US' Coach drives Tapestry's FY25 gains, Kate Spade declines

Revenues in the fourth quarter (Q4), ended June 28, rose 8 per cent to $1.72 billion, with gains across North America (+8 per cent), Europe (+10 per cent), and APAC (+6 per cent). Gross margin expanded 210 basis points for the year and 140 basis points in Q4, driven by operational efficiencies.

Coach delivered $5.6 billion in annual revenue (+10 per cent constant currency), while Kate Spade fell 10 per cent to $1.20 billion and Stuart Weitzman dropped 11 per cent to $215 million. Kate Spade recorded $855 million in impairment charges due to reduced cash flow expectations and anticipated tariff impacts, the company said in a media release.

The company added 6.8 million new customers during the year—60 per cent from Gen Z and Millennials—while direct-to-consumer revenue grew 5 per cent annually, supported by mid-teens digital sales growth. Handbag sales at Coach saw mid-teens average unit retail (AUR) gains in Q4 and low double-digit gains for the year.

On a non-GAAP basis, FY25 operating income reached $1.40 billion (20 per cent margin) versus $1.25 billion last year, and EPS rose to $5.10 from $4.29. GAAP net income was $183 million ($0.82 EPS), down from $816 million, reflecting impairment, organisational efficiency, and transaction-related charges. Adjusted free cash flow was $1.35 billion.

Tapestry returned $2.3 billion to shareholders in FY25—$300 million in dividends and $2 billion through an accelerated share repurchase (ASR) programme at an expected $78 average price. For FY26, the board has approved a 14 per cent dividend increase to $1.60 per share annually and authorised $800 million in additional buybacks.

Joanne Crevoiserat, chief executive officer of Tapestry, Inc, commented: “Fiscal 2025 was a breakout year for Tapestry as our systemic approach to brand-building is capturing a new generation of consumers around the world. Our strong growth, capped by our fourth quarter outperformance, reinforces that our strategies are working. Importantly, we achieved bold targets we set three years ago in a dynamic landscape, delivering over $5 in adjusted earnings per share and returning more than $3 billion cumulatively to shareholders. Looking ahead, the creativity, craftsmanship, and compelling value we offer at scale—combined with the agility of our operating model—position us to drive compounding long-term growth and shareholder value.”

For FY26, Tapestry forecasts revenue approaching $7.2 billion, with mid-single-digit pro-forma growth excluding Stuart Weitzman, and EPS of $5.30–$5.45, despite a projected $160 million hit from incremental tariffs and duties (230 basis points of margin impact). Adjusted free cash flow is expected at about $1.3 billion.

ALCHEMPro News Desk (KD)