Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Tapestry's (TPR) Q3 Earnings & Sales Beat Estimates, Rise Y/Y

By Zacks Investment ResearchStock MarketsMay 06, 2021 03:17AM ET
Tapestry's (TPR) Q3 Earnings & Sales Beat Estimates, Rise Y/Y
By Zacks Investment Research   |  May 06, 2021 03:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

In spite of a challenging backdrop, Tapestry (NYSE:TPR), Inc. TPR reported better-than-expected results for third-quarter fiscal 2021. This house of modern luxury accessories and lifestyle brands witnessed a significant improvement in sales trends on a sequential basis.

While the quarter marked the sixth straight top-line beat, the bottom line surpassed the Zacks Consensus Estimate for the fourth time. Also, the company attained a meaningful improvement in earnings per share on a year-over-year basis owing to gross margin expansion and lower SG&A expenses.

Management highlighted that strength in e-commerce and China contributed to this upbeat performance. In fact, the company saw a triple-digit increase in digital sales globally. Notably, the company registered new customer acquisition across all brands.

Tapestry posted adjusted earnings of 51 cents per share that surpassed the Zacks Consensus Estimate of 30 cents. Also, the bottom line compared favorably with adjusted loss of 27 cents per share in the year-ago quarter.

Net sales of this New York-based company were $1,273.3 million, ahead of the Zacks Consensus Estimate of $1,231 million. Moreover, the metric increased 18.7% on a year-over-year basis.

Let’s Take an Insight

Clearly, Tapestry’s impressive performance reflects significant progress with the previously-announced Acceleration Program. The program aims at transforming into a leaner and more responsive organization, building significant data and analytics capabilities with focus on e-commerce channels, and operating with a clearly defined path and strategy for each brand.

Impressively, management made significant progress on its Acceleration Program. It recruited nearly 700,000 new customers via its e-commerce channels in North America and witnessed higher purchase frequency year over year. The company saw significant growth in China on integrated and comprehensive brand-building strategies with innovative product and solid marketing efforts.

Moreover, Tapestry used data and analytics tools across its platform to enhance customer experience. It has also been enhancing the flexibility of its operating model via a streamlined organizational structure and optimized global fleet. Markedly, it is on track to realize about $300 million in gross run rate expense savings, including $200 million projected for fiscal 2021.

Although management did not provide any detailed guidance for fiscal 2021 owing to the pandemic, its actions to lower promotional activity and improve Average Unit Retail or AURs across brands as well as disciplined expense management helped the company see the third successive quarter of operating income growth.

Again, given the stronger-than-expected results in the first nine months and anticipations of sustained recovery, Tapestry now envisions revenues for fiscal 2021 to improve at a mid-teens rate on both a 52 and 53-week basis. This outlook includes anticipations of operating income and earnings per share increases compared to fiscal 2019 on a 52 and 53-week basis.

Margin Discussions

Consolidated adjusted gross profit came in at $912 million, up 26.7% from the year-ago period. Also, adjusted gross margin expanded 450 basis points (bps) to 71.6% owing to lower and more disciplined promotional activity. Further, the company reported adjusted operating income of $183 million versus adjusted operating loss of $32 million reported in the year-ago period. Also, adjusted operating margin improved to 14.4% from operating margin of (2.9)% in the prior-year period.

We note that adjusted SG&A expenses contracted 3.1% to $729 million, reflecting cost-containment efforts and the earlier announced actions to transform the company’s operating model. Again, as a percentage of net sales, adjusted SG&A contracted to 57.3% from 70.1% recorded in the year-earlier quarter.

Segment Details

Net sales for Coach came in at $963.5 million, up 24.9 % year over year. Gross margin for the segment expanded 490 bps to 74.5%. We note that adjusted operating margin increased to 28.7% from 15.1% in the year-ago quarter.

Kate Spade sales came in at $252.4 million, up 1% from the year-ago period. Adjusted gross margin for the segment increased 150 bps to 63.5%. The segment reported adjusted operating margin of 4.6% versus an operating margin of (6.9)% recorded in the year-ago quarter.

Net sales for Stuart Weitzman totaled $57.4 million, up 11.8% year over year. The segment’s adjusted gross margin improved 420 bpsto 58.9%. The company reported adjusted operating loss of $8 million compared with an operating loss of $35 million in the year-ago quarter.

Store Update

At the end of the quarter, the Zacks Rank #2 (Buy) company operated 357 Coach stores, 211 Kate Spade outlets and 49 Stuart Weitzman stores in North America. Internationally, the count was 587, 202 and 54 for Coach, Kate Spade and Stuart Weitzman, respectively.

Other Financial Details

Tapestry ended the quarter with cash, cash equivalents and short-term investments of $1,659.2 million, long-term debt of $1,590 million and stockholders' equity of $3,015 million.

Don’t Miss These Solid Bets Too

Abercrombie & Fitch ANF has an expected long-term earnings growth rate of 18%. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Levi Strauss LEVI has a trailing four-quarter earnings surprise of 54.5% on average. It has a Zacks Rank #1.

L Brands (NYSE:LB) LB has an expected long-term earnings growth rate of 13% and currently has a Zacks Rank #2.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?

Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

AccessZacks Top 10 Stocks for 2021 today >>

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

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

L Brands, Inc. (LB): Free Stock Analysis Report

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

Levi Strauss & Co. (NYSE:LEVI): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research
Tapestry's (TPR) Q3 Earnings & Sales Beat Estimates, Rise Y/Y

Related Articles

Tapestry's (TPR) Q3 Earnings & Sales Beat Estimates, Rise Y/Y

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email