Coach parent company expects to lose $160 million to tariffs this year

The parent company of Coach and Kate Spade expects costs from higher duties will total $160 million this year, according to its latest earnings report. 

Tapestry is “facing greater than previously expected profit headwinds from tariffs and duties, with the earlier than expected ending of de minimis exemptions being a meaningful factor,” Chief Financial Officer Scott Roe said in a Thursday earnings call, reported by CNBC. The company said it expects to offset the impact of incremental tariffs and duties over time.

In addition to introducing new tariffs on goods manufactured abroad, President Donald Trump eliminated the de minimis provision referenced by Roe, a tax loophole that allowed items worth $800 or less to enter the U.S. duty-free. The lifting of the exemption was a direct blow to fast-fashion companies like Shein and Temu. As higher import costs threatened their business models, the companies shifted their advertising efforts from the U.S. to other countries in Europe and the U.K., according to Reuters .

But, Tapestry’s earnings show that it’s not only fast-fashion brands feeling a crunch. Tariffs are showing an outsized effect on high-end brands and luxury labels as they combat consumer fatigue. 

To mitigate the cost of tariffs, many companies are moving manufacturing to other countries, raising prices, trimming promotions, or promoting trendy items, CNBC reported. In July, Bernard Arnault, chairman and CEO of French luxury giant LVMH, told the Wall Street Journal that the company would open a second Louis Vuitton factory in Texas. 

While some companies are banking on pricing power to offset the cost of tariffs, analysts told Reuters that luxury brands may hit a ceiling. The sector lost 50 million customers last year amidst economic pressures.