Tapestry, Inc. TPR has experienced a remarkable jump in its share price over the past year. The stock has rallied 56.2%, significantly outpacing the Zacks Retail-Apparel and Shoes industry’s 6.8% decline. The company’s enhanced operational efficiency and growth initiatives have also helped it outperform the broader Retail-Wholesale sector and the S&P 500 index’s growth of 11.3% and 6.5%, respectively, during the same period.

This remarkable surge has sparked curiosity among investors, leaving them to question whether they have already missed a profitable window or if there is still room for further gains. Closing at $63.78 as of yesterday, the TPR stock is trading 29.8% below its 52-week high of $90.85 attained on Feb. 18, 2025.

TPR Stock's Past-Year Performance

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From a valuation perspective, this leading lifestyle products retailer is currently trading at a low price-to-earnings (P/E) multiple. Its forward 12-month P/E ratio is 12.16, down from the industry and the sector’s ratios of 13.98 and 21.99, respectively. This undervaluation highlights its potential for investors seeking attractive entry points. Moreover, TPR's Value Score of A underscores its appeal as an investment option.

TPR Looks Attractive From a Valuation Standpoint

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Digital & DTC Channels Enhance Tapestry’s Brand Visibility

Tapestry continues to strengthen its digital and direct-to-consumer (“DTC”) channels, which delivered robust performance in the second quarter of fiscal 2025. DTC sales rose 4%, driven by a notable uptick in digital revenues and steady growth in physical retail locations. Profitability improved across all distribution platforms.

By leveraging AI-powered customer engagement tools, the company has optimized pricing strategies and reduced its dependence on promotional discounting. TPR’s growing appeal among younger demographics, particularly Gen Z and Millennials, further solidifies its competitive positioning.

Coach: Catalyst Behind TPR’s Growth

Coach remains central to Tapestry’s growth agenda, continuing to deliver strong revenue gains. In the fiscal second quarter, Coach achieved an 11% increase in reported revenues and a 10% rise in constant currency, along with a 270-basis-point improvement in gross margin.

On Feb. 19, Tapestry announced a definitive agreement to sell the Stuart Weitzman brand to Caleres for $105 million in cash, reinforcing its strategic focus on core brands, Coach and Kate Spade.

Iconic collections such as Tabby, Brooklyn and Empire have further elevated Coach’s market presence, enabling it to capture greater handbag market share. Coach’s global pricing power underscores the brand’s strong positioning within the accessible luxury segment and enhances its long-term investment appeal.

Global Expansion Fuels Tapestry’s Momentum

Tapestry’s international growth strategy continues to deliver, with global markets driving a significant portion of revenue gains. Europe stood out in the fiscal second quarter with a remarkable 42% year-over-year revenue increase, supported by strong consumer demand and effective customer acquisition initiatives.

Greater China returned to growth with a 2% sales increase, demonstrating resilience amid macroeconomic pressures. The broader Asia-Pacific region (excluding China) saw revenue growth of 11%, bolstered by strong performance in South Korea, Malaysia, Australia and New Zealand. These results underscore the strength and effectiveness of Tapestry’s international strategy.

TPR’s Optimistic FY25 Outlook

On the back of sustained performance, Tapestry has raised fiscal 2025 guidance on its last earnings call. The company anticipated full-year revenues to exceed $6.85 billion, reflecting a 3% year-over-year increase despite foreign exchange headwinds, up from its previous estimate of $6.75 billion.

Operating margin is expected to expand 100 basis points, up from an earlier projection of more than 50 basis points. Moreover, Tapestry has modified its earnings per share (EPS) estimate to a range of $4.85 to $4.90, representing a 13-14% year-over-year improvement, surpassing the prior outlook of $4.50 to $4.55.

Upward Estimate Revisions Favor Tapestry Stock

The positive sentiment surrounding Tapestry is reflected in the upward revisions in the Zacks Consensus Estimate for earnings. In the past seven days, the consensus estimate has moved up 1 cent to $4.92 per share for the current fiscal year and by 3 cents to $5.33 for the next fiscal year, indicating year-over-year growth of 14.7% and 8.3%, respectively. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The Zacks Consensus Estimate for the current and the next fiscal year’s sales is pegged at $6.88 billion and $7.12 billion, respectively, implying year-over-year growth of 3.1% and 3.6%.

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Final Word on Tapestry

Investors may consider Tapestry stock for its strong brand positioning, operational efficiency and strategic focus on core labels like Coach and Kate Spade. The company’s growing digital and direct-to-consumer presence, along with successful global expansion, particularly in Europe and Asia-Pacific, demonstrates its adaptability and forward-thinking approach. Tapestry’s focus on profitability, innovative customer engagement and appeal to younger consumers enhances its long-term growth prospects, while the current valuation offers an attractive entry point for value-oriented investors. The company currently has a Zacks Rank #2 (Buy).

Other Key Picks

Some other top-ranked stocks are The Gap, Inc. GAP, Stitch Fix SFIX and Gildan Activewear Inc. GIL.

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Gap’s fiscal 2025 earnings and revenues indicates growth of 7.7% and 1.6%, respectively, from fiscal 2024 reported levels. GAP delivered a trailing four-quarter average earnings surprise of 77.5%.

Stitch Fix delivers customized shipments of apparel, shoes and accessories for women, men and kids. It currently has a Zacks Rank of 2.

The Zacks Consensus Estimate for Stitch Fix’s fiscal 2025 earnings implies growth of 64.7% from the year-ago actuals. SFIX delivered a trailing four-quarter average earnings surprise of 48.9%.

Gildan Activewear is a manufacturer and marketer of premium quality branded basic activewear. It carries a Zacks Rank #2 at present.

The Zacks Consensus Estimate for Gildan Activewear’s current financial year’s earnings and revenues implies growth of 16% and 4.4%, respectively, from the year-ago actuals. GIL delivered a trailing four-quarter average earnings surprise of 5.3%.

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This article originally published on Zacks Investment Research (zacks.com).

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