Capri Holdings Q4 Earnings Fall Short of Estimates, Revenues Dip Y/Y

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]