Tapestry Inc. Charts a 2028 Turnaround Amid U.S. Tariff Fallout
Tapestry Inc., the luxury‑fashion conglomerate that owns Coach and Kate Spade, has laid out a bold, if ambitious, plan to neutralize the hit from U.S. tariffs and to return substantial value to shareholders by the end of 2028. The company projects that tariff costs—currently estimated at roughly $160 million in fiscal 2026—will be fully offset within the next three years, a move that underscores a relentless focus on fiscal discipline.
A Dual‑Pronged Approach to Shareholder Payback
The strategy is built around two levers:
- $3 billion in share repurchases – a massive buy‑back program that will be executed over the 2027–2028 horizon, signaling confidence in the company’s intrinsic value and a desire to counter any market underestimation.
- $1.60 annual dividend in FY 2026 – an increase that positions Tapestry as a dividend‑growth leader in the luxury sector, appealing to income‑oriented investors.
Collectively, these initiatives aim to return $4 billion to shareholders by fiscal year 2028, a figure that dwarfs the projected tariff losses and demonstrates a proactive, not reactive, stance.
Financial Targets: Moderation Meets Momentum
Tapestry’s guidance for the next two fiscal years sets a clear trajectory:
- Revenue growth: mid‑single digits annually.
- Earnings per diluted share (EPS): low double‑digits growth.
These targets reflect a measured yet assertive growth outlook. The company acknowledges that the luxury market remains competitive and that margins can be pressured, yet it positions itself to capitalize on the “Amplify” growth strategy. This strategy, unveiled during the investor day, focuses on elevating shareholder value through disciplined capital allocation and targeted operational efficiencies.
Market Reaction: A Modest Lift
The market has responded with a modest uptick, trading the Tapestry stock at $105.62—a 0.41 percent increase. While the move may seem incremental, it is a positive affirmation of investor confidence in the company’s turnaround narrative. In a sector where brand perception can outweigh fundamentals, the uptick signals that analysts and investors see merit in Tapestry’s aggressive repurchase and dividend plans.
Critical Perspective
Critics may argue that the aggressive share repurchase program could deplete cash reserves needed for strategic investments or that the projected tariff offset assumes a smooth resolution of trade tensions that may not materialize. However, the company’s insistence on returning value to shareholders, combined with realistic revenue and EPS growth targets, suggests a balanced approach. If executed as outlined, Tapestry could emerge from the tariff shock not merely unscathed but better positioned to command premium pricing and shareholder dividends.
This analysis reflects Tapestry Inc.’s publicly disclosed plans and market reactions as of the latest investor day communications.