What Happened?
Shares of luxury fashion conglomerate Tapestry (NYSE: TPR)
fell 14.8% in the morning session after the luxury fashion company issued a disappointing fiscal 2027 revenue forecast that triggered a steep selloff, completely overshadowing its fourth-quarter earnings beat. Tapestry delivered strong quarterly results, with revenue rising 9% to $1.88 billion and non-GAAP EPS of $1.32 beating the $1.28 consensus, driven by 15% growth at its core Coach brand.
The board also approved a 16% increase to the quarterly dividend. However, investors focused heavily on the fiscal 2027 outlook, which projected revenue of $8.4 billion to $8.5 billion. The $8.45 billion midpoint fell slightly short of the $8.47 billion analyst consensus. Given the stock's significant rally heading into the print and ongoing sales declines at the Kate Spade brand, the lack of an upward guidance revision prompted immediate profit-taking.
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What Is The Market Telling Us
Tapestry’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for Tapestry and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock dropped 13.9% on the news that the company reported mixed second-quarter results that included a significant miss on profitability. While the parent company of Coach and Kate Spade posted revenue of $1.72 billion, up 8.3% year-on-year and beating analyst estimates, it recorded a steep GAAP loss of $2.49 per share, falling well short of Wall Street's profit expectations.
The loss was driven by a dramatic contraction in operating margin, a key measure of profitability, which swung to negative 33.9% from a positive 14.8% in the prior year's quarter. Although Tapestry's full-year guidance was viewed as solid, the severe miss on the bottom line and deteriorating margins in the reported quarter prompted a sharp sell-off in the stock.
Tapestry is up 1.5% since the beginning of the year, but at $131.03 per share, it is still trading 20.5% below its 52-week high of $164.78 from August 2026. Investors who bought $1,000 worth of Tapestry’s shares 5 years ago would now be looking at an investment worth $2,962.
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