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Understanding Tapestry (TPR) Reliance on International Revenue

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Have you looked into how Tapestry (TPR - Free Report) performed internationally during the quarter ending March 2024? Considering the widespread global presence of this maker of high-end shoes and handbags, examining the trends in international revenues is essential for assessing its financial resilience and prospects for growth.

In the current era of a tightly interconnected global economy, the proficiency of a company to penetrate international markets significantly influences its financial health and trajectory of growth. For investors, the key is to grasp how reliant a company is on overseas markets, as this provides insights into the durability of its earnings, its ability to exploit different economic cycles, and its overall growth capabilities.

Presence in international markets can act as a hedge against domestic economic downturns and provide access to faster-growing economies. However, this diversification also brings complexities due to currency fluctuations, geopolitical risks and differing market dynamics.

While delving into TPR's performance for the past quarter, we observed some fascinating trends in the revenue from its foreign segments that are commonly modeled and observed by analysts on Wall Street.

The company's total revenue for the quarter amounted to $1.48 billion, showing decrease of 1.8%. We will now explore the breakdown of TPR's overseas revenue to assess the impact of its international operations.

Decoding TPR's International Revenue Trends

During the quarter, Greater China contributed $270.9 million in revenue, making up 18.3% of the total revenue. When compared to the consensus estimate of $277.91 million, this meant a surprise of -2.52%. Looking back, Greater China contributed $264.7 million, or 12.7%, in the previous quarter, and $285.8 million, or 18.9%, in the same quarter of the previous year.

Of the total revenue, $234.9 million came from Other Asia during the last fiscal quarter, accounting for 15.9%. This represented a surprise of -5.03% as analysts had expected the region to contribute $247.34 million to the total revenue. In comparison, the region contributed $248.2 million, or 11.9%, and $237.3 million, or 15.7%, to total revenue in the previous and year-ago quarters, respectively.

Other International generated $102.6 million in revenues for the company in the last quarter, constituting 6.9% of the total. This represented a surprise of +9.39% compared to the $93.79 million projected by Wall Street analysts. Comparatively, in the previous quarter, Other International accounted for $113.4 million (5.4%), and in the year-ago quarter, it contributed $81.6 million (5.4%) to the total revenue.

Projected Revenues in Foreign Markets

Wall Street analysts expect Tapestry to report $1.64 billion in total revenue for the current fiscal quarter, indicating an increase of 1.2% from the year-ago quarter. Greater China, Other Asia and Other International are expected to contribute 15.6% ($256.08 million), 13.7% ($223.61 million) and 7.2% ($118.22 million) to the total revenue, respectively.

Analysts expect the company to report a total annual revenue of $6.73 billion for the full year, marking an increase of 1% compared to last year. The expected revenue contributions from Greater China, Other Asia and Other International are projected to be 15.5% ($1.04 billion), 13.8% ($925.35 million) and 6.3% ($426.41 million) of the total revenue, in that order.

Closing Remarks

The dependency of Tapestry on global markets for its revenues presents a mix of potential gains and hazards. Thus, monitoring the trends in its overseas revenues can be a key indicator for predicting the firm's future performance.

In an era of growing international ties and escalating geopolitical disputes, financial analysts on Wall Street pay keen attention to these developments to fine-tune their earnings estimations for businesses operating across borders. It's important to note, however, that a range of additional variables, like a company's local market status, also play a crucial role in shaping these forecasts.

Here at Zacks, we put a great deal of emphasis on a company's changing earnings outlook, as empirical research has shown that's a powerful force driving a stock's near-term price performance. Quite naturally, the correlation is positive here -- an upward revision in earnings estimates drives the stock price higher.

The Zacks Rank, our proprietary stock rating mechanism, demonstrates a notable performance history confirmed through external audits. It effectively utilizes the power of earnings estimate revisions to act as a predictor of a stock's price performance in the near term.

Tapestry, bearing a Zacks Rank #4 (Sell), is expected to underperform the broader market's movements in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

A Review of Tapestry's Recent Stock Market Performance

Over the past month, the stock has seen a decline of 2.6% in its value, whereas the Zacks S&P 500 composite has posted an increase of 1.3%. The Zacks Retail-Wholesale sector, Tapestry's industry group, has ascended 1.4% over the identical span. In the past three months, there's been a decline of 12.7% in the company's stock price, against a rise of 4.3% in the S&P 500 index. The broader sector has increased by 4.6% during this interval.

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