Capri Holdings posts surprise quarterly loss, warns of tariff hit

Core Insights - Capri Holdings reported an unexpected quarterly loss and warned of potential margin impacts due to tariffs amid rising economic uncertainty affecting consumer sentiment and retail operations [1][2] - The company anticipates an unmitigated tariff impact of approximately $85 million in fiscal 2026 [1] Financial Performance - Capri's quarterly gross margin decreased to 61% from 62.3%, primarily due to a 130-basis-point negative impact from tariffs [3] - The company posted a quarterly adjusted loss of 3 cents per share, contrasting with Wall Street estimates of a profit of 13 cents per share [3] - Quarterly revenue reached $856 million, surpassing estimates of $825.7 million [5] Brand Performance - Revenue for the Michael Kors brand declined by 1.8% on a reported basis, an improvement from a 5.9% decline in the previous quarter [4] - Capri's turnaround efforts included the sale of its struggling Versace label to Prada earlier this year [4] Market Outlook - CEO John Idol projected a gross margin decline of 200 to 250 basis points for Q3, attributing this to higher inventory costs due to full tariffs [2] - Analyst Rachel Wolff noted that while Capri's earnings indicate some recovery in the luxury industry, demand remains uncertain due to economic turbulence affecting consumer sentiment [4]