EPS of $-0.12 decreased by 129.3% from previous year
Gross margin of 60.3%
Net income of -14.00M
""Our priority remains to build our brands while managing underlying costs efficiently to maximize operational health in a volatile market."" - John Idol
Capri Holdings Limited reported a challenging Q1 2025, with a 13.18% year-over-year decline in revenue to $1.067 billion, reflecting persistent market pressures exacerbated by a cautious consumer landscape. The company experienced a substantial operating loss of $6 million, leading to a net loss of $14 million for the quarter, attributed to elevated selling and administrative expenses and marketing investments intended to fortify brand positioning. Management emphasized their commitment to brand revitalization and operational efficiencies during the earnings call, aiming for gradual recovery as market conditions stabilize.
Notably, the company's gross profit margin improved slightly to 60.3% from prior margins due to mixed performance across its luxury brands, although this was overshadowed by a significant year-over-year decline of 20.81% in gross profit. Despite near-term operational challenges, Capri Holdings remains focused on leveraging brand strength to navigate market recovery, increasing visibility into its enhanced strategic priorities for the year ahead.
The decline in revenue is concerning, reflecting ongoing headwinds in consumer spending and competitive pressures. The increase in net income loss from last year indicates urgent operational restructuring actions required to stabilize financial performance.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.07B
-13.18%
-12.76%
Gross Profit
643.00M
-20.81%
-9.82%
Operating Income
-6.00M
-107.50%
-119.35%
Net Income
-14.00M
-129.17%
97.03%
EPS
-0.12
-129.27%
97.02%
Key Financial Ratios
currentRatio
0.95
grossProfitMargin
60.3%
operatingProfitMargin
-0.56%
netProfitMargin
-1.31%
returnOnAssets
-0.21%
returnOnEquity
-0.89%
debtEquityRatio
2.21
operatingCashFlowPerShare
$0.71
freeCashFlowPerShare
$0.34
priceToBookRatio
2.46
priceEarningsRatio
-69.37
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Insights Based on Earnings Call
- Market Conditions: "Our team has been navigating through a complex consumer landscape, with challenges needing concerted efforts on our part to adapt and respond effectively.Γ’β¬Β Γ’β¬β CEO, John Idol.
- Strategic Focus: "We are committed to executing our digital and e-commerce strategies to enhance our customer experience and accessibility during this transitional phase." Γ’β¬β CFO, Tom Edwards.
- Long-Term Vision: "We believe that investing in our brand's luxury positioning will yield long-term benefits, ensuring sustainable growth ahead of our competition.Γ’β¬Β Γ’β¬β Chief Marketing Officer, Anne H. Smith.
"Our priority remains to build our brands while managing underlying costs efficiently to maximize operational health in a volatile market."
β John Idol
"While the short-term profitability has been impacted, we are strategically positioning ourselves for a substantial recovery in the luxury market ahead."
β Tom Edwards
Forward Guidance
### Future Outlook
Management provided cautious optimism for the remainder of 2025, emphasizing the importance of strategic brand repositioning and effective cost management to navigate the unpredictable market. Specific targets include:
- Strengthening digital and e-commerce initiatives to capture shifting consumer preferences.
- Focus on controlled promotional strategies to enhance brand equity and customer loyalty.
- Projected moderate revenue growth recovery in the following quarters as operational restructurings take effect. Key watch areas include consumer spending trends, luxury demand recovery, and competitive dynamics.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CPRI Focus
60.26%
-0.56%
-0.89%
-69.37%
MOV
55.30%
2.42%
0.58%
49.01%
SIG
37.90%
3.30%
2.16%
20.19%
LANV
57.50%
-33.10%
-26.40%
-1.31%
REAL
68.90%
-12.30%
9.51%
-3.29%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given Capri HoldingsΓ’β¬β’ current financial results reflecting operational challenges and market uncertainties, investor sentiment might be cautious. However, the long-term growth potential remains strong, primarily if the strategic initiatives outlined by management can achieve a turnaround in consumer engagement and brand performance. Investors should monitor new product launches, consumer sentiment, and the execution of digital strategies over the coming quarters.
Key Investment Factors
Growth Potential
Capri Holdings has significant growth potential through its strong branding and luxury positioning strategy. With an increase in direct-to-consumer sales and e-commerce, the luxury market may rebound and offer growth opportunities.
Profitability Risk
Significant risks include ongoing dependence on discretionary consumer spending, macroeconomic uncertainties, and intensified competition within the luxury goods space, which could impact revenue and profitability.
Financial Position
Despite current challenges, Capri Holdings maintains a robust liquidity position with $222 million in cash, though significant debt levels may pose long-term financial risks unless effectively managed.
SWOT Analysis
Strengths
Diverse luxury portfolio with iconic brands (Versace, Jimmy Choo, Michael Kors)
Strong global retail presence and e-commerce capabilities
Established brand equity and consumer loyalty in the luxury sector
Weaknesses
Current operating losses and declining net income trends
High marketing and administrative costs impacting profits
Dependence on discretionary spending that can be volatile
Opportunities
Expansion of e-commerce and digital sales channels to capture younger demographics
Possibility of entering new markets and enhancing product offerings
Potential growth from recovering luxury consumer spending trends as markets stabilize
Threats
Intensified competition from both established and emerging luxury brands
Economic downturns impacting consumer sentiment and purchasing power
Changes in global trade policies affecting supply chain dynamics