Executive Summary
Tapestry Inc reported a challenging QQ1 2025 with revenue of USD 1.5075 billion, reflecting a substantial year-over-year decline of approximately 27.7% and a modest sequential drop of about 5.3%. The gross margin remained exceptionally strong at 75.28%, underscoring resilient product economics and brand mix despite softer top-line performance. Operating income stood at USD 252.0 million, delivering an operating margin of 16.72%, while net income reached USD 186.6 million and diluted EPS was USD 0.79–0.81 depending on the metric chosen. The company generated USD 119.5 million of operating cash flow and USD 93.9 million of free cash flow for the quarter, supported by a robust USD 6.46 billion cash balance and a net debt position of USD 2.34 billion. Equally notable is the capital allocation cadence: USD 81.4 million in dividends, USD 34.5 million in share repurchases, and USD 41.7 million in share issuances, with total debt still elevated at USD 8.81 billion and long-term debt at USD 8.20 billion. The results highlight a company with strong profitability on a margin basis and healthy liquidity, but faced with a softer revenue environment and leveraged balance sheet dynamics. Absent management guidance in the provided data, the near-term path hinges on demand stabilization, channel mix optimization, and continued focus on direct-to-consumer growth and inventory discipline.
Key Performance Indicators
QoQ: -5.25% | YoY:-27.68%
QoQ: -4.73% | YoY:-24.00%
QoQ: 17.14% | YoY:-42.10%
QoQ: 17.39% | YoY:-42.55%
Key Insights
Revenue: USD 1,507,500,000; YoY change: -27.68%; QoQ change: -5.25%
Gross Profit: USD 1,134,900,000; Gross Margin: 75.28%; YoY: -24.00%; QoQ: -4.73%
Operating Income: USD 252,000,000; Operating Margin: 16.72%; YoY: -43.70%; QoQ: +7.23%
Net Income: USD 186,600,000; Net Margin: 12.38%; YoY: -42.10%; QoQ: +17.14%
EPS (GAAP): USD 0.81; Diluted EPS: USD 0.79; YoY: -42.55%; QoQ: +17.39%
Cash From Operations: USD 119.5 million; Capex: USD 25.6 million; Free Cash Flow: USD 93.9 million
Cash and Equivale...
Financial Highlights
Revenue: USD 1,507,500,000; YoY change: -27.68%; QoQ change: -5.25%
Gross Profit: USD 1,134,900,000; Gross Margin: 75.28%; YoY: -24.00%; QoQ: -4.73%
Operating Income: USD 252,000,000; Operating Margin: 16.72%; YoY: -43.70%; QoQ: +7.23%
Net Income: USD 186,600,000; Net Margin: 12.38%; YoY: -42.10%; QoQ: +17.14%
EPS (GAAP): USD 0.81; Diluted EPS: USD 0.79; YoY: -42.55%; QoQ: +17.39%
Cash From Operations: USD 119.5 million; Capex: USD 25.6 million; Free Cash Flow: USD 93.9 million
Cash and Equivalents: USD 6.4629 billion; Total Debt: USD 8.8055 billion; Net Debt: USD 2.3426 billion
Current Ratio: 4.93x; Quick Ratio: 4.38x; Cash Ratio: 3.49x
DSO: 32.35 days; DIO: 248.99 days; CCC: 149.93 days
Dividend Payout Ratio: 43.6%; Dividend Yield: 0.733%; Payouts (Dividends): USD 81.4 million; Buybacks: USD 34.5 million; Issuances: USD 41.7 million
P/BV: 3.72; P/S: 7.36; P/E: 14.87; EV/Sales multiples indicate a balanced but elevated leverage stance with growth optionality in brand equity and DTC scale.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
1.51B |
-27.68% |
-5.25% |
| Gross Profit |
1.13B |
-24.00% |
-4.73% |
| Operating Income |
252.00M |
-43.70% |
7.23% |
| Net Income |
186.60M |
-42.10% |
17.14% |
| EPS |
0.81 |
-42.55% |
17.39% |
Key Financial Ratios
operatingProfitMargin
16.7%
operatingCashFlowPerShare
$0.52
freeCashFlowPerShare
$0.41
dividendPayoutRatio
43.6%
Management Commentary
Note: Earnings transcript data is not provided in the input. As a result, there are no management quotes or transcript-based highlights available. The following highlights are based on the quantitative results and typical strategic interpretation for a luxury/accessories-focused portfolio like Tapestry:
- Strategic brand mix and margin resilience: The trailing gross margin of 75.28% implies ongoing pricing power and favorable product mix across Coach and Kate Spade, even as revenue declined YoY.
- Capital allocation discipline: The quarter shows a balanced approach to shareholders via dividends and modest buybacks, alongside continued investment implied by capex and working capital management. The free cash flow generation supports debt service and potential deleveraging over time.
- Channels and growth potential: A durable liquidity position supports investments in DTC transformation, omnichannel experiences, and international expansion, particularly in Asia where luxury demand remains a longer-term tailwind, though near-term demand softness is evident in the topline figures.
Forward Guidance
No explicit forward guidance is provided in the data set for QQ1 2025. Given the material YoY revenue decline and a stabilizing QoQ trend, a cautious view is warranted. Investors should monitor: (1) demand stabilization across key regions, (2) Asia-Pacific growth and new store openings versus productivity of existing fleet, (3) direct-to-consumer growth metrics and e-commerce penetration, (4) gross margin persistence against mix shifts and any potential pricing power, (5) inventory levels and working capital dynamics given the length of inventory days (DIO ~249 days). Management commentary in a future release is likely to address whether the company expects a rebound in consumer sentiment, continued mix optimization (Coach vs Kate Spade vs Stuart Weitzman), and any guidance on full-year revenue and margin trajectory. Factors to watch include: currency effects, wholesale dynamics, store productivity, and ongoing capital deployment in technology and digital platforms.