Strategic Sales and Capital Returns: Tapestry’s Path to Enhanced Performance

Analyst Ike Boruchow of Wells Fargo maintained a Buy rating on Tapestry (TPR – Research Report), retaining the price target of $100.00.

Ike Boruchow has given his Buy rating due to a combination of factors surrounding Tapestry’s strategic decisions and financial outlook. The sale of Stuart Weitzman, a brand that has significantly underperformed, is seen as a sensible move. This allows Tapestry to sharpen its focus on bolstering the performance of Coach and revitalizing Kate Spade. The proceeds from the sale, expected to be completed in the summer, will be utilized for general corporate purposes, including capital returns such as share repurchases and dividends, projected to exceed $2 billion in fiscal year 2025.
Furthermore, the disposal of Stuart Weitzman, which has been a financial drag on the company, signifies the removal of operating losses of approximately $20 million annually. Although the immediate impact on operating income and EPS is deemed minor, the anticipated use of the $105 million sale proceeds for share buybacks could potentially enhance the company’s earnings per share by more than $0.10 in the coming years. These factors contribute to a positive outlook, reinforcing Tapestry’s position as a strong investment choice.

In another report released today, Barclays also maintained a Buy rating on the stock with a $100.00 price target.

Based on the recent corporate insider activity of 47 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of TPR in relation to earlier this year.