Core Viewpoint - Capri Holdings Limited (CPRI) presents an attractive investment opportunity following a challenging period marked by issues related to the Michael Kors brand and a failed acquisition attempt [1] Group 1 - The company has faced difficulties in recent years, particularly with the Michael Kors brand, which has impacted its overall performance [1] - The potential for recovery and growth in Capri Holdings is highlighted, suggesting a bullish outlook for investors [1]

Core Viewpoint - Capri Holdings (CPRI) stock initially rose above $25 after a sell rating was issued, but has since declined, indicating volatility in its market performance [1] Group 1: Stock Performance - After the initial analysis, Capri Holdings' stock experienced a short-lived increase before gradually declining [1] - The stock's performance suggests a potential disconnect between market perception and the analyst's rating [1] Group 2: Investment Philosophy - The company focuses on identifying undervalued stocks with a favorable risk-reward profile, emphasizing the importance of understanding ownership [1] - A belief is expressed that the simplest investment ideas often yield the best results, particularly when they are contrarian in nature [1]

Core Insights - Capri Holdings Limited (CPRI) reported better-than-expected third-quarter fiscal 2026 results, with revenues and earnings exceeding the Zacks Consensus Estimate, despite a year-over-year decline in top line [1][12] Financial Performance - Adjusted earnings were 81 cents per share, surpassing the Zacks Consensus Estimate of 78 cents, and increased from 63 cents in the prior year [2] - Total revenues reached $1,025 million, exceeding the Zacks Consensus Estimate of $998 million, but declined 4% year over year on a reported basis and 5.9% on a constant-currency basis [3] - Gross profit decreased to $623 million from $674 million in the year-ago quarter, with gross margin contracting 230 basis points to 60.8% [4] - Operating income rose to $46 million from $26 million a year ago, with the operating margin improving 210 basis points to 4.5% [4] Segment Performance - Revenues from Michael Kors declined 5.6% year over year to $858 million, but were better than the Zacks Consensus Estimate of $846 million, with operating income at $119 million [5] - Jimmy Choo's revenues increased 5% year over year to $167 million, surpassing the Zacks Consensus Estimate of $152 million, with an operating income of $3 million [6] Financial Health - Capri Holdings ended the quarter with cash and cash equivalents of $154 million and total borrowings of $234 million, resulting in net debt of $80 million, a significant improvement from $1.17 billion a year earlier [7] - Operating cash flow for the quarter was $271 million, leading to robust free cash flow of $252 million [7] Strategic Developments - The company completed the sale of its Versace business to Prada, focusing on core brands Michael Kors and Jimmy Choo, using proceeds to reduce debt and enhance financial flexibility [8][9] Outlook - For fiscal 2026, Capri Holdings expects total revenues between $3.45 and $3.475 billion, with adjusted earnings projected in the range of $1.30-$1.40 per share [10] - Revenues for Michael Kors are projected between $2.86-$2.875 billion, while Jimmy Choo revenues are expected in the range of $590-$600 million [11]

Core Viewpoint - Capri Holdings, owner of Jimmy Choo, reported lower third-quarter sales but exceeded earnings and free cash flow expectations due to a significant reduction in net debt [1][6] Financial Performance - Revenue from continuing operations decreased by 4% year on year to $1.025 billion, or 5.9% at constant currency [1] - Gross profit fell to $623 million, with a margin of 60.8%, down from $674 million and 63.1% previously [2] - Operating margin improved to 4.5% from 2.4%, and net income from continuing activities rose to $57 million from $6 million a year earlier [1][2] - Diluted earnings per share from continuing operations increased to $0.47 from $0.05, with adjusted diluted EPS rising to $0.81 from $0.63 [2] Cash Flow and Debt - Operating cash flow reached $271 million, generating $252 million in free cash flow after $19 million of capital expenditure [2] - Cash and cash equivalents totaled $154 million, with borrowings of $234 million, resulting in net debt of $80 million, down from $1.17 billion a year earlier [3] Brand Performance - Michael Kors reported revenue of $858 million, down 5.6% on a reported basis and 7.3% in constant currency, with an operating income of $119 million and a margin of 13.9% [3] - Jimmy Choo generated revenue of $167 million, up 5% reported and 1.9% in constant currency, with an operating profit of $3 million, recovering from a $6 million loss [3] Regional Sales - Americas sales declined to $646 million from $696 million, EMEA sales increased to $268 million from $256 million, and Asia sales slipped to $111 million from $116 million [4] Year-to-Date Performance - For the nine months ending December 27, 2025, Capri reported revenue of $2.67 billion, down from $2.79 billion in the prior year, with net income attributable to the group reaching $141 million after a $537 million loss previously [4] Future Guidance - Capri issued adjusted guidance for fiscal 2026, projecting revenue of approximately $3.45 billion to $3.475 billion from continuing operations [5] - For Michael Kors, anticipated revenue is around $2.86 billion to $2.87 billion with an operating margin in the high single digits, while Jimmy Choo is forecasted to generate $590 million to $600 million in sales with a negative low single-digit operating margin [5] Management Outlook - The company remains exposed to global macroeconomic conditions, potential tariff increases, inflation, weaker consumer sentiment, and currency fluctuations [6] - Capri Holdings' chairman and CEO expressed confidence in the third-quarter performance and the strategies in place to support a return to growth in fiscal 2027 [6]

Revenue Performance - Total revenue for the three months ended December 27, 2025, was $1,025 million, a decrease of 4% compared to $1,068 million for the same period in 2024[167]. - Michael Kors revenue for the nine months ended December 27, 2025, was $2,218 million, down 4% from $2,322 million in the prior year[167]. - Jimmy Choo revenue for the three months ended December 27, 2025, increased by 5% to $167 million from $159 million in the same period last year[167]. - Total revenue decreased by $43 million, or 4.0%, to $1.025 billion for the three months ended December 27, 2025, compared to $1.068 billion for the same period in 2024[175]. - Total revenue decreased by $116 million, or 4.2%, to $2.678 billion for the nine months ended December 27, 2025, compared to $2.794 billion for the same period in 2024[195]. - Michael Kors revenue decreased by $104 million, or 4.5%, to $2.218 billion for the nine months ended December 27, 2025, with a constant currency decrease of 6.0%[199]. - Jimmy Choo revenue decreased by $12 million, or 2.5%, to $460 million for the nine months ended December 27, 2025, with a constant currency decrease of 5.5%[199]. Cost and Expenses - Total cost of goods sold for the three months ended December 27, 2025, was $402 million, compared to $394 million for the same period in 2024, reflecting a 2% increase[167]. - Gross profit decreased by $51 million, or 7.6%, to $623 million, with a gross profit margin of 60.8% for the three months ended December 27, 2025, down from 63.1% in 2024[177]. - Total operating expenses decreased by $71 million, or 11.0%, to $577 million, which is 56.3% of total revenue for the three months ended December 27, 2025, down from 60.7% in 2024[178]. - Selling, general and administrative expenses decreased by $2 million, or 0.4%, to $535 million, with an increase in percentage to 52.2% of total revenue for the three months ended December 27, 2025[180]. - Selling, general and administrative expenses decreased by $54 million, or 3.5%, to $1.471 billion for the nine months ended December 27, 2025, compared to $1.525 billion for the same period in 2024[201]. - Total operating expenses decreased by $128 million, or 7.4%, to $1.597 billion for the nine months ended December 27, 2025, representing 59.6% of total revenue[198]. Income and Profitability - Income from continuing operations for the three months ended December 27, 2025, was $46 million, compared to $26 million for the same period in 2024, representing a significant increase[167]. - Income from continuing operations increased by $20 million, or 76.9%, to $46 million, representing 4.5% of total revenue for the three months ended December 27, 2025[174]. - Net income from continuing operations was $57 million for the three months ended December 27, 2025, compared to $6 million for the same period in 2024[192]. - Income from continuing operations was $50 million for the nine months ended December 27, 2025, compared to $31 million for the same period in 2024, representing a 61.3% increase[206]. - Michael Kors recorded income from operations of $255 million for the nine months ended December 27, 2025, down from $309 million for the same period in 2024, with an operating margin decrease from 13.3% to 11.5%[210]. - Jimmy Choo operating margin improved from a loss of 3.8% to an income of 1.8% due to leveraging operating expenses on higher revenues[188]. Store and Asset Management - The number of full-price retail stores for Michael Kors decreased to 368 as of December 27, 2025, from 435 as of December 28, 2024[169]. - The total number of retail stores decreased from 971 as of December 28, 2024, to 908 as of December 27, 2025[169]. - Impairment of assets during the nine months ended December 27, 2025, primarily related to operating lease right-of-use assets at certain Michael Kors store locations[168]. - No asset impairment charges were recognized for the three months ended December 27, 2025, compared to $81 million in the same period of 2024[182]. - The company recognized asset impairment charges of $21 million for the nine months ended December 27, 2025, down from $101 million for the same period in 2024[203]. - Restructuring expenses of $12 million were recorded for the three months ended December 27, 2025, primarily related to lease termination costs[183]. Financial Position and Cash Flow - Net cash provided by operating activities was $258 million during the nine months ended December 27, 2025, compared to $441 million for the same period in 2024, reflecting a decrease due to timing of payments[216]. - Net cash used in investing activities was $45 million during the nine months ended December 27, 2025, compared to $25 million for the same period in 2024, primarily due to capital expenditures[217]. - Net cash used in financing activities increased to $1.344 billion during the nine months ended December 27, 2025, compared to $212 million for the same period in 2024, mainly due to higher net debt repayments[218]. - As of December 27, 2025, total borrowings outstanding amounted to $234 million, a significant decrease from $1,490 million on March 29, 2025[219]. - The company has a total availability of $1,500 million under its Revolving Credit Facility, with remaining availability of $1,278 million as of December 27, 2025[219]. - The company is in compliance with all covenants related to its debt agreements, which require a maximum net leverage ratio of 4.0 to 1.0[219]. Corporate Developments - The merger agreement with Tapestry was terminated, with Tapestry agreeing to reimburse the company approximately $45 million for certain expenses[157]. - The company expects to spend approximately $100 million in Fiscal 2026 on capital expenditures, including store renovations and IT enhancements[214]. - The share repurchase program approved on November 4, 2025, allows for the repurchase of up to $1.0 billion of outstanding ordinary shares, expected to begin in Fiscal 2027[223]. - The company has not repurchased any ordinary shares during the pendency of the Merger Agreement through the expiration date of the previous share repurchase program[222]. Risk Management - The company faced macroeconomic challenges, including inflation and geopolitical factors, impacting consumer spending and overall financial performance[158]. - The company is exposed to interest rate risk related to $221 million borrowings outstanding under its 2022 Credit Facility as of December 27, 2025[234]. - The company has multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $3.5 billion to hedge net investments in CHF denominated subsidiaries[231]. - A 10% appreciation or devaluation of the United States dollar would result in a net increase or decrease of approximately $390 million in the fair value of the cross-currency swap agreements for CHF[231]. - The company has 17 financial institutions participating in its credit facilities, with none maintaining a maximum commitment percentage in excess of 10%[220].

Core Viewpoint - Capri Holdings Limited reported third-quarter results that exceeded analyst expectations for both earnings and revenue, despite ongoing sales pressure across its portfolio [1] Financial Performance - For the quarter ended December 27, 2025, Capri posted adjusted earnings per share of $0.81, surpassing the consensus estimate of $0.77 [2] - Revenue totaled $1.025 billion, exceeding analyst forecasts of $1.00 billion, although sales declined 4.0% year over year, or 5.9% on a constant-currency basis [2] - The company significantly reduced its net debt position to $80 million at quarter-end, down from $1.17 billion a year earlier, due to proceeds from the sale of its Versace brand [2] Brand Performance - By brand, Michael Kors revenue declined 5.6% to $858 million, while Jimmy Choo posted revenue growth of 5.0% to $167 million [3] - Gross margin fell to 60.8% from 63.1% in the prior-year quarter, primarily due to higher-than-expected tariff costs [3] Future Guidance - Capri guided fiscal 2026 revenue of $3.45 billion to $3.475 billion, modestly below the $3.53 billion consensus estimate [3] - The company projected diluted earnings per share of approximately $1.30 to $1.40 for the full year [3]

Company Overview - Proactive is a financial news publisher that provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The company operates with a team of experienced and qualified news journalists across key finance and investing hubs including London, New York, Toronto, Vancouver, Sydney, and Perth [2] Market Focus - Proactive specializes in medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [3] - The content delivered by the company includes insights across various sectors such as biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto, and emerging digital and EV technologies [3] Technology Utilization - Proactive is recognized for its forward-looking approach and enthusiastic adoption of technology to enhance workflows [4] - The company employs automation and software tools, including generative AI, while ensuring that all content is edited and authored by humans to maintain best practices in content production and search engine optimization [5]

Core Insights - Capri Holdings reported revenue of $1.03 billion for the quarter ended December 2025, reflecting an 18.7% decline year-over-year, but exceeded the Zacks Consensus Estimate by 2.68% [1] - The earnings per share (EPS) for the quarter was $0.81, up from $0.45 in the same quarter last year, surpassing the consensus EPS estimate of $0.78 by 4.11% [1] Revenue Performance - Geographic Revenue in the Americas was $646 million, slightly above the average estimate of $620.84 million, but down 14.3% year-over-year [4] - Revenue from Asia was $111 million, matching the average estimate but down 33.1% year-over-year [4] - EMEA revenue stood at $268 million, in line with estimates but down 21.4% year-over-year [4] - Revenue from Jimmy Choo was $167 million, exceeding the estimate of $152.02 million, marking a 5% increase year-over-year [4] - Michael Kors generated $858 million in revenue, slightly above the estimate of $846.27 million, but down 5.6% year-over-year [4] Operational Metrics - Income from operations for Jimmy Choo was $3 million, significantly better than the estimated loss of $5.36 million [4] - Michael Kors reported an income from operations of $119 million, surpassing the average estimate of $115.28 million [4] Stock Performance - Capri Holdings' shares have returned -6.2% over the past month, contrasting with the Zacks S&P 500 composite's +1.8% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market in the near term [3]

Core Insights - The company reported a strong third quarter performance, exceeding expectations, with a focus on strategic initiatives for long-term brand success [1][4][20] - The sale of Versace was completed to strengthen financial foundations and reduce debt, ending the quarter with $80 million in net debt [4][25] - Total company revenue decreased by 4% year-over-year to $1.025 billion, with underlying gross margins expanding by 70 basis points due to improved full-price sell-throughs [4][21][23] Financial Performance - Total revenue for the third quarter was $1.025 billion, a decrease of 4% compared to the previous year [4][21] - Earnings per share increased approximately 30% to 81 cents [4] - Gross margin was reported at 60.8%, a decline of 230 basis points, but underlying gross margin expanded by 70 basis points [23][24] Brand Performance - Michael Kors revenue decreased by 5.6% year-over-year, with a modest sequential improvement in retail sales trends [5][22] - Jimmy Choo revenue increased by 5% year-over-year, driven by strong brand momentum and improved retail sales [14][22] - Retail sales for Michael Kors in Europe increased mid-single digits, while The Americas and Asia saw declines [6][22] Strategic Initiatives - The company is focused on enhancing brand desirability through storytelling and luxury product offerings [1][14] - A significant reduction in promotional activity has led to healthier sales mixes and higher average unit retail prices (AURs) [6][11] - The store renovation plan aims to redefine the luxury retail experience, with plans to renovate approximately 50% of the store fleet over the next three years [13] Consumer Engagement - The company has leveraged advanced data analytics to strengthen consumer engagement, resulting in an 8% year-over-year increase in the Michael Kors global consumer database [10] - Influencer-driven content has significantly increased, contributing to a nearly 300% rise in impressions and engagement [10][17] - Jimmy Choo's holiday campaign reached approximately 150 million consumers across social media platforms, enhancing brand awareness [16] Future Outlook - The company anticipates a return to growth in fiscal 2027, supported by strategic initiatives and improved retail trends [20][27] - Revenue guidance for fiscal 2026 is set between $3.45 billion and $3.475 billion, with expectations for gross margin expansion [26][27] - The focus remains on disciplined expense management and leveraging brand strengths to drive sustainable growth [27][79]

Financial Data and Key Metrics Changes - Total company revenue for Q3 fiscal 2026 was $1.025 billion, a decrease of 4% year-over-year and 5.9% in constant currency [22][24] - Earnings per share increased approximately 30% to $0.81 [7] - Gross margin was 60.8%, down 230 basis points, but underlying gross margin expanded by 70 basis points due to better full price sell-throughs [24][29] Business Line Data and Key Metrics Changes - Michael Kors revenue decreased 5.6% year-over-year, with retail sales down mid-single digits and wholesale sales also declining mid-single digits [23][24] - Jimmy Choo revenue increased 5% year-over-year, with retail sales improving sequentially and wholesale revenue growing double digits [15][23] Market Data and Key Metrics Changes - Revenue in the Americas decreased 7%, while EMEA increased 5% and Asia decreased 4% [22] - For Michael Kors, revenue in the Americas decreased 9%, EMEA increased 6%, and Asia decreased 1% [23] - For Jimmy Choo, revenue in the Americas increased 23%, EMEA increased 3%, and Asia decreased 10% [23] Company Strategy and Development Direction - The company completed the sale of Versace to strengthen its financial foundation and reduce debt, ending the quarter with $80 million of net debt [7][26] - Strategic initiatives focus on enhancing brand desirability through storytelling and modern product offerings, aiming for a return to growth in fiscal 2027 [5][6][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic initiatives and their potential to support growth, with expectations for sequential improvement in retail trends in Q4 and a return to growth in fiscal 2027 [21][28] - The company is optimistic about sustainable growth potential for both Michael Kors and Jimmy Choo, leveraging advanced data analytics and consumer insights [29][87] Other Important Information - The company plans to renovate approximately 50% of its store fleet over the next three years to enhance the luxury retail experience [14] - Inventory at quarter-end totaled $663 million, a 6.5% decline year-over-year, with expectations for year-end inventory levels to be flat to prior year [25][26] Q&A Session Summary Question: Drivers of sequential improvement in Michael Kors retail sales - Management noted strategic initiatives are starting to take hold, with improved full price sell-throughs and reduced promotional activity leading to healthier business dynamics [31][34] Question: Expected revenue growth next year - Management indicated a cautious optimism for revenue growth in FY 2027, with expectations for continued sequential improvement in retail [40][56] Question: Performance by price range and age demographics - Management highlighted strong trends in the $150-$250 price range, particularly appealing to Gen Z consumers, and noted a positive response to new product introductions [80][81] Question: Plans for free cash flow and balance sheet management - Management stated that with reduced net debt, the focus will be on strategic investments and potentially returning value to shareholders through stock buybacks or store updates [91]