Capri Holdings 2026 Q1 Earnings Strong Turnaround as Net Income Surges 541.7%

Capri Holdings reported mixed first-quarter results for fiscal 2026, with revenue declining but net income surging. The company beat expectations on profitability, though revenue missed guidance. Capri also affirmed its strategic direction and provided updated full-year revenue and earnings expectations.

Revenue
Capri Holdings reported total revenue of $797 million for Q1 2026, a 6.0% decline from the prior year's $848 million. The Michael Kors brand drove the majority of sales, contributing $635 million, while the luxury footwear brand Jimmy Choo generated $162 million in revenue. Combined, the two segments accounted for the company’s total top-line performance, though the decline highlights ongoing challenges in regaining market share.

Earnings/Net Income
The company returned to profitability, reporting a net income of $53 million in Q1 2026, a dramatic turnaround from a net loss of $12 million in the prior-year period. Earnings per share surged to $0.44, a 500.0% improvement from a loss of $0.11 per share. This marks a significant positive shift in Capri’s financial performance.

Price Action
Capri Holdings' stock has shown resilience in recent trading sessions, with a 1.17% gain on the latest trading day, a 12.10% rise during the most recent week, and a 12.65% increase month-to-date. However, its long-term post-earnings performance has been mixed.

Post Earnings Price Action Review
Despite the positive earnings surprise, a strategy of buying Capri Holdings shares following a revenue decline and holding for 30 days has underperformed significantly over the past three years. The approach yielded a negative return of -28.61%, far below the benchmark’s 51.69%. The strategy faced a CAGR of -10.77%, with a Sharpe ratio of -0.18 and high volatility of 58.56%, reflecting the stock’s unpredictable performance post-earnings releases.

CEO Commentary
John D. Idol, CEO of Capri Holdings, acknowledged the progress made in fiscal 2026, particularly in reversing the company’s financial losses. He emphasized a renewed focus on growth through strategic initiatives and the pending sale of the Versace brand to Prada Group. Idol highlighted early improvements in brand engagement and full-price sell-throughs, while expressing confidence in the long-term potential to restore operating margins to double digits. However, he also noted ongoing challenges such as tariffs and macroeconomic uncertainties.

Guidance
Capri Holdings provided updated fiscal 2026 guidance, projecting total revenue in the range of $3.3 to $3.4 billion, with Michael Kors expected to contribute $2.75 to $2.85 billion and Jimmy Choo between $540 and $550 million. The company anticipates gross margins of 61.0% to 61.5%, operating income of approximately $100 million, and diluted earnings per share of $1.20 to $1.40. For Q1 2026, Capri expects revenue between $765 and $780 million, with operating margins near break-even for the company overall, mid-single digits for Michael Kors, and near break-even for Jimmy Choo.

Additional News
Capri Holdings announced the pending sale of its luxury brand, Versace, to Prada Group, a strategic move aimed at reducing debt and refocusing the company’s resources on its core brands, Michael Kors and Jimmy Choo. The sale, expected to close within the next six months, is a key step in the company’s restructuring efforts. Additionally, the company confirmed its intention to reinstate a share repurchase program, signaling confidence in its stock’s intrinsic value. No major executive changes were reported in the three weeks following the earnings release, though internal restructuring is expected as part of the broader strategic overhaul.