Shares of Capri Holdings Ltd. (CPRI, Financial) gained on Wednesday of the back of strong earnings for the third quarter of fiscal 2021, which ended Dec. 26.
The New York-based luxury fashion house, which owns the Michael Kors, Jimmy Choo and Versace brands, posted adjusted earnings of $1.65 per share, topping Refinitiv's estimates of $1.01. The net profit of $179 million, however, was down from $210 million a year ago.
Revenue tumbled 17% from the prior-year quarter to $1.3 billion, falling short of analysts' expectations of $1.33 billion.
While Capri was able to beat profit projections during the holiday season as a result of selling more products at full price and cutting manufacturing costs, the Covid-19 pandemic still dealt a blow as store closures in major European markets stunted sales. To counteract this, the company has been selling more merchandise through its own retail stores and e-commerce channels rather than relying on department stores.
In a statement, Chairman and CEO John Idol expressed his pride in the company's performance during this "unprecedented time."
"Looking back over the last three quarters since the onset of COVID-19, we are encouraged by the performance of all our luxury houses, which illustrates the strength of our brands as well as the resilience and agility of our businesses," he said. "We were pleased with our third quarter results as revenue improved sequentially and exceeded our expectations. As we continued to execute on our strategic initiatives, earnings were meaningfully higher than anticipated driven by significant gross margin expansion."
While Capri has not provided guidance for 2021 due to the lingering uncertainty regarding the pandemic as well as macroeconomic fundamentals and tourism flows, Idol noted he is "increasingly optimistic" about the outlook for both the company and the overall fashion industry.
"By fiscal 2023, we anticipate revenue and earnings per share will exceed pre-pandemic levels," Idol said. "We remain confident that our three luxury houses position Capri Holdings to deliver multiple years of revenue and earnings growth as well as increase shareholder value."
With a market cap of $6.62 billion, Capri's shares were up 1.72% at $43.47 on Wednesday. GuruFocus estimates the stock has climbed nearly 45% over the past year.
Disclosure: No positions.
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