Tapestry Exceeds Expectations in the Third Quarter of 2026
Tapestry closed its third fiscal quarter of 2026 with results that exceeded expectations and once again raised its full-year guidance, driven by growth at the Coach brand, expanding margins, and strong demand in key international markets.
The U.S. group, owner of the Coach and Kate Spade brands, reported revenue of $1.92 billion (approximately €1.69 billion) for the quarter ended March 28, up 21% from the same period last year (+19% at constant exchange rates), exceeding analysts’ average estimate of $1.79 billion, Reuters reports. On a pro forma basis, excluding Stuart Weitzman, which was sold in August 2025, revenue growth reached 25% (+23% at constant exchange rates).
Profitability surges
Operating income jumped 69% to $427.5 million, with an operating margin of 22.3%, an improvement of 630 basis points compared to the third quarter of the previous fiscal year. Diluted earnings per share were $1.65, up 74%, while adjusted earnings per share reached $1.66 (+62%).
Coach drives growth, Kate Spade lags
The performance was primarily driven by Coach, which closed the quarter with revenue of $1.7 billion, up 31% (+29% at constant exchange rates), benefiting from strong demand in the leather goods category and growth in the Gen Z customer base. Conversely, Kate Spade recorded a 10% decline to $219.6 million.
From a geographic perspective, Tapestry posted double-digit growth in North America (+20%), Europe (+21%), and Asia-Pacific, with Greater China up 55% at constant exchange rates. The company also reported that it acquired more than 2.4 million new customers during the quarter, over 35% of whom are Gen Z consumers.
“We have successfully translated our insights and creativity into significant growth, expanded margins, and enhanced brand desirability,” commented Joanne Crevoiserat, CEO of Tapestry, noting that these results reflect “the cumulative benefits of the ‘Amplify’ strategy.”
Annual Forecasts Revised Upward
In light of the quarter’s performance and a fourth quarter expected to exceed initial forecasts, the group has raised its outlook for the full fiscal year 2026. Tapestry now expects revenue of approximately $7.95 billion, up from a previous forecast of over $7.75 billion. Expected annual growth is approximately 14% on a reported basis and 13% at constant exchange rates. On a pro forma basis, the estimated increase is 17% and 16%, respectively.
The group also expects an operating margin of approximately 23%, an improvement of nearly 300 basis points compared to the previous year, versus a prior forecast of +180 basis points. Adjusted earnings per share are now expected to be around $6.95, exceeding the previous range of $6.40 to $6.45, representing year-over-year growth of more than 35%.
Cash flow guidance has also been revised upward: adjusted free cash flow is expected to be nearly $1.6 billion, compared to a previous guidance of approximately $1.5 billion. At the same time, Tapestry increased its shareholder remuneration plan for fiscal year 2026 to $1.6 billion, including dividends and share buybacks, up from $1.5 billion previously.
Wall Street punishes the stock despite strong results
Despite these positive figures, the stock fell on Wall Street, dropping 12%. During the earnings conference call, several factors dampened investor enthusiasm, notably the Kate Spade brand, which remains in difficulty and faces short-term revenue declines and margin pressures related to tariffs.