What Happened?
Shares of luxury fashion conglomerate Tapestry (NYSE: TPR) jumped 6.4% in the afternoon session after the company reported robust second-quarter fiscal 2026 results that surpassed analyst expectations and raised its full-year outlook.
The luxury goods company announced record quarterly revenue of $2.5 billion, a 14% increase compared to the previous year. Earnings per share came in at $2.69, easily beating the forecast of $2.19. Buoyed by the strong performance, Tapestry lifted its financial outlook for the full fiscal year 2026, raising its forecast for revenue, operating margin, and earnings per share. Additionally, the company increased its plan to return capital to shareholders, boosting its expected stock buybacks to approximately $1.2 billion from a prior outlook of $1.0 billion.
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What Is The Market Telling Us
Tapestry’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 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 17.7% since the beginning of the year, and at $151.95 per share, has set a new 52-week high. Investors who bought $1,000 worth of Tapestry’s shares 5 years ago would now be looking at an investment worth $3,962.
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