Capri Holdings Q4 2025: Unpacking Contradictions in Wholesale Strategy, Margins, and Consumer Trends

Wholesale strategy and reduction in exposure, gross margin expectations, Michael Kors' pricing strategy, consumer spending behavior, and wholesale and retail balance are the key contradictions discussed in Capri Holdings Limited's latest 2025Q4 earnings call.



Sales Performance and Strategic Initiatives:
- Capri Holdings reported a 15% decrease in total company revenue for Q4 FY2025, with Michael Kors revenue decreasing by 16% and Jimmy Choo by 3%.
- However, the company is optimistic about future growth due to new strategic initiatives, including brand storytelling and product improvements, which started to show positive signs in Q1.

Michael Kors Brand Recovery:
- After a decline of 15% in Michael Kors retail sales in the previous quarter, trends improved significantly in Q1, with sales nearly flat compared to the prior year.
- The improvement was driven by strong full-price sell-throughs of new product launches, such as the Laila, Dakota, Bryant, and new Dakota groups, and the positive reception of the Jet Set brand storytelling.

Jimmy Choo's Product Strategy and Accessory Expansion:
- Jimmy Choo saw strong performance in new accessory styles like the Diamond and Cinch Groups, with plans to introduce new materials and animations each season.
- The brand will expand its pricing architecture to target a broader range of luxury consumers, aiming to strengthen its market position and productivity through new accessory collections priced between $500 and $1,000.

Operating Margins and Tariff Impact:
- Capri Holdings reported an operating loss of $33 million for Q4 FY2025, with a gross margin decline of 170 basis points compared to the prior year.
- The decrease was impacted by actions taken to ensure a current inventory position and anticipated tariffs, which are estimated to increase cost of goods sold by approximately $60 million in fiscal 2026 on an unmitigated basis.