Tapestry (TPR) Stock Forecast & Price Target

Tapestry's financial outlook is bolstered by Coach's strong performance, which achieved a remarkable 21% year-over-year revenue growth in the first quarter, significantly outpacing the 4% growth of the overall North American handbags market. The brand's appeal among Gen Z consumers has expanded its market share, contributing to an anticipated total sales increase of 9.5% year-over-year to $1.650 billion. Additionally, Tapestry's strategic Amplify plan aims to enhance topline growth and margins further, supported by notable sales increases in Coach's leather goods and a higher average unit retail price.

Tapestry's financial outlook is negatively impacted by a significant decline in revenue at its Kate Spade brand, which reported a 9% year-over-year decrease in the fiscal first quarter, a slight improvement from the previous quarter's 13% contraction but still reflective of broader challenges. Additionally, the brand's operating margin fell dramatically by 730 basis points to just 2.2%, primarily due to increased tariffs and pressures related to customer engagement investments, contributing to a greater-than-expected profit headwind of approximately $160 million. The overall complexity of the fluctuating tariff environment, coupled with historical shortcomings in marketing investment and customer acquisition, further exacerbate Tapestry's financial challenges, leading to anticipated deleveraging in SG&A expenses.