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Tapestry Inc TPR

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Stock XNYS Rating as of
$42.32 −0.20 (0.47%)
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As of Delayed Price Closed
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Company Report

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Tapestry Earnings: Margin Gains Despite Tough Demand Environment; Shares Attractive

David Swartz

Coach’s high profitability allowed narrow-moat Tapestry to overcome subpar sales for each of its brands in its (March-ended) fiscal 2024 third quarter. The results were something of an afterthought following the news that the US Federal Trade Commission intends to block the firm’s proposed acquisition of no-moat Capri (see our April 23 note). Our assumption remains that Tapestry and Capri will prevail in court as there is little precedent for antitrust action in the apparel and accessories industry. We do not expect to make any material change to our $60 per share fair value estimate on Tapestry, which is based on a post-merger model. Shares are attractive at 50% upside to our valuation.

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Price vs Fair Value

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TPR is trading at a 575% premium.
Price
$42.32
Fair Value
$35.00
Uncertainty
High
1-Star Price
$25.00
5-Star Price
$18.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Coach is one of the share leaders in the desirable category of handbags and other leather goods. Coach bags achieve better pricing than many others, allowing for gross margins above 70%.

Bears

Kate Spade and Stuart Weitzman do not have the pricing power or profitability of Coach and therefore detract from Tapestry’s overall profitability.

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Trading Information

Previous Close Price
$42.52
Day Range
$42.18–42.76
52-Week Range
$25.99–48.80
Bid/Ask
$41.80 / $42.47
Market Cap
$9.72 Bil
Volume/Avg
3.8 Mil / 3.8 Mil

Key Statistics

Price/Earnings (Normalized)
9.84
Price/Sales
1.48
Dividend Yield (Trailing)
3.19%
Dividend Yield (Forward)
3.31%
Total Yield
5.26%

Company Profile

Coach, Kate Spade, and Stuart Weitzman are Tapestry’s fashion and accessory brands. The firm’s products are sold through about 1,400 company-operated stores, wholesale channels, and e-commerce in North America (66% of fiscal 2023 sales), Europe, Asia (29% of fiscal 2023 sales), and elsewhere. Coach (75% of fiscal 2023 sales) is best known for affordable luxury leather products. Kate Spade (21% of fiscal 2023 sales) is known for colorful patterns and graphics. Women’s handbags and accessories produced 69% of Tapestry's sales in fiscal 2023. Stuart Weitzman (4% of sales) generates nearly all its revenue from women’s footwear. In August 2023, Tapestry agreed to acquire rival Capri and its three brands, Michael Kors, Versace, and Jimmy Choo.
Sector
Consumer Cyclical
Industry
Luxury Goods
Stock Style Box
Small Value
Total Number of Employees
20,600
Website
https://www.tapestry.com

Competitors

Valuation

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Metric
TPR
SFER
RMS
Price/Earnings (Normalized)
 9.8440.8252.11
Price/Book Value
 3.522.2015.73
Price/Sales
 1.481.3317.83
Price/Cash Flow
 8.368.8346.69
Price/Earnings
TPR
SFER
RMS

Financial Strength

Metric
TPR
SFER
RMS
Quick Ratio
 5.491.223.58
Current Ratio
 6.252.044.40
Interest Coverage
 16.133.0499.32
Quick Ratio
TPR
SFER
RMS

Profitability

Metric
TPR
SFER
RMS
Return on Assets (Normalized)
 9.77%1.69%24.29%
Return on Equity (Normalized)
 38.47%4.05%33.36%
Return on Invested Capital (Normalized)
 12.68%2.66%27.81%
Return on Assets
TPR
SFER
RMS
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