In a dramatic twist for the luxury fashion sector, new trade dynamics and tariff pressures are rapidly shifting the outlook and investor sentiment across the industry. Tapestry Inc., the parent company of Coach and Kate Spade, is confronting a new reality in 2025: the resurgence of tariffs is putting significant pressure on profit forecasts enough to send shares plunging 17% in premarket trading. For a company that had otherwise rallied 74% through the year on the strength of its leading brand, Coach, this marks a stark change in investor mood.
Tariff Costs: The $160 Million Question
Tapestry’s annual earnings-per-share (EPS) outlook for the current fiscal year has missed analyst expectations, with leadership now forecasting diluted EPS between $5.30 and $5.45. Analysts had hoped for $5.49. The discrepancy is due to the impact of increased tariffs. The company’s EPS forecast already includes additional costs from higher duties, totaling about $160 million…
for the year. Management indicated that the effect of tariffs would be significant and emphasized their plans to address and mitigate these pressures moving forward. Revenue Outlook: Growth Driven by Coach Despite these challenges, Tapestry projects revenue of nearly $7.2 billion for the fiscal year ending June.
This would be an increase over the previous year and is slightly above analyst expectations. Notably, this forecast excludes contributions from Stuart Weitzman, the shoe brand recently sold by Tapestry due to poor performance.
Executives say that offloading Stuart Weitzman will enable more focus and resources on boosting Coach sales and turning around Kate Spade. Coach has demonstrated remarkable growth in the most recent quarter, with revenues rising substantially.
The brand’s appeal has accelerated in recent months, helping Tapestry face headwinds in the luxury market. Kate Spade, however, continues to require strategic attention. Revenue at the brand declined during the same period, and management indicated that efforts to reset and improve the brand are underway…
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