5 Retailers Hedge Funds Are Bailing On As Inflation Soars

3. Tapestry, Inc. (NYSE:TPR)

Number of Hedge Fund Shareholders: 39

Tapestry, Inc. (NYSE:TPR) shares are held by 26% fewer hedge funds as of March 31 compared to a year earlier, when the stock peaked at an all-time high in ownership. Since then, the company has lost numerous powerhouse money managers as investors, including Steve Cohen of Point72 Asset Management and Louis Bacon of Moore Global Investments.

Luxury retailer Tapestry, Inc. (NYSE:TPR), which owns the Kate Spade, Stuart Weitzman, and Coach brands, has been hit hard by the Chinese lockdowns. China is one of the biggest markets for luxury goods, and Coach has a large retail presence in the country, where lockdowns have shuttered or hindered operations at 40% of its stores. The company is nonetheless guiding for a record $6.7 billion in revenue this year, which could have further upside should China meaningfully reopen.

The Ariel International & Ariel Global Fund have been impressed with Tapestry, Inc. (NYSE:TPR)’s growing online sales and improving margins, as laid out in the fund’s Q3 2021 investor letter:

“Luxury accessory and lifestyle brand, Tapestry, Inc. was the top contributor to performance over the trailing one-year period. Revenue improvement across all three brands with a notable increase in consumer demand, particularly for the Coach business, triple-digit growth in e-commerce, and better than expected pricing, drove margins higher. Looking ahead, we expect Tapestry’s supply chain and SKU rationalization initiatives to continue to deliver margin expansion. Together, with early signs of improved receptivity for the Kate Spade brand, we believe a significant value creation opportunity lies ahead.”