Capri Q2 Earnings Call Highlights

Key Points

• Capri raised its fiscal 2027 outlook after second-quarter results exceeded expectations, forecasting approximately $3.42 billion in revenue, $175 million in operating income and $2.20 in diluted EPS.
• Revenue fell 5.5% year over year to $809 million, but operating income rose 55% to $31 million and EPS improved to $0.42, supported by stronger full-price sell-throughs, gross-margin expansion and cost controls.
• Jimmy Choo delivered double-digit growth, while Michael Kors sales declined 8.6% amid inventory delays and reduced promotions; Capri also increased its annual share-repurchase plan to $300 million.

Capri NYSE: CPRI reported second-quarter fiscal 2027 results above its expectations and raised its full-year revenue and earnings outlook, citing improving sales trends at Michael Kors and continued momentum at Jimmy Choo.

Total revenue declined 5.5% year over year to $809 million, or 4.9% on a constant-currency basis. However, operating income rose 55% to $31 million, while diluted earnings per share improved to $0.42 from a loss of $0.03 per share a year earlier. The company said the quarter benefited from higher full-price sell-throughs, gross-margin gains and cost discipline.

“We are encouraged by the momentum building at both Michael Kors and Jimmy Choo,” Chairman and Chief Executive Officer John Idol said. He said the company expects total revenue to return to growth in the second half of fiscal 2027, supported by product introductions, marketing investments and efforts to improve the consumer experience.

Michael Kors Sales Decline Moderates Amid Inventory Constraints

Michael Kors revenue fell 8.6% to $663 million during the quarter, though Capri said the result was ahead of its expectations. The brand was affected by approximately $50 million in inventory delays that constrained product availability, as well as planned actions to reduce promotional activity and markdown inventory.

Capri reduced Michael Kors markdown inventory by about 40% and promotional activity by about 50% year over year. While those actions pressured revenue, they contributed to higher average unit retail prices, stronger full-price sell-throughs and gross-margin expansion, according to management.

Michael Kors gross margin expanded 220 basis points to 61.5%. Its operating margin increased 20 basis points to 10.3%, as improved gross margin more than offset expense deleverage from lower sales.

Idol said sales trends improved sequentially each month as fall assortments arrived. He highlighted demand for new accessories, including the Hamilton Soft handbag, as well as footwear styles such as the Jennings loafer and Piper Flex ballet flat. The company said it was pursuing additional inventory for certain products where demand exceeded expectations.

Revenue in Michael Kors’ Americas business declined 11%, while EMEA sales fell 5% and Asia revenue declined 1%. Capri said the EMEA result reflected inventory delays and the broader effects of the ongoing conflict in the Middle East.

The company has renovated 50 Michael Kors stores as part of a plan to renovate 300 locations. Management said renovated stores have produced higher traffic and revenue, and it expects to complete roughly 25 additional renovations during the year. Idol also said Capri expects to open between 50 and 75 new Michael Kors stores in fiscal 2028.

Jimmy Choo Delivers Double-Digit Growth

Jimmy Choo revenue rose 11.5% to $146 million, or 12.2% in constant currency. The result included approximately $5 million of wholesale revenue that shifted from the third quarter into the second quarter because of earlier-than-expected shipments.

Revenue increased 24% in the Americas and 13% in EMEA, while Asia sales declined 7%. In the company’s own retail channel, Jimmy Choo sales rose by the mid-single digits, led by double-digit growth in the Americas and high-single-digit growth in EMEA.

Jimmy Choo’s gross margin rose 100 basis points to 71.2%, primarily reflecting higher full-price sell-throughs. The brand’s operating margin improved 830 basis points to 1.4%, supported by higher revenue and expense management.

Idol said accessories revenue at Jimmy Choo increased by double digits, led by the Bon Bon and Cinch handbag franchises and growth in newer Bar and Curve styles. The company also cited demand for casual footwear, including the Margot flat and Scarlett kitten heel, alongside continued growth in dress styles such as Azia, Sacora and Faiz.

Capri reiterated its expectation that Jimmy Choo will return to profitability in fiscal 2027. Management said it sees a long-term opportunity for the brand to reach $800 million in revenue with operating margins in the low-double-digit range.

Margins, Balance Sheet and Capital Returns

Companywide gross margin increased 230 basis points to 63.3%, driven by higher full-price sell-throughs, brand mix and lower tariff rates compared with the prior-year period. Operating expenses declined $21 million, as savings initiatives and lower variable costs outweighed inflationary pressures.

Capri ended the quarter with $125 million in cash and $461 million in debt, for net debt of $336 million, down from $1.6 billion a year earlier. During the quarter, the company repurchased $150 million of shares, or 10.3 million shares, reducing its share count by approximately 9%. As of Sept. 26, 2026, $721 million remained available under its repurchase authorization.

Fiscal 2027 Outlook Raised

Capri now expects fiscal 2027 revenue of approximately $3.42 billion, including $2.77 billion at Michael Kors and $650 million at Jimmy Choo. The company continues to forecast gross margin of about 64%, operating expenses of roughly $2 billion and operating income of approximately $175 million, which would represent a 50% increase from the prior year.

The company raised its expected share repurchases for the year to $300 million from its prior $200 million outlook. It now expects diluted earnings per share of $2.20, representing projected growth of 45% from the prior year.

For the fiscal third quarter, Capri expects revenue of just over $1 billion, operating income of about $90 million and diluted earnings per share of $0.95. The outlook includes the effect of approximately $20 million in wholesale shipments that shifted from the third quarter into the second quarter, as well as greater foreign-currency headwinds.

About Capri (NYSE:CPRI)

Capri Holdings Limited NYSE: CPRI is a global fashion and luxury goods company headquartered in London. The company designs, develops, markets and distributes luxury apparel, footwear, handbags, accessories, watches, jewelry and fragrances through its portfolio of fashion brands.

Capri's principal brands are Michael Kors, Versace and Jimmy Choo. Michael Kors offers a broad range of fashion and lifestyle products, including handbags, footwear, apparel, watches and accessories. Versace is known for luxury clothing, accessories, footwear, home products and fragrances, while Jimmy Choo specializes in luxury footwear, handbags, accessories and fragrances.

The company sells its products through directly operated retail stores, e-commerce platforms, wholesale partners, department stores, specialty retailers and other distribution channels.

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