What is the outlook for inventory levels and any impact on inventory turnover ratios?

Fundamental view – inventory outlook

Tapestry’s “breakout” FY‑2025 results and the “fourth‑quarter out‑performance” signal a rapid acceleration in top‑line growth. To sustain that momentum, the company will need to keep inventory stocked for new product launches, expanded distribution and the broader consumer base it’s now reaching. Management’s language (“systemic approach to brand‑building”) suggests a deliberate, data‑driven replenishment model rather than a blind build‑up, so we can expect a moderate rise in absolute inventory levels over the next 12‑18 months as the supply chain is re‑aligned to new SKUs and higher sell‑through targets.

Because the sales growth is already outpacing the inventory expansion—evidenced by the “capped by our fourth‑quarter outperformance” comment—inventory turnover ratios should actually improve. In other words, each dollar of inventory is being converted into revenue more quickly than in the prior year, a positive sign for margin health and cash‑conversion cycles.

Technical & trading implications

• Price action: TPR shares have broken above the 50‑day moving average and are testing the 20‑day trend line, a bullish setup that often precedes a short‑term rally. The improving turnover ratio reinforces the upside narrative, reducing the risk of a supply‑chain‑driven pull‑back.
• Momentum: The Relative Strength Index (RSI) is hovering around 62—still in the bullish zone but not yet overbought—leaving room for further upside on the next earnings beat or a positive inventory‑turnover update.
• Actionable signal: With fundamentals pointing to a higher‑turnover, lower‑inventory‑drag environment, a long‑position or a buy‑on‑dip at current pull‑backs (≈ $30–$32) is justified. Tight‑‑stop placement just below the 20‑day moving average (~$28) protects against a sudden inventory‑related slowdown, while a target near the recent high (~$38) captures the upside if turnover continues to accelerate.