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Capri Holdings (CPRI) Q3 Earnings Top, Sales Miss Estimates
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Capri Holdings Limited (CPRI - Free Report) , formerly known as Michael Kors Holdings Limited, maintained its positive earnings surprise streak for the 15th straight quarter, when it reported third-quarter fiscal 2019 results. On the contrary, revenues fell short of the Zacks Consensus Estimate for the second quarter in row.
Management highlighted that sturdy performance of Jimmy Choo contributed to the results. Also, the company remains optimistic about Michael Kors to return on growth path on the back of Runway 2020 strategic initiatives. Moreover, Capri Holdings expects to deliver double digit revenue and adjusted earnings per share growth during fiscal 2019.
Capri Holdings has been steadily firming its position in the luxury fashion space, as evident from the acquisition of Jimmy Choo and Versace. These brands along with Michael Kors will help augment the company’s revenues to $8 billion in the long term.
We note shares of this Zacks Rank #3 (Hold) company are up roughly 10% during pre-market trading hours. However, in the past three months, the stock has plunged about 11.2% as against the industry’s decline of 14.5%.
Let’s Delve Deep
This designer, marketer, distributor and retailer of branded apparel and accessories delivered adjusted quarterly earnings of $1.76 per share that surpassed the Zacks Consensus Estimate of $1.57 but came marginally below $1.77 reported in the year-ago quarter. Bottom line declined on account of higher operating expenses. However, share repurchase activity did provide some cushion.
Total revenues of $1,438 million remained almost flat year over year but fell short of the Zacks Consensus Estimate of $1,454 million. Top line includes revenue contribution of $1,276.4 million from Michael Kors, down 3.7% year over year and $161.6 million from Jimmy Choo. On a constant currency basis, total revenues were up 1.1%.
Adjusted gross profit slipped 1.3% to $874.1 million. Meanwhile, adjusted gross margin shrunk 70 basis points (bps) to 60.8%. Adjusted operating income declined 8.4% to $316.5 million, while operating margin contracted 200 bps to 22%.
Segment Performance
MK Retail revenue came in at $838 million, down 1% year over year due to lower revenue contribution from Europe and Asia. Comparable sales (comps) slid 2.4%. On a constant currency basis, comps fell 1%.
MK Wholesale revenue fell 8.3% to $394.9 million. We note that decline in revenue across The Americas and EMEA, was partially offset by higher revenue from Asia.
MK Licensing revenue decreased 9.9% to $43.5 million due to soft performance in the EMEA compared with the year-ago period.
Other Financial Details
Michael Kors ended the quarter with cash and cash equivalents of $264.5 million, long-term debt of $1,954.7 million and shareholders’ equity of $2,263.7 million, excluding non-controlling interest of $3.4 million.
During the quarter, the company bought back approximately 2.1 million shares for approximately $100 million. The company had $442.2 million remaining under its share buyback program as of Dec 31, 2018.
Store Update
As of Dec 29, 2018, there were 1,076 stores (870 Michael Kors stores — 401 in the Americas, 198 in Europe and 271 in Asia — and 206 Jimmy Choo stores).
Guidance
Management now envisions fourth-quarter fiscal 2019 total revenue to be about $1.33 billion. Revenues from Michael Kors are expected to be approximately $1.07 billion, comprising a low single digit fall in comps close to the upper end of the range. Jimmy Choo revenue is projected to be about $130 million, including low single digit growth in comps. Versace revenue is estimated to be approximately $130 million.
Operating margin is envisioned to be approximately 10.3%. The company forecast earnings in the range of 56-61 cents, including dilution from Versace of about 15 cents. The Zacks Consensus Estimate for the fourth quarter stands at 81 cents, which may witness a downward revision in the coming days.
For fiscal 2019, management projects total revenue to be approximately $5.22 billion. Michael Kors revenue is estimated to be roughly $4.51 billion, comprising a low single digit fall in comps. Revenues from Jimmy Choo and Versace are expected to be about $580 million and $130 million, respectively. Operating margin is now expected to be roughly 17.3%.
Management envisions earnings in the band of $4.90-$4.95 per share, including dilution from Jimmy Choo of approximately flat to 5 cents and from Versace of about 15 cents. The Zacks Consensus Estimate for fiscal 2019 is pegged at $4.99, which may witness a revision in the coming days.
3 Hot Stocks Awaiting Your Look
DSW Inc. delivered an average positive earnings surprise of 28.8% in the trailing four quarters. It has a long-term earnings growth rate of 9% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Boot Barn Holdings, Inc. (BOOT - Free Report) has a long-term earnings growth rate of 23% and a Zacks Rank #2 (Buy).
Foot Locker, Inc. (FL - Free Report) has a long-term earnings growth rate of 7.5% and carries a Zacks Rank #2.
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Capri Holdings (CPRI) Q3 Earnings Top, Sales Miss Estimates
Capri Holdings Limited (CPRI - Free Report) , formerly known as Michael Kors Holdings Limited, maintained its positive earnings surprise streak for the 15th straight quarter, when it reported third-quarter fiscal 2019 results. On the contrary, revenues fell short of the Zacks Consensus Estimate for the second quarter in row.
Management highlighted that sturdy performance of Jimmy Choo contributed to the results. Also, the company remains optimistic about Michael Kors to return on growth path on the back of Runway 2020 strategic initiatives. Moreover, Capri Holdings expects to deliver double digit revenue and adjusted earnings per share growth during fiscal 2019.
Capri Holdings has been steadily firming its position in the luxury fashion space, as evident from the acquisition of Jimmy Choo and Versace. These brands along with Michael Kors will help augment the company’s revenues to $8 billion in the long term.
We note shares of this Zacks Rank #3 (Hold) company are up roughly 10% during pre-market trading hours. However, in the past three months, the stock has plunged about 11.2% as against the industry’s decline of 14.5%.
Let’s Delve Deep
This designer, marketer, distributor and retailer of branded apparel and accessories delivered adjusted quarterly earnings of $1.76 per share that surpassed the Zacks Consensus Estimate of $1.57 but came marginally below $1.77 reported in the year-ago quarter. Bottom line declined on account of higher operating expenses. However, share repurchase activity did provide some cushion.
Total revenues of $1,438 million remained almost flat year over year but fell short of the Zacks Consensus Estimate of $1,454 million. Top line includes revenue contribution of $1,276.4 million from Michael Kors, down 3.7% year over year and $161.6 million from Jimmy Choo. On a constant currency basis, total revenues were up 1.1%.
Adjusted gross profit slipped 1.3% to $874.1 million. Meanwhile, adjusted gross margin shrunk 70 basis points (bps) to 60.8%. Adjusted operating income declined 8.4% to $316.5 million, while operating margin contracted 200 bps to 22%.
Segment Performance
MK Retail revenue came in at $838 million, down 1% year over year due to lower revenue contribution from Europe and Asia. Comparable sales (comps) slid 2.4%. On a constant currency basis, comps fell 1%.
MK Wholesale revenue fell 8.3% to $394.9 million. We note that decline in revenue across The Americas and EMEA, was partially offset by higher revenue from Asia.
MK Licensing revenue decreased 9.9% to $43.5 million due to soft performance in the EMEA compared with the year-ago period.
Other Financial Details
Michael Kors ended the quarter with cash and cash equivalents of $264.5 million, long-term debt of $1,954.7 million and shareholders’ equity of $2,263.7 million, excluding non-controlling interest of $3.4 million.
During the quarter, the company bought back approximately 2.1 million shares for approximately $100 million. The company had $442.2 million remaining under its share buyback program as of Dec 31, 2018.
Store Update
As of Dec 29, 2018, there were 1,076 stores (870 Michael Kors stores — 401 in the Americas, 198 in Europe and 271 in Asia — and 206 Jimmy Choo stores).
Guidance
Management now envisions fourth-quarter fiscal 2019 total revenue to be about $1.33 billion. Revenues from Michael Kors are expected to be approximately $1.07 billion, comprising a low single digit fall in comps close to the upper end of the range. Jimmy Choo revenue is projected to be about $130 million, including low single digit growth in comps. Versace revenue is estimated to be approximately $130 million.
Operating margin is envisioned to be approximately 10.3%. The company forecast earnings in the range of 56-61 cents, including dilution from Versace of about 15 cents. The Zacks Consensus Estimate for the fourth quarter stands at 81 cents, which may witness a downward revision in the coming days.
For fiscal 2019, management projects total revenue to be approximately $5.22 billion. Michael Kors revenue is estimated to be roughly $4.51 billion, comprising a low single digit fall in comps. Revenues from Jimmy Choo and Versace are expected to be about $580 million and $130 million, respectively. Operating margin is now expected to be roughly 17.3%.
Management envisions earnings in the band of $4.90-$4.95 per share, including dilution from Jimmy Choo of approximately flat to 5 cents and from Versace of about 15 cents. The Zacks Consensus Estimate for fiscal 2019 is pegged at $4.99, which may witness a revision in the coming days.
3 Hot Stocks Awaiting Your Look
DSW Inc. delivered an average positive earnings surprise of 28.8% in the trailing four quarters. It has a long-term earnings growth rate of 9% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Boot Barn Holdings, Inc. (BOOT - Free Report) has a long-term earnings growth rate of 23% and a Zacks Rank #2 (Buy).
Foot Locker, Inc. (FL - Free Report) has a long-term earnings growth rate of 7.5% and carries a Zacks Rank #2.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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