Tapestry (TPR) AI Stock Analysis

• Market Cap: $13.93B
• Dividend Yield: 2.08%
• Average Volume (3M): 7.04M
• Price to Earnings (P/E): 19.5
• Beta (1Y): 1.15
• Revenue Growth: 0.74%
• EPS Growth: -12.69%
• Country: US
• Employees: 12,500
• Sector: Consumer Cyclical
• Sector Strength: 55
• Industry: Luxury Goods
• EPS (TTM): 3.44
• Shares Outstanding: 207,015,470
• 10 Day Avg. Volume: 8,055,193
• 30 Day Avg. Volume: 7,040,923
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.23
• Price to Cash Flow (P/CF): 7.50
• P/FCF Ratio: 7.60
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $90.22
• Price Target Upside: 41.15% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 19

Tapestry's overall stock score reflects a solid financial position, despite high leverage, and an optimistic outlook from recent earnings. While short-term technical indicators suggest caution, the company's strategic focus on growth and shareholder returns is promising.

Positive Factors

Brand Performance

The CEO highlighted 'accelerating growth' with a 'breakout quarter' for the Coach brand, indicating a significant change for the Tapestry portfolio.

Customer Acquisition

Acquisition of younger millennial and Gen Z customers remains a top focus as this cohort will comprise 75% of buying power within a few years.

Market Expansion

Management continues to see enormous opportunity to grow its customer base in Asia, particularly in China, with a return to store growth and most store openings coming from China.

Negative Factors

Financial Losses

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.

Sale of Stuart Weitzman

The sale of Stuart Weitzman comes at a steep discount to the original acquisition price, as the brand has underperformed since it was acquired.

Stock Price Reaction

The muted stock price reaction is likely due to the minimal go-forward financial impact and the stock's recent strong performance.

Tapestry Business Overview & Revenue Model

Company Description

Tapestry, Inc. (TPR) is a leading American multinational luxury fashion holding company based in New York City. It operates in the fashion and lifestyle sectors, primarily through its three core brands: Coach, Kate Spade, and Stuart Weitzman. These brands offer a range of products including handbags, footwear, apparel, and accessories, catering to a diverse global customer base. Tapestry is recognized for its commitment to craftsmanship and quality, blending classic designs with contemporary trends.

How the Company Makes Money

Tapestry 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 demonstrates stable profitability and efficient cash flow generation with a strong gross profit margin of 72.7% and solid operating cash flow. However, a high debt-to-equity ratio of 3.07 poses a risk, requiring careful management to maintain financial stability.

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.

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.

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.

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
907.66M	7.20B	741.50M	953.20M	2.02B	1.43B
	Total Assets
2.64B	13.40B	7.12B	7.27B	8.38B	7.92B
	Total Debt
24.99M	8.77B	3.29B	3.26B	3.44B	4.49B
	Net Debt
-677.79M	2.62B	2.57B	2.47B	1.42B	3.05B
	Total Liabilities
978.59M	10.50B	4.84B	4.98B	5.12B	5.65B
	Stockholders Equity
1.66B	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

• Technical Analysis Sentiment: Negative
• Last Price: 63.92
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TPR, the sentiment is Negative. The current price of 63.92 is below the 20-day moving average (MA) of 70.01, below the 50-day MA of 76.00, and above the 200-day MA of 56.43, indicating a neutral trend. The MACD of -1.56 indicates Positive momentum. The RSI at 45.85 is Neutral, neither overbought nor oversold. The STOCH value of 38.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TPR.

Tapestry Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TPR	72 Outperform	$13.93B	19.53	39.82%	2.08%	0.74%	-12.69%
MYTE	60 Neutral	$681.28M	―	-8.28%	―	12.01%	-23.53%
Sector *	59 Neutral	$11.76B	10.11	-0.70%	3.92%	1.27%	-16.30%
SIG	57 Neutral	$2.53B	5.56	2.62%	2.28%	-6.52%	-104.24%
CPRI	49 Neutral	$1.93B	―	-67.22%	―	-12.34%	-574.65%
REAL	49 Neutral	$605.18M	―	32.94%	―	9.32%	25.94%
LANV	43 Neutral	$327.75M	―	-70.81%	―	―	―

Tapestry Corporate Events

Tapestry Sells Stuart Weitzman Brand to Caleres

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.