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How Capri Holdings (CPRI) Looks Just Ahead of Q1 Earnings

Capri Holdings Limited CPRI is likely to register a decrease in the top line when it reports first-quarter fiscal 2021 numbers on Aug 5, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $436.4 million, suggesting a sharp decline of about 67.6% from the prior-year reported figure.

In fact, the Zacks Consensus Estimate for the bottom line stands at a loss of $1.01, wider than the loss of 72 cents pegged 30 days ago. The consensus mark also compares unfavorably with earnings of 95 cents a share reported in the year-ago quarter.

Notably, this global fashion luxury group has a trailing four-quarter negative earnings surprise of 15.6%, on average. In the last reported quarter, the company missed the Zacks Consensus Estimate by a wide margin.

Factors to Note

Capri Holdings is not immune to the effects of the coronavirus outbreak that compelled it to temporarily close vast majority of stores in North America and Europe. The company on its lastearnings callinformed that in first-quarter fiscal 2021, stores were closed for an average of about 55% of the period compared with 10% in the preceding quarter. As a result, management guided a decline of approximately 70% for fiscal first-quarter revenues on account of significant store closures, the gradual recovery in revenues as stores reopen and low wholesale shipments.

The company indicated that its department store partners have placed limited replenishment orders during the quarter, and as a result, it has not had a significant level of wholesale shipments. Further, travel retail, which is part of the wholesale channel, is bearing the brunt of decline in tourism.

Management projected a significant loss per share in the fiscal first quarter on account of the lower revenues and resulting deleverage. Industry experts believe that demand for high-end fashion clothing and accessories is likely to remain soft, as consumers will remain cautious regarding discretionary purchases. Nonetheless, to address the challenges tied to the pandemic, Capri Holdings has been focusing on cutting operating expenses, lowering capital expenditures and managing inventory.

Capri Holdings Limited Price, Consensus and EPS Surprise

Capri Holdings Limited Price, Consensus and EPS Surprise

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

What the Zacks Model Unveils

Our proven model does not 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Capri Holdings has a Zacks Rank #5 (Strong Sell) and an Earnings ESP of 0.00%.

Stocks With Favorable Combination

Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

SpartanNash Company SPTN has an Earnings ESP of +4.84% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco COST has an Earnings ESP of +1.31% and a Zacks Rank #3.

KAR Auction Services KAR has an Earnings ESP of +17.65% and a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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