By Teresa Rivas
Luxury stocks have been looking a bit threadbare over the past year -- but shares of Coach parent Tapestry look très chic.
Tapestry, which also owns Kate Spade, has risen well over 25% this year, to $82.76, trouncing the S&P 500 index's 2% gain -- and is within a few dollars of its February high. That has left some wondering how much farther it can rally. One analyst's answer: nearly 20%.
Bernstein's Aneesha Sherman reiterated a $100 price target on Tapestry on Tuesday after hosting the company's CEO and chief financial officer, and she offered five reasons for her optimism. The first is Coach's ability to attract and retain younger shoppers, a key indicator of longer-term success. Sherman notes that 4 million new customers have shopped at Coach over the past six months, with half of those being Gen Z or millennials. Secondly, Coach appears to be doing this without resorting to promotions, as average selling prices rise and markdowns kept to a minimum.
Coach's average unit retail -- a metric that reflects a product's average selling price during a specific period -- is much lower than European peers and has actually widened. That gives the company plenty of room to boost its own AURs, as the metric is known, as it has 18 of the past 20 quarters, without pricing out consumers.
Nor is Coach's appeal attributable to a single trendy item that could easily go out of fashion. No single franchise at Coach accounts for more than 10% of sales, and it's seeing a surge in interest across merchandise categories. "Search interest data also supports the idea that this isn't just a flash in the pan," Sherman writes. "Coach's search interest is actually more diversified across franchises today compared to a few years ago."
Finally, Coach has been gaining traction with shoppers over the past five years, as strong products and execution have made it more popular on social media, Sherman notes. While it's quite easy to destroy a brand's reputation with mistakes, it's much harder to make a midrange brand more premium. Tapestry's success with Coach shows successful execution of a long-term strategy threading that needle.
There are other reasons to be bullish on the shares. Tapestry has been turning in a series of strong earnings reports, and its most recent included an increase for its full-year forecast -- no small feat given the looming impact of tariffs. Barron's argued that the sale of shoe brand Stuart Weitzman was a smart move, and its blocked merger with Michael Kors owner Capri Holdings prevented it from absorbing a struggling competitor. And for all its success, the shares still trade around 16 times forward earnings, a discount to many European luxury stocks.
Sherman isn't the only bull. On June 12, TD Cowen analyst Oliver Chen upgraded Tapestry to Buy from Hold, and boosted his price target by $10 to $100, citing the company's successful handbag collections and the firm's own research showing its growing popularity among young and wealthier shoppers.
Whatever it takes to be a winner in luxury, Tapestry has it in spades.
Write to Teresa Rivas at teresa.rivas@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 18, 2025 04:00 ET (08:00 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
免责声明:投资有风险,本文并非投资建议,以上内容不应被视为任何金融产品的购买或出售要约、建议或邀请,作者或其他用户的任何相关讨论、评论或帖子也不应被视为此类内容。本文仅供一般参考,不考虑您的个人投资目标、财务状况或需求。TTM对信息的准确性和完整性不承担任何责任或保证,投资者应自行研究并在投资前寻求专业建议。