Yahoo Finance Tapestry (TPR) Rides on Customer-Centricity & Digitization
Tapestry, Inc. TPR maintains a robust position in the global luxury market through proactive measures aimed at expanding its luxury brand portfolio and enhancing operational capabilities. Its strategic initiatives, spanning digital transformation to regional market adaptations, are precisely designed to align with evolving consumer preferences and market dynamics.
By exercising disciplined financial management and pursuing forward-thinking growth strategies, Tapestry is well-prepared to navigate the challenges of a competitive landscape. Emphasizing customer-centricity and leveraging digital platforms, the company aims to drive continuous growth, enhance shareholder value and uphold its reputation as a leader in luxury retail.
TPR continues to bolster its digital and omnichannel strategies in response to the evolving retail landscape, launching online platforms like katespadeoutlet.com to offer a seamless shopping experience. With a strong focus on data-driven decision-making, Tapestry's digital business accounted for more than 25% of the total revenues in the third quarter of fiscal 2024.
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Central to Tapestry's strategy is a robust focus on customer-centricity, which is crucial in engaging and expanding its customer base, especially among younger demographics like Gen Z and Millennials. In North America alone, Tapestry attracted 1.2 million customers in the fiscal third quarter, a substantial portion from the younger groups, indicating continued growth potential, driven by consumer preferences.
Moreover, TPR's acquisition of Capri Holdings is set to significantly enhance its value and financial performance. This transformative move will create a global luxury and fashion powerhouse, expanding the company's portfolio across consumer segments and geographies.
International Growth
Tapestry's international strategy, particularly in key markets like Asia and Europe, has yielded significant growth by tailoring products and marketing strategies to local preferences. Notably, revenues in Europe grew 19% year over year and other Asian markets (excluding China and Japan) saw a 15% increase in the fiscal third quarter. This targeted approach has strengthened TPR's presence across diverse global markets.
Strong Outlook
Looking ahead, Tapestry's financial forecast for fiscal 2024 reflects its commitment to maintaining brand integrity, enhancing operational efficiencies and exercising financial prudence in a challenging market landscape. Revenue projections exceed $6.6 billion, with modest 1% growth on a constant-currency basis. Regionally, revenue growth predictions vary, with improvements expected in Greater China, Japan, and other Asian regions, as well as Europe.
Moreover, Tapestry anticipates an improvement of 230 basis points in the gross margin, supported by decreased freight costs contributing approximately 130 basis points to this enhancement. An operating margin expansion of 110 basis points is also anticipated. Earnings per share are estimated between $4.20 and $4.25, indicating an 8-9% year-over-year increase.
Soft Brand Performances
Despite Tapestry's overall positive outlook, challenges persist within its portfolio, notably with Kate Spade and Stuart Weitzman brands. Kate Spade has witnessed a 5.6% decline in sales, reflecting difficulties in maintaining market relevance and attracting consumer interest amidst intense competition. Similarly, Stuart Weitzman's recovery has been sluggish, partly due to strategic adjustments in off-price wholesale shipments, indicating ongoing struggles in adapting to changing consumer preferences and market dynamics in the luxury footwear segment.
Zacks Rank & Share Performance
This Zacks Rank #3 (Hold) company’s shares have risen 32.5% compared with the industry’s 25.8% growth over the past six months.
Key Picks
A few better-ranked stocks are The Gap, Inc. GPS, Abercrombie & Fitch Co. ANF and Canada Goose GOOS.
Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. The company 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 Gap’s fiscal 2023 earnings indicates growth of 4.2% from the fiscal 2023 reported figure. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. The company flaunts a Zacks Rank #1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current fiscal-year earnings and sales indicates growth of 47.5% and 10.5%, respectively, from fiscal 2023’s reported figures. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Canada Goose is a global outerwear brand. It sports a Zacks Rank #1 at present.
The Zacks Consensus Estimate for Canada Goose’s current fiscal-year earnings indicates growth of 13.7% from the year-ago period’s reported figures. GOOS has a trailing four-quarter average earnings surprise of 70.9%.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
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Tapestry, Inc. (TPR) : Free Stock Analysis Report
