# Tapestry (TPR) Financial Model Free Excel 3-statement financial model and company analysis for Tapestry. - Canonical: https://finamodel.com/companies/tapestry - Industry: Consumer Goods - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/TPR.xlsx ## Model Purpose This model provides a comprehensive equity valuation and scenario planning tool for an analyst assessing Tapestry's organic growth trajectory and capital return programme following the terminated Capri Holdings acquisition and the divestiture of the Stuart Weitzman brand. ## Company Overview Tapestry, Inc. is a New York-based house of modern luxury accessories and lifestyle brands, primarily known for its premium handbags, leather goods, and footwear. The company operates a direct-to-consumer led model, engaging customers through its global network of retail stores, e-commerce platforms, and select wholesale partnerships. Business segments (based on FY25 revenue): * **Coach:** Approximately 80% of total net sales. The flagship brand driving the majority of growth and profitability. * **Kate Spade:** Approximately 17% of total net sales. A lifestyle brand that has recently faced revenue declines and required strategic repositioning. * **Stuart Weitzman:** Approximately 3% of total net sales. A luxury footwear brand that Tapestry divested to Caleres in August 2025 (early FY26). Key geographies include North America (the largest market) and Greater China, alongside growing penetration in Europe and Southeast Asia. The business model is predominantly direct-to-consumer (DTC), which accounts for approximately 86% of total sales, with wholesale making up the remaining 13%. Recent major events include the termination of the $8.5 billion Capri Holdings acquisition in November 2024 due to regulatory blocks, the subsequent redemption of $6.1 billion in acquisition-related debt, a $2 billion accelerated share repurchase programme, and the divestiture of Stuart Weitzman. ## Revenue Deep Dive ### Coach * **Segment name:** Coach * **Revenue driver formula:** (DTC Volume x Average Unit Retail) + Wholesale Revenue * **Historical growth rate:** 3% to 10% YoY (10% growth in FY25) * **Key growth levers and headwinds:** Strong brand momentum among Gen Z and Millennial consumers, product innovation in leather goods, and expansion in Greater China. Headwinds include macroeconomic pressures on discretionary spending and foreign exchange volatility. * **Pricing dynamics:** Premium positioning with high pricing power; recent gross margin expansion driven by lower promotional activity and higher average unit retail (AUR). * **Revenue recognition notes:** Recognised at the point of sale in retail stores or upon delivery for e-commerce and wholesale. * **Seasonality:** Highly seasonal, with the fiscal second quarter (holiday season) generating the highest revenue and disproportionate operating profit. ### Kate Spade * **Segment name:** Kate Spade * **Revenue driver formula:** (DTC Volume x Average Unit Retail) + Wholesale Revenue * **Historical growth rate:** Negative 5% to negative 10% YoY (-10% in FY25) * **Key growth levers and headwinds:** Efforts to elevate brand perception and improve product assortment are ongoing. Headwinds include heavy promotional environments and weaker consumer demand in the aspirational luxury tier. * **Pricing dynamics:** Highly competitive; historically reliant on outlet and promotional sales, though management is attempting to pull back on discounting. * **Revenue recognition notes:** Standard point-of-sale and delivery recognition. * **Seasonality:** Peaks during the fiscal second quarter holiday period. ### Stuart Weitzman (Divested) * **Segment name:** Stuart Weitzman * **Revenue driver formula:** Historical run-rate (divested August 2025) * **Historical growth rate:** Negative 10% to negative 15% YoY * **Key growth levers and headwinds:** Divested to Caleres for $120.2 million. The model must zero out this revenue stream from Q1 FY26 onwards. ## Cost Structure ### Variable Costs / COGS * Line items include the direct cost of materials, manufacturing labour, freight, and import duties or tariffs. * Gross margin range: 70% to 76% (expanded to 75.4% in FY25). * Key input costs include leather, hardware, and logistics. The company is exposed to tariff risks, particularly concerning goods manufactured in Asia. * COGS scales linearly with volume, but gross margin percentage fluctuates based on channel mix (DTC is higher margin than wholesale) and promotional intensity. ### Operating Expenses * **SG&A:** The primary operating expense, encompassing store rent, retail payroll, marketing, and corporate overhead. Marketing is a critical growth driver and typically runs at a mid-to-high single-digit percentage of sales. * **Depreciation & Amortisation:** Embedded within SG&A in the reported income statement, primarily related to store build-outs and digital infrastructure. * **Restructuring / one-time charges:** Frequent in recent years due to the terminated Capri acquisition (financing and professional fees) and an $855 million non-cash impairment charge on Kate Spade goodwill and intangibles in FY25. ### Margin Profile * Gross margin: 73% to 76% (expanding due to Coach's pricing power). * Operating margin: 16% to 20% on a non-GAAP basis (20.0% in FY25). * Net margin: 10% to 16% (non-GAAP). * Segment margins: Coach operates at a highly accretive operating margin, while Kate Spade operates at a significantly lower margin. ## Balance Sheet Structure * Total assets: Approximately $6.0 billion to $7.0 billion. * Key asset categories: Cash and short-term investments, inventory, operating lease right-of-use assets, and goodwill/intangibles. * Goodwill & intangibles: Historically high due to the Kate Spade acquisition, though significantly reduced following the $855 million impairment in FY25. * Working capital profile: * Days Sales Outstanding (DSO): 20 to 30 days (low due to high DTC mix). * Days Inventory Outstanding (DIO): 120 to 150 days (inventory is a major use of cash ahead of the holiday season). * Days Payable Outstanding (DPO): 60 to 80 days. * Net working capital is typically positive but fluctuates heavily with seasonal inventory builds. * PP&E: Primarily leasehold improvements for retail stores, fixtures, and IT equipment. * Right-of-use assets: Highly material due to the extensive global retail store fleet. ## Capital Expenditure & Investment * Capex as % of revenue: 3% to 5% historically. * Split: Heavily weighted towards digital/IT investments and targeted store renovations or relocations, rather than aggressive net new store growth. * M&A pattern: Historically a transformational acquirer (Kate Spade, attempted Capri Holdings). Following the blocked Capri deal, management has pivoted to organic growth and shareholder returns. ## Debt & Capital Structure * Total debt: Approximately $2.4 billion (as of late FY25). * Key debt instruments: Senior unsecured notes and a revolving credit facility. The company issued $6.1 billion in notes for the Capri acquisition but redeemed them in late 2024 via a Special Mandatory Redemption feature at 101% of par. * Interest rate profile: Primarily fixed-rate senior notes. * Share repurchase programme: Highly active. Executed a $2.0 billion Accelerated Share Repurchase (ASR) in FY25 at an average price of approximately $78 per share. An additional $1.2 billion is authorised for FY26. * Dividend policy: $1.40 per share in FY25, increased by 14% to $1.60 per share for FY26. Target payout ratio is 35% to 40%. ## Cash Flow Characteristics * Operating cash flow conversion: Very strong, typically >1.2x non-GAAP net income. * Free cash flow margin: 12% to 16% of revenue. * Major non-cash items: Depreciation, amortisation, stock-based compensation, and periodic impairment charges (e.g., Kate Spade in FY25). * Working capital cash flow impact: Significant seasonal swings; inventory consumes cash in Q1 and releases cash in Q2/Q3. * Cash tax rate: Generally tracks closely to the non-GAAP effective tax rate of 18% to 19%. ## Sheet Structure 1. **Assumptions:** Hardcoded drivers for revenue growth by brand, margin profiles, tax rates, and capital return targets. 2. **Scenarios:** Base, Bull, and Bear cases toggling Coach's growth rate and Kate Spade's turnaround success. 3. **Income Statement:** Consolidated P&L mirroring the 10-K, ending in both GAAP and Non-GAAP EPS. 4. **Balance Sheet:** Standard assets, liabilities, and equity, with breakout lines for operating lease assets and liabilities. 5. **Cash Flow Statement:** Indirect method starting from Net Income, adjusting for the Kate Spade impairment and Capri deal costs. 6. **Segment Build:** Revenue and operating profit broken out strictly by Coach, Kate Spade, and Stuart Weitzman (with Stuart Weitzman zeroed out post-Q1 FY26). 7. **Working Capital:** Schedules for accounts receivable, inventory, and accounts payable driven by DSO, DIO, and DPO. 8. **Debt & Interest:** Schedule tracking senior notes, the revolving credit facility, and interest expense (excluding the redeemed $6.1B Capri notes). 9. **PPE & Leases:** Capex, depreciation, and right-of-use asset amortisation. 10. **Equity & Shares:** Retained earnings roll-forward, dividend payouts, and a detailed share count reduction schedule based on the ASR and ongoing buybacks. 11. **DCF Valuation:** Unlevered free cash flow build, WACC calculation, and terminal value. ## Key Financial Relationships 1. `Coach Revenue = Prior Year Coach Revenue x (1 + Coach Growth Rate)` 2. `Kate Spade Revenue = Prior Year Kate Spade Revenue x (1 + Kate Spade Growth Rate)` 3. `Stuart Weitzman Revenue = IF(Date > August 2025, 0, Prior Year SW Revenue x (1 + SW Growth Rate))` 4. `Total Net Sales = Coach Revenue + Kate Spade Revenue + Stuart Weitzman Revenue` 5. `Gross Profit = Total Net Sales x Consolidated Gross Margin %` 6. `SG&A Expense = Total Net Sales x SG&A % of Sales` 7. `Non-GAAP Operating Income = Gross Profit - SG&A Expense` 8. `GAAP Operating Income = Non-GAAP Operating Income - Impairment Charges - Acquisition/Divestiture Costs` 9. `Interest Expense = (Beginning Debt + Ending Debt) / 2 x Weighted Average Interest Rate` 10. `Share Repurchases = Total Authorised Buyback Amount allocated per period` 11. `Ending Share Count = Beginning Share Count - (Share Repurchases / Assumed Share Price)` 12. `Dividends Paid = Ending Share Count x Annual Dividend Per Share` ## Cross-Sheet Dependencies * The **Segment Build** is the foundation; it feeds Total Net Sales and Segment Operating Profit into the **Income Statement**. * The **Income Statement** generates Net Income, which flows to the top of the **Cash Flow Statement** and into Retained Earnings on the **Balance Sheet**. * The **Working Capital** sheet calculates changes in operating assets and liabilities, which feed the operating activities section of the **Cash Flow Statement**. * The **Equity & Shares** sheet calculates the reduced share count from buybacks, which feeds back into the **Income Statement** for EPS calculations and dictates the total cash outflow for dividends on the **Cash Flow Statement**. * Circularity risk exists between the **Debt & Interest** sheet and the **Cash Flow Statement** if revolving debt is used to fund share repurchases; a circularity breaker toggle must be included. ## Sign Convention * Revenue, Assets, and Equity are positive. * Expenses (COGS, SG&A, Interest) are positive in their specific build schedules but subtracted in the Income Statement to calculate profit. * Liabilities and Debt balances are positive. * On the Cash Flow Statement, cash inflows are positive, and cash outflows (capex, dividends, share repurchases, debt paydowns) are negative. ## Things Most Likely to Go Wrong * **Stuart Weitzman Divestiture:** The builder might extrapolate historical Stuart Weitzman revenue into FY26 and beyond. The model must explicitly zero out this segment after August 2025. * **Capri Debt Distortion:** The company issued and then quickly redeemed $6.1 billion in debt in late 2024. If historical averages are used for debt balances or interest expense, the model will severely overstate future interest costs. * **Share Count Dynamics:** The $2.0 billion ASR in FY25 and the planned $1.2 billion buyback in FY26 will drastically reduce the share count. Failing to model this dynamic share reduction will result in understated EPS. * **GAAP vs Non-GAAP:** The $855 million Kate Spade impairment in FY25 heavily distorts GAAP net income. The model must clearly separate GAAP and Non-GAAP metrics, using Non-GAAP for valuation multiples. * **Tariff Impacts:** Tapestry noted a 230 basis point negative impact from tariffs in its FY26 guidance. The builder must ensure gross margin assumptions account for this headwind rather than straight-lining the FY25 peak margin. * **Foreign Exchange:** The company frequently reports constant currency versus nominal growth. The model should default to nominal growth but include a toggle or assumption line for FX headwinds/tailwinds. * **Seasonality in Working Capital:** Annualising Q2 (holiday) inventory or receivables will break the balance sheet. Working capital metrics must be based on full-year averages. * **Dividend Payout Ratio:** The dividend was raised to $1.60 per share. The model should calculate total dividend cash outflow based on this per-share amount multiplied by the dynamic share count, rather than a fixed historical cash amount. ## Validation Checks * "Consolidated Gross Margin should remain between 73.0% and 76.0%; flag if outside this band." * "Non-GAAP Operating Margin should be between 17.0% and 21.0%." * "Stuart Weitzman revenue must equal $0 for all periods after Q1 FY26." * "Total Assets must exactly equal Total Liabilities plus Stockholders' Equity in every forecasted period." * "Free Cash Flow (OCF less Capex) should be positive and generally exceed $1.0 billion annually." * "The effective tax rate should remain between 17.5% and 19.5% based on management guidance." * "Share count must decrease year-over-year in FY26 due to the $1.2 billion repurchase programme." ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | Coach Revenue Growth | 4.0 | % | Mid-single-digit growth reflecting brand momentum and international expansion. | | Kate Spade Revenue Growth | -2.0 | % | Continued near-term pressure with gradual stabilisation. | | Stuart Weitzman Revenue (Post-Aug 2025) | 0.0 | $M | Brand was divested to Caleres. | | Consolidated Gross Margin | 74.5 | % | FY25 peak of 75.4% offset by management's guided tariff headwinds. | | SG&A as % of Revenue | 54.0 | % | Historical average required to support marketing and DTC operations. | | Days Sales Outstanding (DSO) | 22 | Days | Based on historical DTC-heavy channel mix. | | Days Inventory Outstanding (DIO) | 135 | Days | Reflects luxury supply chain and seasonal inventory builds. | | Days Payable Outstanding (DPO) | 70 | Days | Based on historical supplier payment terms. | | Capex as % of Revenue | 3.5 | % | Maintenance and digital investment run-rate. | | Effective Tax Rate (Non-GAAP) | 18.0 | % | Management guidance for FY26. | | Annual Dividend Per Share | 1.60 | $ | Board approved rate for FY26. | | FY26 Share Repurchases | 1,200 | $M | Management guidance for FY26 capital return. | | Average Interest Rate on Debt | 4.5 | % | Weighted average cost of remaining senior notes. | | WACC | 9.5 | % | Standard discount rate for consumer discretionary apparel. | | Terminal Growth Rate | 2.0 | % | Long-term GDP-aligned growth for luxury accessories. | ## Data Sources & Benchmarks * **Filings:** SEC EDGAR for Tapestry, Inc. (TPR) 10-K, 10-Q, and 8-K filings. * **Investor Relations:** Tapestry investor relations website for earnings presentations and Investor Day transcripts. * **Key Peers:** Ralph Lauren (RL), LVMH (MC.PA), Kering (KER.PA), and PVH Corp (PVH) for margin and multiple benchmarking. * **Industry Data:** Bain & Company Luxury Goods Worldwide Market Study for broader macroeconomic trends in personal luxury goods. * **Consensus Estimates:** FactSet or Bloomberg for forward-looking EPS and revenue consensus to validate base case assumptions. ## Sources * Tapestry, Inc. FY25 Annual Report on Form 10-K (filed August 2025) * Tapestry, Inc. Q4 FY25 Earnings Release and Presentation (August 14, 2025) * Tapestry, Inc. Q1 and Q2 FY26 Earnings Releases (November 2025 and February 2026) * Tapestry, Inc. Press Release: Termination of Merger Agreement with Capri Holdings (November 14, 2024) * Tapestry, Inc. Press Release: Divestiture of Stuart Weitzman to Caleres (August 2025) --- ## Frequently asked questions ### What is Tapestry, Inc. and what brands does it own? Tapestry, Inc. is a New York-based house of modern luxury accessories and lifestyle brands. Its primary brands include Coach and Kate Spade, and it formerly owned Stuart Weitzman, which was divested in FY26. The company is known for its premium handbags, leather goods, and footwear. ### How does Tapestry, Inc. generate its revenue? Tapestry primarily generates revenue through its direct-to-consumer (DTC) model, which accounts for approximately 86% of total sales. This is achieved via its global network of retail stores, e-commerce platforms, and select wholesale partnerships. The Coach brand is its flagship, driving about 80% of total net sales. ### What is the assumed capital expenditure rate in the Tapestry financial model? The financial model for Tapestry assumes a Capital Expenditure as a percentage of revenue (Capex_Pct_Revenue) of 0.06, or 6%. Historically, Tapestry's capital expenditure has ranged from 3% to 5% of revenue, primarily focused on digital/IT investments and targeted store renovations or relocations. ### What is the main purpose of the Tapestry financial model? The Tapestry financial model serves as a comprehensive equity valuation and scenario planning tool for analysts. It is designed to assess Tapestry's organic growth trajectory and capital return program, particularly following the terminated Capri Holdings acquisition and the divestiture of the Stuart Weitzman brand. ### Can I download an Excel financial model for Tapestry, Inc.? Yes, an Excel financial model for Tapestry, Inc. is available for download. This model provides a forecast horizon from FY2026 through FY2030, offering detailed assumptions for analysis. ### What are the key revenue growth and margin assumptions in the Tapestry financial model? The Tapestry financial model assumes a Revenue_Growth rate of 0.2, or 20%. Key margin assumptions include Cost of Goods Sold as a percentage of revenue (COGS_Pct_Revenue) at approximately 0.532, and Selling, General & Administrative expenses as a percentage of revenue (SGA_Pct_Revenue) at approximately 0.488. [Interactive forecast calculator](https://finamodel.com/companies/tapestry/forecast)