Capri Holdings (CPRI) Post-Q3 Results: Factors to Watch Out For

Capri Holdings Limited CPRI is likely to see year-over-year earnings and earnings gains when it reports fiscal 2022 third-quarter earnings on February 2, before the market opens. The Zacks Consensus Estimate is for revenue of $1,466 million, up 12.6% for comparison with data for the previous year.

The global luxury fashion group’s financial performance is expected to improve year over year. While the Zacks Consensus Estimate for third-quarter earnings per share has held steady at $1.67 over the past 30 days, the number suggests an increase from the $1.65 reported in the year-ago period.

A look at this London-based company’s performance over the last four quarters shows that, on average, it delivered a significant earnings surprise. In the most recently reported quarter, the company’s earnings beat the Zacks Consensus Estimate by a margin of 61.1%.

Factors to pay attention to

Consumers’ return to active social lifestyles has stimulated demand for luxury clothing and accessories, and Capri Holdings is likely to benefit. The company is committing resources to expand offerings, improve distribution, create seamless omnichannel and digital capabilities, and deepen customer engagement. It also benefits from full-price merchandise sales and select price increases at Jimmy Choo and Michael Kors stores.

Capri Holdings’ e-commerce business continues to report strong performance due to the growing number of customers shopping online. The company is investing in digital analytics and modernizing its e-commerce platform. E-commerce business was strong in the last reported quarter, achieving double-digit growth.

During the most recent earnings call, management estimated third-quarter revenue of approximately $1.46 billion and earnings per share of $1.65. Capri Holdings estimated revenue for the reporting quarter at approximately $235 million from Versace, $145 million from Jimmy Choo and $1.08 billion from Michael Kors. The company forecast operating margins in the low double-digit range for Versace, in the negative mid-single digit range for Jimmy Choo and in the high 20% range for Michael Kors.

While the above-mentioned factors make us optimistic about the results, we cannot ignore the impact of ongoing supply chain difficulties and increased transportation costs caused by the pandemic.

Capri Holdings Limited Price, Consensus and EPS Surprise

Capri Holdings Limited consensus price-eps-surprise chart | Capri Holdings Limited offer

What the Zacks Model Reveals

Our proven model does not clearly predict an increase in Capri Holdings’ earnings this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. With our Earnings ESP filter, you can discover the best stocks to buy or sell before they are reported. You can see complete list of today’s Zacks #1 ranked stocks here.

Capri Holdings currently has a Zacks Rank of #2, but its Earnings ESP is 0.00%.

Stocks with a favorable combination

Here are some companies worth considering because our model shows they have the right combination of elements to see earnings growth:

Macy’s M currently has an Earnings ESP of +7.71% and a Zacks Rank #1. The company is likely to see improved earnings performance when it releases fourth-quarter fiscal 2021 numbers. The Zacks Consensus Earnings EPS of $1.97 suggests significant improvement compared to 80 cents reported in the year-ago quarter.

Macy’s revenues are expected to increase year over year. The Zacks Consensus Estimate for quarterly revenue is expected to be $8.44 billion, representing a 24.5% improvement from the prior-year quarter’s figure. M has an earnings surprise of 313.5% for the trailing four quarters.

Objective TGT currently has an Earnings ESP of +0.50% and a Zacks Rank #3. The company is expected to post earnings growth after reporting fourth-quarter fiscal 2021 earnings. The Zacks Consensus Estimate for quarterly earnings per share of $2.85 suggests growth of 6.7% from the prior-year quarter’s numbers.

Target’s revenues are expected to increase year over year. The revenue consensus is set at $31.53 billion, up 11.3% from the year-ago quarter. TGT surprises with results for the last four quarters, averaging 19.7%.

Tapestry TPR currently has an Earnings ESP of +0.85% and a Zacks Rank of 2. The company is likely to see earnings growth when it releases second-quarter fiscal 2022 numbers. The Zacks Consensus Estimate projects quarterly earnings per share of .18 USD suggests an increase of 2.6% compared to last year.

Tapestry’s revenues are expected to grow year over year. The Zacks Consensus Estimate for quarterly revenue is expected to be $1.99 billion, up 17.8% from the prior-year quarter. TPR surprises with results for the last four quarters, averaging 29%.

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