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Likely Coronavirus Impact on Tapestry's (TPR) Q3 Earnings

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Zacks Equity Research
·3 min read
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Tapestry, Inc. TPR is likely to see a decline in the top line when it reports third-quarter fiscal 2020 numbers on Apr 30, before market open. The Zacks Consensus Estimate for revenues is pegged at $1.12 billion, indicating a decline of 15.7% from the prior-year reported figure.

The consensus estimate for the bottom line is pegged at a loss of 2 cents for the third quarter. The company reported earnings of 42 cents a share in the same quarter a year ago.

Notably, the company’s earnings have outperformed the Zacks Consensus Estimate in three of the trailing four quarters. This luxury accessories and lifestyle retailer has a trailing four-quarter positive earnings surprise of 5.7%, on average.

Key Factors to Note

Like several retailers, Tapestry has been bearing the brunt of the coronavirus outbreak. The company had temporarily shut all its Coach, Kate Spade and Stuart Weitzman stores across North America and Europe. It also shuttered majority of its stores in the Asia Pacific, including all outlets in Malaysia, Australia, Singapore, New Zealand and in certain parts of Japan. Loss of sales from such store closures has most likely dented its performance in the fiscal third quarter. Apart from these, a weak Stuart Weitzman brand performance remains a deterrent.

Nevertheless, the company has been undertaking transformational initiatives pertaining to products and stores. The company has been focusing on global digital opportunity for its brands and has been ensuring that its e-commerce and distribution centers remain operational in key regions. Meanwhile, management has been taking actions to curb expenses such as elimination of non-essential operating expenses and lower fixed costs like rent as well as enhance SG&A savings.

What the Zacks Model Unveils

Our proven model doesn’t predict 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 odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tapestry, Inc. Price and EPS Surprise

 

Tapestry, Inc. Price and EPS Surprise
Tapestry, Inc. Price and EPS Surprise

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

Although Tapestry carries a Zacks Rank #3, its Earnings ESP of -475.77% makes surprise prediction difficult.

Stocks With a 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:

Dollar General DG has an Earnings ESP of +2.95% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kroger KR has an Earnings ESP of +8.93% and a Zacks Rank #2.

Casa Systems, Inc. CASA has an Earnings ESP of +24.73% and a Zacks Rank #3.

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