What Happened?
Shares of luxury fashion conglomerate Tapestry (NYSE: TPR) fell 13.9% in the morning session after 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.
The shares closed the day at $95.59, down 15.8% from previous close.
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What Is The Market Telling Us
Tapestry’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. But moves this big are rare even for Tapestry and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 5.7% on the news that multiple analysts raised their price targets on the company, citing optimism ahead of its upcoming earnings report. This wave of optimism from Wall Street analysts comes just ahead of the company's fourth-quarter earnings report, scheduled for August 14. Telsey Advisory Group reiterated its "outperform" rating and significantly increased its price target on the stock to $125 from $92. Similarly, Evercore ISI also maintained an "Outperform" rating while raising its price target to $130 from $97. Analysts at Evercore see potential upside to consensus estimates for Tapestry's upcoming results. This confidence is supported by the company's strong performance in the previous quarter and a raised full-year outlook, fueling expectations for another positive report.
Tapestry is up 47.3% since the beginning of the year, but at $96.70 per share, it is still trading 14.8% below its 52-week high of $113.53 from August 2025. Investors who bought $1,000 worth of Tapestry’s shares 5 years ago would now be looking at an investment worth $6,070.
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