What gives confidence that the Coach brand can sustain its strong growth momentum in North America, especially as it begins to cycle very tough comparisons?

Todd Kahn expressed high confidence, citing comping double-digit growth in the critical holiday period with lower promotions, exceptional margins, and a 40% increase in marketing focused on future desirability. He highlighted 'Confidence Performance Indicators' (CPIs) including single-digit market share in North America (globally 10% of sales), and balanced AUR/unit contribution, with units still below pre-pandemic levels. “I appreciate that there was some concern about our ability to comp the double-digit growth in the quarter, but not only did we comp the comp in the most critical holiday period, we did it the right and sustainable way with lower promotions, exceptional margins and a 40% increase in marketing.”

Can you provide more detail around Average Unit Retail (AUR) and future opportunities, including benefits from pricing, sales mix, and product innovation?

Joanne and Todd explained AUR growth is driven by brand heat, innovation, and the unmatched value proposition of their brands, not merely a reaction to cost. They highlighted the $200-$500 sweet spot, constant product animation, and mix benefits from the 'One Coach' strategy and customers trading up. They stressed the importance of not compromising value or artificially driving units through promotion, ensuring sustainable growth. “AUR for us is not just a reaction to cost. It really is thoughtful about how we deliver a strong value proposition to consumers.”

TPR

Tapestry (TPR) Q2 FY26 earnings call: guidance and Q&A

Q: What gives confidence in the raised FY26 EPS guide of $6.40-$6.45, which is ahead of the Investor Day timeline, and what are the paths for continued revenue and margin drivers?

Joanne highlighted the power of strategies, brands, and business model, driving strong customer acquisition and compounding efforts. Scott emphasized a 'new gear of growth' with operational discipline, leading to a $0.80 EPS increase ($0.50 beat, $0.30 H2 raise), 14% constant currency growth, increased gross margin outlook (mitigating tariffs), and $1.5B free cash flow returned to shareholders. He stated the new guide is a re-baseline for future mid-single-digit revenue and double-digit EPS growth with expanding margins. “this is a moment we prepared for. So we've been known for operational discipline for quite a while. But what you see in the results in Q2 and the outlook for the year is a new gear of growth.”

Q: Can you elaborate on the strength and outperformance in China (25%+ growth) and comment on what is being seen in the European market (20% growth), given other brands' reported slowdowns?

Joanne and Todd explained China's growth is driven by new Gen Z customer acquisition, digital leadership, and significant market share gains, with targeted marketing campaigns like the CLOT collaboration. Europe's consistent growth is attributed to low penetration, disciplined brand building, and attracting local young consumers, with plans to expand into new markets like France. Both regions benefit from effective regional execution and understanding local customer needs. “what is driving our growth and our share gain -- significant share gains in the market is new customer acquisition, which is being led by Gen Z.”

Earnings call· Dec 2025 (Q2 FY26)· Consumer Discretionary· Feb 5, 2026

Source: earnings call transcript

Executive summary

Tapestry Q2 FY26 — Strong Outperformance Drives Raised Full-Year Outlook

Tapestry delivered a standout second quarter, significantly outperforming expectations across revenue, operating income, and EPS, driven by the compounding impact of its Amplify strategies and strong customer acquisition, particularly among Gen Z. This momentum has led to a confident increase in the full-year outlook, reinforcing the company's structural advantages and commitment to durable growth. The company continues to invest in brand building and operational discipline, positioning it for sustained value creation.

Highlights

Delivered pro forma revenue growth of 18% in Q2 FY26, exceeding expectations.
Expanded adjusted operating margin by 390 basis points in Q2 FY26.
Grew earnings per share by 34% to $2.69 in Q2 FY26, surpassing guidance.
Acquired over 3.7 million new customers globally in the quarter, driven by Gen Z focus.
Increased full-year FY26 EPS outlook to $6.40-$6.45, up from $5.45-$5.60.

Concerns

Kate Spade revenue declined 14% in Q2 FY26 due to deliberate promotional pullback.
Japan sales declined 6% in Q2 FY26 due to intentional pullback in promotions.
Gross margin was impacted by a 190 basis point headwind from tariffs and duties in Q2 FY26.
Kate Spade is expected to incur a modest profit loss for FY26 due to outsized tariff impacts and brand investments.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year FY26 revenue	over $7.75 billion high materiality	FY26	High
Full-year FY26 revenue growth (nominal)	approximately 15% high materiality	FY26	High
Full-year FY26 revenue growth (constant currency)	14% high materiality	FY26	High
Full-year FY26 FX impact on revenue	70 basis point tailwind medium materiality	FY26	High
Full-year FY26 North America revenue growth (constant currency)	low double digits medium materiality	FY26	High
Full-year FY26 Europe revenue growth	in the area of 20% medium materiality	FY26	High
Full-year FY26 Greater China revenue growth	over 25% medium materiality	FY26	High
Full-year FY26 Japan revenue growth	high single-digit decline medium materiality	FY26	High
Full-year FY26 Other Asia revenue growth	low double-digit gains medium materiality	FY26	High
Full-year FY26 Coach revenue growth	high teens percentage growth high materiality	FY26	High
Full-year FY26 Kate Spade revenue growth	high single-digit decline high materiality	FY26	High
Full-year FY26 operating margin expansion	approximately 180 basis points high materiality	FY26	High
Full-year FY26 gross margin increase	in the area of 20 basis points high materiality	FY26	High
Full-year FY26 operational gross margin expansion	roughly 180 basis points medium materiality	FY26	High
Full-year FY26 structural tailwind to gross margin from Stuart Weitzman divestiture	60 basis point medium materiality	FY26	High
Full-year FY26 tariff and duties headwind	nearly 200 basis point high materiality	FY26	High
Full-year FY26 FX headwind to gross margin	20 basis points medium materiality	FY26	High
Full-year FY26 SG&A leverage	roughly 160 basis points medium materiality	FY26	High
Full-year FY26 marketing as a percentage of sales	approaching 12% medium materiality	FY26	High
Full-year FY26 Coach operating margin	expand its operating margin medium materiality	FY26	High
Full-year FY26 Kate Spade operating profit	modest profit loss medium materiality	FY26	High
Full-year FY26 net interest expense	approximately $65 million low materiality	FY26	High
Full-year FY26 tax rate	approximately 17% low materiality	FY26	High
Full-year FY26 weighted average diluted share count	approximately 211 million shares low materiality	FY26	High
Full-year FY26 share repurchases	$1.2 billion high materiality	FY26	High
Full-year FY26 EPS	$6.40 to $6.45 high materiality	FY26	High
Full-year FY26 adjusted free cash flow	in the area of $1.5 billion high materiality	FY26	High
Full-year FY26 CapEx and cloud computing costs	in the area of $200 million medium materiality	FY26	High
Second half FY26 total pro forma revenue growth	low double-digit rate medium materiality	H2 FY26	High
Second half FY26 Coach growth	mid-teens growth versus prior year medium materiality	H2 FY26	High
Second half FY26 Kate Spade decline	mid- to high single-digit decline medium materiality	H2 FY26	High
Q3 FY26 total sales increase (pro forma constant currency)	in the area of 14% high materiality	Q3 · FY26	High
Q3 FY26 FX benefit to nominal sales	more than 150 basis point medium materiality	Q3 · FY26	High
Q3 FY26 Coach sales growth (constant currency)	up high teens medium materiality	Q3 · FY26	High
Q3 FY26 Kate Spade sales decline	high single digits medium materiality	Q3 · FY26	High
Q3 FY26 operating margin expansion	in the area of 70 basis points medium materiality	Q3 · FY26	High
Q3 FY26 SG&A leverage	over 150 basis points medium materiality	Q3 · FY26	High
Q3 FY26 gross margin	decline medium materiality	Q3 · FY26	High
Q3 FY26 EPS	approximately $1.25 high materiality	Q3 · FY26	High
Q3 FY26 tax rate	roughly 14% low materiality	Q3 · FY26	High
Coach brand ambition	$10 billion brand high materiality	over time	High
Long-term gross leverage target	below 2.5x medium materiality	long-term	High
Long-term dividend growth	at least in line with earnings growth medium materiality	over time	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Coach Delivered exceptional quarter with revenue increasing 25% and margins expanding, accelerating from Q1. Customer acquisition drove top line gains, welcoming 2.9 million new customers, led by Gen Z. Growth was led by core leathergoods with AUR and unit volumes increasing at mid-teens rates.	—	25%	—	margins expanded
Kate Spade Revenue declined 14%, reflecting deliberate actions to reset the brand through promotional pullback. Made incremental investments to advance the turnaround, focusing on strengthening the brand's foundation for long-term growth. Expects a modest profit loss for FY26 due to outsized tariff impacts and brand investments.	—	-14%	—	—
North America Sales increased 17%, ahead of plan and led by 27% growth at Coach, driving share gains while expanding both gross and operating margins.	—	17%	—	gross and operating margins expanded
Europe Revenue grew 22%, driven by strength in direct business and reflecting market share gains. Strong new customer acquisition, particularly among Gen Z, and increased local consumer spending fueled momentum.	—	22%	—	—
Greater China Revenue outperformed expectations, increasing 34%, driven by broad-based growth across channels and continued market share gains. Digital was a notable contributor, with Coach ranking as a top-performing brand over the Double 11 period.	—	34%	—	—
Other Asia Revenue increased 12%, led by growth primarily in Australia and South Korea.	—	12%	—	—
Japan Sales declined 6%, as expected, driven by an intentional pullback in promotions.	—	-6%	—	—

TPR operating KPIs by quarter

TPR operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q2 FY25	Mar 2025 Q3 FY25	Jun 2025 Q4 FY25	Sep 2025 Q1 FY26	This call Dec 2025 Q2 FY26	Mar 2026 Q3 FY26	Jun 2026 Q4 FY26	Change vs prior quarter
New customers acquired North America	~2.7M During the quarter, we drove new customer acquisition growth, welcoming approximately 2.7 million new customers in North America alone. Source: earnings call transcript	1.2M+ In North America specifically, we acquired over 1.2 million new customers in the quarter, representing strong growth versus last year. Source: earnings call transcript	—	—	—	—	—	—
New customers acquired Coach North America	1.7M+ Overall, our holistic brand building activities helped to drive increases in new customer acquisition as we welcomed over 1.7 million new customers to Coach in North America, a strong increase versus prior year and a significant acceleration in trend. Source: earnings call transcript	<900K Overall, our holistic brand-building activities helped to drive increases in new customer acquisition as we welcome nearly 900,000 new customers to Coach in North America, of which nearly 70% were Gen Z and millennials. Source: earnings call transcript	1M+ 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. Source: earnings call transcript	—	—	—	—	—
New customers acquired Coach	—	—	—	1.7M+ This is evident in our strong customer acquisition results as we welcomed over 1.7 million new customers globally to Coach, a strong increase over prior year, led by Gen Z Our new and younger customers are transacting at higher AUR and have a higher retention rate than the balance of our client base. Source: earnings call transcript	2.9M Customer acquisition once again drove top line gains, welcoming 2.9 million new customers to the brand this quarter. Source: earnings call transcript	2M Customer acquisition once again drove our top line growth this quarter, with Coach welcoming 2 million new customers to the brand, a significant increase over the prior year. Source: earnings call transcript	2M+ We drove new customer acquisition around the world, welcoming over 2 million new consumers in the quarter and nearly 9 million for the full year. Source: earnings call transcript	—
New customers acquired	—	—	—	2.2M+ We built emotional connections with consumers, acquiring over 2.2 million new customers globally in the quarter, driven by Gen Z By connecting with consumers early in their journey, we're building lifetime value and reinforcing a competitive advantage, our ability to attract and retain new generations to our brands. Source: earnings call transcript	3.7M+ First, we built emotional connections with consumers, acquiring over 3.7 million new customers globally in the quarter, driven by a strategic focus on Gen Z This continues to be central to our healthy top line growth, as engaging consumers earlier in their purchase journey enhances repeat purchasing and lifetime value over time. Source: earnings call transcript	2.4M+ First, we built emotional connections with consumers acquiring over 2.4 million new customers globally in the quarter, driven by an increase in Gen Z This continues to be a key driver of our growth as engaging consumers earlier supports higher repeat purchasing and lifetime value. Source: earnings call transcript	—	—
New customers acquired kate spade	—	—	—	—	—	400K This is true across brand consideration, handbags performance and customer acquisition as we welcomed 400,000 new customers to kate spade in the quarter. Source: earnings call transcript	450K+ We welcomed over 450,000 new customers during the quarter and approximately 2 million for the full year, with these consumers transacting at higher AURs than the balance of the customer base, a foundational element of our strategy. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Margot family	launch	Q2 FY26
CLOT collaboration	launch	Q2 FY26
Spark Something Beautiful campaign	update	Q2 FY26

Deals & partnerships

Stuart Weitzman divestiture

The divestiture of Stuart Weitzman provided a structural tailwind to gross margin and a benefit to expenses.

Risks & headwinds

Tariff and duty impact on gross margin Q2 FY26 and FY26

190 basis points negative impact in Q2 FY26; approximately 140 basis points on Coach's gross margin; 520 basis points on Kate Spade's gross margin. Nearly 200 basis point headwind for FY26.

Mitigation:Fully offset for FY26 by operational gross margin expansion and structural tailwind from Stuart Weitzman divestiture.

FX headwind on gross margin FY26

20 basis points

Mitigation:Partially offset by other margin drivers.

Kate Spade profit loss FY26

modest profit loss

Mitigation:Ongoing brand investments and strategic actions to reset the brand, with sequential improvement planned for the second half.

Japan sales decline due to promotional pullback Q2 FY26

6% decline

Mitigation:Intentional action to strengthen brand health and value proposition.

Q&A highlights

What gives confidence in the raised FY26 EPS guide of $6.40-$6.45, which is ahead of the Investor Day timeline, and what are the paths for continued revenue and margin drivers?

Joanne highlighted the power of strategies, brands, and business model, driving strong customer acquisition and compounding efforts. Scott emphasized a 'new gear of growth' with operational discipline, leading to a $0.80 EPS increase ($0.50 beat, $0.30 H2 raise), 14% constant currency growth, increased gross margin outlook (mitigating tariffs), and $1.5B free cash flow returned to shareholders. He stated the new guide is a re-baseline for future mid-single-digit revenue and double-digit EPS growth with expanding margins.

“this is a moment we prepared for. So we've been known for operational discipline for quite a while. But what you see in the results in Q2 and the outlook for the year is a new gear of growth.”

asked by Matthew Boss · answered by Scott Roe

3 min read 7 chapters

Detailed narrative

Strategic Outperformance and Outlook

Tapestry's Q2 FY26 results demonstrated significant outperformance, with pro forma revenue growth of 18%, adjusted operating margin expansion of 390 basis points, and EPS growth of 34%. This strong momentum led to an increased full-year FY26 outlook, with expected revenue over $7.75 billion and EPS of $6.40 to $6.45, reflecting a new gear of growth and operational discipline.

The company's strategies are compounding, driving healthy and sustainable growth with expanding operating margins.

Customer Acquisition and Brand Building

The company acquired over 3.7 million new customers globally in the quarter, with a strategic focus on Gen Z, enhancing repeat purchasing and lifetime value. Marketing spend increased by approximately 40% year-over-year, shifting towards top-of-funnel brand building to support sustained customer acquisition and cultural relevance.

This was evident through campaigns like 'The Gift for New Adventures' and a collaboration with CLOT in China, deepening cultural relevance and accelerating consumer acquisition.

Coach's Continued Strength and Product Innovation

Coach delivered exceptional results with revenue increasing 25% and margins expanding, driven by 2.9 million new customer acquisitions. Growth was led by core leathergoods, with both average unit retail (AUR) and unit volumes increasing at mid-teens rates, demonstrating diversified drivers.

The brand's icons, including the Tabby franchise and New York family, outperformed, fueled by Gen Z recruitment, and a strong product pipeline is expected to support continued gains in AUR and units.

Kate Spade Turnaround Efforts and Store Experience

Kate Spade's revenue declined 14%, reflecting deliberate actions to reset the brand through promotional pullback and increased investments in its turnaround strategy. Early positive signs include improved brand consideration and Gen Z acquisition trends in handbags, with handbag styles reduced by 40% for the holiday season to support full-price selling and AUR growth.

The brand also tested updated visual merchandising in 10 locations, which experienced a lift in conversion and ADT, with plans to expand this format.

Gross Margin and Tariff Mitigation

Gross margin expanded by 110 basis points to 75.5% in Q2 FY26, driven by operational expansion of 250 basis points and a 50 basis point benefit from the Stuart Weitzman divestiture. These gains fully offset a 190 basis point tariff and duty headwind.

For the full year, gross margin is expected to increase by 20 basis points, completely mitigating tariff impacts through AUR improvements and supply chain actions, with most tariff impact hitting in Q3 and Q4.

Capital Allocation and Shareholder Returns

Tapestry plans to return $1.5 billion, or 100% of expected adjusted free cash flow, to shareholders in FY26, including over $300 million in dividends and $1.2 billion in share repurchases. The company maintains a commitment to investing in brands, increasing dividends in line with earnings growth, and evaluating strategic portfolio management opportunities while targeting a gross leverage ratio below 2.5x, underpinned by a solid investment-grade rating.

International Market Penetration and Strategy

International markets, particularly Europe and Greater China, represent significant growth opportunities for Tapestry. Europe saw 22% revenue growth, driven by direct business strength and new customer acquisition, while Greater China revenue increased 34%, outpacing the industry and driven by digital channels and Gen Z engagement.

The company is focused on disciplined brand building and attracting local young consumers in these regions, with plans to expand further in Europe, including France.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.