American fashion holding company Capri Holdings Limited has reported a 2.5 per cent year-over-year (YoY) decline in revenue to $856 million in the second quarter (Q2) of fiscal 2026 (FY26), or a 4.2 per cent drop in constant currency, as it prepares for the upcoming sale of Versace to Prada for $1.37 billion. The sale, expected to close in the fiscal third quarter, will allow Capri to concentrate on its two remaining luxury houses—Michael Kors and Jimmy Choo.

The gross profit was $522 million with a 61 per cent margin, slightly down from 62.3 per cent last year due to tariff-related headwinds.

US fashion house Capri Holdings expects FY26 revenue of $3.38–3.45 billion, operating income of $100 million, and EPS of $1.20–1.40, supported by Michael Kors’ high-single-digit margin and Jimmy Choo’s modest loss.
For Q3 FY26, revenue is projected at $975 million-1 billion, with an operating margin of 7-8 per cent and EPS of $0.7-0.8, reflecting gradual improvement across core brands.

The company posted a loss from operations of $12 million, translating to an operating margin of –1.4 per cent, while the adjusted operating margin stood at 2.3 per cent. Net loss totalled $34 million, or $0.28 per diluted share, compared with a profit of $42 million in the prior year. Adjusted net loss was $4 million, or $0.03 per diluted share, impacted by a higher-than-expected effective tax rate, Capri Holdings said in a press release.

Brand-wise, Michael Kors revenue declined 1.8 per cent to $725 million, with constant-currency revenue down 3.3 per cent. Gross margin slipped to 59.3 per cent, while operating income dropped to $73 million (10.1 per cent margin) from $87 million last year.

Jimmy Choo reported a 6.4 per cent decrease in revenue to $131 million (down 9.3 per cent in constant currency). Gross margin rose to 70.2 per cent, but operating loss widened to $9 million, reflecting weaker sales momentum.

“We are encouraged by our second quarter results. Trends continued to improve sequentially, which resulted in revenue, gross margin and operating income exceeding our expectations. This performance demonstrates the progress we are making as we execute against our strategic initiatives to energise our fashion luxury houses,” said John D Idol, chairman and CEO of Capri Holdings.

“With the Versace sale expected to close in our fiscal third quarter, we are now fully focused on the growth of our two iconic brands Michael Kors and Jimmy Choo,” added Idol. “We plan to use the proceeds of the sale to repay the majority of our debt, substantially strengthening our balance sheet and providing greater financial flexibility to both invest in our growth as well as return capital to shareholders in the future.”

“Given the encouraging signs of stabilisation across our business and our planned reduction in debt levels, our Board of Directors has authorised a new $1 billion share repurchase programme which the company expects to begin implementing in fiscal 2027,” continued Idol.

For full FY26, Capri Holdings expects total revenue between $3.375 billion and $3.45 billion, with operating income around $100 million and net interest income ranging from $85 million to $95 million.

The company anticipates an effective tax rate in the mid-teens, weighted average diluted shares of about 120 million, and diluted earnings per share (EPS) between $1.2 and $1.4. Capital expenditures are projected to total approximately $110 million. For its brands, Michael Kors is expected to generate revenue of $2.8 billion to $2.875 billion in FY26, with an operating margin in the high-single-digit range, while Jimmy Choo is forecast to deliver $565 million to $575 million in revenue and a negative mid-single-digit operating margin.

For the third quarter (Q3) of FY26, Capri Holdings projects revenue of $975 million to $1 billion, an operating margin between 7 per cent and 8 per cent, and net interest income of about $20 million. The effective tax rate is expected to be in the low to mid-single-digit range, with diluted shares outstanding of approximately 120 million and diluted EPS between $0.70 and $0.80. Michael Kors is expected to post revenue of $825 million to $845 million with an operating margin in the low-teens range, while Jimmy Choo anticipates revenue of $150 million to $155 million and an operating margin in the negative low-to mid-single-digit range.

“We continue to expect retail trends to improve in the back half of fiscal 2026 positioning us to return to growth in fiscal 2027. Longer term, we remain optimistic about the sustainable growth potential of both Michael Kors and Jimmy Choo,” said Idol.

Fibre2Fashion News Desk (SG)