Capri Holdings (CPRI) Up 1.6% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Capri Holdings (CPRI). Shares have added about 1.6% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Capri Holdings due for a pullback? 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 Q3 Earnings Miss Estimates, Gross Margin Declines Y/YCapri Holdings posted drab third-quarter fiscal 2025 results, wherein the top and bottom lines declined year over year. Total revenues surpassed the Zacks Consensus Estimate, while earnings missed the same.More on Capri Holdings’ Q3 ResultsThis designer, marketer, distributor and retailer of branded apparel and accessories posted adjusted quarterly earnings of 45 cents per share, showcasing a decline from $1.20 in the year-ago period. Also, the metric lagged the Zacks Consensus Estimate of 63 cents per share.Total revenues of $1,261 million surpassed the Zacks Consensus Estimate of $1,248 million and decreased 11.6% year over year on a reported basis and 11.4% on a constant-currency basis. The company's total retail sales fell in the low-double digits, whereas wholesale revenues dropped in the low-teens. The gross profit decreased 12.5% year over year to $812 million. The gross margin contracted 60 basis points (bps) to 64.4%, primarily led by lower full-price sell-throughs.Capri Holdings reported an adjusted operating income of $76 million, considerably down from $172 million in the prior-year quarter. The adjusted operating margin shrunk 610 bps to 6%. This decrease in the operating margin was due to expense deleverage, resulting from lower revenues.CPRI’s Q3 Revenue Insights by SegmentsRevenues from Versace dipped 15% year over year to $193 million on both reported and constant-currency basis. Retail sales dropped in the mid-teens, while wholesale revenues declined in the double digits. Regionally, revenues fell 21% in the Americas, 13% in EMEA and 11% in Asia. Despite the revenue decline, Versace's global customer database grew by 1.1 million consumers, marking a 15% year-over-year increase.Jimmy Choo’s revenues were $159 million. The figure marked a 4.2% decrease on both reported and constant-currency basis from the previous year. Retail sales remained consistent with the prior year, while wholesale revenues declined in the mid-teens. Regionally, revenues decreased 10% in the Americas, increased 9% in EMEA and declined 17% in Asia. Jimmy Choo's global customer database expanded by 0.7 million consumers, reflecting 12% year-over-year growth.Revenues from Michael Kors were $909 million. This marked a decrease of 12.1% on a reported basis and 11.7% at constant currency from the prior-year period. Retail sales declined in the low teens, while wholesale revenues fell in the high-single digits. Regionally, revenues decreased 10% in the Americas, 13% in EMEA and 27% in Asia. Despite the decline, Michael Kors' global customer database grew by 9 million consumers, reflecting an 11% year-over-year increase.Capri Holdings’ Financial Health SnapshotThe company ended the quarter with cash and cash equivalents of $356 million, long-term debt of $1.45 billion and total shareholders’ equity, including non-controlling interest, of $1.07 billion. The operating cash flow for the fiscal third quarter was $309 million, whereas the free cash flow totaled $278 million.As of Dec. 28, 2024, CPRI had 1,205 retail stores. These include 747 Michael Kors, 224 Jimmy Choo and 234 Versace stores.What to Expect From CPRI in FY25?For fiscal 2025, Capri Holdings expects total revenues of $4.4 billion, including negative impacts of $40 million from foreign currency. Adjusted operating income is projected to be $100 million.For Versace, total revenues are expected to reach $810 million, with negative foreign-currency impacts of $10 million. The operating margin is projected to be in the negative high-single-digit range.For Jimmy Choo, total revenues are forecast at $600 million, including negative impacts of $5 million from foreign currency, with an operating margin in the negative low-single-digit range.For Michael Kors, total revenues are expected to be $3.0 billion, with negative foreign-currency impacts of $25 million. The operating margin is projected to be in the low-double-digit range.Capri Holdings’ FY26 OutlookLooking to fiscal 2026, CPRI anticipates total revenues of $4.1 billion, including negative foreign currency impacts of $100 million. Adjusted operating income is expected to be $150 million.For Versace, total revenues are projected at $800 million, with negative foreign-currency impacts of $25 million. The operating margin is expected to break even.For Jimmy Choo, total revenues are forecast at $550 million, including negative impacts of $15 million from foreign currency. The operating margin is expected to be slightly negative.For Michael Kors, total revenues are anticipated to reach $2.75 billion, with negative foreign-currency impacts of $60 million. The operating margin is projected to be in the low-double-digit range.How Have Estimates Been Moving Since Then?It turns out, fresh estimates have trended downward during the past month.The consensus estimate has shifted -178.05% due to these changes.VGM ScoresCurrently, Capri Holdings has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates 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 #4 (Sell). We expect a below average return from the stock in the next few months.Just Released: Zacks Top 10 Stocks for 2025Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Capri Holdings Limited (CPRI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks