Stock movement in 2018
Tapestry (TPR) stock was down 23.6% on a year-to-date basis as of December 28. The company lags the S&P 500, which has declined 7.0% so far this year. The stock of its closest rival, Capri Holdings Limited (CPRI), most recently known as Michael Kors, has fallen 40.9% since the start of 2018.
Despite reporting better-than-expected sales and earnings for the first quarter of fiscal 2019, which ended on September 29, Tapestry stock has declined 17.1% since it announced results at the end of October.
Tapestry’s fiscal 2019 first-quarter sales exceeded analysts’ expectations, but investors seemed to be concerned about the decline in same-store sales of handbag brand Kate Spade as well as footwear brand Stuart Weitzman. We’ll discuss the company’s sales in detail in part two of this series.
The luxury goods company changed its name from Coach to Tapestry in October 2017 to better reflect its expansion into a multi-brand company with three core brands: Coach, Kate Spade (acquired in 2017), and Stuart Weitzman (acquired in 2015).
Currently, Tapestry is in search of a CFO who will succeed Kevin Wills. On November 6, Tapestry announced that CFO Kevin Wills would leave the company, effective February 8, 2019, to pursue another opportunity.
Following the fiscal 2019 first-quarter results, J.P. Morgan, Wells Fargo, Jefferies, Credit Suisse, Canaccord Genuity, and Barclays lowered their 12-month price targets on the stock. On November 16, Oppenheimer lowered its price target to $50 from $65. On December 18, J.P. Morgan lowered its price target to $44 from $49.
Tapestry is currently rated a “buy” by 25 out of 37 analysts covering the stock. The stock has a “hold” recommendation from 12 analysts. The stock doesn’t have any “sell” ratings. As of December 28, the average 12-month price target for Tapestry stock was $53.45, which reflects a strong upside potential of 58% over the next year.
Capri Holdings Limited was rated a “buy” by 13 out of 29 analysts, while 16 analysts have a “hold” recommendation. The average 12-month price target of $65.38 for Capri Holdings indicated an upside potential of 76% as of December 28.
Next, we’ll look at the strategies that Tapestry is implementing to improve its sales.