What happened

Shares of Tapestry (NYSE:TPR) climbed 26.2% last month, according to data provided by S&P Global Market Intelligence. Investors cheered the news that the operator of luxury brands, including Coach, Kate Spade, and Stuart Weitzman, appointed its own chairman of the board, Jide Zeitlin, to lead the company as the new CEO.

The company hasn't been able to grow fast enough to justify the high valuation it had at the start of the year, which led to a dramatic collapse in the stock price. Investors are hopeful that the new head honcho can instill new life into a business with a lot of potential to perform better in the growing luxury goods industry.

A young woman trying on high heels in a boutique.

IMAGE SOURCE: GETTY IMAGES.

So what

Jide Zeitlin is not an outsider. He has served on the company's board of directors since 2006 and was appointed chairman in 2014, a role he will continue to hold.

Tapestry is not doing as badly as its stock price indicates, but its latest results show a business that is severely underperforming its potential. In fiscal 2019 (which ended in June), sales were up only 4% on a constant-currency basis. Adjusted net income slid 1.4% to $749 million.

Investors are hopeful that Zeitlin's experience working as an executive with Goldman Sachs for 20 years, along with his observations on the company's operations from serving on the board for 13 years, will bring valuable insight into how to improve the company's operating results.

Now what

Tapestry is maintaining its current outlook for fiscal 2020 and plans to return $700 million to shareholders via dividends and share repurchases. The current outlook calls for sales to increase in the low-single-digit range and for earnings to be flat over fiscal 2019.

In a statement, Zeitlin had encouraging words for investors:

I have profound belief in Tapestry's people and culture, as well as our ability to enhance returns for all stakeholders. Coach, Kate Spade, and Stuart Weitzman have powerful and differentiated positioning, strong consumer connections and attractive growth potential. Together with a talented management team that combines long-tenured executives with new leaders who bring fresh perspectives, we will act with urgency to drive sustainable organic growth.

The opportunity here for investors is that Tapestry is not valued like a growth stock anymore, trading for a forward price-to-earnings ratio of just 8.95. If Zeitlin can accelerate the company's growth, the stock could be a steal at these levels.