Tapestry Hits a New 52-Week High: How Should You Play the Stock Now?

Core Viewpoint - Tapestry, Inc. (TPR) has demonstrated strong financial performance and growth potential, significantly outperforming the broader retail sector and showing resilience in international markets [1][18]. Group 1: Stock Performance - TPR shares reached a new 52-week high of $88.07, closing at $87.70, with a year-to-date rally of 34.2% compared to a 5.7% decline in the Zacks Retail-Apparel and Shoes industry [1]. - The stock is currently trading above its 50-day and 200-day simple moving averages of $50.50 and $69.77, indicating price stability and long-term bullish trends [3][4]. Group 2: Digital and DTC Growth - Tapestry's digital and direct-to-consumer (DTC) strategies have driven growth, with a 4% increase in DTC sales in the second quarter of fiscal 2025, supported by high-single-digit growth in digital sales [5][6]. - AI-driven customer engagement has improved pricing power and reduced reliance on promotions, enhancing the company's market positioning among younger consumers [6]. Group 3: Brand Performance - Coach brand remains a key growth driver, achieving an 11% year-over-year revenue increase in the fiscal second quarter, with a gross margin expansion of 270 basis points [7][8]. - The brand is expanding its market share in handbags, with successful collections like the Tabby and new Brooklyn and Empire bags [8]. Group 4: International Expansion - Tapestry's global strategy has resulted in significant revenue growth, particularly in Europe, where revenues increased by 42% year-over-year in the fiscal second quarter [9][10]. - Greater China returned to revenue growth with a 2% year-over-year increase, while APAC (excluding China) grew by 11%, highlighting the company's global execution strength [9][10]. Group 5: Financial Guidance - Tapestry raised its full-year revenue outlook to exceed $6.85 billion, reflecting a 3% year-over-year increase, surpassing previous guidance [11]. - Operating margin is expected to expand by 100 basis points, with earnings per share forecasted between $4.85 and $4.90, indicating 13-14% growth from the prior year [12]. Group 6: Valuation and Analyst Sentiment - TPR's forward 12-month P/E ratio is 17.00, lower than the industry and sector averages, indicating potential for attractive entry points for investors [13]. - Analysts have positively revised Tapestry's EPS estimates, with the current fiscal year consensus at $4.91 per share and the next fiscal year at $5.30 per share [16].