Tapestry Inc (NYSE:TPR) shares plunged almost 17% in early trade as Coach, Kate Spade New York and Stuart Weitzman parent company issued cautious guidance for fiscal 2026.
The company said it expects revenue of $7.2 billion, representing low-single-digit growth year-over-year.
Earnings per share (EPS) are expected to be in the range of $5.30 to $5.45, representing 4% to 7% growth, including a negative impact of more than $0.60 due to tariffs and duties.
Tariffs are also expected to be a 230 basis point headwind to gross margins, with the company expecting an operating margin above the prior year.
The weak guidance drew focus from Tapestry’s better-than-expected fiscal fourth quarter 2025 earnings.
Revenue was up 8% year-over-year at $1.72 billion, led by a 14% gain in the Coach brand, above estimates of $1.68 billion.
Adjusted EPS of $1.04 beat the Street consensus of $1.02.
Analysts at Jefferies noted that while Q4 sales and EPS beat, the EPS was likely less than bulls had hoped.
They wrote that they would be buyers on weakness in Tapestry’s shares post-earnings.
“Stock is down, we believe due to full year EPS guide below Street,” they noted. “We view gross margin/tariff outlook as especially conservative and are encouraged Q1 guide shows double-digit percentage topline and EPS upside.”
On the tariff impacts, the analysts wrote that they were unsure if it is gross versus net after the company’s mitigation measures. “Our estimates suggest this embeds minimal mitigation offsets and could be conservative,” they wrote.
“Mitigation measures include track record of Average Unit Retail (AUR) gains, strategic inventory management capabilities with ability to optimize manufacturing against shifting landscape, and longstanding relationships with service providers.”