Capri Holdings Limited Earnings Report Highlights

• Capri Holdings Limited reported an EPS of approximately -4.03, missing the estimated EPS of 0.72.
• Revenue for the period was about $1.22 billion, falling short of the expected $1.29 billion.
• The company's financial metrics indicate challenges in profitability, with a P/E ratio of approximately -17.49 and a D/E ratio of about 2.24.

On Wednesday, May 29, 2024, Capri Holdings Limited (NYSE:CPRI), a prominent player in the global fashion luxury group sector, reported its earnings after the market closed. The company revealed an earnings per share (EPS) of approximately -4.03, missing the estimated EPS of 0.72. Additionally, CPRI's revenue for the period was about $1.22 billion, falling short of the expected $1.29 billion. This performance indicates a challenging period for the company, as highlighted by its Chairman and Chief Executive Officer, John D. Idol, who expressed disappointment with the results.

Capri Holdings' financial outcomes for the fourth quarter and the entire fiscal year of 2024, which concluded on March 30, 2024, showed a revenue decline of 8.4% on a reported basis and 7.9% in constant currency during the fourth quarter. The company also reported an adjusted operating margin of 6.4% and adjusted earnings per share of $0.42. These figures reflect the difficulties CPRI faced in maintaining its profitability and revenue growth amidst a challenging market environment.

The company's financial metrics, such as the price-to-earnings (P/E) ratio of approximately -17.49, indicate that CPRI is currently facing challenges in generating profits relative to its share price. The price-to-sales (P/S) ratio stands at about 0.77, suggesting that the company's shares are trading at a value slightly less than its sales revenue. Furthermore, with an enterprise value to sales (EV/Sales) ratio of approximately 1.42, it shows that the market values the company at a higher rate than just its sales figures, despite its recent financial performance.

CPRI's valuation in relation to its operating cash flow is relatively high, with an enterprise value to operating cash flow (EV/OCF) ratio of around 27.77. This indicates that the market may still have some confidence in the company's future cash flow generation capabilities. However, the earnings yield of approximately -5.72% and a debt-to-equity (D/E) ratio of about 2.24 suggest that CPRI is currently not generating positive earnings from its assets and has a higher level of debt compared to its equity, which could pose a risk for investors.

The current ratio of roughly 0.95 shows that CPRI might have a tight liquidity position, indicating the company's ability to cover its short-term liabilities with its short-term assets is nearly balanced but slightly below ideal. This financial situation underscores the challenges Capri Holdings faces in managing its finances effectively in a competitive and ever-evolving luxury fashion market.