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14th May 2022

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Tapestry Stock Is Falling Despite the Earnings Beat and Strong Guidance

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Strong fiscal-third-quarter earnings and upbeat guidance isn’t helping shares of Tapestry, which owns brands including Kate Spade and Coach.


Michael Nagle/Bloomberg


Tapestry

stock is falling early Thursday, despite better-than-expected fiscal-third-quarter earnings and upbeat sales guidance.

Tapestry (ticker: TPR) earned $91.7 million, or 32 cents a share, compared with a loss of $2.45 a share, in the year-ago period. Adjusted earnings, which exclude nonrecurring items, were 51 cents a share. Revenue rose 18.7% to $1.27 billion. Analysts were looking for EPS of 31 cents on revenue of $1.22 billion.

Sales at Tapestry’s Coach brand were up 25% to $964 million. Stuart Weitzman sales climbed 13% to $57 million, and sales at Kate Spade edged up 1% to $252 million.

Looking ahead, Tapestry sees fiscal 2021 revenue rising at a mid-teens percentage rate. Consensus currently calls for sales of $5.45 billion, an increase of roughly 10% from last year.

Tapestry stock is down 4.2% to $46.36 in morning trading. The shares have shot up 49% year to date and are up 219% in the latest 12 months.


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Still analysts praised the quarter. Barclays’ Adrienne Yih reiterated an Overweight rating on Tapestry stock, and a $57 price target. Yih noted that the company has been disciplined about promotions and exited the quarter with clean inventories, boosting margins.

Piper Sandler’s Erinn Murphy reiterated an Overweight rating and $54 price target, noting that Stuart Weitzman’s sales increase was its first in seven quarters, while the company as a whole notched its fourth consecutive quarter of triple-digit e-commerce growth.

BMO Capital Markets’ Simeon Siegel kept a Market Perform rating on Tapestry stock. He, too, highlighted the company’s “notable margin strength,” although the company’s revenue versus 2019 pre-pandemic levels is below the group average.

Tapestry stock got a boost after the company reported an upbeat quarter in February and named a new chief financial officer late last month.

Write to Teresa Rivas at teresa.rivas@barrons.com

2021-05-06 14:42:00


www.barrons.com


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