Tapestry Inc, the parent company of Coach and Kate Spade, reported a net profit of $347.8 million for its fiscal fourth quarter, with revenue climbing 9% to $1.88 billion. Despite this positive result, shares of Tapestry (NYSE: TPR) plunged 15.12% on Thursday.

Coach delivered another quarter of robust sales growth to close out its fiscal year, but investors are concerned that the company may struggle to sustain this momentum in the new fiscal year. Coach has been a favorite among shareholders this year, with its handbags gaining popularity among Gen Z consumers and several items, such as the Brooklyn Bag, going viral online. However, Tapestry struck a cautious tone on Thursday, forecasting a slowdown in revenue growth during the second half of the new fiscal year.

The fashion group's shares fell 15% to $130 in early trading on Thursday. The company provided a sales forecast for the new fiscal year of $8.4 billion to $8.5 billion, compared to the analyst consensus of $8.47 billion. Its earnings per share guidance of $7.80 to $7.90 was in line with the market expectation of $7.87. During the earnings call, management told analysts that revenue is expected to maintain high single-digit growth in the first half of the new fiscal year but will decelerate to mid-single-digit growth in the second half. Chief Financial Officer Scott Roe stated that the guidance assumes Coach's growth rate at the start of the new fiscal year will be roughly similar to the previous quarter, but it does not assume the same level of growth for the entire year. "Our outlook reflects both confidence and a prudent approach to our guidance and business planning," Roe said.

In the fiscal fourth quarter, Coach's revenue increased by 15% to $1.64 billion, offsetting a 7% decline in Kate Spade's revenue. Total group sales rose 9% to $1.88 billion, slightly above the analyst estimate of $1.87 billion. Net profit for the quarter was $347.8 million, or $1.68 per share, compared to a loss of $517.1 million, or $2.49 per share, in the same period last year. According to FactSet data, adjusted earnings per share, excluding one-time items, came in at $1.32, beating the market consensus of $1.28. Roe noted that Tapestry continues to face macroeconomic uncertainty and tariff policy changes, which could cause earnings to fluctuate from quarter to quarter. Tariffs are expected to provide a small benefit in the first half of the new fiscal year but will become a negative drag in the second half. The company forecasts current first-quarter earnings per share of $1.55, above the analyst estimate of $1.49. Tapestry also announced that its board has approved a 16% increase in its quarterly dividend to 46.25 cents per share and plans to execute a $1.35 billion share buyback program in the current fiscal year under existing authorization.