Tapestry Inc (TPR)

Interest coverage

Jun 30, 2025 Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020
Earnings before interest and tax (EBIT) (ttm) US$ in thousands 880,700 1,112,000 1,059,000 1,141,500 1,136,900 1,178,600 1,206,400 1,178,900 1,170,700 1,157,300 1,094,500 1,145,800 1,195,000 1,195,400 1,141,200 1,058,100 970,100 431,600 -372,200 -398,200
Interest expense (ttm) US$ in thousands 85,400 101,100 117,700 142,400 125,000 100,700 74,800 33,500 27,600 33,300 42,000 50,000 58,700 63,200 65,300 68,100 71,400 75,300 71,900 67,200
Interest coverage 10.31 11.00 9.00 8.02 9.10 11.70 16.13 35.19 42.42 34.75 26.06 22.92 20.36 18.91 17.48 15.54 13.59 5.73 -5.18 -5.93

June 30, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $880,700K ÷ $85,400K
= 10.31

The interest coverage ratios for Tapestry Inc. exhibit a notable evolution over the observed period, reflecting significant fluctuations in the company’s ability to meet its interest obligations from its earnings before interest and taxes (EBIT).

At the beginning of the period, as of September 30, 2020, the company reported a negative interest coverage ratio of -5.93, indicating that EBIT was insufficient to cover interest expenses, which suggests substantial financial distress or losses at that time. This negative ratio persisted through December 31, 2020, with a ratio of -5.18, maintaining a similar level of financial strain.

Starting from March 31, 2021, a marked improvement becomes evident, with the interest coverage shifting to a positive figure of 5.73, signaling a turnaround in earnings capability relative to interest obligations. This positive trend continues, with ratios significantly increasing over subsequent quarters: 13.59 at June 30, 2021; 15.54 at September 30, 2021; 17.48 at December 31, 2021; and further to 18.91, 20.36, and 22.92 in the following quarters respectively through September 30, 2022. These figures indicate a robust ability to cover interest expenses, with the ratios suggesting strong earnings relative to interest obligations during this period.

The trend peaks around March 31, 2023, with the ratio reaching 34.75, and remains relatively high through June 30, 2023, at 42.42, indicating continued strong financial health. However, a decline appears in the subsequent periods, with the ratio decreasing to 35.19 by September 30, 2023, and then sharply dropping to 16.13 by December 31, 2023. This significant reduction points to a potential deterioration in earnings capacity or increased interest expenses. The downward trend persists into the first half of 2024, with ratios of 11.70 in March and 9.10 in June. By September 30, 2024, the ratio stabilizes slightly at 8.02, and it slightly increases again to 9.00 by the end of the year.

Projections for 2025 show further stabilization with ratios of 11.00 in March and 10.31 in June, indicating a potential recovery or further restructuring of earnings relative to interest burdens.

In summary, Tapestry Inc. experienced a period of financial distress in late 2020, followed by a strong and sustained improvement in interest coverage throughout 2021 and into 2022. The peak in early 2023 suggests optimal earnings coverage, but the subsequent decrease indicates emerging challenges or increased debt servicing requirements. The forecasted ratios imply cautious optimism with an expected stabilization or modest recovery in the company's ability to comfortably meet its interest obligations moving forward.


Peer comparison

Jun 30, 2025

Company name
Symbol
Interest coverage
Tapestry Inc
TPR
10.31
Capri Holdings Ltd
CPRI
-17.81