Tapestry Rises 10% on Strong Q2 Earnings & Higher FY26 Outlook

Core Insights - Tapestry, Inc. (TPR) reported strong second-quarter fiscal 2026 results, surpassing revenue and earnings estimates, and raised its fiscal 2026 guidance [1][9] Financial Performance - Adjusted earnings were $2.69 per share, exceeding the Zacks Consensus Estimate of $2.20, and reflecting a 34% year-over-year increase [4] - Net sales reached $2,502.4 million, beating the consensus estimate of $2,310 million, with a 14% year-over-year increase [4] - Excluding the impact of Stuart Weitzman, pro forma net sales increased by 18% on both nominal and constant-currency bases [5] Brand Performance - Coach brand net sales were $2.14 billion, exceeding the Zacks Consensus Estimate of $1.95 billion, marking a 25% year-over-year increase [7] - Kate Spade's sales were $360 million, below the consensus estimate of $368 million, representing a 14% decline year-over-year [7] Regional Sales Insights - North America sales increased 17% year-over-year to $1.72 billion, while Greater China improved 35% to $343.1 million [8] - European revenues rose 27% to $159.1 million, while Japan saw a 9% decline to $128.3 million [8] Margin and Cost Analysis - Adjusted gross profit was $1.89 billion, up 16% from the previous year, with an adjusted gross margin of 75.5%, an increase of 110 basis points [10] - Adjusted operating income rose 31% to $719.8 million, with an adjusted operating margin of 28.8%, up 390 basis points [11] Shareholder Returns - Tapestry returned approximately $400 million to shareholders through share repurchases and declared a quarterly cash dividend of 40 cents per share [15] - For fiscal 2026, the company expects to return $1.5 billion to shareholders, an increase from the previous estimate of $1.3 billion [16] Future Outlook - Management raised the fiscal 2026 revenue outlook to over $7.75 billion, reflecting about 11% growth year-over-year [20] - The company anticipates operating margin expansion of roughly 180 basis points and earnings per share of $6.40-$6.45, representing growth of over 25% year-over-year [22]