Core Viewpoint - Prada S.p.A. has officially acquired Versace for $1.38 billion, which is significantly lower than the $2 billion paid by Capri Holdings Limited in 2018 [1] Group 1 - The acquisition price of $1.38 billion reflects a strategic move by Prada to enhance its luxury brand portfolio [1] - The previous acquisition of Versace by Capri Holdings in 2018 for $2 billion sets a comparative benchmark for the current deal [1]

Core Viewpoint - The article expresses optimism about Prada S.p.A. due to its strong brand portfolio, including Miu Miu and Versace, and its attractive valuation [1]. Group 1: Company Analysis - Prada S.p.A. is highlighted for its potential as a value investment, focusing on identifying undervalued stocks with growth potential [1]. - The company is noted for its diverse brand offerings, which contribute to its market strength and appeal [1]. Group 2: Market Context - The analysis reflects a broader trend in the luxury goods market, where brands like Prada are positioned to capitalize on consumer demand [1].

Core Viewpoint - The article expresses optimism about Prada S.p.A. due to its strong brand portfolio, including Miu Miu and Versace, and its attractive valuation [1] Group 1: Company Analysis - Prada S.p.A. is highlighted for its potential as a value investment, focusing on identifying undervalued stocks with growth potential [1] - The company benefits from a diverse brand portfolio, which includes luxury brands that appeal to a wide range of consumers [1] Group 2: Market Context - The analysis is positioned within the broader financial market, indicating a favorable environment for value investors [1]

Core Viewpoint - Capri Holdings Limited has successfully completed the sale of Versace to Prada S.p.A. for $1.375 billion in cash, which is expected to enhance the company's financial position and flexibility for future investments and shareholder returns [1][2]. Financial Impact - The proceeds from the sale will primarily be used to repay a significant portion of Capri Holdings' debt, leading to a substantial reduction in the company's leverage ratio [2]. - This transaction is anticipated to provide greater financial flexibility for Capri Holdings to invest in growth and return capital to shareholders in the future [2]. Strategic Focus - The company remains committed to executing its strategic initiatives across its remaining brands, Michael Kors and Jimmy Choo, to maximize their potential [2]. - Capri Holdings aims to stabilize its business in the current fiscal year while laying a solid foundation for growth in fiscal 2027 [2]. Leadership Acknowledgment - The CEO of Capri Holdings expressed gratitude to the Versace team for their contributions, particularly recognizing key leaders for their commitment to the brand's evolution [2]. Company Overview - Capri Holdings Limited is a global fashion luxury group that includes iconic brands such as Michael Kors and Jimmy Choo, focusing on glamorous style and craftsmanship [3].

Core Insights - Capri Holdings Limited reported second quarter results for Fiscal 2026, with revenue, gross margin, and operating income exceeding expectations, indicating positive trends in the luxury fashion market [1][2] - The company announced a $1 billion share repurchase program, expected to begin in Fiscal 2027, aimed at strengthening its balance sheet and returning capital to shareholders [2][10] - The sale of Versace to Prada for $1.375 billion is anticipated to close in the third quarter of Fiscal 2026, allowing Capri to focus on growth for its remaining brands, Michael Kors and Jimmy Choo [2][4] Financial Performance - Total revenue for the second quarter was $856 million, a decrease of 2.5% year-over-year, and a 4.2% decline on a constant currency basis [12][30] - Gross profit was $522 million, with a gross margin of 61.0%, down from 62.3% in the prior year, impacted by tariffs [12][30] - The company reported a net loss of $34 million, or $(0.28) per diluted share, compared to a net income of $42 million, or $0.37 per diluted share, in the previous year [12][30] Segment Performance - Michael Kors generated revenue of $725 million, a decrease of 1.8% on a reported basis and 3.3% in constant currency [12][30] - Jimmy Choo's revenue was $131 million, down 6.4% on a reported basis and 9.3% in constant currency [12][30] - The operating margin for Michael Kors was 10.1%, while Jimmy Choo reported an operating loss margin of (6.9)% [12][30] Outlook and Strategic Initiatives - The company expects retail trends to improve in the latter half of Fiscal 2026, positioning it for growth in Fiscal 2027 [2][11] - Capri Holdings aims to utilize proceeds from the Versace sale to reduce debt significantly, enhancing financial flexibility for future investments [2][4] - Long-term growth potential for Michael Kors and Jimmy Choo remains optimistic, with strategic initiatives in place to energize these brands [2][11]

Group 1: Company Performance - Estée Lauder reported a 4% year-over-year increase in net sales to $3.48 billion, with a 9% growth in the China market [4][5] - Puma's third-quarter sales declined by 15.3%, with plans to cut 1,400 jobs by the end of 2026 due to ongoing sales challenges [6][7] - Moncler’s revenue for the first three quarters remained stable at €1.8413 billion, with direct-to-consumer channels showing slight improvement [8] Group 2: Corporate Actions and Changes - Prada denied rumors of acquiring Giorgio Armani, focusing instead on strengthening its own brand matrix, reporting a net revenue of €4.07 billion, an 8.9% increase year-over-year [2] - The Outnet was sold for $30 million, indicating a shift in strategy for LuxExperience, which acquired it through the purchase of YNAP [7] - Gucci continues to adjust its management structure, appointing new executives to enhance brand strategy and customer experience [11] Group 3: Market Developments - Eight Horses Tea Company listed on the Hong Kong Stock Exchange, closing its first day at HK$92 per share, an 84% increase from its IPO price, achieving a market capitalization of HK$7.9 billion [10] - Viking Cruises launched new Mediterranean routes tailored for Chinese tourists, enhancing its European offerings after ten years in the Chinese market [13]

Core Insights - Capri Holdings Limited (CPRI) reported a decline in total revenues but an increase in earnings for the first quarter of fiscal 2026, with results surpassing the Zacks Consensus Estimate [1][2][8] Financial Performance - Adjusted earnings per share for the quarter were 50 cents, significantly higher than the Zacks Consensus Estimate of 13 cents and up from 16 cents in the same quarter last year, driven by improved margins and cost control [2][8] - Total revenues amounted to $797 million, beating the Zacks Consensus Estimate of $774 million, but reflecting a 6% year-over-year decline on a reported basis and a 7.7% decline on a constant-currency basis [3][8] - Gross profit decreased by 6.2% year over year to $502 million, with a slight decrease in gross margin by 10 basis points to 63% [3] - Adjusted operating income was reported at $20 million, down from $31 million in the prior-year quarter, with an adjusted operating margin contracting 120 basis points to 2.5% [4] Segment Performance - Revenues from Michael Kors decreased by 5.9% year over year to $635 million, surpassing the Zacks Consensus Estimate of $622.5 million, with gross profit declining to $388 million and gross margin contracting by 100 basis points to 61.1% [5] - Jimmy Choo's revenues were $162 million, a 6.4% decrease on a reported basis, but above the Zacks Consensus Estimate of $153.5 million, with gross profit slightly down to $114 million and gross margin expanding by 330 basis points to 70.4% [6] Financial Health - As of the end of the quarter, Capri Holdings had cash and cash equivalents of $129 million, long-term debt of $1.65 billion, and total shareholders' equity of negative $13 million [7] - The operating cash flow for the first quarter was $20 million, while free cash flow totaled $7 million [7] Strategic Developments - Capri Holdings is in the process of selling Versace to Prada S.p.A. for $1.375 billion, with the transaction expected to close in the second half of calendar 2025 [8] - The company aims to stabilize performance and drive growth by fiscal 2027, focusing on strengthening the Michael Kors and Jimmy Choo brands [1][8] Outlook - For the second quarter of fiscal 2026, Capri Holdings expects total revenues between $815 million and $835 million, with projected earnings per share between 10 cents and 15 cents [12] - For the full fiscal 2026, total revenues are anticipated to be in the range of $3.375 billion to $3.45 billion, with earnings per share expected between $1.20 and $1.40 [14][15]

Financial Data and Key Metrics Changes - The company reported revenues of EUR5.4 billion, up 17% at constant exchange rates, marking the fourth consecutive year of double-digit growth [6][26] - EBIT reached EUR1.28 billion with a margin of 23.6%, an increase from 22.5% in the previous fiscal year [7][28] - Net income increased by 25% year-on-year to EUR839 million [36] - The company closed the year with a net cash position of EUR600 million after significant capital expenditures and dividends [7][39] Business Line Data and Key Metrics Changes - Retail sales totaled EUR4.8 billion, up 18% versus fiscal year '23 at constant FX, driven by full-price sales [27][29] - Wholesale sales increased by 7% year-on-year, with a 4% rise in Q4 [30] - Royalties grew by 17% year-on-year, supported by eyewear and fragrances [30] Market Data and Key Metrics Changes - Asia Pacific saw a growth of 13% year-on-year, improving to 16% in Q4 [33] - Europe grew by 18% over the year, maintaining a solid growth of 16% in Q4 [33] - The Americas reported a 9% increase in retail sales, with Q4 showing an 11% improvement [34] - Japan was the best-performing region, up 46% year-on-year, with Q4 growth at 31% [34] - The Middle East also performed well, with a 26% increase over the year and 30% in Q4 [35] Company Strategy and Development Direction - The company aims for sustainable long-term growth despite challenging market conditions, focusing on brand strength and product quality [8][10] - Continued investment in store renovations and retail network improvements is a priority [8][28] - The company is committed to sustainability, reducing greenhouse gas emissions by 61% and promoting gender equality within management [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining growth trajectories despite a challenging environment, particularly in Greater China [42][48] - The company is prepared for potential ups and downs in the market, emphasizing a solid trend in brand performance [48][43] - The outlook for 2025 remains cautious but optimistic, with expectations of continued investment in brand desirability and market presence [43][41] Other Important Information - The company plans to increase its dividend per share to EUR0.164, reflecting a payout ratio of 50% [39] - Capital expenditures for fiscal year '24 were EUR493 million, with expectations for an increase in 2025 [37][119] Q&A Session Summary Question: Outlook for Prada's growth in 2025 - Management is confident in maintaining growth for Prada, expecting potential fluctuations but a solid overall trend [48] Question: Acquisition interests in Versace and Jimmy Choo - Management refrained from commenting on rumors but acknowledged differences in the current company structure compared to past acquisition strategies [53] Question: Profitability outlook for fiscal '25 - The focus will remain on investing behind brands rather than cutting back on marketing, aiming for moderate margin expansion [58] Question: Growth by nationality in Q4 - Chinese consumers showed low single-digit growth, while North Americans improved to high single digits [69] Question: Impact of macroeconomic conditions on the U.S. market - Management noted that consumer reactions to macroeconomic changes are not immediate, but they remain optimistic about the U.S. market [81] Question: Profitability gap between Miu Miu and Prada - Miu Miu's profitability has increased significantly, and the company aims for sustainable growth across both brands [92] Question: Retail expansion plans for 2025 - The company expects to see an increase in store openings, particularly for Miu Miu, with a focus on balancing growth and profitability [102] Question: Sales per square meter by brand - Miu Miu's productivity has substantially increased, prompting plans for more store openings [110] Question: Capital allocation and potential investments - The company plans to increase CapEx to around EUR550 million in 2025, focusing on retail and industrial investments [119] Question: Pricing strategy for 2025 - Management indicated there is room for upward pricing adjustments without drastic changes, focusing on a balanced price architecture [130] Question: Chinese consumer behavior and clienteling strategy - The company noted a stable environment for Chinese consumers, focusing on events and tourism for sales [138] Question: Dual listing considerations - There has been no progress on dual listing discussions [143]