Tapestry (TPR 2.41%), the parent company behind luxury brands such as Coach, Kate Spade, and Stuart Weitzman, reported fourth-quarter results on August 14, 2025, covering the period. The company delivered GAAP revenue of $1.72 billion, exceeding the consensus GAAP estimate of $1.68 billion, and posted non-GAAP earnings per share of $1.04, beating the $1.02 non-GAAP forecast. The quarter's results were marked by continued strength at Coach and gross margin expansion, though accompanied by an impairment charge related to Kate Spade (GAAP) and the divestment of Stuart Weitzman. Overall, the results outperformed expectations, with non-GAAP EPS and GAAP revenue both exceeding analyst estimates, reflecting momentum in the core Coach brand, ongoing customer acquisition, and tactical execution across channels, while also highlighting brand and portfolio challenges for the business going forward.
| Metric | Q4 FY2025(Ended Jun 28, 2025) | Q4 FY2025 Estimate | Q4 FY2024(Ended Jun 29, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.04 | $1.02 | $0.92 | 13.0 % |
| Revenue (GAAP) | $1.72 billion | $1.68 billion | $1.59 billion | 8.2 % |
| Gross Margin | 76.3 % | 74.9 % | 1.4 pp | |
| Operating Income (Non-GAAP) | $289 million | $262 million | 10.3% | |
| Adjusted Free Cash Flow (Non-GAAP) | $424 million | $338 million | 25.4 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q3 2025 earnings report.
Business Overview and Key Focus Areas
Tapestry is a luxury fashion holding company with a portfolio that includes the Coach (handbags, accessories, and footwear), Kate Spade (handbags, accessories, and lifestyle products), and until recently, Stuart Weitzman (footwear) brands. Each label operates independently but benefits from shared sourcing, supply chain, and data analytics platforms. Coach is the clear growth driver, accounting for most of the company’s sales.
Over recent periods, Tapestry has focused on four pillars: effective brand portfolio management, executing a seamless omni-channel (integrated physical and online retail) strategy, targeted geographic expansion, and product innovation. These efforts aim to reinforce each brand’s market position, grow the customer base—with special emphasis on Millennials and Gen Z customers—and increase profitability by advancing gross margins and operational discipline. Success depends on continued strength at Coach, progress on turning around Kate Spade, and disciplined capital allocation, particularly now that Stuart Weitzman has been divested from the brand mix.
Quarter Highlights: Brand, Channel, and Financial Developments
The quarter was defined by impressive growth at Coach, supported by strong performance in handbags (a core category) and a mid-teens percentage increase in average unit retail (AUR—average sale price per unit sold). Coach operating income (GAAP) was $447.7 million, while Gross profit (GAAP) jumped to $1.32 billion. Product innovation, particularly in handbags and footwear, along with premium pricing, sustained the brand's momentum. Coach’s ongoing focus on acquiring new, younger consumers maintained long-term customer retention and brand desirability.
Kate Spade, in contrast, continued to face headwinds. Net sales (GAAP) slid 13% to $252.6 million year over year, and the segment posted a substantial operating loss driven by an $855 million impairment charge (GAAP). This charge reflected lower-than-expected future cash flows, compounded by anticipated effects from rising tariffs and cost inflation, as disclosed in Tapestry's GAAP results. These results, paired with flat-to-declining volume at Stuart Weitzman (which was sold in early August 2025), increased Tapestry’s reliance on Coach for growth.
Direct-to-consumer sales—via both digital platforms and physical stores—rose 6% compared to last year. Digital revenue was a particular standout, increasing by a mid-teens percentage, while brick-and-mortar operations grew in the low-single digits. This digital focus allowed Tapestry to acquire about 1.5 million new North American customers, around 60 % of whom were Gen Z or Millennials. Globally, new customer additions topped 6.8 million, a core growth lever for the company’s major labels.
Regionally, revenue expanded in North America (up 8%), Europe (up 10%), and Asia-Pacific (up 6%; with Greater China up 18%) on a constant currency basis. Growth in Europe was particularly notable, with revenue increasing 35% year-over-year in Q3 FY2025, while sustained gains in Greater China showed resilience despite industry pressures affecting U.S.-based brands. The gains offset softer trends in Japan, where revenues dipped relative to last year. Management credited a mix of successful product introductions and brand storytelling for securing customer engagement across all key markets. There were no material anti-U.S. sentiment or geopolitical impacts called out by management in the period.
Financial Metrics, Capital Allocation, and Segment Results
Profitability improved, driven by gross margin expansion and steady operating discipline. Gross margin (GAAP) rose to 76.3%, a 1.4 percentage-point increase compared to the prior year, even as currency shifts created a slight headwind. Non-GAAP operating income was $289 million, with the operating margin (non-GAAP) improved to 16.8%. Growing gross margin reflects operational improvements and discipline in inventory and pricing, especially at Coach. However, selling, general, and administrative (SG&A) expenses grew as a share of revenue on a non-GAAP basis, in part due to higher brand marketing investments. Marketing now approaches 10% of sales, up from pre-pandemic levels of about 3–4%.
Free cash flow, adjusted for one-time items (non-GAAP), climbed to $424 million, a jump of 25.5% versus last year. At quarter's end, Tapestry reported $1.12 billion in cash and manageable net debt of $1.27 billion, supported by a leverage ratio of 1.4 times. The company returned $2.3 billion to shareholders—including a $2 billion accelerated share repurchase program and $300 million in dividends. The quarterly dividend was increased 14% to $0.40 per share, effective Q1 FY2026, raising the annual payout rate to $1.60 per share for FY2026. Tapestry expects to buy back $800 million in common stock under its existing share repurchase authorization.
Looking Ahead: Guidance and Areas to Watch
Management provided non-GAAP outlook guidance for FY2026, forecasting revenue approaching $7.2 billion—a low single-digit increase, with mid-single-digit pro-forma growth excluding Stuart Weitzman. Earnings per share (non-GAAP) for FY2026 are expected to reach $5.30 to $5.45, a 4–7% rise, though this projection includes a negative impact of more than $0.60 per share from new and expanded tariffs on imported goods. Operating margin is expected to climb in FY2026 (non-GAAP), but a tariff headwind of 230 basis points, or about $160 million, will nearly offset underlying gains. Adjusted free cash flow (non-GAAP) was $1.35 billion.
Investors should monitor three main trends: turnaround progress at Kate Spade, but increases reliance on Coach and the success of planned recovery efforts at Kate Spade. Management signaled its view that customer acquisition—especially of younger demographics—remains a critical lever for growth, while discipline in marketing investment and tactical use of data and supply chain flexibility will be important as Tapestry navigates a more volatile trade and policy environment.
The quarterly dividend was raised 14% to $0.40 per share for Q1 FY2026.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
