Tapestry added roughly $1 billion of revenue in the twelve months ended June 27, 2026, almost the size of its entire Kate Spade business. The headline figure: sales reached $8.0 billion, up 14.2% from the comparable year.
The stock did not offer a drumroll. Shares closed at $153.51 on August 12, down 4.4% for the day. The annual numbers are substantial, but the comparison has a large accounting shadow.
Operating income jumped from $415.0 million to $1.9 billion, while net income rose from $183.2 million to $1.5 billion. Gross margin improved to 77.8%, but the more dramatic move came from the company clearing out costs and impairments that weighed on the prior year.
Tapestry's disclosure puts some scale on that prior burden:
"These charges include: Capri Acquisition Costs: Total pre-tax charges of $268.4 million primarily related to: Loss on extinguishment of debt - $119.4 million primarily related to redemption premiums, as well as unamortized debt issuance costs and discounts, as a result of the redemption of the Capri Acquisition Senior Notes in fiscal 2025 due to the termination of the Capri Acquisition agreement; SG&A expenses - $88.8 million primarily related to expense reimbursement payment made to Capri and professional fees recorded; Interest expense, net - $60.2 million of financing related charges which primarily includes the net impact of the Capri Acquisition Senior Notes; and Stuart Weitzman Business Divestiture Costs : Total pre-tax charges of $23.7 million primarily due to the loss on business held for sale, professional fees, share-based compensation expense and store impairment."
Tapestry, 10-K filed August 13, 2026
Some of those charges were cash costs, but the prior year also included major non-cash goodwill and intangible-asset impairments. The company says the current year's operating cash flow rose $761.9 million partly because those prior non-cash adjustments were no longer weighing on the comparison.
That does not make the cash generation imaginary. Operating cash flow reached $2.0 billion, up 62.6%. It does make the earnings jump harder to read as a clean measure of recurring operating improvement, especially because cash conversion fell from 6.64x to 1.30x as net income grew much faster than cash.
The business itself was not moving in one piece. Coach revenue rose 23.5% to $6.9 billion and supplied most of the group's growth. Kate Spade revenue fell 10.2% to $1.1 billion, while Stuart Weitzman's reported revenue was nearly gone after the divestiture.
Working capital added another useful receipt. Inventory fell 4.0%, and management says it was a source of cash this year rather than a use in the prior year:
"Inventories were a source of cash of $35.4 million in fiscal 2026 compared to a use of cash of $108.2 million in fiscal 2025, primarily driven by increased inventory purchases for Coach in the prior year to support sales growth and the strategic decision to pull forward receipts."
Tapestry, 10-K filed August 13, 2026
That is a concrete change in cash consumption, though it also means the next period will be read against a year in which inventory receipts were already pulled forward. The company separately says Kate Spade's impairment assessment included estimated cost increases from changes in tariff and trade policies, leaving trade costs as an operating exposure alongside the brand's sales decline.
The balance sheet had $974.7 million of cash at year-end, down from $1.1 billion, while capex rose 35.3% to $166.0 million. The filing therefore presents two simultaneous facts: a much larger operating cash haul and a profit comparison that benefited materially from the disappearance of prior-year impairment charges.
Tapestry's next quarterly report will give the cleanest comparison if it reports whether cash conversion has moved up from the latest 1.30x without relying on another inventory swing.
Source: Tapestry's fiscal 2026 Form 10-K filed August 13, 2026.