Tapestry, Inc. (NYSE:TPR) shares fell 8.9% in premarket trading after the accessories group delivered stronger-than-expected fourth-quarter earnings and revenue but issued a fiscal 2027 sales outlook that came in slightly below Wall Street forecasts. Strong growth at Coach helped drive the quarterly beat, although investors appeared more focused on the company’s expectations for the year ahead.
Fourth-quarter earnings and revenue beat forecasts
Tapestry reported adjusted earnings of $1.32 per share for the fourth quarter, exceeding the analyst consensus of $1.25 by $0.07.
Revenue increased 9% year over year to $1.88 billion, also coming in ahead of the $1.86 billion expected by analysts.
On a pro forma constant-currency basis, revenue advanced 11%, with Coach continuing to lead the group’s performance after delivering quarterly growth of 14%.
“Our fourth quarter outperformance capped a year of strong growth, as we meaningfully exceeded expectations and achieved key financial commitments we established at our Investor Day two years ahead of plan,” said Joanne Crevoiserat, Chief Executive Officer.
Fiscal 2027 revenue guidance falls short of consensus
Despite the stronger fourth-quarter performance, Tapestry’s outlook for fiscal 2027 failed to provide investors with a further positive surprise.
The company expects adjusted earnings of between $7.80 and $7.90 per share for the year. The midpoint of $7.85 sits marginally above the analyst consensus of $7.84.
Revenue, however, is forecast at between $8.4 billion and $8.5 billion. The midpoint of $8.45 billion falls slightly below Wall Street’s $8.47 billion estimate.
Tapestry expects revenue to grow at a mid-single-digit rate during fiscal 2027, while operating margin is projected to expand by approximately 50 basis points.
The modest revenue shortfall appeared to outweigh the earnings guidance and strong fourth-quarter numbers in the initial market reaction.
First-quarter earnings outlook exceeds expectations
Tapestry offered a more encouraging earnings forecast for the opening quarter of fiscal 2027.
The company expects adjusted earnings of approximately $1.55 per share, ahead of the analyst consensus of $1.48.
The forecast indicates that management expects profitability momentum to continue even as the company’s full-year revenue outlook remains slightly below current Wall Street expectations.
Margin expansion will also remain an important part of the investment case as Tapestry looks to convert continued sales growth into higher earnings.
Coach drives strong fiscal 2026 performance
Tapestry finished fiscal 2026 with revenue of $8.0 billion, representing year-over-year growth of 14%.
Adjusted earnings increased 38% to $7.05 per share, while operating margin expanded by 340 basis points to 23.4%.
Coach remained the standout brand within the portfolio, with full-year revenue increasing 23% on a constant-currency basis.
Performance at Kate Spade was considerably weaker, with revenue declining 11% over the year, highlighting a continued divergence between Tapestry’s two major brands.
Tapestry raises dividend by 16%
Alongside its earnings report, Tapestry’s Board approved a 16% increase in the company’s dividend.
The increase takes the annual dividend rate to $1.85 per share, providing shareholders with a higher level of direct capital returns following the company’s strong fiscal 2026 performance.
Despite the earnings beat, strong Coach growth and increased dividend, the sharp premarket decline suggests investors had been positioned for a more ambitious fiscal 2027 outlook. Attention will now turn to whether Tapestry can outperform its initial revenue guidance while maintaining margin expansion and addressing the weaker performance at Kate Spade.
Tapestry stock price
