Tapestry Lifts FY2027 Outlook as Coach Growth Outpaces Kate Spade

By Amara Osei

Tapestry beat first-quarter expectations with revenue of $1.9 billion, up 12% on a pro forma basis, and lifted its fiscal 2027 earnings outlook to $8.25 to $8.35 a share.

Earnings reached $1.82 a share, up 32%, while operating margin expanded 230 basis points to more than 23%. Chief Executive Officer Joanne Crevoiserat said the company welcomed 2.6 million new customers across its brands.

“Growth in North America exceeded our expectations and drove our beat, while international added to our performance with strong double-digit revenue increases,” Crevoiserat said.

Coach did the heavy lifting. North America delivered the beat, and buybacks helped raise the full-year earnings range.

What does the higher fiscal 2027 outlook include?

Tapestry now expects fiscal 2027 revenue of $8.5 billion to $8.6 billion, representing constant-currency growth of 6% to 7%. It forecasts earnings per share of $8.25 to $8.35, versus its previous $7.80 to $7.90 range. The guidance is non-GAAP and compares 52 weeks with 52 weeks.

Chief Financial Officer and Chief Operating Officer Scott Roe said the company's $0.27 first-quarter earnings outperformance contributed to the higher forecast. Approximately $0.12 of the increase came from below-the-line items for the balance of the year, primarily additional share repurchases; the remainder reflected higher revenue expectations driven by North America.

Tapestry also increased planned share repurchases by $350 million to $1.7 billion for the year. Including dividends, it expects to return approximately $2 billion to shareholders in fiscal 2027. During the first quarter, it returned about $700 million, including $600 million in buybacks.

The company expects operating margin to expand approximately 100 basis points to more than 24% for the year. Its outlook assumes a low- to mid-20% tariff rate on U.S. imports and a modest net year-over-year benefit to the profit and loss statement, including mitigating actions.

Fiscal 2027 includes a 53rd week, which Tapestry expects to add approximately one percentage point of annual revenue growth outside its comparable 52-week guidance. For the second quarter, the company forecasts constant-currency revenue growth of 5% to 6% and earnings per share of approximately $3.05.

Higher revenue expectations and buybacks now support a wider earnings range, with tariff assumptions and an extra week shaping the comparison.

How is Coach driving Tapestry's growth?

Coach revenue rose 16% at constant currency in the first quarter. At constant currency, regional revenue changes were:

• North America: revenue increased 7%.
• Greater China: revenue rose 41%.
• Europe: revenue rose 27%.
• Japan: revenue rose 5%.

The brand welcomed more than 2.1 million new customers, 40% of whom were Gen Z, according to Coach CEO and Brand President Todd Kahn. Handbag average unit retail increased at a low-double-digit rate, while unit volumes grew at a low-single-digit rate.

Crevoiserat said Coach raised both prices and units in its core $200-to-$500 handbag range while reducing its emphasis on promotional products below $200. Kahn said that range would remain central to the brand's strategy.

Asked about holiday promotions, Kahn said shoppers should see Coach become “even less promotional,” with the brand emphasizing its assortment and limited seasonal offerings.

Coach footwear revenue rose more than 20% in the quarter. Kahn said footwear contributed about 6% of the brand's growth and helped attract new customers, including young men buying the Soho sneaker.

For the full year, Tapestry continues to forecast high-single-digit revenue growth at Coach, including mid-single-digit growth in North America. Crevoiserat said the company modeled mid-teens growth in Greater China for both the second quarter and the year despite tougher comparisons.

Coach carries the group's growth, with international and footwear offsetting a more measured North America.

Can Kate Spade turn around?

Kate Spade revenue declined 10% in the first quarter, in line with guidance, although gross margin expanded 190 basis points. Tapestry continues to expect a high-single-digit revenue decline and a modest operating loss at the brand for fiscal 2027.

Crevoiserat said the company is streamlining Kate Spade, closing unproductive stores and stepping away from promotional activity as it builds a stronger foundation. Newly appointed Executive Creative Director Jonathan Saunders is working with Brand CEO Eva Erdmann on product and storytelling.

Handbags brought nearly 500,000 new customers to Kate Spade during the quarter at higher average unit retail, Crevoiserat said. She added that Tapestry expects progress as the year moves into its second half, while monitoring those early signs of improvement.

The turnaround has drawn new handbag customers at higher average unit retail, but the top line remains under pressure.

What do margins and investment show?

First-quarter gross margin rose 220 basis points to 78.7%, including 130 basis points of operational improvement and a 70-basis-point net benefit from lower tariffs and duties. Marketing represented more than 12% of sales, up 140 basis points from a year earlier.

Tapestry expects adjusted free cash flow to approach $1.7 billion for fiscal 2027 and plans approximately $300 million in capital expenditures and cloud computing costs. Much of that spending will support store openings and renovations, including Coach's expressive luxury store concept, which the company aims to expand to reach approximately 80% of its traffic by fiscal 2030.

Cash generation remains strong. The spending plan directs money toward stores, cloud computing and broader use of Coach's expressive luxury format.