Capri Expects Earnings, Sales to Exceed Pre-Pandemic Levels by Fiscal 2023

Shares of Capri Holdings Ltd. climbed in Wednesday premarket trading after the luxury fashion group notched better-than-expected earnings in the third quarter — and predicted its growth would exceed pre-pandemic levels in a matter of a couple years.

For the three months ended Dec. 26, the Michael Kors, Versace and Jimmy Choo parent logged adjusted profits of $250 million, or $1.65 per diluted share, compared with the prior year’s profits of $253 million, or $1.66 per diluted share. Wall Street had anticipated earnings of $1.01.

However, revenues fell 17.1% to $1.3 billion, versus market watchers’ bets of $1.33 billion. Its e-commerce business, on the other hand, improved 65%.

As of 9:00 a.m. ET, CPRI was up nearly 7% to $45.65. Over the past year, its stock has risen more than 43%.

“We were pleased with our third-quarter results as revenue improved sequentially and exceeded our expectations. As we continued to execute on our strategic initiatives, earnings were meaningfully higher than anticipated driven by significant gross margin expansion,” chairman and CEO John Idol said in a statement. “We also remain encouraged by the double-digit increases in our customer databases as we continue to attract new consumers to each of our luxury houses.”

Like many fashion purveyors, Capri has seen a lag in sales as shoppers continue to opt for sweats and slippers over dresses and heels amid the persistent COVID-19 pandemic. It saw positive retail sales in Asia across all of its luxury houses, driven by double-digit growth in Mainland China. Renewed lockdowns across certain countries in Europe, however, have offset those gains.

During the third quarter, sales at Versace were flat at $195 million. Jimmy Choo and Michael Kors saw respective revenue declines of 26.7% to $121 million and 18.6% to $986 million.

Although Capri did not provide an outlook for the 2021 fiscal year, Idol expressed optimism. Over the past several months, the luxury conglomerate has taken several steps in a bid to preserve liquidity, such as cutting back on operating expenses, reducing capital expenditures and suspending its share repurchase program.

“By fiscal 2023, we anticipate revenue and earnings per share will exceed pre-pandemic levels,” he said. “We remain confident that our three luxury houses position Capri Holdings to deliver multiple years of revenue and earnings growth as well as increase shareholder value.”

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