CPRI

Capri Holdings Ltd

Consumer


Presented:10/25/2019
Price:$31.87
Cap:$4.83B
Current Price:$43.04
Cap:$5.07B

Presented

Date10/25/2019
Price$31.87
Market Cap$4.83B
Ent Value$9.70B
P/E Ratio11.87x
Book Value$15.31
Div Yield0%
Shares O/S151.58M
Ave Daily Vol3,053,988
Short Int7.54%

Current

Price$43.04
Market Cap$5.07B
Capri Holdings Ltd. engages in the design and distribution of sportswear, accessories, footwear and apparel of branded women's apparel and accessories and men's apparel. It operates through the following segments: Versace, Jimmy Choo and Michael Kors. The Versace segment sells Versace luxury ready-to-wear, accessories, footwear and home furnishings through directly operated Versace boutiques. The Jimmy Choo segment sells Jimmy Choo luxury goods to end clients through directly operated Jimmy Choo stores. The Michael Kors segment sells Michael Kors products through four primary Michael Kors retail store formats: Collection, Lifestyle, outlet stores and e-commerce. The company was founded by Michael David Kors on December 13, 2002 and is headquartered in London, the United Kingdom.

Capri Holdings Ltd (CPRI) - Long

Publicly traded companies mentioned herein: Ascena Retail Group Inc (ASNA), Capri Holdings Limited (CPRI), Ralph Lauren Corporation (RL)

Highlights

The presenter is long shares of Capri (CPRI), which he considers undervalued given its growth potential following the Versace and Jimmy Choo acquisitions. Despite the market’s concern about the retail sector and CPRI’s department store exposure, he sees an attractive risk/reward setup. Shares are currently trading at ~$30 (5x the presenter’s ~$6 2021 EPS estimate), and he models a ~$90 PT based on a 15x 2021 P/E multiple. 

Michael Kors Holdings Limited, renamed Capri Holdings, acquired both Jimmy Choo (2017) and Versace (2018), paying what equates to ~$23 per share on those businesses combined. In his view, these acquisitions are not akin to Ascena’s purchase of Ann Taylor, where it remains unclear as to whether the acquisition was accretive. Jimmy Choo and Versace are strong brands; the presenter expects Versace to be a ~$1.5B business in the next few years. Applying a 3x multiple effectively creates the market cap of the company today. 

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Idea Discussion

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