Tapestry Q4 Earnings & Sales Top Estimates, Gross Margin Grows Y/Y

Tapestry, Inc. TPR has reported impressive fourth-quarter fiscal 2025 results that exceeded the Zacks Consensus Estimate for revenues and earnings.  Also, the top and bottom lines increased year over year. Also, the gross margin improved year over year.The company showcased broad-based growth in the fiscal fourth quarter, with the Coach brand driving momentum through strong consumer engagement, especially among Gen Z and Millennials. Tapestry emphasized global gains, with notable strength in North America, Europe and China, supported by product innovation and digital expansion. TPR’s direct-to-consumer model and agile supply chain remain central to its strategy for long-term, sustainable growth across a dynamic retail landscape.Tapestry, Inc. Price, Consensus and EPS Surprise  Tapestry, Inc. price-consensus-eps-surprise-chart | Tapestry, Inc. QuoteMore on TPR’s Q4 Financial ResultsTapestry reported adjusted earnings of $1.04 a share for the fiscal third quarter, which surpassed the Zacks Consensus Estimate of $1.01 and increased 13% from 92 cents in the prior-year period. Net sales were $1,723.2 million, beating the consensus estimate of $1,684 million. Also, net sales reflected an 8.3% year-over-year increase and 8% growth on a constant-currency basis. Foreign exchange had a positive impact of roughly 50 basis points for the quarter, driven by the depreciation of the U.S. Dollar.In the fiscal fourth quarter, the company acquired 1.5 million customers in North America, fueled by increasing engagement from Gen Z and Millennial consumers, who accounted for about 60% of new customers for both periods.Direct-to-consumer revenues grew 6% on a constant-currency basis, driven by mid-teens growth in digital revenues and a low-single-digit gain in global brick-and-mortar sales. The company achieved strong and improving profitability across channels, fueled by creativity and TPR’s data and analytics capabilities.Tapestry’s Brand-Wise Sales DetailsFor the quarter, Coach's net sales were $1.43 billion, beating the Zacks Consensus Estimate of $1.39 billion. This marked a 14% year-over-year increase on a reported basis and 13% growth on a constant-currency basis.Kate Spade’s sales were $252.6 million, lagging the consensus estimate of $254.7 million, marking a 13% decline on a reported basis and a 13% dip on a constant-currency basis from the year-ago period.Stuart Weitzman’s net sales totaled $45.5 million, surpassing the consensus estimate of $43.3 million. This marked a 10% year-over-year decrease on a reported basis and a 10% dip on a constant-currency basis.TPR Provides Q4 Revenue Insights by RegionSales in North America increased 8% year over year to $1.10 billion. Sales in Greater China improved 18% to $273.9 million.In Japan, sales decreased 7% year over year to $118.3 million, while revenues from Other Asian markets remained flat at $86.4 million. European markets continued to show momentum, with a 13% increase in revenues to $104.2 million, thanks to robust spending from local consumers and tourists.Tapestry’s Margins & Cost DetailsThe consolidated gross profit was $1.32 billion, up 10.4% from the year-ago period. Also, the gross margin increased by 140 basis points to 76.3%, reflecting operational improvements of about 200 basis points, partially offset by a currency headwind of more than 50 basis points.The company reported an adjusted operating income of $288.6 million, up 10.2% from $262 million in the year-ago period. Meanwhile, the adjusted operating margin increased 20 basis points to 16.7%.Adjusted selling, general and administrative expenses totaled $1.03 billion, up 10.5% from $929.2 million in the year-ago period. As a percentage of net sales, this metric increased 120 basis points year over year to 59.6%.TPR’s Q4 Store UpdateAs of the end of the fiscal fourth quarter, the company operated 324 Coach stores, 189 Kate Spade outlets and 28 Stuart Weitzman stores in North America. Internationally, the store count was 607, 171 and 52 for Coach, Kate Spade and Stuart Weitzman, respectively.TPR Stock's Past 3-Month Performance Image Source: Zacks Investment Research Tapestry’s Financial Snapshot: Cash, Debt & Equity OverviewTPR ended the quarter with cash, cash equivalents and short-term investments of $1.12 billion, long-term debt of $2.38 billion, and stockholders' equity of $857.8 million.The operating cash flow as of June 28, 2025, was $1.22 billion, down from $1.26 billion in the previous-year period. The adjusted free cash flow was an inflow of $1.35 billion. The capital expenditure and implementation costs related to cloud computing for fiscal 2025 totaled $153 million compared with $144 million in the prior year.In fiscal 2025, the company returned $2.3 billion to shareholders through dividends and share repurchases. It distributed $300 million in dividends at an annual rate of $1.40 per share. In November 2024, it completed a $2-billion accelerated share repurchase (“ASR”) program, initially receiving 28.4 million shares, with an expected average purchase price of approximately $78 per share.Under the terms of the agreement, Tapestry owes an estimated final payment of about $200 million, with the exact amount to be determined by the share price through the final settlement date, anticipated in the first quarter of fiscal 2026.The company approved a 14% increase to the dividend, with a quarterly cash dividend of 40 cents per share payable on Sept. 22, 2025, to shareholders of record as of the close of business on Sept. 5, for an anticipated annual dividend rate of $1.60 per share. In addition to the completion of the ASR noted above, Tapestry plans to repurchase $800 million of common stock in fiscal 2026 under its existing share repurchase authorization.What Lies Ahead for Tapestry?This Zacks Rank #3 (Hold) company is initiating its fiscal 2026 guidance on a non-GAAP basis. Revenues are projected to be close to $7.2 billion, reflecting low-single-digit growth from the prior year. Excluding Stuart Weitzman, pro-forma revenues are expected to grow at a mid-single-digit rate on both a nominal and constant-currency basis, with foreign currency anticipated to provide an 80-basis-point benefit to the top-line results.The operating margin is forecast to improve from the prior year, with more than 250 basis points of underlying expansion, partially offset by an estimated 230-basis-point headwind, or roughly $160 million, from tariffs and duties. This impact reflects the timing of policy changes, product sell-through, and mitigation efforts currently in progress, which the company expects will offset the effect of these incremental costs over time.Earnings per share are forecast at $5.30-$5.45, indicating growth of 4-7% from the prior year’s actual, including a negative impact of more than 60 cents from incremental tariffs and duties.The adjusted free cash flow for fiscal 2026 is projected to be $1.3 billion.Shares of the company have gained 36.4% in the past three months against the industry’s decline of 0.3%.Key PicksSome better-ranked stocks are Levi Strauss & Co. LEVI, Wolverine World Wide, Inc. WWW and Ralph Lauren Corp. RL.Levi designs and markets jeans, casual wear and related accessories for men, women and children. It flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Levi’s current fiscal-year earnings indicates growth of 4% from the year-ago actual. LEVI delivered a trailing four-quarter average earnings surprise of 25.9%.Wolverine is engaged in the designing, manufacturing and distribution of a wide variety of casual as well as active apparel and footwear. It presently sports a Zacks Rank of 1.The Zacks Consensus Estimate for Wolverine’s current financial-year earnings and sales indicates growth of 44% and 6.1%, respectively, from the year-ago actuals. WWW delivered a trailing four-quarter average earnings surprise of 39.1%.Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products. It has a Zacks Rank 1 at present.The Zacks Consensus Estimate for Ralph Lauren’s current fiscal-year earnings and sales indicates growth of 19.8% and 6%, respectively, from the year-ago actuals. RL delivered a trailing four-quarter average earnings surprise of 8.5%.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ralph Lauren Corporation (RL): Free Stock Analysis Report Wolverine World Wide, Inc. (WWW): Free Stock Analysis Report Tapestry, Inc. (TPR): Free Stock Analysis Report Levi Strauss & Co. (LEVI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks