Capri Holdings (CPRI) Rises High on Strategies: Fit to Hold – October 20, 2022
Capri Holdings Limited (IRCP – Free Report) is well positioned for growth, thanks to its solid strategies. CPRI has been strengthening its position in the luxury fashion space for some time, thanks to the potential of the Versace, Jimmy Choo and Michael Kors brands across expanded products and categories. Management has been deploying resources for some time to expand product offerings, upgrade distribution infrastructure, build seamless omnichannel capabilities, and deepen engagement with customers.
Shares of this accessories and footwear retailer are up 9.2% in the past three months from the industrydown 6.8%. A VGM score of A coupled with an expected long-term earnings growth rate of 10.1% speaks volumes about the potential of this currently ranked No. 3 (Hold) Zacks stock.
Let’s take a closer look
In terms of branding efforts, Capri Holdings designs innovative fashion products through its brand banners. While exploring growth opportunities in apparel is an important focus for CPRI, management will also focus on strengthening its accessories business, including leather goods and handbags. Its acquisitions of the Jimmy Choo and Versace brands have strengthened its position in the luxury fashion space. These brands, together with the Michael Kors label, constitute a perfect brand portfolio for CPRI.
Management remains confident of Versace’s positioning as a leader in luxury leather goods and growing its accessories revenue to $1 billion over time. It also aims to more than double Capri Holdings’ footwear revenue. The Versace brand has extended its licensing agreement with EuroItalia for an additional 15 years. EuroItalia is a world leader in perfumes and cosmetics based in Italy. At Michael Kors, CPRI continues to increase its Signature penetration across all product categories.
Additionally, CPRI will continue to leverage its omnichannel capabilities to accelerate revenue growth and deepen consumer engagement through enhanced communications. Management has invested significantly in digital analytics, expanding capabilities and improving the e-commerce platform for some time. Capri Holdings’ e-commerce business continues to show strong performance, driven by the growing number of customers shopping online.
In the first quarter of fiscal 2023, Signature represented 50% of the assortment. Men’s business remains one of the fastest growing categories at Michael Kors. He’s looking to double Michael Kors’ e-commerce revenue.
In its latest earnings call, Capri Holdings estimated revenue at $5.85 billion for fiscal 2023, suggesting an increase of 3% on a reported basis and around 10% on an at-exchange basis. constant. It estimated earnings per share at $6.85, indicating an increase from the adjusted earnings of $6.21 reported in fiscal 2022. The fiscal 2023 revenue projection assumes revenue of about $1.175 billion from Versace (up about 8% on a reported basis), $650 million from Jimmy Choo (up about 6%) and $4.025 billion from Michael Kors ( up about 6%).
Analysts also seem bullish on Capri Holdings. For fiscal year 2023, Zacks consensus estimate for CPRI’s sales and earnings per share (EPS) is currently pegged at $5.84 billion and $6.84 each, suggesting growth of 3.3 % and 10.1%, respectively, compared to the corresponding figures for the prior year period.
Additionally, for fiscal 2024, the consensus estimate for sales and EPS currently stands at $6.21 billion and $7.33, respectively, indicating an increase of 6.3% and 7. 2% each compared to the comparable actual figures of the previous year.
Key Choices in Retail
Some higher ranked stocks are Ultimate beauty (ULTA – free report), Designer brands (DBI – free report) and Loop (BKE – free report).
Ulta Beauty, the leading beauty retailer, currently sports a Zacks #1 (Strong Buy) rating. You can see the full list of today’s Zacks #1 Rank stocks here.
Zacks consensus estimate for Ulta Beauty sales for fiscal year 2022 suggests growth of 13.7% over the corresponding level of the previous year. ULTA has an earnings surprise for the last four quarters of 32.8% on average.
Designer Brands, the leading footwear and accessories designer, currently has a Zacks rating of 1.
Zacks’ consensus estimate for Designer Brands’ fiscal 2022 sales and EPS suggests growth of 6.9% and 23.5%, respectively, from corresponding levels a year earlier. DBI has a surprise on earnings for the last four quarters of 55.1% on average.
Buckle, a leading apparel, footwear and accessories retailer, currently has a Zacks rank of #2 (buy). BKE has a surprise on earnings for the last four quarters of 12.7% on average.
Zacks’ consensus estimate for Buckle’s fiscal 2022 sales and EPS suggests growth of 6.8% and 4.5%, respectively, over the corresponding figures for the prior year.