What Happened?

Shares of luxury fashion conglomerate Tapestry (NYSE:TPR) jumped 16.9% in the morning session after 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.

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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 9 months ago when the stock gained 9% on the news that the company reported second-quarter results that beat analysts' revenue expectations. The outperformance was led by a 6% year-on-year growth in the Coach business, which made it easier to reconcile the weakness in other segments. It also raised its EPS outlook, which came in ahead of consensus. 

On the other hand, its EPS missed analysts' expectations, and its full-year revenue guidance was maintained, slightly missing Wall Street's estimates. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track.

Tapestry is up 32.8% since the beginning of the year, and at $50.67 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 $1,916.

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