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Tapestry (TPR) Gains Market Share on Operational Strength
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Tapestry, Inc. (TPR - Free Report) , one of the widely recognized names in the Retail - Apparel And Shoes industry, has been making tactical changes to its business operations to adapt and stay relevant in the competitive retail landscape. Its consumer-centric approach, omnichannel capabilities, brand awareness and emphasis on high-growth areas position it well among peers.
The company's ability to adapt to changing consumer preferences and leverage its portfolio of iconic brands, including Coach, Kate Spade and Stuart Weitzman, has been the key to its success. The company's commitment to innovation and product diversification positions it well to capitalize on evolving trends. Moreover, Tapestry has been harnessing the power of the direct-to-consumer business model.
In the third quarter of fiscal 2023, the company generated roughly 10% direct-to-consumer revenue growth at constant currency, led by a low-teens increase in stores and a mid-single-digit gain in digital. The company acquired more than 1.2 million new customers in North America alone, of which about half were Gen Z and Millennial consumers.
Image Source: Zacks Investment Research
Tapestry’s growth drivers include deepening engagement with consumers, creating innovative and compelling products, venturing into under-penetrated markets and enhancing digital capacities. The company’s compelling pricing strategy, smaller format locations and cost-effective global sourcing model have been enhancing store productivity.
From the growth perspective, China remains one of the prominent markets for Tapestry. The company has been accelerating growth in the region through tailored and innovative product assortments, enhanced marketing and expanded reach across direct channels and third-party online distribution. Greater China witnessed a stronger upturn than expected, with sales growth of 20%.
Owing to a robust performance in the third quarter, Tapestry raised its guidance for fiscal 2023. It now envisions revenues of approximately $6.7 billion for fiscal 2023. On a constant-currency basis, revenues are estimated to grow 3% year over year. Earlier, the company projected revenues of approximately $6.6 billion for fiscal 2023. TPR guided earnings in the band of $3.85-$3.90 per share, representing low-double-digit growth from the prior year on an adjusted basis.
Wrapping Up
Tapestry's market share gains are a testament to its operational strength, iconic brand portfolio, digital initiatives and successful expansion into the Chinese market. Based on the outstanding performance in the third quarter, management foresees mid-single-digit growth in Greater China for the fiscal year, with a notable surge of approximately 50% anticipated in the fourth quarter.
Shares of this Zacks Rank #3 (Hold) company have rallied 15.5% in the past six months against the industry’s decline of 5.8%.
Pick These 3 Stocks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , Urban Outfitters (URBN - Free Report) and G-III Apparel Group (GIII - Free Report) .
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 3.4% and 732%, respectively, from the year-ago reported figures. ANF delivered a trailing four-quarter earnings surprise of 480.6%, on average.
Urban Outfitters, the lifestyle apparel and accessories retailer, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 12.2%, on average.
The consensus estimate for Urban Outfitters’ current financial-year sales and EPS suggests growth of 5.1% and 57.1%, respectively, from the year-ago reported figures. The expected EPS growth rate for three to five years is 18%.
G-III Apparel, a global fashion leader with expertise in design, sourcing and manufacturing, currently sports a Zacks Rank #1. G-III Apparel delivered an average earnings surprise of 47.4% in the trailing four quarters.
The Zacks Consensus Estimate for G-III Apparel’s current financial-year sales suggests growth of 1.4% from the year-ago period. The expected EPS growth rate for three to five years is 15%.
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Tapestry (TPR) Gains Market Share on Operational Strength
Tapestry, Inc. (TPR - Free Report) , one of the widely recognized names in the Retail - Apparel And Shoes industry, has been making tactical changes to its business operations to adapt and stay relevant in the competitive retail landscape. Its consumer-centric approach, omnichannel capabilities, brand awareness and emphasis on high-growth areas position it well among peers.
The company's ability to adapt to changing consumer preferences and leverage its portfolio of iconic brands, including Coach, Kate Spade and Stuart Weitzman, has been the key to its success. The company's commitment to innovation and product diversification positions it well to capitalize on evolving trends. Moreover, Tapestry has been harnessing the power of the direct-to-consumer business model.
In the third quarter of fiscal 2023, the company generated roughly 10% direct-to-consumer revenue growth at constant currency, led by a low-teens increase in stores and a mid-single-digit gain in digital. The company acquired more than 1.2 million new customers in North America alone, of which about half were Gen Z and Millennial consumers.
Image Source: Zacks Investment Research
Tapestry’s growth drivers include deepening engagement with consumers, creating innovative and compelling products, venturing into under-penetrated markets and enhancing digital capacities. The company’s compelling pricing strategy, smaller format locations and cost-effective global sourcing model have been enhancing store productivity.
From the growth perspective, China remains one of the prominent markets for Tapestry. The company has been accelerating growth in the region through tailored and innovative product assortments, enhanced marketing and expanded reach across direct channels and third-party online distribution. Greater China witnessed a stronger upturn than expected, with sales growth of 20%.
Owing to a robust performance in the third quarter, Tapestry raised its guidance for fiscal 2023. It now envisions revenues of approximately $6.7 billion for fiscal 2023. On a constant-currency basis, revenues are estimated to grow 3% year over year. Earlier, the company projected revenues of approximately $6.6 billion for fiscal 2023. TPR guided earnings in the band of $3.85-$3.90 per share, representing low-double-digit growth from the prior year on an adjusted basis.
Wrapping Up
Tapestry's market share gains are a testament to its operational strength, iconic brand portfolio, digital initiatives and successful expansion into the Chinese market. Based on the outstanding performance in the third quarter, management foresees mid-single-digit growth in Greater China for the fiscal year, with a notable surge of approximately 50% anticipated in the fourth quarter.
Shares of this Zacks Rank #3 (Hold) company have rallied 15.5% in the past six months against the industry’s decline of 5.8%.
Pick These 3 Stocks
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , Urban Outfitters (URBN - Free Report) and G-III Apparel Group (GIII - Free Report) .
Abercrombie & Fitch, a leading casual apparel retailer, 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 Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 3.4% and 732%, respectively, from the year-ago reported figures. ANF delivered a trailing four-quarter earnings surprise of 480.6%, on average.
Urban Outfitters, the lifestyle apparel and accessories retailer, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 12.2%, on average.
The consensus estimate for Urban Outfitters’ current financial-year sales and EPS suggests growth of 5.1% and 57.1%, respectively, from the year-ago reported figures. The expected EPS growth rate for three to five years is 18%.
G-III Apparel, a global fashion leader with expertise in design, sourcing and manufacturing, currently sports a Zacks Rank #1. G-III Apparel delivered an average earnings surprise of 47.4% in the trailing four quarters.
The Zacks Consensus Estimate for G-III Apparel’s current financial-year sales suggests growth of 1.4% from the year-ago period. The expected EPS growth rate for three to five years is 15%.