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

Tapestry (TPR) shares slumped 15% after the company significantly lowered its fiscal 2026 earnings per share forecast to $5.30-$5.45, below analyst consensus, citing an anticipated $160 million negative impact from new U.S. tariffs. This forward-looking guidance overshadowed stronger-than-expected fourth-quarter results, which saw record revenue of $1.72 billion and adjusted EPS of $1.04, primarily driven by robust demand for its Coach brand.

Analysis

Tapestry's strong fourth-quarter performance, which included record revenue of $1.72 billion and an adjusted EPS of $1.04, was decisively overshadowed by a significant downward revision to its fiscal 2026 forecast. The company slashed its full-year earnings guidance to a range of $5.30 to $5.45 per share, citing a direct negative impact of over $0.60 per share, or $160 million, from new U.S. tariffs. This guidance places the midpoint below the analyst consensus of $5.42 and implies a 230 basis point compression in operating margin. The market reacted sharply, with shares falling 15% despite having reached an all-time high the previous day. Furthermore, the company's operational strength appears highly concentrated; the robust results were driven entirely by the Coach brand's 14% year-over-year sales jump, which masked double-digit sales declines at both Kate Spade (-13%) and Stuart Weitzman (-10%), revealing a significant brand diversification risk.

Key Decisions for Investors

• Investors should re-evaluate their forward-looking models to fully account for the $160 million tariff impact, as the market is clearly prioritizing this external headwind over current operational strength.
• Monitor the performance of the Kate Spade and Stuart Weitzman brands closely, as their continued double-digit sales declines represent a material risk and offset the impressive growth momentum at the core Coach brand.
• Given the stock remains up nearly 50% year-to-date despite the 15% selloff, investors holding a position might consider trimming exposure to lock in gains, as sentiment has turned decidedly negative on the earnings outlook.