Tapestry Cuts Profit Outlook on Tariff Costs, Shares Slide

Tapestry which owns Coach and Kate Spade reduced its annual profit outlook because of US tariffs leading to a 14% decline in its stock price on Thursday. The company predicts that Trump administration trade policies will reduce fiscal 2026 earnings by about $160 million.

The handbag production facilities of the company operate mainly in Southeast Asia where products now face approximately 20% tariffs. The majority of Kate Spade sales occur in the US market according to CFO Scott Roe. The company will decrease Kate Spade handbag choices by 30% to concentrate on profitable product lines.

The company achieved better-than-expected results with $1.72 billion in quarterly revenue and $1.04 per share adjusted earnings. The company now predicts full-year EPS between $5.30 and $5.45 which falls below the $5.49 market consensus.

The analysts predict Coach will maintain enough brand power to transfer higher costs to customers more effectively than Kate Spade. The "de minimis" exemption termination for small imports will generate about one-third of the total tariff impact.

Tapestry stock prices declined on Thursday but the company has achieved a 74% increase in value throughout this year because of Coach bag popularity among young consumers.