Is TPR Worth Buying as Coach Growth Meets Kate Spade Execution Risk?

Tapestry, Inc. TPR presents investors with a divided setup. Coach is expanding quickly, earnings expectations are rising and cash generation remains strong, but Kate Spade is still losing sales and money.

That split matters because TPR's valuation already assumes solid execution. The growth profile is attractive, yet the unfinished turnaround and premium to Tapestry's historical multiple make the buy decision less straightforward.
TPR’s Coach Engine Is Still Accelerating

Coach generated 86.4% of fiscal 2026 revenues and increased sales 24%, or 23% at constant currency. Handbag average unit retail rose at a mid-teens rate for the year, while units increased at a low-double-digit rate.

Management expects high-single-digit Coach revenue growth in fiscal 2027 and sees a path to a $10 billion brand. About 70% of the brand's fiscal 2027 growth is expected to come from international markets.

Tapestry’s Valuation Demands Execution

TPR trades at 15.3X forward 12-month earnings, above the Zacks sub-industry's 13.5X and its five-year median of 10.5X. The multiple remains below the Zacks Retail-Wholesale sector's 22.7X and the S&P 500's 20.3X.

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Peer results show why execution matters. Capri Holdings Limited CPRI reported fiscal first-quarter 2027 revenue down 3.5%, while adjusted operating margin improved to 3.6%. Levi Strauss & Co. LEVI posted second-quarter 2026 net revenues up 8% and raised its full-year revenue and earnings outlook.

TPR’s Kate Spade Turnaround Remains Unproven

Kate Spade's fiscal 2026 revenues declined 10% on a reported basis and 11% at constant currency. The brand posted an adjusted operating loss of $27.2 million despite adding about 2 million customers.

Customer acquisition has not yet produced a broader recovery. Unaided brand awareness did not improve, and management expects another high-single-digit revenue decline and a modest operating loss in fiscal 2027.

Tapestry’s Earnings Estimates Point Higher

Tapestry expects fiscal 2027 adjusted earnings of $7.80-$7.90 per share, representing low-double-digit growth. The outlook also calls for about 50 basis points of operating-margin expansion.

The Zacks Consensus Estimate for fiscal 2027 earnings has risen 3% in the past four weeks and 4.4% in the past 12 weeks. Projected fiscal 2027 earnings growth is 12.1%.

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TPR’s Cash Returns Strengthen the Case

Adjusted free cash flow rose to $1.86 billion in fiscal 2026 from $1.35 billion a year earlier. Tapestry returned $1.7 billion to shareholders, including $1.35 billion in repurchases and $326 million in dividends.

Management expects roughly $1.7 billion of capital returns again in fiscal 2027. Gross leverage ended fiscal 2026 at 1.1X adjusted EBITDA, leaving room for store and technology investment alongside shareholder returns.

TPR’s Mixed Rating Signals Reward Patience

TPR's operating momentum is real, but the investment case remains balanced. Coach, earnings revisions and cash returns support the stock, while Kate Spade's losses and a valuation premium to history limit the margin for execution errors.

The stock currently carries a Zacks Rank #3 (Hold), which fits a wait-and-see stance rather than a clear buy signal. The rank can still support holding shares, but it keeps the near-term case measured. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

TPR also has a Growth Score of A, Momentum Score of A and VGM Score of A, alongside a Value Score of C. The stronger growth and momentum marks are favorable, while value is less supportive. Because the Style Scores complement the Zacks Rank, the combined picture favors patience.

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This article originally published on Zacks Investment Research (zacks.com).

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