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Capri Holdings (CPRI) Q2 Earnings Miss Estimates, Decline Y/Y
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Capri Holdings Limited (CPRI - Free Report) reported weaker-than-expected second-quarter fiscal 2024 results. Both the top and bottom lines declined on a year-over-year basis. A tough operating environment and e-commerce implementation-related challenges in Michael Kors’ segment weighed on the company’s performance.
In August 2023, Capri Holdings entered into a merger agreement with Tapestry, Inc. (TPR - Free Report) . The deal, valued at $8.5 billion, will involve Capri Holdings merging its entire business with Tapestry and creating a global house of leading luxury and fashion brands across consumer segments. The transaction is expected to be completed in 2024, subject to certain regulatory approvals and customary closing conditions.
Image Source: Zacks Investment Research
CPRI has lost 10.6% in the past three months compared with the industry’s decline of 1.7%.
Capri Holdings’ Q2 Results
This designer, marketer, distributor and retailer of branded apparel and accessories posted adjusted quarterly earnings of $1.13 per share, showcasing a decline from the adjusted earnings of $1.79 reported in the year-ago period. Also, the metric fell short of the Zacks Consensus Estimate of $1.49.
Total revenues of $1,291 million missed the Zacks Consensus Estimate of $1,330 million and decreased 8.6% year over year. On a constant-currency basis, total revenues declined by 10.1%.
The adjusted gross profit decreased approximately 12.2% year over year to $832 million. The adjusted gross margin contracted by 270 basis points (bps) to 64.4%. The gross profit margin decline was attributable to lower full-price sell-throughs, partially offset by a decrease in supply chain costs.
Total operating expenses increased 4.7% to $732 million. The metric, as a percentage of net sales, increased 720 bps year over year to 56.7%.
The company reported an adjusted operating income of $157 million, down from $280 million in the prior year’s quarter. The operating margin shrunk by 760 bps to 12.2%.
Capri Holdings Limited Price, Consensus and EPS Surprise
Revenues from Versace decreased 9.1% year over year to $280 million during the quarter. The decline was attributable to the soft demand environment, primarily in the Americas and the lapping of the successful Spring 22 Fendace collaboration. The Zacks Consensus Estimate for Versace’s revenues was pegged at $318 million for the quarter. The operating income was $35 million, down 43.5% year over year, while its margin contracted 760 bps to 12.5%.
Jimmy Choo’s revenues came in at $132 million, down 7% from the prior-year period. The decline was due to soft consumer demand, primarily in the Americas. The Zacks Consensus Estimate for Jimmy Choo’s revenues was pegged at $156 million for the quarter. The operating loss was $9 million in the quarter compared with an operating income of $8 million in the year-ago quarter. The operating margin was a negative 6.8% compared with 5.6% in the prior-year quarter.
Revenues from Michael Kors fell 8.6% year over year to $879 million but fared better than the Zacks Consensus Estimate of $874 million. The decline was attributable to weak demand in the Americas and challenges related to e-commerce implementation. The operating income was $169 million, down 31.9% year-over-year, while its margin contracted 660 bps to 19.2%.
Other Details
Capri Holdings ended the quarter with cash and cash equivalents of $238 million, net receivables of $383 million, long-term debt of $2,079 million and total shareholders’ equity of $1,912 million.
As of Sep 30, 2023, the company had 1,269 retail stores. These include 802 Michael Kors, 237 Jimmy Choo and 230 Versace stores.
Guidance
With the planned merger agreement, Capri Holdings restrained from providing financial guidance for the upcoming quarter and fiscal 2024.
Zacks Rank & Stocks to Consider
Capri Holdings currently carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks from the same space are American Eagle Outfitters, Inc. (AEO - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) .
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 36.1% and 2.4%, respectively, from the year-ago period’s reported figures. AEO has a trailing four-quarter average earnings surprise of 43.2%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year earnings and sales indicates growth of 1,668% and 10.3%, respectively, from the year-ago period’s reported figures. ANF has a trailing four-quarter average earnings surprise of 724.8%.
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Capri Holdings (CPRI) Q2 Earnings Miss Estimates, Decline Y/Y
Capri Holdings Limited (CPRI - Free Report) reported weaker-than-expected second-quarter fiscal 2024 results. Both the top and bottom lines declined on a year-over-year basis. A tough operating environment and e-commerce implementation-related challenges in Michael Kors’ segment weighed on the company’s performance.
In August 2023, Capri Holdings entered into a merger agreement with Tapestry, Inc. (TPR - Free Report) . The deal, valued at $8.5 billion, will involve Capri Holdings merging its entire business with Tapestry and creating a global house of leading luxury and fashion brands across consumer segments. The transaction is expected to be completed in 2024, subject to certain regulatory approvals and customary closing conditions.
Image Source: Zacks Investment Research
CPRI has lost 10.6% in the past three months compared with the industry’s decline of 1.7%.
Capri Holdings’ Q2 Results
This designer, marketer, distributor and retailer of branded apparel and accessories posted adjusted quarterly earnings of $1.13 per share, showcasing a decline from the adjusted earnings of $1.79 reported in the year-ago period. Also, the metric fell short of the Zacks Consensus Estimate of $1.49.
Total revenues of $1,291 million missed the Zacks Consensus Estimate of $1,330 million and decreased 8.6% year over year. On a constant-currency basis, total revenues declined by 10.1%.
The adjusted gross profit decreased approximately 12.2% year over year to $832 million. The adjusted gross margin contracted by 270 basis points (bps) to 64.4%. The gross profit margin decline was attributable to lower full-price sell-throughs, partially offset by a decrease in supply chain costs.
Total operating expenses increased 4.7% to $732 million. The metric, as a percentage of net sales, increased 720 bps year over year to 56.7%.
The company reported an adjusted operating income of $157 million, down from $280 million in the prior year’s quarter. The operating margin shrunk by 760 bps to 12.2%.
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 decreased 9.1% year over year to $280 million during the quarter. The decline was attributable to the soft demand environment, primarily in the Americas and the lapping of the successful Spring 22 Fendace collaboration. The Zacks Consensus Estimate for Versace’s revenues was pegged at $318 million for the quarter. The operating income was $35 million, down 43.5% year over year, while its margin contracted 760 bps to 12.5%.
Jimmy Choo’s revenues came in at $132 million, down 7% from the prior-year period. The decline was due to soft consumer demand, primarily in the Americas. The Zacks Consensus Estimate for Jimmy Choo’s revenues was pegged at $156 million for the quarter. The operating loss was $9 million in the quarter compared with an operating income of $8 million in the year-ago quarter. The operating margin was a negative 6.8% compared with 5.6% in the prior-year quarter.
Revenues from Michael Kors fell 8.6% year over year to $879 million but fared better than the Zacks Consensus Estimate of $874 million. The decline was attributable to weak demand in the Americas and challenges related to e-commerce implementation. The operating income was $169 million, down 31.9% year-over-year, while its margin contracted 660 bps to 19.2%.
Other Details
Capri Holdings ended the quarter with cash and cash equivalents of $238 million, net receivables of $383 million, long-term debt of $2,079 million and total shareholders’ equity of $1,912 million.
As of Sep 30, 2023, the company had 1,269 retail stores. These include 802 Michael Kors, 237 Jimmy Choo and 230 Versace stores.
Guidance
With the planned merger agreement, Capri Holdings restrained from providing financial guidance for the upcoming quarter and fiscal 2024.
Zacks Rank & Stocks to Consider
Capri Holdings currently carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks from the same space are American Eagle Outfitters, Inc. (AEO - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) .
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 36.1% and 2.4%, respectively, from the year-ago period’s reported figures. AEO has a trailing four-quarter average earnings surprise of 43.2%.
Abercrombie & Fitch is a specialty retailer of premium, high-quality casual apparel. The company currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year earnings and sales indicates growth of 1,668% and 10.3%, respectively, from the year-ago period’s reported figures. ANF has a trailing four-quarter average earnings surprise of 724.8%.