Capri Holdings Q1 Fiscal 2027 earnings report shows revenue down 3.5% to $769M and EPS up 30% to $0.67, with challenges at Michael Kors and growth at Jimmy Choo.
Capri Holdings Limited reported Q1 Fiscal 2027 revenue of $769 million, down 3.5% year-over-year and slightly above the consensus estimate. The decline was primarily driven by a 7% drop in Michael Kors revenue, yet the company achieved a notable 30% increase in earnings per share, reaching $0.67, reflecting strong operating income growth.
Key Takeaways
- Total revenue was $769 million, a 3.5% decrease year-over-year, but above expectations.
- Earnings per share rose 30% to $0.67, ahead of the prior year's $0.52.
- Michael Kors revenue fell 7% to $590 million, impacted by reduced promotional activity and lower inventory levels.
- Jimmy Choo revenue increased 10.5% to $179 million, benefiting from broad-based growth across channels.
- Fiscal 2027 guidance revised to approximately $3.4 billion in revenue with EPS holding steady at $2.15, representing 40% growth.
Declining Revenue with Strong Profit Growth
Capri Holdings experienced a revenue decline of 3.5% year-over-year, totaling $769 million, as the company faced challenges primarily from its Michael Kors brand. Despite this, operating income increased approximately 40%, aided by cost management and improved gross margins. The breakdown of the numbers is as follows:
| Metric | Q1 Fiscal 2027 | YoY Change | QoQ Change |
|---|---|---|---|
| Revenue | $769M | -3.5% | N/A |
| Operating Income | $28M | +40% | N/A |
| EPS | $0.67 | +30% | N/A |
The overall decline in revenue was attributed to lower sales at Michael Kors, where revenue dropped 7% to $590 million. The brand's strategy to enhance quality of sale through reduced markdowns and less promotional activity has resulted in softer revenue numbers but improved margins, as indicated by the increase in full-price sell-through rates.
Michael Kors Faces Inventory Headwinds
Capri's management noted that Michael Kors' retail performance was adversely affected by lower inventory levels and challenging market conditions in Europe, specifically the EMEA region. As CEO John Idol mentioned, “Lower than anticipated inventory levels at Michael Kors in the second quarter and softer trends in EMEA” were significant factors in the revised outlook.
While the brand aims to strengthen its market positioning through fewer markdowns, this has led to a high single-digit decline in retail sales. Management anticipates a recovery in the back half of the fiscal year, supported by new product launches and increased marketing efforts.
Jimmy Choo's Positive Momentum
In contrast to Michael Kors, Jimmy Choo reported a solid 10.5% revenue increase, reaching $179 million. The growth was broad-based, driven by successful product launches and effective marketing strategies that have resonated with consumers. The brand's storytelling efforts and engagement initiatives have resulted in positive consumer responses, leading to an uptick in sales across all regions.
The brand's ability to attract new and younger customers has been critical, as evidenced by a 7% year-over-year increase in its global consumer database. Management remains optimistic about Jimmy Choo’s trajectory, with plans to further develop its product offerings in both accessories and casual footwear while expanding its marketing initiatives.
Revised Fiscal 2027 Guidance
Capri Holdings has revised its fiscal 2027 revenue expectations to approximately $3.4 billion, citing challenges from lower inventory and foreign currency impacts. However, the company maintains its EPS guidance at $2.15, which would mark a 40% increase from the previous year. The expected breakdown by brand includes:
- Michael Kors: Approximately $2.765 billion
- Jimmy Choo: Approximately $635 million
The updated guidance reflects the company’s proactive measures to manage operating expenses, which are projected to be approximately $2 billion for the year—a reduction of $70 million compared to prior expectations.
Frequently Asked Questions
Did Capri Holdings Limited beat earnings estimates in Q1 Fiscal 2027?
Yes, Capri Holdings Limited reported earnings per share of $0.67, exceeding the consensus estimate.
What were the revenue figures for Michael Kors and Jimmy Choo in Q1 Fiscal 2027?
Michael Kors generated $590 million in revenue, down 7% year-over-year, while Jimmy Choo achieved $179 million, up 10.5% compared to the previous year.
What are Capri Holdings' revenue expectations for Fiscal 2027?
Capri Holdings anticipates total revenue of approximately $3.4 billion for Fiscal 2027, down from earlier estimates due to inventory and market challenges.
How did Capri Holdings manage expenses in Q1 Fiscal 2027?
The company reduced operating expenses by $10 million, focusing on cost-saving initiatives while still investing in marketing and digital enhancements.
In summary, while Capri Holdings navigates challenges with Michael Kors, it is experiencing significant momentum with Jimmy Choo. The company’s focus on brand desirability, reduced markdowns, and strategic inventory management will be critical as it moves through the fiscal year.
This analysis is based on public earnings call materials and is not investment advice.
