Forbes 
(NYSE: TPR), a luxury handbag, shoe and accessory retailer under the Coach, Kate Spade and Stuart Weitzman brands has become vulnerable during the pandemic due to its non-essential product assortment. As a result, the company’s revenue fell 20% to a consolidated figure of $ 4.8 billion for the last 4 quarters compared to the consolidated figure of $ 6.0 billion for the previous 4-quarter period. However, TPR stock rose 17% – from around $ 29 to $ 34 in the past 12 months, due to a better-than-expected fiscal first quarter (ended in September), the announcement of two Covid vaccines and the US federal election. Having said that, we believe that the company’s shares could potentially collapse in the future due to this income and stock price mismatch. This takes into account poor revenue growth for Tapestry, which declined 18% year-over-year in fiscal 2020 (ended June 20) and only increased 3% in fiscal year 2020. during fiscal year 2019 – before the pandemic. While the Coach brand, which accounts for around 71% of total sales, has been fairly stable – Kate Spade and Stuart Weitzman have been everywhere. While both these brands saw pre-pandemic revenue growth in fiscal 2019, Kate Spade’s adjusted operating profit fell 5% to $ 186 million and Stuart Weitzman recorded an adjusted operating loss of $ 17 million. That said, luxury goods tend to be cyclical in nature and economically sensitive, leading to uncertainty until the Covid threat subsides. Our dashboard provides the key figures of our thinking, and we explain more to you below. The tapestry inventory decreased by 73%, from nearly $ 46 in fiscal 2018 to approximately $ 13 in fiscal 2020 (fiscal year ended June 2020), with much of this decrease being attributable to to store closures caused by the pandemic. During that period, it fell 16%, from $ 5.9 billion in 2018 to $ 5.0 billion in 2020, and shares outstanding fell 3%. Taken as a whole, earnings per share fell 13% from around $ 21 in 2018 to $ 18 in 2020. Finally, Tapestry’s P / S multiple fell 2.2x during the year 2018 to 0.7x in fiscal year 2020. While the company’s P / S has now increased to 1.9x, there is a downside risk when the current P / S is compared to the levels seen during recent years – 0.7x in 2020 and 1.5x in 2019. For the first fiscal quarter, which ended September 26, sales continued to decline. Its revenue fell 14% year-over-year to $ 1.2 billion, due to reduced demand due to the pandemic. However, Tapestry increased its e-commerce sales to triple digits, and e-commerce accounted for almost 25% of its quarterly sales. Additionally, operating profit nearly tripled year-on-year to $ 151 million.
Highlights
- According to Forbes, “the tapestry stock is about to drop.”
- This takes into account poor revenue growth for Tapestry, which declined 18% year-over-year in fiscal 2020 (ended June 20) and only increased 3% in fiscal year 2020. during fiscal year 2019 – before the pandemic. While the Coach brand, which accounts for around 71% of total sales, has been fairly stable – Kate Spade and Stuart Weitzman have been everywhere. While both these brands saw pre-pandemic revenue growth in fiscal 2019, Kate Spade’s adjusted operating profit fell 5% to $ 186 million and Stuart Weitzman recorded an adjusted operating loss of $ 17 million. That said, luxury goods tend to be cyclical in nature and economically sensitive, leading to uncertainty until the Covid threat subsides. Our dashboard provides the key figures of our thinking, and we explain more to you below.
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