Financial Performance - Tapestry reported record revenue and 16% sales growth for its fiscal Q1 [1] - Coach brand experienced a standout performance with 21% growth [6] - Kate Spade's sales are still declining by 9%, but slightly ahead of expectations [4][5] - The company raised its outlook for the year across topline and earnings [4] Brand Strategy & Consumer Behavior - Coach is driving the overall growth [4] - Kate Spade is undergoing a brand reset, with progress in Gen Z acquisition trends driven by handbags and higher Average Unit Retail (AUR) with handbag blockbusters [5][6] - Consumers are resilient and active, responding positively to innovation and emotion from brands [7] - Tapestry is seeing traction in acquiring young consumers, leading to growth and higher retention across the portfolio [8] - Tapestry's strategy focuses on expanding the market by capturing young consumers at the point of market entry [14] - The company emphasizes innovation, compelling value, and brand storytelling to resonate with young consumers [16] Holiday Season Outlook - Tapestry is optimistic about the holiday season, with strength continuing into Q2 [10][11] - The company is staying close to consumers to deliver a value proposition that resonates during the quarter [11]

Core Insights - Tapestry's sales growth in the first quarter of fiscal 2026 was significantly driven by new customer acquisition, particularly among Gen Z consumers, who represented approximately 35% of new customers [1][2][5] - The company raised its full-year revenue outlook to around $7.3 billion, reflecting a growth of 4% to 5% from the previous year, and adjusted its earnings per diluted share forecast to a range of $5.45 to $5.60 [4] Financial Performance - Tapestry reported a net income of $274.8 million, or $1.28 per share, for the three-month period ending September 27, compared to $186.6 million, or 79 cents per share, in the same period last year [3] - The company's earnings per share exceeded expectations at $1.38, compared to the anticipated $1.26, and revenue also surpassed forecasts at $1.70 billion against an expected $1.64 billion [8] Market Trends - Despite Tapestry's positive performance, shares fell approximately 9% in premarket trading following the earnings report [4] - Other companies, such as Chipotle and Cava, reported weaker sales attributed to younger consumers reducing their spending, contrasting with Tapestry's success in attracting Gen Z [5][6]

Core Insights - Tapestry, Inc. reported record first quarter revenue and earnings per share (EPS) for fiscal 2026, exceeding expectations and prompting an increase in the full-year outlook [1][3][5] Financial Performance - Net sales reached $1.704 billion, a 13% increase from the previous year, with a 12% increase on a constant currency basis [4][5] - Pro forma net sales, excluding Stuart Weitzman, totaled $1.690 billion, reflecting a 16% growth [4][7] - Gross profit was $1.301 billion, with a gross margin of 76.3%, up from 75.3% in the prior year [4][13] - Operating income increased by 30% to $328 million, with an operating margin of 19.3% [4][13] - GAAP diluted EPS rose 61% to $1.28, while non-GAAP diluted EPS increased by 35% to $1.38 [5][6] Brand Performance - The Coach brand led growth with a 22% increase in revenue, while Kate Spade experienced an 8% decline [7][32] - North America saw an 18% increase in sales, with Europe achieving a 39% growth [8][7] Strategic Initiatives - Tapestry's Amplify Growth Strategy focuses on building emotional connections with consumers, fueling fashion innovation, delivering compelling experiences, and empowering employees [8] - The company acquired over 2.2 million new customers, with approximately 35% being Gen Z consumers [8] Shareholder Returns - Tapestry plans to return $1.3 billion to shareholders in fiscal 2026 through dividends and share repurchases [5][9] - The quarterly cash dividend declared is $0.40 per share, with an annual dividend expectation of $1.60 per share [12] Financial Outlook - The company raised its fiscal 2026 revenue and earnings outlook, anticipating revenue of approximately $7.3 billion, representing 4% to 5% growth [16][18] - Expected adjusted free cash flow for fiscal 2026 is $1.3 billion, with a net interest expense of approximately $65 million [16][18]

Market Overview - The stock market has shown a sense of calm after recent volatility, with all three major indices starting the week positively, particularly the S&P 500 and Nasdaq, both up about 0.5% [1][2] - The S&P 500 is approaching record highs seen earlier in October, indicating strong market momentum [1][2] - The government shutdown has reached day 20, marking it as the third longest in U.S. history, yet it has not significantly impacted market performance so far [1] Company Performance - Amazon's stock is slightly up despite an outage in its AWS service, which affected several companies, indicating investor resilience [1][2] - Apple has seen a positive shift in stock performance, gaining 6% in the past month due to strong demand for the iPhone 17, with analysts projecting a significant upgrade cycle [1][2] - Amazon's year-to-date performance is down 3%, making it the worst performer among the MAG 7 stocks, while Apple is gaining traction [1][2] Consumer Trends - The consumer staples sector is under scrutiny as earnings estimates decline, with Coca-Cola expected to report strong demand in the U.S. but weakness in other regions [2][3] - There is a bifurcation in consumer spending, with high-end consumers willing to pay more for premium products, while low-end consumers focus on essentials [2][3] Cryptocurrency Market - Bitcoin has rebounded, rising above $110,000, alongside a broader recovery in the cryptocurrency market, indicating renewed investor confidence [1][2] - Ethereum has crossed the $4,000 threshold, suggesting a positive trend in the crypto space [1][2] Sector Rotation - A rotation into defensive sectors such as utilities and consumer staples is observed, which may indicate a cautious market sentiment [2][3] - Utilities have performed well, up 21% year-to-date, and are seen as a growth sector benefiting from lower interest rates and the AI trade [2][3] International Market Insights - There is a growing interest in international markets, with South Korea up nearly 50% this year and China showing a 14-16% increase, suggesting potential value outside the U.S. [2][3] - The focus on international value trades is becoming more prominent as investors seek diversification [2][3]

Opening Bid Unfiltered is available on Apple Podcasts, Spotify, YouTube, or wherever you get your podcasts. Before it was known as Tapestry (TPR) and an owner of the Coach and Kate Spade Brands, Coach was just Coach — maker of handbags and accessories that dominated mall racks. But like with every retailer in business for decades, Coach has stories to tell. Yahoo Finance Executive Editor Brian Sozzi sits on the Opening Bid Unfiltered podcast with former longtime Coach CEO Lew Frankfort. Frankfort is out wit ...

Core Insights - Tapestry Inc. is redefining its approach to the global handbag market after the failed acquisition of Capri Holdings, focusing on potential consumer reach rather than past sales figures [1] - The company identifies a target audience of 1.9 billion people, with current market share at only 0.6%, indicating significant growth potential [2] - Tapestry's new three-year strategic plan, named Amplify, aims to enhance brand reach and consumer engagement while driving sustainable growth and shareholder value [3][4] Strategic Goals - The Amplify plan includes pushing Coach revenues to $10 billion, up from $5.6 billion last year [5] - The plan aims to return Kate Spade to growth by fiscal 2027 [5] - Tapestry intends to expand operating margins by over 200 basis points to exceed 22% for fiscal 2027 and 2028 [5] - The company plans to return $4 billion to shareholders through share repurchases and dividends by fiscal 2028 [5]

Acquisition & Strategy - Tapestry's attempted $85 billion acquisition of Capri Holdings was blocked by the FTC due to concerns about creating an excessively concentrated player in the accessible luxury handbags market [1][2] - Wall Street disliked the Capri deal, fearing Tapestry would overstretch its balance sheet to acquire a consistently worse operator [3] - Tapestry redeemed deal debt and announced a $28 billion buyback program, including a $2 billion accelerated share repurchase program, representing roughly 15% of shares outstanding [6][7] - Tapestry sold its Steuart Weitzman brand to focus on the core Coach brand and turning around Kate Spade [8][9] Financial Performance & Market Dynamics - Tapestry's stock has increased 148% since the merger was blocked and is up 69% for the year [2] - Coach's revenue growth accelerated from 2% to 15% on a constant currency basis [11][12] - Tapestry delivered substantial top and bottom-line beats, raising full-year earnings forecast by $025 [10] - Kate Spade's constant currency revenue growth has declined for eight straight quarters, down 12% [16] Future Outlook & Risks - Tapestry aims to turn around Kate Spade by emulating Coach's strategies, targeting younger consumers and developing new products [17] - The stock trades at just under 22 times this year's earnings estimate, with 18% earnings growth, but is considered inherently risky given its recent performance [19][20] - The report suggests a potential buying opportunity if Tapestry reports a good quarter that doesn't fully satisfy shareholders, leading to a sell-off [20]