Hot stock to watch: Capri Holdings Ltd (NYSE: CPRI)

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Capri Holdings Ltd (NYSE: CPRI) stock rose 4.2% in the pre-market session of 2nd July, 2020 (Source: Google finance) post fourth quarter of FY 20 results. CPRI in the fourth quarter of FY 20 has reported the adjusted earnings per share of 11 cents, while reported 11 percent fall in the adjusted revenue to $1.19 billion in the fourth quarter of FY 20, beating the analysts’ estimates for revenue of $908.7 million. Further, almost 90% of the global retail fleet is now open. In the Americas, 70% of stores are open. While in EMEA and Asia approximately 98% of stores are currently open. The company expects to see gradual sequential improvements in revenue performance in the Americas and EMEA but projects both regions will remain well below prior-year. The company also expects revenue in the Asia region to continue to improve but remain below the second quarter last year. In the wholesale channel, the company anticipates shipments will begin to improve during the second quarter. In the third quarter of fiscal 2021, the company expects that all regions will gradually improve as consumer confidence and the economy begins to recover, but will remain below the same period of last year.

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The total inventory was $827 million, which reflects a decline of 13% compared to the last year. The company ended the fourth quarter with approximately $900 million in liquidity. Total borrowings outstanding at the end of the fourth quarter were approximately $2.2 billion. During the first quarter, the company’s stores were closed on average for nearly 55% of the quarter. That is compared to the fourth quarter when the fleet was closed for an average of approximately 10% of the quarter.

Moreover, in the fourth quarter of fiscal 2021, the company projects the revenue to remain below the same period of last year in the Americas, EMEA and Asia excluding Greater China, mainly due to a slower recovery in tourist activity. In Greater China, the company anticipates the revenue could increase year-over-year due to growing domestic demand. Overall, for the full fiscal year 2021, the company expects a gradual recovery as stores reopen and consumer’s shopping patterns return to normal. The company anticipates an earnings per share loss in the first half of fiscal 2021 on the back of reduction in revenue and resulting deleverage.

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