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Capri's Turnaround Is Taking Shape, But Is the Stock a Buy Yet?Capri NYSE: CPRI executives said the company is entering a more focused phase after the sale of Versace, with management emphasizing growth plans for Michael Kors and Jimmy Choo, store renovations, tighter product assortments and a stronger balance sheet.

Speaking at Bernstein’s Retail Forum in New York, Capri Chief Executive Officer John Idol and Chief Financial Officer Tyler Reddien outlined the company’s efforts to reposition Michael Kors, expand Jimmy Choo and return the business to growth. The discussion was hosted by Bernstein analyst Aneesha Sherman.

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Tapestry Stock Drops After Strong Quarter and Raised OutlookIdol said Capri ended the year with “a little over $200 million in debt,” giving the company flexibility to invest in its remaining two brands. He said management believes Michael Kors can return to approximately $4 billion in revenue from an estimated $2.93 billion this year, while Jimmy Choo can grow to $800 million from roughly $600 million.

Michael Kors Repositioning Remains in Early Stages Idol said Capri decided to take a “more modern lens” to Michael Kors in an effort to attract younger consumers, including Gen Z and parts of the millennial cohort. The company has leaned into the “Jet Set” concept, which Idol described as a mindset tied to travel, style and aspiration.

After a Huge Rally, Is There Any Upside Left for Ralph Lauren Stock? The company has also shifted its marketing strategy through “hotel stories” campaigns, including Ibiza, Rome and Saint-Tropez, while increasing its use of social media. Idol said Michael Kors now has more than 400 influencers working with the brand.

On product, Idol said Michael Kors has narrowed its full-price focus around three handbag icons: Nolita, Hamilton and Laila. Those groups now represent about 50% to 60% of full-price sales, he said. The company has reduced SKUs, sharpened storytelling and introduced more accessories priced under $200 to appeal to younger shoppers.

Idol said Michael Kors had raised prices by 20% to 25% coming out of COVID, which contributed to lower sell-throughs and higher markdowns. The brand has since moved closer to its historical pricing in the full-price channel, which he said has improved full-price sell-throughs and average unit retails because the company is taking fewer markdowns.

“We’re still in the very early innings,” Idol said of the repositioning, adding that the full-price channel comped positive in the most recent quarter. He said wholesale, which had lagged full-price stores, also showed an “incredible lift” last quarter and is showing similar trends this quarter.

Outlet Business and Back-Half Growth Idol said the outlet business has been the weaker part of Michael Kors because it had not received enough new product innovation. New outlet product begins arriving more broadly in August, including three new icon groups, one of which, Sammy, has already landed and is “fast becoming the best-selling group inside the stores,” he said.

Capri has also reduced promotional activity and third-party sales as part of what Idol called “quality of sales initiatives.” He said the company walked away from about $150 million in sales tied to those initiatives, which management believes is better for the long-term health of the brand.

Reddien said unit growth is expected to decline in fiscal 2027 due to the quality-of-sales initiative, but he expects the company to return to unit growth in fiscal 2028 and beyond as new products resonate with customers.

Idol said the company expects growth in the back half of the fiscal year as the impact of quality-of-sales initiatives diminishes after being anniversaried in October and November. He also cited new product flow in handbags and footwear, higher marketing spend and social media initiatives as factors supporting the outlook.

Jimmy Choo Gains Momentum in Accessories Idol said Jimmy Choo is already back to growth and is seeing strong momentum, especially in accessories. He said accessories are growing at a double-digit rate and described the category as “the hottest part of Jimmy Choo right now.”

The brand is selling products across a broad price architecture, including $5,000 Bonbon bags, the Cinch group priced between $2,000 and $2,500, and newer Bar and Curve groups priced under $1,500. Idol said the broader range has helped as luxury consumers become more selective.

Jimmy Choo is also expanding beyond its traditional image as a red carpet, wedding and special-occasion brand. Idol pointed to casual footwear, sneakers, jellies, loafers, kitten heels and block heels as areas that are resonating with younger consumers. He said casual footwear now accounts for more than 20% of Jimmy Choo’s business, with room to grow.

Reddien said Capri expects Jimmy Choo to return to profitability in fiscal 2027 and sees opportunities to expand margins through top-line growth, store productivity, gross margin improvement and SG&A leverage. He noted that about 50% of Jimmy Choo production is done in-house, creating opportunities to improve factory efficiency.

Margins, Stores and Capital Allocation Reddien said gross margin expansion remains the largest opportunity for Michael Kors, driven by new products, higher full-price sell-throughs and higher average unit retails. He also cited production efficiencies, product engineering, improved store productivity and SG&A optimization as contributors to margin improvement.

Management also emphasized store renovations. Idol said the renovated Michael Kors store at Rockefeller Center is up almost 30% in sales. At Jimmy Choo, he said the renovated Madison Avenue store increased from $2.5 million to almost $6 million in trend over about 18 months.

Reddien said Capri’s capital allocation priorities are to invest in the business and return value to shareholders. The company has announced a $1 billion share repurchase program, with a significant portion expected to be completed this fiscal year. Idol added that Capri plans to spend $300 million, with most of that directed toward renovating the Michael Kors fleet, along with investments in IT and other areas.

Consumer Outlook Mixed by Region Idol described consumers as “choiceful,” saying shoppers across income levels are being more thoughtful but are still buying when products offer design, quality and value. He said the North American consumer remains relatively healthy, despite pressures from higher costs for fuel, groceries and rent.

In Europe, Idol said Capri has become more cautious over the past 90 days, citing war-related effects on tourism and reduced Middle East tourist traffic. He said the company has substantial business with Middle East tourists at both Michael Kors and Jimmy Choo. Idol was more optimistic about China, where he said the consumer is beginning to improve, and said Japan has remained solid.

Looking ahead, Idol said Capri is at “the beginning of an inflection” for Michael Kors, though the turnaround will take time. He also said Jimmy Choo has the potential to reach $800 million in revenue, with $100 million of that growth expected to come from accessories.

About Capri NYSE: CPRICapri 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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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A month has gone by since the last earnings report for Capri Holdings (CPRI - Free Report) . Shares have lost about 4.5% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Capri Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Capri Holdings Beats Q4 Earnings Estimates, Sees FY27 Growth AheadCapri Holdings delivered fourth-quarter fiscal 2026 results, with revenues missing the Zacks Consensus Estimate and declining year over year. However, earnings surpassed the consensus estimate and improved significantly from the prior-year quarter.

Management highlighted that strategic initiatives introduced last year are gaining traction, with improving trends visible across both Michael Kors and Jimmy Choo. The company noted that actions taken to strengthen product innovation, brand desirability and consumer engagement are resonating well with consumers, providing early validation of its transformation efforts. Capri Holdings also emphasized that fiscal 2026 was focused on stabilizing the business and building a stronger foundation for long-term growth.

Looking ahead, management expressed confidence in returning to revenue and earnings growth in fiscal 2027, projecting low-single-digit revenue growth and nearly 40% earnings-per-share growth. Longer term, the company aims to grow Michael Kors revenues to $4 billion and Jimmy Choo revenues to $800 million while significantly improving profitability and delivering sustainable long-term shareholder value.

More on Capri Holdings’ Q4 ResultsCapri Holdings reported adjusted earnings of 22 cents per share for the fourth quarter, which surpassed the Zacks Consensus Estimate of 11 cents. The bottom line improved significantly from an adjusted loss of $4.55 per share reported in the year-ago period. On a reported basis, the company posted a loss of one cent per share compared with a loss of $4.90 in the prior-year quarter.

Total revenues came in at $796 million, missing the Zacks Consensus Estimate of $804 million. The top line declined 3.7% year over year on a reported basis and 7% on a constant-currency basis.

By geography, The Americas remained the largest region but was also the main drag, with revenues of $433 million compared with $493 million in the year-ago quarter. EMEA improved to $246 million from $223 million, while Asia edged up to $117 million from $111 million, partially offsetting softness in the Americas.

Gross profit increased to $516 million from $495 million in the year-ago quarter. Gross margin expanded 490 basis points to 64.8%, aided by a $40 million reduction in the cost of goods sold tied to estimated IEEPA tariff refunds.

Operating loss narrowed to $27 million from $57 million a year ago. On an adjusted basis, operating loss improved to $1 million from $15 million in the prior-year quarter, with adjusted operating margin improving to negative 0.1% from negative 1.8% a year ago.

CPRI’s Q4 Revenue Insights by SegmentsMichael Kors generated revenues of $656 million, down 5.5% year over year on a reported basis and 8.4% on a constant-currency basis. The brand experienced sequential improvement in retail trends, with full-price retail channel comparable sales increasing across all regions. Total retail channel average unit retails (AURs) increased by a mid-single-digit percentage, while wholesale sales at the point of sale improved to approximately flat compared with the prior year.

Gross margin expanded to 64.6%, benefiting from an estimated receivable related to IEEPA tariff refunds. Operating income increased to $57 million from $32 million a year ago, while operating margin expanded to 8.7% from 4.6% in the prior-year quarter.

Jimmy Choo delivered a solid performance, with revenues increasing 5.3% year over year to $140 million on a reported basis and remaining flat on a constant-currency basis. Retail sales increased by a mid-single-digit percentage, with sequential improvement across all regions, while wholesale point-of-sale trends also improved sequentially. Gross margin came in at 65.7%. However, the brand reported an operating loss of $20 million compared with an operating loss of $10 million in the prior-year quarter.

Capri Holdings’ Financial Health SnapshotCapri Holdings exited fiscal 2026 with cash and cash equivalents of $135 million and total borrowings of $357 million, resulting in net debt of $222 million, a significant improvement from $1.4 billion in the prior year. Operating cash flow for fiscal 2026 totaled $197 million, while capital expenditures were $63 million, leading to free cash flow of $134 million. Inventory levels declined 17% year over year to $581 million, reflecting improved inventory discipline and operational efficiency.

Capri Holdings resumed a more aggressive capital return stance in the quarter, repurchasing approximately 4 million shares for $79 million. The remaining authorization under the share repurchase program was $921 million at the end of the fourth quarter.

Capri Holdings’ Q1 OutlookFor the first quarter of fiscal 2027, Capri Holdings expects total revenues of approximately $750 million and operating income of around $10 million. Net interest and other income are projected at roughly $20 million, while the effective tax rate is expected to be approximately negative 50%. The company anticipates earnings per share of about 40 cents.

Within the segments, Michael Kors revenues are projected at approximately $585 million, with the operating margin expected in the high-single-digit range. Jimmy Choo revenues are anticipated to be approximately $165 million, with the operating margin in the low-single-digit range.

CPRI’s FY27 GuidanceFor fiscal 2027, Capri Holdings expects total revenues of approximately $3.525 billion, representing growth of nearly 1.5% from fiscal 2026 revenues of $3.474 billion. The company projects operating income of around $190 million compared with $23 million reported in fiscal 2026. Net interest and other income are projected in the range of $85-$90 million, while the effective tax rate is expected to be in the low-teens range. The company anticipates earnings per share of about $2.15. Capri Holdings also plans share repurchases of nearly $200 million and capital expenditures of approximately $125 million during the fiscal year.

For Michael Kors, fiscal 2027 revenues are expected to be approximately $2.9 billion, with the operating margin projected in the low-double-digit range. Jimmy Choo revenues are anticipated to be approximately $625 million, with the operating margin in the low-single-digit range.

How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates review.

The consensus estimate has shifted 20% due to these changes.

VGM ScoresCurrently, Capri Holdings has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock has a grade of B on the value side, putting it in the second quintile for value investors.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Capri Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.