Coach Takes The Lead: Tapestry's Revenue Surges, Boosting Analyst's Confidence In The Fashion Powerhouse

Telsey Advisory Group analyst Dana Telsey reiterated an Outperform rating on the shares of Tapestry Inc TPR with a $54.00 price target.
TPR reported better-than-expected EPS of $0.78, handily topping the consensus estimate and guidance of $0.60.
The analyst said the beat was nicely operational, with strong topline and gross margin performance relative to expectations.
Total revenue grew 5.0% for the period to $1.51 billion, coming in ahead of the consensus for 0.3% growth to $1.44 billion.
Tapestry's most important brand, Coach (at 75.8% of total Q3 sales) was the primary driver of the company's strong performance, with revenue up 6.7% (11% in constant currency) and a 320-basis points improvement on the operating margin to 29.9%, noted the analyst.
The analyst added that Kate Spade was the laggard for the quarter, with a 1.4% revenue decline and a 90-bp decline in the operating margin to 2.7%.
The analyst also looked at Tapestry's raised guidance as a positive factor.
Geographically, the business saw a sharper inflection in Greater China (+20% in Q3), which boosted the international business to 20%, while North America grew low-single digits, ahead of expectations, the analyst said.
The analyst commented that the inventories are well-positioned, and momentum continues across brands and regions.
Price Action: TPR shares are trading higher by 10.41% at $41.01 on the last check Thursday.
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