Tapestry (TPR) Stock Forecast & Price Target

Tapestry is experiencing a positive outlook due to expected gross margin expansion of 200 basis points to 75.3%, driven by improvements in average unit retail (AUR) and average unit cost (AUC). The company has seen significant revenue growth in its digital business, accounting for approximately one-third of revenue, alongside notable increases in both gross and operating margins in North America and internationally. Notably, Coach has consistently achieved mid-teens growth in handbag and accessory AURs, contributing to a strong product offering that appeals to Gen Z and Millennial consumers, further enhancing their overall market position.

Tapestry's stock outlook is negatively impacted by a significant decline in sales across its brands, with Kate Spade experiencing a 9.6% year-over-year revenue drop in the fiscal second quarter, and Stuart Weitzman facing a 15.2% decline mainly driven by weak performance in Greater China and North America. The company is also contending with broader risks, including potential consumer weakness and reduced discretionary spending, which could hinder the execution of its growth initiatives and exacerbate existing challenges in scaling its brands. Additionally, the overall flat performance in both wholesale and direct-to-consumer revenues in the first quarter signals persistent struggles in capturing market growth.