Analysis: Tapestry reaches new peak as stock soars in August

New York-based Tapestry, Inc. is a leading American multinational holding company specializing in luxury fashion accessories and lifestyle products. The company's portfolio includes two brands: Coach and Kate Spade New York.
This analysis comes at a pivotal time for Tapestry, following its recent fiscal year results and the strategic decision to streamline its brand portfolio, which has drawn the attention of investors, driving the share price to a new all-time high this month. The company's current position in the stock market is influenced by both its recent performance and broader trends within the luxury goods sector.

Company profile and history

Originally founded in 1941 as a family-run workshop in a loft in Manhattan, Coach began as a manufacturer of leather goods. The company's business model evolved from a small leather-goods workshop to a publicly traded house of brands, culminating in the re-naming to Tapestry, Inc. in 2017 to reflect its diversified portfolio. This transformation was marked by a series of key acquisitions, including the purchase of Kate Spade New York in 2017.

The company is led by chief executive officer Joanne Crevoiserat, who has been in the role since 2020. Other key figures include Scott Roe, who serves as chief operating officer and chief financial officer.

Tapestry operates a significant global retail footprint, including its direct-to-consumer (D2C) channels which encompass retail and outlet stores, branded e-commerce sites, and concession shop-in-shops. The company also engages in wholesale and licensing partnerships to expand its reach.

The price range of the company's products varies across its brands. Coach offers items in a mid-luxury range; for example, a Coach ‘Tabby’ shoulder bag can retail for around 550 dollars, while a wallet might be priced at 150 dollars. Kate Spade New York products are typically positioned in a similar accessible luxury bracket, with a tote bag priced at approximately 300 dollars.

The most noteworthy recent news for Tapestry has been the possible merger with Capri Holdings, this arrangement has been officially canceled as of late 2024 due to regulatory issues. This would have been a strategic move that would have brought luxury brands like Versace, Michael Kors, and Jimmy Choo into the Tapestry portfolio, creating a new American luxury fashion conglomerate. Another significant development was the company’s recent sale of the Stuart Weitzman brand to Caleres this month.

Performance and financial outlook

Tapestry (then Coach, Inc.) had its initial public offering on the New York Stock Exchange in October 2000, with an IPO price of 16 dollars per share. Tapestry, Inc. has had three stock splits in its history, all of which occurred when the company was still named Coach, Inc. On April 5, 2005: a two-for-one split. October 2, 2003: a two-for-one split. July 5, 2002: a two-for-one split. The split-adjusted IPO price would be around 2.25 dollars.

The share price has demonstrated significant fluctuations over its history. The all-time high of 114.05 dollars was reached on August 13, 2025, while the all-time low was 3.00 dollars in October 2000. At the start of 2025, the price was 66 dollars, with the lowest price, post stock split, being around 12 dollars around June 2020.

Over the last ten years, Tapestry’s share price has experienced periods of both growth and volatility, reflecting shifts in the retail landscape and its corporate strategy. The recent share price performance, particularly in 2025, has shown a notable increase, with the stock closing at 102.61 dollars on August 28, 2025. This performance has been influenced by positive earnings reports which exceeded expectations.

Revenue and growth

In the fiscal year ending June 2024, Tapestry's revenue was 6.67 billion dollars, which represented a growth of 0.2% compared to the previous year. The company's revenue has shown varied growth over the past five years; for instance, revenue grew by 15.8% in fiscal year 2021 and 16.3% in fiscal year 2022, but declined by 0.4% in fiscal year 2023. The primary drivers of growth have been strong performance from the Coach brand and expansion in digital and e-commerce channels, particularly in North America and Asia. Conversely, a challenging macroeconomic environment and decreased consumer spending on discretionary goods have acted as inhibitors.

Profitability

Tapestry’s net profit has been influenced by a mix of factors. The company’s average net profit margin for fiscal year 2024 was 12.3%, up from 11.19% in fiscal year 2023. The company’s gross profit margin improved, indicating effective cost management. However, recent financial reports have shown a significant drop in net income to 183.2 million dollars from 816 million dollars in fiscal year 2024, largely due to an impairment charge of 854.8 million dollars related to goodwill and intangible assets.

Dividend and cash flow

Tapestry maintains a quarterly dividend policy, having increased its dividend for four consecutive years. The current dividend yield is 1.39%, with a payout ratio of 163.37%. Tapestry’s payout ratio is unusually high in 2025 primarily because its net income dropped sharply due to large impairment charges, while the company continued or increased its dividend payments and buyback program. This may impact its ability to reinvest in the business.

Competitor comparison

When compared to its competitors, such as British luxury brand Burberry and US-based Capri Holdings (before the potential acquisition), Tapestry has shown a stronger performance in certain areas. In a recent period, Tapestry had a trailing twelve-month revenue of 7.0 billion dollars and a net profit margin of 2.6%. In contrast, Capri Holdings reported a trailing twelve-month revenue of 4.4 billion dollars and a net profit margin of negative 25.4%, while Burberry reported a significant reduction in its operating profit for the fiscal year 2025, a decrease of 88% to 26 million pounds. Tapestry's price-to-earnings (P/E) ratio is high at 121.5, which is notably higher than many of its peers, reflecting investor optimism about its future growth prospects.

SWOT analysis

Strengths

• Strong brand portfolio: The company's main strength lies in its portfolio of brands, with Coach serving as a cornerstone. Coach consistently accounts for a significant majority of the company's sales and operating profit, supported by a loyal customer base.
• Robust digital capabilities: Tapestry has invested in its e-commerce platforms, providing a seamless omnichannel experience. This has enhanced its direct-to-consumer reach and allows for advanced technologies to improve customer engagement.
• Global presence: The company has a solid presence in key international markets, particularly in Asia, which provides a foundation for further global expansion.

Weaknesses

• Dependence on a single brand: Despite its multi-brand portfolio, the company remains highly dependent on the performance of Coach. A downturn for this brand could have a substantial impact on the company's overall financial health.
• Susceptibility to economic cycles: As a seller of discretionary luxury goods, Tapestry's performance is sensitive to macroeconomic downturns and fluctuations in consumer confidence. This was evidenced by a significant drop in net income.
• Intense competition: The luxury fashion market is highly competitive, requiring continuous innovation and significant marketing investments to maintain relevance against a backdrop of established and emerging rivals.

Opportunities

• Emerging markets expansion: There is an opportunity for continued expansion in emerging markets, particularly in Asia and other developing economies, where a growing middle class is driving demand for luxury goods.
• Sustainability initiatives: Consumers are increasingly prioritizing brands with strong sustainability credentials. Tapestry has an opportunity to deepen its commitment to ESG initiatives, which could attract a new segment of socially conscious consumers.
• BNPL and new retail formats: Embracing new retail technologies and payment solutions such as buy now, pay later (BNPL) could attract a younger, more tech-savvy demographic.

Threats

• Economic downturns: An economic recession could lead to a decrease in consumer spending on luxury items, directly impacting the company’s sales and profitability.
• Intense competition: Competitors such as LVMH and Kering, which have vast resources and a wider array of high-luxury brands, pose a significant threat. The company also faces competition from smaller, direct-to-consumer brands that can quickly adapt to trends.
• Supply chain disruptions: The company's reliance on a global supply chain makes it vulnerable to geopolitical risks, trade tensions, and logistical challenges that could affect costs and efficiency.

Sustainability and ESG

Tapestry has established its ‘Our Social Fabric’ corporate responsibility framework, which focuses on three pillars: people, planet, and community. The company has a dedicated ESG Task Force comprising senior leaders and cross-functional members. In 2021, the company announced several bold commitments, including a 15 dollars per hour minimum wage for its US hourly employees, and an initiative to procure one hundred percent renewable electricity in its stores, offices, and fulfilment centres by 2025.

In terms of specific initiatives, the company has launched the Tapestry Foundation, with an initial 50 million dollars commitment to advance equity and combat climate change. Tapestry has also tied a percentage of its leadership's annual incentive compensation to equity, inclusion, and diversity goals. This signals a commitment to integrating ESG metrics into its business operations. For investors and consumers, these ESG factors are becoming increasingly relevant as they are seen as indicators of a company's long-term resilience and value.

Conclusion and investor perspective

Tapestry is a company undergoing a strategic transformation, having successfully divested a non-core brand and moved past the canceled Capri Holdings merger. The company has demonstrated resilience and strong brand power, particularly with its flagship brand Coach. Its focus on digital expansion and cost management has helped it navigate recent headwinds.

The share might be suitable for a growth investor who believes in the company’s long-term strategy and its ability to deliver organic growth. The recent upward trajectory of the share price and the high P/E ratio suggest that the market has a positive outlook on this growth potential. However, it may not be an ideal choice for a value investor due to its high valuation metrics.

The specific risks associated with the share include continued exposure to economic fluctuations that could impact consumer discretionary spending and the potential for competition to erode market share. The potential of the share lies in its ability to leverage its streamlined brand portfolio, drive efficiencies, and capture a greater share of the global luxury market.

Disclaimer: This analysis is for informational purposes only and should absolutely not be considered as investment advice. It is essential for individuals to conduct their own thorough research and consult with a financial professional before making any investment decisions.