By Connor Hart and Katherine Hamilton
Tapestry shares tumbled after the company forecast a difficult year ahead for its Kate Spade brand, overshadowing a successful turnaround of sister-brand Coach.
The company this year will take "strategic and financial steps to reset Kate Spade for long-term growth," Chief Executive Joanne Crevoiserat said on a call with analysts Thursday. "While these actions will pressure revenue and profitability in fiscal 2026, they are essential to strengthening the brand's foundation and unlocking sustainable, profitable growth."
Tapestry's stock fell 16%, to $95.65, in premarket trading. Through Wednesday's close, shares have nearly tripled over the past year.
Tapestry will apply what it learned from Coach's turnaround to Kate Spade's, Crevoiserat said. Its efforts will include investing in marketing that focuses on its target Gen Z customer, as well as strengthening and simplifying Kate Spade's handbag offerings.
"While a turnaround takes time, we are confident in our path forward and the brand's opportunity for healthy and profitable growth," Crevoiserat said.
Kate Spade's sales fell 13% in Tapestry's fiscal fourth quarter, to $252.6 million. Despite the drop, sales edged out Wall Street estimates. Coach sales, meanwhile, rose 14% to $1.43 billion, buoying company-wide sales ahead of expectations, according to FactSet.
For its current fiscal year, Tapestry expects revenue to approach $7.2 billion, while analysts are estimating $7.12 billion. The company sees per-share earnings at $5.30 to $5.45, below the $5.49 Wall Street is anticipating.
Scott Roe, Tapestry's finance chief and chief operating officer, said higher costs from tariffs will pressure profitability this year. The company is working to offset the levies, he said, though it still expects a $160 million hit to its bottom line in fiscal 2026.
"I remain confident in our ability to address these headwinds fully over time," Roe said.
The outlooks came as Tapestry swung to a loss of $517.1 million, or $2.49 a share, for its three months ended June 28, compared with a profit of $159.3 million, or 68 cents a share, a year earlier.
Adjusted earnings--which strip out expenses such as fees tied to Tapestry's canceled acquisition of Capri Holdings, costs related toward selling its Stuart Weitzman brand and over $800 million of impairment charges tied to Kate Spade--came in at $1.04 a share, topping the $1.02 a share that analysts had expected.
Sales rose 8.3% to $1.72 billion, also beating the $1.68 billion that Wall Street modeled.
Tapestry's board additionally approved a 14% increase to the quarterly cash dividend, to 40 cents a share. The dividend is payable Sept. 22 to shareholders of record Sept. 5.
Write to Connor Hart at connor.hart@wsj.com and Katherine Hamilton at katherine.hamilton@wsj.com
(END) Dow Jones Newswires
August 14, 2025 09:30 ET (13:30 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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