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Capri Holdings (CPRI) Outpaces Industry in the Past 6 Months

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Zacks Equity Research
·4 min read
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Capri Holdings Limited CPRI, one of the widely recognized names in the apparel and footwear industry, has exhibited an outstanding run on the bourses in the past six months. Thanks to its operational initiatives — strengthening of omni-channel solutions, expanding customer reach and focus on brand innovation — the stock has outpaced the Zacks Retail - Apparel And Shoes industry and the Retail-Wholesale sector. In the said period, shares of Capri Holdings have soared about 153.1% compared with the industry’s rally of 84.3%. Meanwhile, the sector rose 4.5%.

Additionally, an uptrend in the Zacks Consensus Estimate echoes the same sentiment. The consensus estimates for the current and next financial year have increased about 14.5% and 0.6% to $1.50 and $3.60, respectively, over the past 60 days. Notably, this Zacks Rank #3 (Hold) stock’s long-term earnings growth rate of 5.4% and Growth Score of A highlight its inherent strength.

Some Fact Checks

Quite apparent, the fashion and apparel space is brimming with optimism, courtesy of rapid inoculation drive and coronavirus relief package worth $1.9 trillion that entitles eligible Americans to $1,400 stimulus checks. The return to active social lifestyle, events and occasions are likely to spur demand, and Capri Holdings looks well-poised to tap the same.

Undoubtedly, the company has been reinforcing its position in the luxury fashion space. It has been focusing on fashion and newness across all categories. It has been deploying resources to expand product offerings and upgrade distribution infrastructure. This along with cost containment efforts and focus on e-commerce platform bode well. E-commerce operations were strong, and surged 65% sequentially during third-quarter fiscal 2021. This reflects an acceleration from an increase of 60% and 30% witnessed in the second and first quarter, respectively.



Although total revenues fell year over year during the third quarter, the rate of decline sharply decelerated from the preceding quarter. Markedly, total revenues increased 17.3% on a sequential basis. Additionally, sales increased in Mainland China across Versace, Jimmy Choo and Michael Kors. Meanwhile, adjusted gross margin expanded 520 basis points during the quarter under review.

Capri Holdings expects to drive gross margin expansion through higher full price sell-throughs and strategic increase in prices. The company envisions gross margin expansion of about 300 basis points for fiscal 2021. Looking into fiscal 2022, the company projects 100 basis points improvement in gross margin. With respect to operating expenses, management foresees about $100 million of net savings flowing into fiscal 2022 from cost containment efforts.

Well, management believes that by fiscal 2023 revenue and earnings per share will exceed pre-pandemic or fiscal 2020 levels. On its last earnings call management said, “As the world emerges from the pandemic, 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.”

3 More Stocks Worth a Look

Hibbett Sports, Inc. HIBB has a long-term earnings growth rate of 17.2%. It presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

L Brands, Inc. LB has a long-term earnings growth rate of 13%. The stock flaunts a Zacks Rank #1.

Boot Barn Holdings BOOT has a long-term earnings growth rate of 20%. It currently carries a Zacks Rank #2 (Buy).

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