Tapestry Inc (NYSE: TPR), the renowned $9.8bn luxury footwear and handbag manufacturer, recently delivered a robust fiscal Q3 performance, with a notable surge in demand in the Asian markets of China and Japan. This uptick successfully compensated for the slightly softer trends observed in the North American sector post-January, according to an investor note released by Goldman Sachs on Friday, May 12, 2023.
Goldman Sachs expressed confidence in Tapestry's strategic direct-to-consumer positioning, lauding the company's globally diversified operating model and strong brand momentum. The note highlighted Tapestry Inc stock's solid innovation pipeline as a critical factor that should continue to fuel relative outperformance against an unpredictable macroeconomic backdrop.
Tapestry’s EPS Revisions
A day prior, Tapestry reported an impressive increase in its fiscal Q3 earnings and revenue, prompting an upward revision of its fiscal 2023 outlook. Following the announcement, Goldman Sachs revised its estimate for Tapestry's fiscal 2023 earnings per share (EPS) to $3.90, up from the previous estimate of $3.72.
Tapestry also raised its EPS guidance for fiscal 2023 to range between $3.85 and $3.90, surpassing its previous range of $3.70 to $3.75. This optimistic projection is in line with FactSet’s consensus EPS estimate of $3.87.
Sign up for Investing Intel Newsletter
TPR Stock: Analyst Price Targets
Despite this promising outlook, Goldman Sachs modestly lowered its price target for Tapestry stock from $50 to $49, while maintaining its buy rating on the stock. This minor adjustment reflects the ever-evolving and intricate nature of the luxury goods market, which often requires fine-tuning of predictions and targets.
Meanwhile, FactSet Research System analysts have a consensus Overweight rating on TPR stock with a target share price of $50.61.
At market close on Tuesday May 16, Tapestry's shares were trading at $41.91, reflecting a 7.9% rise year-to-date. This uptick underscores investor confidence in Tapestry's ability to navigate the challenging global economic landscape while continuing to deliver strong financial performance.
Tapestry's solid Q3 results and the subsequent upward revision of its fiscal 2023 outlook highlight the company's resilience and adaptability amidst a fluctuating market environment. With its globally diversified operating model and robust innovation pipeline, Tapestry stock appears well-positioned to maintain its optimistic outlook and deliver value to its shareholders.
The company has a price-to-earnings ratio (P/E) of 11, which is lower than the industry average of 17. Its P/S ratio is currently 1.5, above the sector-wide average of 1.1. TPR stock also comes with a 2.9% dividend yield.
Tapestry Inc stock has total debt of $3.27bn as of 08 May 2023, and this has fallen by 5% over the past year. The company also has cash & short-term investments totaling $953m, giving it a 'net debt' of $2.31bn.
Is Tapestry Inc Worth Investing in?
All in all, we’ve noticed some trends at Tapestry Inc that give us confidence in its prospects as a 'buy and hold' investment.
Tapestry, Inc., once known as Coach, Inc., is a leading designer and marketer of luxury lifestyle products and gifts for both men and women, not only in the United States, but around the globe. Their exquisite product portfolio includes handbags, footwear, jewelry, seasonal fashion collections, sunglasses, travel bags, fragrances, and watches.
Tapestry operates through three renowned brand segments: Coach, Kate Spade and Stuart Weitzman. The Coach brand is well-known for its sales through company-owned and operated stores and online platforms in North America, as well as to wholesale customers and distributors. Internationally, Coach has a significant presence in Japan, China, Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, and several other European countries, where it sells via outlets, online, and in-store concessions.
The company also owns the stylish Kate Spade New York brand, which is popular for its unique fashion products and luxury accessories sold through Kate Spade's physical and online stores, to wholesale customers, via in-store concessions, and through independent distributors. The Stuart Weitzman brand, known for its designer shoes, mainly sells through its own stores.
Tapestry, founded by Dawn Hughes in 1941, is headquartered in New York, NY. As a retail investor, consider Tapestry's globally recognized brands and diverse product range when thinking about potential investment opportunities.
Sign up for Investing Intel Newsletter
In recent Coach news, Coach has unveiled Coachtopia, a new sub-brand that propels the company towards a circular business model, with its initial launch in the United States, Canada, and the UK and plans for Asian expansion later this year.
Rooted in a Made Circular™ design philosophy, Coachtopia is designed to reimagine the product lifecycle, crafting with waste and designing products that can be reimagined, remade and recycled to live multiple lives, significantly reducing their impact on the planet. The sub-brand is positioned as both a discovery lab to pioneer circularity in fashion and a collaborative platform for change, co-creating with a community of Gen Z individuals who share their perspectives on circular fashion and help shape concepts.
Coachtopia offers an all-gender collection of bags, luxury accessories, ready-to-wear, and footwear made with recycled, repurposed, and renewable materials. The products, which are designed keeping the Made Circular™ principles in mind, come with a unique digital passport that provides transparency into the materials used, design, and impacts.
This initiative builds on Coach's ongoing investments in improving the sustainability of its business and the learnings from the brand's Coach (Re)Loved program. With a commitment to take back every product at the end of its life for reuse, remaking, or recycling, Coachtopia is setting a new standard in the fashion industry's move towards circularity.
What's Next for Your Investment Portfolio?
To deepen your understanding and expand your investment strategies, consider exploring our investing guides on topics such as investing in luxury goods stocks, buying OTC and TSX stocks, finding investment opportunities, and the benefits of investing in gold.