Tapestry (NYSE:TPR), a luxury goods retailer of handbags, shoes, and accessories under the Coach, Kate Spade, and Stuart Weitzman brands, is scheduled to report its fiscal third-quarter results on Thursday, May 12. We expect the apparel retailer stock to trade higher post the fiscal Q3 release with revenues and earnings beating market expectations. The company was able to beat on both top and bottom lines consistently over the last seven quarters. The retailer’s revenue trends have accelerated compared to pre-pandemic levels, driven by continued growth in China as well as the Digital segment in the FYQ2. While China’s recent Covid outbreak may impact the company’s FYQ3 margins (as it accounts for about 20% of revenues), we still expect the company to navigate well – thanks to its Acceleration Program. This program is focused on cost-cutting, improving margins, and prioritizing more on digitization. The retailer achieved approximately $200 million of gross run-rate expense savings in fiscal 2021 and is on track to realize gross run-rate savings of $300 million in FY 2022.
Tapestry raised its guidance for full-year 2022 – it increased its sales target from a prior $6.6 billion to $6.75 billion, which would be a record number for the company. On the bottom line, the company increased its projected range for earnings per share from $3.45 to $3.50 up to $3.60 to $3.65. Also, TPR expects digital sales to reach $2 billion in revenue in this fiscal year, with further room for growth.
Our forecast indicates that Tapestry’s valuation is around $36 a share, which is 28% higher than the current market price. Look at our interactive dashboard analysis on Tapestry’s Earnings Preview: What to Expect in Fiscal Q3? for more details.
(1) Revenues expected to be well ahead of consensus estimates
Trefis estimates TPR’s Q3 2022 revenues to be around $1.5 Bil, 8% ahead of the consensus estimate. The company’s revenue grew 27% year-over-year (yoy) to $2.14 billion in fiscal Q2. Regional highlights included North American sales growth of 37% and growth of 6% in China. For the full year, we now forecast Tapestry Revenues to be $6.8 billion for fiscal 2022, up 18% yoy.
(2) EPS likely to comfortably beat the consensus estimates
TPR’s Q3 2022 ear1nings per share is expected to be 45 cents per Trefis analysis, almost 10% higher than the consensus estimate of 41 cents. In Q2, the retailer’s adjusted earnings per share came in at $1.33, up from $1.15 a year ago.
(3) Stock price estimate higher than the current market price
Going by our Tapestry’s Valuationwith an EPS estimate of around $3.70 and a P/E multiple of close to 9.8x in fiscal 2022, this translates into a price of $36, which is 28% higher than the current market price
It is helpful to see how its peers stack up. TPR Peers shows how Tapestry’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons,
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Credit: www.forbes.com /