Capri Cuts Sales Outlook as Margin Gains Support Profit Target
The luxury-fashion group lowered its fiscal 2027 revenue forecast to approximately $3.4 billion.
Capri Holdings (CPRI), the luxury-fashion group behind Michael Kors and Jimmy Choo, increased adjusted earnings by 34% in its fiscal first quarter even as sales declined.
The results extended Capri’s revenue contraction, though the constant-currency decline moderated to 4.1% from 7.0% in the prior quarter. Improved full-price sell-throughs and lower tariff rates helped offset the pressure on sales.
Revenue fell 3.5% from a year earlier to $769 million, after declining 3.7% in the fourth quarter. Adjusted earnings rose to $0.67 a share from $0.50 and more than tripled from $0.22 in the preceding quarter. Adjusted operating margin increased 1.1 percentage points to 3.6%, returning to positive territory after a negative 0.1% fourth-quarter margin.
Michael Kors remained the main drag, with revenue falling 7.1% to $590 million, including about $10 million of wholesale shipments that occurred earlier than expected. Its gross margin expanded 2.8 percentage points to 63.9%, though operating margin narrowed to 9.3% as lower sales caused expense deleverage.
Jimmy Choo revenue rose 10.5% to $179 million. Its operating margin expanded 4.8 percentage points to 7.3%, and operating income more than tripled to $13 million, as higher revenue produced expense leverage despite a weaker channel mix.
Capri cut its fiscal 2027 sales outlook from low-single-digit growth, citing $50 million from Michael Kors inventory delays, $50 million from softer trends in Europe, the Middle East and Africa, and $35 million from currency headwinds. The company maintained adjusted earnings guidance of approximately $2.15 a share, representing growth of about 40%, as it plans additional operating-expense reductions.
For the second quarter, Capri expects revenue of approximately $780 million, including an aggregate $85 million drag from inventory delays, softer regional demand, currency and the reversal of wholesale shipments pulled into the first quarter. Jimmy Choo is expected to post a negative mid-single-digit operating margin for the quarter, while remaining profitable for the full year.
Inventory fell 20% from a year earlier to $624 million, while net debt dropped to $224 million following the Versace sale. First-quarter free cash flow declined to $48 million, and Capri repurchased about 2.6 million shares for $50 million, leaving $871 million under its authorization.