Key facts
- Tapestry's fourth-quarter adjusted profit was $1.32 per share, surpassing analyst estimates.
- Quarterly sales increased by 8.9% to $1.88 billion.
- Gross margins expanded to 78.1% due to sequential price hikes.
- The company forecasts annual earnings per share for the year ending June 2027 to be between $7.80 and $7.90.
- Tapestry expects to buy back $1.35 billion of stock in the fiscal year.
Tapestry, the parent company of Coach, reported quarterly results that surpassed Wall Street expectations and provided an optimistic earnings forecast for the upcoming fiscal year. The company is leveraging the appeal of its Coach brand, particularly among younger and affluent consumers, to drive growth. This strategy has involved scaling back promotions and focusing marketing efforts on gaining market share, with newer collections like the Tabby and Belted Ergo shoulder bags contributing to sales increases.
In contrast to Coach's performance, Tapestry's Kate Spade brand continues to face challenges with declining sales. The company's largest market, North America, saw a 7% revenue increase on a constant currency basis, while China and Europe experienced significant growth of 28% and 19%, respectively. Tapestry's finance chief, Scott Roe, highlighted the resilience of the North American consumer as a key strength.
For the fiscal year ending June 2027, Tapestry anticipates earnings per share to be in the range of $7.80 to $7.90, a midpoint that exceeds analysts' average estimate. The company also projects first-quarter revenue growth in the high single digits and a profit of approximately $1.55 per share, both above analyst expectations. Quarterly gross margins improved by 180 basis points to 78.1%, attributed to recent price adjustments. Tapestry's annual revenue forecast is set between $8.4 billion and $8.5 billion, and the company plans to repurchase $1.35 billion of its stock during the fiscal year.