Stock Analysis & Valuation Tapestry, Inc. (0LD5.L)

• Previous Close: £126.54
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	55.90	-56
Intrinsic value (DCF)	41.41	-67
Graham-Dodd Method		n/a
Graham Formula	8.30	-93

Strategic Investment Analysis

Company Overview

Tapestry, Inc. (LSE: 0LD5.L) is a leading global luxury fashion holding company renowned for its portfolio of iconic brands, including Coach, Kate Spade, and Stuart Weitzman. Headquartered in New York, Tapestry operates in the high-end accessories and lifestyle segment, offering handbags, footwear, jewelry, fragrances, and apparel. The company serves a diverse customer base across North America, Asia (particularly Japan and Greater China), and other international markets through a robust omnichannel strategy, including 1,443 retail stores, e-commerce platforms, and wholesale partnerships. Tapestry’s brands cater to distinct consumer segments—Coach emphasizes timeless American luxury, Kate Spade targets playful sophistication, and Stuart Weitzman focuses on premium footwear. With a strong digital presence and strategic licensing agreements, Tapestry leverages its brand equity to drive growth in both established and emerging markets. The company’s acquisition of Capri Holdings (owner of Michael Kors, Versace, and Jimmy Choo) in 2023 further solidifies its position as a formidable player in the global luxury retail sector.

Investment Summary

Tapestry presents a compelling investment case with its diversified brand portfolio, strong free cash flow ($1.15B in FY2023), and consistent profitability (net income of $816M). The company’s acquisition of Capri Holdings enhances scale and synergies, though integration risks and high debt ($8.77B) warrant caution. Trading at a market cap of $16B, Tapestry’s beta of 1.43 reflects sector volatility, but its 3.5% dividend yield and growth in Asia (particularly China) offer balance. Challenges include reliance on discretionary consumer spending and competition from European luxury giants.

Competitive Analysis

Tapestry competes in the premium lifestyle segment, differentiating through accessible luxury pricing (vs. Hermès or Chanel) and brand-specific identities. Coach’s heritage and leather craftsmanship underpin its resilience, while Kate Spade’s whimsical designs attract younger demographics. Stuart Weitzman’s footwear expertise complements the portfolio. Tapestry’s vertical integration (control over design, manufacturing, and distribution) and direct-to-consumer focus (75% of revenue) provide margin advantages. However, its mid-tier positioning faces pressure from both high-end luxury brands (with stronger pricing power) and contemporary labels (e.g., Tory Burch). The Capri acquisition expands Tapestry’s reach but overlaps with Michael Kors’ market. Geographic diversification (35% revenue from Asia) is a strength, though it exposes the company to regional economic shifts. Digital innovation, including AI-driven personalization, helps retain customers in a crowded market.

Major Competitors

• LVMH Moët Hennessy Louis Vuitton (LVMH.PA): LVMH dominates global luxury with brands like Louis Vuitton and Dior, offering superior pricing power and exclusivity. Its vast scale and diversified segments (wines, jewelry) reduce risk. However, Tapestry’s more affordable positioning appeals to a broader audience, and LVMH’s minimal focus on North American handbags limits direct overlap.
• Kering (KER.PA): Kering’s Gucci and Saint Laurent compete with Tapestry’s Coach in leather goods, but its higher price points target ultra-affluent consumers. Kering’s reliance on European markets contrasts with Tapestry’s Americas/Asia balance. Both face sustainability pressures, but Kering leads in eco-initiatives.
• Capri Holdings (now part of Tapestry) (CPRI): Capri’s Michael Kors directly rivaled Coach in accessible luxury handbags, while Versace and Jimmy Choo elevated its portfolio. Pre-acquisition, Capri struggled with Michael Kors’ overexposure, but its integration into Tapestry creates cost synergies and cross-selling opportunities.
• Tiffany & Co. (owned by LVMH) (TIF): Tiffany’s jewelry focus overlaps with Kate Spade’s accessories. Its LVMH backing strengthens resources, but Tapestry’s multi-brand agility allows faster adaptation to trends. Tiffany’s higher price tier limits direct competition.
• Ralph Lauren Corporation (RL): Ralph Lauren’s apparel-centric model diverges from Tapestry’s accessories focus, but both emphasize American heritage. Ralph Lauren’s stronger menswear presence and global licensing are advantages, while Tapestry’s digital growth outpaces its peer.