Back to top

Bear of the Day: Tapestry (TPR)

Read MoreHide Full Article

Formerly known as Coach, Inc., Tapestry (TPR - Free Report) is a luxury retailer that owns and operates the Coach, Kate Spade & Company, and Stuart Weitzman brands. All three offer popular lifestyle products like handbags, clothes, shoes, and fragrance.

How the Coronavirus Crisis is Impacting TPR

Tapestry reported fiscal 2020 third quarter results at the end of April, and the coronavirus pandemic has hit the business hard.

Adjusted net loss was 27 cents a share, much wider than what analysts were expecting and down significantly compared to the $0.42 per share in Q3 2019. Revenue totaled $1.07 billion compared to $1.33 billion in the prior year period.

Brand-wise, Coach reported operating income of $38 million, falling over 84% year-over-year. Kate Spade posted an operating loss of $91 million, while Stuart Weitzman’s operating loss was $531 million.

During the quarter, 90% of the company’s stores were either closed or operating on reduced hours, though a degree of normalcy has returned to areas like Korea and Mainland China.

Tapestry is now ultra-focused on conserving cash and reducing spending. The company has slashed orders for later in the year, suspended its quarterly dividend and share buyback programs, and drew down $700 million (of $900 million total) of its revolving credit facility.

Management provided no guidance for the current quarter because of the overall economic uncertainty, but TPR is moving to adapt to a changing retail landscape.

“We are accelerating key elements of the transformational work we began prior to the crisis, notably driving outsized growth in digital and creating a more streamlined and data-driven organization,” said CEO Jide Zeitlin.

Bottom Line

Shares have plummeted over 43% year-to-date. TPR is now a Zacks Rank #5 (Strong Sell). 11 analysts have cut their full year earnings outlook, and the consensus estimate has fallen $1.55 from $2.21 to $0.66 a share.

For nearly all economic sectors, the real damage from the coronavirus is still uncertain.

Tapestry’s future revenue, earnings, and cash flow are still up-in-the-air, and won’t be able to be determined until and the length of the outbreak is figured out. It’s probably best to avoid retail stocks like TPR for the time being.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Tapestry, Inc. (TPR) - free report >>

Published in