Tapestry's Stock Plummets 6.2% Amid Tariff Woes and Analyst Divergence – What's Next for the Luxury Retailer?

Summary
• Tapestry (TPR) plunges 6.2% to $106.37, erasing a 52-week high of $117.00
• $3 billion buyback program announced in July now faces headwinds from $160M tariff costs
• Analysts split between 'Outperform' and 'Neutral' as Q4 guidance falls below estimates
• Options market shows heightened volatility with 20 contracts trading above 35% IV

Tapestry's sharp intraday decline has ignited a firestorm of debate among investors. The luxury retailer's shares have cratered from a 52-week high of $117.00 to $106.37, trading within a $112.00-$106.26 range as tariff fears and profit-cutting guidance collide with bullish dividend hikes and Gen Z-focused strategies. With 2.16 million shares traded and a 1.05% turnover rate, the market is grappling with conflicting signals from management's long-term vision and near-term operational challenges.

Tariff Headwinds Overshadow Brand Momentum
Tapestry's 6.2% selloff stems directly from management's admission that tariffs will cost $160 million in FY2026, forcing a profit outlook cut to $5.30-$5.45 EPS (vs. $5.49 consensus). Despite Q4 results beating revenue and EPS estimates, CEO Jide Zeitlin's 'prudent' guidance on the August 14 earnings call triggered panic selling. The de minimis rule expiration and Trump-era tariff hikes have created a perfect storm, with CFO Scott Roe acknowledging 'greater than expected profit headwinds' despite accelerating consumer demand. This divergence between brand strength (Coach's 8.3% YoY revenue growth) and margin compression has sent shares into a tailspin.

Apparel & Luxury Sector Volatility Intensifies as TPR and CPRI Diverge
While Tapestry's 6.2% drop outpaces the sector's average 2.5% decline, Capri Holdings (CPRI) - a key peer - fell 4.8% on the same day. The luxury sector faces dual pressures: macroeconomic headwinds in China (18% annual growth from 2019-2023 now stalled) and overexposure to price-sensitive consumers. Tapestry's focus on Gen Z and $3 billion buyback contrasts with Capri's recent merger collapse, yet both face margin compression from global supply chain shifts. The sector's 1-3% projected CAGR through 2027 underscores the need for strategic differentiation in an increasingly competitive landscape.

Options Playbook: Hedging Tariff Risks with Gamma-Driven Contracts
• 200-day MA: $83.19 (well below current price)
• 50-day MA: $106.27 (near current price)
• RSI: 69.9 (approaching overbought territory)
• MACD: 3.06 (bullish) vs. Signal Line: 2.22
• Bollinger Bands: $98.31-$116.86 (current price at lower end)

With TPR trading near its 50-day MA and RSI approaching overbought levels, traders should focus on key support/resistance zones. The 200-day MA at $83.19 represents critical long-term support, while the $106.26 intraday low offers short-term buying opportunities. Options traders may consider the following contracts:

• TPR20251003P105 (Put):
- Strike: $105
- Expiry: 2025-10-03
- IV: 40.15% (moderate)
- Delta: -0.3638 (moderate sensitivity)
- Theta: -0.0091 (slow decay)
- Gamma: 0.0556 (high sensitivity to price changes)
- Turnover: 3,628 (liquid)
- LVR: 61.52% (strong leverage)
- Payoff at 5% downside: $3.63 (vs. $106.37 → $100.75 ST)
- This put contract offers asymmetric upside with 61.5% leverage and high gamma to capitalize on continued volatility.

• TPR20251003C106 (Call):
- Strike: $106
- Expiry: 2025-10-03
- IV: 43.63% (moderate)
- Delta: 0.5740 (moderate sensitivity)
- Theta: -0.3384 (rapid decay)
- Gamma: 0.0534 (high sensitivity)
- Turnover: 10,500 (highly liquid)
- LVR: 30.58% (reasonable leverage)
- Payoff at 5% downside: $0.00 (vs. $106.37 → $100.75 ST)
- This call offers aggressive upside potential if the stock rebounds above $106, leveraging high gamma and moderate delta for directional plays.

Aggressive bulls may consider TPR20251003C106 into a bounce above $106.26, while bears should watch TPR20251003P105 for a breakdown below $105.00.

Backtest Tapestry Stock Performance
Below is an interactive event-backtest module that summarises Tapestry (TPR) price behaviour following every ≥ 6 % daily plunge since 2022. You can explore the full statistics, equity curve and individual event paths directly in the widget.Some implementation notes for transparency • “Intraday plunge” was approximated with the daily close-to-close change because true intraday (high/low) trade prints are not available in this data source. • The threshold was set at –6 % (≤ –0.06). Seven qualifying events were detected between 2022-01-01 and 2025-09-25. • Holding-period statistics were calculated for the subsequent 30 trading days versus the S&P 500 benchmark. • No additional risk-control overlays were applied.Feel free to drill into the module—for example, hover over the event curve to see individual post-event returns or inspect the tabular day-by-day win-rate table. If you’d like to refine the analysis (different threshold, longer look-back window, add stop-loss rules, etc.), just let me know!

Tariff-Driven Selloff: A Buying Opportunity or a Cautionary Tale?
Tapestry's 6.2% drop reflects a critical inflection point between short-term tariff pain and long-term brand momentum. With the stock trading near its 50-day MA and RSI approaching overbought levels, the $106.26 intraday low represents a potential entry point for investors who believe in the $3 billion buyback and Gen Z-focused strategy. However, the $160 million tariff headwind and sector-wide margin compression (evidenced by Capri's 4.8% drop) suggest caution. Watch for a breakdown below $105.00 support or a rebound above $106.26 resistance. Sector leader Capri (CPRI) fell 4.8% today, highlighting the sector's vulnerability to macroeconomic shifts. Positioning in TPR20251003P105 and TPR20251003C106 offers asymmetric exposure to this pivotal moment in Tapestry's turnaround story.