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Tapestry (TPR) Beats on Q4 Earnings & Revenues, Stock Up
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Tapestry, Inc. (TPR - Free Report) delivered better-than-expected fourth-quarter fiscal 2018 results. The adjusted earnings of 60 cents a share beat the Zacks Consensus Estimate of 57 cents, thereby resulting in a positive earnings surprise of 5% and marking the 18th straight quarter of earnings beat. The quarterly earnings improved approximately 21% year over year buoyed by top line growth.
Net sales of this New York-based company came in at $1,483.7 million, up 31% year over year. On a constant currency basis, net sales surged 29%. We noted that the total sales came ahead of the Zacks Consensus Estimate of $1,464 million, marking the third successive quarterly beat.
Tapestry is undergoing a brand transformation and is introducing modern luxury concept stores in key markets. The acquisition of Stuart Weitzman and Kate Spade & Company is being viewed as a significant step in its efforts toward becoming a multi-brand company. Moreover, management has undertaken transformation initiatives revolving around product, stores and marketing. Sales increase at Coach brand, contributions from recent buyouts and cost containment efforts favorably impacted the results.
These endeavors have aided the stock to rise 7% so far in the year outperforming the industry’s growth of 2%. We note that shares of Tapestry are up 5.4% during the pre-market trading hours.
We note that consolidated adjusted gross profit came in at $1,008.7 million, up significantly from $756.8 million, while gross margin expanded 120 basis points to 68%. Further, adjusted operating income of $227.5 million, up 27% from the prior-year quarter figure, however, operating margin shrunk 50 basis points to 15.3%.
Net sales for Coach came in at $1,098.9 million, reflecting an increase of 5% on a reported basis and 3% on a constant currency basis. Comparable-store sales rose 2% buoyed by robust performance in North America. Both gross and operating margins for the segment expanded.
Kate Spade sales came in at $311.9 million. Comparable-store sales slid 3%, including the adverse impact of about half a point from a fall in global e-commerce on account of lower online flash sales. Management highlighted that the segment’s results well surpassed its expectations. Kate Spade also managed to post double digit earnings per share accretion in its first year, in spite of the strategic pullback in online flash sales and wholesale disposition, which was partly offset by the consolidation of the joint ventures for Mainland China, Hong Kong, Macau and Taiwan.
Net sales for Stuart Weitzman totaled $72.9 million, reflecting a decrease of 17% year over year. The segment’s gross margin also shriveled considerably. The company hinted that as expected earlier development and delivery delays hurt sales and margins. Management expects the segment’s topline to return to growth in the second quarter of fiscal 2019.
Store Update
At the end of the quarter, the company operated 402 Coach stores, 200 Kate Spade outlets and 68 Stuart Weitzman stores in North America. Internationally, the count stood at 585, 142 and 35 for Coach, Kate Spade and Stuart Weitzman, respectively.
Other Financial Details
Tapestry, which carries a Zacks Rank #4 (Sell), ended the quarter with cash, cash equivalents and short-term investments of $1,250 million, long-term debt of $1,599.9 million and shareholders' equity of $3,244.6 million.
FY 2019 Guidance
Tapestry now envisions fiscal 2019 to increase at a mid-single-digit rate year over year to $6.1-$6.2 billion. Management expects operating income growth rate to surpass that of the top line on the back of organic growth, realization of synergies from the Kate Spade buyout, impact of distributor consolidations and systems investments. The company anticipates to attain run-rate synergies of approximately $100-$115 million from Kate Spade buyout in fiscal 2019.
The company forecasts fiscal 2019 earnings in the range of $2.70-$2.80 per share compared with $2.63 delivered in fiscal 2018. The current Zacks Consensus Estimate for fiscal year is pegged at $2.80.
Interested in the Retail Space? Check Out These
Abercrombie & Fitch (ANF - Free Report) delivered an average positive earnings surprise of 32.3% in the trailing four quarters. It has a long-term earnings growth rate of 12.5% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zumiez (ZUMZ - Free Report) delivered an average positive earnings surprise of 18.6% in the trailing four quarters and a Zacks Rank #1.
Buckle (BKE - Free Report) delivered an average positive earnings surprise of 9.7% in the trailing four quarters and a Zacks Rank #2 (Buy).
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Tapestry (TPR) Beats on Q4 Earnings & Revenues, Stock Up
Tapestry, Inc. (TPR - Free Report) delivered better-than-expected fourth-quarter fiscal 2018 results. The adjusted earnings of 60 cents a share beat the Zacks Consensus Estimate of 57 cents, thereby resulting in a positive earnings surprise of 5% and marking the 18th straight quarter of earnings beat. The quarterly earnings improved approximately 21% year over year buoyed by top line growth.
Net sales of this New York-based company came in at $1,483.7 million, up 31% year over year. On a constant currency basis, net sales surged 29%. We noted that the total sales came ahead of the Zacks Consensus Estimate of $1,464 million, marking the third successive quarterly beat.
Tapestry is undergoing a brand transformation and is introducing modern luxury concept stores in key markets. The acquisition of Stuart Weitzman and Kate Spade & Company is being viewed as a significant step in its efforts toward becoming a multi-brand company. Moreover, management has undertaken transformation initiatives revolving around product, stores and marketing. Sales increase at Coach brand, contributions from recent buyouts and cost containment efforts favorably impacted the results.
These endeavors have aided the stock to rise 7% so far in the year outperforming the industry’s growth of 2%. We note that shares of Tapestry are up 5.4% during the pre-market trading hours.
We note that consolidated adjusted gross profit came in at $1,008.7 million, up significantly from $756.8 million, while gross margin expanded 120 basis points to 68%. Further, adjusted operating income of $227.5 million, up 27% from the prior-year quarter figure, however, operating margin shrunk 50 basis points to 15.3%.
Tapestry, Inc. Price, Consensus and EPS Surprise
Tapestry, Inc. Price, Consensus and EPS Surprise | Tapestry, Inc. Quote
Segment Details
Net sales for Coach came in at $1,098.9 million, reflecting an increase of 5% on a reported basis and 3% on a constant currency basis. Comparable-store sales rose 2% buoyed by robust performance in North America. Both gross and operating margins for the segment expanded.
Kate Spade sales came in at $311.9 million. Comparable-store sales slid 3%, including the adverse impact of about half a point from a fall in global e-commerce on account of lower online flash sales. Management highlighted that the segment’s results well surpassed its expectations. Kate Spade also managed to post double digit earnings per share accretion in its first year, in spite of the strategic pullback in online flash sales and wholesale disposition, which was partly offset by the consolidation of the joint ventures for Mainland China, Hong Kong, Macau and Taiwan.
Net sales for Stuart Weitzman totaled $72.9 million, reflecting a decrease of 17% year over year. The segment’s gross margin also shriveled considerably. The company hinted that as expected earlier development and delivery delays hurt sales and margins. Management expects the segment’s topline to return to growth in the second quarter of fiscal 2019.
Store Update
At the end of the quarter, the company operated 402 Coach stores, 200 Kate Spade outlets and 68 Stuart Weitzman stores in North America. Internationally, the count stood at 585, 142 and 35 for Coach, Kate Spade and Stuart Weitzman, respectively.
Other Financial Details
Tapestry, which carries a Zacks Rank #4 (Sell), ended the quarter with cash, cash equivalents and short-term investments of $1,250 million, long-term debt of $1,599.9 million and shareholders' equity of $3,244.6 million.
FY 2019 Guidance
Tapestry now envisions fiscal 2019 to increase at a mid-single-digit rate year over year to $6.1-$6.2 billion. Management expects operating income growth rate to surpass that of the top line on the back of organic growth, realization of synergies from the Kate Spade buyout, impact of distributor consolidations and systems investments. The company anticipates to attain run-rate synergies of approximately $100-$115 million from Kate Spade buyout in fiscal 2019.
The company forecasts fiscal 2019 earnings in the range of $2.70-$2.80 per share compared with $2.63 delivered in fiscal 2018. The current Zacks Consensus Estimate for fiscal year is pegged at $2.80.
Interested in the Retail Space? Check Out These
Abercrombie & Fitch (ANF - Free Report) delivered an average positive earnings surprise of 32.3% in the trailing four quarters. It has a long-term earnings growth rate of 12.5% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zumiez (ZUMZ - Free Report) delivered an average positive earnings surprise of 18.6% in the trailing four quarters and a Zacks Rank #1.
Buckle (BKE - Free Report) delivered an average positive earnings surprise of 9.7% in the trailing four quarters and a Zacks Rank #2 (Buy).
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>