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Tapestry Inc (NYSE:TPR), the parent company of Coach , Kate Spade, and Stuart Weitzman, delivered strong third-quarter results for fiscal year 2025, highlighted by 8% revenue growth and a 27% increase in earnings per share. The company’s performance, driven primarily by the Coach brand, led management to raise its full-year outlook for revenue, earnings, and cash flow.
Quarterly Performance Highlights
Tapestry reported third-quarter revenue of $1.6 billion, representing 8% growth on a constant currency basis compared to the same period last year. The company achieved operating profit growth of 16% and delivered record earnings per share of $1.03, exceeding expectations with a 27% year-over-year increase. Additionally, Tapestry generated over $1 billion in adjusted free cash flow year-to-date.
The company’s customer acquisition strategy showed continued momentum, with over 1.2 million new customers added in North America during the quarter, representing an increase from the prior year.
As shown in the following chart highlighting key third-quarter metrics:
Geographic Performance
Tapestry’s global growth was broad-based across most regions, with particularly strong performance in North America and Europe. On a constant currency basis, North America grew 9%, Europe surged 35%, Greater China increased 5%, and Other Asia rose 14%. Japan was the only region to show a decline, with revenue down 2% compared to the prior year.
The following map illustrates Tapestry’s revenue trends by geography for the third quarter:
Detailed Financial Analysis by Brand
The company’s performance was driven primarily by the Coach brand, which delivered 15% revenue growth on a constant currency basis. Coach achieved a gross profit margin of 78.7% and an operating margin of 32.4%, highlighting the brand’s strong profitability.
Kate Spade faced challenges with revenue declining 12% year-over-year. Despite the top-line pressure, the brand maintained a 66.7% gross margin and delivered a modest operating income of $3 million, representing a 1.2% operating margin.
Stuart Weitzman continued to struggle, with revenue declining 17% and an operating loss of $5 million for the quarter.
The detailed P&L breakdown by brand reveals the significant contribution of Coach to Tapestry’s overall performance:
Strategic Initiatives & Portfolio Management
In a significant strategic move, Tapestry announced it has entered into a definitive agreement to sell the Stuart Weitzman brand to Caleres (NYSE:CAL). The transaction is expected to close this summer and have an immaterial impact on Tapestry’s non-GAAP operating income and EPS results.
CEO Joanne Crevoiserat emphasized the company’s strong performance and strategic direction: "Our strong third-quarter performance reflects the power of our brands and our ability to drive accelerated growth while building deeper connections with consumers. We remain committed to maintaining a bias for action, leveraging our competitive advantages, and delivering durable growth and shareholder value."
Tapestry highlighted its advantageous position to navigate the shifting global trade landscape, noting that less than 10% of its production comes from China, with approximately 70% manufactured in Vietnam, Cambodia, and the Philippines.
The following slide illustrates Tapestry’s supply chain advantages:
Raised Financial Outlook
Based on the strong third-quarter performance, Tapestry raised its fiscal 2025 outlook across key metrics. The company now expects:
- Revenue of approximately $6.95 billion, up from the previous outlook of over $6.85 billion
- Earnings per share of around $5.00, increased from the prior range of $4.85-$4.90
- Free cash flow of approximately $1.3 billion, up from approximately $1.2 billion
The updated guidance reflects confidence in continued momentum across the business, particularly for the Coach brand.
As shown in the following comparison of current versus prior outlook:
Capital Allocation & Shareholder Returns
Tapestry remains committed to returning significant capital to shareholders. The company expects to return over $2 billion to shareholders in fiscal year 2025 alone, representing more than 100% of its adjusted free cash flow. This return will come through a combination of share repurchases and dividend payments.
The strong cash flow generation is evident in the company’s adjusted free cash flow, which reached $1,066.5 million for the nine months ended March 29, 2025, compared to $946.4 million for the same period in the prior year.
The following reconciliation illustrates Tapestry’s free cash flow performance:
Forward-Looking Statements
Looking ahead, Tapestry identified several key priorities for fiscal year 2025. For Coach, the focus remains on deepening consumer connections, growing leather goods, and expanding lifestyle offerings. Kate Spade’s strategy centers on resetting the brand, strengthening the handbag offering, and building brand heat with cohesive storytelling.
The company highlighted its competitive advantages, including its iconic brands, attractive categories, omni-channel leadership, global platform, and talented team. These advantages position Tapestry to continue delivering on its financial targets while navigating potential challenges in the global trade environment.
As summarized in the key takeaways slide:
Tapestry’s third-quarter results demonstrate significant improvement from the previous quarter, when the company reported just 1% revenue growth. The acceleration in performance, particularly in North America and with the Coach brand, has given management confidence to raise its full-year outlook despite ongoing challenges with the Kate Spade brand. With the planned divestiture of Stuart Weitzman, Tapestry appears focused on optimizing its brand portfolio and allocating resources to its highest-performing assets.
Full presentation:
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