TAPESTRY INC (NYSE:TPR) Beats Q1 Earnings and Revenue Estimates, Raises Full-Year Outlook

Tapestry Inc (NYSE:TPR) has reported financial results for the first quarter of fiscal year 2026, delivering a performance that exceeded analyst expectations on both the top and bottom lines. The parent company of Coach and Kate Spade showcased robust growth, prompting an upward revision to its full-year outlook, though the market's initial reaction appears tempered.

Earnings and Revenue Performance Versus Estimates

The luxury accessories house posted a strong quarter, with both revenue and earnings per share coming in ahead of Wall Street forecasts.

• Revenue: Reported $1.70 billion, surpassing the analyst estimate of $1.65 billion.
• Earnings Per Share (Non-GAAP): Reported $1.38, beating the estimated $1.27.

On a pro forma basis, which excludes the recently divested Stuart Weitzman brand, net sales grew 16% to $1.69 billion. This performance was largely driven by the Coach brand, which saw a 21% constant currency revenue increase. The company's profitability metrics also improved significantly, with gross margin expanding 120 basis points to 76.5% and operating margin increasing 200 basis points to 20.9% on a non-GAAP basis.

Market Reaction and Price Action

Despite the earnings beat and raised guidance, Tapestry's stock is indicating a negative opening in pre-market trading, down approximately 4.9%. This reaction suggests that investors may have been anticipating even stronger results or are expressing caution despite the positive report. The stock has been under mild pressure in recent weeks, declining about 6.4% over the past month leading into the earnings announcement.

Raised Full-Year Outlook

Bolstered by the first-quarter outperformance, Tapestry has raised its financial outlook for fiscal 2026. The company now anticipates revenue of approximately $7.3 billion, which aligns with the analyst sales estimate of $7.29 billion. More notably, the company raised its earnings per share guidance to a range of $5.45 to $5.60, representing 7% to 10% growth. This new EPS outlook exceeds the previous guidance of $5.30 to $5.45 and positions the company favorably against full-year analyst expectations.

Strategic and Operational Highlights

The quarter's success was attributed to the execution of Tapestry's "Amplify" growth strategy. Key operational achievements included:

• Acquiring over 2.2 million new customers globally, with Gen Z consumers representing approximately 35% of new acquisitions.
• Delivering strong handbag revenue growth at the Coach brand, supported by a mid-teens percentage increase in average unit retail (AUR).
• Achieving significant growth across key geographic markets, including North America (+18%), Europe (+32%), and Greater China (+19%) on a pro forma constant currency basis.
• Increasing direct-to-consumer revenue by 16%, with growth in both digital and brick-and-mortar channels.

Capital Return to Shareholders

Reflecting its strong financial position and cash flow generation, Tapestry reinforced its commitment to returning capital to shareholders. The company expects to return approximately $1.3 billion in fiscal 2026 through dividends and share repurchases, representing roughly 100% of its anticipated adjusted free cash flow. This includes an increased share buyback program, now expected to be approximately $1.0 billion, up from the original outlook of $800 million.

For a detailed look at Tapestry's historical earnings, future estimates, and analyst projections, you can review the earnings and estimates data.

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