Capri Holdings' Q2 Highlights: Earnings Beat, Higher Inventory Levels, $1B Stock Buyback & More

Capri Holdings Ltd CPRI reported second-quarter FY23 sales growth of 8.6% year-on-year to $1.41 billion, beating the consensus of $1.40 billion. On a constant currency basis, total revenue increased 17.5%.
Versace revenue increased 9.2% Y/Y to $308 million, Jimmy Choo revenue rose 3.6% to $142 million, and Michael Kors revenue expanded 9.2% to $962 million.
Gross profit rose 7.6% Y/Y to $951 million, and gross margin contracted 60 basis points to 67.4%. Adjusted gross margin contracted 50 basis points to 67.1%.
The operating margin was 17.8%, and operating income for the quarter amounted to $252 million.
Operating expenses increased 1.45% Y/Y to $699 million.
The company held $215 million in cash and equivalents as of October 1, 2022.
Adjusted EPS of $1.79 beat the analyst consensus of $1.54.
Net inventory as of October 1, 2022, was $1.180 billion, a 36% increase Y/Y.
Buyback: The company's Board of Directors approved a new share repurchase program of up to $1 billion of its outstanding ordinary shares. This new two-year program will replace its existing $1 billion share repurchase program, which had $250 million of availability remaining.
"Looking at the remainder of Fiscal 2023, we are now taking a more cautious view with our revenue outlook due to an increasingly uncertain macroeconomic environment, foreign currency headwinds and the ongoing impact of COVID related restrictions in China,” said CEO John D. Idol.
Outlook: Capri sees FY23 sales of about $5.7 billion (prior view $5.85 billion) versus the consensus of $5.83 billion.
Capri continues to expect FY23 adjusted EPS of about $6.85, against the consensus of $6.76.
For Q3, the company sees sales of about $1.53 billion (prior view $1.65 billion) versus the estimate of $1.64 billion. It expects Q3 adjusted EPS of about $2.20 (prior view $2.45) versus the estimate of $2.43.
For Q4, the company sees sales of about $1.40 billion (prior view $1.44 billion). It still expects Q4 adjusted EPS of about $1.35.
Price Action: CPRI shares are trading higher by 1.68% at $47.72 on the last check Wednesday.
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