Tapestry cuts profit forecast as US tariffs hit Kate Spade hardest

Tapestry, the owner of Coach, Kate Spade and Stuart Weitzman, has cut its profit outlook for fiscal 2026 due to the impact of US import tariffs, sending its share price down 14%.

The New York-based group now expects annual earnings per share in the range of $5.30 to $5.45 (£3.91 to £4.02), compared with analysts’ expectations of $5.49 (£4.05), with tariffs alone forecast to cost around $160 million (£118 million) next year. The duties will be most damaging for Kate Spade, which relies heavily on the US market.

Chief Financial Officer Scott Roe told analysts that Tapestry will reduce Kate Spade handbag styles by around 30% across all regions, with the focus shifting to faster-selling, higher-margin products to help offset rising costs.

The tariffs stem from US President Donald Trump’s decision to impose roughly 20% duties on goods from key sourcing hubs such as Vietnam, Cambodia, the Philippines and India - countries where Tapestry manufactures the bulk of its handbags.

The profit warning comes as Tapestry prepares to sell footwear label Stuart Weitzman for $105 million (£83 million) in cash to Caleres - the owner of Dr Scholl, Sam Edelman and Vince. Tapestry acquired Stuart Weitzman in 2015 for around $530 million (£420 million), but the brand has struggled in recent years. The deal, expected to close this summer, will allow Tapestry to sharpen its focus on Coach and Kate Spade after last year’s failed $8.5 billion (£6.7 billion) bid to acquire Capri Holdings, the parent of Versace and Michael Kors.

Despite the pressure, Tapestry’s fourth-quarter revenue rose to $1.72 billion (£1.27 billion), beating forecasts of $1.68 billion (£1.24 billion), while adjusted earnings per share came in at $1.04 (£0.77), slightly ahead of estimates. Full-year revenue is projected at $7.2 billion (£5.31).

Coach continues to be the group’s star performer, with sales up 14% as demand from younger shoppers fuels growth in both the US and overseas. Kate Spade sales rose 13%, while Stuart Weitzman was up 10%.

Across regions, America was up 8%, Greater China rose 18%, and Europe gained 13%, though international performance was mixed overall, with sales down 11% in Japan and 1% across other Asian markets.

Even after Thursday’s share price drop, Tapestry stock remains about 74% higher year-to-date.