Tapestry reports blockbuster quarter as Coach drives revenue growth
Tapestry Inc. continues to exceed expectations, fueled by ongoing momentum at Coach.
The parent company of Coach and Kate Spade delivered a blowout second quarter, with record quarterly revenue and earnings per share amid better-than-expected growth. It also raised its full-year forecast.
Sales at Coach surged 25% to $2.1 billion, with handbag AUR and units each increasing at a mid-teens percentage rate, for the quarter ended Dec. 27. Revenue declined 14% at Kate Spade, in line with management’s expectations, as the company reduced promotional activity as part of a turnaround plan.
Total revenue rose 14% to $2.5 billion. (Excluding the impact of Stuart Weitzman, which was acquired by Caleres in August, pro forma net sales growth was 18%.) Total direct-to-consumer revenue rose by 17% on a pro forma basis, led by strong digital growth of approximately 20% and mid-teens percentage growth in global brick-and-mortar sales.
[READ MORE: Done Deal: Parent company of Famous Footwear acquires Stuart Weitzman]
Net income rose 81% to $561 million. Adjusted earnings per share rose 34% to $2.69, blowing past analysts expectatins of $2.23 per share.
The company said it acquired over 3.7 million new customers globally during the quarter, led by a growing number of Gen Z consumers versus prior year, which represented approximately one-third of new customers. Demand from existing customers also increased, reflecting broad-based traction across the business.
“Our second quarter outperformance reflects the compounding impact of our Amplify strategy, driving deeper consumer engagement, accelerated growth, and record results,” said CEO Joanne Crevoiserat. “As we move forward, we do so with momentum and confidence. By harnessing our proven strategies and structural advantages, we are raising our outlook for the fiscal year, reinforcing our commitment to driving durable growth and long-term value creation.”
Tapestry said that. based on its "strong operational results, robust balance sheet, significant free cash flow generation, and outlook for growth," it expects to return $1.5 billion, which is approximately 100% of its anticipated adjusted free cash flow, to shareholders through dividends and share repurchases in fiscal 2026. This represents an increase from its previous outlook of $1.3 billion.
For the full fiscal year, Tapestry now expects revenues to grow 11% to $7.75 billion. Earnings per shares are expected to rise more than 25% to $6.40 to $6.45 as compared to its previous forecast of $5.45 to $5.60 previously forecast.
