Capri Holdings Reports Q3 Earnings Below Street View; Cuts Q4, FY23 Outlook

Capri Holdings Ltd CPRI reported a third-quarter FY23 sales decline of 6% year-on-year to $1.51 billion, missing the consensus of $1.53 billion.
Versace revenue decreased 0.8% Y/Y to $249 million, Jimmy Choo revenue fell 5.6% to $168 million, and Michael Kors revenue contracted 7.2% to $1.095 billion.
Gross profit was $1.01 billion, and gross margin expanded 140 basis points to 66.5%. Adjusted gross margin expanded 120 basis points to 66.3%.
Operating margin was 15.6%, and the operating income for the quarter amounted to $236 million.
Operating expenses increased 7.3% Y/Y to $769 million.
The company held $281 million in cash and equivalents as of Dec. 31, 2022.
Adjusted EPS of $1.84 missed the analyst consensus of $2.22.
Net inventory as of Dec. 31, 2022, was $1.188 billion, a 21% increase Y/Y. The company continues to expect inventory levels to be below the prior year by the end of the fourth quarter.
In Q3, the company repurchased approximately 5.7 million ordinary shares for $300 million in open market transactions.
Outlook: Capri lowered its FY23 sales outlook from $5.7 billion to $5.56 billion versus the $5.72 billion estimate. It also lowered FY23 EPS outlook from $6.85 to $6.10 against the consensus of $6.87.
Capri lowered Q4 revenue guidance from $1.40 billion to $1.275 billion versus the $1.41 billion estimate. It also lowered Q4 EPS guidance from $1.35 to $0.90 - $0.95 versus the $1.39 estimate.
For FY24, the company sees revenue of $5.80 billion versus the $6.03 billion estimate. It expects FY24 EPS of $6.40 versus the Street view of $7.24.
Price Action: CPRI shares are trading lower by 28.47% at $47.47 on the last check Wednesday.
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