Tapestry (TPR) Stock Forecast & Price Target

Tapestry is anticipating an expansion in gross margin by 200 basis points to 75.3%, driven by enhanced Average Unit Retail (AUR) and Average Unit Cost (AUC), reflecting overall improvements in profitability. The company's digital business growth at high-single digits constitutes approximately one-third of revenue, while brick-and-mortar sales also demonstrate positive trends, contributing to increased margins. Additionally, Tapestry projects an overall revenue increase of 2.8% for fiscal 2025, bolstered by significant growth in both European and Asian markets, highlighting the robust demand among Gen Z and Millennial consumers.

Tapestry has reported significant declines in revenues across its key brands, with Kate Spade experiencing a 9.6% year-over-year decline in the fiscal second quarter, accelerating from a previous decrease, highlighting persistent weak demand in crucial markets. Sales for Stuart Weitzman fell sharply by 15.2% year-over-year, primarily impacted by weaker performance in Greater China and North America, further stressing the challenges within Tapestry's portfolio. Additionally, risks to the company's performance include an inability to implement effective growth strategies, potential prolonged consumer weakness, and challenges related to scaling its brands amid a backdrop of declining discretionary spending and ongoing economic uncertainty.