Tapestry, Inc. (NYSE:TPR) shares have fallen sharply since the company reported fiscal 2026 results, as Jim Cramer noted during the September 9 episode of Mad Money when he said:
What the heck went wrong with the stock of Tapestry, the parent company of Coach and Kate Spade? When it reported a little less than a month ago, the company actually delivered a pretty strong set of results, but the stock got obliterated, plunging 16.5% in a single session. Since then, the pain hasn’t stopped. It’s down 30% over the past month, even though Tapestry posted a healthy top and bottom-line beat, 28% earnings growth driven by incredibly robust results from Coach. Oh, maybe the forecast was a little bit light. I don’t know… I’ve come to the conclusion that I want to be with the company… And I’ve got to tell you, it’s very rare that you see this stock this down with the fundamentals this up.
Tapestry Earnings Show Coach Strength, But Kate Spade Struggles
Tapestry, Inc. reported fiscal fourth-quarter revenue of $1.88 billion, up 9%, while non-GAAP diluted EPS increased 28% to $1.32. Coach revenue rose 15% to $1.64 billion, while Kate Spade revenue fell 7% to $235.1 million. For fiscal 2026, revenue increased 14% to $8 billion, with Coach revenue rising 24%. For fiscal 2027, it expects revenue of $8.4 billion to $8.5 billion and EPS of $7.80 to $7.90, representing mid-single-digit revenue growth and low-double-digit EPS growth.
Management expects Coach to grow at a high-single-digit rate, while Kate Spade revenue is expected to decline at a high-single-digit rate. CEO Joanne Crevoiserat said on the August 13 earnings call that Coach’s performance remained strong across new and existing customers and in its core leather goods category.
Tapestry Bear Case Centers on Slower Growth
Coach accounted for much of Tapestry, Inc.’s fiscal 2026 revenue growth, with revenue increasing 24%, while Kate Spade revenue declined. For fiscal 2027, management expects Coach to grow at a high-single-digit rate and Kate Spade revenue to decline at a high-single-digit rate. Crevoiserat also said Kate Spade’s “top-line progress was more gradual than we planned,” while adding that the company had gained greater clarity on where consumers were responding and where investments were driving results.
Additionally, Tapestry’s fiscal 2027 outlook incorporates a mid-20% tariff rate on U.S. inventory receipts, with management expecting mitigation actions to result in a neutral net year-over-year earnings impact.
Hedge Funds and Short Interest in Tapestry
Insider Monkey, which tracks more than 1,000 hedge funds, shows 66 hedge funds held TPR shares in the second quarter, versus 67 in the first quarter. Of those funds, SRS Investment Management was the most prominent shareholder even after reducing its position by 20% to 4.06 million shares. Short interest stood at approximately 7.6% to 7.9% of the float, depending on the reporting date and data provider.
Tapestry, Inc.’s share price has fallen sharply despite strong overall earnings growth and another strong quarter from Coach. Continued weakness at Kate Spade and the slower growth expected for Coach in fiscal 2027 help explain the market’s reaction, but Cramer sees the stock’s decline as difficult to reconcile with the company’s results. With Coach still growing at a high-single-digit rate and Tapestry forecasting low-double-digit EPS growth, the stock’s performance leaves room for investors to reassess whether the selloff has gone too far.
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