Tapestry (NYSE:TPR) shares are under pressure in Thursday’s premarket trading as tariff pressures are expected to weigh on the company’s profitability in FY26, overshadowing better-than-expected fiscal fourth quarter results and driving the stock more than 6% lower into the open.
The parent company of Coach and Kate Spade also raised its quarterly dividend by 14% to reflect the strength of its financial performance during the first half of the year.
“Fiscal 2025 was a breakout year for Tapestry as our systemic approach to brand-building is capturing a new generation of consumers around the world. Our strong growth, capped by our fourth quarter outperformance, reinforces that our strategies are working,” said Tapestry CEO Joanne Crevoiserat.
Led by a 13% increase in Coach sales, total revenue for the company increased 8% to a quarterly record of $1.7B, $40M better than expectations. This contributed to a profit of $1.04 per share, up from $0.82 per share a year ago and 2 cents better than expected. Operating margin improved 290 basis points to 20.0%.
Sales were strongest in China with an 18% increase, following by +10% in Europe and +8% in North America. Sales in Japan and regions in Asia excluding Japan and China were down 11% and 1%, respectively.
For FY26 – including the impact of tariffs – Tapestry (NYSE:TPR) expects revenue to increase by low-single-digits to $7.2B, above the $7.10B estimate. Earnings, however, are expected to be between $5.30 and $5.45 per share, representing 4% to 7% growth but below the $5.48 consensus estimate. This is attributed to the $160M impact from tariffs which the company expects will shave 230 basis points off operating margin.
The impact on Tapestry (NYSE:TPR) shares is weighing on peers including Capri (CPRI), Ralph Lauren (RL), PVH (PVH), and Abercrombie & Fitch (ANF).