On August 8, 2024, Capri Holdings Ltd (CPRI, Financial) released its 8-K filing announcing its financial results for the first quarter of Fiscal 2025, which ended on June 29, 2024. Capri Holdings, a global fashion luxury group, owns renowned brands such as Michael Kors, Versace, and Jimmy Choo.
Performance Overview
Capri Holdings Ltd (CPRI, Financial) reported a revenue of $1.07 billion for the first quarter, a 13.2% decrease compared to the previous year. On a constant currency basis, the revenue decline was 12.1%. The company also reported an adjusted earnings per share (EPS) of $0.04, significantly below the analyst estimate of $0.64. The adjusted operating margin stood at 1.5%.
Challenges and Strategic Focus
John D. Idol, Chairman and CEO, commented on the results, stating, "Overall, we were disappointed with our first quarter results as performance continued to be impacted by softening demand globally for fashion luxury goods. We are continuing to manage our operating expenses and inventory levels carefully in light of the challenging global retail environment." He emphasized the company's focus on executing strategic initiatives to achieve long-term sustainable growth across its luxury brands.
Financial Achievements and Metrics
Despite the challenges, Capri Holdings Ltd (CPRI, Financial) achieved several financial milestones:
- Gross profit was $689 million with a gross margin of 64.6%, compared to $812 million and 66.1% in the prior year.
- Net inventory decreased by 23% to $902 million, reflecting diligent inventory management.
- Cash flow from operating activities was an inflow of $83 million, while free cash flow was an inflow of $40 million versus an outflow of $10 million last year.
- Cash and cash equivalents totaled $213 million, and total borrowings outstanding were $1.71 billion, resulting in net debt of $1.50 billion versus $1.70 billion last year.
Segment Performance
| Segment | Revenue | Operating Income | Operating Margin |
|---|---|---|---|
| Versace | $219 million | $(17) million | (7.8)% |
| Jimmy Choo | $173 million | $4 million | 2.3% |
| Michael Kors | $675 million | $75 million | 11.1% |
Analysis and Outlook
The decline in revenue and operating margins across all segments highlights the impact of global softening demand for fashion luxury goods. Versace and Michael Kors experienced significant revenue declines, while Jimmy Choo showed a relatively smaller decrease. The company's focus on managing operating expenses and inventory levels is crucial in navigating the challenging retail environment.
Capri Holdings Ltd (CPRI, Financial) continues to attract new consumers, adding 12.6 million new consumers across its databases, representing a 15% growth versus last year. This growth reflects the strong brand equity and enduring value of its three iconic houses.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Capri Holdings Ltd for further details.
