Coach Drives Accelerated Growth as Margin Expansion and Gen Z Demand Push the Group Ahead of Long-Term Targets
Tapestry delivered a standout fiscal third quarter, fueled by continued momentum at Coach, broad-based international growth, and expanding profitability, prompting the company to once again raise its full-year outlook.
Revenue for the quarter rose 21 percent to $1.9 billion, or 19 percent in constant currency, while pro forma revenue increased 25 percent, driven primarily by Coach, where sales climbed 31 percent, or 29 percent in constant currency, to $1.7 billion. The brand’s performance was powered by accelerating demand in leathergoods, with handbag unit sales rising more than 20 percent alongside low double-digit average unit retail increases.
The company also highlighted strong traction with younger consumers, acquiring more than 2.4 million new customers globally during the quarter, with Gen Z accounting for over 35 percent of those additions. Demand from existing customers also increased, reinforcing what the group described as broad-based brand momentum.
By region, Tapestry continued to outperform expectations. North America sales rose 20 percent, Europe gained 21 percent, and total Asia-Pacific increased 30 percent in constant currency, led by a 55 percent surge in Greater China. Japan declined 10 percent during the period.
Direct-to-consumer revenue increased 23 percent on a pro forma constant currency basis, supported by approximately 25 percent digital growth and more than 20 percent growth in global brick-and-mortar sales, with profitability improving across both channels.
The strong top-line performance translated into significant earnings leverage. Operating margin expanded 630 basis points on a GAAP basis and 490 basis points on a non-GAAP basis, driven by gross margin improvement and SG&A leverage. Adjusted operating income rose 55 percent to $430.1 million, while net income increased 69 percent to $343.8 million.
GAAP diluted earnings per share rose 74 percent to $1.65, while non-GAAP diluted EPS increased 62 percent to $1.66.
The company raised its fiscal 2026 outlook across revenue, operating margin, earnings per share, and cash flow. Tapestry now expects annual revenue of approximately $7.95 billion, up $200 million from guidance issued in February. Operating margin is projected to expand by 300 basis points to roughly 23 percent, while EPS is forecast at $6.95, above prior guidance of $6.40 to $6.45. The company also said it remains on track to return $1.6 billion to shareholders in fiscal 2026, supported by strong cash flow generation and a healthy balance sheet.
“Our third quarter outperformance reflects the compounding benefits of our Amplify strategy, as we bring creativity, craftsmanship, and value to more consumers around the world,” said Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc. “With disciplined execution and the consumer at the center of everything we do, we are translating insights into action at scale, fueling meaningful growth, expanding margins, and enduring brand desire. From this position of strength, we move confidently into the future with significant opportunity ahead. We are raising our outlook for the fiscal year, underscoring the power of Tapestry and our commitment to driving durable growth and long-term shareholder value.”