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Tapestry (TPR) Gains on Strategic Growth, Customer-Centricity
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Tapestry, Inc. (TPR - Free Report) solidifies its foothold in the global luxury market by advancing its luxury brand portfolio and optimizing its operational strengths. The company’s strategic framework includes a comprehensive suite of initiatives, from embracing digital transformation to customizing strategies for regional markets, all aimed at syncing with shifting consumer tastes and emerging market trends.
The company’s prudent financial oversight and innovative growth strategies equip it to tackle the competitive challenges within the luxury sector. By prioritizing customer-centricity and harnessing digital platforms, TPR aims to achieve sustainable growth, enhance shareholder value and uphold its reputation as a luxury retail leader.
Image Source: Zacks Investment Research
Seamless Shopping Experience
At the heart of Tapestry's approach is a commitment to customer-centricity. This strategy is crucial for engaging a diverse and expanding customer base, particularly among younger consumers such as Gen Z and Millennials. In North America, Tapestry drew 1.2 million new customers in the fiscal third quarter, with a notable influx from younger demographics, highlighting its potential for continued growth, driven by evolving consumer preferences.
The introduction of online platforms like katespadeoutlet.com enhances the shopping experience, with TPR’s digital operations contributing more than 25% to the total revenues in the third quarter of fiscal 2024.
The acquisition of Capri Holdings is a milestone for Tapestry, which is expected to enhance its market value and financial performance. This strategic move will form a global luxury and fashion powerhouse, broadening TPR’s portfolio across various consumer segments and geographical 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 Asia markets (excluding China and Japan) saw a 15% increase in the fiscal third quarter. This targeted approach has bolstered TPR's presence across diverse global markets.
Positive Outlook
Looking forward, TPR’s financial forecast for fiscal 2024 underscores its commitment to brand integrity, operational efficiency and financial discipline amid a challenging market landscape. Projected revenues are expected to exceed $6.6 billion, with modest 1% growth on a constant-currency basis. Regional revenue growth is anticipated in Greater China, Japan, other Asian regions and Europe.
Tapestry is also poised for a 230-basis-point improvement in the gross margin, driven by reduced freight costs contributing approximately 130 basis points. An operating margin expansion of 110 basis points is projected, with earnings per share estimated between $4.20 and $4.25, indicating an 8-9% year-over-year increase.
Challenges
Despite a generally optimistic outlook, TPR faces challenges within its portfolio, particularly with the Kate Spade and Stuart Weitzman brands. Kate Spade has seen a 5.6% drop in sales in the third quarter due to difficulties in maintaining market relevance amid fierce competition. Similarly, Stuart Weitzman’s recovery has been gradual, partly due to strategic adjustments in off-price wholesale shipments, revealing ongoing struggles to adapt to changing consumer preferences and market dynamics in the luxury footwear sector.
This Zacks Rank #3 (Hold) company’s shares have risen 4.5% compared with the industry’s 0.5% growth in the past three 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 Urban Outfitters Inc. (URBN - 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 22.4% and 0.2%, respectively, from fiscal 2023 reported 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 reported 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 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.
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Tapestry (TPR) Gains on Strategic Growth, Customer-Centricity
Tapestry, Inc. (TPR - Free Report) solidifies its foothold in the global luxury market by advancing its luxury brand portfolio and optimizing its operational strengths. The company’s strategic framework includes a comprehensive suite of initiatives, from embracing digital transformation to customizing strategies for regional markets, all aimed at syncing with shifting consumer tastes and emerging market trends.
The company’s prudent financial oversight and innovative growth strategies equip it to tackle the competitive challenges within the luxury sector. By prioritizing customer-centricity and harnessing digital platforms, TPR aims to achieve sustainable growth, enhance shareholder value and uphold its reputation as a luxury retail leader.
Image Source: Zacks Investment Research
Seamless Shopping Experience
At the heart of Tapestry's approach is a commitment to customer-centricity. This strategy is crucial for engaging a diverse and expanding customer base, particularly among younger consumers such as Gen Z and Millennials. In North America, Tapestry drew 1.2 million new customers in the fiscal third quarter, with a notable influx from younger demographics, highlighting its potential for continued growth, driven by evolving consumer preferences.
The introduction of online platforms like katespadeoutlet.com enhances the shopping experience, with TPR’s digital operations contributing more than 25% to the total revenues in the third quarter of fiscal 2024.
The acquisition of Capri Holdings is a milestone for Tapestry, which is expected to enhance its market value and financial performance. This strategic move will form a global luxury and fashion powerhouse, broadening TPR’s portfolio across various consumer segments and geographical 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 Asia markets (excluding China and Japan) saw a 15% increase in the fiscal third quarter. This targeted approach has bolstered TPR's presence across diverse global markets.
Positive Outlook
Looking forward, TPR’s financial forecast for fiscal 2024 underscores its commitment to brand integrity, operational efficiency and financial discipline amid a challenging market landscape. Projected revenues are expected to exceed $6.6 billion, with modest 1% growth on a constant-currency basis. Regional revenue growth is anticipated in Greater China, Japan, other Asian regions and Europe.
Tapestry is also poised for a 230-basis-point improvement in the gross margin, driven by reduced freight costs contributing approximately 130 basis points. An operating margin expansion of 110 basis points is projected, with earnings per share estimated between $4.20 and $4.25, indicating an 8-9% year-over-year increase.
Challenges
Despite a generally optimistic outlook, TPR faces challenges within its portfolio, particularly with the Kate Spade and Stuart Weitzman brands. Kate Spade has seen a 5.6% drop in sales in the third quarter due to difficulties in maintaining market relevance amid fierce competition. Similarly, Stuart Weitzman’s recovery has been gradual, partly due to strategic adjustments in off-price wholesale shipments, revealing ongoing struggles to adapt to changing consumer preferences and market dynamics in the luxury footwear sector.
This Zacks Rank #3 (Hold) company’s shares have risen 4.5% compared with the industry’s 0.5% growth in the past three 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 Urban Outfitters Inc. (URBN - 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 22.4% and 0.2%, respectively, from fiscal 2023 reported 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 reported 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 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.