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Tapestry (TPR) Rides on Business Strength & Omnichannel Efforts
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Tapestry, Inc. (TPR - Free Report) , one of the most widely recognized names in the Retail - Apparel and Shoes industry, boasts robust prospects based on its business strength, consumer-centric approach, omnichannel capabilities, brand awareness and emphasis on high-growth areas. The company's constant focus on innovation and product diversification enables it to adapt to changing consumer preferences and capitalize on evolving trends.
The New York-based company has a $10.3-billion market capitalization and currently carries a Zacks Rank #2 (Buy).
Let’s delve into the factors that have been benefiting the luxury accessories and lifestyle products provider for a while now.
Tapestry has been benefiting from strength across its Coach, Kate Spade and Stuart Weitzman brands, driven by solid demand for its products. In third-quarter fiscal 2023, the company’s net sales came in at $1,509.5 million, reflecting an increase of 5% year-over-year, supported by strong sales across its brands.
The company continues to witness strength across its omnichannel capabilities, evident from a mid-single-digit increase in store revenues as consumers continue to embrace the return of in-person shopping during the fiscal third quarter. Also, in the quarter, its digital sales grew in mid-single digits and remained three times its fiscal 2019 level. Also, TPR’s efforts to boost curbside or store pickup service as well as contactless payment options have been driving its performance.
Tapestry has been benefiting from the solid momentum in China, one of its most prominent markets of late. The company’s tailored and innovative product assortments, expanded reach across direct channels and third-party online distribution strategies have been allowing it to capitalize on market opportunities.
It’s worth noting that in the fiscal third quarter, Tapestry witnessed 20% sales increases in Greater China, Japan and Other Asia, which outpaced expectations. It also delivered 4% revenue growth in Europe.
The company is well poised for long-term growth, courtesy of its deepening engagement with consumers, creating innovative and compelling products, venturing into under-penetrated markets and improving digital capabilities.
In the fiscal third quarter, it acquired over 1.2 million new customers in North America alone. Its effective pricing strategy, smaller format locations and cost-effective global sourcing model have been aiding it enhance store productivity.
Image Source: Zacks Investment Research
In the past year, it has increased 42.2% compared with the industry’s growth of 8.6%.
Driven by strength across its business, TPR raised its guidance for fiscal 2023. For the fiscal year, it expects to generate revenues of about $6.7 billion compared with $6.6 billion projected earlier. On a constant-currency basis, revenues are estimated to grow 3% year over year. It estimates earnings to lie in the band of $3.85-$3.90 per share, representing year-over-year growth in low-double-digit on an adjusted basis.
Tapestry’s ability to generate healthy cash flow also allows it to reward shareholders handsomely through dividend payouts and share repurchases. In the fiscal third quarter, it returned $270 million to shareholders through a combination of share repurchases and dividends. The company looks to repurchase approximately $700 million worth of shares in fiscal 2023, with $500 million spent in the first nine months of the fiscal year.
Other Key Picks
Some other top-ranked stocks are Urban Outfitters, Inc. (URBN - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Arcos Dorados Holdings, Inc. (ARCO - Free Report) . Urban Outfitters and Abercrombie & Fitch currently sport a Zacks Rank #1 (Strong Buy), and Arcos Dorados carries a Zacks Rank #2.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products.
The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales and earnings per share suggests growth of 5.1% and 57.1%, respectively, from the corresponding year-ago reported figures. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 3.4%. Its earnings per share are expected to rise 732% from the corresponding year-ago reported figures. ANF has a trailing four-quarter earnings surprise of 480.6%, on average.
Arcos Dorados operates as a franchisee of McDonald's restaurants. The Zacks Consensus Estimate for ARCO’s current financial-year sales and earnings per share suggests growth of 13.4% and 4.4%, respectively, from the corresponding year-ago reported figures. The company has a trailing four-quarter earnings surprise of 23.5%, on average.
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Tapestry (TPR) Rides on Business Strength & Omnichannel Efforts
Tapestry, Inc. (TPR - Free Report) , one of the most widely recognized names in the Retail - Apparel and Shoes industry, boasts robust prospects based on its business strength, consumer-centric approach, omnichannel capabilities, brand awareness and emphasis on high-growth areas. The company's constant focus on innovation and product diversification enables it to adapt to changing consumer preferences and capitalize on evolving trends.
The New York-based company has a $10.3-billion market capitalization and currently carries a Zacks Rank #2 (Buy).
Let’s delve into the factors that have been benefiting the luxury accessories and lifestyle products provider for a while now.
Tapestry has been benefiting from strength across its Coach, Kate Spade and Stuart Weitzman brands, driven by solid demand for its products. In third-quarter fiscal 2023, the company’s net sales came in at $1,509.5 million, reflecting an increase of 5% year-over-year, supported by strong sales across its brands.
The company continues to witness strength across its omnichannel capabilities, evident from a mid-single-digit increase in store revenues as consumers continue to embrace the return of in-person shopping during the fiscal third quarter. Also, in the quarter, its digital sales grew in mid-single digits and remained three times its fiscal 2019 level. Also, TPR’s efforts to boost curbside or store pickup service as well as contactless payment options have been driving its performance.
Tapestry has been benefiting from the solid momentum in China, one of its most prominent markets of late. The company’s tailored and innovative product assortments, expanded reach across direct channels and third-party online distribution strategies have been allowing it to capitalize on market opportunities.
It’s worth noting that in the fiscal third quarter, Tapestry witnessed 20% sales increases in Greater China, Japan and Other Asia, which outpaced expectations. It also delivered 4% revenue growth in Europe.
The company is well poised for long-term growth, courtesy of its deepening engagement with consumers, creating innovative and compelling products, venturing into under-penetrated markets and improving digital capabilities.
In the fiscal third quarter, it acquired over 1.2 million new customers in North America alone. Its effective pricing strategy, smaller format locations and cost-effective global sourcing model have been aiding it enhance store productivity.
Image Source: Zacks Investment Research
In the past year, it has increased 42.2% compared with the industry’s growth of 8.6%.
Driven by strength across its business, TPR raised its guidance for fiscal 2023. For the fiscal year, it expects to generate revenues of about $6.7 billion compared with $6.6 billion projected earlier. On a constant-currency basis, revenues are estimated to grow 3% year over year. It estimates earnings to lie in the band of $3.85-$3.90 per share, representing year-over-year growth in low-double-digit on an adjusted basis.
Tapestry’s ability to generate healthy cash flow also allows it to reward shareholders handsomely through dividend payouts and share repurchases. In the fiscal third quarter, it returned $270 million to shareholders through a combination of share repurchases and dividends. The company looks to repurchase approximately $700 million worth of shares in fiscal 2023, with $500 million spent in the first nine months of the fiscal year.
Other Key Picks
Some other top-ranked stocks are Urban Outfitters, Inc. (URBN - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Arcos Dorados Holdings, Inc. (ARCO - Free Report) . Urban Outfitters and Abercrombie & Fitch currently sport a Zacks Rank #1 (Strong Buy), and Arcos Dorados carries a Zacks Rank #2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products.
The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales and earnings per share suggests growth of 5.1% and 57.1%, respectively, from the corresponding year-ago reported figures. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales suggests growth of 3.4%. Its earnings per share are expected to rise 732% from the corresponding year-ago reported figures. ANF has a trailing four-quarter earnings surprise of 480.6%, on average.
Arcos Dorados operates as a franchisee of McDonald's restaurants. The Zacks Consensus Estimate for ARCO’s current financial-year sales and earnings per share suggests growth of 13.4% and 4.4%, respectively, from the corresponding year-ago reported figures. The company has a trailing four-quarter earnings surprise of 23.5%, on average.