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Tapestry Inc TPR

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Narrow-Moat Tapestry’s Acceleration Program Was Not Slowed by Supply Chain Challenges in Q1

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Tapestry executed on an acceleration program to improve margins, boost e-commerce, and engage with consumers in fiscal 2022’s first (September) quarter as both Coach and Kate Spade beat our sales and margin expectations. Given its results and the outlook, Tapestry lifted its full-year guidance to EPS of $3.45 to $3.50 on $6.6 billion in sales, above our estimates of $3.38 and $6.4 billion, respectively. We intend to increase our fair value estimate of $46.50 by a mid-single-digit percentage, leaving Tapestry’s shares, up nearly 10% on the report, slightly undervalued.

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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 1,400 company-operated stores, wholesale channels, and e-commerce in North America (62% of fiscal 2021 sales), Europe, Asia (33% of fiscal 2021 sales), and elsewhere. Coach (74% of fiscal 2021 sales) is best known for affordable luxury leather products. Kate Spade (21% of fiscal 2021 sales) is known for colorful patterns and graphics. Women’s handbags and accessories produced 70% of Tapestry's sales in fiscal 2021. Stuart Weitzman, Tapestry's smallest brand, generates nearly all (99%) 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 Sep 30, 2021
Fiscal Year End Jul 2, 2022
Stock Type Cyclical
Employees 16,400