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Capri Holdings (CPRI)
NYSE:CPRI
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Capri Holdings
(NYSE:CPRI)
48Neutral
Positive Factors
Financial Performance
A deal for Versace at a reported selling price of ~$1.6B is well above the previously estimated value, indicating significant value unlocking for equity holders.
Long-term Strategy
Management is focused on growing key categories for Versace and Jimmy Choo, including accessories, footwear, and Men’s.
Negative Factors
Brand Performance
The health of CPRI’s brands has deteriorated, with sales and earnings declines for the past nine quarters and EBIT margin reaching an all-time low.
Market Sentiment
The market may only price in ~50% of the news due to uncertainties about whether the deal will be finalized.
Uncertainty
Conclusions about the impact on Capri Holdings' shares are uncertain as there's a possibility the deal may not be finalized.
Capri Holdings (CPRI) vs. S&P 500 (SPY)
Market Cap
$2.24B
Dividend YieldN/A
Average Volume (3M)3.80M
Price to Earnings (P/E)―
Beta (1Y)0.84
Revenue Growth-12.34%
EPS Growth-574.65%
CountryUS
Employees10,200
SectorConsumer Cyclical
Sector Strength49
IndustryRetail - Discretionary
Share Statistics
EPS (TTM)-8.56
Shares Outstanding117,909,800
10 Day Avg. Volume4,290,529
30 Day Avg. Volume3,796,083
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.48
Price to Cash Flow (P/CF)1.80
P/FCF Ratio2.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$23.83Price Target Upside22.33% Upside
Rating ConsensusHold
Number of Analyst Covering12
Capri Holdings Business Overview & Revenue Model
Company DescriptionCapri Holdings Limited (CPRI) is a leading global fashion luxury group that operates in the design, marketing, and retail sectors. The company owns a portfolio of renowned brands including Versace, Jimmy Choo, and Michael Kors. Capri Holdings offers a wide range of products such as luxury apparel, footwear, accessories, and fragrances. With a strong global presence, the company focuses on creating innovative luxury products and experiences that resonate with customers worldwide.
How the Company Makes MoneyCapri Holdings generates revenue primarily through the sale of luxury goods under its three flagship brands: Versace, Jimmy Choo, and Michael Kors. The company operates through retail stores, e-commerce platforms, and wholesale partnerships. Revenue streams include direct sales to consumers via branded retail stores and online channels, as well as wholesale distribution to high-end department stores and specialty retailers. Additionally, Capri Holdings benefits from licensing agreements and collaborations that expand its product offerings and brand reach. The company's earnings are significantly influenced by brand strength, global market presence, and strategic marketing initiatives aimed at enhancing brand visibility and consumer engagement.
Capri Holdings Financial Statement Overview
Summary
Capri Holdings faces significant financial challenges with declining revenues and profitability, negatively impacting the income statement and cash flow. The balance sheet shows high leverage, but the company maintains positive cash flow generation. To improve financial health, Capri Holdings needs to focus on revenue growth and cost management.Income Statement
Capri Holdings has experienced a notable decline in both revenue and profitability. The TTM (Trailing-Twelve-Months) figures show a gross profit margin of 62.8% and a significant negative net profit margin of -21.8%, indicating high costs relative to revenue. The EBIT and EBITDA margins are negative, reflecting operational challenges. Revenue growth has been inconsistent, with recent periods showing declines, which raises concerns about the company's ability to sustain growth in a competitive retail environment.45
Neutral
Balance Sheet
The balance sheet reflects moderate leverage with a debt-to-equity ratio of 2.92 in the TTM, indicating potential financial risk if earnings do not improve. The equity ratio stands at 18.1%, suggesting a relatively low proportion of equity in asset financing. Return on equity is negative at -94.5% in the TTM, highlighting profitability challenges. Despite these concerns, the company's asset base provides some stability.55
Neutral
Cash Flow
Capri Holdings maintains a positive operating cash flow, with an operating cash flow to net income ratio of -0.48 in the TTM, indicating efficient cash generation despite net losses. The free cash flow growth rate shows improvement, and the free cash flow to net income ratio is -0.33, reflecting robust cash flow management. However, the negative ratios highlight ongoing profitability issues impacting cash flow generation.60
Neutral
| Breakdown | |||||
| TTM | Mar 2024 | Jun 2023 | Jun 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.05B | 5.17B | 5.62B | 5.65B | 4.06B | 5.55B | Gross Profit |
| 3.33B | 3.34B | 3.72B | 3.74B | 2.60B | 3.27B | EBIT |
| 481.00M | -241.00M | 510.00M | 718.00M | 19.00M | -192.00M | EBITDA |
| 739.00M | -89.00M | 1.00B | 1.19B | 258.00M | 52.00M | Net Income Common Stockholders |
| 415.00M | -229.00M | 616.00M | 822.00M | -63.00M | -225.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 356.00M | 199.00M | 249.00M | 169.00M | 232.00M | 592.00M | Total Assets |
| 5.91B | 6.69B | 7.29B | 7.48B | 7.48B | 7.95B | Total Debt |
| 3.12B | 3.58B | 3.60B | 3.04B | 3.45B | 4.37B | Net Debt |
| 2.76B | 3.38B | 3.35B | 2.87B | 3.21B | 3.77B | Total Liabilities |
| 4.83B | 5.09B | 5.45B | 4.92B | 5.32B | 5.78B | Stockholders Equity |
| 1.07B | 1.60B | 1.85B | 2.56B | 2.16B | 2.17B |
| Cash Flow | Free Cash Flow | ||||
| 783.00M | 120.00M | 545.00M | 573.00M | 513.00M | 636.00M | Operating Cash Flow |
| 883.00M | 309.00M | 771.00M | 704.00M | 624.00M | 859.00M | Investing Cash Flow |
| -101.00M | -135.00M | 183.00M | 58.00M | -124.00M | 62.00M | Financing Cash Flow |
| -791.00M | -208.00M | -776.00M | -800.00M | -870.00M | -497.00M |
Capri Holdings Technical Analysis
Negative
19.48
Price Trends
22.47
Negative
23.54
Negative
29.43
Negative
Market Momentum
-0.65
Positive
35.98
Neutral
16.10
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CPRI, the sentiment is Negative. The current price of 19.48 is below the 20-day moving average (MA) of 21.59, below the 50-day MA of 22.47, and below the 200-day MA of 29.43, indicating a bearish trend. The MACD of -0.65 indicates Positive momentum. The RSI at 35.98 is Neutral, neither overbought nor oversold. The STOCH value of 16.10 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CPRI.
Capri Holdings Risk Analysis
Capri Holdings disclosed 45 risk factors in its most recent earnings report. Capri Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Capri Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $13.79B | 19.91 | 27.57% | 1.48% | 5.23% | 24.63% | |
76 Outperform | $14.90B | 20.52 | 39.82% | 1.98% | 0.74% | -12.69% | |
67 Neutral | $3.75B | 5.70 | 13.79% | 0.21% | -4.83% | 45.23% | |
60 Neutral | $5.22B | 235.89 | 7.53% | 0.15% | ― | ― | |
60 Neutral | $12.39B | 10.47 | 1.07% | 3.58% | 1.64% | -18.33% | |
58 Neutral | $6.75B | ― | -16.13% | 2.07% | -8.42% | 57.91% | |
48 Neutral | $2.24B | ― | -67.22% | ― | -12.34% | -574.65% |
* Consumer Cyclical Sector Average
Performance Comparison
CPRI
Capri Holdings
19.48
-27.22
-58.29%
TPR
Tapestry
71.97
25.42
54.61%
PVH
PVH
66.29
-65.50
-49.70%
RL
Ralph Lauren
223.20
43.39
24.13%
VFC
VF
17.33
2.15
14.16%
LB
LandBridge Company LLC Class A
69.21
46.32
202.36%
Capri Holdings Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -18.93% | Next Earnings Date: May 28, 2025
Earnings Call Sentiment Neutral
The earnings call reflected significant challenges faced by Capri Holdings, including substantial revenue declines across brands and geographies, coupled with reduced operating margins. However, there are positive developments in consumer engagement, strategic pricing adjustments, and growth in specific segments like eyewear and fragrance. The company's focus on data-driven strategies and marketing efforts offers potential for recovery, but the current sentiment remains cautious given the near-term challenges.Highlights
Versace VIC Consumer Growth
Versace's VIC consumers grew at a double-digit rate, responding positively to sophisticated offerings and indicating successful engagement with high-value customers.
Eyewear and Fragrance Success
Both Versace and Michael Kors experienced growth in their eyewear and fragrance segments, with Michael Kors' latest fragrance launch exceeding expectations.
Data-Driven Strategy Adjustments
The company is implementing data-driven strategy adjustments, especially in pricing and product offerings, to better align with consumer expectations and improve full-price sell-throughs.
Marketing and Brand Awareness Initiatives
All three brands have shown significant increases in their global consumer databases, reflecting successful brand awareness and consumer engagement efforts.
Lowlights
Overall Revenue Decline
Total company revenue decreased by 12% year-over-year, with significant declines in the wholesale and retail channels.
Brand-Specific Revenue Challenges
Versace revenue declined 15%, Jimmy Choo by 4%, and Michael Kors by 12% compared to the previous year, largely due to decreased demand for luxury goods.
Geographical Revenue Declines
Revenue decreased by 11% in the Americas, 9% in EMEA, and a significant 20% in Asia, reflecting global challenges in the luxury fashion market.
Operating Margin Decrease
Operating margins declined across all brands, with Versace at -10.9%, Jimmy Choo at -3.8%, and Michael Kors down to 16.2%, due to expense deleverage on lower revenue.
Fourth Quarter Revenue Warning
The company anticipates a 20% revenue decline in the fourth quarter, with continued challenges in the wholesale channel and foreign currency headwinds.
Company Guidance
During the Capri Holdings Limited third quarter fiscal 2025 conference call, the company provided guidance indicating a challenging near-term outlook with expectations of a 20% revenue decline in the fourth quarter, amounting to approximately $975 million. This includes a $25 million foreign currency headwind and a $15 million impact from store closures. Retail sales are forecasted to decline in the mid-teens, while wholesale revenue is anticipated to drop by about 30%, marking the most significant decline before moderating as stabilization efforts take effect. By brand, Versace is expected to generate $200 million in revenue, impacted negatively by $7 million due to currency fluctuations; Jimmy Choo is forecasted at $125 million, with a $5 million currency impact; and Michael Kors is projected to achieve $650 million, with a $13 million currency impact. The company forecasts a flat gross margin compared to the prior year for the fourth quarter and an operating loss of $25 million. For fiscal 2026, Capri Holdings anticipates revenue stabilization and modest gross margin expansion, with a forecast of $4.1 billion in total company revenue, factoring in a $100 million negative impact from foreign exchange rates and a $60 million impact from planned store closures. Versace is projected to achieve $800 million in revenue, Jimmy Choo $550 million, and Michael Kors $2.75 billion, each affected by foreign currency. The company plans to execute new cost reduction initiatives, aiming to reduce expenses by $200 million, resulting in an operating income forecast of $150 million for fiscal 2026. Looking ahead to fiscal 2027, Capri Holdings expects to return to revenue growth and continued operating margin expansion.Capri Holdings Corporate Events
Business Operations and StrategyFinancial Disclosures
Capri Holdings Announce New Long-Term Financial Targets
Positive
Feb 19, 2025
On February 19, 2025, Capri Holdings Limited held its Investor Day in New York City, where it announced new long-term financial targets. The company expressed optimism about the growth potential of its brands, Versace, Jimmy Choo, and Michael Kors, as it pursues strategic initiatives. Capri Holdings highlighted that its powerful brands have enduring value and resilience, which it expects to drive revenue and earnings growth over time. The guidance provided is based on adjusted, non-GAAP measures and is subject to external factors such as global economic conditions and currency fluctuations.
Private Placements and FinancingBusiness Operations and Strategy
Capri Holdings Secures $2.2 Billion Credit Facility
Positive
Feb 4, 2025
On February 4, 2025, Capri Holdings Limited finalized an amended and restated credit agreement, establishing a $2.2 billion senior secured credit facility with JPMorgan Chase Bank among others. The facility includes a $700 million term loan and a $1.5 billion revolving credit line, maturing in July 2027, and aims to support the company’s operations through repaying existing debts and financing general corporate needs. This strategic financial restructuring enhances Capri Holdings’ liquidity and financial flexibility, potentially strengthening its position in the market.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.