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Capri Holdings Limited (CPRI - Free Report) reported better-than-expected second-quarter fiscal 2023 results. Both the top and bottom lines improved on a year-over-year basis. The company was encouraged by the performance of all three luxury brands. However, management provided a cautious sales commentary for the remainder of fiscal 2023.
Given the ongoing macroeconomic conditions, foreign currency headwinds and pandemic-related restrictions in China, Capri Holdings has taken a cautious approach on the revenue front. However, the company reiterated its earnings per share view for the fiscal year due to higher gross margin expectations, efficient cost management and a lower share count.
Let’s Delve Deeper
This designer, marketer, distributor and retailer of branded apparel and accessories posted adjusted quarterly earnings of $1.79 per share, which showcased an improvement from the adjusted earnings of $1.53 reported in the year-ago period. The quarterly earnings also handily beat the Zacks Consensus Estimate of $1.55.
Total revenues of $1,412 million marginally came ahead of the Zacks Consensus Estimate of $1,399 million and increased 8.6% year over year. On a constant-currency basis, total revenues rose 17.5%.
The adjusted gross profit increased approximately 7.8% year over year to $948 million. However, the adjusted gross margin contracted 50 basis points (bps) to 67.1%.
The company reported an adjusted operating income of $280 million, up from $241 million in the prior-year quarter. The operating margin expanded 130 bps to 19.8%.
Capri Holdings Limited Price, Consensus and EPS Surprise
Revenues from Versace increased 9.2% year over year to $308 million during the quarter under discussion. Women’s accessories retail sales increased 60%. The operating margin increased 60 bps to 20.1%.
Jimmy Choo’s revenues came in at $142 million, up 3.6% from the prior-year period. Women’s accessories retail sales grew 30%. The operating margin expanded 490 bps to 5.6%.
Revenues from Michael Kors grew 9.2% year over year to $962 million. Women’s accessories retail sales grew in the mid-single digits. The operating margin expanded 80 bps to 25.8%.
Other Details
Capri Holdings ended the quarter with cash and cash equivalents of $215 million, net receivables of $441 million, long-term debt of $1,585 million and total shareholders’ equity of $2,143 million.
During the quarter, the company repurchased roughly 7.1 million shares for approximately $350 million. On Nov 9, 2022, Capri Holdings’ board of directors authorized a new share repurchase program of up to $1 billion. This new two-year program will replace the existing $1-billion share buyback program, which had $250 million of availability remaining.
As of Oct 1, 2022, the company had 1,276 retail stores. These include 821 Michael Kors, 238 Jimmy Choo and 217 Versace stores.
Guidance
Capri Holdings estimates revenues of approximately $5.7 billion for fiscal 2023, down from the prior projection of $5.85 billion. It reaffirmed the earnings per share guidance of approximately $6.85, which indicates an increase from the adjusted earnings of $6.21 reported in fiscal 2022.
Management projected a gross margin expansion of 50 basis points and an operating margin to be approximately 18.3%.
The fiscal 2023 top-line projection assumes revenues of approximately $1.15 billion from Versace, $640 million from Jimmy Choo and $3.91 billion from Michael Kors. Management anticipates an operating margin of approximately 16%, 5% and 25% for Versace, Jimmy Choo and Michael Kors, respectively, for the fiscal year.
Management envisions third-quarter fiscal 2023 revenues to be roughly $1.53 billion. It projected earnings per share of approximately $2.20 compared with the adjusted earnings of $2.22 reported in the third quarter of fiscal 2022. The company expects its operating margin to be approximately 20.5%.
For the third quarter, Capri Holdings anticipates revenues of approximately $240 million from Versace, $180 million from Jimmy Choo and $1.11 billion from Michael Kors. The company expects the operating margin in the high-single-digit range for Versace and Jimmy Choo and a mid-to-high 20% range for Michael Kors.
For the fourth quarter, the company expects revenues of $1.40 billion and adjusted earnings of $1.35 per share, with an adjusted operating margin of 14%.
This Zacks Rank #4 (Sell) stock has fallen 6.2% in the past three months compared with the industry’s decline of 10.3%.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS suggests growth of 51.5% and 23.7%, respectively, from the year-ago period. CROX has a trailing four-quarter earnings surprise of 18.2%, on average.
Chipotle Mexican Grill, an operator of fast-casual restaurants, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 23.4%.
The Zacks Consensus Estimate for Chipotle Mexican Grill’s current financial-year revenues and EPS suggests growth of 15.2% and 30.8%, respectively, from the year-ago reported figure. CMG has a trailing four-quarter earnings surprise of 4.1%, on average.
Kroger, one of the leading grocery retailers, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 11.7%.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 7.8% and 10.3%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 15.7%, on average.
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Capri Holdings (CPRI) Q2 Earnings Beat, Revenues Rise Y/Y
Capri Holdings Limited (CPRI - Free Report) reported better-than-expected second-quarter fiscal 2023 results. Both the top and bottom lines improved on a year-over-year basis. The company was encouraged by the performance of all three luxury brands. However, management provided a cautious sales commentary for the remainder of fiscal 2023.
Given the ongoing macroeconomic conditions, foreign currency headwinds and pandemic-related restrictions in China, Capri Holdings has taken a cautious approach on the revenue front. However, the company reiterated its earnings per share view for the fiscal year due to higher gross margin expectations, efficient cost management and a lower share count.
Let’s Delve Deeper
This designer, marketer, distributor and retailer of branded apparel and accessories posted adjusted quarterly earnings of $1.79 per share, which showcased an improvement from the adjusted earnings of $1.53 reported in the year-ago period. The quarterly earnings also handily beat the Zacks Consensus Estimate of $1.55.
Total revenues of $1,412 million marginally came ahead of the Zacks Consensus Estimate of $1,399 million and increased 8.6% year over year. On a constant-currency basis, total revenues rose 17.5%.
The adjusted gross profit increased approximately 7.8% year over year to $948 million. However, the adjusted gross margin contracted 50 basis points (bps) to 67.1%.
The company reported an adjusted operating income of $280 million, up from $241 million in the prior-year quarter. The operating margin expanded 130 bps to 19.8%.
Capri Holdings Limited Price, Consensus and EPS Surprise
Capri Holdings Limited price-consensus-eps-surprise-chart | Capri Holdings Limited Quote
Segment Details
Revenues from Versace increased 9.2% year over year to $308 million during the quarter under discussion. Women’s accessories retail sales increased 60%. The operating margin increased 60 bps to 20.1%.
Jimmy Choo’s revenues came in at $142 million, up 3.6% from the prior-year period. Women’s accessories retail sales grew 30%. The operating margin expanded 490 bps to 5.6%.
Revenues from Michael Kors grew 9.2% year over year to $962 million. Women’s accessories retail sales grew in the mid-single digits. The operating margin expanded 80 bps to 25.8%.
Other Details
Capri Holdings ended the quarter with cash and cash equivalents of $215 million, net receivables of $441 million, long-term debt of $1,585 million and total shareholders’ equity of $2,143 million.
During the quarter, the company repurchased roughly 7.1 million shares for approximately $350 million. On Nov 9, 2022, Capri Holdings’ board of directors authorized a new share repurchase program of up to $1 billion. This new two-year program will replace the existing $1-billion share buyback program, which had $250 million of availability remaining.
As of Oct 1, 2022, the company had 1,276 retail stores. These include 821 Michael Kors, 238 Jimmy Choo and 217 Versace stores.
Guidance
Capri Holdings estimates revenues of approximately $5.7 billion for fiscal 2023, down from the prior projection of $5.85 billion. It reaffirmed the earnings per share guidance of approximately $6.85, which indicates an increase from the adjusted earnings of $6.21 reported in fiscal 2022.
Management projected a gross margin expansion of 50 basis points and an operating margin to be approximately 18.3%.
The fiscal 2023 top-line projection assumes revenues of approximately $1.15 billion from Versace, $640 million from Jimmy Choo and $3.91 billion from Michael Kors. Management anticipates an operating margin of approximately 16%, 5% and 25% for Versace, Jimmy Choo and Michael Kors, respectively, for the fiscal year.
Management envisions third-quarter fiscal 2023 revenues to be roughly $1.53 billion. It projected earnings per share of approximately $2.20 compared with the adjusted earnings of $2.22 reported in the third quarter of fiscal 2022. The company expects its operating margin to be approximately 20.5%.
For the third quarter, Capri Holdings anticipates revenues of approximately $240 million from Versace, $180 million from Jimmy Choo and $1.11 billion from Michael Kors. The company expects the operating margin in the high-single-digit range for Versace and Jimmy Choo and a mid-to-high 20% range for Michael Kors.
For the fourth quarter, the company expects revenues of $1.40 billion and adjusted earnings of $1.35 per share, with an adjusted operating margin of 14%.
This Zacks Rank #4 (Sell) stock has fallen 6.2% in the past three months compared with the industry’s decline of 10.3%.
Stocks Hogging the Limelight
Here we have highlighted three better-ranked stocks, namely Crocs (CROX - Free Report) , Chipotle Mexican Grill (CMG - Free Report) and Kroger (KR - Free Report) .
Crocs, a leader in innovative casual footwear for women, men and children, carries a Zacks Rank #2 (Buy). CROX has an expected EPS growth rate of 15% for three to five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS suggests growth of 51.5% and 23.7%, respectively, from the year-ago period. CROX has a trailing four-quarter earnings surprise of 18.2%, on average.
Chipotle Mexican Grill, an operator of fast-casual restaurants, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 23.4%.
The Zacks Consensus Estimate for Chipotle Mexican Grill’s current financial-year revenues and EPS suggests growth of 15.2% and 30.8%, respectively, from the year-ago reported figure. CMG has a trailing four-quarter earnings surprise of 4.1%, on average.
Kroger, one of the leading grocery retailers, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 11.7%.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 7.8% and 10.3%, respectively, from the year-ago reported figure. Kroger has a trailing four-quarter earnings surprise of 15.7%, on average.