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Capri Holdings (CPRI) to Post Q4 Earnings: What's in Store?

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Capri Holdings Limited (CPRI - Free Report) is likely to register a decline in the top line when it reports fourth-quarter fiscal 2021 numbers on May 26, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $1,032 million, suggesting a decrease of 13.4% from the prior-year reported figure.

The Zacks Consensus Estimate for loss for the quarter under review has improved by a penny in the past seven days to 1 cent. However, the current Zacks Consensus Estimate indicates a sharp decline from adjusted earnings of 11 cents in the year-ago quarter.

The consensus estimates for fiscal 2021 revenues and earnings are pegged at $3,892 million and $1.51 per share, respectively, indicating a slump of 30% and 61.2%.

Notably, this designer, marketer, distributor and retailer of branded apparel and accessories has a trailing four-quarter earnings surprise of 296.1%, on average. In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by a significant margin.

Factors to Note

On its third-quarter fiscal 2021 earnings call, management cautioned that the near term will be more challenging, as resurgence of the virus led to additional restrictions and stores closures. As of Feb 3, 2021, approximately 50% of stores were closed in the EMEA region compared to about 40% at the end of the third quarter.

We note that the company guided fourth-quarter revenues to decline at a rate equivalent to that of the third quarter. It also projected fiscal 2021 revenues to decline approximately 30%. Again, the company forecast a marginal loss per share for the final quarter.

We note that the Zacks Consensus Estimate for fourth-quarter revenues at Michael Kors, Versace and Jimmy Choo brands are pegged at $724 million, $202 million and $81 million, indicating declines of 17%, 5.2% and 24.3%, respectively, year over year.

Nonetheless, Capri Holdings has been reinforcing its position in the luxury fashion space. Markedly, the company has been deploying resources to expand product offerings and upgrade distribution infrastructure. This along with cost containment, fleet optimization and e-commerce enhancement bode well. Meanwhile, higher full price sell-throughs, strategic increase in prices and manufacturing cost efficiencies are likely to have benefited margins.

For the fourth quarter, management projected approximately 100 basis points of improvement in gross margin driven by greater full price sell-throughs and selective price increases. The company had guided gross margin expansion of approximately 300 basis points for the fiscal year.


Capri Holdings Limited Price, Consensus and EPS Surprise

Capri Holdings Limited Price, Consensus and EPS Surprise

Capri Holdings Limited price-consensus-eps-surprise-chart | Capri Holdings Limited Quote

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Capri Holdings this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Capri Holdings has a Zacks Rank #2 and an Earnings ESP of +600.0%.

Other Stocks With Favorable Combination

Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Best Buy (BBY - Free Report) has an Earnings ESP of +6.79% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco (COST - Free Report) has an Earnings ESP of +2.75% and a Zacks Rank #3.

Ulta Beauty (ULTA - Free Report) has an Earnings ESP of +10.22% and a Zacks Rank #3.

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