Q4 2026 Tapestry Inc Earnings Call Transcript
Key Points
- Tapestry Inc (TPR) exceeded its 3-year revenue, operating margin, and EPS commitments from Investor Day 2 years ahead of plan, delivering record results.
- The company achieved strong revenue growth of 17% on a pro forma constant currency basis, with broad-based double-digit growth across key regions including North America, Europe, and Greater China.
- Coach brand demonstrated exceptional performance with high single-digit growth, strong customer acquisition (9 million new customers), and a clear path to becoming a $10 billion brand.
- Gross margin expanded by 180 basis points in Q4, driven by operational improvements and favorable mix, despite tariff headwinds.
- The company returned $1.7 billion to shareholders in fiscal 2026 and plans to return another $1.7 billion in fiscal 2027, including a 16% dividend increase.
- Tapestry Inc (TPR) continues to invest in AI and data capabilities, securing its first AI patent, which enhances its competitive advantage and operational efficiency.
- Kate Spade brand continues to struggle, with a high single-digit decline expected in fiscal 2027 and a modest operating loss, indicating ongoing challenges in turning the brand around.
- The company faces tariff and duty headwinds, with a mid-20s percent tariff rate on U.S. imports expected in fiscal 2027, which could impact profitability.
- Japan sales declined 4% in Q4 due to an intentional pullback in promotions, and the company expects a return to growth only in fiscal 2027.
- Inventory levels are expected to increase in fiscal 2027 to support growth, which could pose a risk if demand softens.
- The company's guidance for fiscal 2027 implies a moderation in growth from the exceptional levels seen in fiscal 2026, with revenue growth expected to slow to mid-single digits.
- Kate Spade's unaided brand awareness has not yet improved, indicating that marketing investments have not fully translated into broader brand recognition.
Good day, and welcome to this Tapestry conference call. Today's call is being recorded. (Operator Instructions)
At this time, for opening remarks and introductions, I would like to turn the call over to the Global Head of Investor Relations, Christina Colone.
Good morning. Thank you for joining us. With me today to discuss our fourth quarter and full year results, our strategies and our outlook are Joanne Crevoiserat, Tapestry's Chief Executive Officer; and Scott Roe, Tapestry's Chief Financial Officer and Chief Operating Officer.
Before we begin, we must point out that this conference call will involve certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. This includes projections for our business in the current or future quarters or fiscal years. Forward-looking statements are not guarantees, and our actual results may differ materially from those expressed or implied in the forward-looking statements. Please refer to our annual report on Form 10-K, the press release we issued this
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