8-K: Capri Holdings Reports FY26 Results, Eyes FY27 Growth

Capri Holdings Limited announced its fourth quarter and full year Fiscal 2026 results, showing a return to profitability and outlining a positive outlook for Fiscal 2027 with projected revenue and EPS growth.

Summary

• Capri Holdings Limited reported its financial results for the fourth quarter and full fiscal year ended March 28, 2026.
• Total revenue for the fourth quarter decreased by 3.7% to $796 million, or 7.0% in constant currency.
• The company reported an operating margin of (3.4)% and an adjusted operating margin of (0.1)% for the quarter.
• Net loss per share was $(0.01), while adjusted earnings per share was $0.22 for the fourth quarter.
• For the full fiscal year 2026, total revenue was $3,474 million.
• The company expects Fiscal Year 2027 revenue to be approximately $3.525 billion, with diluted EPS of approximately $2.15.
• Capri Holdings anticipates returning to low single-digit revenue growth and approximately 40% earnings per share growth in Fiscal Year 2027.
• The company also announced a share repurchase authorization, with $921 million remaining availability as of March 28, 2026.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a cautiously optimistic report, with clear signs of strategic progress and a positive outlook for the upcoming fiscal year, despite ongoing revenue challenges in the current quarter.

Positives

• Return to profitability in Fiscal Year 2026, with adjusted net income of $27 million and adjusted EPS of $0.22 in Q4 FY26.
• Strategic initiatives are gaining traction, with early validation and improving trends across Michael Kors and Jimmy Choo brands.
• Fiscal Year 2027 guidance projects low-single-digit revenue growth and approximately 40% earnings per share growth.
• Longer-term vision includes growing Michael Kors revenue to $4 billion and Jimmy Choo revenue to $800 million.
• Net inventory decreased by 17% to $581 million as of March 28, 2026.
• Cash flow from operating activities was $197 million for FY26, resulting in free cash flow of $134 million.
• Net debt significantly reduced to $222 million from $1.4 billion in the prior year.
• Share repurchase program has $921 million remaining availability.

Negatives

• Fourth quarter revenue decreased by 3.7% on a reported basis and 7.0% in constant currency.
• Operating margin for the fourth quarter was (3.4)%, with an adjusted operating margin of (0.1)%.
• Net loss per share was $(0.01) for the fourth quarter.
• Jimmy Choo experienced an operating loss of $20 million and an operating margin of (14.3)% in the fourth quarter.
• The company is unable to provide GAAP reconciliation for non-GAAP financial outlook without unreasonable effort.

Risks

• Macroeconomic pressures and general uncertainty regarding the overall future economic environment.
• Imposition or threat of new or additional duties, tariffs or trade restrictions on imported products.
• Risks related to the recovery of estimated tariff refund receivables, including delays in government processing or changes in law.
• Changes in fashion, consumer traffic and retail trends.
• Fluctuations in demand for products and loss of market share.
• Increased competition.
• Risks associated with operating in international markets and global sourcing, including currency fluctuations and manufacturing/shipment disruptions.
• Departure of key employees or failure to attract and retain qualified personnel.

Future Outlook

For Fiscal Year 2027, Capri Holdings expects total revenue of approximately $3.525 billion, operating income of approximately $190 million, and diluted earnings per share of approximately $2.15. The company anticipates returning to low single-digit revenue growth and approximately 40% earnings per share growth. For Michael Kors, revenue is expected to be approximately $2.9 billion with operating margin in the low-double-digit range. For Jimmy Choo, revenue is expected to be approximately $625 million with operating margin in the low-single-digit range. First Quarter Fiscal 2027 outlook includes total revenue of approximately $750 million and diluted EPS of approximately $0.40.

Management Comments

• "Looking at fiscal 2026 we were encouraged by the progress we made executing against the strategic initiatives introduced last year to maximize the full potential of our two iconic fashion luxury houses, Michael Kors and Jimmy Choo."
• "Early validation of our strategic initiatives and improving trends across both brands reinforce our confidence in their return to revenue and earnings growth."
• "A year ago, our priority was to stabilize the business and create a stronger foundation for growth. Today, we are building upon the improving trends resulting from the success of our strategic initiatives."
• "In fiscal 2027 we expect to return to low single digit revenue growth and approximately 40% earnings per share growth."
• "Longer term we expect to grow Michael Kors revenue to $4 billion and Jimmy Choo revenue to $800 million while significantly increasing profitability."
• "With a strengthened foundation and clear strategic priorities, we are well positioned to accelerate growth, enhance profitability and deliver sustainable long-term value for our shareholders."

Industry Context

StockSavvy.ai notes that Capri Holdings' results and outlook reflect the ongoing recovery and strategic repositioning within the global luxury fashion sector, which has seen varied performance across brands due to shifting consumer preferences and economic conditions. The focus on core brands and profitability aligns with industry trends emphasizing brand desirability and operational efficiency.

Comparison to Industry Standards

• The reported revenue decline of 3.7% in Q4 FY26 for Capri Holdings is within the range of challenges faced by some discretionary retail sectors, though the luxury segment has shown resilience.
• The projected 40% EPS growth for FY27 is a strong indicator of expected recovery and operational leverage, potentially outperforming broader retail industry growth forecasts.
• The strategic goal of growing Michael Kors to $4 billion and Jimmy Choo to $800 million indicates an ambition to compete more directly with larger, diversified luxury conglomerates, though specific comparable company targets are not detailed in the filing.

Legal Proceedings

• The company is entitled to a refund of approximately $65 million in IEEPA tariffs previously paid to U.S. Customs and Border Protection, following a Supreme Court decision.
• The company has begun filing refund claims and expects to recover the full amount, subject to CBP's refund process.

Stakeholder Impact

• Shareholders: Potential for long-term value enhancement through accelerated growth, enhanced profitability, and ongoing share repurchases.
• Employees: Continued focus on attracting and retaining qualified personnel is critical for executing growth strategies.
• Suppliers: Potential for increased orders as revenue grows, but also subject to global sourcing risks.
• Creditors: Improved financial health with reduced net debt may strengthen credit standing.

Next Steps

• Continue executing strategic initiatives to maximize the potential of Michael Kors and Jimmy Choo.
• Focus on strengthening product innovation, brand desirability, and consumer engagement.
• Achieve projected FY27 revenue growth of low-single-digits and EPS growth of approximately 40%.
• Execute share repurchases of approximately $200 million in Fiscal Year 2027.
• Manage capital expenditures of approximately $125 million in Fiscal Year 2027.

Key Dates

Recommendation

The filing indicates a stabilization and a positive outlook for FY27, with strategic initiatives showing traction and a significant reduction in net debt. However, the Q4 revenue decline and ongoing risks suggest a 'hold' position until sustained revenue growth is demonstrated and the FY27 targets are clearly on track.

Keywords

Capri Holdings, Michael Kors, Jimmy Choo, Luxury Fashion, Financial Results, SEC Filing, 8-K, Earnings