Key Takeaways:
- Tapestry beat Q4 estimates with non-GAAP EPS of $1.32, up 28% year over year
- Coach revenue rose 15% to $1.64B, while Kate Spade fell 7% to $235M
- Company raised dividend 16% to $1.85 annual, guided FY2027 EPS of $7.80-$7.90
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Tapestry drops 10% premarket as Kate Spade sales slide 7%
Tapestry reported fiscal fourth-quarter non-GAAP EPS of $1.32, beating consensus of $1.28, yet shares fell more than 10% in premarket trading as Kate Spade sales declined 7%.
"Our fourth quarter outperformance capped a year of strong growth, as we meaningfully exceeded expectations and achieved key financial commitments we established at our Investor Day two years ahead of plan," Joanne Crevoiserat, chief executive officer of Tapestry, said.
Revenue totaled $1.88B, up 9% reported and 8% constant currency, edging past the $1.87B consensus. Coach delivered $1.64B in revenue, up 15%, with handbag average unit retail rising at a mid-teens percentage rate. Kate Spade revenue fell 7% to $235.1M, marking another quarter of decline for the brand. Non-GAAP gross margin expanded 180 basis points to 78.1%, while operating margin widened 250 basis points to 19.3%.
The premarket decline suggests investors focused on Kate Spade's continued drag and the fiscal 2027 outlook of $8.4B to $8.5B in revenue and $7.80 to $7.90 in EPS, implying mid-single-digit revenue growth and low-double-digit EPS growth. The company raised its dividend 16% to $1.85 per share annually and expects to return approximately $1.7B to shareholders in fiscal 2027 through dividends and buybacks.
For the full fiscal year, Tapestry reported net sales of $8.00B, up 14%, and non-GAAP EPS of $7.05, up 38%. The company returned $1.7B to shareholders in fiscal 2026, including $1.35B in share repurchases at an average price of approximately $118 per share.
Greater China revenue grew 28% in the fourth quarter on a constant currency basis, while North America grew 7% and Europe grew 19%. The company welcomed approximately 11 million new consumers in fiscal 2026, with roughly 35% from Gen Z.
The fiscal 2027 outlook embeds a mid-20% tariff rate on U.S. inventory receipts, which management described as having a neutral net impact year over year. The company expects first-quarter fiscal 2027 revenue growth of high-single digits and EPS of approximately $1.55.
The stock's decline puts pressure on a company that has outperformed the broader retail sector this year. Investors will watch the fiscal 2027 first-quarter earnings call on Nov. 5 for signs of stabilization at Kate Spade and continued momentum at Coach.
This article is for informational purposes only and does not constitute investment advice.
