Tapestry CEO Todd Kahn Sells $4.06 Million of Stock After Record Quarter

Tapestry, Inc. (NYSE:TPR) chief executive Todd Kahn sold 30,000 shares on Monday, November 9, at an average price of $135.28, for a total of $4,058,400. The filing, lodged with the SEC and available on its website, shows the sale cut his direct ownership by 24.52%. He still holds 92,368 shares, worth $12,495,543.04 at the filing price.

That number deserves scrutiny. A chief executive trimming a quarter of his direct stake four days after an earnings beat invites questions the filing does not answer. The document records the transaction; it records no reason. Insider sales may reflect diversification, tax planning, or conviction — the SEC form does not say which.

What did the latest quarter deliver?

On Thursday, November 5, the New York-based luxury accessories house reported $1.82 in earnings per share, beating the consensus estimate of $1.56 by $0.26. Revenue reached $1.89 billion against an expected $1.85 billion, up 11.1% year over year. In the same quarter last year, the firm earned $1.38 per share.

Return on equity stood at 254.95% and net margin at 19.09%. Analysts expect $8.29 in EPS for the current fiscal year. Strong figures, certainly — though a 254.95% return on equity reflects a heavily leveraged balance sheet, and the numbers here confirm it: debt-to-equity of 3.44.

Where does the stock stand?

Shares traded down $0.37 on Tuesday to $135.70, on volume of 2,517,527 against an average of 2,610,306. Key metrics:

• Market capitalization: $27.06 billion
• P/E ratio: 17.46; PEG ratio: 1.58; beta: 1.44
• 50-day moving average: $117.62; 200-day average: $136.97
• 12-month range: $99.00 to $164.80
• Current ratio: 1.75; quick ratio: 1.25

The stock trades above its 50-day average but below its 200-day average — a rally in progress, not yet confirmed.

What changes for dividend holders?

Tapestry declared a quarterly dividend of $0.4625 per share, payable Monday, December 21, to shareholders of record on Friday, December 4. That annualizes to $1.85, a yield of 1.4%, with a payout ratio of 23.81%. The ex-dividend date is Friday, December 4.

How do analysts read the picture?

The desks disagree. Telsey Advisory Group raised its target from $160.00 to $175.00 on August 6 with an "outperform" rating. JPMorgan Chase & Co. lifted its target from $205.00 to $211.00 on August 4, rating the stock "overweight." UBS Group cut its target from $232.00 to $200.00 on October 20, keeping a "buy."

The downgrades came earlier. Zacks Research moved from "strong-buy" to "hold" on July 22; Wall Street Zen followed from "buy" to "hold" on August 16. MarketBeat.com counts one Strong Buy, sixteen Buy and five Hold ratings, for an average "Moderate Buy" and a mean target of $167.26 — roughly 23% above the current price.

Who else has been buying and selling?

Institutions moved heavily in the second quarter. BlackRock Inc. opened a new position worth about $2,610,995,000. SEB Asset Management AB bought in during the first quarter, a stake of roughly $59,525,000. Virginia Retirement Systems acquired a new position valued near $43,929,000. Tidal Investments LLC added 8,656 shares, lifting its holding 14.7% to 67,741 shares worth $9,916,000. Raiffeisen Bank International AG raised its position by 13,153.1%, buying 23,018 shares to hold 23,193 worth $3,399,000. Institutional investors own 90.77% of the stock.

Tapestry, based in New York, sells handbags, accessories, footwear, apparel and jewelry under the Coach and Kate Spade New York brands through stores, e-commerce and wholesale partners across North America, Asia and Europe.

Institutional money is buying; the chief executive is selling. Both facts are on the record, and neither explains the other.