Tapestry's fiscal 2026 sales rose 14% to $8.0 billion. Coach grew 23.5% on higher handbag prices, which lifted adjusted EPS 38% to $7.05, while Kate Spade sales fell 10% and the brand swung to an adjusted operating loss.
Revenue
$8.0B
+14.2% YoY
Net income
$1.5B
+733.9% YoY
Diluted EPS
$7.27
+786.6% YoY
Operating margin
23.9%
Coach carried the year: sales up 14%, operating margin up, Kate Spade still shrinking
Tapestry's fiscal 2026 ran for 52 weeks and ended June 27, 2026. Net sales rose 14.2% to $8.00 billion. Almost all of the growth came from one brand. Coach sales grew 23.5% to $6.91 billion, while Kate Spade fell 10.2% to $1.07 billion. The company sold Stuart Weitzman to Caleres on August 4, 2025, so that brand added only $14.6 million this year, against $215.1 million last year. Leaving Stuart Weitzman out of both years and removing currency swings, sales grew 16.7% (the 10-K's figure; the press release rounds it to 17%).
The GAAP profit figures look enormous, but they are distorted. GAAP (Generally Accepted Accounting Principles) is the official accounting standard. Under it, net income rose from $183.2 million to $1.53 billion and diluted EPS rose from $0.82 to $7.27. Fiscal 2025 carried $854.8 million of impairment charges on the Kate Spade brand and goodwill. An impairment is a write-down that admits an asset is worth less than the price paid for it. Fiscal 2025 also carried about $270 million of costs from the Capri (Michael Kors) takeover, which regulators blocked. Remove those one-off items and fiscal 2025 EPS was $5.10. On that basis, adjusted EPS grew 38% to $7.05, which is the better measure of how the business actually did.
Key figures
Metric
FY2026
FY2025
YoY Change
Net sales
$8,004.2M
$7,010.7M
+14.2% (+13.3% constant currency)
Pro forma net sales (ex-Stuart Weitzman)
$7,989.6M
$6,795.6M
Read 0 community reports on Tapestry, Inc., or write your own.Write a report
Notes: "Constant currency" (cc) is growth restated at last year's exchange rates, so it shows real sales growth without currency effects. A basis point (bp) is one hundredth of a percentage point. The adjusted figures are the company's non-GAAP numbers. They exclude divestiture costs, restructuring ("organizational efficiency") costs, a tariff refund and a warehouse move. The press release gives prior-year regional figures only as growth rates, so those cells are marked "—". Tapestry does not publish comparable-store sales.
Why Coach grew and Kate Spade didn't
Coach. The 10-K says the $1.32 billion sales increase was "primarily due to an increase of $1.09 billion in DTC sales, mainly driven by North America, Greater China, and Europe." DTC (direct-to-consumer) means Tapestry's own stores and websites, as opposed to department-store wholesale. The main driver was higher prices rather than more bags sold. The press release says Coach's handbag AUR (average unit retail, the typical selling price per bag) rose at a mid-teens percentage rate in both the fourth quarter and the full year. Unit volume also grew over the year.
Coach became more profitable at the same time. Its operating margin is the share of sales left after product and running costs. Excluding one-off items, it rose about 230 bps to 35.8%. The 10-K gives two reasons:
Gross margin rose 70 bps "mainly due to net pricing improvements, partially offset by the impact of higher tariffs."
SG&A (selling, general and administrative costs) fell about 170 bps as a share of sales. The 10-K credits "leverage of fixed costs on higher net sales and lower distribution costs, partially offset by higher marketing spend." In plain terms, rent and salaries were spread over much larger sales.
Kate Spade. Kate Spade went the other way. DTC sales fell $120.3 million, which accounts for nearly all of the brand's $122.2 million decline. Excluding one-off items, the brand swung from $91.3 million of operating income to a $27.2 million loss, and its adjusted operating margin went from 7.6% to -2.5%. The 10-K attributes the drop to two things:
Gross margin fell 370 bps "mainly due to the impact of higher tariffs and unfavorable channel mix."
SG&A rose about 640 bps as a share of sales, "driven by higher marketing spend and deleverage of fixed costs on lower net sales."
Kate Spade is paying more for marketing while its sales shrink.
Takeaway: Tapestry is now almost entirely a Coach business. Coach earned $2.48 billion of adjusted operating income, more than the company's $1.87 billion adjusted total, because Kate Spade lost money and corporate overhead cost $583.5 million. The 38% rise in adjusted EPS comes from pricing power on Coach handbags and the fixed-cost leverage that follows. It does not come from a broad recovery across the company's brands.
Geography: China is the fastest-growing region
On a pro forma constant-currency basis, these were the regional sales results:
Region
FY2026 sales
Growth (cc)
Q4 growth (cc)
North America
$5,034.1M
+15%
+7%
Greater China
$1,396.6M
+35%
+28%
Europe
$525.4M
+23%
+19%
Japan
$465.7M
-7%
-4%
Other Asia
$441.6M
+13%
+22%
Japan was the only major region to shrink. North America's growth slowed from 15% for the full year to 7% in the fourth quarter. Growth is still strong but moderating in the company's largest market.
Tariffs, and a one-time refund that flatters the GAAP numbers
New US import tariffs, including the end of the "de minimis" exemption for low-value parcels, cut adjusted gross margin by about 130 bps for the year. Tapestry had paid roughly $117 million in tariffs under the International Emergency Economic Powers Act (IEEPA). On February 20, 2026, the US Supreme Court ruled those tariffs invalid. Tapestry received $2.1 million in cash refunds in the fourth quarter. It also booked an estimated $114.7 million of further refunds it judges probable, of which $96.2 million reduced cost of sales.
The company counts $98.3 million of pre-tax income from the refund as a one-off and removes it from its adjusted figures. This is why GAAP gross margin in the fourth quarter was 83.3%, compared with 78.1% on the adjusted basis. It is also why GAAP operating margin (23.9%) is slightly higher than adjusted (23.4%). Until the cash arrives, the refund is an estimate. The appeals process on the replacement tariffs is also still unresolved. Section 122 tariffs were ruled invalid on May 7 and the government has appealed. New Section 301 tariffs of 10%–12.5% on imports from certain countries took effect after July 24, 2026.
Fourth quarter (April–June 2026)
Net sales were $1.88 billion, up 9% reported and 12% pro forma. Coach grew 15% and Kate Spade fell 7%.
Adjusted gross margin was 78.1%, up 180 bps. Operational gains added about 170 bps and the Stuart Weitzman sale added 60 bps. Tariffs and duties took away 60 bps.
Adjusted operating margin was 19.3%, up 250 bps. This came even though marketing spend rose by an amount equal to 130 bps of sales.
GAAP EPS was $1.68, compared with -$2.49 a year earlier, when the Kate Spade impairment hit. Adjusted EPS was $1.32, up 28%.
Cash and shareholder returns
Operating cash flow was $1.98 billion, compared with $1.22 billion. Adjusted free cash flow (operating cash minus capital spending, adjusted for one-offs) was $1.86 billion, compared with $1.35 billion.
The company spent $1.35 billion buying back about 11.5 million shares at an average price of around $118, and paid $326 million in dividends.
Year-end cash and short-term investments were $1.15 billion. Debt was $2.38 billion, or 1.1x gross debt to adjusted EBITDA (a standard measure of borrowing relative to cash earnings).
Inventory fell to $826 million from $861 million, so the sales growth did not come from building up excess stock.
Outlook
Management's fiscal 2027 guidance is on an adjusted, 52-week basis. It excludes the 53rd week in fiscal 2027, which the company says will add about one percentage point to revenue growth.
Revenue of $8.4–$8.5 billion, which is mid-single-digit growth. Currency is expected to add 40 bps.
Operating margin up about 50 bps.
EPS of $7.80–$7.90, up about 11%–12% from $7.05.
Tax rate of about 18.5% and about 203 million diluted shares.
Roughly $1.7 billion returned to shareholders: $1.35 billion in buybacks, and a dividend raised 16% to an annual rate of $1.85 per share.
For the first quarter of fiscal 2027 (results expected November 5, 2026): high-single-digit revenue growth and EPS of about $1.55.
The guidance assumes tariffs have a neutral net effect year over year, with a mid-20% tariff rate on US inventory receipts.
Our view: The guidance shows sales growth slowing from 17% to roughly 5%. That is partly because Coach's pricing gains are now in the base year. North America had already slowed to 7% growth in the fourth quarter. EPS growth of about 11% depends mainly on buybacks and a small margin gain rather than on sales. The main risks are that tariffs do not stay neutral, that Chinese demand weakens, or that Kate Spade keeps losing money while marketing spend rises. Any of these would put pressure on the EPS range. Guidance does not include a date for Kate Spade to return to growth, and it remains the weak spot. The IEEPA refund boosts GAAP results but is excluded from guidance, so it does not affect the outlook.