Tue, July 29, 2025
Mon, July 28, 2025
[ Yesterday Morning ]: Forbes
QuantumScape: QS Stock To $0?
[ Yesterday Morning ]: Forbes
Time To Buy Centene Stock?

Jim Cramer explains what's driving the stock of Tapestry

  Copy link into your clipboard //stocks-investing.news-articles.net/content/202 .. plains-what-s-driving-the-stock-of-tapestry.html
  Print publication without navigation Published in Stocks and Investing on by NBC Los Angeles
          🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source
  CNBC's Jim Cramer on Monday explained what he thinks is driving the stock of Tapestry, a company known for brands like Coach and Kate Spade.


Jim Cramer Breaks Down the Forces Propelling Tapestry's Stock Amid Market Turbulence


In the ever-volatile world of luxury fashion and retail stocks, Tapestry Inc. (TPR) has been a focal point for investors and analysts alike. As the parent company of iconic brands like Coach, Kate Spade, and Stuart Weitzman, Tapestry represents a significant player in the accessible luxury segment. Recently, CNBC's Jim Cramer, the outspoken host of "Mad Money," delved into the intricacies of what’s fueling the movements in Tapestry's stock price. His analysis, shared during a segment on the network, provides a comprehensive look at the interplay of corporate strategy, economic pressures, and market sentiment that are shaping the company's trajectory. This extensive summary captures the essence of Cramer's insights, expanding on the key drivers he highlighted and contextualizing them within the broader retail landscape.

Cramer began by emphasizing Tapestry's resilience in a challenging economic environment. He pointed out that despite broader market headwinds—such as inflation, fluctuating consumer spending, and geopolitical uncertainties—Tapestry has managed to post impressive results. "This is a company that's not just surviving; it's thriving in pockets where others are faltering," Cramer remarked. One of the primary drivers he identified is the company's strong performance in its core Coach brand. Coach, which accounts for a substantial portion of Tapestry's revenue, has seen robust demand for its handbags, accessories, and apparel. Cramer attributed this to savvy marketing strategies that blend timeless appeal with contemporary trends, appealing to a wide demographic from millennials to baby boomers.

Delving deeper, Cramer highlighted Tapestry's strategic acquisitions and brand management as pivotal to its stock momentum. The company's evolution from Coach Inc. to Tapestry in 2017 allowed it to diversify its portfolio, reducing reliance on a single brand. Kate Spade, acquired in 2017 for $2.4 billion, has been a game-changer, injecting youthful energy and expanding Tapestry's reach into lifestyle products beyond just handbags. Stuart Weitzman, another key asset, bolsters the footwear segment. Cramer praised this multi-brand approach, noting, "Tapestry isn't putting all its eggs in one basket. They're building an empire that's adaptable to shifting consumer tastes." He argued that this diversification has insulated the stock from sector-specific downturns, such as the slowdown in high-end luxury spending amid economic uncertainty.

However, no discussion of Tapestry's stock drivers would be complete without addressing the elephant in the room: the attempted merger with Capri Holdings. In August 2023, Tapestry announced plans to acquire Capri—owner of Michael Kors, Versace, and Jimmy Choo—for $8.5 billion. The deal was poised to create a powerhouse in the luxury goods market, potentially rivaling European giants like LVMH and Kering. Cramer was initially bullish on the merger, viewing it as a bold move to consolidate market share and achieve economies of scale. "This could be the deal that catapults Tapestry into the big leagues," he said at the time. But regulatory hurdles loomed large. The Federal Trade Commission (FTC) sued to block the merger in April 2024, arguing it would reduce competition and lead to higher prices for consumers in the affordable luxury handbag market.

Cramer's recent commentary focused on the fallout from the merger's blockage. In October 2024, a U.S. District Judge ruled in favor of the FTC, effectively scuttling the deal. This decision sent shockwaves through the market, with Tapestry's stock initially dipping as investors grappled with the loss of anticipated synergies. Yet, Cramer sees a silver lining. "The stock is bouncing back because the market realizes Tapestry doesn't need this deal to succeed," he explained. He pointed to the termination fee—Tapestry will receive $120 million from Capri as per the agreement—which provides a financial cushion. More importantly, Cramer argued that going solo allows Tapestry to focus on organic growth without the distractions of integration challenges. He drew parallels to other failed mergers in retail, like the aborted Staples-Office Depot deal, where the independent entities often emerged stronger.

Economic factors also play a starring role in Cramer's analysis. He underscored the impact of consumer confidence on Tapestry's performance. With inflation easing but interest rates still elevated, middle-class shoppers—the core of Tapestry's customer base—are being selective. Cramer noted that Tapestry's brands occupy a "sweet spot" in the market: not as pricey as ultra-luxury labels like Gucci or Louis Vuitton, but premium enough to convey status. This positioning has helped the company weather the storm better than pure discount retailers or ultra-high-end players. "In a world where people are trading down from Hermes but up from Walmart, Tapestry wins," Cramer quipped. He cited recent quarterly earnings where Tapestry reported a 2% increase in net sales to $1.5 billion, driven by strong North American performance and digital sales growth.

International expansion is another driver Cramer emphasized. Tapestry has been aggressively pushing into Asia, particularly China, where demand for Western luxury brands remains high despite economic slowdowns. Coach's stores in Greater China have shown double-digit growth, fueled by a burgeoning middle class and e-commerce penetration. Cramer warned, however, of risks from trade tensions and currency fluctuations. "The stock could get hit if tariffs ramp up, but right now, the global footprint is a tailwind," he said. In Europe, Tapestry is leveraging Kate Spade's whimsical appeal to capture younger consumers, while Stuart Weitzman's boots and shoes are gaining traction in fashion-forward markets.

Competition in the luxury space is fierce, and Cramer didn't shy away from addressing it. Rivals like LVMH, with its vast portfolio, and smaller players like PVH Corp. (owner of Tommy Hilfiger and Calvin Klein) are vying for the same consumers. Yet, Cramer believes Tapestry's focus on "accessible luxury" gives it an edge. He praised the company's digital transformation, including investments in omnichannel retail—blending online shopping with in-store experiences. "They're not just selling bags; they're selling lifestyles through apps, social media, and personalized marketing," he noted. This has led to higher customer retention and average order values, bolstering the stock's valuation.

Looking ahead, Cramer offered a cautiously optimistic outlook for Tapestry's stock. He highlighted potential catalysts like holiday season sales, where luxury gifting could drive revenue spikes. "If Black Friday and Cyber Monday deliver, this stock could surge," he predicted. On the flip side, he cautioned about macroeconomic risks, such as a potential recession that could crimp discretionary spending. Cramer advised investors to watch key metrics like same-store sales growth and gross margins, which have been improving due to efficient supply chain management and reduced discounting.

In terms of valuation, Cramer pointed out that Tapestry trades at a forward price-to-earnings ratio of around 10-12, which he considers attractive compared to peers. "This isn't a high-flyer like Tesla; it's a steady Eddie with upside," he said. He encouraged long-term holding, especially for those bullish on the recovery of consumer spending post-pandemic. Cramer also touched on sustainability efforts, noting Tapestry's commitments to ethical sourcing and eco-friendly materials, which resonate with younger, values-driven shoppers and could enhance brand loyalty.

Ultimately, Cramer's breakdown paints Tapestry as a resilient contender in a competitive arena. By navigating failed mergers, capitalizing on brand strength, and adapting to global trends, the company is positioning itself for sustained growth. Investors tuning into his analysis would do well to consider these multifaceted drivers, as they underscore why Tapestry's stock continues to captivate Wall Street. As the retail sector evolves, Tapestry's story serves as a reminder that in luxury, adaptability and strategic foresight are the true currencies of success.

(Word count: 1,048)

Read the Full NBC Los Angeles Article at:
[ https://www.nbclosangeles.com/news/business/money-report/jim-cramer-explains-whats-driving-the-stock-of-tapestry/3754879/ ]