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Capri Holdings Ltd.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 3 February 2026: press release. Guidance figures: 5 raised, 2 lowered, 3 kept. The quarter’s numbers.

Key takeaways

  • Revenue fell 4.0% reported: Revenue was $1.025 billion, down 4.0% reported and 5.9% in constant currency compared with a year earlier. Source
  • Adjusted EPS $0.81 versus $0.63: Adjusted net income was $98 million, or $0.81 per diluted share, against $0.63 a year earlier; reported diluted EPS was $0.47. Source
  • Michael Kors revenue fell 5.6%: Michael Kors revenue was $858 million, with operating margin of 13.9% against 16.2% a year earlier. Source
  • Tariffs above plan absorbed gains: Tariffs ran above management's assumptions, offsetting the 70 basis point rise in underlying gross margin. Source
  • Free cash flow of $252 million: Operating cash flow was $271 million; after $19 million of capital expenditure, free cash flow was $252 million. Source
  • Net debt cut to $80 million: Net debt was $80 million at quarter end, against $1.17 billion a year earlier, after Versace sale proceeds repaid debt. Source
  • Versace sale completed December 2: The sale to Prada, agreed April 10, 2025, closed on December 2, 2025. Source
  • Quarter revenue against prior range: Third-quarter revenue of $1.025 billion compared with the $975 million to $1.0 billion range given in the previous release.

“We were pleased with our third quarter performance which exceeded our expectations.”

John D. Idol, Chairman and Chief Executive Officer

Guidance

AreaPeriodFigureAgainst last quarter
Total revenue (Capri) SourceFY2026$3.45 to $3.475 billionRaised from $3.375 to $3.45 billion
Operating income SourceFY2026approximately $100 millionKept
Net interest income SourceFY2026$85 to $90 millionLowered from $85 to $95 million
Weighted average diluted shares outstanding SourceFY2026approximately 120 millionKept
Diluted earnings per share SourceFY2026$1.30 to $1.40Raised from $1.20 to $1.40
Capital expenditures SourceFY2026approximately $100 millionLowered from approximately $110 million
Michael Kors total revenue SourceFY2026$2.86 to $2.875 billionRaised from $2.8 to $2.875 billion
Michael Kors operating margin SourceFY2026high-single-digit rangeKept
Jimmy Choo total revenue SourceFY2026$590 to $600 millionRaised from $565 to $575 million
Jimmy Choo operating margin SourceFY2026negative low-single-digit rangeRaised from negative mid-single-digit range

What changed from last quarter

  • Guidance raised: Full-year Capri revenue guidance raised to $3.45 to $3.475 billion from $3.375 to $3.45 billion. Source
  • Guidance raised: Full-year diluted EPS guidance now $1.30 to $1.40, low end raised from $1.20. Source
  • Guidance raised: Michael Kors full-year revenue guidance low end raised to $2.86 billion from $2.8 billion. Source
  • Guidance raised: Jimmy Choo full-year revenue raised to $590 to $600 million; operating margin moved to negative low-single-digit. Source
  • Guidance lowered: Net interest income guidance now $85 to $90 million, upper end down from $95 million. Source
  • Guidance lowered: Effective tax rate guidance now spans low- to mid-teens, against mid-teens previously. Source
  • Guidance lowered: Capital expenditure guidance lowered to about $100 million from about $110 million. Source
  • Guidance kept: Diluted share count guidance remains about 120 million. Source
  • Ended: Versace business sale to Prada completed; Versace is no longer part of the group. Source

Results and growth drivers

  • Revenue fell 4.0% reported: Revenue was $1.025 billion, down 4.0% reported and 5.9% in constant currency compared with a year earlier. Source
  • Adjusted EPS $0.81 versus $0.63: Adjusted net income was $98 million, or $0.81 per diluted share, against $0.63 a year earlier; reported diluted EPS was $0.47. Source
  • Reported margin rose, adjusted fell: Reported operating margin was 4.5%, up from 2.4%; adjusted operating margin was 7.7%, down from 9.1%. Source
  • No impairment charge this quarter: The company recorded no impairment charge this quarter, against $81 million a year earlier. Source

Segments and regions

  • Michael Kors revenue fell 5.6%: Michael Kors revenue was $858 million, with operating margin of 13.9% against 16.2% a year earlier. Source
  • Michael Kors gross margin lower: Michael Kors gross margin was 59.7%, down from 62.6% a year earlier, on gross profit of $512 million. Source
  • Jimmy Choo revenue rose: Jimmy Choo revenue was $167 million, up 5.0% reported and 1.9% in constant currency; operating margin was 1.8% against (3.8)%. Source
  • Americas down, EMEA and Asia mixed: Americas revenue fell to $646 million from $696 million; EMEA rose to $268 million and Asia eased to $111 million. Source

“Recently we completed the sale of Versace which was a thoughtful decision to strengthen our financial foundation”

John D. Idol, Chairman and Chief Executive Officer

Gross margin, tariffs and costs

  • Gross margin down 230 basis points: Gross margin was 60.8% against 63.1% a year earlier, on gross profit of $623 million. Source
  • Tariffs above plan absorbed gains: Tariffs ran above management's assumptions, offsetting the 70 basis point rise in underlying gross margin. Source
  • Corporate SG&A higher than last year: Corporate selling, general and administrative expense was $58 million, against $30 million a year earlier. Source

Inventory and receivables

  • Inventory down year on year: Net inventory was $663 million, compared with $709 million a year earlier, a 6.5% decrease. Source
  • Wholesale customer reserve recorded: The company recorded $15 million of reserves on receivables from a wholesale customer that filed for Chapter 11. Source

“Looking ahead, we remain confident that these strategies will support a return to growth in fiscal 2027”

John D. Idol, Chairman and Chief Executive Officer

Cash, debt and shareholder returns

  • Free cash flow of $252 million: Operating cash flow was $271 million; after $19 million of capital expenditure, free cash flow was $252 million. Source
  • Net debt cut to $80 million: Net debt was $80 million at quarter end, against $1.17 billion a year earlier, after Versace sale proceeds repaid debt. Source
  • Shares outstanding edged up: Shares outstanding were 119,148,040 at December 27, 2025, up from 117,913,201 at March 29, 2025. Source
  • Repurchase program approved in November: The Board approved a three-year repurchase program of up to $1 billion of ordinary shares in the November release.

Versace sale and portfolio

  • Versace sale completed December 2: The sale to Prada, agreed April 10, 2025, closed on December 2, 2025. Source
  • Versace shown as discontinued: Versace results are presented as discontinued operations for all periods; discontinued operations added $59 million of net income this quarter. Source
  • Group now two brands: Management describes the company as a group of two brands, Michael Kors and Jimmy Choo. Source

Guidance basis and quarter comparison

  • Quarter revenue against prior range: Third-quarter revenue of $1.025 billion compared with the $975 million to $1.0 billion range given in the previous release.
  • Full-year guidance is non-GAAP: Full-year figures are adjusted, non-GAAP, and cover continuing operations only. Source
  • No GAAP reconciliation for guidance: Management cannot reconcile full-year guidance to GAAP without unreasonable effort, citing currency, taxes, tariffs and restructuring. Source

Restructuring and adjusted items

  • Final store lease termination: Restructuring and other expense was $12 million, mainly a lease termination for the final store in the Global Optimization Plan. Source
  • Store renovation costs expensed: Store renovation plan costs of $5 million were expensed as incurred, because they are not capitalizable. Source
  • Transformation costs excluded: No Capri transformation costs were adjusted this quarter, against $6 million a year earlier. Source

Coming up, as management said on 3 February 2026

  • Return to growth targeted fiscal 2027: Management expects its brand strategies to support a return to growth in fiscal 2027. Source
  • Buyback to begin fiscal 2027: The three-year repurchase program of up to $1 billion is expected to begin in fiscal 2027, per the November release.

Figures management reported

FigureReported
Retail stores, total Source908 (Michael Kors 694; Jimmy Choo 214)

Risks management discussed

  • Regulatory: Tariffs above management's assumptions offset the 70 basis point rise in underlying gross margin. Source
  • Financial: A wholesale customer's Chapter 11 filing led to a one-time reserve on receivables this quarter. Source

Earlier plans management reported on

  • Ahead: Management said third-quarter performance exceeded its expectations. Source
  • Met: The sale closed on December 2, 2025, per the company's statement. Source
  • Met: Management states the Versace proceeds were used to significantly reduce debt levels. Source
  • Not stated: Management reiterated confidence in a return to growth in fiscal 2027 without a stated status. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.