Capri Holdings managed through the supply chain troubles heading into the holiday season to post big gains in its third quarter and boost the outlook for the year.
The company’s net income increased 80 percent to $322 million, or $2.11 a share, from $179 million, or $1.18, a year earlier. Adjusted earnings of $2.22 a share easily exceeded the $1.69 analysts projected.
Revenues for the three months ended Dec. 25 advanced 23.6 percent to $1.6 billion from $1.3 billion.
Investors liked what they saw and pushed shares of Capri up 10.6 percent to $68 in premarket trading on Wednesday.
John Idol, chairman and chief executive officer, said the quarter’s performance “exceeded our expectations for revenue, operating margin and earnings per share.”
“We are especially proud of our performance given the ongoing headwinds caused by the pandemic, including regional restrictions and supply chain challenges,” Idol said.
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Capri came into the last quarter of the fiscal year warning that the disruptions in the global supply chain had pushed delivery dates on goods back 45 to 60 days, with the Michael Kors brand the hardest hit in the portfolio.
While the company’s inventory position was not what Idol had hoped for going into the holidays, he said goods had been flown in to get them to market more quickly and that supply was sufficient.
Capri ended the quarter with inventories down 24 percent, including what the company said was a “significant increase in in-transit inventory.”
The firm said its on-hand inventory levels constrained revenues. But each of the company’s businesses pushed ahead in the quarter.
• Michael Kors’ revenues rose 20 percent to $1.2 billion with operating income of $335 million.
• Versace posted a 29 percent increase in revenue to $251 million with operating income of $32 million.
• Jimmy Choo’s revenues jumped 47 percent to $178 million, driving operating income of $16 million.
“We are raising fiscal 2022 revenue and earnings guidance based on the strength across all our luxury houses. Looking to fiscal 2023, we expect to generate double-digit revenue and earnings growth,” Idol said. “This outlook reflects the success of our ongoing strategic initiatives as well as a continued recovery from the global pandemic. Longer term, the power of Versace, Jimmy Choo and Michael Kors position Capri Holdings to deliver multiple years revenue and earnings growth.”
For the full fiscal year, Capri is looking to post revenues of $5.6 billion with diluted earnings per share of $6, where analysts were looking for revenues of $5.4 billion and earnings of $5.35.
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