Capri Holdings 2025 Q4 Earnings Deepening Losses as Net Income Declines 36.4%

Capri Holdings (CPRI) reported its fiscal 2025 Q4 earnings on May 27th, 2025. Capri Holdings saw a significant decline in its financial performance for the fourth quarter of fiscal 2025, with revenues falling short of expectations. The company provided guidance that was in line with previous expectations, but the results reflected ongoing challenges. Despite these setbacks, Capri Holdings expressed optimism about the upcoming fiscal year, anticipating improvements in fiscal 2026 and a return to growth in fiscal 2027.

Revenue

Capri Holdings experienced a 15.4% decline in total revenue, amounting to $1.03 billion in the fourth quarter of fiscal 2025, compared to $1.22 billion in the same quarter of the previous year. Versace contributed $208 million, marking a substantial drop, while Jimmy Choo added $133 million. Michael Kors, the largest segment, generated $694 million.

Earnings/Net Income

Capri Holdings recorded a significant widening in losses, with earnings per share dropping to $5.44 in Q4 of 2025 from a loss of $4.03 in Q4 of 2024. The net loss increased by 36.4% to $-644 million. This reflects a challenging financial environment.

Price Action

Post-Earnings Price Action Review

The strategy of purchasing Capri Holdings shares after a revenue increase on the financial report release date and holding for 30 days has resulted in substantial losses. Over the past three years, this approach yielded a return of -70.09%, significantly underperforming the benchmark return of 39.33%. This translates to an excess return of -109.43% and a compound annual growth rate (CAGR) of -33.41%. The maximum drawdown reached -84.12%, underscoring the high risk associated with this strategy. Furthermore, the Sharpe ratio stood at -0.52, indicating poor risk-adjusted returns. These figures highlight the challenges faced by investors employing this strategy and underscore the importance of reevaluating such approaches in light of market conditions.

CEO Commentary

John D. Idol, Chairman and CEO of Capri Holdings, acknowledged the challenges faced in fiscal 2025 but expressed optimism for fiscal 2026. Idol emphasized the company's commitment to implementing strategic initiatives aimed at returning to growth. He highlighted the positive impact of the definitive agreement to sell Versace, which is expected to facilitate future investments, reduce debt, and potentially reinstate a share repurchase program.

Guidance

The company anticipates improving trends throughout fiscal year 2026, positioning itself for a return to growth in fiscal 2027 and beyond. Capri Holdings is confident in achieving long-term revenue targets of $4 billion for Michael Kors and $800 million for Jimmy Choo, while restoring operating margins to the double-digit range.

Additional News

Capri Holdings recently announced a definitive agreement to sell Versace to Prada S.p.A. for $1.375 billion in cash, marking a significant move in its strategic realignment. The transaction is expected to close in the second half of 2025, subject to regulatory approvals. This sale aims to reduce debt levels and provide capital for future growth initiatives. Additionally, Capri Holdings is exploring potential spin-off opportunities for Jimmy Choo, potentially involving co-founder Tamara Mellon. These strategic decisions are part of the company's efforts to focus on its core brands, Michael Kors and Jimmy Choo, and optimize its business portfolio. The Versace sale is anticipated to improve Capri's financial flexibility and support its long-term growth objectives.