HomeMost PopularInvestingTapestry (TPR) Gains on Strategic Innovations, Global Expansion

Tapestry (TPR) Gains on Strategic Innovations, Global Expansion

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Tapestry, Inc.’s TPR strategic efforts in marketing, digital innovation and global expansion are effectively driving growth and strengthening brand loyalty. By targeting a younger demographic and enhancing omnichannel experiences, the company is expanding its customer base and reinforcing loyalty. TPR’s focus on product innovation and strategic acquisitions like Capri Holdings positions it for sustainable growth and competitive advantage in the luxury fashion market. With a clear vision and commitment to operational excellence, Tapestry is poised for a dynamic future.


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Let’s Dig Deeper

The company, which is poised to acquire Capri Holdings, has made substantial progress in strengthening its brand and engaging customers more deeply. In the fiscal second quarter of 2024, it gained 2.5 million customers in North America, notably attracting younger generations, with about half being Gen Z and Millennials. This achievement highlights the company’s effective strategies in marketing and brand positioning to expand its customer base and enhance brand loyalty.

Tapestry excelled in providing seamless omnichannel experiences, recording mid-single-digit growth in both physical store and online sales on a constant-currency basis in the quarter. The digital segment, which accounts for a third of the company’s revenues, underscores the company’s emphasis on digital innovation and its commitment to accommodating customers across different shopping platforms.

Internationally, TPR experienced a 3% increase in sales, driven by a strong and diverse business model. The company saw constant-currency growth of 12% in key markets like Greater China, Japan, Other Asia and Europe, highlighting its strategic market positioning and ability to capitalize on global growth opportunities.

Tapestry’s commitment to product innovation and quality has led to significant gains in the global handbag Average Unit Retail, supporting robust sales in handbags, small leather goods and lifestyle offerings. The company’s focus on creative product development and value continues to attract consumer interest and drive sales.

Promising Outlook

TPR projects fiscal 2024 revenues of $6.7 billion, indicating a slight increase from that reported in fiscal 2023 on a reported basis and 2% growth in constant-currency terms. Regionally, the company expects mid-single-digit revenue growth in Greater China and Japan in constant currency, with North America revenues projected to be similar to or slightly above that reported in the previous year. Other Asia markets are expected to see a low-double-digit increase, while Europe is anticipated to experience high-single-digit growth in constant currency.

The company’s operational strategy includes an operating margin expansion of about 100 basis points (bps), driven by an expected gross margin improvement of around 200 bps partly due to reduced freight costs, contributing approximately 120 bps. For fiscal 2024, Tapestry anticipates the adjusted EPS between $4.10 and $4.15, indicating growth of 6-7% from that reported in fiscal 2023.

Zacks Rank & Estimates

This Zacks Rank #3 (Hold) company has exhibited a decent run in the past six months. Driven by the company’s focus on customer acquisition, product innovation, omnichannel and balanced growth across regions, the accessories designer’s shares have gained 45.6% compared with the industry’s 23% growth over the said period.

The Zacks Consensus Estimate for the current and next fiscal years’ earnings per share is pegged at $4.23 and $4.57, indicating 9% and 8% growth from the year-ago reported levels, respectively. The Zacks Consensus Estimate for the current and next fiscal years’ sales is pegged at $6.75 billion and $6.98 billion, suggesting 1.3% and 3.4% year-over-year increases, respectively.

Three Solid Picks

A few better-ranked stocks are American Eagle Outfitters Inc. AEO, Abercrombie & Fitch Co. ANF and The Gap, Inc. GPS.

American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 12.5% and 3.3% from the year-ago period’s reported figures. AEO has a trailing four-quarter average earnings surprise of 22.7%.

Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently sports a Zacks Rank of 1. ANF has a trailing four-quarter average earnings surprise of 715.6%.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year earnings and sales indicates growth of 19.1% and 5.6% from the year-ago period’s reported figures.

The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company flaunts a Zacks Rank #1 at present.

The Zacks Consensus Estimate for The Gap’s current fiscal-year earnings and sales indicates declines of 0.3% and 4.9% from the year-ago period’s reported figures. GPS has a trailing four-quarter average earnings surprise of 180.9%.

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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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