TPR — Tapestry, Inc.

Tapestry, Inc. (TPR) Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Pro Forma Revenue Growth: 18% year-over-year, exceeding expectations.
• Adjusted Operating Margin: Expanded by 390 basis points.
• Earnings Per Share (EPS): $2.69, a 34% increase from the prior year.
• Regional Performance:
  • North America: Revenue up 17%, with Coach growing 27%.
  • Europe: Revenue increased 22%.
  • Greater China: Revenue surged 34%.
  • Japan: Revenue declined 6% due to intentional promotional pullback.
• Gross Margin: 75.5%, up 110 basis points year-over-year.
• Shareholder Returns: Declared a quarterly dividend of $0.40 per share and repurchased $400 million in shares.

2. Strategic Updates and Business Highlights

• Customer Acquisition: Acquired 3.7 million new customers globally, with a focus on Gen Z.
• Brand Performance:
  • Coach: 25% revenue growth, driven by leather goods and strong AUR (average unit retail).
  • Kate Spade: Revenue declined 14% as part of a brand reset, but showed early signs of improvement in key performance indicators (KPIs).
• Marketing Investments: Increased by 40% to support brand desirability and customer acquisition, particularly among younger consumers.
• Innovation and Product Development: Continued focus on compelling product offerings, with a strong pipeline expected to drive future growth.

3. Forward Guidance and Outlook

• Fiscal 2026 Revenue Guidance: Raised to over $7.75 billion, reflecting pro forma growth of approximately 15%.
• Operating Margin: Expected to expand by approximately 180 basis points for the year.
• EPS Forecast: Projected between $6.40 and $6.45, representing over 25% growth compared to the previous year.
• Second Half Expectations: Anticipate low double-digit revenue growth, with Coach expected to grow in the mid-teens and Kate Spade to decline in the high single digits.

4. Challenges and Points of Concern

• Kate Spade Performance: Revenue decline of 14% indicates ongoing challenges in the brand's turnaround strategy, though early signs of improvement are noted.
• Tariff Impacts: Continued headwinds from tariffs affecting gross margins, particularly for Kate Spade.
• Market Conditions: Potential competitive pressures and economic uncertainties in key markets, particularly in Europe, where some brands are seeing a slowdown.

5. Notable Q&A Insights

• Confidence in Coach's Growth: CEO and team expressed strong confidence in sustaining growth momentum, particularly in North America, despite tough comparisons.
• AUR and Unit Growth: Emphasis on balanced growth between AUR and unit sales, with a focus on sustainable customer acquisition rather than promotional strategies.
• AI Utilization: Discussion on leveraging AI for product development and marketing, enhancing efficiency and creativity within the organization.
• Future Innovation: Assurance that the brand will continue to innovate without allowing any single product family to dominate sales, maintaining a balanced portfolio.

Overall, Tapestry reported a strong quarter with significant growth across its brands, particularly Coach, while navigating challenges with Kate Spade and external market pressures. The company remains optimistic about its strategic direction and future growth potential.