Jim Cramer on Tapestry: “They’re Very Much in Charge of Their Own Destiny”

Tapestry, Inc. (NYSE:TPR) is one of the stocks Jim Cramer shared insights on. When a caller asked about the stock, Cramer commented:

“I think they’re very much in charge of their own destiny. I like it. I like Ralph Lauren more, but I saw my great friend Sara Eisen interview the CEO of Tapestry. They do tell a terrific story, and I’m very proud of the work that she’s doing…. That was a great interview about Tapestry.”

A laptop and a computer monitor display a detailed stock market technical analysis chart. Photo by Jakub Zerdzicki on Pexels

Tapestry, Inc. (NYSE:TPR) markets fashion and lifestyle products, including handbags, footwear, apparel, jewelry, and accessories under the Coach, Kate Spade, and Stuart Weitzman brands. Cramer discussed the stock in a July episode and said:

“Late last year, the Biden administration’s Federal Trade Commission blocked yet another merger, Tapestry’s $8.5 billion acquisition of Capri Holdings… Despite all the tariff uncertainty, Tapestry was able to raise its sales and earnings guidance. What’s driving the strength? Now, a lot of it’s because the Coach brand keeps getting better and better… Now, why is Coach winning? I think this is another example of what we have seen in the consumer discretionary space for a while now. Consumers want value, not necessarily absolute value, but relative value. They want high-quality goods at reasonable prices…

… The way I see it, even with the once red-hot Kate Spade doing terribly right now, Tapestry’s been putting up great numbers, so if they can turn around Kate Spade, that would be pure upside. In the end, giving up on the Capri Holdings acquisition turned out to be a brilliant move for Tapestry. Rather than buying a bunch of struggling brands, they made a much better investment in their own stock, sold off the unexciting Stuart Weitzman business, and have turned their core Coach brand into a powerhouse.

When your competitors are in bad shape, you don’t try to take them over, you just eat them alive, which is what Coach has been doing to Michael Kors… Given the stock’s incredible performance since last October, obviously the expectations here are high… I don’t think the stock is crazy expensive here, trading at just under 22 times this year’s earnings estimate, 18% earnings growth business looks good.

But considering that the stock’s up 69% for the year, this quarter, I’m calling it inherently risky. Here’s the bottom line: Ideally, I want Tapestry to report a good quarter that doesn’t quite satisfy the shareholder base, causing a sell-off that allows you to buy this stock at a lower price. But if you like the story, you got my blessing to put on a small position before the quarter because from my perspective, Tapestry’s management knows exactly what they’re doing and they’re doing it well.”

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Disclosure: None. This article is originally published at Insider Monkey.