Capri Holdings: Can Strategic Realignments Revive a Fading Luxury Portfolio?

Capri Holdings (CPRI) finds itself at a crossroads. Once a darling of the luxury market, its three brands—Michael Kors, Versace, and Jimmy Choo—have seen sales tumble amid shifting consumer preferences and macroeconomic headwinds. Yet, the company's aggressive restructuring, including the proposed sale of Versace to Prada and potential divestments of Jimmy Choo, hints at a bold pivot to survive. The question remains: Can these moves reverse the slide, or are Capri's brands too far gone to justify a contrarian bet?

Michael Kors: Heritage Marketing vs. Asia's Retreat

Michael Kors, Capri's largest brand, has slashed prices and leaned into heritage campaigns to combat a 16% revenue decline in Q2 2025. The strategy targets nostalgia-driven buyers in North America, where mid-single-digit retail declines were less severe than the catastrophic 43% drop in Asia. reveals a steady erosion in sales, with Asia now a critical weak spot. While price corrections may stabilize U.S. sales, the brand's reliance on discounting risks diluting its luxury image. Asia's weakness, driven by weak tourism and shifting preferences toward Chinese-owned brands like Shanghai Tang, poses a long-term threat.

Versace: Luxury Rebalancing or a Write-Off?

Versace's 28% revenue collapse underscores why Capri is selling it to Prada for $1.375 billion. The brand's struggles—operating losses, declining full-price sales, and a 33% revenue drop in the Americas—suggest it no longer fits Capri's vision. The sale is a lifeline: proceeds will slash net debt by ~90%, from $1.3 billion to nearly zero, freeing cash for share buybacks or debt repayment. highlights the transformative impact. However, Prada's ability to revive Versace's prestige remains unproven, and the FTC's merger injunction with Tapestry adds uncertainty.

Jimmy Choo: Casual Shifts and a Possible Exit

Jimmy Choo's 6% revenue growth—driven by EMEA's 25% surge—offers a glimmer of hope. The brand's pivot to casual footwear and sustainable materials has resonated with younger buyers, though Asia's 8% decline hints at execution gaps. Analysts speculate Capri may divest Jimmy Choo next, given its smaller scale compared to Michael Kors. A sale would further streamline the portfolio but could alienate investors betting on its long-term value.

Near-Term Risks: Debt, FTC, and Store Closures

Capri's leverage remains a concern. Even post-Versace sale, its $182 million cash pile and $1.5 billion net debt (as of Q2) are thin for a luxury firm. shows it lags Tapestry and LVMH. Store closures—especially in Asia—are likely, which could accelerate margin pressure. Meanwhile, the FTC's injunction against the Tapestry merger freezes Capri's access to capital markets, delaying investor calls and guidance.

Long-Term Gains: A Slimmer, Focused Portfolio

The strategic realignment could pay off. Post-Versace, Capri could focus on Michael Kors' core strengths: its 9 million new customers (a 12% annual gain), brand equity, and potential for e-commerce upgrades. A debt-free balance sheet would also allow share buybacks, boosting EPS at its current 6x EBITDA multiple—a discount to peers like LVMH's 22x.

Investment Thesis: Contrarian Play or Avoid?

The bull case hinges on execution:
1. Michael Kors: Turn Asia around via localized marketing and e-commerce fixes.
2. Debt Reduction: Versace proceeds to lower leverage and fund growth.
3. Divestiture Proceeds: Use Jimmy Choo sale (if it happens) for shareholder returns.

Bears argue that Capri's brands are overexposed to a slowing luxury market, and its operational execution has been shaky. The FTC's merger delay also clouds liquidity.

shows it has underperformed Tapestry and LVMH, but its current valuation leaves room for upside if restructuring works.

Verdict: Hold for Now, Watch for Catalysts

While Capri's pivot is logical, near-term risks—including FTC delays, Asia's weakness, and brand execution gaps—make it a high-risk bet. Investors should wait for clarity on the Versace sale and Tapestry merger before considering a position. If Capri can stabilize Michael Kors' Asia sales and deploy proceeds wisely, shares could rebound. Until then, the contrarian opportunity remains speculative.

Risk Rating: High
Hold Until: Versace sale closes, FTC merger resolution, and Q4 sales trends emerge.