Factors To Know Ahead Of Capri Holdings' (CPRI) Q3 Earnings
Zacks Investment Research | Feb 02, 2020 08:58PM ET
Capri Holdings Limited (NYSE:CPRI) is slated to release third-quarter fiscal 2020 results on Feb 5, before the market opens. In the last reported quarter, the company witnessed negative earnings surprise of 7.2%. This designer, marketer, distributor and retailer of branded apparel and accessories has a trailing four-quarter positive earnings surprise of 3.4%, on average.
The Zacks Consensus Estimate for third-quarter earnings stands at $1.61, suggesting a decline of 8.5% from the year-ago period. We note that the Zacks Consensus Estimate has remained stable in the last 30 days. The consensus estimates for revenues is pegged at $1,534 million, indicating an improvement of 6.7% from the year-ago quarter.
Key Factors to Note
Capri Holdings’ commitment toward deploying resources to expand product offerings, build “shop-in-shops”, and upgrading information system and distribution infrastructure is likely to get reflected in the top line in the to-be-reported quarter. Notably, the company has been expanding product mix beyond handbags into men’s, footwear and women’s ready to wear. Moreover, the company’s third-quarter results are anticipated to reflect gains from inventory management and focus on the e-commerce platform.
In the last earnings call, management guided mid-single digit growth in revenues for the third quarter revenues. This includes revenue contribution of about $180 million and $165 million from Versace and Jimmy Choo, respectively, and marginally below $1.2 billion from Michael Kors.
For a while now, revenues have been soft for Michael Kors, which accounts for a major portion of the company's top line. Nonetheless, Capri Holdings had forecast a low single-digit increase in comparable store sales for the brand. Further, management envisioned flat comparable store sales for Jimmy Choo and Versace brands.
We also note that costs associated with investments in e-commerce expansion, technological advancements and global infrastructure (including new store openings and international expansions) are likely to get reflected in margins, and consequently the bottom line in the third quarter.
Capri Holdings projected a decline of 450 basis points in operating margin to 17.5% for the third quarter. The company anticipates a contraction in Michael Kors brand operating margin. The company also guided earnings per share in the range of $1.55-$1.60 down from $1.76 reported in the year-ago period. The projection took into account dilution from Versace of about 15 cents.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.