We enhanced our digital capabilities, highlighted by our global e-commerce channel, a margin accretive business for Tapestry, reaching approximately $1.6 billion in revenue, nearly doubling versus prior year and over $1 billion ahead of pre-pandemic levels.
This was fueled by the acquisition of nearly 4 million new customers in North America alone, including a growing number of millennial and Gen Z consumers.
In fact, Tapestry's business in Greater China reached $1.1 billion in sales this fiscal year, led by over 60% growth on the Mainland.
This has underpinned our ability to optimize the assortment planning process, lower SKU counts by 40% to 45% and reduced promotional activity, supporting higher AUR and gross margin as well as improved inventory turns.
This resulted in $200 million of gross expense savings in fiscal year '21, which funded investments in areas such as digital and marketing to fuel our continued growth as well as our purpose-led initiatives to accelerate and amplify our work within our social fabric to effect positive change for our industry and stakeholders.
In addition, we generated $1.2 billion of free cash flow and ended the year in a strong cash position, while reducing our leverage through organic profit growth and the pay down of the company's revolver.
Given our strong financial position and underlying business trends, our board of directors approved the reinstatement of our capital return programs with a plan to return over $750 million to shareholders through both dividend and share repurchases in fiscal year '22.
During the fourth quarter, Coach revenue rose 117% versus prior year, outpacing pre-pandemic levels of sales by 2%, a meaningful achievement given the volatile backdrop.
In addition, we delivered significant profitability enhancements during the fiscal year, resulting in operating income increases of 67% on a one year basis and 14% on a two year basis.
During the fiscal year, we acquired nearly 2.5 million new Coach customers through our digital channels in North America alone, a meaningful increase versus prior year.
Fourth, we accelerated growth in China by leveraging our foundation in the country, which resulted in over 60% revenue growth on the Mainland in fiscal year '21 with strength across channels.
Finally, we enhanced profitability to realize an operating margin of over 31%.
This performance was driven by higher gross margin, which reached nearly 74% through a focus on streamlining our offering, sharpening our merchandising efforts and reducing SKU counts by approximately 45%.
Looking ahead to fiscal year '22, our goals are to increase market share in our core handbag and small leather goods categories through a combination of AUR and unit growth by continuing to develop the brand's iconic families, approachable and inclusive messaging and consistent global positioning, invest and grow in digital while delivering differentiated and compelling omnichannel experiences, continue to drive growth in China with key initiatives to capitalize on market trends of the emerging middle class and increased digitalization and grow men's by expanding lifestyle, building brand awareness and increasing our presence in Asia in keeping with our ambition to deliver over $1 billion in revenue in this category over our planning horizon.
Throughout the year, the brand delivered consistent improvement on the top-line, resulting in fiscal year '21 sales growth of 3% compared to prior year or 13% decline compared to pre-pandemic revenue levels.
In the most recent quarter, sales increased 95% versus prior year and were 4% below fiscal year '19.
During the most recent quarter, we continued to rereengage lapsed customers and an increasing rate as we reactivated 550,000 customers through our North America digital channels, an increase of nearly 35% compared to prior year, demonstrating our focus on building lasting relationships with our customers.
This was evidenced by our viral Happy Dance Campaign on TikTok, which has over 11 billion views and counting.
We're seeing traction in leather with the introduction of the Knot, which has already grown to approximately 20% of our retail assortment, proving its position as a key family in the assortment going forward.
Fourth, we leaned into our digital strength, delivering approximately 35% growth compared to prior year across our e-commerce channels, reaching 35% of sales for the fiscal year.
This growth was driven by both the acquisition of nearly 1.4 million new customers through our North America digital channels as well as the engagement of existing customers.
Through the use of data, we adjusted our assortment and pricing strategies, which resulted in approximately 40% lower SKU count and disciplined promotional activity.
We continue to believe in the significant runway ahead and our ability to achieve $2 billion in revenue and enhanced profitability in the future.
Second, we grew our key categories by building strength in boots, booties and sandals through fashion innovation, highlighted by the continued success of our iconic 5050 Land and Nudist families, which brought a new and younger customers.
At the same time, we dramatically simplified the product assortment with SKU counts declining approximately 45%.
At the same time, momentum continued for our China business in fiscal '21 with revenue on the Mainland increasing over 35% compared to prior year or nearly 50% on a two year basis.
As previously shared, we reentered 90 Nordstrom doors in the year, fueling North America wholesale revenue ahead of pre-pandemic levels in the fourth quarter.
Finally, we made progress in establishing a robust digital presence and drove approximately 30% e-commerce growth during the fiscal year, including continued strength in the fourth quarter, even as store trends improve.
We grew operating margin by 300 basis points versus FY '19, reaching peak levels of Tapestry.
This despite significant investments in talent, digital capabilities and marketing, which were more than funded by gross profit gains and $200 million in gross SG&A savings delivered through the Acceleration Program.
And we further strengthened our financial position through tight inventory management and a reduction in debt levels, while achieving $1.2 billion in free cash flow, resulting in an ending cash position of approximately $2 billion.
Total sales rose 126% versus prior year on a 14-week basis or 113% on a 13-week basis, outpacing pre-pandemic levels, an important milestone.
By region, North America led the overall growth, rising approximately 150% versus FY '20 and a high-single-digit percentage versus FY '19, fueled by digital and a continued improvement in our brick and mortar businesses.
In Mainland China, our strong momentum continued as revenue increased approximately 60% on a one year basis and over 40% compared to pre-pandemic levels.
By channel, we maintained strength in digital, which grew more than 35% compared to prior year, reaching 30% penetration, that's three times 2019 level.
On a two year basis, the increase in SG&A was attributable to higher marketing spend of almost $100 million compared to Q4 '19, and an increase in our annual incentive plan given our outperformance this year.
In addition, our expenses for the quarter included the $25 million contribution toward the endowment of the newly established Tapestry Foundation.
Earnings per diluted share for the quarter was $0.74 on a 14-week basis or $0.65 on a 13-week basis, a significant increase compared to a loss in the prior year and 7% ahead of pre-pandemic earnings per share levels.
For Tapestry, we closed a net of 59 locations globally in FY '21, including 10 net closures in the fourth quarter.
As compared to fiscal '19 year end, we have closed a net of 90 locations across our brands.
We ended the quarter in a strong position with $2 billion in cash and equivalents and total borrowings of $1.6 billion.
Total inventory at quarter end was approximately in line with last year and 6% below FY '19, reflecting in part deliberate actions to reduce SKU counts and prioritize inventory turn.
And we generated $1.2 billion in free cash flow in FY '21 versus $202 million in the prior year and $118 million in fiscal '19.
This included capex of $116 million, a decline of 44% versus prior year as we prioritize investments in high return projects, notably in digital, while tightly controlling overall spend and reducing our outlay for new stores.
In keeping with the strategy, we're pleased to announce today our plan to return over $750 million to shareholders.
Specifically, the board declared a quarterly cash dividend of $0.25 with an anticipated annual dividend rate of $1 per share.
We also expect to repurchase approximately $500 million worth of stock in fiscal '22 under our current authorization.
And finally, in keeping with our objective to reduce leverage, we expect to repay our July 2022 bonds totaling $400 million at the end of this fiscal year.
We expect revenue to increase at a mid-teens rate versus FY '21, resulting in approximately $6.4 billion in sales, which would mark a record for the company.
We continue to estimate that we will realize approximately $300 million in structural gross run rate expense savings, including $100 million of incremental savings from the prior year.
We are utilizing these savings to fund investments in the business, including $50 million of planned higher marketing spend, which is expected to represent approximately 7% of sales in fiscal '22, up roughly 75% or 3, 4 percentage points compared to FY '19.
And we're focused on continuing to retain and develop these strong teams as evidenced by our recently announced commitment that all U.S. Tapestry employees will earn at least $15 per hour.
Operating income is expected to increase in a mid-teens rate, resulting in operating margin modestly ahead of prior year and an increase of over 300 basis points versus 2019.
Net interest expense for the year is expected to be $65 million, and the tax rate is estimated at 18.5%, assuming a continuation of current tax laws.
Weighted average diluted share count is forecasted to be in the area of 283 million shares, approximately even with last year with share repurchase activity expected to offset dilution.
We anticipate earnings per share to be in the range of $3.30 to $3.35, reflecting leverage to the bottom line.
Capex for the year is projected to be about $220 million.
We anticipate approximately 40% of the spend to be related to store development, primarily in China, with the balance dedicated to our digital and IT initiatives, including the initial investments related to build out our new distribution center.
Revenue growth versus prior year is expected to be front-half weighted given relatively easier compares due to lapping COVID impacts with the first quarter forecasted to increase more than 20%.

Summary:
Total sales rose 126% versus prior year on a 14-week basis or 113% on a 13-week basis, outpacing pre-pandemic levels, an important milestone.