Capri Holdings shares jumped 10% in premarket trading: how come?

Shares of Capri Holdings Ltd (NYSE: CPRI) are up more than 10% in premarket trading after the fashion company reported better-than-expected results for its fiscal third quarter.

Q3 results

Capri said its net income printed at $322 million that translates to $2.11 per share. In the same quarter last year, it had posted $179 million in net income or $1.18 per share. On an adjusted basis, the multinational earned $2.22 per share in the recent quarter.

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The New York-headquartered firm generated $1.609 billion in revenue that represents a year-over-year growth of 24%. According to FactSet, experts had forecast $1.69 of adjusted EPS on $1.470 billion in revenue.

Revenue was up 20% at Michael Kors, 47% at Jimmy Choo, and 29% at Versace. In the earnings press release, CEO John Idol said:

Results were driven by strong momentum across all three luxury houses and continued execution of our strategic initiatives. We are especially proud of our performance given the ongoing headwinds caused by the pandemic, including regional restrictions and supply constraints.

Future guidance

For Q4, Capri forecasts 80 cents of EPS on $1.4 billion in revenue. This compares to the FactSet consensus for 73 cents of per-share earnings on $1.391 billion in revenue.

The NYSE-listed company expects $5.56 billion in revenue this year and a record $6.00 of EPS versus $5.413 billion and $5.34 that analysts had predicted. CEO Idol added:

Looking to fiscal 2023, we expect double-digit revenue and earnings growth, reflecting the success of our ongoing strategic initiatives and a continued recovery from the global pandemic. Longer-term, our luxury brands position us to deliver multiple years revenue and earnings growth.

Adjusted gross margin jumped 40 basis points. Capri spent $200 million on stock buyback in Q3 and has another $800 million pending under current authorisation.