Breaking Down Capri Holdings Limited (CPRI) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments in the luxury fashion sector? Have you taken a good look at Capri Holdings Limited (CPRI) recently? In the fiscal year 2024, the company faced some headwinds, reporting a total revenue of $5.17 billion, which is a decrease of 8.4% compared to the previous year, and a net loss of $229 million. With total borrowings outstanding at $1.723 billion and cash and cash equivalents at $199 million, resulting in net debt of $1.524 billion, understanding the nuances of their financial health is more crucial than ever for making informed decisions. Let’s dive into the key insights that can help you navigate the complexities surrounding CPRI's financial performance.

Capri Holdings Limited (CPRI) Revenue Analysis

Understanding Breaking Down Capri Holdings Limited (CPRI) Financial Health: Key Insights for Investors is crucial for investors. A key aspect of this analysis involves dissecting the company's revenue streams to identify strengths, weaknesses, and opportunities for growth.

Here's a breakdown of Capri Holdings Limited's revenue streams:

Primary Revenue Sources:

Capri Holdings Limited generates revenue primarily through three luxury brands:

• Michael Kors: Known for handbags, accessories, and watches.
• Versace: Offers luxury ready-to-wear, accessories, and footwear.
• Jimmy Choo: Specializes in luxury footwear, handbags, and accessories.

Year-over-Year Revenue Growth Rate:

Capri Holdings Limited has experienced fluctuations in its revenue growth rate. For the fiscal year ending March 30, 2024, the company's annual revenue was $5.17 billion, a decrease of 7.99% compared to the previous year. The total revenue for the second quarter of fiscal year 2025, which ended on September 28, 2024, was $1.08 billion, representing a 16.4% year-over-year decline.

The company expects revenue of approximately $4.4 billion for fiscal year 2025 and projects a decline to $4.1 billion in fiscal year 2026.

Contribution of Different Business Segments to Overall Revenue:

The revenue contribution from each brand varies. In fiscal year 2023, the breakdown was as follows:

• Michael Kors: $3.2 billion, which accounted for 56.8% of the total revenue.
• Versace: $1.1 billion, contributing 19.5% to the total revenue.
• Jimmy Choo: $579 million, representing 10.3% of the total revenue.

For the third quarter of fiscal year 2025, all brands showed declines:

• Versace revenue fell 15.0%
• Jimmy Choo decreased 4.2%
• Michael Kors declined 12.1%

Regional Revenue Breakdown for Fiscal Year 2023:

• North America: $2.94 billion (52.2% of total revenue)
• Europe: $1.41 billion (25.0% of total revenue)
• Asia: $942 million (16.7% of total revenue)
• Other regions: $333 million (5.9% of total revenue)

Analysis of Any Significant Changes in Revenue Streams:

Capri Holdings Limited has experienced several significant changes in its revenue streams:

• Decline in Total Revenue: In the third quarter of fiscal year 2025, total revenue decreased by 11.6% compared to the previous year.
• Retail Sales Decline: Total company retail sales declined low-double-digits, impacted by softening demand for luxury goods.
• Wholesale Revenue Decrease: Wholesale revenue decreased in the high-teens, driven by softer demand in the Americas and EMEA.
• Brand-Specific Performance: Versace's revenue decreased by 3.6%, while Jimmy Choo's revenue decreased by 9.3% in the fourth quarter of fiscal year 2024.

Capri Holdings Limited's financial results for the fourth quarter and full year fiscal 2024, ended March 30, 2024, indicate an 8.4% decrease in revenue on a reported basis and 7.9% in constant currency. Total revenue was reported as $1.223 billion.

Capri Holdings Limited (CPRI) Profitability Metrics

Assessing Capri Holdings Limited's (CPRI) financial health requires a close look at its profitability metrics. These metrics provide insights into how efficiently the company generates profits from its revenue and assets. Key indicators include gross profit, operating profit, and net profit margins, which reveal different aspects of the company's ability to manage costs and generate earnings.

Analyzing trends in these profitability metrics over time is crucial. An upward trend indicates improving efficiency and profitability, while a downward trend may signal challenges in cost management or declining sales. Comparing Capri Holdings' profitability ratios with industry averages offers a benchmark to gauge its relative performance and competitive positioning.

Let's delve into specific profitability aspects:

• Gross Profit: This is the profit a company makes after deducting the costs associated with producing and selling its goods or services.
• Operating Profit: This metric reflects the profit earned from a company's core business operations, excluding interest and taxes.
• Net Profit: Often referred to as the bottom line, net profit is the profit remaining after all expenses, including interest and taxes, have been deducted from revenue.

Operational efficiency plays a significant role in profitability. Effective cost management and favorable gross margin trends are indicative of a company's ability to control expenses and maximize profits. Monitoring these elements helps investors understand how well Capri Holdings manages its operations to achieve sustainable profitability.

For fiscal year 2024, Capri Holdings Limited reported the following:

• Total revenue decreased 10.7% to $5.16 billion.
• Gross profit was $3.26 billion and gross margin was 63.2%.
• Operating income was $478 million and operating margin was 9.3%.

A detailed look at these figures, sourced from their 2024 financial reports, provides a clearer picture of the company's financial standing. You can gain additional insights into the company’s goals and values at Mission Statement, Vision, & Core Values of Capri Holdings Limited (CPRI).

Capri Holdings Limited (CPRI) Debt vs. Equity Structure

Understanding how Capri Holdings Limited (CPRI) finances its operations and growth is crucial for investors. The balance between debt and equity plays a significant role in the company's financial stability and potential returns. Here’s a breakdown of key aspects related to Capri Holdings Limited's (CPRI) debt and equity structure.

As of December 30, 2023, Capri Holdings Limited (CPRI) exhibited the following debt profile:

• Total debt: $1.67 billion
• Cash and cash equivalents: $153 million

This results in a net debt of approximately $1.517 billion.

To evaluate Capri Holdings Limited's (CPRI) financial leverage, we can examine its debt-to-equity ratio. While specific updated debt-to-equity ratio for fiscal year 2024 isn't available in the search results, this ratio is a critical metric. Generally, it's calculated by dividing total liabilities by shareholders' equity. A high ratio indicates that the company relies more on debt, which can increase financial risk, while a lower ratio suggests a more conservative approach.

Factors influencing Capri Holdings Limited's (CPRI) debt levels include:

• Strategic Acquisitions: Debt may have been acquired to finance acquisitions, such as the acquisition of Versace in 2018.
• Operational Needs: Funding day-to-day business activities and expansions.

Recent activities related to Capri Holdings Limited's (CPRI) debt include monitoring credit ratings and managing existing debt. For instance, credit rating agencies like S&P Global Ratings and Moody's provide ratings on Capri Holdings Limited's (CPRI) debt, reflecting their assessment of the company's creditworthiness.

Balancing debt and equity is vital for Capri Holdings Limited (CPRI). Too much debt can strain the company's finances, especially if earnings decline, while relying solely on equity might limit growth opportunities. The company's approach includes:

• Strategic Use of Debt: Utilizing debt for significant opportunities like acquisitions, while maintaining a manageable level.
• Equity to Strengthen Balance Sheet: Issuing equity to reduce debt or fund operations.

Here is a table summarizing key financial data for Capri Holdings Limited (CPRI) based on available information:

For more insight into Capri Holdings Limited's (CPRI) values and long-term goals, explore Mission Statement, Vision, & Core Values of Capri Holdings Limited (CPRI).

Capri Holdings Limited (CPRI) Liquidity and Solvency

Liquidity and solvency are vital indicators of a company's financial well-being. For investors eyeing Capri Holdings Limited (CPRI), assessing these metrics provides insights into the company's ability to meet its short-term obligations and long-term sustainability. Let's explore CPRI's liquidity position, working capital trends, and cash flow dynamics.

Current and Quick Ratios

The current and quick ratios are essential tools for evaluating a company's liquidity. The current ratio measures a company's ability to pay off its current liabilities with its current assets. The quick ratio, also known as the acid-test ratio, excludes inventory from current assets, providing a more conservative measure of liquidity.

• A current ratio of 1.5 or higher generally indicates good liquidity.
• A quick ratio of 1.0 or higher is typically considered healthy.

For the fiscal year 2024, Capri Holdings reported:

• Current Ratio: 1.52
• Quick Ratio: 0.71

While the current ratio suggests a capacity to cover short-term liabilities, the quick ratio indicates a less robust immediate liquidity position, primarily due to the exclusion of inventories.

Analysis of Working Capital Trends

Working capital, the difference between a company's current assets and current liabilities, is a key indicator of its short-term financial health. Monitoring trends in working capital can reveal whether a company is efficiently managing its resources.

Capri Holdings Limited (CPRI) reported a working capital of $843 million for fiscal year 2024, compared to $729 million for fiscal year 2023.

Cash Flow Statements Overview

Cash flow statements provide a comprehensive view of a company's cash inflows and outflows, categorized into operating, investing, and financing activities.

For the fiscal year 2024, Capri Holdings reported the following:

• Net cash provided by operating activities: $701 million
• Net cash used for investing activities: $155 million
• Net cash used for financing activities: $627 million

The table below summarizes the cash flow activities for Capri Holdings Limited for the fiscal year 2024:

Capri Holdings' ability to generate positive cash flow from operating activities is a positive sign, indicating it can fund its core business operations. The use of cash for investing activities suggests strategic investments in the company's future, while the use of cash for financing activities may reflect debt repayments or share repurchases.

Potential Liquidity Concerns or Strengths

While Capri Holdings demonstrates strengths in generating cash from operations and maintaining a healthy current ratio, potential liquidity concerns may arise from its relatively lower quick ratio and significant use of cash for financing activities.

Investors should monitor these trends closely to assess the company's ability to navigate short-term challenges and sustain long-term growth. Analyzing these financial metrics provides a clearer picture of Capri Holdings' financial health, enabling informed investment decisions. For more insights, read: Breaking Down Capri Holdings Limited (CPRI) Financial Health: Key Insights for Investors

Capri Holdings Limited (CPRI) Valuation Analysis

Analyzing whether Capri Holdings Limited (CPRI) is overvalued or undervalued involves looking at several key financial metrics:

• Price-to-earnings (P/E) Ratio: As of April 2025, CPRI's P/E ratio is around 3.90. A lower P/E ratio typically suggests that a stock might be undervalued because the price is low relative to earnings. However, it is important to consider whether the low P/E ratio is a result of temporary issues or a genuine undervaluation.
• Price-to-book (P/B) Ratio: The P/B ratio for CPRI in March 2025 was approximately 2.22. However, more recent data from April 2025 indicates a P/B ratio of 1.51. This ratio compares a company's market price to its book value. A lower P/B ratio can indicate undervaluation, but it should be assessed in conjunction with other factors.
• Enterprise Value-to-EBITDA (EV/EBITDA): As of April 18, 2025, CPRI's EV/EBITDA ratio is 8.77. Another source indicates a similar value of 8.8. Historically, the EV/EBITDA ratio has fluctuated, with a 5-year average of 11.5x between 2020 and 2024. This ratio is used to assess the overall value of the company relative to its earnings before interest, taxes, depreciation, and amortization.

Stock Price Trends: Over the last 12 months, CPRI's stock price has fallen by 63.81%. The stock has experienced a 52-week low of $13.12 and a high of $44.11. As of April 18, 2025, the stock price was around $13.69. Recent trading data shows price fluctuations throughout April 2025.

Dividend Yield and Payout Ratios: Currently, Capri Holdings Limited does not pay dividends. Therefore, the dividend yield is 0%.

Analyst Consensus: The consensus among analysts is a 'Hold' rating for CPRI. The average 1-year price target among brokers is $25.92. Another analysis indicates a mean price target forecast of $26.46, which is 36.65% above the current price. However, analyst opinions vary, with some suggesting a price target as high as $31.00 and as low as $14.00.

Here is a summary table of key valuation metrics:

Considering these factors, CPRI's valuation appears complex. While some metrics suggest it may be undervalued, the lack of dividends and a 'Hold' consensus from analysts indicate caution. Investors should conduct thorough due diligence, considering both the quantitative data and qualitative factors, before making investment decisions.

Read more about Capri Holdings Limited (CPRI) Financial Health: Breaking Down Capri Holdings Limited (CPRI) Financial Health: Key Insights for Investors

Capri Holdings Limited (CPRI) Risk Factors

Several internal and external factors could significantly impact Capri Holdings Limited's (CPRI) financial health. These risks span industry competition, regulatory changes, evolving market conditions, and specific operational and strategic challenges highlighted in the company’s reports. Understanding these risks is crucial for investors.

Industry Competition: The fashion industry is intensely competitive. Capri Holdings faces competition from established luxury brands, emerging designers, and fast-fashion retailers. This competition can pressure pricing, marketing expenses, and the need for continuous innovation to maintain market share. Failure to compete effectively could adversely affect revenue and profitability.

Regulatory Changes: Changes in laws and regulations, particularly those concerning international trade, tariffs, and data privacy, can pose significant risks. For instance, increased tariffs on imported goods could raise costs and reduce profit margins. Compliance with evolving data privacy laws, such as GDPR, requires ongoing investment and may impact marketing strategies.

Market Conditions: Economic downturns, shifts in consumer spending, and changing fashion trends can all impact Capri Holdings' performance. A decline in consumer confidence or disposable income could reduce demand for luxury goods, affecting sales. Staying ahead of rapidly changing fashion trends and consumer preferences is vital to maintaining brand relevance and sales.

Operational, Financial, and Strategic Risks: Recent earnings reports and filings may highlight specific operational, financial, or strategic risks. These could include:

• Supply Chain Disruptions: Disruptions to the global supply chain, whether due to geopolitical events, natural disasters, or other factors, can impact production and distribution, leading to increased costs and reduced availability of products.
• Brand Image and Reputation: Any event that damages the brand image or reputation of Capri Holdings or its brands could lead to a decline in sales and customer loyalty. This includes issues related to product quality, ethical sourcing, or marketing practices.
• Integration Risks: If Capri Holdings pursues acquisitions or mergers, integrating these new businesses can be complex and may not always yield the expected benefits. Integration challenges can lead to increased costs, operational inefficiencies, and a failure to achieve synergies.

Mitigation Strategies: Capri Holdings likely has strategies in place to mitigate these risks. These may include:

• Diversifying Supply Chains: Reducing reliance on any single supplier or region can help mitigate the impact of supply chain disruptions.
• Investing in Brand Management: Protecting and enhancing brand image through consistent quality, ethical practices, and effective marketing is crucial.
• Implementing Robust Compliance Programs: Staying abreast of regulatory changes and implementing programs to ensure compliance can help avoid legal and financial penalties.
• Financial Risk Management: Using hedging strategies to mitigate currency risk and interest rate risk. Maintaining adequate insurance coverage to protect against unforeseen events.

Investors should carefully consider these risk factors and the company's mitigation strategies when evaluating Capri Holdings' financial health and investment potential.

Learn more about Capri Holdings investors: Exploring Capri Holdings Limited (CPRI) Investor Profile: Who’s Buying and Why?

Capri Holdings Limited (CPRI) Growth Opportunities

Capri Holdings Limited's future growth hinges on several key factors, including product innovation, strategic market expansions, impactful acquisitions, and the cultivation of strong competitive advantages. These elements collectively shape the trajectory of revenue growth and earnings potential.

Analyzing Capri Holdings Limited's growth prospects involves considering these pivotal drivers:

• Product Innovation: The company's ability to consistently introduce new and appealing products is crucial. This encompasses not only design innovation but also incorporating sustainable practices to resonate with evolving consumer preferences.
• Market Expansion: Identifying and penetrating new geographic markets, as well as expanding within existing markets, represents a significant growth avenue. This includes leveraging both physical retail and e-commerce channels to maximize reach.
• Acquisitions: Strategic acquisitions can provide access to new brands, technologies, or customer segments, accelerating growth and diversification.

Future revenue growth projections and earnings estimates will depend on how effectively Capri Holdings Limited can leverage these growth drivers. Investors should closely monitor the company's strategic initiatives and partnerships, as these can significantly influence future performance. For a detailed look into the company's financial standing, see: Breaking Down Capri Holdings Limited (CPRI) Financial Health: Key Insights for Investors.

Capri Holdings Limited possesses several competitive advantages that position it for sustained growth:

• Brand Portfolio: A diverse portfolio of well-known luxury brands provides a strong foundation for growth, allowing the company to cater to a wide range of consumer tastes and preferences.
• Global Presence: An established global presence enables Capri Holdings Limited to capitalize on growth opportunities in various markets and mitigate risks associated with regional economic fluctuations.
• Operational Efficiency: Continuous efforts to enhance operational efficiency, including supply chain optimization and cost management, contribute to improved profitability and competitiveness.

To provide a clearer picture, consider a hypothetical projection based on available data and industry trends. Please note that these figures are speculative and for illustrative purposes only:

These projections assume continued investment in product innovation, successful market expansion, and effective management of operating expenses. Strategic partnerships and potential acquisitions could further enhance these growth rates.

Capri Holdings Limited's strategic initiatives, such as enhancing its e-commerce platform and expanding its presence in emerging markets, are expected to be key catalysts for future growth. These initiatives, combined with the company's strong brand portfolio and operational efficiencies, position it favorably in the competitive luxury market.