Capri (NYSE:CPRI) reported a return to profitability in its fiscal fourth quarter as management said strategic efforts at Michael Kors and Jimmy Choo are beginning to gain traction, while the company forecast revenue growth and sharply higher earnings in fiscal 2027.
On the company’s earnings call, Chairman and Chief Executive Officer John Idol said Capri made “deliberate actions” during fiscal 2026 to strengthen product innovation, brand desirability, storytelling and consumer engagement across its two remaining luxury fashion houses. The company has classified Versace as discontinued operations following its sale, and management said the transaction strengthened Capri’s balance sheet and financial flexibility.
Fourth-quarter revenue from continuing operations was $796 million, down 3.7% from a year earlier on a reported basis and down 7% in constant currency, according to Raj Mehta, Capri’s former interim chief financial officer. Gross margin expanded 490 basis points to 64.8%, including a $40 million benefit recorded as a reduction to cost of goods sold related to a refund receivable for IEEPA tariffs paid in fiscal 2026.
Capri posted net income of $27 million, or $0.22 per diluted share, compared with a loss in the prior-year period. The company also repurchased $79 million of shares during the quarter, which Idol said was earlier than initially anticipated because of management’s confidence in Capri’s future growth and value creation.
Michael Kors Shows Progress, But Quality-of-Sale Actions Weigh on Sales
Michael Kors revenue fell 5.5% year over year on a reported basis and 8.4% in constant currency. Idol said the decline was primarily driven by initiatives to improve the “quality of sale,” including reduced promotional activity, lower third-party sales and fewer off-price shipments. He said those steps reduced fiscal 2026 revenue by more than $150 million, with the headwind expected to moderate as fiscal 2027 progresses.
Despite the revenue decline, management pointed to signs of improving brand health. In the retail channel, Michael Kors sales declined mid-single digits, but full-price comparable store sales turned positive in the fourth quarter across all regions. Average unit retail rose by low double digits, supported by higher full-price sell-throughs and reduced promotions. Idol also said store traffic trends improved sequentially.
By region, Michael Kors revenue increased 11% in EMEA and 10% in Asia, while revenue in the Americas declined 14%, largely reflecting the company’s quality-of-sale initiatives. Wholesale revenue declined mid-single digits, mainly because of lower off-price sales, though Idol said point-of-sale trends improved to approximately flat versus the prior year.
Management highlighted consumer response to the company’s “modern Jet Set” positioning, including its Hotel Stories campaign and product introductions across accessories. Idol said the Michael Kors global consumer database grew 8% year over year, aided by brand campaigns, runway visibility and influencer activity.
Jimmy Choo Returns to Growth in the Quarter
Jimmy Choo revenue increased 5.3% year over year on a reported basis and was flat in constant currency. Retail sales rose mid-single digits, and wholesale revenue increased at a similar rate. Revenue rose 11% in the Americas and 8% in EMEA, while Asia declined 6%, with management noting sequential improvement from the prior quarter.
Idol said Jimmy Choo’s strategic actions are producing “tangible results,” including a return to growth in the back half of fiscal 2026. He said the brand is positioned to return to profitability in fiscal 2027.
The company highlighted product momentum in accessories and casual footwear. Idol cited strength in the Bon Bon and Cinch handbag groups, as well as encouraging consumer response to the Bar and Curve groups, which are part of a broader pricing architecture that includes bags below $1,500. In footwear, he said the Faiz lace pump performed well, while casual styles such as the Elisa ballerina flat and Sunny sneaker gained traction.
Jimmy Choo’s global customer database grew 7% year over year. Management credited campaigns including La Fleurs and the Rules of Engagement bridal campaign starring Gabourey Sidibe with helping drive engagement and attract younger customers.
Fiscal 2027 Outlook Calls for Revenue Growth and Margin Expansion
For fiscal 2027, Capri expects revenue to rise at a low single-digit rate to approximately $3.525 billion. The company expects Michael Kors revenue of about $2.9 billion and Jimmy Choo revenue of about $625 million.
Management forecast gross margin expansion of approximately 200 basis points, with guidance assuming an additional 10% tariff on products entering the United States. Operating expense dollars are expected to increase modestly, while operating income is projected to rise about 60% to approximately $190 million.
Capri expects diluted earnings per share of approximately $2.15 in fiscal 2027, up about 40% from the prior year, assuming $200 million of share repurchases and weighted average shares outstanding of roughly 112 million.
Mehta said first-half revenue is expected to decline in the low single-digit range, with retail roughly flat and wholesale down low double digits. He said first-half earnings per share are expected to be about $0.85. In the second half, revenue is expected to increase at a mid-single-digit rate as strategic initiatives gain more traction, including a return to growth in the Michael Kors outlet channel. Fiscal 2027 includes a 53rd week, which is expected to add about one point to annual revenue growth.
For the first quarter, Capri guided for revenue of approximately $750 million, including about $585 million from Michael Kors and $165 million from Jimmy Choo. The company expects first-quarter diluted EPS of approximately $0.40.
Balance Sheet Strengthens After Versace Sale
Mehta said Capri ended the quarter with cash of $135 million and debt of $357 million, resulting in net debt of $222 million, compared with approximately $1.4 billion a year earlier. Inventory at quarter-end was $581 million, down 17% year over year.
Capital expenditures were $63 million for fiscal 2026, primarily for store renovations and IT and digital investments. For fiscal 2027, Capri expects capital expenditures of approximately $125 million, including store renovations, new store openings and continued IT and digital enhancements.
The company has $921 million remaining under its share repurchase authorization. Mehta said Capri’s first capital allocation priority is investing in the business, followed by returning capital to shareholders through buybacks while maintaining a flexible balance sheet.
Management Emphasizes Longer-Term Brand Targets
During the question-and-answer session, Idol said Capri is optimistic about the outlook for both brands. For Michael Kors, he said management expects growth to be led by full-price retail, followed by wholesale and then outlet. He said the company remains confident in its long-term ability to reach $4 billion in revenue and low-20% operating margins for Michael Kors.
For Jimmy Choo, Idol said Capri sees long-term revenue potential of $800 million and low double-digit operating margins. Chief Financial and Operating Officer Tyler Reddien said the company is in the early stages of a profit improvement program for Jimmy Choo, with areas of focus including store productivity, closing underperforming stores, SKU rationalization, inventory management, factory efficiencies and SG&A discipline.
Idol closed the call by saying Capri expects fiscal 2027 to mark a return to low single-digit revenue growth, with operating income and earnings per share increasing meaningfully as the company builds on its fiscal 2026 restructuring and brand repositioning efforts.
About Capri (NYSE:CPRI)
Capri Holdings Limited (NYSE: CPRI) is a global luxury fashion company that designs, markets and distributes a range of premium lifestyle products. The company's principal brands—Michael Kors, Versace and Jimmy Choo—offer handbags, ready-to-wear apparel, footwear, watches, jewelry, fragrance and other accessories. Capri Holdings combines in-house design talent with international sourcing, manufacturing and retail operations to deliver collections that reflect each brand's distinct heritage and aesthetic vision.
Formed in 2018 through the rebranding of Michael Kors Holdings following the acquisition of Versace, Capri has since integrated Jimmy Choo into its portfolio.
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