Capri (NYSE:CPRI) reported first-quarter fiscal 2027 results that exceeded its expectations, as higher margins and lower operating expenses helped offset a decline in revenue. The company also reduced its full-year revenue outlook, citing delayed Michael Kors inventory receipts, softer conditions in Europe, the Middle East and Africa, and foreign-exchange headwinds, while maintaining its earnings-per-share forecast.
Total first-quarter revenue was $769 million, down 3.5% from a year earlier, or down 4.1% in constant currency. Operating income increased about 40% to $28 million, while operating margin expanded 110 basis points to 3.6%. Net income totaled $76 million, or $0.67 per diluted share, up approximately 30% from the prior year.
“We are encouraged by our first quarter results, which exceeded our expectations and demonstrated the progress we are making to build a stronger and more profitable business,” Idol said.
Michael Kors Revenue Falls as Jimmy Choo Extends Growth
Michael Kors revenue declined 7.1% to $590 million in the quarter, though the result was ahead of Capri’s expectations. The brand’s retail business was affected by softer trends in EMEA late in the quarter, store closures and the company’s planned reduction in markdown inventory. Global Michael Kors retail sales declined by a high-single-digit percentage.
By region, Michael Kors revenue declined 10% in the Americas and 5% in EMEA, while Asia revenue increased 6%. Idol said full-price comparable sales remained positive in North America and Asia, including China, but EMEA was pressured by conflict in the Middle East and lower tourist traffic in Europe.
Michael Kors wholesale revenue declined by a low-single-digit percentage but exceeded expectations. At the point of sale, the company reported positive comparable-store trends among wholesale partners, led by a double-digit increase in accessories.
Jimmy Choo continued to gain momentum, reporting revenue growth of 10.5% to $179 million, or 9.3% in constant currency. Retail and wholesale revenue each increased by a low-double-digit percentage. Sales rose 26% in the Americas, 5% in EMEA and 3% in Asia.
Idol said Jimmy Choo’s growth was broad-based across regions, channels and categories. Accessories sales rose by a double-digit percentage, led by the Cinch and Bon Bon bag franchises, while the company also cited demand for casual footwear and newer styles. Jimmy Choo’s global consumer database increased 7% year over year, according to the company.
Margins Expand Despite Lower Sales
Capri’s gross margin increased 200 basis points to 65%, driven primarily by higher full-price sell-throughs and lower tariff rates compared with the prior-year period. Michael Kors gross margin rose 280 basis points to 63.9%, while Jimmy Choo gross margin declined to 68.7% from 70.4%, primarily due to channel mix.
Operating expenses fell by $10 million, reflecting cost-savings actions that more than offset inflationary pressure. Still, operating expenses rose as a percentage of revenue to 61.4% from 60.5% because of lower sales.
Michael Kors operating margin was 9.3%, down 60 basis points year over year, while Jimmy Choo operating margin rose 480 basis points to 7.3%. Capri said Jimmy Choo is positioned to return to profitability for the full fiscal year, supported by revenue growth, gross-margin expansion and expense discipline.
The company ended the quarter with $114 million in cash and $338 million in debt, resulting in net debt of $224 million, down from approximately $1.5 billion a year earlier. Capri repurchased approximately $50 million of shares during the quarter and had $871 million remaining under its authorization.
Revenue Outlook Reduced; EPS Target Maintained
Capri lowered its fiscal 2027 revenue outlook to approximately $3.4 billion. It now expects Michael Kors revenue of about $2.765 billion and Jimmy Choo revenue of about $635 million.
Chief Financial and Chief Operating Officer Tyler Reddien said lower-than-expected inventory at Michael Kors was primarily tied to delayed receipts and longer transit times caused by congestion at certain Asian ports. The company expects second-quarter inventory to decline by a high-single-digit percentage and is using selective air freight to accelerate deliveries.
The company expects the inventory situation to be temporary, with inventory building again during the second half to support anticipated revenue growth. Capri expects Michael Kors revenue to return to growth in the back half of fiscal 2027, aided by product introductions, higher marketing investment, normalizing promotional comparisons and store renovations.
- Fiscal 2027 revenue guidance: approximately $3.4 billion
- Fiscal 2027 operating income guidance: approximately $170 million
- Fiscal 2027 diluted EPS guidance: approximately $2.15
- Second-quarter revenue guidance: approximately $780 million
- Second-quarter diluted EPS guidance: approximately $0.20
Capri reduced its expected annual operating expenses by $70 million to approximately $2 billion while preserving planned spending on marketing, store refurbishments, digital initiatives and information technology. The company expects full-year gross margin of about 64%, based on assumed U.S. tariff rates of 10% to 12.5% on imported products as of July 24.
For the second quarter, Capri expects Michael Kors revenue of approximately $645 million, including an estimated $50 million impact from lower inventory, $15 million from softer EMEA trends, $10 million from foreign exchange and a $10 million wholesale-shipment timing effect that benefited the first quarter.
Idol said the company expects the largest improvement in the second half to come from North America, where Michael Kors full-price comparable sales and wholesale point-of-sale trends have improved. However, he said Capri does not expect EMEA conditions to improve in its outlook and has adjusted guidance accordingly.
About Capri (NYSE:CPRI)
Capri 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.
