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]

Group 1 - Macquarie has adjusted Prada's net profit forecasts for 2025 to 2027 down by 1.5%, 1.3%, and 1.3% respectively, considering currency headwinds [1] - The target price for Prada has been reduced by 2% from HKD 60 to HKD 59, while maintaining an outperform rating based on a 20x P/E ratio for 2025 [1] - For the fourth quarter, retail sales are expected to grow by 7% year-on-year at constant exchange rates, while reported retail and group sales are projected to increase by 0.2% and 0.9% respectively [1] Group 2 - Macquarie anticipates resilience in the group during the fourth quarter amid macro uncertainty and market share gains, with a projected 1% year-on-year increase in retail sales for the Prada brand [2] - Miu Miu is expected to achieve a robust 20% year-on-year growth in retail sales for the fourth quarter, with plans to expand retail space by 10% to 15% next year, which may drive further growth [2] - The group expects Versace to negatively impact the company's EBITDA by EUR 50 million to EUR 100 million annually over the next two years, but Macquarie believes this outlook may be conservative and has potential for upside [2]

Group 1 - Macquarie has adjusted Prada's net profit forecasts for 2025 to 2027 down by 1.5%, 1.3%, and 1.3% respectively, considering currency headwinds [1] - The target price for Prada has been reduced by 2% from HKD 60 to HKD 59, while maintaining an outperform rating based on a 20x P/E ratio for 2025 [1] - For the fourth quarter, retail sales are expected to grow by 7% year-on-year at constant exchange rates, while reported retail and group sales are projected to increase by 0.2% and 0.9% respectively [1] Group 2 - The group is expected to show resilience in the fourth quarter amid macro uncertainty and market share gains, with a projected 1% year-on-year increase in retail sales for the Prada brand [2] - Miu Miu is anticipated to achieve a robust 20% year-on-year growth in retail sales for the fourth quarter, with plans to expand retail space by 10% to 15% next year, which may drive further growth [2] - Macquarie believes the forecasted EBIT impact of EUR 50 million to 100 million from Versace over the next two years is conservative and has potential for upside [2]

Core Viewpoint - Capri Holdings Limited, a global fashion luxury group, is facing challenges despite a recent stock price increase, raising concerns about the sustainability of its performance [1][5]. Group 1: Stock Performance - Capri Holdings has experienced a 23.1% increase in its stock price since the last earnings report, outperforming the S&P 500 [2][5]. - Guggenheim has set a price target of $32 for CPRI, indicating a potential upside of 23.31% from its current price of $25.95 [1][5]. - The current stock price is $25.95, with a decrease of 1.22% today, and the stock has fluctuated between a low of $25.72 and a high of $26.35 during the trading day [4]. Group 2: Financial Performance - The second-quarter fiscal 2026 earnings report showed a year-over-year decline in revenue, although it exceeded the Zacks Consensus Estimate [2]. - The bottom line decreased compared to the previous year and fell short of the consensus estimate [2]. - Revenue declines were noted for both Michael Kors and Jimmy Choo, raising investor concerns about the sustainability of the stock's upward trend [3][5]. Group 3: Market Context - Capri Holdings competes with other luxury fashion houses such as LVMH and Kering [1]. - The company's market capitalization is approximately $3.09 billion, with a trading volume of 1,829,852 shares [4].

Core Viewpoint - Prada S.p.A. has officially acquired Versace for $1.38 billion, which is significantly lower than the $2 billion paid by Capri Holdings Limited in 2018 [1] Group 1 - The acquisition price of $1.38 billion reflects a strategic move by Prada to enhance its luxury brand portfolio [1] - The previous acquisition of Versace by Capri Holdings in 2018 for $2 billion sets a comparative benchmark for the current deal [1]

Core Viewpoint - The article expresses optimism about Prada S.p.A. due to its strong brand portfolio, including Miu Miu and Versace, and its attractive valuation [1] Group 1: Company Analysis - Prada S.p.A. is highlighted for its potential as a value investment, focusing on identifying undervalued stocks with growth potential [1] - The company benefits from a diverse brand portfolio, which includes luxury brands that appeal to a wide range of consumers [1] Group 2: Market Context - The analysis is positioned within the broader financial market, indicating a favorable environment for value investors [1]

Core Viewpoint - Capri Holdings Limited has successfully completed the sale of Versace to Prada S.p.A. for $1.375 billion in cash, which is expected to enhance the company's financial position and flexibility for future investments and shareholder returns [1][2]. Financial Impact - The proceeds from the sale will primarily be used to repay a significant portion of Capri Holdings' debt, leading to a substantial reduction in the company's leverage ratio [2]. - This transaction is anticipated to provide greater financial flexibility for Capri Holdings to invest in growth and return capital to shareholders in the future [2]. Strategic Focus - The company remains committed to executing its strategic initiatives across its remaining brands, Michael Kors and Jimmy Choo, to maximize their potential [2]. - Capri Holdings aims to stabilize its business in the current fiscal year while laying a solid foundation for growth in fiscal 2027 [2]. Leadership Acknowledgment - The CEO of Capri Holdings expressed gratitude to the Versace team for their contributions, particularly recognizing key leaders for their commitment to the brand's evolution [2]. Company Overview - Capri Holdings Limited is a global fashion luxury group that includes iconic brands such as Michael Kors and Jimmy Choo, focusing on glamorous style and craftsmanship [3].

Core Insights - Capri Holdings Limited (CPRI) reported a decline in top-line revenue year over year but exceeded the Zacks Consensus Estimate, while the bottom line decreased and missed consensus estimates [1][10] - The company is focused on growth through its core brands and aims to enhance profitability and reduce debt following the expected closure of the Versace sale-off [2][3] Financial Performance - CPRI posted an adjusted quarterly loss of $0.03 per share, missing the Zacks Consensus Estimate of $0.14, and down from adjusted earnings of $0.64 per share in the prior year [4][10] - Total revenues were $856 million, a decrease of 2.5% year over year, but above the Zacks Consensus Estimate of $830 million; on a constant-currency basis, revenues fell by 4.2% [5][10] - Gross profit decreased by 4.6% year over year to $522 million, with a gross margin decline of 130 basis points to 61% [5][6] Segment Performance - Michael Kors revenues declined by 1.8% year over year to $725 million, surpassing the Zacks Consensus Estimate of $697.2 million; gross profit fell to $430 million, with a gross margin contraction of 180 basis points to 59.3% [7] - Jimmy Choo's revenues were $131 million, down 6.4% year over year, missing the Zacks Consensus Estimate of $132.8 million; gross profit slightly decreased to $92 million, but gross margin expanded to 70.2% [8] Strategic Initiatives - The company plans to utilize proceeds from the Versace sale-off to improve financial flexibility and support a newly authorized $1 billion share repurchase program expected to begin in fiscal 2027 [3][12] - Capri Holdings anticipates improving retail trends in the second half of fiscal 2026, positioning itself for a return to growth in fiscal 2027 [3] Future Outlook - For the third quarter of fiscal 2026, Capri Holdings expects total revenues between $975 million and $1 billion, with an operating margin of 7-8% and earnings per share between $0.70 and $0.80 [15] - For fiscal 2026, total revenues are projected to be between $3.375 billion and $3.45 billion, with an expected operating income of $100 million and earnings per share of $1.20 to $1.40 [17][18]

Core Insights - Capri Holdings is undergoing a strategic shift following the $1.4 billion sale of Versace to Prada, focusing on the growth of its brands Michael Kors and Jimmy Choo [1][4] - The company reported a revenue decline of 2.5% to $856 million for the quarter ended September 27, with a more favorable constant currency decline of 4.2% compared to 7.7% in the previous quarter [2] - Adjusted operating income was $20 million, resulting in an operating margin of 2.3%, down from 4.2% a year earlier, while net losses totaled $34 million [2] Financial Performance - Michael Kors' revenues decreased by 1.8% to $725 million, with a constant currency decline of 3.3% [4] - Jimmy Choo's revenues fell 6.4% to $131 million, reflecting a 9.3% drop in constant currencies [5] - Despite the challenges, the CEO expressed optimism about improving retail trends in the second half of the fiscal year and a return to growth next year [5] Strategic Initiatives - The proceeds from the Versace sale are intended to repay a significant portion of the company's debt, enhancing its balance sheet and financial flexibility for future investments and shareholder returns [4] - Capri Holdings announced a three-year, $1 billion share repurchase plan to buy back its own stock, indicating a commitment to returning capital to shareholders [5]

Financial Data and Key Metrics Changes - Total company revenue decreased 2.5% year-over-year to $856 million, with a 4.2% decline in constant currency [20][22] - Gross margin declined 130 basis points to 61%, primarily due to higher tariff rates impacting margins by approximately 120 basis points [22][23] - Operating margin decreased to 2.3% from 4.2% year-over-year [23] Business Line Data and Key Metrics Changes - Michael Kors revenue decreased 2% year-over-year, with retail sales showing signs of momentum and positive comps in the full-price channel [6][21] - Jimmy Choo revenue decreased 6% year-over-year, with retail sales improving sequentially but wholesale revenue declining mid-teens due to shipment timing [14][22] Market Data and Key Metrics Changes - Revenue in the Americas decreased 7%, while EMEA increased 1% and Asia increased 12% [21] - Michael Kors saw a 25% increase in revenue in Asia, driven by higher wholesale shipments [21] Company Strategy and Development Direction - The company is focused on the growth of Michael Kors and Jimmy Choo following the expected closure of the Versace sale, with plans to use proceeds to reduce debt and enhance financial flexibility [4][26] - A new $1 billion share repurchase program has been authorized, expected to begin in fiscal 2027 [4][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about stabilization and recovery in the business, with expectations for improved retail trends in the second half of fiscal 2026 [5][29] - The company anticipates returning to revenue and earnings growth in fiscal 2027, with gross margin expansion expected as tariff impacts are mitigated [29] Other Important Information - The company plans to invest approximately $350 million over the next three years for store renovations, aiming to enhance the luxury retail experience [12][26] - Inventory at quarter-end totaled $766 million, a 2.8% decline year-over-year [24] Q&A Session Summary Question: Can you speak to global reception for Michael Kors full-price retail repositioning? - Management noted stabilization in Michael Kors business, with positive consumer response to strategic initiatives and full-price comps turning positive [31][32] Question: What is the profile of the consumer engaging in North America? - Management indicated that Gen Z consumers are more price-sensitive, and strategic pricing architecture is helping attract them [40][41] Question: What are the expectations for revenue by geography in the back half? - Management stated that Europe is the best-performing region, with continued strong performance anticipated, while North America is expected to improve gradually [55][56]