Capri Holdings Limited
Incorporated in the British Virgin Islands and headquartered in London whose common shares are listed on the NYSE, Capri is a global luxury fashion group whose portfolio includes well recognized brands Michael Kors, Versace, and Jimmy Choo. High water EPS FY19 4.97, FY22 estimates are still below those levels, while stock has recovered well, it doesn’t seem to be priced on optimism that earnings recover faster or even exceed FY19 levels.
Kors ~73% of total Revs, Versace ~17%, Jimmy Choo ~10%,
Ests 3Q23 4Q23 FY23 FY24
Revs 1.5b 1.4 5.7b 6.0b
EPS 2.22 1.39 6.87 7.24
P=46.93, TTM EPS=6.55, P/E=7X, FY23 P/E=6.5X, D/C=36%, 21% incl NWC, 1.5bn net debt, debt could be repaid with normalized operating cash flow in 1-2 years depending on capex, share repurchases, acquisitions.
3Q23 1.84 vs 2.22 -17%, est 2.22 down from 2.43
Feb 8, 2023, P=66.36, TTM EPS=6.17, P/E=11X
Revs -6% to 1.51bn (-0.5% ex fx), GM 66.3% vs 65.1%, OM 16.9% vs 22.3%
Versace -0.8% to 249m (+11.2% ex fx), OM 9.6% vs 12.7%
Choo -5.6% to 168m (+3.4% ex fx), OM 10.7% vs 9%
Kors -7.2% to 1.095bn (-3.6% ex fx), OM 22.9% vs 28.4%, Retail +LSD, Wholesale -25%
FY23 Outlook: Revs 5.56bn (cut again, prev 5.7), EPS ~6.10 (prev 6.85), ending inv down y/y
4Q Outlook: Revs -14% to 1.275bn (est 1.4bn), EPS .90-.95 (vs 1.02, est 1.39), weakness in all brands.
FY24 Outlook: Revs ~5.8bn or +4%, modest GM expansion, OM ~16.5%, EPS ~6.40 (est 7.24), LDD growth in retail, Wholesale down mid-teens, lower margins in 1H, higher 2H
Inv +21% to 1.188bn vs 1.18bn in 2Q
Retail + MSD ex fx, >12m new customers, highest y/y growth in their history.
Wholesale -20% driven by Kors, shipped less into channel to avoid excess inventories, weakness continued into 4Q
Disappointing results and outlook but 11X EPS not expensive, mgmt. taking cost action to improve results next year, obviously economic climate and reception to price increases has yet to be determined. China was big impact, ex fx and China, Versace +21%, Choo +10%,
2Q23 1.79 vs 1.53 +17%, est 1.54
Nov 9, 2022, P=46.93, TTM EPS=6.55, P/E=7X,
Revs +8.6% to 1.4bn (+17.5% ex fx, est 1.4bn), GM 67.1% vs 67.6%, OM 19.8% vs 18.5%, OpInc +16% to 280m, inv +36% to 1.18bn, +10% vs pre-covid, -7% q/q
Versace +9.2% to 308m (+27.7% ex fx), OM 20.1% vs 19.5%
Choo +3.6% to 142m (+15.3% ex fx), OM 5.6% vs 0.7%
Kors +9.2% to 962m (+14.6% ex fx), OM 25.8% vs 25%
Repurchased 7.1m shares for 350m, subsequent to 2Q additional 2.3m for $100m, new share repurchase authorization up to $1bn as existing one had 250m remaining.
Outlook: FY23 Revs 5.7bn (rev 5.85bn), EPS ~6.85 (unchanged)
3Q Revs -4.4% to 1.53bn, EPS 2.20 vs 2.22, est 2.43
4Q Revs -6% to 1.4bn (+5% ex fx and extra week last year), EPS +32% to 1.35, est 1.34
More cautious rev outlook on macro uncertainty, fx, covid lockdowns in China, maintaining EPS outlook. Mgmt. surprised thay haven’t seen EU slowdown yet.
Mgmt intends 1 more price increase before spring then pause and assess.
1Q23 1.50 vs 1.42, est 1.36 down from 1.45
Aug 9, 2022, P=50.00, TTM EPS=6.29, P/E=8X, FY23 P/E=7X
Revs +8.5% to 1.36bn (+15.2% ex fx, est 1.3bn), GM 66.2% vs 68.1%, OM 18.5% vs 20.8%
Inv +66% to 1.265bn (+25% vs pre-covid), planned early arrival and more core inventory
Versace +14.6% to 275m (+29.6% ex fx), OM 18.9% vs 20%
Choo +21.1% to 172m (+30.3% ex fx), OM 11% vs 7.7%
Kors +4.8% to 913m (+8.7% ex fx), OM 24.3% vs 27.6%
Americas +11% (+13% ex fx), EMEA +21% (+37% rx fx), Asia-14% (-7% ex fx) but ex China +21% (+35% ex fx ex China)
Repurchased 6.1m shares for ~$300m, $700m remaining
FY23 Outlook: Revs 5.85bn (prev 5.95), EPS ~6.85 (unchanged), ending inventory down y/y
2Q Outlook: Revs +7.6% (+16% ex fx) to 1.4bn (est 1.39), EPS ~1.55 (est 1.55)
4Q22 1.02 vs .38, est .82 up from .73, FY22 EPS 6.21 vs 1.90
Jun 1, 2022, P=48.74, TTM EPS=6.21, P/E=8X, FY23 P/E=7X
Revs +24.6% to 1.49bn (est 1.4), +18.8% on 13-week basis, GM 63.7% vs 63.5%, OM 14.2% vs 11.9%
Versace +34% to 315m, OM 15.9% vs 12.3%
Choo +25.8% to 156m, OM (9.6%) vs (14.5%)
Kors +21.8% to 1.02bn, OM 20.6% vs 20.5%
Americas +29.6% (56% of Revs) faced inventory constraints, EMEA +32.7% (26% of Revs), Asia +2.3% (17.3% of Revs)
Repurchased 5.1m shares for $300m (avg $58.82), authorized new $1bn, Inventory +48.9% (vs low levels last year) most in transit, within mgmt. plan to take seasonal product earlier and hold more core inventory, mgmt. feels product still underpriced, more price increases coming.
FY23 Outlook: Revs +5% to 5.95m (+10% ex fx), OM 18%, EPS 6.85 (raised EPS, moderated revs on fx headwinds, covid lockdowns, no Russian sales/travel), Tax Rate 11% vs 12.6%
1Q23 Outlook: Revs +4% to 1.3bn (+9% ex fx), OM 16.5%, EPS -5% to 1.35 (previous guide 1.45), factors China est -40% due to lockdowns, fx headwinds
Mgmt optimistic about resuming double digit revenue growth once past current macro headwinds. Stock incredibly inexpensive especially given business more stable than some others.
3Q22 2.22 vs 1.65 +35%, est 1.69 up from 1.57, vs 1.65
Feb 2, 2022, P=61.49, TTM EPS=5.56, P/E=11X, FY23 P/E=10X
Revs +24% to 1.6bn (est 1.47), GM 65.1% vs 64.7%, incl 400bps supply chain impact, 100bps higher than expected at 3Q, OM 22.3% vs 19.7%, Inventory +24% to 978m incl in-transit inventory up >2.5X y/y, revenues would have been higher if not for inventory constraints, expect inventory growth to outpace sales over next 12m,
EMEA +26%, Asia +3% despite China down y/y, Accessories almost doubled y/y.
Versace +29% to 251m, OM 12.7% vs 6.7%
Choo +47% to 178m, OM 9% vs (6.6%)
Kors +20% to 1.18bn (MSD impact from inv constraints), OM 28.4% vs 28.5%
store and e-commerce up double digit across all brands.
Customer file +11.5m y/y (Kors +20% to almost 60m)
Repurchased 3.2m shares for 200m (~$62.5/sh)
Stores have been underinvested over 10-15 years, renovated ~50%, remaining over next 24m, new stores better “quite significant” productivity, still below peers.
Outlook: 4Q Revs 1.4bn (est 1.39), OM 13.5%, EPS 0.80 (est 0.73 vs .38)
FY22 Revs 5.56bn incl !75m from 53rd week (est 5.4bn), OM 19%, EPS $6.00,
FY23: Revs 6.1bn (+9.7% but ex 53rd week +11%), OM 19%, EPS 6.60 (est 6.05), 1Q +2% to 1.45, 2Q +4.5%, 1.60, 3Q +13% to 2.50, 4Q +88% to 1.50
FY23: Versace +20% to 1.3bn, OM 18% vs 17%, Choo +12.5% to 675m, OM 8% vs 2%, Kors +6.3% to 4.125bn, OM 25% vs 25%
FY23 earnings outlook factors higher supply chain costs more than offset by initiatives, supply chain comps worst in 1Q then expect “begin to normalize”, expect GM expansion in 3Q and 4Q, does not factor return of tourist spend.
2Q22 1.53 vs .90 +70%, est .95
Nov 3, 2021, P=55.53, TTM EPS=4.99, P/E=11X, FY23 P/E=10X
Revs +17% to 1.3bn, GM 67.6% vs 63.2%, OM 18.5% vs 16.4%, Opinc +32%
Versace +45% to 282m, OM 19.5% vs 10.3%
Choo +12% to 137m, OM 0.7% vs 0%
Kors+11% to 881m, OM 25% vs 24%
e-commerce increased “double digits”, grew q/q even as they re-opened stores. Americas would have been stronger if not for inventory constraints, EU strong, Asia flat due to covid restrictions, China revs grew despite new restrictions
Inv -6.9% y/y to 866m, +14% q/q, not in the inventory position they wanted but still good.
Approved 2-year $1bn share repurchase program, replacing existing plan w 250m remaining.
Raised FY Outlook, Revs ~5.4bn, adj EPS 5.30 (est 4.57) incl supply chain disruptions and higher shipping costs. 3Q Revs 1.46bn (est 1.44b), adj EPS 1.65 (vs 1.65, est 1.57)
Very solid results despite, headwinds, outlook constrained by estimated flat 3Q but lower discount sales to benefit and drive healthier business. Longer-term opportunity is much more significant than near-term earnings, FY23 ests around mgmt. FY22 guidance.
1Q22 1.42 vs (1.04) vs 1.32, est .79 up from .55
Jul 30, 2021, P=50.05, TTM EPS=4.36, P/E=11X, FY22 ests too low
Revs +178% to 1.25bn, -7% vs 2y, GM 68.1% vs 67.2% vs 59.7%, OM 20.8% vs (32.6%) vs 14.1%, OpInc +37% vs 2y
Vs 2 years ago: Versace +16% to 240m, OM 20% vs (1.4%), Choo -10% to 142m, OM 7.7% vs 7%, Kors -9% to 871m, OM 27.6% vs 20.5%
Inventories -20% to 760m, will build to support sales growth.
2Q Outlook: Revs 1.25bn (est 1.1bn), OM 13%, EPS .90 (est .83)
Raised FY22 Outlook again Revs 5.3bn, OM 16%, EPS to 4.50 (est 3.93), looks conservative given TTM EPS at 4.36, guidance reflects cautious optimism in 2H due to potential pandemic headwinds, logistics, staffing at factories.
Management reiterated they are moving away from promotional competitive pricing, don’t have the inventory for it, raising prices at Kors, fits with strategic plan for wholesale business to be smaller and more profitable than before.
Solid results, still not quite at pre-pandemic levels but strong profitability, supports investor day outlook.
Investor Day June 29, 2021
Raised FY22 Guidance Revs 5.15bn vs previous expectation 5.10bn, adj EPS 3.80-3.90 vs previous guidance 3.70-3.80 with 14% OM, target 16.5% in FY23, EPS 5.00 (est 4.73), longer term OM target ~20%
MK FY23 Revs ~4bn, sooner than expected
Target FY23 debt outstanding 300m from 1.1bn at end of FY21
Management committed to being less promotional through product/inventory discipline, not chasing top line revenue for the sake of it.
Closing underperforming US stores, opening in Asia where sales densities are higher, total store count to decline moderately (target 1230 from 1257 at end of FY21)
Versace to expand accessories from 25% to 50%, and “establish authority as a luxury leather house”, expand e-commerce from 90m to 500m (time period undefined), OM LDD FY22, mid-teens FY23, low 20% longer-term target
Choo to grow accessories from 90m to 300m, triple e-commerce from 60m to 200m, expand casual footwear, OM MSD in FY22, 10% in FY23, 15% longer-term goal.
Kors e-commerce from 590m to >2bn, Signature from 1bn to 2bn to 50% of Kors, MKGO from 250m to 500m, Men’s from 200m to 500m, OM to low 20s in FY22, low-mid 20s in FY23, ~25% longer-term goal
Although FY22 guidance looks conservative, management looks to invest upside for FY23 and beyond, stock looks cheap on FY23 and beyond outlook although some of it is a show-me story.
4Q21 .38 vs .11, est .02, FY21 EPS 1.90 vs 3.89
May 26, 2021, P=52.94, TTM EPS 1.90, P/E=28X, FY22 P/E=14X, FY23 P/E=12X
Revs flat to 1.2bn (est 1bn) adj GM 63.5% vs 60.7%, adj OM 11.9% vs 8.3%
Inventories -11% to 736m
Retail sales +13%, ~60% of EMEA and ~40% of Canadian stores were closed during 4Q, e-commerce strong
Versace +10.3% (-0.5% ex fx) to 235m despite EMEA -15% , OM 12.3% vs (0.9%)
Choo +15.9% to 124m (+10.3% ex fx) despite EMEA -18%, OM (14.5%) vs (21.5%)
Kors -3.9% to 838m (-6.5% ex fx) Americas -9%, EMEA -5%, Asia +26%, OM 20.5% vs 15.9%
Re-established 400m share repurchase authorization
Outlook: 1Q22 Revs 1.1bn GM expansion 100bps, OM ~12%, EPS ~.75 (est .55)
2Q Revs 1.2bn, EPS .70-.75, 3Q Revs 1.4bn, EPS 1.65-1.70, 4Q Revs 1.4bn, EPS .55-.60
FY22 Revs 5.1bn, GM expansion 50bps, OM ~14%, EPS 3.70-3.80 (est 3.72)
Total Rev potential $7bn, Versace $2bn ($843m in FY20). Choo $1bn ($555m in FY20), Kors rev $4bn ($4.1bn in FY20)
Solid results better than expected, mgmt. provided visibility for all quarters, 1Q and 2Q still solid but not eclipsing 2020 results due to some residual headwinds from pandemic (Europe especially), mgmt. not chasing revenue
3Q21 1.65 vs 1.66
Feb 3, 2021, YTD adj EPS 1.52 vs 3.77
Revs -17% to 1.3bn, adj GM 64.7% vs 59.5%, adj OM 19.7% vs 16.8%
e-commerce sales +65%, Inventories -18% y/y
Versace flat at 195m, OM 6.7% vs (5.1%)
Choo -27% to 121m, OM (6.6%) vs 5.5%
Kors -19% to 986m, OM 28.5% vs 23.8%
No guidance
229m in cash, 1.4bn debt, 353m non-cash NWC
Expect 4Q revs -y/y similar to 3Q, +100bps GM, slightly negative EPS.
Expect by FY23 revenues and EPS will > pre-pandemic levels
@51, 14X FY22 ests, 10X FY19 EPS
4Q20 .11 vs .63, FY20 adj eps 3.89 vs 4.97
3Q20 1.66 vs 1.76
2Q20 1.16 vs 1.27
1Q20 .95 vs 1.32
4Q19 .63 vs .63, FY19 4.97 vs 4.52
FY19 Revs+11% to 5.2bn, adj OM 17%