Tapestry Inc. delivered its strongest quarter on record in Q2 fiscal 2026, reporting revenue of $2.5 billion, a 14% increase versus the prior year. Simultaneously, closing the books on the blocked Capri Holdings merger and completing the divestiture of Stuart Weitzman. The results mark a new chapter for the New York based house of accessible luxury brands, now operating as a leaner, more focused two brand company built around Coach and Kate Spade New York.
The quarter came in well ahead of expectations across revenue, operating profit, and earnings per share, prompting the company to raise its full year outlook across every key financial metric.
Coach Is the Engine Driving Everything
The standout number in the results was Coach, which posted 25% revenue growth in the quarter, an extraordinary result for a brand of its scale and maturity. Handbag average unit retail prices and unit volumes each grew at a mid teens rate, contributing roughly equally to the brand’s momentum and pointing to both stronger pricing power and wider customer reach.
Geographically, the brand drove growth across all major markets. Greater China was the standout region with 34% pro forma constant currency growth, while Europe climbed 22% and North America added 17%. Total direct to consumer revenue grew 17% on a pro forma basis, led by digital growth of approximately 20%.
Kate Spade Remains a Work in Progress
The picture at Kate Spade New York was more challenging. The brand posted a 14% revenue decline in Q2, bringing its year to date performance to a 11% drop. The brand’s operating income also contracted significantly versus the prior year, reflecting ongoing work to reposition its product and marketing identity. That contrast with Coach is one of the more notable dynamics in the results and one that management will need to address clearly as it looks to justify the brand’s place in the portfolio.
A Cleaner Portfolio After Two Pivotal Moves
The Q2 results reflect the aftermath of two major strategic shifts. First, Tapestry’s proposed $8.5 billion acquisition of Capri Holdings, owner of Versace, Jimmy Choo, and Michael Kors, was blocked by the FTC in 2024 after a federal judge ruled it would harm competition in the accessible luxury handbag market. That outcome, painful at the time, effectively forced the company to sharpen its focus on its existing brands.
Second, the divestiture of Stuart Weitzman, completed on August 4, 2025, removed a chronically underperforming brand from the portfolio. The sale generated a 90 basis point favorable impact on non GAAP operating margin and allowed management to concentrate capital and attention where it matters most.
Joanne Crevoiserat, Chief Executive Officer of Tapestry, Inc., said, “Our second quarter outperformance reflects the compounding impact of our Amplify strategy, driving deeper consumer engagement, accelerated growth, and record results. This holiday season, our talented teams brought creativity, craftsmanship, and value to consumers around the world, building new and lasting connections that fuel enduring brand desire and demand. As we move forward, we do so with momentum and confidence. By harnessing our proven strategies and structural advantages, we are raising our outlook for the fiscal year, reinforcing our commitment to driving durable growth and long term value creation.”
Margins Expand Sharply Despite Tariff Headwinds
The profitability story is equally compelling. Non GAAP operating margin reached 28.8% in Q2, up 390 basis points versus the prior year, even after absorbing a 190 basis point headwind from tariffs and duties. GAAP diluted EPS of $2.68 was up 94% year over year, while gross margin expanded 110 basis points to 75.5%.
The company also acquired over3.7 million new customers globally in the quarter, with Gen Z representing approximately one third of that cohort — a meaningful signal for long term brand health.
$1.5 Billion Flowing Back to Shareholders
With a leverage ratio of just 1.2x gross debt to adjusted EBITDA and adjusted free cash flow tracking toward $1.5 billion for the full year, Tapestry increased its shareholder return target from $1.3 billion to $1.5 billion, roughly 100% of anticipated free cash flow. That includes approximately $1.2 billion in share buybacks and an annual dividend of $1.60 per share.
By the end of Q2, the company had already spent $900 million year to date repurchasing 8.3 million shares at an average price of approximately $109 per share.
A Stronger Full Year Outlook
Tapestry raised its fiscal 2026 guidance materially. Full year revenue is now expected to exceed $7.75 billion, up from prior guidance of approximately $7.3 billion, representing approximately 15% pro forma growth. Full year EPS guidance was lifted to $6.40 to $6.45, representing growth of over 25% versus the prior year and well above prior guidance of $5.45 to $5.60.
Operating margin expansion of approximately 180 basis points is also now expected, versus prior guidance of around 50 basis points, suggesting that the underlying business improvement is proving durable even in a tariff heavy environment.
