Shares of Tapestry (NYSE:TPR) fell sharply by over 16% in premarket U.S. trading on Thursday after the luxury fashion company released its fiscal-year income projections, which disappointed Wall Street analysts.
The Coach-owner also reported that pre-tax earnings for the April-to-June quarter were reduced by $872 million due to charges tied to declining current and projected cash flows, driven by higher operating costs from tariffs.
Tapestry, which sources many of its products from countries like Vietnam and the Philippines affected by elevated U.S. tariffs, warned that these duties could also create a 230-basis-point headwind — roughly $160 million — in its fiscal 2026 profit margin.
“[T]his outlook reflects the timing of policy implementation, product sell-through, and mitigating actions underway,” Tapestry said in a statement, while noting that it expects to offset these “incremental tariffs and duties over time.”
Against this backdrop, the company forecasted full-year adjusted earnings per share of $5.30 to $5.45, slightly below the Bloomberg consensus of $5.49. Revenue is projected at up to $7.2 billion, versus estimates of $7.12 billion, partially aided by favorable foreign currency effects.
Accessible luxury brands like Tapestry have been gaining traction as tariffs contribute to broader economic uncertainty, prompting some consumers — particularly younger shoppers — to seek lower-cost alternatives over high-end items.
For the fourth quarter, net sales climbed 8.3% year-over-year to $1.72 billion, surpassing expectations, while adjusted earnings per share came in at $1.04.
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