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Tapestry Inc TPR

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Morningstar’s Analysis

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Led by Robust Handbag Demand, Narrow-Moat Tapestry’s Resurgence Continued in Q3; Shares Fully Priced

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Narrow-moat Tapestry’s sales and earnings exceeded our estimates in fiscal 2021’s (March-ending) third quarter as handbag sales continue to outpace other categories, a trend we think will continue. However, its shares, which we view as fully valued, fell about 4% on the report as investors may have been hoping for a quicker return to prepandemic sales levels. Regardless, we expect to raise our per share fair value estimate of $40.50 on Tapestry by a mid-single-digit percentage.

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Company Profile

Business Description

Coach, Kate Spade, and Stuart Weitzman are the fashion and accessory brands that comprise Tapestry. The firm’s products are sold through about 1,500 company-operated stores, wholesale channels, and e-commerce in North America (62% of fiscal 2020 sales), Europe, Asia (32% of fiscal 2020 sales), and elsewhere. Coach (71% of fiscal 2020 sales) is best known for affordable luxury leather products. Kate Spade (23% of fiscal 2020 sales) is known for colorful patterns and graphics. Women’s handbags and accessories produced 68% of Tapestry's sales in fiscal 2020. Stuart Weitzman, Tapestry's smallest brand, generates nearly all (98%) of its revenue from women’s footwear.

10 Hudson Yards
New York, NY, 10001
T +1 212 946-8400
Sector Consumer Cyclical
Industry Luxury Goods
Most Recent Earnings Dec 31, 2020
Fiscal Year End Jun 27, 2021
Stock Type Cyclical
Employees 17,300