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Things You Need to Know Before Tapestry's (TPR) Q4 Earnings

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Tapestry, Inc. (TPR - Free Report) is set to release fourth-quarter fiscal 2019 results on Aug 15. This house of lifestyle brands as well as designer and marketer of fine accessories and gifts has outperformed the Zacks Consensus Estimate by an average of 3.3% in the trailing four quarters. In the last reported quarter, the company reported a positive earnings surprise of 2.4%.

After witnessing a bottom-line decline of 22% during the third quarter of fiscal 2019, Tapestry is likely to witness year-over-year increase of about 1.7% in the final quarter. The Zacks Consensus Estimate for the quarter under review is pegged at 61 cents, which is a penny above from the year-ago reported figure. We note that the Zacks Consensus Estimate has remained stable in the last 30 days.

The Zacks Consensus Estimate for revenues stands at $1,535 million, indicating an improvement of roughly 3.5% from the prior-year period.

Factors Likely to Influence Tapestry’s Performance

Tapestry is leaving no stone unturned to tackle prevailing headwinds in the retail landscape — soft store traffic, stiff competition from online retailers and aggressive pricing strategy. The company has undertaken transformational initiatives revolving around products, stores and marketing.

The company is undergoing a brand transformation and introducing modern luxury concept stores in key markets. The acquisition of Stuart Weitzman and Kate Spade has been accretive to performance and is being viewed as a significant step toward becoming a multi-brand company.

Management had earlier projected positive comparable-store sales at both Coach and Kate Spade and enhanced profitability at Stuart Weitzman in the final quarter of fiscal 2019. We note that the consensus estimates of sales for Coach, Kate Spade and Stuart Weitzman brands reflect likely growth of 0.7%, 8.4% and 16.6% to $1,107 million, $338 million and $85 million, respectively.

Tapestry continued to envision fiscal 2019 sales growth at a low-to-mid-single-digit rate on a year over year basis. However, it had projected earnings per share of $2.55-$2.60 for the current fiscal year, which indicates a year-over-year decline from $2.63 reported in fiscal 2018.

Further, management expects SG&A deleverage in fiscal 2019 on account of regional distributor buyback activity and systems investments. SG&A expenses have been increasing for quite some time now. Certainly, any deleverage in the same has a direct bearing on margins.

Tapestry, Inc. Price, Consensus and EPS Surprise


 

Tapestry, Inc. Price, Consensus and EPS Surprise

Tapestry, Inc. price-consensus-eps-surprise-chart | Tapestry, Inc. Quote

What the Zacks Model Unveils?

Our proven model does not conclusively show that Tapestry is likely to beat estimates this quarter. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tapestry has a Zacks Rank #3 (Hold) but an Earnings ESP of -4.40%, which makes surprise prediction difficult.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Target (TGT - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ross Stores (ROST - Free Report) has an Earnings ESP of +1.79% and a Zacks Rank #3.

Costco (COST - Free Report) has an Earnings ESP of +0.79% and a Zacks Rank #3.

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