Tapestry Inc. (NYSE:TPR) Beats Q4 Earnings Estimates but Shares Plunge on Tariff-Driven Outlook Concerns

Tapestry Inc. (NYSE:TPR) reported fiscal fourth-quarter and full-year 2025 results, delivering revenue and earnings that exceeded analyst expectations, though its outlook for the coming year reflects headwinds from tariffs and trade policies.

Earnings and Revenue Performance vs. Estimates

• Q4 Revenue: $1.72 billion, up 8% year-over-year (YoY) on a constant-currency basis, surpassing the consensus estimate of $1.70 billion.
• Q4 EPS (Non-GAAP): $1.04, slightly above the $1.03 analyst forecast.
• Full-Year Revenue: $7.01 billion, a 5% YoY increase, driven by strong performance in North America, Europe, and Greater China.
• Full-Year EPS (Non-GAAP): $5.10, exceeding the company’s long-term target of over $5 per share.

Despite the beat, shares fell sharply in pre-market trading, down over 16%, reflecting investor concerns over the company’s fiscal 2026 outlook.

Market Reaction & Outlook Concerns

Tapestry’s guidance for fiscal 2026 anticipates:

• Revenue: Approaching $7.2 billion (low-single-digit growth YoY), slightly below the analyst consensus of $7.20 billion.
• EPS: $5.30–$5.45, representing 4%–7% growth but below some expectations due to an estimated $0.60 per share drag from tariffs and duties.
• Operating Margin: Expected to expand by over 250 basis points before tariff impacts, which are projected to reduce margins by ~230 basis points.

The market’s negative reaction appears tied to the tariff-related pressures, which could weigh on profitability despite underlying operational strength.

Key Highlights from the Earnings Report

1. Strong Brand Performance:

   • Coach led growth with a 13% Q4 revenue increase (constant currency).
   • Kate Spade and Stuart Weitzman saw declines, with Kate Spade revenue down 13% YoY.

2. Geographic Expansion:

   • Greater China sales surged 18% in Q4, while Europe grew 10%.
   • North America revenue rose 8%, supported by digital and brick-and-mortar growth.

3. Shareholder Returns:

   • Returned $2.3 billion via dividends and buybacks in fiscal 2025.
   • Announced a 14% dividend hike to $0.40 per share.

4. Impairment Charges:

   • Recorded $855 million in non-cash impairments for Kate Spade, reflecting revised cash flow expectations due to tariff impacts.

Analyst Sentiment & External Factors

Recent headlines highlight concerns over tariffs, with one noting that Wall Street is "still adjusting to the full cost of duties for US companies." This aligns with Tapestry’s guidance, which assumes no further deterioration in trade policies but acknowledges a significant near-term drag.

Conclusion

While Tapestry delivered a solid Q4 and met long-term EPS targets, its fiscal 2026 outlook reflects margin pressures from tariffs, tempering investor enthusiasm. The stock’s pre-market drop suggests the market is pricing in these headwinds, despite the company’s strong brand momentum and capital returns.

For more detailed earnings estimates and historical performance, visit Tapestry’s earnings page.

Disclaimer: This article is not investment advice. Investors should conduct their own research or consult a financial advisor before making decisions.