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    TPR
    Earnings call· Mar 2026(Q3 FY26)

    TAPESTRY Q3 FY26 earnings call TPR

    May 7, 2026 Source

    Executive summary

    Tapestry Q3 FY26 — Strong Outperformance Driven by Coach and New Customer Acquisition

    Tapestry delivered a standout Q3 FY26, significantly outperforming expectations with robust revenue growth and margin expansion, primarily fueled by the Coach brand's strong performance and successful Gen Z customer acquisition. The company raised its full-year outlook, demonstrating confidence in its Amplify strategy and structural advantages, despite a revenue decline at Kate Spade and tariff headwinds.

    Highlights

    5

    • Pro forma revenue grew 23% at constant currency, exceeding expectations.

    • Operating margin expanded 490 basis points, exceeding expectations.

    • EPS increased 62% versus prior year to $1.66, exceeding expectations.

    • Acquired over 2.4 million new customers globally, driven by Gen Z, with higher retention rates.

    • Coach delivered 29% constant currency revenue growth and increased profitability, welcoming 2 million new customers.

    Concerns

    3

    • Kate Spade revenue declined 11%, falling slightly below expectations due to strategic pullback in promotions.

    • Tariff and duty headwind of approximately 180 basis points on gross margin (150 bps for Coach, 440 bps for Kate Spade).

    • Japan sales declined 10% as expected due to intentional pullback in promotions.

    Guidance & targets

    34
    CategoryTargetConfidence
    Full-year FY26 Revenue
    $7.95 billion
    high materiality
    High
    Full-year FY26 Pro Forma Revenue Growth (constant currency)
    16%
    high materiality
    High
    Full-year FY26 North America Revenue Growth (constant currency, pro forma)
    mid-teens
    medium materiality
    High
    Full-year FY26 Europe Revenue Growth (constant currency, pro forma)
    20%
    medium materiality
    High
    Full-year FY26 Greater China Revenue Growth (constant currency, pro forma)
    over 30%
    high materiality
    High
    Full-year FY26 Japan Revenue Growth (constant currency, pro forma)
    high single-digit decline
    medium materiality
    High
    Full-year FY26 Other Asia Revenue Growth (constant currency, pro forma)
    low double-digit gains
    medium materiality
    High
    Full-year FY26 Coach Revenue Growth
    over 20%
    high materiality
    High
    Full-year FY26 Kate Spade Revenue Growth
    low double-digit decline
    high materiality
    High
    Full-year FY26 Operating Margin
    approximately 23%
    high materiality
    High
    Full-year FY26 Gross Margin Increase
    approximately 110 basis points
    high materiality
    High
    Full-year FY26 SG&A Leverage
    190 basis points favorable
    medium materiality
    High
    Full-year FY26 Marketing as % of Sales
    approaching 13%
    medium materiality
    High
    Full-year FY26 Coach Operating Margin
    expand
    medium materiality
    High
    Full-year FY26 Kate Spade Operating Profit
    modest profit loss
    medium materiality
    High
    Full-year FY26 Net Interest Expense
    approximately $60 million
    low materiality
    High
    Full-year FY26 Tax Rate
    approximately 17.5%
    low materiality
    High
    Full-year FY26 Weighted Average Diluted Share Count
    approximately 210 million shares
    low materiality
    High
    Full-year FY26 EPS
    in the area of $6.95
    high materiality
    High
    Full-year FY26 Adjusted Free Cash Flow
    approach $1.6 billion
    high materiality
    High
    Full-year FY26 CapEx and Cloud Computing Costs
    in the area of $200 million
    medium materiality
    High
    Q4 FY26 Pro Forma Revenue Growth (reported & constant currency)
    low double digits
    high materiality
    High
    Q4 FY26 Coach Growth Rate
    low teens
    high materiality
    High
    Q4 FY26 Kate Spade Growth Rate
    high single-digit decline
    high materiality
    High
    Q4 FY26 Operating Margin Expansion
    approximately 60 basis points
    medium materiality
    High
    Q4 FY26 Gross Margin Increase
    in the area of 130 basis points
    medium materiality
    High
    Q4 FY26 Marketing Increase
    over 300 basis points
    medium materiality
    High
    Q4 FY26 EPS
    approximately $1.20
    high materiality
    High
    Coach Revenue
    $10 billion
    high materiality
    High
    Tapestry Revenue Growth
    mid-single-digit revenue growth as a floor
    high materiality
    High
    Coach Revenue Growth
    at least mid-single digit
    high materiality
    High
    AUR Growth
    at least inflation plus a point
    medium materiality
    High
    New Door Expansion Contribution to Growth
    1 to 2 points
    medium materiality
    High
    Coach Store Fleet Renovation
    majority of the fleet
    medium materiality
    High

    Segment performance

    9
    SegmentRevenueYoYQoQMargin
    Tapestry (Pro Forma)
    Exceeded expectations.
    Constant currency growth: 23%
    		—23%——
    North America
    Fueled by Coach's 27% increase.
    Market share gainsOperating margin expansion
    		—20%——
    Europe
    Driven by local consumer spending. Significant opportunity for further growth due to low penetration.
    Direct business strengthStrong new customer acquisition (Gen Z)Strong market share gains
    		—21%——
    Greater China
    Outperformed expectations.
    Significant market share gainsAccelerated customer acquisitionBroad-based growth across channels (led by digital)Exceeded Chinese New Year planWinning with Gen Z consumers
    		—55%——
    Other Asia
    Led by growth primarily in South Korea and Australia.
    		—16%——
    Japan
    As expected, driven by intentional pullback in promotions.
    		—-10%——
    Direct-to-Consumer (DTC)
    Fueled by strong global momentum.
    Digital growth: approximately 25%Global brick-and-mortar sales growth: over 20%
    		—23%—strong and increasing profitability
    Coach
    Delivered another exceptional quarter, executing strategies with "Magic and Logic". Strong momentum across key geographies.
    Constant currency revenue growth: 29%2 million new customers acquiredGen Z acquisition accelerated meaningfullyUnit volumes increasing: over 20%AUR growth: low double-digit rateNorth America growth: 27%Greater China growth: 58%Europe growth: 27%Footwear growth: approximately 20% (fueled by sneakers)
    		—29%—increased profitability
    Kate Spade
    Top line trends improved sequentially but fell slightly below expectations due to strategic pullback in promotions. Continued strategic brand investments.
    400,000 new customers acquiredHandbag blockbusters (Duo, Margot) outperformedHigher full-price sellingHandbag AUR growth at constant currency
    		—-11%—exceeded plan

    Operational metrics

    10
    New Customers Acquired
    2.4 million
    Q3 FY26

    Key driver of growth, supporting higher repeat purchasing and lifetime value.

    Marketing Spend Increase
    approximately 50%versus prior year
    Q3 FY26

    To support sustained customer acquisition.

    Coach Marketing Spend
    approaching $1 billion
    annual

    A level of spend few in the industry can match, attracting new customers.

    Inventory Levels
    3% below prior yearYoY
    quarter end

    On a reported basis, excluding Stuart Weitzman.

    Gross Debt to Adjusted EBITDA Leverage Ratio
    1.1xmore than a full turn below long-term target
    quarter end

    Long-term target is below 2.5x.

    CapEx and Cloud Computing Costs
    $50 million
    Q3 FY26
    North America Handbag & Leather Goods Market Growth
    mid- to high single digits
    Q3 FY26

    Observed market growth, indicating consumer engagement in the category.

    Coach AUR Price Point
    $200 to $500
    current

    Valued price point, with headroom for growth.

    Coach AUR
    just about where they were 15 years agovs 15 years ago
    current

    Indicates significant headroom for price increases.

    Coach Europe Double-Digit Growth Quarters
    11
    consecutive

    Demonstrates sustained strong performance in the region.

    Industry KPIs

    10
    MetricValueDetails
    China trajectory55%%
    Inventory position3% below prior year%
    Revenue by channelDirect-to-consumer growth of 23%%
    Gross margin bridge76.9%%
    Revenue by geography—
    Operating margin sg a490 basis pointsbps
    Store fleet door investment—
    Share buyback capital return$150 millionUSD
    Tariff cost exposure recoveryapproximately 180 basis pointsbps
    Franchise product cycle performance—

    Product announcements

    6
    ProductTypeDetails
    Chelsea Baglaunch
    Duo and Margot Handbagsmilestone
    Expressive Luxury Store Conceptexpansion
    Coach Play Storeslaunch
    Coach Coffee Shopsexpansion
    Kate Spade Light-Touch Renovation Testexpansion

    Deals & partnerships

    1
    CLOTpartnership

    Partnership with a world-renowned Chinese streetwear brand for Lunar New Year in China. Included gaming, cafe, bespoke collection shop, and community activations.

    Risks & headwinds

    5
    Disruption in the Middle Eastcurrent

    represents less than 1% of our sales

    Mitigation: closely monitoring the situation; do not anticipate a material direct impact to our business at this time

    Tariff and duty headwind on gross marginQ3 FY26

    approximately 180 basis points (Tapestry), 150 basis point negative impact (Coach), 440 basis point negative impact (Kate Spade)

    Mitigation: fully offset by operational expansion and Stuart Weitzman divestiture benefit; no price increases in direct response to tariffs

    Strategic pullback in promotions at retailQ3 FY26

    revenue declined 11% (Kate Spade), fell slightly below expectations

    Mitigation: exceeded gross margin and profitability plan; continued strategic brand investments to support a return to profitable growth

    Intentional pullback in promotionsQ3 FY26

    sales declined 10% (Japan)

    Mitigation: expected decline (implies planned strategy)

    Inflation in input costscurrent

    not much (so far), modest cost pressure (fuel surcharges)

    Mitigation: watching closely; not material at this point

    Q&A highlights

    6

    Asked about the implications of delivering Investor Day targets two years early and the growth trajectory for FY27 and beyond, given the strong FY26 EPS and operating margin guidance.

    Joanne Crevoiserat stated that the company is "just getting started" and remains confident in its long-term algorithm of mid-single-digit revenue growth as a floor, driven by consumer obsession, agile operating model, and low share in a large global TAM. She highlighted continued investments in product innovation, marketing, and store experiences.

    “Our goal is clear and unchanged to deliver durable growth that's defined for us as mid-single-digit revenue growth as a floor, well ahead of the category at best-in-class margins, which we expect will deliver exceptional TSR.”

    asked by Robert Drbul · answered by Joanne Crevoiserat

    2 min read6 chapters

    Detailed Narrative

    01

    Amplify Strategy Driving Outperformance

    Tapestry's Amplify strategy continues to yield significant results, with Q3 FY26 pro forma revenue growing 23% at constant currency, operating margin expanding 490 basis points, and EPS increasing 62% year-over-year. This outperformance, driven by deep consumer connection and disciplined growth, led to an increased full-year outlook, underscoring the structural and sustainable advantages of the business model.

    02

    Customer Acquisition and Gen Z Engagement

    The company successfully acquired over 2.4 million new customers globally in the quarter, with a significant increase in Gen Z consumers. These younger customers exhibit higher retention rates, supporting increased repeat purchasing and long-term lifetime value. This broad-based strength, including growth with existing customers, reinforces Tapestry's ability to attract and retain new generations across its brands.

    03

    Coach's Strong Performance and Market Share Gains

    Coach delivered exceptional results with 29% constant currency revenue growth and increased profitability, welcoming 2 million new customers. The brand's core leather goods offering saw healthy growth with unit volumes up over 20% and AUR growing at a low double-digit rate. Coach significantly outpaced the industry and gained market share in North America (up 27%), Greater China (up 58%), and Europe (up 27%), demonstrating global resonance and effective regional strategies.

    04

    Kate Spade Turnaround Progress and Challenges

    Kate Spade's revenue declined 11%, though trends improved sequentially. The brand exceeded gross margin and profitability plans despite strategic investments and a pullback in promotions. Progress is noted in brand consideration, handbag performance (blockbusters like Duo and Margot), and customer acquisition (400,000 new customers), particularly among Gen Z. However, unaided brand awareness has not yet improved, indicating more work is needed to scale marketing efforts and creative execution for consistent growth.

    05

    Strategic Marketing and Retail Experiences

    Tapestry increased marketing spend by approximately 50% year-over-year, shifting towards top-of-funnel brand building to support sustained customer acquisition. Coach's "Explore Your Story" campaign resonated with Gen Z, and collaborations like CLOT in China drove cultural relevance. The rollout of new expressive luxury store concepts and Coach Play stores globally is enhancing immersive retail experiences, delivering higher traffic and dwell times, especially with Gen Z.

    06

    Capital Allocation and Shareholder Returns

    The company's Board declared a quarterly cash dividend of $0.40 per share ($81 million total). Tapestry repurchased $150 million of stock in Q3, bringing the year-to-date total to $1.05 billion (9.3 million shares at ~$112 average). For FY26, the company expects to return $1.6 billion (100% of adjusted free cash flow) to shareholders, including over $300 million in dividends and $1.3 billion in share repurchases, reflecting strong organic business and robust free cash flow.

    AI-generated summary of the company’s earnings call. Not investment advice.