Introduction
Tapestry, Inc. has three reportable segments:
•Coach – Coach is a global fashion house of accessories and lifestyle collections, founded in New York City in 1941. Inspired by the vision of Expressive Luxury and the inclusive and courageous spirit of its hometown, the brand makes beautiful things, crafted to last – for you to be yourself in. Coach has built a legacy of craftsmanship and a community that champions the courage to be real. Coach includes global sales of primarily Coach brand products to customers through our direct-to-consumer (“DTC”), wholesale and licensing businesses. This segment represented 76.4% of total net sales in fiscal 2024.
•Kate Spade – Since its launch in 1993 with a collection of six essential handbags, kate spade new york has always been colorful, bold and optimistic. Today, it is a global lifestyle brand that designs extraordinary things for the everyday, delivering seasonal collections of handbags, ready-to-wear, jewelry, footwear, gifts, home décor and more. Known for its rich heritage and unique brand DNA, kate spade new york offers a distinctive point of view and celebrates communities of women around the globe who live their perfectly imperfect lifestyles. Kate Spade includes global sales of primarily kate spade new york brand products to customers through our DTC, wholesale and licensing businesses. This segment represented 20.0% of total net sales in fiscal 2024.
•Stuart Weitzman – Since 1986, New York City based global luxury footwear brand Stuart Weitzman has combined its signature artisanal craftsmanship and precise engineering to empower women to stand strong. Having perfected the art of shoemaking for over 35 years, the brand continues to expand its assortment to feature handbags and men’s footwear, all the while staying true to its ethos of inspiring strength and confidence with every step. Stuart Weitzman includes global sales of primarily Stuart Weitzman brand products to customers through our DTC and wholesale businesses. This segment represented 3.6% of total net sales in fiscal 2024.
Asset Structure Analysis
Tapestry’s fiscal 2024 ended on June 29, 2024 and fiscal 2023 ended on July 1, 2023.
Tapestry’s total assets were $13.4 billion as of June 29, 2024, down from $7.1 billion as of July 1, 2023.
Why the company’s total assets soared to $13.4 billion ?
Tapestry want to acquire Capri Holdings Limited, so it must has to raise cash through adding debt.
Property and equipment, net were $514.7 million at June 29, 2024, accounting for 3.8% of total assets.
Operating lease right-of-use assets were $1.3 billion as of June 29, 2024, making up 9.7% of total assets.
Goodwill was $1.2 billion as of June 29, 2024, representing 8.95% of total assets.
Intangible assets were $1.35 billion as of June 29, 2024, composing 10% of total assets.
Total current assets were $8.8 billion as of June 29, 2024, accounting for 65.7% of total assets.
Of total current assets, cash and cash equivalents were $6.1 billion, short-term investments were $1 billion, trade accounts receivable were $228 million and inventories were $824.8 million.
Liquidity and Solvency
Total current liabilities were $1.7 billion as of June 29, 2024.
Total liabilities were $10.5 billion with the debt ratio of 78.4% as of June 29, 2024.
Given that the company’s cash flow, we think that Tapestry could maintain its debt level.
Profitability Analysis
Net sales were $6.67 billion, $6.66 and $6.68 billion in fiscal 2024, 2023 and 2022, respectively.
As you can see that Tapestry’s net sales have been flat in the past three years.
Net income was $816 million, $936 million and $856 million in fiscal 2024, 2023 and 2022, respectively.
The net profit margin was 12.2%, 14% and 12.8% in fiscalk 2024, 2023 and 2022, respectively.
Cash Flow Analysis
Net cash provided by operating activities was $1.26 billion, $975 million and $853 million in fiscal 2024, 2023 and 2022, respectively.
Purchases of property and equipment were $108.9 million, $184.2 million and $93.9 million in fiscal 2024, 2023 and 2022, respectively.
The free cash flow was $1.15 billion,$791 million and $759.1 million in fiscal 2024, 2023 and 2022, respectively.
Conclusion
We think Tapestry’s reasonable valuation is $7 billion to $9 billion before the company acquire Capri Holdings Limited.
If I held Tapestry shares, I would consider the buyout of Capri Holdings Limited to be bad news.
We believe Capri ‘s reasonable valuation is $5 billion to $6 billion.
Disclaimer: The content is for reference only and does not constitute investment advice.
