Tapestry lifts FY outlook as Coach drives 22% growth, margins at 76.3%
Bottom Line Impact
Momentum at Coach, disciplined pricing, and regional outperformance lift revenue run-rate and expand margins, positioning Tapestry to gain share in accessible luxury while compounding brand equity with a growing Gen Z base.
Key Facts
5- Q1 FY2026 revenue: $1.7B, up 13% YoY (+12% constant currency), quarter ended Sep 27, 2025
- Gross profit: $1.3B vs $1.1B YoY; gross margin 76.3% (+100 bps vs 75.3%)
- Coach pro forma revenue: $1.43B (+22% YoY); Kate Spade: $260.2M
- Regional brand revenue growth: Europe +39%, Greater China +20%, North America +18%
- Customer acquisition: >2.2M new customers; ~35% Gen Z share of new-to-file
Time Horizons
Key Roles Affected
Executive Summary
Tapestry delivered a record Q1 FY2026 with 13% revenue growth to $1.7B and 100 bps gross margin expansion to 76.3%, led by Coach's 22% pro forma surge. The upgraded FY outlook signals structural momentum in accessible luxury, with outsized growth in Europe, China, and North America and a strong Gen Z pipeline underpinning demand.
Actionable Insights
Immediate Actions (Next 30-90 days)
Reallocate 10-15% of digital spend to Gen Z performance channels and creator commerce; launch 2 capsule collaborations in the next 2 quarters
Rationale: Gen Z is ~35% of new customers; targeted spend can lift 90-day repeat rates to >20% and lower CAC by 10-15%
Role affected:CMO
Urgency level:immediate
Hedge 70-80% of EUR and CNY exposure for the next 9 months and lock leather input costs with 6-9 month contracts
Rationale: Protects the 100 bps gross margin expansion and reduces earnings volatility amid FX swings and input inflation
Role affected:CFO
Urgency level:immediate
Short-term Actions (6-12 months)
Authorize 15-20 new doors across Europe tourist corridors and Tier 1-2 China within 12 months with modular store formats
Rationale: Europe +39% and China +20% growth indicate undersupply; new doors can capture traffic and tourist rebound with payback under 24 months
Role affected:CEO
Urgency level:short-term
Scale limited drops on Coach hero families (Tabby, Rogue) and enforce stricter markdown cadence to lift AUR 3-5%
Rationale: Hero SKU scarcity and reduced promotions can push full-price sell-through to 70-75% and sustain margin gains
Role affected:Chief Merchandising Officer
Urgency level:short-term
Risks & Opportunities
Primary Risks
- Holiday promotional intensity in North America could compress AUR by 200-300 bps
- China macro and sentiment volatility may slow conversion and traffic in Q1-Q2 calendar 2026
- Supply bottlenecks on hero SKUs risk 1-2 percentage points of lost sales in peak weeks
Primary Opportunities
- Price optimization on hero SKUs with 2-3% selective list increases and minimal volume elasticity
- Accelerated footprint expansion in Europe high-traffic corridors to capture 100-150 bps share
- Gen Z cohort development through loyalty tiers and community, increasing LTV by 15-20%