Shares of Tapestry, Inc. (NYSE: TPR) plunged as much as 16.9% in premarket trading on Thursday, even after the luxury parent company reported better-than-expected fiscal fourth-quarter earnings. The sharp sell-off underscored investor anxiety over the company's heavy reliance on its Coach brand, which accounted for roughly 87% of total quarterly revenue.
For the quarter ended June 27, 2026, Tapestry posted adjusted earnings per share of $1.32, surpassing the Street's estimate of $1.28 and up from $1.04 in the year-ago period. Revenue climbed to $1.88 billion, slightly above the $1.72 billion reported a year earlier and in line with the consensus range of $1.87–$1.88 billion.
However, the breakdown revealed a stark concentration risk. Coach generated approximately $1.64 billion in sales, representing 87.2% of the total, while Kate Spade contributed just $240 million, or 12.8%. Kate Spade's sales fell 7% on a constant-currency basis, continuing its downward trajectory. The brand's struggles have become a focal point for investors who worry that a slowdown in Coach's momentum would leave Tapestry with little support.
Coach's reported growth of 15% slightly missed the closely watched 15.5% consensus, a marginal shortfall that nonetheless triggered a sharp reaction. The brand's constant-currency growth was 14%, still robust but decelerating from the prior quarter's 31% surge. Regional growth also cooled: North American revenue rose only 7% at constant currency, down from nearly 20% in the previous quarter, while China grew 28% and Europe 19%.
Looking ahead, Tapestry's fiscal 2027 guidance was essentially in line with expectations. The company projected revenue of $8.40–$8.50 billion, with a midpoint of $8.45 billion, just $10 million below the analyst consensus of $8.46 billion. Adjusted EPS guidance of $7.80–$7.90, with a midpoint of $7.85, edged out the consensus by one cent. Management anticipates mid-single-digit growth in the second half of the fiscal year.
Despite the in-line guidance, investors appeared focused on the lack of a second growth engine. "Investors are looking for multiple levers for growth," said Neil Saunders, Managing Director at GlobalData. He emphasized the importance of accelerating Kate Spade's recovery, noting that the brand recently appointed Jonathan Saunders as creative director.
In an effort to appease shareholders, Tapestry increased its quarterly dividend by 15.6% to $0.4625 and announced a $1.35 billion share repurchase program. However, these capital returns failed to offset concerns about the growth mix. The company's balance sheet remains strong, but the market's reaction suggests that brand concentration is now the primary overhang.
Analysts remain cautiously optimistic. Citi's Paul Lejuez pointed to management's projection of low-teens growth for Coach in the current quarter as "a positive sign about the momentum of the brand." Meanwhile, Barclays, Morgan Stanley, and Argus all maintain overweight or buy ratings with price targets ranging from $164 to $182.
Risks to the outlook include shifting fashion trends, a potential slowdown in U.S. consumer spending, tariff adjustments, or a loss of momentum at Coach. Turning around Kate Spade could also require increased marketing investment, pressuring margins. Investors will be closely monitoring Coach's expansion and any signs of stabilization at Kate Spade in the coming quarters.
