Core Insights - Tapestry, Inc. reported fourth-quarter adjusted earnings of $1.04 per share, exceeding the consensus estimate of $1.02, with revenue of $1.72 billion, reflecting an 8% year-over-year increase and surpassing expectations [1] - The company anticipates fiscal 2026 revenue to approach $7.2 billion, slightly above the previous estimate of $6.96 billion, indicating low-single-digit growth from the prior year [2] Financial Performance - Coach experienced strong handbag revenue growth, attributed to a mid-teens average unit retail (AUR) gain for the quarter and a low-double-digit gain for the year [1] - Telsey Advisory Group analyst Dana Telsey maintains an Outperform rating on Tapestry's stock, with a price target of $125 [2] Earnings Outlook - The earnings outlook considers current mitigation efforts, with Telsey suggesting that the guidance appears conservatively prudent, indicating potential for upside [3] - The company is optimistic about a strong start to fiscal year 2026, with a higher dividend enhancing confidence ahead of the upcoming Investor Day [3] Tariff Impact - Tapestry faces greater tariff pressure than expected, with the early end of the de minimis exemption leading to a combined $160 million profit impact, equating to a 230 basis points hit on margins [4] - This situation results in a 60-cent EPS drag, most of which was not present in the previous quarter, due to the exemption's unexpected early termination [4] Revenue Projections - For fiscal year 2026, the analyst projects revenue of $7.24 billion, a 3.2% increase from the prior estimate of $6.99 billion, aligning with the guidance of "approaching $7.2 billion" [5] - The expectation is that Coach will outperform while Kate Spade may underperform earlier forecasts [5] Stock Performance - Tapestry shares are trading higher by 2.90%, reaching $98.50 [5]

Core Insights - Tapestry Inc is experiencing a growth split between its key brands, with Coach showing significant recovery and projected 32% upside for the overall company stock by year-end, while Kate Spade is underperforming [1][6] Group 1: Coach's Performance - Coach is the primary driver of Tapestry's growth, benefiting from a balanced multi-year revenue increase due to average unit retail price hikes and sustainable unit sales growth [2] - Handbag prices for Coach are increasing, supported by improved full-price selling and innovative product lines, reversing previous declines in unit sales [3] - The brand is attracting younger customers, particularly Gen-Z and Millennials, who are spending more and frequently returning, which also encourages older customers to re-engage [4] Group 2: Kate Spade's Challenges - Kate Spade has faced revenue declines this year, with management adopting a cautious approach due to uncertain macroeconomic conditions, and its fourth quarter guidance indicates a sales drop [5] - The brand is currently in a supporting role within Tapestry's portfolio, contrasting with Coach's expected low-double-digit growth [5] Group 3: Overall Outlook for Tapestry - Tapestry's potential upside is largely contingent on Coach's revival, driven by pricing power, customer rejuvenation, and category expansion, with a price target of $104 for investors to monitor [6]

Financial Performance & Outlook - Tapestry's Q3 revenue reached $1.58 billion, with an 8% increase compared to the previous year on a constant currency basis[58] - Coach brand experienced a 15% revenue growth on a constant currency basis[50, 58] - The company raised its FY25 revenue outlook to approximately $6.95 billion, a 4% increase versus the prior year on a reported basis[69] - Diluted adjusted EPS is projected to be around $5.00, representing a high-teens percentage growth compared to last year[69] - Adjusted free cash flow is expected to be approximately $1.3 billion[69] Brand Performance - Coach's operating income margin was 32.4% [58] - Kate Spade's revenue declined by 12%[58, 62] - Stuart Weitzman's net sales were $46 million, a decrease of 17%[58] - Tapestry has entered into an agreement to sell Stuart Weitzman to Caleres[66] Strategic Initiatives & Global Presence - North America accounted for 65% of revenue, while International accounted for 35%[71] - The company acquired over 12 million new customers in North America[50] - Digital channels accounted for 29% of sales[33] - The company expects to return over $2 billion to shareholders in FY25[78]