Tapestry's $3B Buyback and Dividend Hike Could Be a Game Changer for TPR

• Earlier this week, Tapestry, Inc. announced a US$3 billion share repurchase program through fiscal year 2028 alongside a 14% increase in its quarterly dividend, funded by robust free cash flow.
• This move signals the company's focus on returning capital to shareholders even as it manages recent net losses and ongoing brand challenges.
• We'll examine how Tapestry's substantial buyback initiative could impact its future earnings projections and shareholder value narrative.

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Tapestry Investment Narrative Recap

To own shares in Tapestry, an investor needs to believe in the company’s ability to drive sustainable brand growth, particularly through Coach's continued momentum and global expansion, while effectively navigating ongoing challenges at Kate Spade and managing exposure to tariffs. The recently announced US$3 billion buyback plan and higher dividend underscore a commitment to shareholder returns, but do not materially change the dominant short-term catalyst: delivering a successful recovery in Kate Spade performance. The most pressing risk remains: if the turnaround for Kate Spade falters, company-wide revenue and margin recovery could be delayed.

The August 14 dividend hike to US$0.40 per share directly relates to the capital return focus signaled in the new buyback. While a more generous payout can buoy investor sentiment, it places greater scrutiny on Tapestry’s free cash flow generation, especially given recent net losses and persistent brand-level uncertainties.

However, potential improvements in free cash flow could be overshadowed if the company cannot offset the ongoing $850 million Kate Spade impairment charge and restore that brand’s growth trajectory...

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

Tapestry's narrative projects $7.8 billion revenue and $1.4 billion earnings by 2028. This requires 3.6% yearly revenue growth and a $1.2 billion earnings increase from $183.2 million today.

Uncover how Tapestry's forecasts yield a $116.44 fair value, a 9% upside to its current price.

Exploring Other Perspectives

Retail investors in the Simply Wall St Community set Tapestry’s fair value between US$113.63 and US$129.73 across three analyses. With the recent US$3 billion buyback and increased dividend, you may want to consider how brand turnaround risks could affect these projections.

Explore 3 other fair value estimates on Tapestry - why the stock might be worth as much as 22% more than the current price!

Build Your Own Tapestry Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Tapestry research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Tapestry research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Tapestry's overall financial health at a glance.

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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.

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