Yahoo Finance Capri Holdings (CPRI) Down 4.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Capri Holdings (CPRI). Shares have lost about 4.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Capri Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Capri Holdings (CPRI) Q4 Earnings Lag Estimates, Sales Dip Y/Y
Capri Holdings Limited came up with fourth-quarter fiscal 2024 results, wherein both the top and bottom lines missed the Zacks Consensus Estimate and declined on a year-over-year basis. Softness in demand for luxury fashion items hurt the company’s performance. While Capri Holdings continued to face challenges in the wholesale channel, the retail channel performed better.
Impressively, Versace, Jimmy Choo and Michael Kors brands continued to resonate well with consumers. Better customer engagement resulted in the addition of 11.6 million new consumers joining the database, marking 14% growth compared to the last year.
Q4 Details
This designer, marketer, distributor and retailer of branded apparel and accessories posted adjusted quarterly earnings of 42 cents per share, showcasing a decline from 97 cents in the year-ago period. Also, the metric fell short of the Zacks Consensus Estimate of 72 cents.
Total revenues of $1,223 million slightly fell short of the Zacks Consensus Estimate of $1,295 million and decreased 8.4% year over year. On a constant-currency basis, total revenues declined 7.9%. The retail sales experienced a mid-single-digit decline owing to soft demand for luxury fashion items. In the wholesale sector, revenues fall by a high-teen percentage primarily due to muted demand in the Americas and EMEA regions.
Adjusted gross profit decreased approximately 11.1% year over year to $767 million. The adjusted gross margin contracted 190 basis points (bps) to 62.7% due to lower full-price sell-throughs.
Adjusted operating expenses declined 7.1% year over year to $689 million. The metric, as a percentage of total revenues, rose by 76 bps to 56.3%.
The company reported adjusted operating income of $78 million, down from $121 million in the prior-year quarter. The adjusted operating margin shrunk 270 bps to 6.4%. This decline can be attributed to factors including soft gross margin and expense deleverage resulting from lower revenues.
Segment Details
Revenues from Versace dipped 3.6% year over year to $264 million. The downtick stemmed from sluggish consumer demand in the Americas and EMEA regions, partly mitigated by higher revenues in Asia.
Retail sales experienced a mid-single-digit increase, while wholesale revenues saw a double-digit decrease. Revenues fell 1% and 11% in the Americas and EMEA, respectively, but improved 6% in Asia. Versace's global database expanded by 1.9 million new consumers, up 30% year over year.
Jimmy Choo’s revenues came in at $137 million, down 9.3% year over year. This was due to a slowdown in consumer demand in all the three regions.
Retail sales experienced a low-single-digit decline while wholesale revenues saw a double-digit decrease. Specifically, revenues fell 9%, 6% and 14% in the Americas, EMEA and Asia, respectively. Jimmy Choo's global database expanded by 0.7 million new consumers, up 12% on a year-over-year basis.
Revenues from Michael Kors fell 9.7% year over year to $822 million. This downside can be attributed to a softening consumer demand in all the three regions.
Retail sales recorded a high-single-digit decline while wholesale revenues witnessed a double-digit fall. Specifically, revenues in the Americas declined 9%, while in the EMEA, the metric fell 7%. Revenues in Asia plunged 16%. Michael Kors' global database expanded by 9 million new consumers, representing 13% growth year over year.
Other Financial Aspects
Capri Holdings ended the quarter with cash and cash equivalents of $199 million, long-term debt of $1,261 million and total shareholders’ equity, including non-controlling interest, of $1,600 million.
As of Mar 30, 2024, CPRI had 1,239 retail stores. These include 769 Michael Kors, 234 Jimmy Choo and 236 Versace stores.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -37.58% due to these changes.
VGM Scores
At this time, Capri Holdings has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Capri Holdings has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Capri Holdings belongs to the Zacks Retail - Apparel and Shoes industry. Another stock from the same industry, Urban Outfitters (URBN), has gained 2.6% over the past month. More than a month has passed since the company reported results for the quarter ended April 2024.
Urban Outfitters reported revenues of $1.2 billion in the last reported quarter, representing a year-over-year change of +7.8%. EPS of $0.69 for the same period compares with $0.56 a year ago.
Urban Outfitters is expected to post earnings of $0.98 per share for the current quarter, representing a year-over-year change of -10.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.8%.
Urban Outfitters has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Capri Holdings Limited (CPRI): Free Stock Analysis Report
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