In a surprising turn of events, Capri Holdings defies expectations post-Versace sale, sparking questions about its future strategy. But here's where it gets controversial: Can shedding a luxury giant like Versace truly pave the way for sustainable growth in its remaining brands? Let’s dive in.
Capri Holdings, the parent company behind Michael Kors and Jimmy Choo, reported a 5.9% year-over-year decline in revenues on a constant currency basis, reaching $1.03 billion in the third quarter of fiscal 2026, which ended on December 27. Despite this drop, the results surpassed both internal forecasts and analyst predictions, leaving many intrigued. This quarter marks a significant milestone for Capri—its first since the completion of Prada Group’s acquisition of Versace in December 2025. And this is the part most people miss: The sale wasn’t just a financial transaction; it was a strategic move to fortify Capri’s financial foundation, providing the flexibility needed to bolster Michael Kors and Jimmy Choo’s long-term initiatives and enhance shareholder value. As Capri chair and CEO John D. Idol explained, “Recently, we completed the sale of Versace, which was a thoughtful decision to strengthen our financial foundation, ensuring we have the flexibility to support Michael Kors and Jimmy Choo’s strategic initiatives, and enhance long‑term shareholder value.”
With the approximately $1.4 billion in proceeds from the Versace sale, Capri has taken decisive steps to reduce its debt. By the end of the quarter, the company reported $154 million in cash and a debt of $234 million, resulting in a net debt of just $80 million—a dramatic improvement from the $1.6 billion net debt at the end of the second quarter. Interim CFO Rajal Mehta highlighted this achievement during discussions with investors, underscoring the company’s commitment to financial stability.
Breaking down the numbers by brand, Michael Kors saw a 7.3% year-over-year decline in Q3 revenues, totaling $858 million, while Jimmy Choo experienced a modest 1.9% increase, reaching $167 million. Idol expressed satisfaction with the quarter’s performance, stating, “We were pleased with our third-quarter performance, which exceeded our expectations. Across both Michael Kors and Jimmy Choo, we continue to advance our strategic initiatives to position our iconic brands for long-term success.” Looking ahead, Idol remains optimistic, predicting a return to growth in fiscal 2027 and laying the groundwork for sustainable performance in the years to come.
Geographically, revenues in the Americas dipped 7% to $646 million in the third quarter. However, Mehta noted a sequential improvement, particularly in North American retail trends for Michael Kors, and anticipates further progress in Q4. In contrast, EMEA (Europe, the Middle East, and Africa) revenues rose 5% to $268 million, while Asia revenues fell 4% to $111 million. These regional variations highlight the complexities of operating in a global market.
But here’s the controversial part: Capri’s exposure to the recent Saks Global bankruptcy has raised eyebrows. According to court filings, Capri is owed $33 million, though Saks had only reserved $15 million. Mehta downplayed the impact, calling it “not very material,” and emphasized that the company has already accounted for the potential loss. Idol, however, struck a more optimistic tone, expressing excitement about Saks’s new management team. “They’ve been through this before, with Neiman Marcus, and we have a lot of confidence in what their strategy is,” he said. “We also think that a leaner Saks Global will be successful and very focused, so we intend on being very supportive of their strategies and helping them succeed.” This raises the question: Is Capri’s confidence in Saks’s turnaround justified, or is it a risky bet?
Looking to the fourth quarter, Capri plans to continue its tariff mitigation efforts, with Mehta anticipating a majority offset by 2027. “You’ll begin to see some of the tariff mitigation efforts continue regarding our sourcing efficiencies and targeted price increases, and then as we look forward to the 2027 full year, we expect to offset a majority of the tariff impact,” he explained.
For fiscal 2027, Capri projects full-year revenues between $3.45 and $3.475 billion, with Michael Kors contributing approximately $2.86 to $2.875 billion and Jimmy Choo generating around $590 to $600 million. Idol reiterated his confidence in the company’s trajectory, stating, “We anticipate a sequential improvement in retail trends in the fourth quarter, and a return to growth in fiscal 2027. Long term, we remain optimistic about the sustainable growth potential of both Michael Kors and Jimmy Choo.”
Now, here’s the thought-provoking question for you: With the Versace sale behind it, can Capri truly reinvent itself and secure long-term success for its remaining brands? Or will the shadow of Versace’s absence loom larger than anticipated? Share your thoughts in the comments—we’d love to hear your take on this evolving story.
