Note: Tapestry’s FY’24 ended on June 29, 2024.
Tapestry (NYSE: TPR) has seen remarkable growth, with its stock more than doubling since January 2024, far exceeding the S&P 500’s 27% gain. Year-to-date, TPR shares have risen by 30% (as of Jan. 14), outpacing peer Ralph Lauren(NYSE: RL), which has gained 20% YTD. This strong momentum reflects a broader trend as 2025 starts positively for retail, fueled by AI-driven supply chain improvements and a strong labor market. Tapestry’s robust Q2 results and upward revision of its full-year 2025 outlook further highlight the company’s accelerating growth.
Tapestry’s Q2 revenue remained steady at $2.2 billion, with a 10% year-over-year increase in Coach sales counterbalancing declines at Kate Spade (-10%) and Stuart Weitzman (-15%). Coach’s growth was driven by innovative product offerings, a 4% increase in direct-to-consumer sales, and strong digital channel performance. The company achieved record non-GAAP diluted EPS of $1.02, marking a 10% y-o-y increase, along with a significant 280-basis-point expansion in gross margin to 74.5%. Notably, Tapestry expanded its customer base significantly, adding over 2.7 million new customers in North America, primarily from the Gen Z and Millennial demographics. If you prefer broader exposure with lower volatility than individual stocks, consider the High Quality Portfolio, which has outperformed the S&P 500, delivering returns exceeding 91% since inception.
Tapestry has increased its fiscal 2025 guidance, now expecting EPS between $4.85 and $4.90, up from the prior forecast of $4.50-$4.55. The company projects full-year revenue to reach $6.85 billion, a 3% y-o-y increase, compared to its previous growth expectation of 1%-2%. This revision accounts for a new 10% tariff on Chinese imports effective February 4, though the impact on Tapestry’s results is expected to be minimal due to its limited manufacturing footprint in China.
Meanwhile, Tapestry’s Coach brand stands to benefit from China’s economic expansion, given its strong presence in the region. China’s luxury market is rebounding swiftly post-pandemic and is projected to reach $178 billion by 2025, making up roughly 30% of global luxury spending.
TPR stock has exhibited volatility over the past four years, with annual returns fluctuating significantly compared to the S&P 500. The stock delivered returns of 32% in 2021, -3% in 2022, 0% in 2023, and a notable 83% in 2024. The Trefis High Quality Portfolio, comprising 30 stocks, has demonstrated considerably lower volatility while comfortably outperforming the S&P 500 over the last four years. Why? HQ Portfolio stocks have delivered stronger returns with reduced risk compared to the broader market, as shown in HQ Portfolio performance metrics.
We project Tapestry’s Revenues to reach $6.9 billion for fiscal 2024, reflecting a 4% y-o-y increase. On the earnings front, our forecast for EPS stands at $4.85. Based on this, we have revised Tapestry’s Valuation to $75 per share, applying a 15.5x P/E multiple to the expected EPS of $4.85 for fiscal 2025. However, this valuation is approximately 14% below the current market price.
See how Tapestry compares with its peers in key metrics at Tapestry’s Peers or explore broader industry comparisons at Peer Comparisons.
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