Capri beats profit forecasts despite revenue falling 5.5%

Capri Holdings swung to a $45 million adjusted profit in its fiscal second quarter, or 42 cents a diluted share, comfortably ahead of the 21 cents analysts had pencilled in. A year earlier the Michael Kors parent posted a 3 cent adjusted loss.

Revenue for the quarter ended Sept. 26 fell 5.5 percent to $809 million, a 4.9 percent decline at constant currencies. The top line was helped by roughly $20 million in earlier-than-expected wholesale shipments: $15 million of Michael Kors and $5 million of Jimmy Choo.

Net income reached $27 million, a sharp improvement from a loss of $34 million a year earlier. Gross margin climbed to 63.3 percent from 61 percent, which the company put down to higher full-price sell-throughs, a better brand mix and lower tariff rates.

Michael Kors, the founder-led house Capri has built its turnaround around, brought in $663 million, an 8 percent decline in constant currencies. Jimmy Choo grew 12.2 percent in constant currencies to $146 million, the brighter line in the portfolio.

Investors rewarded the report. Shares of Capri, which had been down 34.2 percent for the year before the release, bounced 8.4 percent to $17.40 in premarket trading on Friday.

What John Idol said

John Idol, chairman and chief executive officer, said the company was encouraged by momentum at both Michael Kors and Jimmy Choo. Trends improved sequentially each month across both houses through the quarter, he said, reflecting sharper product assortments and stronger consumer engagement.

Idol said the initiatives were beginning to position the brands for sustainable growth, and he repeated that total company revenue should return to growth in the second half of fiscal 2027. New collections, added marketing investment and a focus on the consumer experience would drive it, he added.

The results continue a turnaround Idol has framed in blunt terms. When he addressed investors at a Goldman Sachs conference, we reported he warned the coming quarter would be the most painful yet for full-price Michael Kors.

That quarter has now passed, and the margin figures suggest the full-price strategy he described is beginning to stick. Gross margin has improved even as top-line revenue has kept shrinking, and Idol promised shareholders meaningful value over time as the initiatives gain traction.

The outlook for the year

For the full fiscal year, Capri expects sales to slip by roughly 1.4 percent, to $3.42 billion. It guides to diluted earnings per share near $2.20, which is a nickel ahead of the $2.15 the company had previously forecast.

The guidance implies the second half of the year must carry meaningful growth to offset the decline just reported, which aligns with Idol's stated expectation of a return to growth. The company has not yet delivered that reversal.

The quarter lands against a longer story of Michael Kors reshaping. Michael Kors is a globally recognised luxury brand founded in 1981 by its namesake designer, and it remains the larger of Capri's two houses by revenue, which is why the full-price push matters so much.

The portfolio has also narrowed. Capri once owned three founder-led houses, but agreed in April 2025 to sell Versace to Prada Group for $1.38 billion, well below the $2.1 billion it paid in 2018. Capri is now a two-brand company.

We laid out the consequences of that consolidation in our guide to the brands Capri owns: the American conglomerate experiment destroyed value and left the group with Michael Kors and Jimmy Choo as its remaining houses.

The backdrop includes buyers circling. In September WWD reported that Capri had attracted interest from would-be buyers, though no deal was on the immediate horizon, and we noted an $809 million hedge liability and a wary stock market complicating any transaction.

Capri's full-year guidance now waits on the second half, when Idol expects revenue to turn positive. The new collections and increased marketing investment he cited are the levers behind that forecast.

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