Despite Slowdown In Chinese Luxury Goods Market, Tapestry Willing To Tap Small Cities - Tapestry (NYSE:TPR)

In an unusual expansion in China, Tapestry Inc TPR is looking to open stores for the American brand Coach in the coming 12 months.
Tapestry is willing to enter lower-tier cities where most Western competitors are reluctant to tread and amid a deep slump in Chinese luxury sales.
Tapestry's Asia Pacific president Yann Bozec told Reuters that the company plans to look at other tier-four cities as candidates for the 30 new stores this financial year.
The move follows some 60 Tapestry store openings in China over the last two years.
As per analysts, the business strategy allows Tapestry to capitalize on its position as a purveyor of so-called "accessible luxury" when many higher-end labels now target even further upmarket, and Chinese consumers have become more cost-conscious.
Ralph Lauren Corp RL, Tapestry's one of closest competitors, says it is sticking with plans, outlined in 2018, to have 150 stores in Greater China by the end of April, up from 135 today, focusing on tier-one cities.
Analysts see Tapestry's pursuit of more stores as an opportunity to cement its lead in brand penetration in China.
Oliver Chen, a Cowen analyst, said Tapestry could benefit from price hikes of up to 60% among top-tier luxury brands in recent years that make Coach look more attractive in terms of value.
Coach's "footprint is still not saturated relative to the opportunity," he added.
Analyst Rating: Credit Suisse Appears To Approve Tapestry's Growth Targets
Price Action: TPR shares closed at $31.96 on Tuesday.

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