May 27 (Reuters) – Capri Holdings reported another quarter of sales decline but provided an upbeat annual profit forecast as it bets on a turnaround strategy focused on reviving demand for its Michael Kors brand.
The company’s shares reversed course from early premarket gains to fall 4% on Wednesday after it also forecast annual revenue of about $3.53 billion, in line with estimates.
Capri is trying to draw in a broader customer base, especially younger and wealthier shoppers, who continue to spend on nice-to-have items such as handbags despite inflationary pressures from higher gas and food costs.
“We expect a more meaningful and sustained improvement in sales once a broader assortment is fully introduced in the fall season,” said CEO John Idol on a post-earnings call.
Luxury brands worldwide have taken a hit from the impact of the Iran war, which has disrupted demand in the Middle East.
Capri reported another quarterly decline for its Michael Kors brand, which makes up the bulk of its sales. Revenue fell 5.5% to $656 million, the company said.
The Michael Kors brand has faced criticism in recent years for its lack of design innovation. Its consecutive quarters of sales decline stand in contrast to handbag rival Coach, owned by Tapestry, which saw a 31% revenue jump in its most recent quarter.
Capri sold Italian brand Versace last year – which it had bought just seven years earlier – to Prada, as the U.S.-based fashion group zeroes in on boosting its Michael Kors and Jimmy Choo labels.
Capri’s fourth-quarter revenue of $796 million was largely in line with estimates, but adjusted earnings per share of 22 cents topped an expectation of 11 cents per share, according to data compiled by LSEG.
The company’s gross margin for the three months ended March 28 was 64.8%, up from 59.9% a year ago. It said it was trying to reduce promotional activity to help drive a reset at Michael Kors.
Capri plans to recover all tariffs paid under the International Emergency Economic Powers Act as of March 28 and has recorded a refund of $65 million to be received, it said.
It expects fiscal year 2027 profit per share of about $2.15, compared to analysts’ expectation of $1.83 per share, according to data compiled by LSEG.
(Reporting by Sanskriti Shekhar in Bengaluru and Danielle Kaye in New York; Editing by Pooja Desai)
