CPRI Posts Q2 Loss, Y/Y Declines in Michael Kors & Jimmy Choo Revenues

Capri Holdings Limited CPRI has reported results for the second quarter of fiscal 2026, with the top line declining year over year but surpassing the Zacks Consensus Estimate. The bottom line also decreased from the prior-year period and missed the consensus estimate. Both Michael Kors and Jimmy Choo recorded year-over-year revenue declines in the quarter.

However, with the Versace sale-off expected to close in the fiscal third quarter, the company remains focused on driving growth across its two core brands, aiming to enhance profitability and strengthen its balance sheet through debt reduction.

The company plans to use proceeds from the sale-off to improve financial flexibility and support shareholder returns, including a newly authorized $1-billion share repurchase program expected to begin in fiscal 2027. It anticipates improving retail trends in the second half of fiscal 2026, positioning the business for a return to growth in fiscal 2027.

More on Capri Holdings’ Q2 Results

The company posted an adjusted quarterly loss of 3 cents per share in the quarter under review. The reported figure missed the Zacks Consensus Estimate for adjusted earnings of 14 cents. Also, the bottom line decreased from adjusted earnings of 64 cents per share in the year-earlier quarter. The bottom line reflected an impact of 20 cents per share due to a higher-than-expected effective tax rate resulting from the company’s valuation allowance position.

Total revenues of $856 million beat the Zacks Consensus Estimate of $830 million but decreased 2.5% year over year on a reported basis and 4.2% on a constant-currency basis.

Gross profit decreased 4.6% year over year to $522 million. The gross margin declined 130 basis points to 61% from 62.3% in the prior year due to tariff impacts.

This designer, marketer, distributor and retailer of branded apparel and accessories reported an adjusted operating income of $20 million, down from $37 million in the prior year. The adjusted operating margin contracted 190 basis points to 2.3% from 4.2% in the year-ago period.

CPRI’s Q2 Revenue Insights by Segments

Revenues from Michael Kors declined 1.8% year over year to $725 million on a reported basis and 3.3% on a constant-currency basis. This surpassed the Zacks Consensus Estimate of $697.2 million. The brand’s gross profit fell to $430 million from $451 million in the year-ago quarter. The gross margin contracted 180 basis points to 59.3% from 61.1%. Operating income declined to $73 million from $87 million in the prior-year period, while the operating margin narrowed 170 bps to 10.1%.

Jimmy Choo’s revenues were $131 million, down 6.4% on a reported basis and 9.3% on a constant-currency basis. This lagged the Zacks Consensus Estimate of $132.8 million. The brand’s gross profit declined slightly to $92 million from $96 million in the year-ago quarter. The gross margin, however, expanded 160 basis points to 70.2% from 68.6% last year. Jimmy Choo recorded an operating loss of $9 million compared with a loss of $5 million in the prior-year period.

CPRI Stock's Past 3-Month Performance

Capri Holdings’ Financial Health Snapshot

The company ended the quarter with cash and cash equivalents of $120 million, long-term debt of $1.75 billion, and total shareholders’ equity of negative $70 million, including non-controlling interest of $4 million. The operating cash flow for the second quarter was $33 million, while the capital expenditure amounted to $13 million, resulting in a negative free cash flow of $46 million.

On Nov. 4, 2025, the company announced that its board of directors approved a three-year share repurchase program of up to $1 billion of its outstanding ordinary shares. The program is expected to begin in fiscal 2027.

As of Sept. 27, 2025, CPRI had 907 retail stores. These include 691 Michael Kors and 216 Jimmy Choo stores.

Other Developments of CPRI

As previously announced, on April 10, 2025, the company entered a stock purchase agreement with Prada S.p.A., under which Prada will acquire the company’s Versace business for $1.375 billion in cash, subject to adjustments. The Versace business has been classified as held for sale and reported as discontinued operations. The transaction is expected to close in the second half of calendar 2025, pending customary closing conditions and regulatory approvals.

Sneak-Peek Into CPRI’s 3Q26 View

This Zacks Rank #2 (Buy) company has issued its outlook as it continues to navigate uncertainty surrounding tariffs, foreign currency fluctuations and shifting consumer spending trends.

For the third quarter of fiscal 2026, Capri Holdings expects total revenues between $975 million and $1 billion. The company projects an operating margin of 7-8%, and earnings per share between 70 cents and 80 cents.

For Michael Kors, total revenues are anticipated between $825 million and $845 million, with an operating margin in the low-teen range.

For Jimmy Choo, total revenues are expected between $150 million and $155 million, with an operating margin in the negative low- to mid-single-digit range.

Capri Holdings’ FY26 Outlook

For fiscal 2026, management expects total revenues of $3.375-$3.45 billion, whereas it reported $4.44 billion in fiscal 2025. The company anticipates operating income of $100 million, including estimated tariff impacts.

It expects earnings per share of $1.20-$1.40, whereas it incurred a loss of $10 per share in fiscal 2025. Capital expenditure is forecast at $110 million.

For Michael Kors, total revenues are anticipated to be $2.8-$2.875 billion, with an operating margin in the high-single-digit range.

For Jimmy Choo, total revenues are expected to be $565-$575 million, with an operating margin in the negative mid-single-digit range.

Shares of this company have gained 14% in the past three months against the industry’s decline of 6.2%.

Other Key Picks

Some other top-ranked stocks in the retail space are Boot Barn Holdings, Inc. BOOT, Urban Outfitters Inc. URBN and American Eagle Outfitters Inc. AEO.

Boot Barn operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Boot Barn’s fiscal 2026 earnings and sales implies growth of 20.5% and 15.7%, respectively, from the year-ago actuals. Boot Barn delivered a trailing four-quarter average earnings surprise of 5.4%.

Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home decor and gift items. It carries a Zacks Rank #2 at present.

The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year earnings and sales indicates growth of 29.1% and 9.7%, respectively, from the year-ago actuals. URBN delivered a trailing four-quarter average earnings surprise of 24.8%.

American Eagle is a specialty retailer of casual apparel, accessories and footwear. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for American Eagle's current fiscal-year earnings and sales indicates declines of 36.2% and 0.2%, respectively, from the year-ago actuals. AEO delivered a trailing four-quarter average earnings surprise of 30.3%.

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