NEW YORK – Shares of Tapestry Inc., the parent company of luxury brands Coach, Kate Spade, and Stuart Weitzman, plunged more than 15% in trading on Thursday and remained under pressure Friday, after the company issued a stark warning that rising import tariffs will take a significant bite out of its annual profits.

The luxury fashion group announced that it anticipates costs from higher duties to total approximately $160 million for the fiscal year. This forecast directly impacted its profit outlook, spooking investors and sending a cautionary signal across the broader retail and consumer goods sectors, which are grappling with the financial implications of ongoing trade disputes.

The sell-off erased more than $1.2 billion from Tapestry's market capitalization, marking one of its worst trading days in recent years. The company's stock fell to its lowest point in over a year as investors reacted to the direct financial consequences of the tariffs on goods manufactured in China.

A Direct Hit to the Bottom Line

During an earnings call with analysts, Tapestry executives laid out the challenge ahead. While reporting sales growth that met market expectations, the guidance for future earnings fell short, with the tariff impact being the primary culprit.

"We are taking decisive action to mitigate the impact of the tariffs, including shifting production and adjusting our supply chain," said Tapestry CEO Joanne Crevoiserat. "However, the scale and speed of these new duties present a near-term headwind that will directly affect our profitability for the fiscal year."

The company is now faced with a difficult choice: absorb the increased costs, which would compress profit margins, or pass them on to consumers through higher prices, risking a potential decline in sales volume. This dilemma is particularly acute in the accessible luxury market where Coach and Kate Spade operate, as consumers can be more price-sensitive than those at the highest end of the luxury spectrum.

Broader Concerns for the Retail Sector

Tapestry's announcement is a clear indicator of how geopolitical trade tensions are translating into tangible corporate pain. Many other U.S.-based retailers and brands that rely on Chinese manufacturing for handbags, footwear, and accessories are facing similar pressures.

Analysts are now closely watching how the rest of the industry will navigate this environment. "Tapestry is the canary in the coal mine for the accessible luxury space," commented a retail analyst from Wells Fargo in a note to clients. "Their direct quantification of the tariff impact sets a benchmark, and we expect similar warnings from their peers in the coming weeks. The entire sector is now on notice."

The issue extends beyond just handbags. Companies across apparel, electronics, and various consumer goods are reassessing their supply chain strategies. For years, China offered an unparalleled combination of skilled labor, infrastructure, and scale. While many companies have been gradually diversifying their manufacturing footprint to countries like Vietnam, Cambodia, and Mexico, shifting entire supply chains is a complex and costly process that cannot be completed overnight.

As Tapestry and its competitors navigate these turbulent economic waters, investors and consumers alike will be watching to see how the balance between profitability, pricing, and global manufacturing strategy plays out in the months ahead.