17% remaining earnings for Tapestry shares? – Trefis
[Updated: 09/29/21] Update of TPR stocks
Tapestry (NYSE: TPR) recently released its fourth quarter report, in which revenues were up 2% and adjusted earnings per share (EPS) 3% above our estimates. The company’s revenue grew 126% year-over-year (year-over-year) to $ 1.62 billion, thanks to an easy comparison with last year. That said, the company’s revenue exceeded pre-pandemic levels in the fourth quarter, thanks to strong sales growth from Coach. Additionally, the luxury retail company’s digital sales grew 35% year-on-year, expanding its digital presence despite the reopening of retail stores. In addition, sales in mainland China were up 60% year-on-year, up from 40% growth from the quarter before the pandemic. The company’s adjusted earnings per share were also 74 cents, down from a loss of 25 cents in the prior year quarter. Overall, the company had an excellent fourth quarter.
The important takeaway from these profits is that Tapestry increased its revenue despite lower promotional activity and a higher average unit selling price. The brand has benefited from the exclusive attractiveness of its products, which appeal to consumers in search of status. Additionally, Tapestry reduced the number of SKUs by almost 40% during the quarter, resulting in higher gross margins and increased inventory. This further reinforces the idea that the reduction in supply created a shortage which, in turn, led to exclusivity of products for consumers.
For fiscal 2022 (ending June 2022), Tapestry expects revenue of approximately $ 6.4 billion and diluted earnings per share of $ 3.30 to $ 3.35. The company also plans to repurchase $ 500 million of shares and intends to grow its dividend faster than earnings growth. We updated our model after the 10-K tax release. We are now planning Tapestry revenues to $ 6.5 billion in fiscal 2021, up 12% year-on-year, compared to a previous forecast of 10% year-over-year revenue growth. We also expect EPS to hit $ 3.37, up 14% year-on-year, from our previous estimate of $ 2.65. In view of the evolution of our revenue and profit forecasts, we have revised our Tapestry assessment at $ 47 per share, based on expected EPS of $ 3.37 and a P / E multiple of 13.9x for fiscal 2022, which is 17% more than the current market price.
[Updated: 08/18/21] TPR T4 pre-benefits
Tapestry (NYSE: TPR), a luxury handbag, shoe and accessory retailer under the Coach, Kate Spade and Stuart Weitzman brands, is expected to release fourth quarter results on Thursday, August 19. We expect apparel retailer stocks are expected to trade higher after the release of the fiscal fourth quarter, with revenues and earnings above market expectations. Achieving triple-digit growth across the company’s digital channels – making it roughly a third of total revenue, and significant growth in China in the nine months of the fiscal year – helped the company to partially recover from the commercial disruptions of fiscal year 2020 (fiscal year ended June 2020). We expect the company to navigate well based on these trends in the coming fourth quarter. For the full year 2021, the company expects revenue to grow at the rate of an average of teens year-over-year (year-over-year), including forecast for the 2021 operating profit and earnings per share up compared to fiscal 2019.
Our forecast indicates that Tapestry’s valuation is around $ 50 per share, which is 18% above the current market price of $ 42. Check out our interactive dashboard analysis at Tapestry pre-profits: what to expect in fiscal fourth quarter? for more details.
(1) Revenue is expected to be slightly higher than consensus estimates
Trefis estimates TPR’s Q4 2021 revenue to be around $ 1.59 billion, slightly ahead of the consensus estimate of $ 1.56 billion. While the retailer’s total sales rose 19% to $ 1.27 billion in the third quarter. Improving digital demand helped offset much of the Covid-related store closings at the start of fiscal 2021, leading to a decline in sales of just 3% year-on-year (year-on-year) over the years. nine months to $ 4.1 billion. Tapestry has driven strong growth in e-commerce, with the company’s digital sales increasing triple digits so far this year. This has led to digital sales reaching around 30% of total revenue, compared to the percentage of teenagers only last year. The company’s constant investment in its technology infrastructure to capture the growing number of millennials and millennials online seems to be paying off.
2) EPS should exceed consensus estimates
TPR’s earnings per share (EPS) in the fourth quarter of 2021 is expected to be 72 cents according to Trefis analysis, up 6% from the consensus estimate of 68 cents. Tapestry said adjusted earnings of $ 0.51 per share, a significant increase from a loss the previous year and 21% ahead of pre-pandemic BPA levels in the third quarter. In the first nine months of fiscal 2021, Tapestry’s earnings per share improved 83% to $ 2.23. E-commerce sales generally have higher operating margins, and as a result, the company’s operating margin increased 790 basis points year-on-year in the first nine months of fiscal 2021. From plus, the retailer’s efforts to increase average selling prices and reduce promotional sales activities also significantly improved profitability.
For the full year, we expect Tapestry’s net margin to grow to 13.5% in fiscal 2021. This coupled with a 10% growth in Tapestry revenues, could result in net income growth to $ 739 million in 2021. All of this could lead to a possible increase in EPS from -2.34 $ in fiscal 2020 to approximately $ 2.65 in fiscal year 2021 (year ending June 2021).
(3) Estimate of the share price higher than the current market price
Through our Tapestry assessment, with an EPS estimate of around $ 2.65 and a P / E multiple of nearly 19x in fiscal 2021, that translates to a price of $ 50, which is 18% more than the current price. from the market of about $ 42.
For a more in-depth comparison between the peer groups, it helps to see how they fare. TPR Stock Comparison With Peers shows how Tapestry stacks up against its peers on the metrics that matter.