Updated Aug 13 at 3:17pm ET.
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Tapestry reported earnings of $1.32 per share on $1.88 billion in revenue, both slightly ahead of what analysts expected. The Coach brand remained the primary engine for the company, with sales rising 15 percent as it successfully attracted younger shoppers. This performance allowed the company to hit its long-term profit and margin targets two years ahead of its original schedule.
However, the stock fell about 15 percent because the company's outlook for the new fiscal year was softer than expected. While Coach is performing well, the Kate Spade brand is seeing sales decline, and management is signaling a more cautious view of the luxury market ahead. For long-term owners, the core question is whether Coach can continue to carry the entire company while Kate Spade works through its current slump.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The latest inflation report showed that core prices, which strip out volatile items like food and energy, rose 0.2 percent in July. This matched what economists expected and suggests that inflation is holding steady rather than surprising the market. For a luxury retailer like Tapestry, stable inflation is generally helpful as it prevents sudden shifts in how much shoppers have left over for high-end handbags.
Tapestry recently held a summit to show how it is using artificial intelligence across its brands. The company is testing AI-powered research tools to get faster insights into what shoppers want, which is a key part of its strategy to win over Gen Z customers. While this is an internal process rather than a single product launch, it shows how the company is trying to use data to keep the Coach brand relevant to a new generation.
Source: Business Wire
Telsey Advisory raised its price target for Tapestry to $175, up from $160. The analyst noted that a resilient consumer and a steady stream of new product designs are helping retail stocks like this one. While the firm kept its existing rating, the higher target reflects more confidence in the company's growth path heading into its year-end results.
Source: Telsey Advisory
Kate Spade has hired Jonathan Saunders to take over as Executive Creative Director. Saunders will be responsible for the brand’s look and product designs as it tries to enter a new era of growth. This is a key hire for Tapestry, as Kate Spade has recently struggled to match the sales growth seen at Coach, and a fresh creative direction is often the first step in turning a fashion brand around.
Source: Business Wire
Analysts have consistently raised their price targets throughout the year, reflecting a steady pattern of confidence in the company. Most analysts rate the stock a buy, and the average target price suggests a 38% upside from current levels.
Tapestry has beaten analyst profit estimates for eight straight quarters. Management consistently sets a bar they can clear, even when the broader retail environment is soft.
| Expectation | |
|---|---|
| EPS | $1.28 |
| Revenue | $1.87B |
