What happened
Shares of Tapestry (TPR 1.68%) rose 16.1% in 2020, but most of those gains occurred in the fourth quarter of the year as the luxury goods retailer saw sales suddenly bound higher.
So what
Demand for high-end handbags, shoes, and accessories took a nose dive earlier in the year as the global pandemic closed retail outlets worldwide. And it was only after governments allowed their economies to begin to reopen that Tapestry saw the first hints of recovery.
Image source: Tapestry.
The company -- owner of the Coach, Kate Spade, and Stuart Weitzman brands -- said that while net sales fell 14% in the third quarter, its e-commerce channel surged with triple-digit growth, leading to net profits exploding 11 times higher than the year-ago period.
A combination of less discounting and higher-margin online sales contributed to the improved profit picture.
Now what
Tapestry sales nearly doubled in value in the last three months of 2020 alone, and the stock has tripled from its March lows. Even with the capacity constraints that retailers are still forced to operate under, the luxury goods giant has a competitive advantage over many of its rivals.
Some 40% of Tapestry's stores are outlets, and most of those are in outdoor retail settings that have seen more customer traffic than traditional enclosed malls. Many retailers will continue to struggle even as the economy continues to reopen because consumers are still shying away from shopping malls, but Tapestry's robust outlets can help carry it forward.
