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Capri Holdings (CPRI) Beats on Q3 Earnings, Raises FY22 View
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Capri Holdings Limited (CPRI - Free Report) reported stronger-than-anticipated third-quarter fiscal 2022 results despite a challenging backdrop. Both the top and the bottom line improved meaningfully on a year-over-year basis. The company was encouraged by the performance of all three luxury brands. Impressively, management raised fiscal year revenues and earnings per share view. The company also provided outlook for fiscal 2023.
Consumers’ return to active social lifestyles has spurred demand for luxury apparel and accessories, and Capri Holdings has benefited from the same. The company has been deploying resources to expand offerings, upgrade distribution, create seamless omni-channel and digital capabilities, and deepen customer engagement.
John D. Idol, chairman and CEO, said, “We are pleased to report third quarter performance exceeded our expectations for revenue, operating margin and earnings per share. Results were driven by strong momentum across all three luxury houses reflecting the power of Versace, Jimmy Choo and Michael Kors as well as the continued execution of our strategic initiatives.”
Let’s Delve Deep
This designer, marketer, distributor and retailer of branded apparel and accessories posted adjusted quarterly earnings of $2.22 per share that showcased a sharp improvement from adjusted earnings of $1.65 reported in the year-ago period. The quarterly earnings also handily beat the Zacks Consensus Estimate of $1.68. Better revenue performance and margin expansion aided bottom-line results.
Total revenues of $1,609 million comfortably surpassed the Zacks Consensus Estimate of $1,468.5 million and surged approximately 24% year over year. On a constant-currency basis, total revenues rose 25%.
Adjusted gross profit increased approximately 24% year over year to $1,047 million. We note that adjusted gross margin expanded 40 basis points (bps) to 65.1%, reflecting sustained benefits from strategic endeavors, largely offset by a roughly 400-bp increase in supply-chain costs compared with the year-ago quarter.
The company reported adjusted operating income of $359 million, up from $257 million in the prior-year quarter. Markedly, operating margin increased 260 bps to 22.3%.
Capri Holdings Limited Price, Consensus and EPS Surprise
Revenues from Versace increased 29% year over year to $251 million. Operating margin increased 600 bps to 12.7%.
Jimmy Choo revenues came in at $178 million, up 47% compared with the prior-year period. The segment operating income was $16 million and operating margin was 9% against operating loss of $8 million and negative operating margin of 6.6% in the prior-year quarter.
Revenues from Michael Kors grew 20% year over year to $1,180 million. Operating margin came in at 28.4% versus 28.5% in the year-ago period.
Other Details
Capri Holdings ended the quarter with cash and cash equivalents of $261 million, net receivables of $449 million, long-term debt of $976 million and total shareholders’ equity of $2,775 million.
During the quarter, the company repurchased roughly 3.2 million shares for approximately $200 million. As of Dec 25, 2021, the remaining availability under the share repurchase authorization was $800 million.
As of Dec 25, 2021, the company had 1,286 retail stores, including 834 Michael Kors, 240 Jimmy Choo and 212 Versace stores.
Outlook
Capri Holdings now envisions revenues at approximately $5.56 billion for fiscal 2022 compared with the previous forecast of $5.4 billion. The company also raised earnings guidance to $6.00 per share from its prior view of $5.30. We note that the company had reported revenues of $4,060 million and earnings per share of $1.90 in fiscal 2021. Management expects operating margin of approximately 19% for fiscal 2022.
Fiscal 2022 top-line projection assumes revenues of approximately $1.08 billion from Versace, $600 million from Jimmy Choo, and $3.88 billion from Michael Kors. Management anticipates operating margin of approximately 17%, 2% and 25% for Versace, Jimmy Choo and Michael Kors, respectively, for the fiscal year.
Management envisions fourth-quarter revenues to be roughly $1.4 billion. It projected operating margin of approximately 13.5% and guided earnings of 80 cents a share.
For the final quarter, Capri Holdings anticipates revenues of approximately $310 million from Versace, $140 million from Jimmy Choo, and $950 million from Michael Kors. The company expects operating margin of about 15% and 20% for Versace and Michael Kors, respectively, in the fourth quarter. It forecasts a negative operating margin of 10% for Jimmy Choo.
Capri Holdings foresees revenues to be approximately $6.1 billion and earnings of approximately $6.60 per share for fiscal 2023. It projected operating margin of roughly 19%. Management expects revenues of about $1.3 billion from Versace, $675 million from Jimmy Choo, and $4.125 billion from Michael Kors. The company anticipates operating margin of approximately 18%, 8% and 25% for Versace, Jimmy Choo and Michael Kors, respectively, for fiscal 2023.
Wolverine World Wide, one of the leading marketers and licensors of branded casual, active lifestyle, work, outdoor sport, athletic, children's and uniform footwear and apparel, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 18.3%, on average.
The Zacks Consensus Estimate for Wolverine World Wide’s current financial year sales and EPS suggests growth of 34.4% and 125.8%, respectively, from the year-ago period. WWW has an expected EPS growth rate of 10% for three-five years.
Tapestry, which provides luxury accessories and branded lifestyle products, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 29%, on average.
The Zacks Consensus Estimate for Tapestry’s current financial year sales and EPS suggests growth of 14.9% and 18.2%, respectively, from the year-ago period. TPR has an expected EPS growth rate of 12.3% for three-five years.
Costco, which operates membership warehouses, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 8.3%, on average.
The Zacks Consensus Estimate for Costco’s current financial year sales and EPS suggests growth of 10.9% and 14%, respectively, from the year-ago period. COST has an expected EPS growth rate of 8.8% for three-five years.
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Capri Holdings (CPRI) Beats on Q3 Earnings, Raises FY22 View
Capri Holdings Limited (CPRI - Free Report) reported stronger-than-anticipated third-quarter fiscal 2022 results despite a challenging backdrop. Both the top and the bottom line improved meaningfully on a year-over-year basis. The company was encouraged by the performance of all three luxury brands. Impressively, management raised fiscal year revenues and earnings per share view. The company also provided outlook for fiscal 2023.
Consumers’ return to active social lifestyles has spurred demand for luxury apparel and accessories, and Capri Holdings has benefited from the same. The company has been deploying resources to expand offerings, upgrade distribution, create seamless omni-channel and digital capabilities, and deepen customer engagement.
John D. Idol, chairman and CEO, said, “We are pleased to report third quarter performance exceeded our expectations for revenue, operating margin and earnings per share. Results were driven by strong momentum across all three luxury houses reflecting the power of Versace, Jimmy Choo and Michael Kors as well as the continued execution of our strategic initiatives.”
Let’s Delve Deep
This designer, marketer, distributor and retailer of branded apparel and accessories posted adjusted quarterly earnings of $2.22 per share that showcased a sharp improvement from adjusted earnings of $1.65 reported in the year-ago period. The quarterly earnings also handily beat the Zacks Consensus Estimate of $1.68. Better revenue performance and margin expansion aided bottom-line results.
Total revenues of $1,609 million comfortably surpassed the Zacks Consensus Estimate of $1,468.5 million and surged approximately 24% year over year. On a constant-currency basis, total revenues rose 25%.
Adjusted gross profit increased approximately 24% year over year to $1,047 million. We note that adjusted gross margin expanded 40 basis points (bps) to 65.1%, reflecting sustained benefits from strategic endeavors, largely offset by a roughly 400-bp increase in supply-chain costs compared with the year-ago quarter.
The company reported adjusted operating income of $359 million, up from $257 million in the prior-year quarter. Markedly, operating margin increased 260 bps to 22.3%.
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 29% year over year to $251 million. Operating margin increased 600 bps to 12.7%.
Jimmy Choo revenues came in at $178 million, up 47% compared with the prior-year period. The segment operating income was $16 million and operating margin was 9% against operating loss of $8 million and negative operating margin of 6.6% in the prior-year quarter.
Revenues from Michael Kors grew 20% year over year to $1,180 million. Operating margin came in at 28.4% versus 28.5% in the year-ago period.
Other Details
Capri Holdings ended the quarter with cash and cash equivalents of $261 million, net receivables of $449 million, long-term debt of $976 million and total shareholders’ equity of $2,775 million.
During the quarter, the company repurchased roughly 3.2 million shares for approximately $200 million. As of Dec 25, 2021, the remaining availability under the share repurchase authorization was $800 million.
As of Dec 25, 2021, the company had 1,286 retail stores, including 834 Michael Kors, 240 Jimmy Choo and 212 Versace stores.
Outlook
Capri Holdings now envisions revenues at approximately $5.56 billion for fiscal 2022 compared with the previous forecast of $5.4 billion. The company also raised earnings guidance to $6.00 per share from its prior view of $5.30. We note that the company had reported revenues of $4,060 million and earnings per share of $1.90 in fiscal 2021. Management expects operating margin of approximately 19% for fiscal 2022.
Fiscal 2022 top-line projection assumes revenues of approximately $1.08 billion from Versace, $600 million from Jimmy Choo, and $3.88 billion from Michael Kors. Management anticipates operating margin of approximately 17%, 2% and 25% for Versace, Jimmy Choo and Michael Kors, respectively, for the fiscal year.
Management envisions fourth-quarter revenues to be roughly $1.4 billion. It projected operating margin of approximately 13.5% and guided earnings of 80 cents a share.
For the final quarter, Capri Holdings anticipates revenues of approximately $310 million from Versace, $140 million from Jimmy Choo, and $950 million from Michael Kors. The company expects operating margin of about 15% and 20% for Versace and Michael Kors, respectively, in the fourth quarter. It forecasts a negative operating margin of 10% for Jimmy Choo.
Capri Holdings foresees revenues to be approximately $6.1 billion and earnings of approximately $6.60 per share for fiscal 2023. It projected operating margin of roughly 19%. Management expects revenues of about $1.3 billion from Versace, $675 million from Jimmy Choo, and $4.125 billion from Michael Kors. The company anticipates operating margin of approximately 18%, 8% and 25% for Versace, Jimmy Choo and Michael Kors, respectively, for fiscal 2023.
This Zacks Rank #2 (Buy) stock has gained 40.3% in the past year against the industry’s decline of 28.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Pick These 3 Stocks
Here are three more favorably ranked stocks — Wolverine World Wide (WWW - Free Report) , Tapestry (TPR - Free Report) and Costco (COST - Free Report) .
Wolverine World Wide, one of the leading marketers and licensors of branded casual, active lifestyle, work, outdoor sport, athletic, children's and uniform footwear and apparel, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 18.3%, on average.
The Zacks Consensus Estimate for Wolverine World Wide’s current financial year sales and EPS suggests growth of 34.4% and 125.8%, respectively, from the year-ago period. WWW has an expected EPS growth rate of 10% for three-five years.
Tapestry, which provides luxury accessories and branded lifestyle products, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 29%, on average.
The Zacks Consensus Estimate for Tapestry’s current financial year sales and EPS suggests growth of 14.9% and 18.2%, respectively, from the year-ago period. TPR has an expected EPS growth rate of 12.3% for three-five years.
Costco, which operates membership warehouses, carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 8.3%, on average.
The Zacks Consensus Estimate for Costco’s current financial year sales and EPS suggests growth of 10.9% and 14%, respectively, from the year-ago period. COST has an expected EPS growth rate of 8.8% for three-five years.