Tapestry Stock Outperforms Dow Amidst Earnings Volatility and Strategic Expansion
Tapestry's Market Outperformance Amidst Volatile Earnings Response
Tapestry, Inc. (TPR), the global fashion house behind Coach, Kate Spade, and Stuart Weitzman, has demonstrated notable market outperformance compared to the broader Dow Jones Industrial Average ($DOWI). This sustained strength comes even as the company's stock experienced significant short-term volatility following its fiscal fourth-quarter 2025 earnings report and subsequent strategic outlook.
Fiscal 2025 Fourth Quarter Results and Immediate Market Reaction
On August 14, Tapestry reported better-than-expected financial results for the fourth quarter of fiscal 2025, which concluded on June 28. The company's net sales rose by 8.3% year-over-year, reaching $1.72 billion, surpassing Wall Street analyst expectations of $1.68 billion. This revenue growth was primarily fueled by a 14% increase in its Coach brand, which generated $1.43 billion for the quarter. Adjusted earnings per share (EPS) also exceeded forecasts, climbing to $1.04 from $0.92 in the prior-year quarter, against an anticipated $1.01.
Despite these strong headline figures, Tapestry's stock experienced a sharp decline of 15.7% on August 14. This reaction was attributed to the company providing a subdued outlook, citing the anticipated negative impact of incremental tariffs and duties. However, the stock rebounded the following day, gaining 5.3%, as investors re-evaluated the long-term prospects.
Underlying Performance and Broader Market Context
Tapestry's stock has consistently outperformed the Dow Jones Industrial Average over various periods, underscoring its robust underlying performance. Over the past three months, TPR has advanced by 30%, significantly higher than the Dow's 7% gain. The longer-term picture is even more pronounced, with Tapestry's stock surging by 149.8% over the past 52 weeks, in stark contrast to the Dow's 9.3% rise during the same period. Year-to-date, TPR is up 73.6%, while the Dow has gained 8.4%.
This outperformance is also evident when compared to other luxury retail peers. For instance, Signet Jewelers Limited (SIG) has seen a 2.6% decline over the past 52 weeks, highlighting Tapestry's stronger market position. With a market capitalization of $24.17 billion, Tapestry is classified as a "large cap" stock. The stock reached a 52-week high of $117 on September 24 and has consistently traded above its 200-day moving average since late 2024, currently hovering near its 50-day moving average.
Strategic Outlook and Analyst Sentiment
The initial market apprehension following the earnings report was largely due to Tapestry's forward guidance, which factored in the negative impact of incremental tariffs and duties. To counteract these headwinds and drive future growth, Tapestry unveiled its "Amplify" growth strategy at its 2025 Investor Day on September 10, 2025. This strategy focuses on building emotional connections with consumers, particularly Gen Z, fueling fashion innovation, and delivering compelling experiences to drive global expansion, with a focus on North America, Greater China, and Europe.
Financially, the "Amplify" strategy projects mid-single-digit annual revenue growth and low-double-digit diluted EPS growth for fiscal years 2027 and 2028. The company aims for operating margin expansion to over 22% by fiscal 2028, a substantial increase from fiscal 2025 levels. Tapestry also announced plans to return $4 billion in capital to shareholders through fiscal year 2028 via share repurchases and dividends, including a new $3 billion share repurchase authorization and an annual dividend of $1.60 per share in fiscal 2026, expected to grow in line with earnings.
Wall Street analysts generally maintain a "Moderate Buy" rating for Tapestry, based on the consensus of 21 analysts. The mean price target stands at $116.95, suggesting a 3.1% upside from current levels, with a Street-high target of $142 indicating a potential 25.2% appreciation. Despite this bullish sentiment, some analyses suggest the stock may be trading above its fair value.
Future Implications and Key Factors to Monitor
Going forward, investors will closely monitor the execution of Tapestry's "Amplify" growth strategy, particularly its ability to mitigate the impact of tariffs and duties, which are projected to reduce fiscal 2026 earnings by $0.60 per share. The continued performance of key brands like Coach and Kate Spade, alongside efforts to attract new customer demographics such as Gen Z, will be crucial. The effectiveness of the company's shareholder return programs, including the substantial share repurchase authorization, will also be a focal point for market observers. The broader macroeconomic environment and consumer spending trends in the luxury retail sector will continue to influence Tapestry's trajectory.
