U.S. Markets close in 14 mins

Factors Setting the Tone for Tapestry's (TPR) Q3 Earnings

  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Tapestry, Inc. TPR is likely to register an increase in the top line when it reports third-quarter fiscal 2021 numbers on May 6, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $1,200 million, suggesting an improvement of 11.8% from the prior-year reported figure.

Although, the Zacks Consensus Estimate for earnings for the quarter under review has decreased by a penny to 29 cents over the past seven days, it still indicates a sharp improvement from loss of 27 cents reported in the year-ago period.

Notably, this provider of luxury accessories and branded lifestyle products has a trailing four-quarter earnings surprise of 39.5%, on average. In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by a margin of 15%.

Factors to Note

Tapestry’s third-quarter performance is likely to have benefited from its Acceleration Program aimed at transforming the company into a leaner and more responsive organization. The company's focus on enhancing omni-channel and e-commerce capabilities, and optimizing cost structure might get reflected in the to-be-reported quarter’s results.

The company’s attempt to lower promotional activity and improve Average Unit Retail across brands remains noteworthy. These are likely to have cushioned gross margin. Notably, the company has been targeting reductions in SG&A expenses and right sizing store fleet.

Additionally, China remains a bright spot for the company, and is likely to have contributed to its top line. The company has been accelerating growth in the region through tailored and innovative product assortments, enhanced marketing and expanded reach across direct channels and third-party online distribution.

Undeniably, aforementioned factors raise optimism. However, soft brick-&-mortar traffic, capacity limits as well as higher freight costs and shipping constraints are some of the headwinds that Tapestry might have encountered.

We note that the Zacks Consensus Estimate for third-quarter revenues at Coach, Kate Spade and Stuart Weitzman brands are pegged at $907 million, $270 million and $52 million, indicating growth of 17.5%, 8% and 2%, respectively, year over year.

Tapestry, Inc. Price, Consensus and EPS Surprise

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 predicts an earnings beat for Tapestry this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tapestry has a Zacks Rank #2 and an Earnings ESP of +10.73%.

Other Stocks With Favorable Combination

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

Gildan Activewear GIL has an Earnings ESP of +7.69% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Under Armour UAA has an Earnings ESP of +6.12% and a Zacks Rank #2.

NIKE, Inc. NKE has an Earnings ESP of +15.26% and a Zacks Rank #3.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

NIKE, Inc. (NKE) : Free Stock Analysis Report

Gildan Activewear, Inc. (GIL) : Free Stock Analysis Report

Under Armour, Inc. (UAA) : Free Stock Analysis Report

Tapestry, Inc. (TPR) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research