What’s Next For Tapestry’s Stock After A Solid Q2?

Note: Tapestry’s FY’24 ended on June 29, 2024.

Tapestry (NYSE: TPR) has been on a tear, with its stock more than doubling since January 2024 and outpacing the S&P 500’s 27% gain. Year-to-date, TPR shares are up 30% (Jan.14), surpassing peer Ralph Lauren’s (NYSE: RL) 20% YTD increase. This robust performance is part of a broader trend, as 2025 gets off to a strong start for retail, driven by AI-powered supply chain efficiencies and a resilient labor market. Tapestry’s solid Q2 results and upwardly revised full-year 2025 guidance further underscore the company’s accelerating growth trajectory.

Tapestry’s Q2 revenues remained steady at $2.2 billion, driven by a 10% year-over-year surge in Coach brand sales, which offset declines at Kate Spade (-10%) and Stuart Weitzman (-15%). Coach’s growth was fueled by innovative products, a 4% rise in direct-to-consumer sales, and robust digital channel performance. The company delivered record non-GAAP diluted EPS of $1.02 (up 10% y-o-y) and a significant 280-basis-point gross margin expansion to 74.5%. Notably, Tapestry saw a substantial increase in its customer base, driven by strong gains among younger demographics, with over 2.7 million new customers acquired in North America, predominantly from Gen Z and Millennial consumers. That said, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

Tapestry has upgraded its fiscal 2025 guidance, anticipating EPS of $4.85-$4.90, up from the previous range of $4.50-$4.55. The company now expects full-year revenue to reach $6.85 billion, representing a 3% y-o-y increase, compared to the prior growth outlook of 1%-2%. This revised guidance incorporates the impact of an additional 10% tariff on Chinese imports, effective February 4, which is not expected to materially affect Tapestry’s results due to its limited manufacturing presence in China.

Meanwhile, Tapestry’s Coach brand is well-positioned to benefit from China’s economic growth, given its significant physical presence in the country. China’s luxury market is experiencing a robust recovery from the pandemic, with forecasts suggesting it will reach $178 billion by 2025, accounting for approximately 30% of total global spending.

The increase in TPR stock over the last 4-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 32% in 2021, -3% in 2022, 0% in 2023, and 83% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

It is helpful to see how its peers stack up. Check out how Tapestry’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 2/13/2025
[2] Cumulative total returns since the end of 2016