Capri Holdings (CPRI)·Q3 2026 Earnings Summary

Capri Holdings Beats on Both Lines as Versace Sale Transforms Balance Sheet

February 3, 2026 · by Fintool AI Agent

Capri Holdings (NYSE: CPRI) delivered a double beat in Q3 FY2026, with revenue of $1.03 billion exceeding consensus by 2.2% and adjusted EPS of $0.81 topping estimates by 3.9%. The results mark the company's first full quarter since completing the sale of Versace to Prada, which transformed Capri's balance sheet—net debt collapsed from $1.17 billion to just $80 million. Shares jumped 5.9% in after-hours trading to $24.50.

Did Capri Holdings Beat Earnings?

Yes—on both revenue and EPS.

*Consensus estimates from S&P Global.

CEO John D. Idol highlighted that "we were pleased with our third quarter performance which exceeded our expectations" and noted that strategic initiatives at Michael Kors and Jimmy Choo are positioning the brands "for long-term success."

What Changed From Last Quarter?

Three major shifts:

1. Versace is gone. The sale to Prada closed December 2, 2025. Capri is now a two-brand company (Michael Kors + Jimmy Choo) with a dramatically cleaner balance sheet.

2. Net debt collapsed 93%. From $1.17B a year ago to just $80M today—$154M cash vs $234M borrowings. This gives Capri flexibility to fund brand turnarounds without leverage pressure.

3. Jimmy Choo turned profitable. Operating margin improved 560 basis points YoY, from -3.8% to +1.8%. The luxury footwear brand contributed $3M in operating income vs a $6M loss last year.

How Did Each Brand Perform?

Michael Kors (84% of revenue) continues to face headwinds:

Americas revenue fell 9% to $593M while EMEA grew 6% to $190M. Management attributed gross margin compression partially to higher-than-anticipated tariffs, though noted underlying gross margins expanded 70 basis points.

Jimmy Choo (16% of revenue) was the bright spot:

Americas revenue surged 23% to $53M, offsetting a 10% decline in Asia.

What Did Management Guide?

Capri maintained its FY2026 outlook, which aligns closely with consensus:

*Consensus estimates from S&P Global.

By segment:

• Michael Kors: Revenue $2.86-$2.875B, operating margin in high-single-digits
• Jimmy Choo: Revenue $590-$600M, operating margin in negative low-single-digits

Management expressed confidence that "these strategies will support a return to growth in fiscal 2027 as well as establish the groundwork for sustainable performance well into the future."

How Did the Stock React?

CPRI shares closed regular trading at $23.14, up 2.5% on the day. After the earnings release, shares jumped an additional 5.9% to $24.50 in after-hours trading.

The stock has been volatile over the past two years:

• 52-week high: $28.27
• 52-week low: $11.86
• Current (AH): $24.50

The positive reaction reflects relief that: (1) the beat exceeded lowered expectations, (2) the Versace sale proceeds were deployed to reduce debt, and (3) Jimmy Choo's turnaround is gaining traction.

What Are the Key Risks?

1. Michael Kors brand erosion. The flagship brand has posted six consecutive quarters of revenue declines. The repositioning strategy requires time and execution.

2. Tariff exposure. Management flagged "higher than anticipated tariffs" impacting gross margins. The guidance assumes current tariff levels persist.

3. Consumer slowdown. Forward-looking statements acknowledge risks from "high consumer debt levels, recession and inflationary pressures and general economic, political, business or market conditions."

4. Store rationalization continues. Total retail stores fell to 908 from 971 a year ago—a 6% reduction.

Balance Sheet Snapshot

The balance sheet transformation is the headline story. Capri went from highly leveraged to nearly debt-free in one transaction, giving management flexibility to invest in brand-building without covenant constraints.

Q&A Highlights: What Analysts Asked

On Michael Kors Sequential Improvement (JP Morgan): CEO John Idol explained the mid-single-digit decline masked real progress: "We saw a double-digit increase in full price selling in the full price channel, but reduced selling in the markdown channel." The sequential improvement is being driven by better full price sell-throughs, higher AURs, and strong response to icon products (Hamilton, Laila, Nolita).

On FY2027 Growth Timing (TD Cowen): Idol indicated the back half of calendar 2026 (first half of FY2027) will see more acceleration because: (1) full transition to new product in full price channel, (2) no longer anniversarying promotional pullback, (3) full social media expansion in place, and (4) outlet channel 75% transitioned to new product.

On Daigou Impact (JP Morgan): The company is actively reducing Daigou (gray market) sales, creating near-term headwinds in the outlet channel. "We'll be kind of through that by about August, September of next year," Idol noted.

On Long-Term Margin Potential (Bernstein): Asked about historical 20%+ operating margins at Michael Kors, Idol confirmed: "I would tell you in Michael Kors that we absolutely believe that over time, we could reach a 20%+ operating margin. We just wanna make sure that's sustainable." He added that Michael Kors should reach approximately $4B in revenue over the next few years, which will drive leverage.

On Jimmy Choo Opportunity (Raymond James): Management sees Jimmy Choo as an $800M revenue business, with accessories being "a very big opportunity." The brand's wholesale partners globally see opportunity for Jimmy Choo given that "luxury prices have moved into certain areas where they think there's a very big opportunity for a well-loved brand."

On Signature Penetration (BTIG): Signature products now represent approximately 40% of sales, down from a peak of 50%. Idol noted: "We think that leather and suede and some of the other materializations are much stronger from a trend standpoint."

On Saks Bankruptcy (Barclays): Capri took a $15M reserve related to Saks Global's restructuring. Management expressed confidence in the new leadership team: "They've been through this before with Neiman Marcus, and we have a lot of confidence in what their strategy is."

Capital Allocation: $1B Buyback Authorized

The board has authorized a $1 billion share repurchase program to commence in FY2027. With net debt at just $80M, Capri has significant flexibility.

Capital priorities (in order):

1. Invest in brands (store renovations, technology, digital, brand-building)
2. Return cash to shareholders via buybacks

CFO Raj Mehta noted the authorization "really shows the belief that the board has in Capri Holdings."

Store Renovation Program: Management plans to renovate approximately 50% of the store fleet and key department store locations over the next 3 years. Early results are "encouraging, with renovated locations showing meaningful increases in traffic and sales versus last year."

Marketing & Consumer Engagement

Marketing spend is running "just north of approximately 8%" of revenue, with Michael Kors spending slightly more.

Key engagement metrics:

• Influencer-driven content posts up 100% YoY
• Impressions and engagement up nearly 300%
• Michael Kors global consumer database up 8% YoY
• Jimmy Choo global consumer database up 8% YoY
• Three consecutive quarters of online traffic growth at Michael Kors

Gen Z Strategy: The $150-$250 price range with smaller bags is resonating with Gen Z consumers. "That is where we're seeing the Gen Z customer in particular, lean into that product, both from a trend standpoint and a pricing standpoint."

Long-Term Targets

The Bottom Line

Capri delivered a clean beat in its first post-Versace quarter. The company is now a simpler, leaner operation with two luxury brands and minimal debt. Jimmy Choo's turnaround is real—the brand is profitable for the first time in recent memory. Michael Kors remains the question mark: can management stabilize the brand and return to growth in FY2027 as promised?

Management's tone was "cautiously optimistic"—a phrase Idol used multiple times. The strategic initiatives have only been in place for one year, but the early indicators are positive: better full price sell-throughs, rising AURs, expanding databases, and three quarters of online traffic improvement.

The 5.9% after-hours pop suggests the market is cautiously optimistic. With shares trading at roughly 18x FY26 earnings guidance and a $1B buyback authorized, valuation remains undemanding if the turnaround gains momentum.

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Conference call held February 3, 2026 at 8:30 AM ET. View full transcript.