TAPESTRY, INC. REPORTS FISCAL 2027 FIRST QUARTER RESULTS AND RAISES FULL YEAR OUTLOOK Exceeded First Quarter Revenue, Gross Margin, Operating Margin, and EPS…
TAPESTRY, INC. (TPR) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 CONTACTS: Tapestry, Inc. Analysts and Investors: Christina Colone Global Head of Investor Relations 212/946-7252 ccolone@tapestry.com Media: Jennifer Leemann Global Head of Communications 212/631-2797 jleemann@tapestry.com TAPESTRY, INC. REPORTS FISCAL 2027 FIRST QUA
How this was made
The 30-second read
Why it matters
The earnings beat and raised guidance provide fresh material for traders to adjust positions.
Market read
First‑report earnings with raised guidance for a large‑cap consumer discretionary name.
What to watch
Potential headwinds from supply chain constraints or slower consumer spending could temper the upside.
TAPESTRY, INC. REPORTS FISCAL 2027 FIRST QUARTER RESULTS AND RAISES FULL YEAR OUTLOOK
Revenue grew 11% on a reported basis and 12% on a pro forma basis, GAAP operating income rose 29%, GAAP diluted EPS increased 38%, and the company raised its fiscal 2027 revenue, operating-margin and EPS outlook while increasing its capital-return outlook to approximately $2.0 billion.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net salesGAAP | $1.89B | – | 11% |
| Pro Forma Net salesother | $1.89B | – | 12% |
| Cost of salesGAAP | $406M | – | – |
| Gross profitGAAP | $1.49B | – | 14% |
| Gross marginGAAP | 78.6% | – | 230 bps |
| Gross profitnon-GAAP | $1.49B | – | 15% |
| Gross marginnon-GAAP | 78.7% | – | 220 bps |
| Selling, general and administrative expensesGAAP | $1.06B | – | – |
| SG&A expensesnon-GAAP | $1.05B | – | – |
| SG&A expenses as a percentage of salesnon-GAAP | 55.5% of sales | – | 10 basis points below prior year |
| Operating incomeGAAP | $424M | – | 29% |
| Operating marginGAAP | 22.4% | – | 310 bps |
| Operating incomenon-GAAP | $439M | – | 24% |
| Operating marginnon-GAAP | 23.2% | – | approximately 230 basis points |
| Interest expense, netGAAP | $13M | – | – |
| Other expense (income)GAAP | — | – | – |
| Income before provision for income taxesGAAP | $411M | – | – |
| Provision for income taxesGAAP | $51M | – | – |
| Tax rateGAAP | 12.5% | – | – |
| Tax ratenon-GAAP | 12.7% | – | – |
| Net incomeGAAP | $360M | – | – |
| Net incomenon-GAAP | $371M | – | – |
| Basic earnings per shareGAAP | $1.81 | – | – |
| Diluted earnings per shareGAAP | $1.76 | – | 38% |
| Diluted earnings per sharenon-GAAP | $1.82 | – | 32% |
| Shares used in computing basic earnings per shareGAAP | 199.3M | – | – |
| Shares used in computing diluted earnings per shareGAAP | 204.5M | – | – |
| Cash flow from operating activitiesGAAP | an inflow of $197 million | – | – |
| Purchases of property and equipmentGAAP | −$48M | – | – |
| CapEx and implementation costs related to Cloud Computingother | $55M | – | – |
| Adjusted Free Cash Flownon-GAAP | $56M | – | – |
| Cash, cash equivalents and short-term investmentsGAAP | $782M | – | – |
| InventoryGAAP | $1.06B | – | – |
| Total borrowings outstandingGAAP | $2.56B | – | – |
| Leverage ratio, based on gross debt to adjusted EBITDAnon-GAAP | 1.1x | – | – |
| Adjusted EBITDA for the trailing twelve months ended September 26, 2026non-GAAP | $2.28B | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| CoachCoach delivered 16% growth, including 7% growth in North America and 30% growth internationally. Handbag AUR increased at a low-double-digit percentage rate and units rose low-single digits. | $1.66B | – | 16% |
| Kate SpadeKate Spade gross profit was $152 million on a GAAP basis and $154 million on a non-GAAP basis. | $233M | – | (10)% |
| Stuart WeitzmanPrior-period net sales were $15 million before the completion of the sale on August 4, 2025. | — | – | NM |
| North AmericaPro forma revenue growth was 4% on a reported and constant currency basis. | $1.11B | – | 4% |
| Greater ChinaPro forma constant currency revenue growth was 39%. | $385M | – | 43% |
| JapanPro forma constant currency revenue growth was 4%. | $103M | – | (5)% |
| Other AsiaPro forma constant currency revenue growth was 23%. | $114M | – | 26% |
| EuropePro forma constant currency revenue growth was 22%. | $151M | – | 20% |
| OtherOther primarily represents royalties earned from the Company's licensing partners and sales in the Middle East. | $31M | – | 11% |
Fiscal 2027 and fiscal second quarter of 2027 outlook
- RevenueFiscal 2027 revenue of approximately $8.5 billion to $8.6 billion, representing approximately 6% to 7% growth on a constant currency basis versus prior year; fiscal second-quarter revenue growth of approximately 5% to 6% on a constant currency basis versus prior year.
- Tax rateapproximately 18%
- NoteFiscal 2027 operating margin expansion of approximately 100 basis points versus prior year.
- NoteFiscal 2027 net interest expense of approximately $60 million.
- NoteFiscal 2027 weighted average diluted share count of approximately 200 million.
- NoteFiscal 2027 earnings per diluted share of $8.25 to $8.35, representing 17% to 18% growth versus prior year.
- NoteFiscal 2027 adjusted free cash flow approaching $1.7 billion, including CapEx and Cloud Computing costs of $300 million or approximately 3% to 4% of revenue.
- NoteFiscal second-quarter foreign currency is expected to be a 70 basis point benefit to revenue growth.
- NoteFiscal second-quarter earnings per diluted share of approximately $3.05, representing low-teens growth versus prior year.
- NoteForeign currency is expected to be a 30 basis point benefit to fiscal 2027 revenue growth.
- NoteThe outlook excludes the impact of the 53rd week in Fiscal 2027, which is expected to contribute an additional percentage point to annual revenue growth and have a neutral impact on operating margin.
- NoteThe outlook embeds a low-to-mid-20% tariff rate on U.S. inventory receipts in Fiscal 2027, resulting in a modest net benefit from tariffs year-over-year.
Capital returns
- Returned approximately $700 million to shareholders through dividends and share repurchases in the fiscal first quarter.
- The Board declared a quarterly cash dividend of $0.4625 per common share payable on December 21, 2026 to shareholders of record as of the close of business on December 4, 2026.
- The company continues to anticipate an annual dividend of $1.85 per share in Fiscal 2027.
- The company expects to return approximately $2.0 billion to shareholders in Fiscal 2027 through its capital return programs.
- The company expects to repurchase $1.7 billion in common stock in Fiscal 2027 under its existing share repurchase authorization.
- During the first quarter, the company spent $600 million to repurchase approximately 4.6 million shares at an average cost of $130 per share.
- Cash-flow statement repurchase of common stock was $(603) million, and payment of dividends was $(92) million.
What drove it
- The company welcomed 2.6 million new consumers globally, of which approximately 35% were Gen Z.
- Demand from existing customers increased.
- Direct-to-Consumer revenue grew 9% on a pro forma basis, with store revenue growing low-double-digits and digital increasing mid-single-digits.
- Wholesale growth of approximately 30% was driven by international markets.
- On a pro forma constant currency basis, APAC revenue rose 28%, including Greater China growth of 39%.
- Non-GAAP gross-margin expansion reflected approximately 130 basis points of operational improvements, a 70-basis point net benefit from tariffs and duties, and a 20-basis point benefit from foreign currency.
- Distribution network optimization costs decreased GAAP operating income by $15 million, GAAP net income by $11 million, and GAAP diluted earnings per share by $0.06.
Concerns
- Kate Spade revenue declined (10)% on a reported and constant currency basis.
- Japan revenue declined (5)% on a reported basis, although it grew 4% on a constant currency basis.
- Adjusted Free Cash Flow was an inflow of $56 million, compared with an inflow of $103 million in the prior-year quarter.
- Fiscal 2027 outlook assumes no material worsening of inflationary pressures or consumer confidence.
- The outlook embeds a low-to-mid-20% tariff rate on U.S. inventory receipts in Fiscal 2027.
What to watch
- Fiscal second-quarter revenue growth guidance of approximately 5% to 6% on a constant currency basis versus prior year.
- Fiscal second-quarter earnings per diluted share guidance of approximately $3.05.
- Delivery of fiscal 2027 revenue of approximately $8.5 billion to $8.6 billion and approximately 100 basis points of operating-margin expansion.
- Coach growth, Kate Spade revenue performance, and the sustainability of international growth.
- Execution of the $1.7 billion fiscal 2027 share-repurchase plan and adjusted free cash flow approaching $1.7 billion.
- The effects of the 53rd week, tariffs, foreign currency, inflationary pressures and consumer confidence.
Balance sheet and cash flow
- Cash, cash equivalents and short-term investments were $782 million at September 26, 2026, compared with $1,152 million at June 27, 2026.
- Cash and cash equivalents were $599 million at September 26, 2026, compared with $719 million at September 27, 2025.
- Current debt was $597 million and long-term debt was $1,960 million at September 26, 2026.
- Net cash provided by operating activities was $197 million, compared with $113 million in the prior-year quarter.
- Net cash used in investing activities was $(53) million, compared with net cash provided by investing activities of $69 million in the prior-year quarter.
- Net cash used in financing activities was $(526) million, compared with $(551) million in the prior-year quarter.
- Net decrease in cash and cash equivalents was $(376) million, compared with $(381) million in the prior-year quarter.
- Inventory was $1.06 billion, versus prior-year ending inventory of $1.02 billion.
Analysis
Tapestry reported a strong fiscal 2027 first quarter. GAAP net sales were $1,894 million, up 11%, while pro forma net sales increased 12% to $1,894 million after excluding Stuart Weitzman sales from the prior-year comparison. Coach generated $1,661 million of revenue and grew 16%, while Kate Spade generated $233 million and declined (10)%. The company cited 2.6 million new consumers globally, approximately 35% of whom were Gen Z, along with increased demand from existing customers.
Profitability expanded substantially. GAAP gross margin reached 78.6%, up 230 basis points, and non-GAAP gross margin was 78.7%, up 220 basis points. The company attributed non-GAAP gross-margin expansion to approximately 130 basis points of operational improvements, a 70-basis point net benefit from tariffs and duties, and a 20-basis point foreign-currency benefit. GAAP operating income increased 29% to $424 million, and non-GAAP operating income increased 24% to $439 million. GAAP diluted EPS was $1.76, up 38%, while non-GAAP diluted EPS was $1.82, up 32%.
Growth was broad geographically but uneven by brand and region. Pro forma constant-currency growth was 39% in Greater China, 23% in Other Asia and 22% in Europe, while North America grew 4%. Coach posted 7% North America growth and 30% international growth. Direct-to-Consumer revenue grew 9% on a pro forma basis, supported by low-double-digit store growth and mid-single-digit digital growth, while wholesale growth of approximately 30% was driven by international markets. Kate Spade and reported Japan revenue remain notable areas of weaker performance.
Cash generation and capital returns showed a more mixed pattern. Operating cash flow increased to an inflow of $197 million from an inflow of $113 million, but adjusted free cash flow was an inflow of $56 million versus an inflow of $103 million. The company spent $600 million to repurchase approximately 4.6 million shares and paid dividends, returning approximately $700 million during the quarter. Cash, cash equivalents and short-term investments totaled $782 million, total borrowings outstanding were $2.56 billion, and leverage was 1.1x.
Management raised fiscal 2027 guidance to revenue of approximately $8.5 billion to $8.6 billion, approximately 100 basis points of operating-margin expansion, and EPS of $8.25 to $8.35. It also increased expected fiscal-year share repurchases to $1.7 billion and total capital returns to approximately $2.0 billion. The outlook includes a 30 basis point fiscal-year foreign-currency benefit to revenue growth, a low-to-mid-20% tariff rate on U.S. inventory receipts, and assumptions of no material worsening in inflationary pressures or consumer confidence.
Management, verbatim
Our first quarter marked a powerful start to the year, with revenue, margin, and earnings growth ahead of expectations and strength around the world. Our Amplify strategy continues to bring new consumers to our brands through our distinctive combination of creativity, craftsmanship, and value. Building on this outperformance, we are raising our full year outlook, reflecting our confidence in the durability of our growth.
Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc.
Not in the filing
stated, not guessed- Prior-release outlook was not provided separately; therefore, no actual-versus-prior-guidance comparisons are presented.
- GAAP reconciliation for fiscal 2027 non-GAAP outlook is not available without unreasonable effort, according to the company.
- Quarterly GAAP free cash flow was not reported.
- Prior-year non-GAAP SG&A expense ratio was not printed.
- Prior-year comparison for total borrowings outstanding was not reported.
- Prior-year comparison for cash, cash equivalents and short-term investments was not reported.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Tapestry, the parent of Coach and Kate Spade, filed a Form 8‑K reporting its fiscal Q1 2027 results.
Ticker impact
Tapestry raised its full-year fiscal 2027 revenue, operating margin and earnings guidance after reporting Q1 results.
likely upward pressure as investors price in the raised outlook
The company posted double‑digit revenue growth, higher margins and increased EPS, then raised its FY outlook, which typically drives buying interest.
Market effects
Positive for the consumer discretionary apparel sector as Tapestry's growth may lift peers.
U.S. market may see modest gains in retail stocks following the upbeat guidance.
Limited to apparel and luxury consumer segments worldwide.
Counterpoint
If the raised outlook is already priced in, the stock could face a short‑term pullback.
Key entities
- companyTapestry, Inc.
Apparel and accessories retailer that raised FY2027 outlook.
