Shares of Tapestry, the parent company of Coach and Kate Spade, plunged nearly 16% on Thursday after the company warned that new tariffs will significantly reduce profits in the year ahead.
The handbag and accessories maker said higher duties will cost about $160 million in its fiscal 2026, pushing expected earnings to a range of $5.30 to $5.45 per share. Analysts had projected $5.49 per share. Despite the pressure, Chief Financial Officer Scott Roe emphasized that consumer demand has remained strong and even accelerated this quarter.
Tapestry forecast revenue of about $7.2 billion, excluding its Stuart Weitzman brand, which it agreed to sell earlier this year to Caleres for $105 million. That outlook suggests low single-digit growth over the prior year. The company’s fourth-quarter results also exceeded Wall Street’s expectations.
The tariff headwinds stem from President Donald Trump’s suspension of the de minimis rule, which had previously allowed goods valued under $800 to enter the U.S. duty-free. Retailers across the industry are adjusting by shifting production, raising prices, and cutting promotions to offset higher costs.
Roe stressed that Tapestry’s cautious guidance is not linked to weaker demand, but rather a prudent response to the uncertain tariff environment. The company is exploring ways to minimize the impact, including diversifying manufacturing and boosting efficiency.
