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Tapestry (TPR)
NYSE:TPR
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Tapestry
(NYSE:TPR)76Outperform
Positive Factors
Coach Brand Growth
There is a strong growth opportunity at Coach, driven by the best creative products in history and the widest value spread compared to European luxury brands.
Strategic Sale
The sale of Stuart Weitzman is seen as a strategic move that eliminates a distraction from both the equity story and management's time.
Negative Factors
Stuart Weitzman Performance
Stuart Weitzman has been EBIT dilutive for TPR, losing $21M in the past fiscal year and is expected to see another significant loss this fiscal year.
Tapestry (TPR) vs. S&P 500 (SPY)
Market Cap
$16.82B
Dividend Yield1.72%
Average Volume (3M)5.45M
Price to Earnings (P/E)23.6
Beta (1Y)1.06
Revenue Growth0.74%
EPS Growth-12.69%
CountryUS
Employees18,600
SectorConsumer Cyclical
Sector Strength53
IndustryRetail - Discretionary
Share Statistics
EPS (TTM)3.44
Shares Outstanding207,015,470
10 Day Avg. Volume5,070,128
30 Day Avg. Volume5,447,734
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.48
Price to Cash Flow (P/CF)8.30
P/FCF Ratio8.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$91.28Price Target Upside12.30% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering18
Tapestry Business Overview & Revenue Model
Company DescriptionTapestry, Inc. engages in the provision of luxury accessories and lifestyle brands. It operates through the following segments: Coach, Kate Spade, Stuart Weitzman, and Corporate. The Coach segment consists global sales of coach brand products to customers through coach operated stores, including the internet and concession shop-in-shops, and sales to wholesale customers, and through independent third party distributors. The Kate Spade segment focuses on Kate Spade New York brand products to customers through Kate Spade operated stores, including the Internet, sales to wholesale customers, through concession shop-in-shops and through independent third party distributors. The Stuart Weitzman segment comprises Stuart Weitzman brand products primarily through Stuart Weitzman operated stores. The Corporate segment represents certain costs that are not directly distributed to a brand. The company was founded by Dawn Hughes in 1941 and is headquartered in New York, NY.
How the Company Makes MoneyTapestry makes money through the sale of its luxury fashion products across its core brands: Coach, Kate Spade, and Stuart Weitzman. The company operates a mix of direct-to-consumer channels including retail stores, e-commerce platforms, and wholesale distribution to department stores and specialty retailers. Revenue is primarily generated from the sale of handbags, which are a staple of the Coach and Kate Spade brands, but also from footwear and accessories under the Stuart Weitzman label. Tapestry's strategic partnerships and collaborations with designers and celebrities enhance brand visibility and attract new customer segments. Additionally, the company leverages its digital platforms to reach a broader audience and increase sales. Seasonal collections and limited-edition releases further drive customer engagement and revenue.
Tapestry Financial Statement Overview
Summary
Tapestry's financial performance is solid with stable revenue streams and strong cash flow generation, but it is burdened by high debt levels, which pose a risk in terms of leverage.Income Statement
Tapestry has shown a consistent revenue stream with a slight increase in TTM compared to the previous year. The gross profit margin is healthy at approximately 72.7%, reflecting strong pricing power and efficiency in cost management. The net profit margin is around 11.7%, indicating reasonable profitability. EBIT and EBITDA margins are also solid at 17.5% and 21.0% respectively, although there has been a modest decline in net income over the last year.77
Positive
Balance Sheet
The balance sheet of Tapestry shows a relatively high debt-to-equity ratio of 3.07, which indicates significant leverage and potential risk in times of financial stress. The return on equity (ROE) is fair at approximately 59.6%, driven by moderate net income. The equity ratio stands at 18.4%, suggesting a low proportion of equity in the capital structure, which could limit financial flexibility.68
Positive
Cash Flow
Tapestry's cash flow shows a strong operating cash flow to net income ratio of 1.23, indicating efficient conversion of earnings to cash. The free cash flow to net income ratio is similarly robust at 1.08. However, there has been a decline in free cash flow over the recent period, which may warrant attention.70
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 6.78B | 6.67B | 6.66B | 6.68B | 5.75B | 4.96B | Gross Profit |
| 4.92B | 4.89B | 4.71B | 4.65B | 4.08B | 3.24B | EBIT |
| 1.19B | 1.14B | 1.17B | 1.18B | 968.00M | -550.80M | EBITDA |
| 1.35B | 1.37B | 1.36B | 1.37B | 1.19B | -315.80M | Net Income Common Stockholders |
| 795.70M | 816.00M | 936.00M | 856.30M | 834.20M | -652.10M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.00B | 7.20B | 741.50M | 953.20M | 2.02B | 1.43B | Total Assets |
| 7.25B | 13.40B | 7.12B | 7.27B | 8.38B | 7.92B | Total Debt |
| 4.11B | 8.77B | 3.29B | 3.26B | 3.44B | 4.49B | Net Debt |
| 3.12B | 2.62B | 2.57B | 2.47B | 1.42B | 3.05B | Total Liabilities |
| 5.92B | 10.50B | 4.84B | 4.98B | 5.12B | 5.65B | Stockholders Equity |
| 1.34B | 2.90B | 2.28B | 2.29B | 3.26B | 2.28B |
| Cash Flow | Free Cash Flow | ||||
| 857.60M | 1.15B | 791.00M | 759.30M | 1.21B | 201.60M | Operating Cash Flow |
| 979.30M | 1.26B | 975.20M | 853.20M | 1.32B | 407.00M | Investing Cash Flow |
| 592.50M | -1.04B | 5.70M | -253.60M | -91.00M | 44.30M | Financing Cash Flow |
| -7.37B | 5.21B | -1.04B | -1.78B | -666.00M | 5.90M |
Tapestry Technical Analysis
Neutral
81.28
Price Trends
75.09
Positive
64.41
Positive
52.87
Positive
Market Momentum
2.39
Positive
50.94
Neutral
26.40
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TPR, the sentiment is Neutral. The current price of 81.28 is below the 20-day moving average (MA) of 83.83, above the 50-day MA of 75.09, and above the 200-day MA of 52.87, indicating a neutral trend. The MACD of 2.39 indicates Positive momentum. The RSI at 50.94 is Neutral, neither overbought nor oversold. The STOCH value of 26.40 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TPR.
Tapestry Risk Analysis
Tapestry disclosed 34 risk factors in its most recent earnings report. Tapestry reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Tapestry Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $15.61B | 23.04 | 27.75% | 1.23% | 5.23% | 24.63% | |
76 Outperform | $16.82B | 23.59 | 39.82% | 1.72% | 0.74% | -12.69% | |
71 Outperform | $4.61B | 21.81 | 12.01% | 1.44% | -3.35% | -6.09% | |
67 Neutral | $3.90B | 5.71 | 13.48% | 0.21% | -4.83% | 45.23% | |
66 Neutral | $6.55B | 31.62 | 10.69% | 3.08% | 2.96% | -15.58% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
58 Neutral | $8.78B | ― | -16.13% | 1.60% | -8.42% | 57.91% |
* Consumer Cyclical Sector Average
Performance Comparison
TPR
Tapestry
81.28
35.66
78.17%
COLM
Columbia Sportswear
84.36
5.12
6.46%
PVH
PVH
71.26
-63.94
-47.29%
RL
Ralph Lauren
250.45
74.17
42.08%
VFC
VF
23.45
7.97
51.49%
LEVI
Levi Strauss & Co
16.66
-1.14
-6.40%
Tapestry Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: 10.77% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong performance at Coach and impressive growth in Europe, alongside a successful customer acquisition strategy and raised fiscal year outlook. However, challenges at Kate Spade and Stuart Weitzman, along with high inventory levels, present areas of concern. Overall, the positive aspects outweigh the negatives, leading to an optimistic outlook.Highlights
Record Quarterly Revenue and Earnings Per Share
Tapestry achieved record quarterly revenue and earnings per share, exceeding expectations with a 5% total revenue increase and over 20% growth in earnings per share compared to the prior year.
Coach's Strong Performance
Coach reported a 10% constant currency revenue gain with significant margin expansion, highlighting 270 basis points of gross margin expansion and a 210 basis point lift in operating margin.
Impressive Growth in Europe
Revenue in Europe increased by 42% at constant currency, driven by strong performance across all brands and channels, indicating a significant runway for growth.
New Customer Acquisition
Tapestry acquired approximately 2.7 million new customers in North America, with over half being Gen Z and millennials, highlighting a focus on building lifetime value with younger consumers.
Omnichannel Strength
Digital revenue grew by high single digits, representing about one-third of revenue at accretive margins, while global brick and mortar sales also rose, contributing to strong profitability.
Raised Fiscal 2025 Outlook
Tapestry raised its outlook for fiscal year 2025, expecting over $6.85 billion in revenue, representing approximately 3% growth compared to the prior year.
Lowlights
Decline in Kate Spade Revenue
Kate Spade experienced a 10% revenue decline, prompting strategic actions to rebuild the brand and focus on long-term growth through consumer insights and brand heat development.
Challenges at Stuart Weitzman
Stuart Weitzman faced a 16% decrease in net sales at constant currency, reflecting softness in Greater China and North America direct channels.
High Inventory Levels
Inventory levels at the end of the quarter were 14% above the prior year, indicating potential challenges in inventory management.
Company Guidance
During the second quarter of fiscal year 2025, Tapestry exceeded expectations with a 5% revenue increase, driven by 10% growth at Coach and a 7% rise in international revenue, including a 42% surge in Europe. In North America, sales rose by 4%, with the brand acquiring 2.7 million new customers, over half of whom were Gen Z and millennials, who also transacted at higher average unit retail (AUR) prices. The company maintained robust digital sales, representing nearly one-third of revenue, and achieved record earnings per share, up over 20% from the previous year. The brand's gross margin expanded by 280 basis points, largely due to operational efficiencies, and Tapestry raised its full-year outlook, forecasting a $6.85 billion revenue, equating to a 3% growth, and an EPS increase to $4.85-$4.90, reflecting 13% to 14% growth. With strong cash flow, the company plans to return over $2 billion to shareholders in fiscal 2025, maintaining a focus on long-term growth and shareholder value.Tapestry Corporate Events
M&A TransactionsBusiness Operations and Strategy
Tapestry Sells Stuart Weitzman Brand to Caleres
Neutral
Feb 19, 2025
On February 19, 2025, Tapestry, Inc. announced its agreement to sell the Stuart Weitzman brand to Caleres for $105 million in cash. This strategic move is aimed at positioning Tapestry’s brands for long-term success while allowing Caleres to expand its portfolio with a focus on global and direct-to-consumer growth, with the transaction expected to close in the summer of 2025.
Private Placements and Financing
Tapestry Strengthens Position with $1.5 Billion Notes Offering
Positive
Dec 11, 2024
Tapestry, Inc. announced the closing of its $1.5 billion senior unsecured notes offering, divided into $750 million notes due 2030 and $750 million notes due 2035. The proceeds from this offering will be used to repay outstanding loans and borrowings, and for general corporate purposes, enhancing Tapestry’s financial flexibility and potentially impacting its market position positively.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.