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Capri Holdings Limited (NYSE:CPRI) shares have edged lower Wednesday, despite initially climbing following its fiscal second-quarter earnings release.
The luxury fashion holding company topped consensus estimates, reporting earnings of $1.63 per share on revenue of $1.41 billion. Analysts expected earnings of $1.55 per share on revenue of $1.4B. Revenue increased by 8.6% on a reported basis, while the company’s adjusted operating margin was 19.8%.
The company also authorized a new $1B share repurchase program.
Although inflation has impacted consumer spending this year, luxury fashion demand has so far remained resilient, with its customer base usually less impacted by rising prices.
Capri initially hit a high of$49.65 per share but is now down 0.5% at $46.68 per share.
“Results were driven by momentum across all three of our luxury houses reflecting the power of Versace, Jimmy Choo and Michael Kors as well as the continued execution of our strategic initiatives,” said John Idol, the Company’s Chairman and Chief Executive Officer.
However, he added that looking at the remainder of fiscal 2023, the company is “now taking a more cautious view” with its revenue outlook due to an “increasingly uncertain macroeconomic environment, foreign currency headwinds and the ongoing impact of COVID-related restrictions in China.”
Capri sees Q3 EPS at $2.20, versus the consensus of $2.43, with revenue coming in at $1.53B, versus the consensus of $1.64B. Meanwhile, FY2023 earnings are seen at $6.85 per share, versus the consensus of $6.76, while revenue is expected to be $5.7B, versus the $5.83B consensus.
Following the release, BMO Capital Markets analysts said: “CPRI posted top-line and strong bottom-line beat, with slightly better revenues across concepts flowing through at much healthier GMs. Critically, although management noted that external pressures were driving ‘more cautious’ revenue outlook, CPRI maintained FY EPS given today’s beat and reflecting higher GM expectations, remaining one of the few explicitly stating their commitment to not give up margin for market share, retaining brand elevation earned the past few years, even if it costs volume.”
