Tapestry Q1 2027: Coach surges 16% as EPS tops estimates by 16%

Tapestry opened fiscal 2027 with adjusted earnings of $1.82 per share, clearing the $1.56 consensus estimate by 16.42% and extending the company's streak of EPS beats to four consecutive quarters. Total revenue came in at $1.89 billion, topping estimates by 2.6% and growing 11.1% year over year.

The result was almost entirely a Coach story. That brand generated $1.66 billion in revenue, up 16%, with handbag average unit retail prices rising low-double digits and unit volumes up low-single digits. International demand was particularly strong, with Greater China up 43%, Europe up 20%, and Asia Pacific up 26%. Coach also opened a net 10 new stores in the quarter.

Non-GAAP gross margin expanded 220 basis points, with management attributing roughly 130 basis points to operational improvements, 70 basis points to a net tariff and duty benefit, and 20 basis points to currency. Operating income rose 29% year over year to $424 million, and net income climbed 31% to $360 million. Operating cash flow surged nearly 75% to $197 million.

Kate Spade remains the visible drag. Its revenue fell 10% to $233 million and the brand reported an operating loss for the quarter, leaving Coach to carry the portfolio essentially on its own. Japan also slipped 5% on a reported basis, though those pressures were overshadowed by the broader momentum.

Encouraged by the quarter, management raised full-year non-GAAP EPS guidance to $8.25 to $8.35, up from the prior range of $7.80 to $7.90, and lifted the full-year revenue outlook to approximately $8.5 to $8.6 billion. The share repurchase plan was increased by $350 million to $1.7 billion, with total planned capital returns now approximately $2.0 billion, including an annual dividend of $1.85 per share. For the second quarter, the company guided EPS to approximately $3.05.

CEO Joanne Crevoiserat described the quarter as a "powerful start to the year" and said the raised outlook reflects "confidence in the durability of our growth." The key question heading into the rest of the fiscal year is whether Kate Spade can stabilize, or whether the company will increasingly depend on a single brand to deliver on that upgraded guidance.