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

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  • 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.
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