Capri returns to profit and raises outlook despite lower sales
Michael Kors sales fell while Jimmy Choo grew. Better margins and earlier wholesale shipments helped the latest quarter.
Capri Holdings returned to a quarterly profit and raised its full-year outlook on Friday, even as sales at its larger Michael Kors brand continued to fall. Growth at Jimmy Choo and stronger gross margins helped the luxury group improve earnings despite lower overall revenue.
For the second quarter of fiscal 2027, ended September 26, revenue from continuing operations fell 5.5% to $809 million. Net income was $27 million, or 25 cents a diluted share, compared with a $34 million loss a year earlier. Adjusted earnings were 42 cents a share, compared with an adjusted loss of 3 cents.
Better margins, but a timing boost to sales
Gross margin rose to 63.3% from 61%. Capri attributed the improvement to more full-price sales, brand mix and lower tariff rates. Its adjusted operating margin increased to 3.8% from 2.3%.
About $20 million in wholesale shipments were made in the second quarter earlier than expected, shifting revenue out of the third quarter. That helped the latest reported sales total without creating an equivalent increase in revenue for the full year.
The two brands moved in opposite directions. Michael Kors revenue fell 8.6% to $663 million, while Jimmy Choo revenue increased 11.5% to $146 million. These are reported-currency changes, not the separate constant-currency figures in the results.
Higher annual guidance, with growth still ahead
Capri now expects fiscal 2027 revenue of about $3.42 billion and adjusted diluted earnings of about $2.20 a share. Its previous official forecast was about $3.4 billion in revenue and $2.15 in adjusted earnings per share. The company also raised its adjusted operating-income forecast to about $175 million from $170 million.
For the third quarter, Capri forecasts revenue of about $1.005 billion and adjusted earnings of about 95 cents a share. That revenue outlook incorporates the $20 million in wholesale shipments moved into the second quarter.
Chairman and Chief Executive John Idol said trends improved sequentially each month at both brands during the quarter. Management still expects total revenue to return to growth in the second half of fiscal 2027. That remains a forecast, not a return to growth already achieved.
The results show a company earning more from a smaller sales base, with Jimmy Choo's growth offsetting only part of the decline at Michael Kors. Sustaining the improvement will depend on turning better margins and product trends into revenue growth, rather than relying on the timing of shipments.
