It’s shaping up to be one bad day for luxury brand Capri Holdings (NYSE:CPRI). The parent company of Versace, Jimmy Choo, and more lost over 27% in Wednesday afternoon trading at the time of writing. The biggest reason behind the slump was an earnings report that disappointed on every front.
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Capri posted adjusted earnings of $1.84 per share, which wasn’t even close to analyst projections of $2.22 per share. Adjusted earnings guidance for the full year faltered similarly; the company looked for $6.10 per share while analysts were looking for $6.87. Revenue was down 6.2% against this time last year, with sales hitting $1.51 billion. Virtually every metric came up as a failure, and that was sufficient to drag several other fashion retailers down with it. Ralph Lauren (NYSE:RL) lost big in Wednesday trading, as did The Gap (NYSE:GPS) among several others.
High-end fashion brands have done well recently, even in a clearly declining economy. However, some have projected that they’d simply be the last line to falter. Rapidly-increasing prices, due mainly to inflationary pressures, have even prompted some wealthy shoppers to dial back their spending on luxury goods. In response to its disappointing performance, John Idol, current CEO, noted that Capri is now working to “…better align operating expenses with the change in revenue.”
Despite inflationary pressures, Wall Street is pretty much all in on Capri. Analyst consensus calls it a Strong Buy. Plus, with an average price target of $68.20, Capri stock also has an upside potential of 41.94%.
