TAPESTRY, INC. (TPR) stock intrinsic value fair value estimate & owner earnings analysis

Tapestry is the parent of Coach and kate spade new york, and until early August 2025 also owned Stuart Weitzman, which was sold to Caleres. The business today is essentially two brands: Coach, roughly 86% of sales, and kate spade new york, roughly 13%. Coach has had two strong years in a row: net sales grew 9.9% in fiscal 2025 and then accelerated to 23.5% in fiscal 2026, to $6.91 billion, led by direct-to-consumer sales in North America, Greater China and Europe, higher average selling prices, and fewer promotions. kate spade, by contrast, has struggled - sales fell 10.2% in fiscal 2026, on top of an $854.8 million non-cash write-down of the brand's goodwill and trademark value taken in fiscal 2025. That write-down doesn't reduce the cash the business generates (it's an accounting adjustment tied to a past acquisition, not a current cost), but it is a real signal that kate spade's competitive position has weakened, and we have carried that risk in our growth assumptions rather than in this year's earnings figure. Fiscal 2025 was also messy for another reason: Tapestry spent much of fiscal 2024 and 2025 trying to buy Capri Holdings (Michael Kors, Versace, Jimmy Choo) for about $8.5 billion. A federal court blocked the deal on antitrust grounds in October 2024, Tapestry terminated it that November, redeemed roughly $6 billion of debt it had raised to finance the purchase, and absorbed about $350 million of one-time deal, financing and severance costs. None of that recurred in fiscal 2026, which is one reason this year's results look so much stronger than last year's. We valued the business assuming none of that one-time drama repeats, and thought instead about what Coach and kate spade can sustainably earn from here, using three cases. Base case: Coach's momentum continues but decelerates from its unusually strong 23.5% pace - we assumed growth slowing from around 8% next year to roughly 2.5-3% within a decade, with kate spade remaining a modest drag throughout. After ten years we assumed earnings simply hold at that level rather than keep growing, since we don't have a specific reason today to expect further expansion beyond what the two brands can support. Bull case: Coach's direct-to-consumer strength and pricing power continue closer to their recent pace for several more years, and kate spade stabilizes rather than continuing to shrink. We also gave credit, in this case only, to Tapestry's demonstrated multi-year habit of shrinking its share count through buybacks (diluted shares outstanding have fallen from about 289 million in fiscal 2018 to about 210 million today), assuming that continues at a modest pace indefinitely. Bear case: the recent margin gains - higher prices, fewer promotions - don't fully hold, kate spade's decline continues, and new U.S. tariffs on imported goods eat into some of the margin progress of the last two years (nearly all of Tapestry's products are made in Vietnam, Cambodia, the Philippines and other Asian countries; the company already paid about $117 million in tariffs this year, with further tariff decisions still working through the courts). Earnings settle back near their fiscal 2023-2025 historical norm and simply hold there rather than growing. We discounted all three cases at a uniform, low rate tied to long-term U.S. government bond yields plus a small buffer, and put the difference in risk between the cases into the cash-flow assumptions themselves rather than into the discount rate. That is why the range between the cases is wide - it reflects genuine uncertainty about how much of the last two years' improvement is durable, not a mechanical formula. On these three cases, we estimate the shares are worth roughly $80 in the bear case, $182 in the base case, and $334 in the bull case. Given how concentrated the business is in a single fashion-driven brand, and how quickly consumer taste for handbags can turn (kate spade's own recent history is a reminder of that), the margin-of-safety price is set with a substantial cushion below the bear-case estimate, at around $50 a share.