Capri Holdings Beats Earnings Expectations as Post-Versace Era Begins
CAPRI HOLDINGS LTD (NYSE:CPRI) reported financial results for its third quarter of fiscal 2026 that surpassed analyst expectations, a performance that appears to be garnering a positive initial reaction from investors. The global fashion luxury group, now streamlined to its Michael Kors and Jimmy Choo brands following the sale of Versace, delivered adjusted earnings that topped estimates despite a decline in overall revenue.
Third Quarter Performance vs. Estimates
The company's results for the quarter ended December 27, 2025, showed a mixed but ultimately favorable picture when measured against Wall Street's projections. While total sales dipped, profitability metrics came in stronger than anticipated.
- Revenue: Reported total revenue was $1.025 billion, a 4.0% decrease from the prior year. This figure narrowly exceeded the analyst consensus estimate of approximately $1.024 billion.
- Earnings Per Share (Adjusted): The key profitability metric of adjusted EPS came in at $0.81. This solidly beat the analyst estimate of $0.79 per share.
The market's early response suggests approval of these results. In pre-market trading, shares of Capri Holdings were up approximately 4.4%, indicating investors are focusing on the earnings beat and the company's improved financial position rather than the top-line contraction.
A Streamlined Company and Strengthened Balance Sheet
The quarterly report underscores a company in transition. The completion of the Versace sale to Prada in December 2025 is a defining event, fundamentally reshaping Capri's portfolio and financial structure. Chairman and CEO John D. Idol stated the divestiture was a "thoughtful decision to strengthen our financial foundation," with proceeds used to dramatically reduce debt.
The impact is stark: net debt plummeted to $80 million at quarter's end, down from $1.17 billion a year earlier. This deleveraging provides significant flexibility to invest in the remaining core brands, Michael Kors and Jimmy Choo. The results are now presented on a "continuing operations" basis, excluding Versace.
Brand Performance and Forward Outlook
The performance of the two remaining brands diverged in the quarter. The larger Michael Kors segment saw revenue decline by 5.6%, while Jimmy Choo posted a 5.0% increase. Notably, Jimmy Choo returned to an operating profit after a loss in the prior year.
Management provided an updated outlook for the full fiscal year 2026, which offers a point of comparison with existing analyst forecasts.
- Capri Holdings (Continuing Operations) FY2026 Guidance:
- Total Revenue: Approximately $3.45 to $3.475 billion.
- Diluted EPS (Adjusted): Approximately $1.30 to $1.40.
- Analyst Estimates for FY2026:
- Sales: Approximately $3.53 billion.
- Revenue (Net Income): Approximately $1.40 billion.
The company's revenue guidance appears slightly cautious relative to the sales estimate, while the EPS forecast brackets a wide range. For the upcoming fourth quarter, analysts are estimating sales of about $816 million and revenue (net income) of approximately $135 million. Capri did not provide specific Q4 guidance.
Conclusion
Capri Holdings' latest earnings report paints a picture of a company successfully navigating a major portfolio transformation. By beating bottom-line expectations and achieving a radical improvement in its balance sheet, the company has delivered a measure of confidence to the market, as reflected in the positive pre-market move. The focus now shifts entirely to the execution of the growth strategies for Michael Kors and Jimmy Choo, with the company anticipating a return to growth in fiscal 2027. The coming quarters will test whether the streamlined, debt-light Capri can reignite consistent sales momentum across its core brands.
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