Tapestry Stock Slumps as Coach, Kate Spade Parent Cuts Outlook on Tariff Costs

Tapestry (TPR) shares slumped 15% after the fashion house lowered its fiscal 2026 earnings per share forecast, projecting a $160 million, or over $0.60 per share, negative impact from new U.S. tariffs. This revised outlook, which overshadowed better-than-expected Q4 results driven by strong Coach sales, signals a significant tariff-induced headwind for the company's future profitability.

Analysis

Tapestry (TPR) shares experienced a significant 15% decline following a downward revision of its fiscal 2026 earnings forecast, directly attributed to the anticipated impact of new U.S. tariffs. The company projects a substantial $160 million negative impact from these tariffs, which translates to a reduction of over $0.60 in earnings per share and a 230 basis point drag on operating margins. This has led to a revised fiscal 2026 EPS guidance of $5.30 to $5.45, with the midpoint falling below the analyst consensus of $5.42. The pessimistic outlook completely overshadowed strong fourth-quarter results, which featured record revenue of $1.72 billion and an adjusted EPS of $1.04, both exceeding estimates. However, this performance was highly concentrated, with the Coach brand's 14% year-over-year sales growth masking significant double-digit declines at both Kate Spade (-13%) and Stuart Weitzman (-10%). The sharp stock selloff from an all-time high indicates that forward-looking guidance on margin compression is outweighing recent historical performance for investors.

Key Decisions for Investors

• Given the explicit $160 million tariff headwind, investors should closely monitor developments in U.S. trade policy, as this external factor is now a primary driver of Tapestry's forward-looking profitability.
• Investors should scrutinize the performance of the Kate Spade and Stuart Weitzman brands in upcoming quarters, as the company's heavy reliance on the Coach brand for growth constitutes a significant portfolio concentration risk.
• While the 15% stock pullback from an all-time high could be viewed as a re-rating, potential buyers must weigh the now-quantified margin pressure against the company's underlying performance, which remains strong but imbalanced.