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Tapestry (TPR) Gains From Customer-Centric Strategy
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Tapestry, Inc. (TPR - Free Report) continues to assert its strong position in the global luxury market by actively expanding its luxury brand portfolio and enhancing operational capabilities. TPR’s strategic initiatives encompass a wide range of efforts, from digital transformation to regional market adaptations, all meticulously designed to align with evolving consumer preferences and market trends.
Central to Tapestry's strategy is a strong emphasis on customer centricity. This focus is key to engaging and expanding its customer base, particularly among younger demographics like Gen Z and Millennials. In North America alone, Tapestry attracted 1.2 million customers in the fiscal third quarter, a significant portion from younger groups, which indicates ongoing growth potential driven by consumer preferences.
Tapestry’s disciplined financial management and innovative growth strategies position it well to navigate the challenges of a competitive landscape. By emphasizing customer-centricity and leveraging digital platforms, the company aims to drive sustainable growth, enhance the value of its shareholder and maintain its reputation as a leader in luxury retail.
Image Source: Zacks Investment Research
The launch of online platforms, such as katespadeoutlet.com, aims to offer a seamless shopping experience. With a strong focus on data-driven decision-making, Tapestry's digital business represented over 25% of total revenues in the third quarter of fiscal 2024.
Additionally, the acquisition of Capri Holdings is a transformative move for TPR, which should enhance its value and financial performance. This acquisition will create a global luxury and fashion powerhouse, which should expand the company's portfolio across various consumer segments and geographic regions.
International Growth
Tapestry's international strategy, especially in key markets like Asia and Europe, has delivered substantial growth by tailoring products and marketing strategies to local preferences. Notably, revenues in Europe grew 19% year over year and other Asian markets (excluding China and Japan) saw a 15% increase in the fiscal third quarter. This targeted approach has bolstered TPR's presence across the diverse global markets.
Strong Outlook
Looking ahead, Tapestry's financial forecast for fiscal 2024 reflects its dedication to maintaining brand integrity, enhancing operational efficiencies and exercising financial prudence in a challenging market environment. Revenue projections exceed $6.6 billion, with a modest 1% improvement on a constant-currency basis. Regional revenue growth is expected in Greater China, Japan, other Asian regions and Europe.
Additionally, Tapestry anticipates a 230-basis point improvement in gross margin, supported by reduced freight costs contributing approximately 130 basis points to this enhancement. An operating margin expansion of 110 basis points is also expected. Earnings per share are anticipated to be between $4.20 and $4.25, which indicates an 8-9% year-over-year increase.
Challenges
Despite Tapestry's positive outlook, challenges persist within its portfolio, particularly with the Kate Spade and Stuart Weitzman brands. Kate Spade has experienced a 5.6% decline in sales, reflecting difficulties in maintaining market relevance amid intense competition. Similarly, Stuart Weitzman's recovery has been slow, partly due to strategic adjustments in off-price wholesale shipments, highlighting ongoing struggles in adapting to changing consumer preferences and market dynamics in the luxury footwear segment.
This Zacks Rank #3 (Hold) company’s shares have risen 9.9% compared with the industry’s 15.3% growth in the past six months.
Gap is a premier international specialty retailer, which offers a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 21.7% and 0.2%, respectively, from fiscal 2023 figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Canada Goose is a global outerwear brand. It currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for Canada Goose’s fiscal 2025 earnings and sales indicates growth of 13.7% and 5.2%, respectively, from the year-ago actuals. GOOS has a trailing four-quarter average earnings surprise of 70.9%.
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Tapestry (TPR) Gains From Customer-Centric Strategy
Tapestry, Inc. (TPR - Free Report) continues to assert its strong position in the global luxury market by actively expanding its luxury brand portfolio and enhancing operational capabilities. TPR’s strategic initiatives encompass a wide range of efforts, from digital transformation to regional market adaptations, all meticulously designed to align with evolving consumer preferences and market trends.
Central to Tapestry's strategy is a strong emphasis on customer centricity. This focus is key to engaging and expanding its customer base, particularly among younger demographics like Gen Z and Millennials. In North America alone, Tapestry attracted 1.2 million customers in the fiscal third quarter, a significant portion from younger groups, which indicates ongoing growth potential driven by consumer preferences.
Tapestry’s disciplined financial management and innovative growth strategies position it well to navigate the challenges of a competitive landscape. By emphasizing customer-centricity and leveraging digital platforms, the company aims to drive sustainable growth, enhance the value of its shareholder and maintain its reputation as a leader in luxury retail.
Image Source: Zacks Investment Research
The launch of online platforms, such as katespadeoutlet.com, aims to offer a seamless shopping experience. With a strong focus on data-driven decision-making, Tapestry's digital business represented over 25% of total revenues in the third quarter of fiscal 2024.
Additionally, the acquisition of Capri Holdings is a transformative move for TPR, which should enhance its value and financial performance. This acquisition will create a global luxury and fashion powerhouse, which should expand the company's portfolio across various consumer segments and geographic regions.
International Growth
Tapestry's international strategy, especially in key markets like Asia and Europe, has delivered substantial growth by tailoring products and marketing strategies to local preferences. Notably, revenues in Europe grew 19% year over year and other Asian markets (excluding China and Japan) saw a 15% increase in the fiscal third quarter. This targeted approach has bolstered TPR's presence across the diverse global markets.
Strong Outlook
Looking ahead, Tapestry's financial forecast for fiscal 2024 reflects its dedication to maintaining brand integrity, enhancing operational efficiencies and exercising financial prudence in a challenging market environment. Revenue projections exceed $6.6 billion, with a modest 1% improvement on a constant-currency basis. Regional revenue growth is expected in Greater China, Japan, other Asian regions and Europe.
Additionally, Tapestry anticipates a 230-basis point improvement in gross margin, supported by reduced freight costs contributing approximately 130 basis points to this enhancement. An operating margin expansion of 110 basis points is also expected. Earnings per share are anticipated to be between $4.20 and $4.25, which indicates an 8-9% year-over-year increase.
Challenges
Despite Tapestry's positive outlook, challenges persist within its portfolio, particularly with the Kate Spade and Stuart Weitzman brands. Kate Spade has experienced a 5.6% decline in sales, reflecting difficulties in maintaining market relevance amid intense competition. Similarly, Stuart Weitzman's recovery has been slow, partly due to strategic adjustments in off-price wholesale shipments, highlighting ongoing struggles in adapting to changing consumer preferences and market dynamics in the luxury footwear segment.
This Zacks Rank #3 (Hold) company’s shares have risen 9.9% compared with the industry’s 15.3% growth in the past six months.
Key Picks
Some better-ranked stocks in the retail space are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Canada Goose (GOOS - Free Report) .
Gap is a premier international specialty retailer, which offers a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 21.7% and 0.2%, respectively, from fiscal 2023 figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It sports a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Canada Goose is a global outerwear brand. It currently sports a Zacks Rank of 1.
The Zacks Consensus Estimate for Canada Goose’s fiscal 2025 earnings and sales indicates growth of 13.7% and 5.2%, respectively, from the year-ago actuals. GOOS has a trailing four-quarter average earnings surprise of 70.9%.