Tapestry (TPR) Last Update 5/19/22
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Kate Spade
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Tapestry Company


  1. Coach constitutes 82% of the Trefis price estimate for Tapestry's stock.
  2. Kate Spade constitutes 12% of the Trefis price estimate for Tapestry's stock.


  1. Tapestry Tops Expectations in Fiscal Q1
Tapestry reported a strong performance in the fiscal first quarter. The company's revenue grew 26% year-over-year (y-o-y) to $1.48 billion and is up 9% compared to pre-pandemic 2019 levels. Regional highlights included North American sales growth of 40% and growth of 25% in China. The company's gross margin increased by approximately 140 bps y-o-y and 450 bps from 2019 driven by higher average unit retail (AUR) price at each brand. To add to this, adjusted earnings per share (EPS) came in at $0.82, up from $0.58 a year ago. Analysts had been calling for EPS of $0.69 so Tapestry soundly beat the Street's number.

  1. TPR Navigates Through Supply Chain Headwinds
TPR's exposure to Vietnam is 40% at present, still, it was clearly able to shift production away from Southern Vietnam factories to other countries (e.g., China) to mitigate production delays and deliver products on time to its DTC and wholesale channels. The fact that TPR continues to meet robust demand despite supply chain pressures, and structural gross margin tailwinds (from higher AURs, price increases, fewer promotions) should benefit it this year and beyond.

  1. Raises outlook for FY 2022
For FY2022, the company now expects revenue of approximately $6.6 billion compared to the prior view of $6.4 billion and earnings per diluted share of $3.45 to $3.50 vs. prior view of $3.30 to $3.35.


Tapestry, Inc. is a leading New York-based house of modern luxury accessories and lifestyle brands. Tapestry owns the Coach, Kate Spade, and Stuart Weitzman brands. The Company’s primary product offerings, manufactured by third-party suppliers, include women’s and men’s bags, small leather goods, footwear, ready-to-wear including outerwear, watches, weekend and travel accessories, scarves, eyewear, fragrance, jewelry, and other lifestyle products.

The Coach segment includes worldwide sales of Coach brand products to customers through Coach-operated stores, including the Internet, concession shop-in-shops, and sales to wholesale customers and independent third-party distributors. The Kate Spade segment includes worldwide sales primarily of Kate Spade New York brand products to customers through Kate Spade operated stores, including the Internet, concession shop-in-shops, independent third-party distributors, and to wholesale customers. The Stuart Weitzman segment includes worldwide sales of Stuart Weitzman brand products primarily to wholesale customers, numerous independent third-party distributors, and through Stuart Weitzman operated stores, including the Internet.


Demand for luxury goods is correlated with economic growth

Demand for luxury, fashion goods can be an indicator of flourishing economies. It is observed that during boom times, consumers with higher incomes tend to consume more high-end goods like leather handbags, designer clothes, branded watches, etc. Luxury goods are cyclical and correlate with GDP in specific regions, often exaggerating the up- and down-swings in the economy. As the global economy recovers, we expect the luxury goods market to return to pre-recessionary growth levels of 7-8% per year.

Increasing demand for luxury goods in China and other emerging markets

Luxury consumption in China has seen double-digit growth in recent years as a result of rapid economic growth and rising standards of living. Despite weak macroeconomic conditions globally and a threat to China's economy from surging inflation, luxury goods sales continue to grow strong in China. China is poised to become the second-largest luxury market by 2019, according to Euromonitor, and the Chinese, the biggest spenders on luxury goods worldwide, now account for 30%-50% of global luxury sales, with 80% of their purchases made abroad.

Emerging markets will see the highest growth in new openings of directly-operated stores in the coming years. Tapestry is aiming for expansion into areas where it feels it is under-penetrated, such as Greater China, South East Asia, and Europe.

Return of the Logo Trend

The trend for logos had fallen out of fashion in the recent past, but this seems to be reversing now, benefiting a brand like Coach. Keeping this in mind, the company successfully relaunched its Signature pattern in Q3 2018. Coach has plans to build upon this, including an expanded range of small leather goods, which should ensure growth for the brand.

Consumer shift to affordable luxury

Affordable luxury brands and private labels have held up solidly during the current market conditions, while luxury and premium end companies, including Louis Vuitton and Hermes, have all reported slowing sales. The luxury market has been hit by a renewed sense of consumer ethics, which has seen some consumers turning away from luxurious lifestyles to take on a "less is more" approach.

This trend was observed even before the economic downturn, with consumers shying away from luxury items, hinting that consumers may not return to buy luxury goods in the near future and may opt for more understated choices.