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Capri Holdings (CPRI) Posts Narrower-Than-Expected Q1 Loss

Capri Holdings Limited CPRI reported better-than-expected first-quarter fiscal 2021 results. The global fashion luxury group posted narrower-than-expected loss. Further, the company’s total revenues surpassed the Zacks Consensus Estimate. However, both the top and the bottom lines declined sharply from the year-ago period thanks to the impact of the coronavirus pandemic. We note that revenues fell across the company’s three brands.

Nonetheless, shares of Capri Holdings are up roughly 8% during the pre-market trading session. However, this Zacks Rank #5 (Strong Sell) stock has fallen 55.2% in the past six months compared with the industry’s decline of 28.7%.

Let’s Delve Deeper

This designer, marketer, distributor and retailer of branded apparel and accessories reported adjusted quarterly loss of $1.04 per share narrower than the Zacks Consensus Estimate of a loss of $1.10. The company had posted earnings of 95 cents in the year-ago period. The bottom line was adversely impacted by lower revenues.

Total revenues of $451 million decreased 66.5% from the prior-year period. On a constant currency basis, total revenues were down 66.2%. However, the top line surpassed the Zacks Consensus Estimate of $431.3 million.

Top line includes revenue contribution of $307 million from Michael Kors, down 68.7% and $51 million from Jimmy Choo, down 67.7% year over year. Revenues from Versace were $93 million, down 55.1% from the prior year period.

Adjusted gross profit fell 63.9% year over year to $303 million, however, adjusted gross margin expanded 480 basis points to 67.2%. The company reported adjusted operating loss of $147 million against adjusted operating income of $190 million in the year-ago period.

Capri Holdings Limited Price, Consensus and EPS Surprise

a Capri Holdings Limited Price, Consensus and EPS Surprise

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

Management, on its last earnings call on Jul 1, had cautioned that the first-quarter fiscal 2021 will mark a low point in terms of revenues and earnings. Management also added that stores were closed for an average of about 55% of the period.

John D. Idol, the CEO of the company, said, "Looking at our progress in the fiscal first quarter, we were encouraged by trends across all three of our luxury houses, with sales and margin performance ahead of our initial expectations. We were particularly pleased with the strong growth of our eCommerce business, as well the sequential improvement in overall revenue
trends through the first quarter and into July."

Other Details

Capri Holdings ended first-quarter fiscal 2021 with cash and cash equivalents of $207 million, net receivables of $183 million, total debt of $1,768 million and shareholders’ equity of $2,006 million, excluding non-controlling interest of $1 million. Total inventory at the end of the quarter under review was $948 million, reflecting a decline of 6.7% year over year.

As of Jun 27, 2020, there were 1,254 stores — 822 Michael Kors stores, 228 Jimmy Choo stores and 204 Versace stores.

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