Capri Holdings Limited Reveals Financial Performance for the Third Quarter of Fiscal Year 2024

Capri Holdings Limited (NYSE: CPRI), a renowned global fashion luxury group, has unveiled its financial results for the third quarter of Fiscal 2024, concluding on December 30, 2023.

Highlights of Third Quarter Fiscal 2024:

  • Revenue experienced a 5.6% decline on a reported basis and a 6.6% decrease in constant currency.
  • Achieved an adjusted operating margin of 12.1%.
  • Attained adjusted earnings per share of $1.20.

John D. Idol, the Chairman, and Chief Executive Officer of the company, acknowledged the impact of softened demand for fashion luxury goods on their third-quarter performance. Despite this, sequential improvements were noted, driven by enhanced results in the retail channel, while the wholesale channel faced ongoing challenges. Idol also highlighted the successful resolution of the Michael Kors Americas Ecommerce issues, emphasizing the smooth operation of the platform.

Idol expressed satisfaction with the continued resonance of Versace, Jimmy Choo, and Michael Kors with consumers. The addition of 10.7 million new consumers to their databases, representing a 13% growth compared to the previous year, marked a significant milestone, surpassing 90 million customers. Idol concluded by expressing anticipation for the merger transaction with Tapestry in 2024, expecting it to bring value to shareholders and open new opportunities for employees globally.

Financial Results for Third Quarter Fiscal 2024:

  • Total revenue reached $1.43 billion, a 5.6% decrease compared to the previous year.
  • Gross profit was $928 million, with a gross margin of 65.0%.
  • Income from operations was $122 million, with an operating margin of 8.5%.
  • Net income was $105 million, or $0.88 per diluted share.
  • Net inventory as of December 30, 2023, was $1.02 billion, reflecting a 14% decrease from the previous year.
  • Cash flow from operating activities for the quarter was an inflow of $362 million, with free cash flow at $313 million.
  • Cash and equivalents totaled $249 million, and total borrowings outstanding were $1.84 billion, resulting in net debt of $1.60 billion.

Brand-Specific Results:

  • Versace’s revenue decreased by 8.8% to $227 million, with an operating loss of $14 million.
  • Jimmy Choo’s revenue declined by 1.2% to $166 million, with an operating income of $4 million.
  • Michael Kors’ revenue decreased by 5.6% to $1.03 billion, with an operating income of $219 million.

Despite challenges, Capri Holdings remains optimistic about strong free cash flow and a significant reduction in net debt by the end of fiscal year 2024.

Utilization of Non-GAAP Financial Metrics

Non-GAAP financial measures, such as constant currency effects, are presented alongside our reported operating results to enhance the clarity of comparisons and trends in our business by eliminating the impact of foreign currency rate fluctuations. Given our global presence, foreign currency exchange rates can significantly influence our reported results. To calculate constant currency measures and their corresponding foreign currency impacts, we convert the current year’s reported amounts into comparable figures using the prior year’s foreign exchange rates for each currency.

It’s important to note that all constant currency performance metrics discussed herein are intended as supplementary information and should not be considered a replacement for our operating performance measures, which are calculated in accordance with U.S. GAAP. Additionally, this earnings release incorporates specific non-GAAP financial measures that exclude various costs, including those related to restructuring, ERP implementation, COVID-19 expenses, war in Ukraine, Capri transformation, Tapestry merger, and long-lived asset impairments.

Our company employs non-GAAP financial measures, among other purposes, to assess its operating performance and to depict how the business is conducted and viewed. The exclusion of these items is believed to aid our management and investors in comparing operating performance based on ongoing operations. While we deem the non-GAAP measures valuable as supplementary tools for result analysis, they are not intended to substitute or act as alternatives to any figures presented in our consolidated financial statements prepared in accordance with U.S. GAAP. Moreover, these measures may differ from non-GAAP metrics reported by other companies.

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