TPR - Embedded Expectations Analysis - 2021 06 25
Tapestry, Inc. (TPR:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 17.0x Uniform P/E. Even at these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about meeting their revenue guidance, maintaining their consumer growth, and their brands' performanceSpecifically, management may lack confidence in their ability to sustain growth in their e-commerce channels in North America, maintain their SKU count, and meet their revenue guidance. Moreover, they may have concerns about Chinese consumer growth, business trends arising from stores reopening, and allowing brands to leverage shared resources to drive more effective decision-making. Finally, management may be exaggerating their outperformance in their Disney collaboration, the Tabby family's market share, and their design and merchandising teams' product innovations
Tapestry is a lifestyle company. The company's primary product offerings, manufactured by third-party suppliers, include women's and men's bags, small leather goods, footwear, ready-to-wear including outerwear, watches, weekend and travel accessories, scarves, eyewear, fragrance, jewelry and other lifestyle products. The company has three reportable segments: Coach, which includes sales of Coach brand products to customers through Coach operated stores; Kate Spade, which includes sales primarily of Kate Spade New York brand products to customers through Kate Spade operated stores; and Stuart Weitzman, which includes sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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