Company Reports

We believe Tapestry has a narrow moat based on the brand strength and pricing power of Coach (86% of June-ended fiscal 2026 revenue). After some lean years, the firm has turned Coach around through store closures, restrictions on markdowns, and increased e-commerce. Tapestry has been highly successful in marketing and introducing products to solidify Coach as a leader in the attractive affordable luxury handbag category. Further, we expect growth in complementary categories like footwear and fashion. Coach’s sales and profitability have risen lately, with gross margins in the high 70s in fiscal years 2025 and 2026, as the brand has gained a strong following among younger consumers.

Tapestry's fiscal 2026 fourth-quarter sales rose 9% as Coach's 15% increase offset Kate Spade's 7% decline. Tapestry's non-GAAP gross margin rose 180 basis points to 78.1% and its non-GAAP operating margin improved 250 basis points to 19.3%. Non-GAAP EPS rose to $1.32 from $1.04.

Tapestry's fiscal third-quarter sales rose 21%, as a 31% increase from Coach (89% of sales) offset a 10% decline from Kate Spade (11% of sales). With sales outperformance and higher Coach prices, gross and adjusted operating margin improved 80 and 490 basis points, respectively, to 76.9% and 22.4%.

We believe Tapestry has a narrow moat based on the brand strength and pricing power of Coach (80% of fiscal 2025 revenue). After some lean years, the firm has turned Coach around through store closures, restrictions on markdowns, and increased e-commerce. The brand is a leader in the attractive handbag category and consistently generates gross margins above 75%. Further, we expect growth in complementary categories like footwear and fashion. Coach’s sales and profitability have risen lately as the brand has gained a strong following among younger consumers.

We believe Tapestry has a narrow moat based on the brand strength and pricing power of Coach (80% of fiscal 2025 revenue). After some lean years, the firm has turned Coach around through store closures, restrictions on markdowns, and increased e-commerce. The brand is a leader in the attractive handbag category and consistently generates gross margins above 75%. Further, we expect growth in complementary categories like footwear and fashion. Coach sales and profitability have risen lately as the brand has gained a strong following among younger consumers.

Coach's sales (86% of total) soared 25% while Kate Spade's sales (14%) declined 14% in Tapestry's fiscal 2026 second quarter. With expense leverage and a gross margin that rose 110 basis points to 75.5%, non-GAAP operating margin increased nearly 4 percentage points to 28.8%.

We believe Tapestry has a narrow moat based on the brand strength and pricing power of Coach (80% of fiscal 2025 revenue). The firm has turned Coach around through store closures, restrictions on discounting, and increased e-commerce. The brand is a leader in the attractive handbag category and consistently generates gross margins above 75%. Further, we expect growth in complementary categories like footwear and fashion. Coach sales and profitability have risen lately as the brand has gained a strong following among younger consumers.

Led by 22% sales growth from Coach (84% of total sales), Tapestry's fiscal 2026 first-quarter sales rose 13%. Adjusted gross margin rose 120 basis points to 76.5% and operating margin rose 200 basis points to 20.9%, despite a 70-basis-point gross margin reduction due to higher US tariffs.

We believe Tapestry has a narrow moat based on the brand strength and pricing power of Coach (80% of fiscal 2025 revenue). The firm has turned Coach around through store closures, restrictions on discounting, and increased e-commerce. The brand is a leader in the attractive handbag category and consistently generates gross margins above 75%. Further, we expect growth in complementary categories like footwear and fashion. Coach sales and profitability have risen lately as the brand has gained a strong following among younger consumers.

In the fourth quarter of fiscal 2025, Tapestry achieved 8% sales growth as sales of Coach (83% of total) soared 14%. Powered by the brand's continuing average unit retail price increases, Tapestry's gross and non-GAAP operating margins rose 140 and 30 basis points, respectively, to 76.3% and 16.8%.

We believe Tapestry has a narrow moat based on the brand strength and pricing power of Coach (76% of fiscal 2024 revenue). The firm has turned Coach around through store closures, restrictions on discounting, and increased e-commerce. The brand is a leader in the attractive handbag category and consistently generates gross margins above 75%. Further, we expect growth in complementary categories like footwear and fashion. Coach sales and profitability have risen lately as the brand has gained a strong following among younger consumers.

Led by 13% sales growth from Coach (82% of total), Tapestry's sales rose 7% in its (March-ended) fiscal 2025 third quarter. The firm's gross and adjusted operating margins rose 140 basis points to 76.1% and 17.5%, respectively, on Coach's higher average unit retail pricing.

Tapestry announced that it has agreed to sell Stuart Weitzman to footwear brand and store operator Caleres. This move is not surprising as recent media reports had suggested that the brand was being shopped around and as Tapestry had revealed little about its plans to fix it. The sale has no effect on our narrow moat rating, which is based solely on the brand value of Coach, or our Standard Capital Allocation Rating. We are also holding our fair value estimate at $62 per share as the sale has no material effect on Tapestry’s future cash flows or capital return plans. We regard Tapestry’s shares, which have soared since the collapse of its attempted acquisition of no-moat Capri, as overvalued.

We believe Tapestry has a narrow moat based on the brand strength and pricing power of Coach (76% of fiscal 2024 revenue). The firm has turned Coach around through store closures, restrictions on discounting, and increased e-commerce. The brand is a leader in the attractive handbag category and consistently generates gross margins above 70%. Further, we expect growth in complementary categories like footwear and fashion. Coach’s sales and profitability have surged lately as the brand has gained a strong following among younger consumers.

Tapestry’s (December-ended) fiscal 2025 second-quarter sales and profitability surpassed expectations. The outperformance was attributable solely to Coach (78% of sales), the brand that underlies our narrow moat rating. We expect to lift our fair value estimate of $59 by a mid-single-digit percentage but regard Tapestry’s shares, which have soared since the proposed acquisition of no-moat Capri fell through, as overvalued and would look for a better entry point.

Narrow-moat Tapestry’s proposed acquisition of no-moat Capri has been called off. The merger was opposed by the US Federal Trade Commission on antitrust grounds, and it was highly unlikely to ever close after a federal judge refused to lift the agency’s block (see our notes of Oct. 25 and Nov. 7).

Led by Coach (78% of sales), Tapestry’s sales and profitability exceeded our expectations in fiscal 2025’s first quarter. As the full-year outlook was only marginally raised, we do not expect to make a material change to our $59 fair value estimate, leaving the shares attractive.

Shares of Tapestry rose about 15% on Oct. 25 after US District Court Judge Jennifer Rochon granted a motion by the US Federal Trade Commission to put its acquisition of Capri on hold pending the completion of the agency's in-house administrative proceeding. We attribute the positive reaction in the shares to investors' concerns regarding the price offered for Capri, the complexity of the deal, the debt raised to fund the acquisition, and Michael Kors' weak results over the past few quarters. Although we have had a more positive view of the deal than most, we rate Tapestry as a narrow-moat company but give a no-moat rating to Capri due, primarily, to our belief that Coach is a stronger brand than Michael Kors.

We believe Tapestry has a narrow moat based on the brand strength and pricing power of Coach (76% of fiscal 2024 revenue). The firm has turned Coach around through store closures, restrictions on discounting, and increased e-commerce, the last of which took off during the pandemic. The brand is a leader in the attractive handbag category and consistently generates gross margins above 70%. Further, we expect growth in complementary categories like footwear and fashion. We anticipate China to be a key growth region for Coach, as according to Bain, Chinese consumers will make up 35%-40% of worldwide luxury goods spending in 2030, up from 22%-24% in 2023. We forecast Coach’s Greater China sales to reach nearly $1.3 billion in 10 years, up from $902 million in fiscal 2024.

We believe Tapestry has a narrow moat based on the brand strength and pricing power of Coach (76% of fiscal 2024 revenue). The firm has turned Coach around through store closures, restrictions on discounting, and increased e-commerce, the last of which took off during the pandemic. The brand is a leader in the attractive handbag category and consistently generates gross margins above 70%. Further, we expect growth in complementary categories like footwear and fashion. We anticipate China to be a key growth region for Coach, as according to Bain, Chinese consumers will make up 35%-40% of worldwide luxury goods spending in 2030, up from 22%-24% in 2023. We forecast Coach’s Greater China sales to reach nearly $1.3 billion in 10 years, up from $902 million in fiscal 2024.