Tapestry, Inc. TPR has reported impressive second-quarter fiscal 2025 results that exceeded the Zacks Consensus Estimate for both revenues and earnings.  Also, the top and bottom lines increased year over year. Driven by the fiscal second-quarter results, Tapestry has raised its fiscal 2025 outlook.

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The company delivered seamless and engaging omni-channel experiences, emphasizing brand appeal, consumer engagement and cultural relevance, leveraging creativity alongside Tapestry’s data and analytics capabilities. TPR is positioned for continued growth, supported by its distinctive brands, flexible platform and solid cash flow.

These factors provide Tapestry with strategic and financial flexibility, enabling the company to pursue accelerated organic growth and long-term value creation, particularly in fiscal 2025 and beyond.

More on TPR’s Q2 Financial Results

Tapestry reported adjusted earnings of $2.00 a share for the fiscal second quarter, which surpassed the Zacks Consensus Estimate of $1.74 and increased from $1.63 in the prior-year period. 

Net sales were $2,195.4 million, beating the consensus estimate of $2,108 million. Also, net sales reflected a 5.3% year-over-year increase. The appreciation of the United States dollar caused a 30-basis-point headwind in the quarter due to foreign exchange impacts.

In the second quarter, Tapestry achieved growth in customer acquisition, adding 2.7 million customers to the company’s brands in North America, with more than half belonging to Gen Z and Millennial demographics.

The company achieved 4% growth in direct-to-consumer sales, driven by a high-single-digit increase in digital sales and a low-single-digit rise in global brick-and-mortar sales, with strong and improving profitability across all channels.

TPR’s Brand-Wise Sales Details

For the quarter, Coach's net sales were $1.71 billion, beating the Zacks consensus estimate of $1.58 billion. This is marking an 11% year-over-year increase on a reported basis and 10% on a constant-currency basis. 

Kate Spade’s sales were $416.4 million, lagging the consensus estimate of $443.7 million, marking a 10% decline both on a reported and constant-currency basis from the year-ago period. 

Stuart Weitzman’s net sales totaled $69.7 million, missing the consensus estimate of $82.1 million. This is marking a 15% year-over-year decrease on a reported basis and 16% on a constant-currency basis.

Tapestry Provides Q2 Revenue Insights by Region

Sales in North America increased 4% year over year to $1.51 billion. Sales in Greater China improved 3% to $272.8 million. 

In Japan, sales decreased 5% year over year to $141.2 million, while revenues from Other Asian markets rose 14% to $113.2 million. European markets continued to show momentum, with a 45% increase in revenues to $129.3 million, thanks to robust spending from local consumers and tourists.

TPR’s Margins & Cost Details

The consolidated gross profit was $1.63 billion, up 9.4% from the year-ago period. Also, the gross margin increased by 280 basis points to 74.4%. This was driven by a 260-basis-point improvement in operations and a 20-basis-point benefit from reduced freight expenses.

The company reported an adjusted operating income of $548.2 million, up 15.2% from $475.9 million in the year-ago period. Meanwhile, the adjusted operating margin increased 220 basis points to 25%.

Adjusted selling, general and administrative expenses totaled $1.08 billion, up 6.6% from $1.02 billion in the year-ago period. As a percentage of net sales, this metric deleveraged 60 basis points to 49.4%.

Tapestry’s Q2 Store Update

As of the end of the fiscal second quarter, the company operated 325 Coach stores, 197 Kate Spade outlets and 34 Stuart Weitzman stores in North America. Internationally, the store count was 597, 182 and 58 for Coach, Kate Spade and Stuart Weitzman, respectively.

TPR’s Financial Snapshot: Cash, Debt & Equity Overview

Tapestry ended the quarter with cash, cash equivalents and short-term investments of $1 billion, long-term debt of $2.38 billion, and stockholders' equity of $1.34 billion.

The operating cash flow as of Dec. 28, 2024, was $625.5 billion, down from $901.8 million in the previous-year period. The adjusted free cash flow was an inflow of $931.9 million, up from $924.9 million in the prior year. The capital expenditure and implementation costs related to cloud computing for the fiscal second quarter totaled $39 million compared with $30 million in the prior year.

The company anticipates returning more than $2 billion, exceeding 100% of its free cash flow, to shareholders in fiscal 2025 through dividends and share repurchases.

TPR Stock Past Three-Month Performance

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What Lies Ahead for Tapestry?

TPR has raised its fiscal 2025 outlook, expecting revenues of $6.85 billion, suggesting 3% growth from the prior year on a reported basis, including a currency headwind of more than 50 basis points. This is ahead of the previous guidance of $6.75 billion, which anticipated growth of 1-2% from the prior year on both reported and constant-currency basis. 

Operating margin expansion is expected to be 100 basis points from that reported in the prior year, an improvement over the previous guidance of more than 50 basis points.

Earnings per share are forecast between $4.85 and $4.90, implying 13-14% growth from that reported in the prior year and exceeding the company's previous guidance of $4.50-$4.55. The increased outlook incorporates benefits of 17 cents from the fiscal second-quarter operational outperformance, a full-year net benefit of 10 cents from share repurchase activity, and a net benefit of 8 cents from a lower tax rate, partially offset by an expected currency headwind.

The adjusted free cash flow is expected to reach $1.2 billion, up from the prior mentioned $1.1 billion.

Shares of this Zacks Rank #2 (Buy) company have gained 42.3% in the past three months compared with the industry’s growth of 9.4%.

Other Key Picks

Some other top-ranked stocks in the same space are Urban Outfitters Inc. URBN, Genesco Inc. GCO and Deckers Outdoor Corporation DECK.

Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor, and gift products. It flaunts a Zacks Rank of (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2025 earnings and revenues indicates growth of 20.6% and 7.5%, respectively, from the fiscal 2024 reported levels. URBN delivered a trailing four-quarter average earnings surprise of 22.8%.

Genesco is a specialty retail and branded company selling footwear and accessories in retail stores. It currently sports a Zacks Rank #1.

The Zacks Consensus Estimate for Genesco’s fiscal 2025 earnings and revenues indicates growth of 67.9% and 1.5%, respectively, from the fiscal 2024 reported figures. GCO delivered a trailing four-quarter average earnings surprise of 36.9%.

Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It flaunts a Zacks Rank of 1 at present.

The Zacks Consensus Estimate for DECK’s fiscal 2025 earnings and revenues implies growth of 20% and 15.3%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 36.8%.

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