Tapestry, Inc. (TPR) | Investment Case

1. Company Snapshot

1.a. Company Description

Tapestry, Inc.provides luxury accessories and branded lifestyle products in the United States, Japan, Greater China, and internationally.The company operates in three segments: Coach, Kate Spade, and Stuart Weitzman.

It offers women's accessories, including handbags, such as wallets, money pieces, wristlets, and cosmetic cases; novelty accessories comprising address books, time management and travel accessories, sketchbooks, and portfolios; and key rings and charms.The company also provides bag collections, including business cases, computer bags, messenger-style bags, backpacks, and totes; small leather goods, such as wallets, card cases, travel organizers, and belts; and footwear, watches, fragrances, sunglasses, novelty accessories, and ready-to-wear for men.In addition, it offers women's footwear; sunglasses; bracelets, necklaces, rings, and earrings; fragrances and watches; women's seasonal lifestyle apparel collections, including outerwear and ready-to-wear, and cold weather accessories, which comprise gloves, scarves, and hats.

Further, the company provides footwear items; and housewares and home accessories for kids, such as fashion bedding and tableware; and stationery and gifts.Additionally, it licenses rights to market and distribute its tech and soft accessories, jewelry, watches, eyewear, and fragrances under the Coach brand; and tableware and housewares, fashion beddings, tech accessories, watches, sleepwear, eyewear, stationery and gifts, and fragrances under the Kate Spade brand.As of July 2, 2022, the company operated through a network of 945 Coach stores, 398 Kate Spade stores, and 100 Stuart Weitzman stores.

It sells its products through e-commerce sites and concession shop-in-shops, and wholesale customers, as well as through independent third-party distributors.The company was formerly known as Coach, Inc.and changed its name to Tapestry, Inc.

in October 2017.Tapestry, Inc.was founded in 1941 and is headquartered in New York, New York.

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1.b. Last Insights on TPR

Tapestry's recent performance was driven by strong Q2 earnings, beating revenue and earnings estimates, fueled by Coach-led growth and global momentum. The company delivered record revenue, operating profit, and EPS, with operating margin rising to 28.6% and gross margin reaching 75.5%. A raised fiscal 2026 outlook further boosted investor confidence. Institutional investors, such as Fisher Asset Management and Sowell Financial Services, have increased their holdings in the company. With a "Moderate Buy" rating from analysts, Tapestry's growth attributes and improved profitability have garnered attention.

1.c. Company Highlights

Last Price	157.09
Change Percentage	3.15%
Open	151.82
Previous Close	152.3
Market Cap ( Millions)	32148
Volume	1795119
Year High	158.28
Year Low	58.39
M A 50	133.77
M A 200	108.9

FCF Yield	5.23%
Dividend Yield	0.95%
ROE	63.26%
Debt / Equity	939.24%
Net Debt / EBIDTA	439.26%
Price To Book	58.17
Price Earnings Ratio	61.39
Price To FCF	19.12
Price To sales	4.28
EV / EBITDA	38.64

2. Tapestry's Q2 Outperformance Propels Growth Ambition

Tapestry's second-quarter financial performance exceeded expectations, with pro forma revenue growth of 18%, adjusted operating margin expansion by 390 basis points, and earnings per share (EPS) growth of 34% to $2.69, surpassing estimates of $2.2. The strong top and bottom-line growth was driven by a systemic approach to building the company's brands and business for healthy and sustainable growth. The revenue growth was led by a 25% increase at Coach, demonstrating the brand's standout performance guided by a clear vision and deep focus on the consumer.

Publication Date: Feb -15

                                    📋 Highlights
                                    Q2 Pro Forma Revenue Growth::
                                                18% increase driven by Coach's 25% growth, exceeding expectations.
Adjusted Operating Margin Expansion::
                                                390 bps improvement, reflecting operational efficiency and cost discipline.
Customer Acquisition::
                                                3.7 million new global customers acquired, with Gen Z growth accelerating in China (25% revenue growth).
Earnings Per Share (EPS) Growth::
                                                34% YoY increase to $2.69, with full-year guidance raised to $6.40–$6.45 ($25% growth).
Capital Returns::
                                                $1.5B expected in 2024, returning 100% of adjusted free cash flow via dividends and buybacks.

                                

Brand Performance and Customer Acquisition

The company's strategic actions during the quarter resulted in the acquisition of over 3.7 million new customers globally, with a notable improvement in Gen Z acquisition trends driven by handbags at Kate Spade. Coach continues to deliver standout results, with the brand poised to become a $10 billion brand over time. The company's customer acquisition and retention rates are strong, particularly with Gen Z, and it's seeing growth across channels, including digital.

Financial Outlook and Guidance

Tapestry raised its full-year guidance to $7.75 billion in revenue, representing 14% constant currency growth, with a balance between the first and second halves. The company expects operating margin to expand by 180 basis points, driven by gross margin expansion and SG&A leverage. EPS is forecasted to be between $6.40 and $6.45, representing 25% growth compared to last year. Analysts estimate next year's revenue growth at 5.4%, indicating a potential slowdown in growth momentum.

Valuation and Growth Prospects

With a P/E Ratio of 60.1 and an EV/EBITDA of 37.92, Tapestry's valuation suggests that the market has priced in significant growth expectations. The company's ROE of 63.26% and ROIC of 10.98% indicate strong profitability. As Tapestry continues to drive growth through its Amplify Growth Agenda, its ability to sustain strong growth momentum will be crucial in justifying its current valuation.

3. NewsRoom

Joanne Crevoiserat Sells 48,795 Shares of Tapestry (NYSE:TPR) Stock

Feb -21

Source: defenseworld.net

Some Consumer Stocks Are Rising After the Supreme Court's Tariff Ruling

Feb -20

Source: investopedia.com

Coach 'Extraordinarily Focused' on Gen Z, CEO Says

Feb -18

Source: youtube.com

Here is Why Growth Investors Should Buy Tapestry (TPR) Now

Feb -18

Source: zacks.com

5 Top-Ranked Retail Apparel and Shoe Stocks for a Stable Portfolio

Feb -18

Source: zacks.com

BOOT & 3 Other Stocks With Strong Interest Coverage to Buy Now

Feb -17

Source: zacks.com

Nike's Losing Streak: Tapestry And Ralph Lauren Step Up

Feb -17

Source: forbes.com

Atticus Wealth Management LLC Purchases 5,133 Shares of Tapestry, Inc. $TPR

Feb -16

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Coach

Expected Growth: 3.0%

Coach's 3.0% growth is driven by strategic pricing, increased online presence, and targeted marketing efforts. The brand's focus on digital transformation, including e-commerce and social media, has enhanced customer engagement. Additionally, Tapestry's efforts to revamp Coach's store fleet and improve operational efficiency have contributed to the growth.

Kate Spade

Expected Growth: 3.0%

Kate Spade's 3.0% growth is driven by strategic brand repositioning, increased e-commerce penetration, and expansion into new markets. The brand's focus on digital marketing, social media engagement, and loyalty programs has improved customer retention and acquisition. Additionally, Tapestry's efforts to optimize store fleet and improve supply chain efficiency have enhanced profitability.

Stuart Weitzman

Expected Growth: 3.0%

Stuart Weitzman's 3.0% growth is driven by strategic brand repositioning, expanded e-commerce capabilities, and increased marketing investments. Additionally, the brand's focus on comfort, quality, and style resonates with consumers, leading to higher sales. Furthermore, Tapestry, Inc.'s efforts to enhance the brand's omnichannel experience and improve operational efficiency also contribute to its growth.

7. Detailed Products

Coach Handbags

Luxury handbags and accessories for women, featuring high-quality materials and craftsmanship

Kate Spade New York Handbags

Colorful, playful, and functional handbags and accessories for women, with a focus on whimsy and personality

Stuart Weitzman Footwear

High-quality, comfortable, and stylish footwear for women, featuring innovative designs and materials

kate spade new york Home and Accessories

Whimsical and colorful home decor and accessories, featuring playful patterns and designs

8. Tapestry, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Tapestry, Inc. operates in the luxury goods industry, where substitutes are limited. However, there is a growing trend towards sustainable and affordable fashion, which could pose a threat to the company's high-end brands.

Bargaining Power Of Customers

Tapestry, Inc.'s customers are largely loyal to its luxury brands, and the company has a strong brand reputation. This reduces the bargaining power of customers.

Bargaining Power Of Suppliers

Tapestry, Inc. relies on a network of suppliers for its raw materials and manufacturing. While the company has some bargaining power, suppliers can still exert some pressure, particularly in times of high demand.

Threat Of New Entrants

The luxury goods industry has high barriers to entry, including significant capital requirements and the need for established brand recognition. This makes it difficult for new entrants to compete with Tapestry, Inc.

Intensity Of Rivalry

The luxury goods industry is highly competitive, with many established players competing for market share. Tapestry, Inc. faces intense rivalry from other luxury brands, which can lead to pricing pressure and advertising wars.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	59.10%
Debt Cost	3.95%
Equity Weight	40.90%
Equity Cost	12.03%
WACC	7.25%
Leverage	144.53%

11. Quality Control: Tapestry, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Dillard's

A-Score: 6.9/10

Value: 5.2

Growth: 6.9

Quality: 7.1

Yield: 9.0

Momentum: 8.5

Volatility: 5.0

1-Year Total Return ->

Travel + Leisure

A-Score: 6.5/10

Value: 7.6

Growth: 4.7

Quality: 6.0

Yield: 7.0

Momentum: 7.5

Volatility: 6.0

1-Year Total Return ->

H&R Block

A-Score: 6.3/10

Value: 7.8

Growth: 6.0

Quality: 6.7

Yield: 7.0

Momentum: 1.5

Volatility: 8.7

1-Year Total Return ->

Allison Transmission Holdings

A-Score: 5.3/10

Value: 5.4

Growth: 7.4

Quality: 7.4

Yield: 2.0

Momentum: 2.0

Volatility: 7.7

1-Year Total Return ->

Tapestry

A-Score: 5.2/10

Value: 1.2

Growth: 5.9

Quality: 5.2

Yield: 4.0

Momentum: 9.5

Volatility: 5.3

1-Year Total Return ->

KB Home

A-Score: 4.9/10

Value: 7.8

Growth: 4.6

Quality: 5.3

Yield: 3.0

Momentum: 2.5

Volatility: 6.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

5.01%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.25%

Tapestry, Inc. - US8760301072

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TPR

1.c. Company Highlights

Better Quality

Higher Yield

Medium Volatility

Earnings Beats

Revenues Miss

Revenues Beats

Average Quality

Stable Momentum

Earnings Miss

Average Yield

Strong Momentum

Fairly Valued

Expensive

Average Growth

2. Tapestry's Q2 Outperformance Propels Growth Ambition

Brand Performance and Customer Acquisition

Financial Outlook and Guidance

Valuation and Growth Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Coach

Expected Growth: 3.0%

Kate Spade

Expected Growth: 3.0%

Stuart Weitzman

Expected Growth: 3.0%

7. Detailed Products

Coach Handbags

Kate Spade New York Handbags

Stuart Weitzman Footwear

kate spade new york Home and Accessories

8. Tapestry, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Tapestry, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

157.09$

Current Price

157.09$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA