On May 7, New York-based luxury group Tapestry, Inc., the parent company of “Coach” and “Kate Spade New York,” reported its fiscal third-quarter 2026 results. Revenue rose 21% year-over-year to $1.9 billion, while operating margin and EPS both exceeded market expectations. The company’s strong performance was primarily driven by Coach, which delivered double-digit growth across major markets, including North America and China.
Following the results, Tapestry also raised its full-year fiscal 2026 outlook for revenue, operating margin, EPS, and cash flow.
Summary
- Tapestry’s Q3 FY2026 revenue increased 21% year-over-year to $1.9 billion
- Coach revenue surged 31%, achieving double-digit growth across key markets, including North America and China
- The “Tabby” series and social media strategies continued to attract Gen Z consumers
- GAAP operating margin improved by 630 basis points, while diluted EPS rose 74% to $1.65
- Tapestry accelerated its transformation into a “modern luxury company” through AI integration and D2C expansion
- The company raised its full-year FY2026 guidance, signaling confidence in sustained growth
Coach Drives Strong Growth Across Major Markets
Tapestry reported third-quarter net sales of $1.92 billion, representing a 19% increase on a constant currency basis. Coach was the standout performer, growing 29% in constant currency terms, fueled by strong demand in the handbag category. Unit sales increased by more than 20%, while average unit retail prices also rose in the low double digits.
Regionally, North America grew by 20%, Europe rose by 21%, and APAC increased by 30%, including strong momentum in China. Digital sales increased by approximately 25%, while global brick-and-mortar sales rose by more than 20%.
Part of Coach’s recent momentum has been driven by the popularity of key handbag lines such as the “Tabby” and “Brooklyn” series, which have resonated strongly with younger consumers. In recent years, Coach has intensified its visibility across social platforms, including TikTok and Pinterest, accelerating engagement with Gen Z audiences globally.
The brand has also continued investing aggressively in campaigns and influencer marketing. The ability to increase marketing investment while simultaneously improving profitability reflects the current strength of Coach’s brand positioning.
Margin Expansion and Strong Cash Generation
Gross margin improved to 76.9%, up 80 basis points year-over-year. SG&A leverage also improved, resulting in an operating margin of 22.3% on a GAAP basis and 22.4% on a non-GAAP basis.
Net income reached $344 million on a GAAP basis, while diluted EPS rose 74% year-over-year to $1.65. Non-GAAP diluted EPS increased 62% to $1.66.
Meanwhile, operating cash flow totaled $263 million for the quarter and $1.46 billion year-to-date, underscoring the company’s strong cash generation capabilities.
Kate Spade New York Continues Brand Repositioning Efforts
Meanwhile, “Kate Spade New York” remains in a transitional phase. The brand continues moving away from discount-driven strategies while strengthening full-price selling and refining its positioning.
In recent years, Tapestry has been reshaping Kate Spade’s brand image and product strategy, prioritizing long-term brand equity over short-term sales acceleration.
Gen Z Customer Acquisition Continues to Accelerate
During the quarter, Tapestry acquired more than 2.4 million new customers, with over 35% coming from Gen Z consumers. The continued influx of younger customers has become a key indicator of the group’s long-term competitiveness.
The company also continues to advance its “Amplify” strategy, which focuses on four pillars: emotional customer connection, product excellence, global growth, and talent development.
At the same time, Tapestry has been accelerating the use of AI technologies across both Coach and Kate Spade New York. While creative direction remains human-led, AI is increasingly being integrated into areas such as color development, product workflows, and supply chain optimization to improve speed and operational efficiency.
Tapestry CEO Joanne Crevoiserat commented on the results: “The strong third quarter results reflect the compounding benefits of our Amplify strategy, which brings creativity, craftsmanship, and value to more consumers around the world. Through disciplined execution and an unwavering focus on the customer, we are transforming insights into scaled action, driving meaningful growth, expanding margins, and building lasting brand desire. With this strong positioning, we are moving confidently toward a future filled with opportunity. By raising our fiscal 2026 outlook, we are demonstrating the power of Tapestry and our commitment to delivering durable growth and long-term shareholder value.”
Full-Year Outlook Raised
Tapestry also raised its fiscal 2026 outlook. Revenue is now expected to reach approximately $7.95 billion, representing roughly 14% year-over-year growth. EPS guidance was increased from the previous range of $6.40–$6.45 to approximately $6.95.
In addition, the company expanded its expected shareholder return program to $1.6 billion for fiscal 2026, continuing aggressive capital returns through dividends and share repurchases.
The Evolution of “Modern Luxury”
Perhaps the most notable aspect of this quarter’s results is the renewed global acceleration of Coach among younger consumers. However, this momentum is not simply the result of a single strong quarter. In reality, Tapestry has consistently delivered Coach-led growth over the past several quarters.
In the previous quarter, Coach revenue rose 25% in Q2 FY2026. Throughout fiscal 2025, the brand also maintained double-digit growth while strengthening its presence across both North America and China.
In recent years, Coach has successfully positioned itself within the “accessible luxury” market by balancing pricing, craftsmanship, and trend relevance. In particular, the brand’s icon bag strategy — led by the “Tabby” series — combined with social-media-driven marketing across TikTok and Pinterest, has resonated strongly with Gen Z consumers.
Meanwhile, sustained double-digit growth in both China and North America suggests that the brand is building long-term aspiration and loyalty rather than relying on temporary hype cycles.
At the same time, Tapestry continues accelerating its transformation into a “modern luxury company” through AI integration, D2C expansion, and data-driven product strategies. During its 2025 Investor Day, the company also outlined ambitions to grow Coach into a future $10 billion brand.
At a time when the broader luxury industry continues to face concerns over slowing consumer demand, Tapestry’s latest results suggest that its performance is not merely a short-term rebound, but rather the outcome of sustained investments in brand strategy, customer understanding, and marketing execution.
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