Tapestry Inc. Stock Takes a Dive: Tariffs Impact Profit Outlook Despite Strong Sales
Tapestry Inc., the parent company of luxury brands Coach and Kate Spade, experienced a significant stock drop of nearly 16% on Thursday. This plunge was a result of a warning that tariffs will greatly affect its profitability, despite a strong sales performance. The luxury accessories giant anticipates costs from higher duties to total $160 million for its fiscal 2026, pulling its earnings forecast below Wall Street expectations.
The company’s projected earnings per diluted share range between $5.30 and $5.45 for the current fiscal year, falling short of analysts’ expectations of $5.49 per share. CFO Scott Roe elaborated on the situation, stating the company is “facing greater than previously expected profit headwinds from tariffs and duties“. He further noted the earlier than expected ending of de minimis exemptions as a significant factor.
Despite the tariff challenges, Tapestry reported strong fundamentals with fiscal 2025 revenue rising 5% to $7 billion, surpassing both company outlook and analyst expectations. Coach, the company’s flagship brand, continues to drive growth with a 14% sales increase to $1.43 billion in the fourth quarter, particularly among Gen Z and millennial consumers. The company expects revenue to approach $7.2 billion by fiscal 2026, representing mid-single-digit growth.
Source: CNBC