Luxury earnings: Kering's second-quarter numbers disappoint
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Tapestry forecasts annual profit below estimates on tariff pain, shares plunge
(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 8% in premarket trading. The company estimates a $160-million hit from the U.S. import duties, which could result in an about 230-basis-point impact on its fiscal 2026 operating margin. Tapestry primarily makes its Coach and Kate Spade handbags in countries such as Vietnam, Cambodia, the Philippines and India. The Trump administration's unpredictable trade policies have shaken consumer sentiment and disrupted businesses and supply chain worldwide. Tapestry's warning on Thursday is in line with the broader luxury sector slowdown that has hurt bellwethers such as Gucci-owner Kering and French luxury group LVMH . U.S. consumer spending falling unexpectedly in May has also compounded concerns for companies such as Tapestry that have been ramping up efforts to attract younger customers by introducing new accessories and collections. The company 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 tariffs. However, it expects fiscal 2026 revenue to be about $7.2 billion, compared with analysts' estimates of $7.11 billion, owing to steady demand for its Coach Tabby and Empire bags. Shares of the company have risen about 74% this year on the back of the popularity of its Coach brand. The push to add bag charms are also attracting millennial and Gen Z customers in regions such as North America, China and Europe. This helped the company post 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Tapestry quarterly revenue likely rose 5.5% as Coach bags drew young shoppers
By Samantha Marshak -Tapestry kept up a brisk pace of sales in the April-June quarter, with revenue likely growing 5.5%, thanks to growing demand for its stylish handbags that are more affordable than traditional luxury labels. Accessible luxury companies, including Tapestry and Ralph Lauren, are gaining momentum in an economy hit by tariffs and inflation, where younger shoppers are being more prudent with their purchases. Shoppers are walking away from the more opulent wares offered by luxury firms, including Kering . Revenue in the New York-based company's fiscal fourth quarter is expected to have climbed to $1.7 billion, its second-quickest pace of growth in 12 quarters, according to LSEG data. Last week, Tapestry's rival and Michael Kors-owner Capri forecast quarterly revenue above estimates. Shares of Tapestry, which beat Wall Street revenue estimates in the past four quarters, have surged more than two-thirds this year. Revenue from the Coach brand, which accounted for 82% of the company's revenue for the first nine months of the year, likely grew almost 11% in the June quarter, according to LSEG estimates. "They've successfully repositioned the brand to target younger demographics with their Tabby and Brooklyn Bag brands," said Adam Steffanus, a managing director at Advisory Research Investment Management, which owns Tapestry stock. Steffanus noted that sales of European luxury brands LVMH and Chanel have suffered because they raised their prices too high. Tapestry said in May that it was well covered on cross-border tariff risk thanks to less than 10% of production from China and a diversified manufacturing base that includes 70% of production from Vietnam, Cambodia, and the Philippines. Still, Tapestry's other brand, Kate Spade, has been a drag on its performance. The brand has suffered from heavy promotions that have hurt its status as an upscale brand, Steffanus said. Morningstar analyst David Swartz said Coach could raise prices without driving away customers because of its high margins, but Tapestry cannot do the same for Kate Spade handbags. Kate Spade's revenue likely fell 13% in the April-June period, according to LSEG estimates. Tapestry reports earnings on Thursday. At least 16 analysts rate it "buy" or higher, with five rating it "hold." It has no "sell" calls, according to LSEG data. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
