend of $1.85 per share.
expect to return approximately $2 billion to shareholders in fiscal 2027
- Balance Sheet: Net debt was $1.8 billion at the end of the quarter, with a gross debt to adjusted EBITDA leverage ratio of 1.1x.
net debt of $1.8 billion. Our gross debt to adjusted EBITDA leverage ratio was 1.1x
Industry trends and dynamics
- Category Demand: Luxury leather goods remains an attractive category with enduring demand, compelling economics, and significant runway for growth.
Luxury leather goods remains one of the most attractive categories within the consumer space
- Holiday Outlook: Industry forecasts for holiday in the U.S. call for mid-single-digit growth, reflecting a constructive macroeconomic backdrop.
Industry forecast for holiday in the U.S. are calling for mid-single-digit growth
Competitive landscape
- Customer Acquisition: Tapestry welcomed 2.6 million new customers across its brands during the quarter, with Gen Z representing approximately 35%.
welcome 2.6 million new customers to our brands, with Gen Z representing approximately 35%
- Coach Customers: Coach welcomed over 2.1 million new consumers in the quarter, led by Gen Z.
welcoming over 2.1 million new consumers in the quarter
Macroeconomic environment
- Tariffs: The company expects a low to mid-20s percent tariff rate on U.S. imports for fiscal 2027, resulting in a modest net P&L benefit year-over-year after mitigating actions.
assumption for a low to mid-20s percent tariff rate on U.S. imports for fiscal '27
- FX: Foreign exchange is expected to be a 30 basis point tailwind for the full fiscal year.
FX is expected to be a 30 basis point tailwind for the year
Growth opportunities and strategies
- Store Concepts: Coach is expanding its expressive luxury store concept globally, targeting approximately 80% of traffic by fiscal year 2030.
expand the concept to impact approximately 80% of our traffic by fiscal year 30
- Kate Spade Strategy: Kate Spade is focusing on sharpening creative execution in product and storytelling under newly appointed Executive Creative Director Jonathan Saunders.
sharpening our creative execution in product and storytelling
Financial guidance and outlook
- Revenue Guidance: Tapestry raised its full year fiscal 2027 revenue outlook to $8.5 billion to $8.6 billion, representing 6% to 7% growth on a constant currency basis.
expect revenue of $8.5 billion to $8.6 billion representing 6% to 7% growth
- Operating Margin Guidance: Full year operating margin expansion is expected to be approximately 100 basis points to more than 24%.
operating margin expansion of approximately 100 basis points to more than 24%
- EPS Guidance: Full year EPS is expected to be $8.25 to $8.35, representing 17% to 18% growth versus the prior year.
expect EPS of $8.25 to $8.35 and representing 17% to 18% growth
- Q2 Guidance: For the second quarter, Tapestry expects revenue growth of 5% to 6% on a constant currency basis and EPS of approximately $3.05.
Q1 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $1.9 billion | Up 12% on a pro forma basis |
| Earnings per share | $1.82 | Up 32% |
| Operating margin | Over 23% | Expanded 230 basis points |
| Gross margin | 78.7% | Up 220 basis points versus last year |
| Coach constant currency revenue | Not stated | Up 16% |
| Kate Spade revenue | Not stated | Declined 10% |
How management sounded
Balanced (+35 on our -100 to +100 scale). Management raised full-year guidance and emphasized durable, compounding growth across regions, supported by strong revenue beats and a robust 32% increase in EPS. Management sounded more upbeat than on 20% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Read the analyst Q&A summary and guidance and outlook for this call.
What to watch before the next call
- Execution of the Kate Spade turnaround under the new Executive Creative Director Jonathan Saunders.
- Macroeconomic uncertainty and evolving tariff dynamics impacting margins.
- The rollout and traffic performance of the expressive luxury store concept and coffee shop expansions.
Earlier calls
- Q4 FY2026 (Aug 13, 2026), tone Positive: Tapestry exceeded Investor Day commitments two years early, delivering $8 billion in revenue and strong earnings growth.
