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Bear of the Day: Tapestry (TPR)

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Tapestry Inc. (TPR - Free Report) is a house of modern luxury lifestyle brands. The company's portfolio includes the Coach, Kate Spade New York, and Stuart Weitzman brands.

When the retailer recently reported fiscal fourth-quarter results, investors were disappointed. Shares plunged over 20% by midday that trading day.

Revenues of $1.51 billion were up 2% year-over-year but missed analyst expectations. The Coach brand brought in $1.1 billion, flat from the prior-year period, while Kate Spade popped 6%. Stuart Weitzman brand grew revenue by 17%.

Earnings came in at 61 cents per share, about in line with estimates; adjusted gross margin fell 0.6 percentage points to 67.3%.

"We understand that driving sustainable growth at Coach is essential to the success of Tapestry overall and are proud of the brand's performance, highlighted by seven consecutive quarters of positive comparable store sales,” said CEO Victor Luis.

Because of these results, analysts have turned bearish on Tapestry, with eight cutting estimates in the last 60 days for the current fiscal year. The Zacks Consensus Estimate has dropped 18 cents during that same time period from $2.85 to $2.67 per share.

This sentiment has stretched into 2021, and our consensus estimate has dropped 14 cents in the past two months.

TPR is now a Zacks Rank #5 (Strong Sell).

Looking ahead, Tapestry expects declines in its top and bottom lines, mostly due to new store openings and other business initiatives. Full-year guidance looks pretty good, and the company expects to see improvements in profitability at both Coach and Stuart Weitzman.

If you’re an investor interested in adding a retailer to your portfolio, consider Boot Barn (BOOT - Free Report) , which expects 20.7% earnings growth for the current fiscal year. Shares of the western and work-related footwear and apparel chain have surged over 75% so far this year.

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