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Is Tapestry’s Margin Push Amid Kate Spade Losses Altering The Investment Case For TPR?

Simply Wall St · 1d ago
  • Tapestry recently outlined its plan through fiscal 2027 to expand operating margins by about 50 basis points while pursuing double-digit EPS growth, largely powered by Coach’s international expansion and higher marketing investment.
  • However, continued operating losses at Kate Spade and mounting tariff-related costs mean the company has far less room for execution missteps as it works toward those goals.
  • We’ll now examine how Tapestry’s push for margin expansion, despite Kate Spade’s ongoing losses, may reshape the company’s broader investment narrative.

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Tapestry Investment Narrative Recap

To own Tapestry today, you really have to believe that Coach’s international growth and digital reach can offset Kate Spade’s drag and rising tariff costs. The new fiscal 2027 margin target and double digit EPS ambition sharpen that bet rather than change it, but they do raise the stakes around execution, especially with Kate Spade still in the red and tariff headwinds compressing the room for error.

Against this backdrop, the company’s decision to keep returning capital through a higher dividend and ongoing buybacks stands out. Recent repurchases of more than 9.1 million shares since late 2025, alongside a 16% dividend increase to US$1.85 annually, tie the margin expansion story directly to per share outcomes, which can amplify both the upside of hitting those 2027 goals and the downside if tariffs or Kate Spade’s turnaround disappoint.

Yet beneath the upbeat margin targets, investors should be aware of how prolonged Kate Spade underperformance and rising tariffs could...

Read the full narrative on Tapestry (it's free!)

Tapestry's narrative projects $9.1 billion revenue and $1.6 billion earnings by 2029. This requires 5.0% yearly revenue growth and about a $937 million earnings increase from $662.8 million today.

Uncover how Tapestry's forecasts yield a $166.60 fair value, a 33% upside to its current price.

Exploring Other Perspectives

TPR 1-Year Stock Price Chart
TPR 1-Year Stock Price Chart

Some of the most optimistic analysts were assuming revenue could reach about US$9.8 billion and earnings US$2.1 billion by 2029, but that upbeat view around Coach led growth and tariff relief might look very different once you factor in fresh guidance that still expects Kate Spade losses and structurally higher trade costs.

Explore 5 other fair value estimates on Tapestry - why the stock might be worth as much as 77% more than the current price!

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.