Tapestry's Trading Volume Drops 36.65% Despite Fourth Consecutive Day of Gains

On June 24, 2025, Tapestry (TPR) experienced a trading volume of $183 million, marking a 36.65% decrease from the previous day. The stock price rose by 1.74%, marking the fourth consecutive day of gains, with a total increase of 5.41% over the past four days.

Tapestry, Inc. has established itself as a leader in the luxury goods sector through brand-specific growth, operational discipline, and strategic repositioning. The company's fiscal 2025 results demonstrate its resilience in a challenging retail environment. Coach, one of Tapestry's key brands, showed a 2% constant currency growth despite headwinds in North America and Greater China. Europe's 27% constant currency revenue surge, driven by Coach's strong appeal in luxury markets, offset regional weaknesses like Japan's 4% decline.

The company's gross margin expanded by 280 basis points to 75.3%, driven by operational improvements, lower freight costs, and favorable FX tailwinds. This margin expansion, combined with disciplined inventory management, has bolstered profitability. Adjusted EPS rose to $1.02, exceeding prior-year levels, while free cash flow of $120 million supported dividend payouts and strategic investments.

Tapestry's decision to divest Stuart Weitzman to Caleres for $105 million signaled a strategic pivot. By focusing on Coach and Kate Spade, Tapestry aims to optimize resources for brands with higher growth potential. The Direct-to-Consumer (DTC) strategy has also been pivotal, with Coach's digital sales now accounting for 30% of revenue. This shift toward younger demographics, coupled with brick-and-mortar store relocations to high-traffic locations, has strengthened brand engagement.

Analysts are cautiously optimistic about TPR's trajectory, with an average 12-month price target and a “Strong Buy” rating. The most aggressive forecast comes from J.P. Morgan, which raised its target, citing “step-function improvements” in profitability and Coach's market leadership. Meanwhile, TD Cowen and Wells Fargo upgraded their ratings to Buy, citing TPR's ability to outperform earnings estimates 100% of the time over the past year.

Historical backtesting reveals that earnings beats have been strongly rewarded. When a buy signal was triggered by an EPS beat and held for 20 trading days between 2020–2025, the strategy delivered a total return, outperforming the benchmark. While the maximum drawdown reached, the annualized return and Sharpe ratio underscore a compelling risk-adjusted reward profile.

However, risks persist. Kate Spade's ongoing decline remains a concern. The brand's turnaround efforts—including product simplification and digital acceleration—are critical but unproven. Additionally, Tapestry's debt burden poses leverage risks if macroeconomic conditions sour.

While TPR's operational excellence and analyst optimism are compelling, investors must weigh execution risks. The FTC's challenge to the Capri Holdings acquisition—a potential growth driver—adds uncertainty, as does Kate Spade's underperformance. Yet, the stock's strong buy ratings, consistent earnings beats, and a forward P/E suggest it's undervalued relative to its growth prospects. The price target—implying a 23% upside from current levels—reflects confidence in Coach's dominance and the company's ability to capitalize on luxury demand.