We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
TPR's Fiscal 2027 Outlook Pits Margin Expansion Against Tariff Risk
Read MoreHide Full Article
Key Takeaways
TPR expects fiscal 2027 revenues of $8.4-$8.5 billion, with mid-single-digit growth.
Tapestry targets about 50 basis points of operating-margin expansion despite tariff pressure.
Coach's strength supports TPR, while Kate Spade is expected to post another modest operating loss.
Tapestry, Inc. (TPR - Free Report) enters fiscal 2027 with a tougher earnings test after fourth-quarter adjusted earnings beat the Zacks Consensus Estimate and margins expanded sharply. Management still expects profit growth even as revenue growth moderates.
The question is whether operating gains can absorb higher marketing spending and changing tariff pressure. Coach remains the earnings engine, while Kate Spade limits the margin for execution errors.
Tapestry’s Fiscal 2027 Sales Growth Is Set to Slow
Tapestry expects fiscal 2027 revenues of $8.4-$8.5 billion, representing mid-single-digit growth on a nominal and constant-currency basis. That compares with fiscal 2026 pro forma constant-currency growth of 17%.
Coach revenues are projected to rise at a high-single-digit rate, while Kate Spade revenues are expected to decline at a high-single-digit rate. Ralph Lauren Corporation (RL - Free Report) provides a sector comparison, with first-quarter fiscal 2027 revenues up 14% reported and 13% in constant currency.
TPR Targets Another 50 Basis Points of Margin Expansion
Management expects fiscal 2027 operating margin to expand about 50 basis points. The plan includes roughly 30 basis points of gross-margin improvement and 20 basis points of leverage from selling, general and administrative expenses.
That follows fourth-quarter fiscal 2026 adjusted operating-margin expansion of 250 basis points to 19.3%. For the full year, adjusted gross margin improved 120 basis points despite a 130-basis-point tariff and duty headwind.
Tapestry Expects Tariffs to Be Neutral for the Year
The fiscal 2027 outlook embeds a mid-20% tariff rate on U.S. inventory receipts and assumes mitigation will make the year-over-year profit impact roughly neutral. Tariffs are expected to provide a modest first-half benefit before becoming a second-half headwind.
Sourcing, product mix and operational offsets therefore matter to the margin target. Levi Strauss & Co. (LEVI - Free Report) faced similar pressure in its second quarter of 2026, when gross margin rose 10 basis points despite tariff and foreign-exchange headwinds.
TPR Sees Coach Offsetting More Kate Spade Weakness
Coach represented 86.4% of fiscal 2026 revenues, giving the brand substantial influence over consolidated results. Management expects Coach to maintain an operating margin of nearly 36% in fiscal 2027.
Kate Spade remains the counterweight. The brand posted a $27.2 million adjusted operating loss in fiscal 2026, and management expects another modest operating loss in fiscal 2027.
Tapestry’s EPS Outlook Still Calls for Double-Digit Growth
Tapestry expects fiscal 2027 adjusted earnings of $7.80-$7.90 per share, representing low-double-digit growth. Adjusted free cash flow is projected to approach $1.7 billion as capital expenditures and cloud-computing costs rise to about $300 million.
First-quarter adjusted earnings are expected at about $1.55 per share, up by low teens. Gross margin is projected to expand roughly 120 basis points, but higher marketing spending is expected to keep operating margin in line with the prior-year quarter.
Image Source: Zacks Investment Research
TPR’s Style Scores Add Context to the Outlook
The fiscal 2027 setup combines a credible margin plan with execution risk. Tariff mitigation, elevated marketing and continued Kate Spade losses leave less room for shortfalls even with Coach providing strong profitability.
TPR currently carries a Zacks Rank #3 (Hold), which supports a measured stance rather than a clear near-term buy signal. A Zacks Rank #3 can still be appropriate for holding shares while investors monitor execution and estimate trends. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock 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 Scores point to favorable characteristics in those styles, while the VGM Score reflects the combined weighted style picture and the Value Score is less supportive. Because the Style Scores complement the Zacks Rank, the combined picture argues for patience.
View the Zacks #1 Rank List
Image: Bigstock
TPR's Fiscal 2027 Outlook Pits Margin Expansion Against Tariff Risk
Key Takeaways
Tapestry, Inc. (TPR - Free Report) enters fiscal 2027 with a tougher earnings test after fourth-quarter adjusted earnings beat the Zacks Consensus Estimate and margins expanded sharply. Management still expects profit growth even as revenue growth moderates.
The question is whether operating gains can absorb higher marketing spending and changing tariff pressure. Coach remains the earnings engine, while Kate Spade limits the margin for execution errors.
Tapestry, Inc. Price, Consensus and EPS Surprise
Tapestry, Inc. price-consensus-eps-surprise-chart | Tapestry, Inc. Quote
Tapestry’s Fiscal 2027 Sales Growth Is Set to Slow
Tapestry expects fiscal 2027 revenues of $8.4-$8.5 billion, representing mid-single-digit growth on a nominal and constant-currency basis. That compares with fiscal 2026 pro forma constant-currency growth of 17%.
Coach revenues are projected to rise at a high-single-digit rate, while Kate Spade revenues are expected to decline at a high-single-digit rate. Ralph Lauren Corporation (RL - Free Report) provides a sector comparison, with first-quarter fiscal 2027 revenues up 14% reported and 13% in constant currency.
TPR Targets Another 50 Basis Points of Margin Expansion
Management expects fiscal 2027 operating margin to expand about 50 basis points. The plan includes roughly 30 basis points of gross-margin improvement and 20 basis points of leverage from selling, general and administrative expenses.
That follows fourth-quarter fiscal 2026 adjusted operating-margin expansion of 250 basis points to 19.3%. For the full year, adjusted gross margin improved 120 basis points despite a 130-basis-point tariff and duty headwind.
Tapestry Expects Tariffs to Be Neutral for the Year
The fiscal 2027 outlook embeds a mid-20% tariff rate on U.S. inventory receipts and assumes mitigation will make the year-over-year profit impact roughly neutral. Tariffs are expected to provide a modest first-half benefit before becoming a second-half headwind.
Sourcing, product mix and operational offsets therefore matter to the margin target. Levi Strauss & Co. (LEVI - Free Report) faced similar pressure in its second quarter of 2026, when gross margin rose 10 basis points despite tariff and foreign-exchange headwinds.
TPR Sees Coach Offsetting More Kate Spade Weakness
Coach represented 86.4% of fiscal 2026 revenues, giving the brand substantial influence over consolidated results. Management expects Coach to maintain an operating margin of nearly 36% in fiscal 2027.
Kate Spade remains the counterweight. The brand posted a $27.2 million adjusted operating loss in fiscal 2026, and management expects another modest operating loss in fiscal 2027.
Tapestry’s EPS Outlook Still Calls for Double-Digit Growth
Tapestry expects fiscal 2027 adjusted earnings of $7.80-$7.90 per share, representing low-double-digit growth. Adjusted free cash flow is projected to approach $1.7 billion as capital expenditures and cloud-computing costs rise to about $300 million.
First-quarter adjusted earnings are expected at about $1.55 per share, up by low teens. Gross margin is projected to expand roughly 120 basis points, but higher marketing spending is expected to keep operating margin in line with the prior-year quarter.
Image Source: Zacks Investment Research
TPR’s Style Scores Add Context to the Outlook
The fiscal 2027 setup combines a credible margin plan with execution risk. Tariff mitigation, elevated marketing and continued Kate Spade losses leave less room for shortfalls even with Coach providing strong profitability.
TPR currently carries a Zacks Rank #3 (Hold), which supports a measured stance rather than a clear near-term buy signal. A Zacks Rank #3 can still be appropriate for holding shares while investors monitor execution and estimate trends. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock 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 Scores point to favorable characteristics in those styles, while the VGM Score reflects the combined weighted style picture and the Value Score is less supportive. Because the Style Scores complement the Zacks Rank, the combined picture argues for patience.