Tapestry Inc. (TPR) Shares Surge on Strong Q2 Results and Optimistic Outlook

Tapestry Inc. (TPR) shares surged on Thursday, February 6, 2025, following the company's release of strong fiscal second quarter results and an optimistic outlook for the remainder of the year. The luxury goods retailer reported record revenue of $2.2 billion, representing a 5% increase year-over-year, driven by a 10% revenue increase at its Coach brand. The company also delivered a diluted EPS of $1.38 on a reported basis and a record non-GAAP diluted EPS of $2.00.



Key highlights of Tapestry's Q2 performance include:

* A 280 basis point gross margin expansion to 74.4%, with 260 basis points coming from operational improvements rather than temporary factors like freight costs. This suggests sustainable margin enhancement through better pricing power and operational efficiency.
* Strong performance across regions, with notable growth in Europe (+42%), North America (+4%), and APAC (+1%).
* The company welcomed approximately 2.7 million new North American customers, with over half being Gen Z and Millennials. This demographic success, combined with high-single-digit digital growth, indicates effective brand rejuvenation and channel strategy.
* Cash flow from operations was over $500 million, and adjusted free cash flow came in at approximately $890 million.

Based on these strong results, Tapestry raised its fiscal 2025 outlook, now expecting revenue over $6.85 billion (approximately 3% growth) and EPS of $4.85-$4.90 (13-14% growth). The company remains on track to return over $2 billion to shareholders in fiscal 2025 through dividends and share repurchases.



Tapestry's Q2 results reveal a tale of two trajectories within its brand portfolio. Coach, representing 78% of total revenue, demonstrated remarkable strength with 10% growth and expanding margins, while Kate Spade (-10%) and Stuart Weitzman (-15%) faced challenges. This divergence highlights the company's increasing dependence on Coach's performance.

In conclusion, Tapestry Inc.'s (TPR) shares surged on Thursday following the company's strong fiscal second quarter results and optimistic outlook for the remainder of the year. The luxury goods retailer's record revenue and expanded gross margins, driven by operational improvements and strong performance across regions, indicate a positive outlook for the company's future growth. Investors should closely monitor Tapestry's progress as it continues to execute on its strategic priorities and deliver shareholder value.