GICS Sector : Consumer Cyclical
Capri Holdings Limited designs, markets, distributes, and retails branded women's and men's apparel, footwear, and accessories in the United States, Canada, Latin America, Europe, the Middle East, Africa, and Asia.It operates through three segments: Versace, Jimmy Choo, and Michael Kors.The company offers ready-to-wear, accessories, footwear, handbags, scarves and belts, small leather goods, eyewear, watches, jewelry, fragrances, and home furnishings through a distribution network, including boutiques, department, and specialty stores, as well as through e-commerce sites.
Capri Holdings reported total company revenue of $1.025 billion, a 4% decrease from the prior year, but still managed to exceed expectations. The company's gross margin stood at 60.8%, a decline of 230 basis points, primarily due to tariffs. However, excluding the impact of tariffs, underlying gross margin expanded by 70 basis points, driven by better full-price sell-throughs and reduced promotional activity. The company's EPS came in at $0.962, beating estimates of $0.78.
Publication Date: Feb -04
Michael Kors revenue decreased by 5.6% compared to the prior year, with sales down mid-single digits in both retail and wholesale channels. However, the company saw a sequential improvement in full-price sales, which increased low double digits. Jimmy Choo revenue, on the other hand, exceeded expectations, increasing by 5% compared to the prior year, driven by strong brand momentum and the continued traction of strategic initiatives. As John Idol mentioned, "our strategic initiatives are starting to take hold, including repositioning the brand under the new Jetset positioning, using social media channels differently, and focusing on standout style."
The company narrowed its range for fiscal 2026, expecting revenue between $3.45 and $3.475 billion, and gross margin of approximately 61%. Operating income is anticipated to be around $100 million, with Michael Kors' operating margin in the high single-digit range and Jimmy Choo operating margin in the negative low single-digit range. The company expects to return to growth in fiscal 2027, driven by full-price retail, outlet channel, and e-commerce.
With a P/E Ratio of -4.78 and an EV/EBITDA of 19.5, the market seems to be pricing in a challenging near-term outlook for Capri Holdings. However, the company's efforts to strengthen brand desirability and improve operational efficiency could potentially drive growth in the long term. Analysts estimate next year's revenue growth at 1.8%, which may not be sufficient to justify the current valuation multiples. The company's Net Debt / EBITDA ratio of 6.36 also raises concerns about its debt burden.
Given the current valuation metrics, it appears that the market is cautious about Capri Holdings' near-term prospects. However, if the company can successfully execute its strategic initiatives and return to growth, there may be opportunities for investors in the long term. The Free Cash Flow Yield of 20.52% could be an attractive feature for income-seeking investors.
Capri Holdings Limited Announces Participation in Citi's 2026 Global Consumer & Retail Conference
Mar -02
DME Capital Scooped Up Over 2 Million Capri Holdings Shares. Is the Stock a Buy?
Feb -25
Capri Sun Brings Back Fan-Favorite Moon Punch as the World Celebrates a New Era of Lunar Exploration
Feb -25
Capri Holdings Appoints New CFO, Shares Drop After Hours
Feb -24
Tyler Reddien Appointed Chief Financial Officer and Chief Operating Officer of Capri Holdings
Feb -24
Financial Contrast: Victoria’s Secret & Co. (NYSE:VSCO) versus Capri (NYSE:CPRI)
Feb -09
Capri Holdings Still Has A Lot To Prove
Feb -06
Capri Holdings: Shareholders Likely To Remain Bag Holders -- Sell
Feb -05
Michael Kors' 5.4% growth is driven by strategic brand revitalization, expanded e-commerce capabilities, and increased marketing efforts. Additionally, the brand's focus on accessories and footwear, which are higher-margin categories, has contributed to its growth. Furthermore, Capri Holdings' efforts to improve operational efficiency and reduce costs have also positively impacted the brand's performance.
Versace's 5.4% growth is driven by strong brand momentum, increased wholesale and e-commerce sales, and strategic expansion into Asia. The brand's refreshed product lines, enhanced marketing efforts, and celebrity endorsements have also contributed to its growth. Additionally, Capri Holdings' focus on omnichannel retailing and investment in digital capabilities have further boosted Versace's sales.
Jimmy Choo's 5.4% growth is driven by strong brand recognition, increased online presence, and strategic expansion in Asia. The brand's focus on luxury footwear and accessories, particularly in the high-growth sneaker market, has also contributed to its growth. Additionally, Capri Holdings' efforts to revamp Jimmy Choo's brand image and improve operational efficiency have positively impacted sales.
Luxury fashion brand offering accessories, footwear, and apparel for men and women
Italian luxury fashion brand providing high-end clothing, shoes, handbags, and accessories
Luxury footwear and accessories brand offering high-end shoes, handbags, and small leather goods
The threat of substitutes for Capri Holdings Limited is medium due to the presence of alternative luxury fashion brands and online marketplaces that offer similar products.
The bargaining power of customers is high due to the availability of multiple luxury fashion brands and online marketplaces, giving customers the power to choose from a wide range of options.
The bargaining power of suppliers is low due to the company's strong relationships with suppliers and its ability to negotiate prices and terms.
The threat of new entrants is low due to the high barriers to entry in the luxury fashion industry, including the need for significant capital investment and established relationships with suppliers and distributors.
The intensity of rivalry is high due to the presence of established luxury fashion brands and the increasing competition from online marketplaces and new entrants.
| Value | |
|---|---|
| Debt Weight | 66.10% |
| Debt Cost | 3.95% |
| Equity Weight | 33.90% |
| Equity Cost | 14.39% |
| WACC | 7.49% |
| Leverage | 195.02% |
Value: 5.6
Growth: 7.3
Quality: 7.1
Yield: 5.0
Momentum: 1.5
Volatility: 3.3
1-Year Total Return ->
Value: 5.5
Growth: 1.7
Quality: 4.6
Yield: 5.0
Momentum: 6.0
Volatility: 5.3
1-Year Total Return ->
Value: 8.1
Growth: 7.1
Quality: 5.0
Yield: 0.6
Momentum: 2.5
Volatility: 2.3
1-Year Total Return ->
Value: 3.9
Growth: 1.9
Quality: 2.6
Yield: 3.8
Momentum: 8.0
Volatility: 2.3
1-Year Total Return ->
Value: 0.4
Growth: 7.8
Quality: 5.2
Yield: 1.2
Momentum: 3.0
Volatility: 3.7
1-Year Total Return ->
Value: 5.6
Growth: 1.4
Quality: 2.2
Yield: 0.0
Momentum: 4.0
Volatility: 0.3
1-Year Total Return ->