Tapestry's Outlook Offers 'An Encouraging Sign,' Says This Analyst

Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating on Tapestry Inc TPR with a price target of $46.00.
The analyst said that the company’s slight bottom-line beat ($0.78 versus the estimate of $0.77) came from better expense deleverage, as sales and gross margin performance for the quarter came in below consensus.
Incremental freight expense was a headwind to the gross margin for the quarter, Telsey noted.
Telsey said Tapestry drove strength across channels leading to solid gains in North America, Europe, and Japan, nearly offset by continued softness in Greater China due to COVID-related pressure.
She cited that the company’s management anticipates a gradual recovery in China in the coming year and, despite continued macro headwinds, its FY23 guidance evokes optimism and is in line with expectations.
Telsey continues to believe that Tapestry is emerging from the pandemic a leaner, more profitable operation, with brands that are now cleaner and better positioned to resonate with consumers.
Price Action: TPR shares are trading higher by 1.12% at $37.52 on the last check Thursday.