Key Takeaways Tapestry closed FY25 with $7B in revenues, up 5% y/y, with adjusted EPS rising to $5.10 from $4.29.TPR projects 2026 sales of $7.2B and EPS of $5.30-$5.45, absorbing tariff-related costs.Coach drives growth, with strong momentum across regions, while Kate Spade faces a near-term decline.Tapestry, Inc. (TPR) concluded fiscal 2025 with record results, setting the stage for an improved outlook in fiscal 2026. The company reported revenues of $7 billion, up 5% from the prior year, and adjusted ear ...

Core Viewpoint - Abercrombie & Fitch Co. (ANF) is set to report its second-quarter fiscal 2025 results on August 27, with expected revenues of $1.2 billion, indicating a 4.8% year-over-year growth [1][10]. Financial Performance - The consensus estimate for fiscal second-quarter earnings is $2.27 per share, reflecting a 9.2% decline from $2.50 in the prior year [2]. - Abercrombie's earnings have historically exceeded consensus estimates, with a 17.8% beat in the last reported quarter and an average earnings surprise of 11.2% over the past four quarters [2]. Earnings Predictions - The company has a positive Earnings ESP of +2.62% and a Zacks Rank of 3, indicating a likelihood of an earnings beat [3]. - Sales growth in the second quarter is anticipated to be driven by the Hollister brand and strong performance across the Americas, EMEA, and APAC regions [4][10]. Strategic Initiatives - Management is optimistic about future top-line performance due to brand positioning and strategic initiatives, including digital innovation and agile inventory management [5]. - Abercrombie is enhancing customer experience through improved delivery and product discovery, supported by investments in technology [6]. Sales Outlook - For the fiscal second quarter, ANF projects net sales to increase by 3-5% from $1.13 billion in the previous year, with a specific expectation of 4.1% growth [7]. - The Hollister brand is expected to grow by 6.1%, while the Abercrombie brand is projected to rise by 2.2% [7]. Cost Pressures - Elevated operating and freight costs are anticipated to impact margins, with operating margin expected to decline to 12-13% from 15.5% in the prior year [8][12]. - The company faces additional cost pressures from heightened tariffs, including a 10% duty on global imports and a 30% tariff on imports from China [9][11]. Market Performance - Abercrombie's shares have increased by 34.6% over the past three months, outperforming industry peers and the S&P 500 [14]. - The current share price of $98.46 is 42.3% below its 52-week high and 50.6% above its 52-week low, with a forward P/E ratio of 9.45X, lower than industry and S&P averages [17].

Core Insights - Target (TGT) and Walmart (WMT) are both major retail stocks trading near $100, but they are experiencing different market dynamics, with Walmart at a 52-week high and Target over 35% below its peak [1][2] Q2 Expectations - Target's Q2 sales are projected to decline by 2% to $24.91 billion compared to $25.45 billion a year ago, with earnings expected to fall approximately 20% to $2.06 per share from $2.57 in the prior year [3] - Walmart's Q2 sales are anticipated to increase by more than 3% to $175.51 billion from $169.34 billion in the previous period, with EPS expected to rise by 9% to $0.73 from $0.67 [4] Stock Performance Overview - Walmart's core business, particularly in grocery and essential items, is thriving, contributing nearly 60% of its sales, while Target is more exposed to discretionary categories that are struggling [5][6] - Walmart's stock has gained 11% this year, outperforming the broader market and Amazon, while Target's shares have declined by 22% [7] Valuation Comparison - Target's stock is trading at 13.7X forward earnings, significantly lower than Walmart's 38.4X and the S&P 500's 24.6X, indicating a more appealing valuation despite Walmart's competitive advantage [9] - Target's valuation is also below its decade-long high of 30.4X forward earnings and its median of 15.7X, while Walmart is near its decade peaks [10] Dividend Comparison - Both companies are recognized as Dividend Kings, but Target offers a more attractive annual dividend yield of 4.43%, compared to Walmart's 0.94% and the S&P 500's average of 1.15% [12] Conclusion & Final Thoughts - Long-term investors may find Target's stock appealing due to its valuation, while Walmart's near-term outlook justifies a premium for its stock [14] - The investment decision hinges on whether investors prefer Target's long-term value or Walmart's growth and defensive safety in the current market [15]

Group 1 - Despite weak consumer confidence in the U.S. due to tariffs, Brinker International, Inc. has achieved over 150% gains in the past 52 weeks [1] - The company appears to be resilient in the face of consumer spending cuts [1]

Group 1 - The market's immediate reaction to Polaris Inc.'s short-term challenges, particularly the $200 million tariff impact, may be obscuring the underlying value of the company [1] - Headline figures may appear alarming, but there is potential for recovery and growth in the company's fundamentals [1] Group 2 - The focus of the analysis is on resilient cash flows, capital allocation discipline, and sustainable dividend growth, which are critical for long-term investment strategies [1]

Market Overview & Strategy - The market experienced a 25% surge from its lows in the second quarter [2] - The market's forward earnings multiple is 24 times, exceeding the 30-year average by more than one standard deviation [2] - The strategist suggests caution due to tariff headwinds and potentially aggressive earnings estimates of 11% for this year and 12% for next year [3][2] - The third quarter is viewed as a tie-breaker to determine the future economic direction [7] - The rally since April is considered a gift, advising repositioning for a potentially more challenging second half of the year [9] Sector Analysis & Investment Opportunities - Healthcare sector is undervalued with terrific cash flows, investment-grade balance sheets, and the lowest valuations in a decade [4] - Healthcare represents the lowest percentage of the S&P in at least 25 years, presenting a value opportunity [4] - Financials and industrials are performing well, driven by economically sensitive factors [6] - The financial sector's potential to lead a broadening rebound is noted, especially considering the regulatory framework [6] Economic Factors & Fed Policy - The passage of the "big beautiful bill" is anticipated to provide a short-term positive impact on the markets [8][9] - The Fed's potential easing is linked to signs of economic deterioration, which may not necessarily benefit the market [11] - The Fed is expected to hold off on easing until economic deterioration and rising unemployment become apparent [12]

Core Insights - Observing megatrends can provide valuable insights into societal advancements and potential investment opportunities [1] - The importance of fundamentals, quality of leadership, and product pipeline is emphasized for successful investing [1] - A focus on marketing and business strategy for medium-sized companies and startups is highlighted [1] Group 1 - Megatrends and emerging technologies are crucial for understanding future investment landscapes [1] - Companies that effectively leverage opportunities presented by societal and technological changes will likely succeed [1] - The analyst has experience in evaluating startups and emerging industries, indicating a strong background in identifying growth potential [1] Group 2 - The article underscores the necessity of combining macrotrends with fundamental analysis for uncovering investment opportunities [1] - The analyst's diverse experience, including international development and journalism, contributes to a well-rounded perspective on market dynamics [1]

Core Viewpoint - The content emphasizes the importance of conducting personal due diligence and consulting competent advisors before making any financial decisions, particularly in the context of investments and trading activities [1]. Group 1 - The website provides general news, personal analysis, and third-party content intended for educational and research purposes [1]. - It explicitly states that the information does not constitute any recommendation or advice for investment actions [1]. - Users are advised to perform their own research and consider their financial situation before making decisions [1]. Group 2 - The website includes information about complex financial instruments such as cryptocurrencies and contracts for difference (CFDs), which carry a high risk of losing money [1]. - It encourages users to understand how these instruments work and the associated risks before investing [1]. - The content may include advertisements and promotional materials, with the website potentially receiving compensation from third parties [1].

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...