Coach Owner Tapestry Sees US$160 Million Profit Hit from Tariffs

Tapestry, the parent company of Coach, projected annual profit below analyst expectations as rising US tariffs increased costs, sending its shares down 14%.

The company said tariffs introduced by President Donald Trump are expected to cost about US$160 million in fiscal 2026. Luxury and accessible-luxury retailers face higher import duties on goods produced in Southeast Asia, where Tapestry manufactures most Coach and Kate Spade handbags in Vietnam, Cambodia, the Philippines, and India.

Chief Financial Officer Scott Roe noted that Kate Spade will be disproportionately affected, as most of its revenue comes from the US market. Tapestry plans to reduce Kate Spade handbag offerings by 30% across all regions to manage costs.

“Tariffs are now forcing brands across the consumer spectrum to take a closer look at their assortments and focus on their most profitable SKUs,” said eMarketer analyst Sky Canaves.

Tapestry expects fiscal 2026 earnings per share of US$5.30–5.45, below analyst estimates of US$5.49, with about 60 cents of the shortfall attributed to tariffs, including the removal of the “de minimis” exemption on small shipments.

Quarterly revenue for the period ended June 28 reached US$1.72 billion, beating analyst estimates of US$1.68 billion. Adjusted profit came in at US$1.04 per share, above expectations of US$1.02. Full-year revenue is projected at US$7.2 billion.

Coach, which accounts for about 82% of Tapestry’s revenue, continues to drive growth, supported by younger consumers. Kate Spade, however, faces pressure after heavy discounting and weaker brand positioning.

While consumer-level inflation remains steady, producer-level inflation spiked in July. U.S. businesses had increased imports earlier to mitigate tariff risks, but economists expect cost pressures to intensify.

The European luxury sector is also slowing, with brands such as LVMH and Kering warning of tariff impacts. Tapestry said its diversified sourcing, with less than 10% of production in China, provides some risk mitigation.