What Happened?

Shares of luxury fashion conglomerate Tapestry (NYSE:TPR) jumped 18.3% in the pre-market session after the company delivered a "beat-and-raise" quarter, its first since the $8.5 billion acquisition of Capri Holdings was called off due to antitrust concerns. Tapestry blew past analysts' constant currency revenue expectations. Its full-year revenue guidance was lifted, and full-year EPS guidance came in much higher than Wall Street's estimates. You may have noticed that EPS missed, but this was largely due to a one-time debt extinguishment charge rather than something fundamental. Overall, this quarter was very good.

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What The Market Is Telling Us

Tapestry’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. Moves this big are rare for Tapestry and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock gained 16.9% on the news that a US district judge halted its merger with Capri Holdings. According to the ruling, Tapestry and Capri are "close competitors," and the merger would lead to "the loss of head-to-head competition," raising prices for shoppers. This followed the FTC's (Federal Trade Commission) move to block the deal in April 2024 following concerns that the merger could stifle competition in the affordable luxury handbag arena.

Tapestry is up 25.1% since the beginning of the year, and at $82.09 per share, has set a new 52-week high. Investors who bought $1,000 worth of Tapestry’s shares 5 years ago would now be looking at an investment worth $2,831.

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