Why Capri Holdings Stock Popped 32% in October
Key Points
Capri's turnaround efforts are starting to gain traction.
Michael Kors is still seeing declining revenue, though management expects it to return to growth.
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Shares of Capri Holdings (NYSE:CPRI) were on the move last month, jumping at the end of the month on a strong earnings report after earlier gains on speculation of a buyout.
Capri also seemed to benefit from a rotation in consumer discretionary stocks as investors sold AI stocks last month.
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According to data from S&P Global Market Intelligence, the stock finished the month up 32%. As you can see from the chart below, the stock rose steadily over the first three weeks of the year and then jumped at the end of the month on the earnings report.
CPRI data by YCharts
What happened with Capri Holdings in October
Capri Holdings jumped in September on reports that the company was looking for a buyer, and it seemed to continue rising on those hopes in the first half of October.
Raymond James upgraded the stock in the middle of the month from outperform to strong buy with a price target of $20. The firm predicted that it would meet or exceed expectations in its earnings report at the end of the month, and expects momentum to build into the second half of its fiscal year with revenue growth expected to inflect positive.
That prediction turned out to be correct once Capri reported earnings on Oct. 30.
While revenue was down 5.5%, it was still much better than expectations at $809 million versus estimates at $780.7 million. On the bottom line, it reported adjusted earnings per share of $0.42, up from a loss of $0.03 in the quarter a year ago. That was also much better than the consensus at $0.21.
Capri's full-year guidance was slightly ahead of expectations, calling for revenue of $3.42 billion against estimates at $3.4 billion, and it sees earnings per share of $2.20, which compares to the consensus at $2.12.
Image source: Getty Images.
What's next for Capri Holdings
Following the sale of Versace to the Prada Group at the end of 2025, Capri now owns two brands, Jimmy Choo and Michael Kors.
Michael Kors is the much bigger of the two brands and is still reporting declining revenue, down 8.6% in the second quarter. The company's turnaround for the brand includes offering more affordably priced products, investing in marketing, and keeping inventory tight.
The holiday quarter will be a key test for the company. If Capri can beat estimates in the holiday quarter and return Michael Kors growth, the stock could move significantly higher.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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