Tapestry(TPR 1.34%) reported its results for the fiscal fourth quarter 2025 (period ended June 28, 2025) on August 14, 2025, delivering $7 billion in annual revenue for fiscal 2025, representing 5% year-over-year growth, a record operating margin of 20% for fiscal 2025, and adjusted EPS of $5.10, up 19% year-over-year. Strategic highlights include Coach achieving double-digit revenue growth across key markets in fiscal 2025, continued expansion of direct-to-consumer channels, a divestiture of Stuart Weitzman, and the announcement of a $160 million tariff headwind expected in fiscal 2026, mitigated by proactive supply chain and pricing initiatives. Guidance for fiscal 2026 (non-GAAP) projects revenue approaching $7.2 billion, non-GAAP EPS of $5.30 to $5.45, and $1 billion in planned capital returns despite new tariff costs and an impairment charge at Kate Spade.
Coach drives Tapestry’s customer acquisition
Coach revenue grew 10% in fiscal 2025, with constant currency sales up 13% in the fiscal fourth quarter and double-digit growth in North America, China, and Europe. Coach added over 1 million new customers in North America in the fiscal fourth quarter, 70% of whom were Gen Z and millennials, and achieved mid-teens average unit retail (AUR) growth in the fiscal fourth quarter and higher retention rates among younger cohorts.
"For the year, Coach delivered a 10% increase in revenue at strong margins, capped by 13% constant currency top-line gains in the fourth quarter, with double-digit growth across our key markets, with North America up 16%, China up 22%, and Europe up 12%. Our global growth led by outperformance in our core leather goods offering highlights that our unique expressive luxury positioning is resonating around the world. This is evident in our strong customer acquisition results as we welcomed over 4.6 million new customers to Coach in North America this year, with over 1 million new customers in the fourth quarter, of which nearly 70% were Gen Z and millennials."
— Joanne Crevoiserat, Chief Executive Officer
Coach’s ability to attract and retain younger customers at higher AUR levels positions Tapestry for durable, long-term growth and strengthens its competitive advantage in the luxury market.
Tapestry margin expands despite volatility
Tapestry’s gross margin expanded 210 basis points year-over-year, reaching a record 76.3% in the fiscal fourth quarter, with AUR growth driving roughly two-thirds of margin improvement, and adjusted EPS of $1.04, up 12% year-over-year and above expectations. The company executed a $2 billion accelerated share repurchase at an average of $78 per share and authorized a 14% dividend increase.
"Our strong gross margin is a core element of our value creation model, providing us with flexibility and fuel to drive sustainable growth. As we've seen in the year, AUR growth is driving roughly two-thirds of our margin improvement with the balance coming from AUC and we see both levers contributing to operational gross margin gains and into the future."
— Scott Roe, Chief Financial Officer and Chief Operating Officer
Margin expansion and robust cash flow support Tapestry’s ability to return capital to shareholders and invest in growth, even as macroeconomic and input cost pressures persist.
Tariff headwinds challenge Tapestry’s outlook
Following an executive order ending de minimis exemptions, new tariffs represent a $160 million, or 230 basis point, margin headwind in fiscal 2026 (non-GAAP), with Tapestry implementing agile manufacturing, global supply optimization, and selective price passes to offset future multiple-year impacts. Management expects mitigation strategies to unfold progressively into fiscal 2027 and fiscal 2028, while still guiding for margin expansion in fiscal 2026 (non-GAAP) and high-single-digit Coach revenue growth at constant currency.
"we are facing greater than previously expected profit headwinds from tariffs and duties, with the earlier than expected ending of de minimis exemptions being a meaningful factor for FY2026 (non-GAAP). In aggregate, the total expected impact on profitability this year from tariffs is $160 million representing approximately 230 basis points of margin headwind. We're taking thoughtful actions to mitigate these impacts while continuing to deliver the compelling value, quality, and innovation that is foundational to our brands."
— Scott Roe, Chief Financial Officer and Chief Operating Officer
Tapestry’s proactive approach to tariff mitigation and supply chain agility demonstrates prudent risk management, but the scale of the headwind will test the company’s ability to sustain margin expansion and earnings growth in the near term.
Looking Ahead
For fiscal 2026, Tapestry expects non-GAAP revenue to approach $7.2 billion, with Coach delivering high-single-digit growth at constant currency (guidance, non-GAAP) and Kate Spade experiencing a high-single-digit decline in non-GAAP revenue before sequential improvement in the second half. Operating margin is guided to expand, with EPS (non-GAAP) in the $5.30 to $5.45 range, incorporating $160 million of tariff costs (non-GAAP), while over $1 billion will be returned to shareholders and CapEx/cloud investments are set at $200 million. Management committed to further supply chain actions to offset tariffs, ongoing share buybacks of $800 million, and delivering a 14% higher dividend, affirming a path to long-term value creation.
