Group 1 - Capri Holdings Limited reported mixed results for Q4, with adjusted EPS of a $4.90 loss, missing the Street view of a $0.14 loss, while quarterly sales were $1.035 billion, down 15.4% year over year, exceeding the analyst consensus estimate of $986.57 million [1] - CEO John D. Idol emphasized the company's focus on strategic initiatives aimed at returning to growth, expressing confidence in growing Michael Kors to $4 billion in revenue and Jimmy Choo to $800 million, while restoring operating margins to double-digit levels [2] - For fiscal 2026, Capri Holdings expects adjusted EPS to range between $1.20 and $1.40, above the $1.06 analyst estimate, but has lowered its sales guidance to $3.30 billion–$3.40 billion from a prior outlook of $4.10 billion, which is below the $4.11 billion consensus [3] Group 2 - For Q1, the company anticipates total revenue of approximately $765 million to $780 million, compared to the $959.91 million estimate, and projects EPS of approximately $0.10 to $0.15 against the $0.10 estimate [4] - Following the earnings announcement, Capri Holdings shares increased by 2.1% to trade at $18.42 [4] - Analysts have adjusted their price targets for Capri Holdings, with Telsey Advisory Group raising it from $17 to $20, JP Morgan lowering it from $19 to $18, and UBS raising it from $14 to $18 [9]

Group 1 - The core statement from Capri Holdings' CEO John Idol indicates that the company is in the early stages of a turnaround [1] Group 2 - The article reflects a focus on value investing rather than growth investing, highlighting a long-term perspective in investment analysis [1] - The author has been contributing to investment discussions since 2011, indicating a wealth of experience in analyzing market trends [1]

Macroeconomic Impact - Capri Holdings Limited reported a significant impact from macroeconomic pressures, which could adversely affect consumer spending and overall financial performance [16]. - The business is heavily influenced by macroeconomic cycles affecting consumer spending, which could materially impact results if prolonged depressed spending occurs [20]. Competition - The company is facing increased competition in both North American and international markets, which may lead to a decline in profitability and gross margins [21]. - The company faces significant competition in both North America and international markets, which could lead to declines in profitability and gross margins [21]. Financial Risks - Capri has incurred substantial indebtedness, which may restrict its ability to engage in additional transactions or incur further debt [24]. - The company has incurred substantial indebtedness, which may restrict its ability to engage in additional transactions or incur further debt [23]. - Increased costs of raw materials could raise production costs, negatively impacting operating results and financial condition [21]. - Fluctuations in tax obligations and changes in tax laws may adversely affect future effective tax rates and results [24]. Operational Risks - Capri's reliance on a limited number of distribution facilities poses a risk; operational difficulties at these facilities could materially impact business results [21]. - The company is dependent on a limited number of distribution facilities, and operational difficulties at these facilities could have a material adverse effect [21]. E-commerce and Cybersecurity - Capri's e-commerce strategy is critical; failure to execute effectively could harm reputation and operating results [21]. - The company faces risks associated with cybersecurity threats and data security breaches, which could negatively impact its reputation and business [24]. - Privacy breaches and cybersecurity risks could harm the company's reputation and business operations [24]. Legal and Regulatory Risks - The company is subject to various legal proceedings and disputes that could have an adverse impact on its financial condition and results of operations [24]. - The company is subject to various legal and regulatory risks that could impact financial condition and results of operations [24]. Employee Dependence - Key employee departures or failure to attract qualified personnel could adversely affect business operations and financial condition [21]. Proposed Sale Risks - Capri's proposed sale of Versace to the Prada Group is subject to risks that could affect business operations and market price of ordinary shares [25]. - The proposed sale of Versace could adversely affect the business and market price of ordinary shares if not completed [25].

Core Insights - Capri Holdings Limited (CPRI) reported disappointing fourth-quarter fiscal 2025 results, with both revenue and earnings declining year over year, although total revenues exceeded the Zacks Consensus Estimate while earnings fell short [1][2] Financial Performance - The company posted an adjusted quarterly loss of $4.90 per share, significantly wider than the Zacks Consensus Estimate of a loss of 16 cents, and down from adjusted earnings of 42 cents in the prior year [4] - Total revenues were $1,035 million, a decrease of 15.4% year over year on a reported basis and 14.1% on a constant-currency basis, surpassing the Zacks Consensus Estimate of $983 million [5] - Gross profit fell 17.7% year over year to $631 million, with gross margin contracting 170 basis points to 61% [5] Segment Performance - Versace revenues decreased 21.2% year over year to $208 million, with gross profit dropping to $136 million and gross margin contracting 60 basis points to 65.4% [6] - Jimmy Choo's revenues were $133 million, down 2.9% on a reported basis, with gross profit decreasing to $88 million and gross margin contracting 390 basis points to 66.2% [7] - Michael Kors revenues were $694 million, a decrease of 15.6% on a reported basis, with gross profit falling to $407 million and gross margin contracting 220 basis points to 58.6% [8] Strategic Developments - Capri Holdings is in the early stages of a strategic turnaround, with positive indicators emerging from new initiatives despite ongoing macroeconomic challenges [2] - The announced sale of the Versace brand to Prada Group for $1.375 billion aims to sharpen focus, strengthen the balance sheet, reduce debt, and potentially reinstate share repurchases [3][11] Financial Health - As of the end of the quarter, Capri Holdings had cash and cash equivalents of $166 million, long-term debt of $1.48 billion, and total shareholders' equity of $372 million [9] - Operating cash flow for fiscal 2025 was $281 million, while free cash flow totaled $153 million [9] Future Outlook - For the first quarter of fiscal 2026, total revenues are expected to be in the range of $765 to $780 million, indicating a decline from $1,067 million in the year-ago quarter [13] - For fiscal 2026, total revenues are projected to be between $3.3 billion and $3.4 billion, down from $4.4 billion in 2025, with an anticipated operating income of around $100 million [15] - Diluted earnings per share for fiscal 2026 are forecasted to be between $1.20 and $1.40, compared to a loss of $10 per share in 2024 [16]

Financial Data and Key Metrics Changes - Total company revenue for the fourth quarter decreased by 15% year-over-year to $1 billion, slightly better than expectations [29] - The company reported a net loss of $581 million, resulting in a diluted loss per share of $4.9, primarily due to a non-cash tax valuation allowance [29][38] - Gross margin declined to 61%, down 170 basis points from the prior year, primarily due to inventory actions taken during the quarter [33] Business Line Data and Key Metrics Changes - Michael Kors revenue decreased by 16% compared to the prior year, with global retail sales down mid-teens and wholesale sales declining double digits [10][31] - Jimmy Choo revenue decreased by 3%, with global retail sales declining high single digits while wholesale increased high teens [19][32] - Michael Kors gross margin was 58.6%, down from 60.8% last year, while Jimmy Choo's gross margin was 66.2%, down from 70.1% [34] Market Data and Key Metrics Changes - Revenue in the Americas decreased by 13%, EMEA declined by 14%, and Asia saw a decrease of 23% [30][32] - For Jimmy Choo, revenue in the Americas decreased by 7%, while EMEA revenue increased by 9% and Asia revenue declined by 16% [32] Company Strategy and Development Direction - The company announced the pending sale of Versace to focus on growth opportunities within Michael Kors and Jimmy Choo, aiming to reduce debt and reinstate a share repurchase program [5][6] - Strategic initiatives include enhancing brand desirability, improving product offerings, and stabilizing the wholesale business [7][8][19] - The company plans to renovate approximately 50% of the Michael Kors store fleet over the next three years to drive sales recovery [16][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future despite a challenging macro environment, citing early signs of improvement in sales momentum and consumer engagement [6][17] - The company anticipates total revenue for fiscal 2026 to be between $3.3 billion and $3.4 billion, with gradual progression expected as strategic initiatives gain traction [45] Other Important Information - The company plans to use proceeds from the sale of Versace to reduce debt, which is expected to significantly lower interest expenses [41] - The company is proactively managing tariff risks and expects to mitigate their impact over time through sourcing optimization and potential price increases [44][70] Q&A Session Summary Question: Can you speak to the comfort in the troughing revenue expectations and margin degradation? - Management highlighted a significant improvement in Michael Kors retail performance, with a near flat comp in the current quarter compared to a 15% decline previously, driven by strong full-price sell-throughs and effective storytelling [58][60] Question: What is the wholesale outlook for Michael Kors this year? - Management indicated that discussions with wholesale partners have been positive, with increased commitments due to the successful new storytelling and product initiatives [74][76] Question: What strategies are in place to drive traffic and conversion? - Management emphasized the importance of marketing initiatives, data analytics, and influencer programs to engage consumers and drive traffic, noting that conversion rates have remained strong [82][84] Question: Can you elaborate on the strategies to improve the sales trajectory of Michael Kors? - Management acknowledged past missteps but emphasized a return to the brand's heritage and pricing strategy that aligns with consumer expectations, aiming for sustainable growth [90][92] Question: What is the timeline for achieving steady state pricing? - Management expects to reach the desired pricing levels by the fall season, having already made significant adjustments to align with historical price points [105]

Financial Data and Key Metrics Changes - Total company revenue for Q4 2025 was $1 billion, a decrease of 15% compared to the prior year, slightly better than expectations [27] - The company reported a net loss of $581 million, resulting in a diluted loss per share of $4.9, primarily due to a non-cash tax valuation allowance [27][35] - Gross margin decreased to 61%, down 170 basis points from the prior year, primarily due to inventory actions taken during the quarter [31][32] Business Line Data and Key Metrics Changes - Michael Kors revenue decreased by 16% compared to the prior year, with global retail sales down mid-teens and wholesale sales declining double digits [29][30] - Jimmy Choo revenue decreased by 3% compared to the prior year, with global retail sales declining high single digits while wholesale increased high teens [30] - Michael Kors gross margin was 58.6%, down from 60.8% last year, while Jimmy Choo's gross margin was 66.2%, down from 70.1% [32] Market Data and Key Metrics Changes - Revenue in The Americas decreased by 13%, EMEA declined by 14%, and Asia saw a decrease of 23% [28][30] - In Jimmy Choo, revenue in The Americas decreased by 7%, while EMEA revenue increased by 9% and Asia revenue declined by 16% [30] Company Strategy and Development Direction - The company plans to focus resources on Michael Kors and Jimmy Choo following the pending sale of Versace, aiming to maximize value and reduce debt levels [4][5] - Strategic initiatives include enhancing brand desirability, improving product offerings, and stabilizing the wholesale business [6][10] - The company aims to grow Michael Kors to $4 billion in revenue and Jimmy Choo to $800 million, while restoring operating margins to the double-digit range [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future despite a challenging macro environment, focusing on strategic initiatives to improve sales trends [5][24] - Early signs of improvement in sales momentum and key indicators such as consumer database growth and store traffic were noted [16][17] - Management expects trends to improve throughout fiscal 2026, positioning the company for growth in fiscal 2027 and beyond [24][50] Other Important Information - The company plans to renovate approximately 50% of the Michael Kors store fleet over the next three years, with an estimated cost of $350 million [47] - The anticipated impact of tariffs is expected to increase the cost of goods sold by approximately $60 million in fiscal 2026 [42] - The company will reclassify Versace as a discontinued operation beginning in fiscal 2026, excluding it from future non-GAAP results [3] Q&A Session Summary Question: Discussion on revenue expectations and margin degradation - Management expressed optimism about revenue growth based on early Q1 trends, with significant improvements in Michael Kors retail performance and strong full-price sell-throughs [56][58] - Concerns about margin degradation were attributed to tariff impacts and inventory actions, with plans to mitigate these effects over time [65] Question: Wholesale outlook for Michael Kors - Management indicated that discussions with wholesale partners have been positive, with increased commitments from some partners and successful launches on platforms like Amazon [72][74] Question: Strategies to drive traffic and conversion - Management highlighted the importance of marketing initiatives, storytelling, and data analytics to engage consumers and drive traffic, noting improvements in conversion rates [80][81] Question: Strategies to improve sales trajectory for Michael Kors - Management acknowledged past missteps and emphasized a return to the brand's heritage and pricing strategies that resonate with consumers, aiming for sustainable growth [90][92] Question: Pricing strategy and its implications - Management expects to achieve a steady pricing state by the fall season, with adjustments made to align with historical price points while evaluating potential price increases to mitigate tariff risks [100]

Capri Holdings (CPRI) came out with a quarterly loss of $4.90 per share versus the Zacks Consensus Estimate of a loss of $0.16. This compares to earnings of $0.42 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -2,962.50%. A quarter ago, it was expected that this luxury retailer would post earnings of $0.63 per share when it actually produced earnings of $0.45, delivering a surprise of -28.57%.Over the last four quarters, the ...

Versace Sale & Strategic Shift - Capri Holdings entered an agreement to sell Versace to Prada Group for $1.375 billion in cash, expected to close in the second half of calendar 2025[4] - Proceeds from the Versace sale will be used for future growth investments, debt reduction, and a potential share repurchase program[6] - Beginning in fiscal year 2026, Versace will be classified as a discontinued operation[5] Fiscal Year 2025 Performance - Fourth quarter revenue decreased by 15%[9] - Michael Kors fourth quarter revenue decreased 16%[12] - Jimmy Choo fourth quarter revenue decreased 3%[26] - The company's global customer database increased by 10% year-over-year[9] Fiscal Year 2026 Outlook - The company projects first quarter revenue of approximately $765 million to $780 million[32] - The company projects fiscal year 2026 revenue of approximately $3.3 billion to $3.4 billion[32] - The company projects fiscal year 2026 net interest income of approximately $85 million to $90 million[32]

Financial Performance - Total revenue for Q4 Fiscal 2025 was $1.0 billion, a decrease of 15.4% year-over-year, and a 14.1% decrease on a constant currency basis[10] - Gross profit was $631 million with a gross margin of 61.0%, down from $767 million and 62.7% in the prior year[10] - Net loss was $645 million, or $(5.44) per diluted share, compared to a net loss of $472 million, or $(4.03) per diluted share, in the prior year[10] - Total revenue for the three months ended March 29, 2025, was $1,035 million, a decrease of 15.4% compared to $1,223 million for the same period in 2024[30] - Gross profit for the three months ended March 29, 2025, was $631 million, down from $767 million in the prior year, representing a decline of 17.7%[30] - Net loss attributable to Capri for the three months ended March 29, 2025, was $645 million, compared to a net loss of $472 million for the same period in 2024, indicating a 36.6% increase in losses[30] - For the fiscal year ended March 29, 2025, total revenue was $4,442 million, down 14.1% from $5,170 million in the previous fiscal year[36] - The diluted net loss per ordinary share for the fiscal year ended March 29, 2025, was $10.00, compared to a diluted net income of $5.89 per share in the previous year[41] Revenue by Brand - Michael Kors revenue decreased by 15.6% to $694 million, while Jimmy Choo revenue decreased by 2.9% to $133 million[10] - Michael Kors revenue for the three months ended March 29, 2025, was $694 million, a decrease of 15.6% from $822 million in the same period last year[32] - Versace revenue for the three months ended March 29, 2025, was $208 million, down 21.2% from $264 million in the prior year[32] - Versace's revenue for the fiscal year ended March 29, 2025, was $821 million, a decrease of 20.3% from $1,030 million in the previous year[36] - Jimmy Choo revenue for the three months ended March 29, 2025, was $133 million, a slight decrease of 2.9% compared to $137 million in the same period in 2024[32] Future Outlook - Capri Holdings expects total revenue for Fiscal 2026 to be approximately $3.3 to $3.4 billion, with an operating income around $100 million[16] - The company anticipates diluted earnings per share for Fiscal 2026 to be approximately $1.20 to $1.40[16] - The company aims to grow Michael Kors to $4 billion in revenue and Jimmy Choo to $800 million over time, while restoring operating margin to the double-digit range[4] Cash Flow and Assets - Cash flow from operating activities for Fiscal 2025 was $281 million, resulting in free cash flow of $153 million after capital expenditures of $128 million[10] - Net inventory as of March 29, 2025, was $869 million, reflecting a 1% increase compared to the prior year[10] - Total current assets decreased to $1,521 million as of March 29, 2025, from $1,608 million as of March 30, 2024, reflecting a decline of 5.4%[28] - Total liabilities decreased to $4,841 million as of March 29, 2025, from $5,089 million as of March 30, 2024, a reduction of 4.9%[28] Operational Changes - The number of retail stores decreased to 1,158 as of March 29, 2025, down from 1,239 as of March 30, 2024, representing a decline of 6.5%[34] - The operating margin for Capri was (11.2)% for the three months ended March 29, 2025, compared to (44.4)% in the same period last year, showing improvement[32] - The operating margin for the three months ended March 29, 2025, was -11.2%, compared to 7.5% in the same period last year[38] Transformation Initiatives - The company is undergoing a multi-year ERP implementation to standardize finance IT applications across its organization[38] - The Capri transformation program aims to improve operational effectiveness and efficiency, with a focus on digital capabilities and shared platforms across brands[41] - The majority of operational and IT projects were paused during Fiscal 2024, with reassessment planned for Fiscal 2026[41] - The Capri transformation program aims to enhance operational effectiveness and efficiency through multi-year initiatives across various operational aspects, including supply chain and digital capabilities[46][48] Previous Fiscal Year Performance - For the fiscal year ended March 30, 2024, gross profit was $3,339 million, while operating expenses totaled $3,580 million, leading to a total operating loss of $241 million and an operating margin of (4.7)%[48] - The net loss attributable to Capri for the three months ended March 30, 2024, was $472 million, translating to a diluted net loss per ordinary share of $(4.03)[44] - For the fiscal year ended March 30, 2024, the net loss attributable to Capri was $229 million, with a diluted net loss per ordinary share of $(1.96)[48] - The company incurred foreign currency losses of $21 million in the three months ended March 30, 2024, and $37 million for the fiscal year ended March 30, 2024[44][48] - Asset impairment charges primarily related to the impairment of goodwill and intangible assets for the Jimmy Choo and Versace brands[44][48] Share Information - The weighted average diluted ordinary shares outstanding were 117,156,327 for the three months ended March 30, 2024, and 117,014,420 for the fiscal year ended March 30, 2024[44][48]

Core Viewpoint - Capri Holdings (CPRI) is expected to report a quarterly loss of $0.16 per share, reflecting a year-over-year decline of 138.1%, with anticipated revenues of $982.81 million, down 19.6% from the previous year [1] Revenue Estimates - The consensus estimate for 'Revenue- Versace' is $195.54 million, indicating a decline of 25.9% from the prior-year quarter [3] - Analysts predict 'Revenue- Michael Kors' will reach $660.03 million, representing a decrease of 19.7% from the year-ago quarter [4] - 'Geographic Revenue- Americas' is expected to be $527.03 million, down 18.5% from the previous year [4] - 'Geographic Revenue- Asia' is projected at $168.26 million, indicating a decline of 24.9% from the prior-year quarter [5] - 'Geographic Revenue- EMEA' is anticipated to reach $292.33 million, reflecting a decrease of 17% from the year-ago quarter [5] Operational Income - The average prediction for 'Income from operations- Michael Kors' is $36.42 million, a significant drop from $116 million reported in the same quarter of the previous year [6] Stock Performance - Capri Holdings shares have increased by 13% over the past month, outperforming the Zacks S&P 500 composite, which rose by 8.2% [6]