Tapestry, Inc. (NYSE: TPR), a globally recognized house of iconic accessories and lifestyle brands including Coach, Kate Spade, and Stuart Weitzman, announced its fiscal third quarter results for the period ending March 29, 2025, delivering record revenue and earnings per share (EPS) growth that surpassed expectations. This comprehensive earnings release not only highlights Tapestry’s robust operational performance but also provides a positive outlook for the full fiscal year 2025, underscoring its strategic strengths and resilience in a complex economic environment.
Key Fiscal Q3 2025 Results and Highlights: - Total revenue reached \(1.6 billion, marking a 7% increase year-over-year, or 8% growth on a constant currency basis. Coach led the brand performance with a remarkable 13% revenue growth (15% constant currency). - The company achieved a gross margin expansion of 140 basis points, lifting it to 76.1% compared to 74.7% in the prior year. - GAAP diluted EPS surged 60% year-over-year to \)0.95, while non-GAAP diluted EPS rose 27% to \(1.03, exceeding the company's outlook. - Operating income stood at \)254 million with a GAAP operating margin of 16.0%, and an improved non-GAAP operating margin of 17.5%.
Strategic Growth Initiatives: - Customer Acquisition: Over 1.2 million new customers were acquired in North America alone, driven predominantly by Gen Z and Millennial consumers who accounted for approximately two-thirds of these new clients. - Global Revenue Expansion: The company achieved an 8% constant currency revenue growth including 9% in North America, 35% in Europe, and 4% across total Asia Pacific. Digital sales notably saw mid-teens growth, complemented by mid-single digit increases in brick-and-mortar retail globally. - Supply Chain and Product Innovation: Tapestry leveraged its agile global supply chain to drive product innovation, especially at Coach with strong handbag revenue growth and a mid-teens increase in average unit retail prices, fueling margin expansion and disciplined inventory management.
Financial Position and Cash Flow: - Tapestry maintained a robust balance sheet with cash, cash equivalents, and short-term investments totaling approximately \(1.1 billion. - Total borrowings were \)2.7 billion, resulting in a manageable net debt of \(1.6 billion and a leverage ratio of 1.6x based on gross debt to adjusted EBITDA. - Operating cash flow was positive at \)144 million for the quarter, while adjusted free cash flow significantly improved to \(135 million, up from \)22 million in the prior year, reflecting efficient capital management.
Capital Allocation and Shareholder Returns: - The company remains committed to returning over \(2 billion to shareholders in 2025, including a quarterly dividend of \)0.35 per common share and ongoing share repurchase programs. - An ongoing \(2 billion Accelerated Share Repurchase (ASR) program was executed alongside \)800 million remaining under the prior repurchase authorization.
Forward-Looking Guidance: - Tapestry raised its fiscal 2025 revenue outlook to approximately \(6.95 billion, representing 4% growth over the prior year on a reported basis. - The company expects operating margin expansion of approximately 100 basis points, adjusted free cash flow of \)1.3 billion, diluted EPS around \(5.00 representing high-teens percentage growth, and net interest expense of \)25 million. - Guidance accounts for current tariff expectations, currency rates, and excludes one-time costs related to the anticipated summer 2025 sale of Stuart Weitzman.
Context from Previous Earnings Calls: Tapestry’s recent earnings calls underscored themes of strategic brand building, digital transformation, market expansion, and operational discipline. The company emphasized harnessing its global scale and data analytics to enhance customer engagement and omni-channel experiences. The fiscal Q3 2025 results empirically validate these strategies with quantitative outcomes, such as the 15% constant currency revenue increase for Coach and 9% growth in direct-to-consumer revenue.
Overall Impact and Industry Outlook: Tapestry’s robust Q3 fiscal performance amidst a dynamic external environment marked by economic uncertainties and tariff policies signifies strong brand resilience and effective managerial execution. The company’s prudent capital deployment and margin expansion strategies position it well for sustainable growth.
For a deep dive into the financial details and complete disclosures, readers can access the original SEC 8-K filing here: https://sec.gov/Archives/edgar/data/1116132/000114036125017853/ef20048446_ex99-1.htm
Tags: Tapestry FiscalQ3Results, CoachBrandGrowth, FashionIndustryEarnings, ShareholderReturnsTPR, RetailRevenueTrends