TPR Stock Falls 10% Despite Q1 Earnings Beat & Raised FY26 Outlook

Core Insights - Tapestry, Inc. (TPR) reported strong first-quarter fiscal 2026 results, exceeding revenue and earnings estimates, with year-over-year growth in both metrics and an increase in fiscal 2026 guidance [1][10] - Despite the positive financial results, TPR shares fell 9.6% due to concerns over significant tariff-related challenges impacting margins and ongoing weakness at the Kate Spade brand [1][10] Financial Performance - Adjusted earnings for the fiscal first quarter were $1.38 per share, surpassing the Zacks Consensus Estimate of $1.25 and reflecting a 35% increase from $1.02 in the prior year [3][10] - Net sales reached $1,704.6 million, exceeding the consensus estimate of $1,640 million, marking a 13.1% year-over-year increase and 12% growth on a constant-currency basis [4][10] - Pro-forma net sales, excluding Stuart Weitzman, increased 16% year over year to $1,690 million [5] Brand Performance - Coach brand net sales were $1.43 billion, exceeding estimates and showing a 22% year-over-year increase [7] - Kate Spade's sales were $260.2 million, representing an 8% decline year-over-year [7] - Stuart Weitzman reported net sales of $14.6 million, a 73% decrease year-over-year [8] Regional Sales Insights - North America sales increased 18% year-over-year to $1.07 billion, while Greater China sales improved 20% to $269.1 million [9] - European markets showed strong momentum with a 39% increase in revenues to $125.2 million [11] Margin and Cost Analysis - Adjusted gross profit was $1.29 billion, with an adjusted gross margin of 76.5%, up 120 basis points year-over-year [12] - Adjusted operating income rose 24% to $353.9 million, with an adjusted operating margin of 20.9% [13] Shareholder Returns and Future Outlook - Tapestry returned approximately $500 million to shareholders through share repurchases in the quarter [16] - For fiscal 2026, the company expects to return $1.3 billion to shareholders, including $1 billion in share repurchases and $300 million in dividends [17] - Tapestry raised its fiscal 2026 revenue outlook to $7.3 billion, projecting 4-5% growth from the prior year [18][19]