Capri Holdings Limited ( CPRI Quick Quote CPRI - Free Report) is likely to register a year-over-year decline in its top and bottom lines when it releases fourth-quarter fiscal 2023 earnings on May 31, before market open. The Zacks Consensus Estimate for revenues is pegged at $1,275 million, indicating a fall of 14.5% from the prior-year reported figure. The bottom line of the global fashion luxury group is anticipated to decrease year over year. The Zacks Consensus Estimate for fiscal fourth-quarter earnings per share has been unchanged over the past 30 days at 94 cents. The figure suggests a decline of 7.8% from the year-ago period’s reported number. Capri Holdings has a trailing four-quarter earnings surprise of 8.8%, on average. In the last reported quarter, this London-based company missed the Zacks Consensus Estimate by a margin of 16.7%. Factors to Note
Capri Holdings has been witnessing sluggish demand for luxury items and pandemic-related restrictions in China, which is expected to have adversely impacted the company’s performance in the quarter. The macroeconomic headwinds, inflationary environment and weakness in the wholesale channel might have also hurt its quarterly performance.
On its last reported quarter’s earnings call, management anticipated fiscal fourth-quarter revenues of $280 million from Versace, $130 million from Jimmy Choo and $865 million from Michael Kors, indicating year-over-year declines of 11.1%, 16.7% and 15.3%, respectively, on a reported basis. Also, rising sales and operating expenses have been a concern for the company over the past few quarters. For instance, in the first nine months of fiscal 2023, its cost of sales increased 3.9% year over year while total operating expenses jumped 6.7%. Also, the impacts of changes in labor and raw material costs might have harmed its margin and profitability in the to-be-reported quarter. Capri Holdings had projected its fourth-quarter adjusted operating margin to be approximately 8.5%, down from 14.2% reported in the year-ago period. The company projected an operating margin of approximately 10% for Versace and in the mid-teens range for Michael Kors, while for Jimmy Choo, it expected an operating margin in the negative mid-teens. Evidently, these might get reflected in the to-be-reported quarter’s bottom line. As a result, management guided fourth-quarter earnings of approximately 90-95 cents per share, down from $1.02 reported in the prior-year quarter. Given the company’s extensive geographic presence, a stronger U.S. dollar might also have hurt its overseas business in the fiscal fourth quarter. However, Capri Holdings’ retail and e-commerce businesses continue to witness a sturdy performance, thanks to its outlet stores and an increasing number of customers shopping online. The company has been investing in digital analytics and upgrading its e-commerce platform. E-commerce operations were strong in the last reported quarter. The return to an active social lifestyle for consumers has spurred demand for luxury apparel and accessories and Capri Holdings is likely to have benefited from the same. Also, the company has been deploying resources to expand offerings, upgrade distribution, create seamless omni-channel and digital capabilities and deepen customer engagement. It has been gaining from selling merchandise at full price and select price increases, which are expected to have a positive impact on its performance. What the Zacks Model Unveils
Our proven model doesn’t conclusively predict 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 odds of an earnings beat, but that’s not the case here as elaborated below. Capri Holdings has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
CPRI currently has a Zacks Rank #4 (Sell).
Stocks With the Favorable Combination
Here are three companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
Chipotle Mexican Grill, Inc. ( CMG Quick Quote CMG - Free Report) currently has an Earnings ESP of +0.17%. The company is likely to register top- and bottom-line increases when it reports its upcoming quarter results. The consensus mark for CMG’s quarterly revenues is pegged at $2.51 billion, which suggests growth of 13.6% from the figure reported in the prior-year quarter. CMG currently sports a Zacks Rank #1. You can see . the complete list of today’s Zacks #1 Rank stocks here The Zacks Consensus Estimate for Chipotle Mexican’s earnings has moved from $11.96 per share to $12.11 in the past 30 days. Fortune Brands Innovations, Inc. ( FBIN Quick Quote FBIN - Free Report) currently has an Earnings ESP of +0.59% and a Zacks Rank #2. The company is likely to register declines in the top and bottom lines when it reports its upcoming quarter numbers. The consensus mark for its quarterly earnings has moved down 1% in the past 30 days to $1.01 per share. The Zacks Consensus Estimate for FBIN's quarterly revenues is pegged at $1.2 billion, which suggests a decline of 44.8% from the figure reported in the prior-year quarter. Macy's, Inc. ( M Quick Quote M - Free Report) currently has an Earnings ESP of +2.81% and a Zacks Rank #3. The company is likely to register top- and bottom-line declines when it reports its upcoming quarterly results. The consensus mark for M’s quarterly revenues is pegged at $5.1 billion, which suggests a 4.4% fall from the figure reported in the prior-year quarter. The consensus mark for M’s quarterly earnings has been unchanged in the past 30 days at 46 cents per share. The consensus estimate suggests a decline of 57.4% from the year-ago quarter. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.