Transition to a new name
Luxury Group Michael Kors (KORS) will now be known as Capri Holdings Limited. Effective January 2, 2019, it will trade on the New York Stock Exchange under the new ticker CPRI. Today, the company announced its name change and the completion of its acquisition of Versace. Capri Holdings acquired the Italian fashion house for $2.12 billion.
Capri Holdings initially announced an agreement to acquire Versace on September 25. There were concerns among investors about the deal being expensive.
Stock down significantly
As of December 28, the stock declined 40.9% on a year-to-date basis compared to a 23.6% fall in rival Tapestry’s (TPR) stock. The company missed revenue guidance for the second quarter of fiscal 2019[1. Q2 of fiscal 2019 ended on September 29], which brought the stock down 14.6% on November 7.
Capri Holdings’ fiscal 2019 second-quarter revenue grew 9.3% to $1.25 billion, missing the consensus analysts’ estimate of $1.26 billion. The company’s adjusted EPS of $1.27 were way ahead of analysts’ expectation of $1.10.
Revenue for the company’s Michael Kors brand declined 0.8%, and same-store sales were down 2.1%. The company cut its inventory with the intention of bringing down its exposure to wholesale channels and driving full-price sales. However, revenue took a hit from a shortage of the company’s logo products.
The company’s second-quarter revenue benefitted from a $116.7 million contribution from the Jimmy Choo brand, which was acquired in November 2017.
Following the fiscal 2019 second-quarter results, the company raised its fiscal 2019 guidance by 5 cents to the range of $4.95 to $5.05. Capri Holdings expects its fiscal 2019 revenue to come in at about $5.13 billion, compared to $4.72 billion in fiscal 2018.
As of December 28, analysts’ average 12-month price estimate of $65.38 indicates a potential rise of about 76% in Capri Holdings stock over the next year.