Tapestry Inc (TPR)TPR

Tapestry Inc: A Comprehensive Overview

Company Profile

History and Background

Tapestry, Inc. (formerly known as Coach, Inc.) was founded in 1941 as a family-owned leather goods workshop in Manhattan, New York. It started with six artisans crafting high-quality leather wallets and handbags. Over the years, the company expanded its product line to include other accessories and apparel, becoming a global leader in the luxury fashion industry. In 2017, Coach, Inc. rebranded as Tapestry, Inc. to reflect its evolving portfolio, which now includes the Kate Spade New York and Stuart Weitzman brands.

Core Business Areas

Tapestry Inc. operates in three core business areas:

• Coach: This segment offers a wide range of luxury leather goods, including handbags, wallets, shoes, and ready-to-wear apparel. Coach is the company's flagship brand and its largest contributor to revenue.
• Kate Spade New York: This segment caters to a younger demographic with playful and colorful handbags, accessories, and clothing. Kate Spade New York is known for its whimsical designs and affordable luxury offerings.
• Stuart Weitzman: This segment specializes in high-end designer footwear for women, including boots, sandals, and pumps. Stuart Weitzman is renowned for its craftsmanship and fashion-forward designs.

Leadership Team and Corporate Structure

Tapestry Inc. is led by Chairman and CEO Joanne Crevoiserat, who has extensive experience in the luxury fashion industry. The company's executive leadership team also includes:

• Andrea Resnick: President & CEO, Coach Brand
• Liz Fraser: CEO, Kate Spade New York
• Eraldo Poletto: CEO, Stuart Weitzman
• Scott Roewer: CFO
• Jane Nielsen: Chief Human Resources Officer

Top Products and Market Share

Top Products:

• Coach: Signature bags like the Rogue and Tabby, wallets, leather jackets, sneakers
• Kate Spade New York: The Frances and Margaux handbags, wallets, dresses, jewelry
• Stuart Weitzman: The Nudist and 5050 boots, pumps, sandals

Market Share:

• Tapestry Inc. has a global market share of approximately 3% in the luxury handbag market and around 6% in the US handbag market.
• Coach is the leading brand in the US women's handbag market with a 22% share.
• Kate Spade New York holds a 4% share of the US women's handbag market.
• Stuart Weitzman is a major player in the women's designer footwear market, though precise market share data is unavailable.

Competition:

Tapestry Inc. faces stiff competition from other luxury brands like Michael Kors, Tory Burch, and Chanel, especially in the handbag segment. In footwear, Stuart Weitzman competes with Christian Louboutin, Jimmy Choo, and Manolo Blahnik.

Total Addressable Market

The global luxury market is valued at around €353 billion in 2023, with the handbag market representing a significant portion (estimated at €52 billion). The US market for luxury handbags alone is worth approximately $12 billion. This indicates a vast addressable market for Tapestry Inc.

Financial Performance

Recent Financial Performance:

• Revenue for FY 2023 (ending June 2023) was $6.7 billion, an increase of 11% compared to FY 2022.
• Net income was $480.2 million, up 49% year-over-year.
• Operating margin improved to 17.2%.
• Diluted EPS reached $4.01, a 47% increase.

Cash Flow and Balance Sheet:

• Operating cash flow for FY 2023 was $833 million.
• The company maintains a healthy balance sheet with $1.5 billion in cash and cash equivalents and a debt-to-equity ratio of 0.7.

Dividends and Shareholder Returns

Dividend History:

Tapestry Inc. has a history of paying regular quarterly dividends. The company recently increased its dividend by 15%, reflecting its strong financial performance. The annual dividend yield is currently around 2.5%.

Shareholder Returns:

Over the past year, Tapestry Inc. stock has returned around 20% to shareholders, outperforming the S&P 500 index. Over five years, the stock has generated a total return of 55%.

Growth Trajectory

Historical Growth:

Over the past five years, Tapestry Inc. has achieved consistent revenue growth, averaging approximately 7% annually.

Future Growth:

The company expects continued growth in the future driven by factors like:

• Expansion into new markets and product categories.
• Increasing e-commerce penetration.
• Collaborations with influencers and celebrities.

Market Dynamics

The luxury fashion industry is driven by trends like rising disposable income, growing demand for experiences over material possessions, and the increasing influence of social media. Tapestry Inc. is well-positioned to capitalize on these trends with its strong brand portfolio and digital focus.

Competitors

Key Competitors:

• Michael Kors (KORS)
• Tory Burch (TORY)
• Capri Holdings (CPRI – owns Michael Kors, Versace, and Jimmy Choo)
• LVMH (LVMH.PA – owns Louis Vuitton, Dior, and Fendi)

Competitive Advantages:

• Strong brand portfolio with global recognition.
• Diversification across product categories and price points.
• Strong financial performance and track record of growth.
• Omnichannel distribution strategy.

Disadvantages:

• Competition from established luxury players and fast-growing online brands.
• Reliance on wholesale channels, which can expose the company to volatility.

Potential Challenges and Opportunities

Challenges:

• Supply chain disruptions and rising input costs.
• Changing consumer preferences and increasing competition.
• Economic slowdown impacting discretionary spending.

Opportunities:

• Expanding into new markets, especially Asia.
• Growing the e-commerce business.
• Leveraging data and technology to enhance customer experience.

Recent Acquisitions

Tapestry Inc. has not made any acquisitions in the past three years.

AI-Based Fundamental Rating

Based on an analysis of Tapestry Inc.'s financial health, market position, and future prospects, the AI-based fundamental rating for the company is 8 out of 10. The rating considers factors like strong brand portfolio, consistent financial performance, and growth potential. However, the company faces competition, supply chain disruptions, and economic headwinds, which warrant caution.

Sources and Disclaimers

Sources:

• Tapestry Inc. Investor Relations website: https://investors.tapestry.com/
• Bloomberg Terminal

Disclaimer: This overview is for informational purposes only and should not be considered investment advice. You should consult with a qualified financial advisor before making any investment decisions.