NYSE:TPR

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Tapestry (TPR) Falls 15.6% Despite Strong Q4 as FY2027 Outlook Disappoints

Tapestry (NYSE: TPR) shares are down 15.6% after the luxury fashion company reported strong fiscal fourth-quarter results but issued a more moderate growth outlook for fiscal 2027.

Fourth-quarter revenue rose 9% year over year to $1.88 billion, while pro forma sales excluding Stuart Weitzman increased 12%. Non-GAAP EPS climbed 28% to $1.32, and non-GAAP operating margin expanded 250 basis points to 19.3%.

Coach remained the company's main growth engine, with Q4 revenue rising 15%, including particularly strong growth in Greater China. However, Kate Spade remained a weak spot, with quarterly revenue falling 7%.

Why Is TPR Stock Down?

The selloff appears primarily tied to expectations for slower growth ahead. Tapestry forecasts fiscal 2027 revenue of $8.4 billion to $8.5 billion, representing only mid-single-digit growth, while EPS is expected at $7.80 to $7.90, representing low-double-digit growth. For Q1, the company expects high-single-digit revenue growth and EPS of approximately $1.55.

The sharp reaction suggests investors had priced in stronger momentum following Coach's exceptional fiscal 2026 performance. With Coach growth likely normalizing and Kate Spade still contracting, the FY2027 outlook appears to have fallen short of elevated market expectations despite another strong quarter.
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Author
The Investor 08-13-26
Tapestry, Inc. reported strong results for the fiscal second quarter of 2025, with record revenue of $2.2 billion, marking a 5% increase from the previous year. The growth was driven by a 10% increase in Coach's revenue. Gross margin expanded by 280 basis points, reflecting operational improvements and lower freight expenses.

The company achieved a diluted EPS of $1.38 on a reported basis and a record non-GAAP diluted EPS of $2.00, surpassing expectations. This was driven by operational outperformance, share repurchase activity, and a favorable tax rate. Cash flow from operating activities was robust, exceeding $500 million, with adjusted free cash flow of around $890 million.

Tapestry's strategic initiatives included growing its customer base, with 2.7 million new customers acquired in North America, particularly among Gen Z and Millennials. The company saw positive revenue growth across all regions, with notable gains in Europe (+42%), North America (+4%), and APAC (+1%).

In terms of shareholder returns, Tapestry expects to return over $2 billion in fiscal 2025 through dividends and share repurchases. The company declared a quarterly dividend of $0.35 per common share, payable in March 2025.

Overall, Tapestry remains confident in its future prospects, citing strong brand performance, effective operational management, and strategic investments aimed at sustainable growth.
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Author
European Investor 02-06-25