By Anuja Bharat Mistry
(Reuters) -Tapestry forecast annual profit below estimates on Thursday, as the Coach handbag maker grapples with higher tariff costs, sending the company’s shares down 12% in premarket trading.
The company estimates a $160-million hit from the U.S. import duties, the latest warning of negative effects of tariffs on luxury retailers, including bellwethers such as Gucci-owner Kering and French luxury group LVMH .
The Trump administration’s unpredictable trade policies have shaken consumer sentiment and disrupted businesses and supply chains worldwide.
Tapestry makes its Coach and Kate Spade handbags primarily in countries such as Vietnam, Cambodia, the Philippines and India.
“Tariffs are expected to have more of a negative effect on fiscal year 2026 than investors may have expected. However, it is still early in the fiscal year, and Tapestry may want to be cautious,” Morningstar analyst David Swartz said.
The Kate Spade-owner expects fiscal 2026 earnings per share to be in the range of $5.30 to $5.45, compared with analysts’ estimates of $5.49 per share, as per data compiled by LSEG. The forecast accounts for about 60 cents of incremental hit from tariffs.
Shares of the company have risen about 74% this year on the back of the popularity of its Coach Tabby and Empire bags, which helped the company forecast strong revenue for the year.
The push to add bag charms is also attracting millennial and Gen Z customers in regions such as North America, China and Europe.
“Demand for the Coach brand is enduring despite the broader downturn in luxury, thanks to the brand’s sharp focus on high-quality, on-trend handbags and its extensive marketing through the right channels to reach younger buyers,” eMarketer’s Sky Canaves said.
The company posted quarterly sales of $1.72 billion that beat analysts’ estimates of $1.68 billion.
Adjusted profit for the fourth quarter ended June 28 was $1.04 per share, topping estimates by 2 cents.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Leroy Leo)
