What happened

Shares of Tapestry (NYSE:TPR) declined 33.2 in August, according to data from S&P Global Market Intelligence, after the luxury handbag and shoe specialist followed reasonably solid quarterly results with underwhelming forward guidance.

To be sure, most of Tapestry's plunge last month came on Aug. 15, when the parent company of the Coach, Kate Spade, and Stuart Weitzman brands told investors its fiscal fourth-quarter 2019 sales grew 2% year over year (or 4% at constant currency) to $1.51 billion, translating to adjusted net income of $174 million, or $0.61 per share (up a penny per share from the same year-ago period). Both figures were essentially in line with analysts' estimates at the time.https://www.tapestry.com/investors/ 

Three leather Coach purses with a beige background.


So what

Digging deeper revealed a key weakness in Tapestry's performance, however. While quarterly sales at the Stuart Weitzman and Coach brands climbed 20% and 2% (as expected), respectively, at constant currencies, Kate Spade's 7% growth was muted by a 6% decline in comparable-store sales.

Tapestry CEO Victor Luis admitted Kate Spade's results, in particular, "did not meet our expectations and more time is required to drive a positive inflection in the business, particularly in light of the traffic-challenged and competitive retail environment in North America."

Now what

For the first quarter of the new fiscal-year 2020, Tapestry anticipates revenue and earnings to fall slightly from the same year-ago period, with the bottom line hampered by investments in opening new locations, distributor buybacks and system upgrades.

For the full fiscal-year 2020, Tapestry is targeting low-single-digit revenue growth, with earnings per share remaining roughly even with the $2.57 it achieved in fiscal 2019.

In the end, it's hard to blame some investors for not wanting to stick around while Tapestry navigates these headwinds. So even with shares yet to fully recover from last month's declines, I'm still content watching from the sidelines as Tapestry works to regain sustained, profitable growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.