Key Highlights

  • Capri Holdings shares are trading up 9.48% at $20.45, against a previous close of $18.68.
  • Fiscal second-quarter adjusted EPS of $0.42 doubled the $0.21 consensus on Revenue of $809 million.
  • Gross Margin expanded 230 basis points to 63.3% on higher full-price sell-throughs and lower tariffs.
  • Net Debt fell to $336 million from $1.6 billion a year earlier, with $150 million of Buybacks in the quarter.
  • The company now guides to about $3.42 billion in FY27 revenue and diluted EPS of about $2.20.

Capri Holdings (NYSE:CPRI) shares are extending a post-earnings rally after the company reported a better-than-expected fiscal second quarter on Oct. 30 and raised its FY27 outlook. The London-headquartered luxury group owns Michael Kors and Jimmy Choo and sold Versace to Prada in 2025. Several banks and research firms have lifted their price targets since the report.

Earnings Doubled Estimates as Gross Margin Widened

Revenue came in at $809 million against a $786.5 million estimate, down 5.5% from a year earlier and down 4.9% in constant currency. Adjusted EPS of $0.42 compared with the $0.21 consensus and with a loss of $0.03 a year ago. Operating Income rose 55% to $31 million, a 3.8% operating margin.

Gross margin expanded 230 basis points to 63.3%, helped by higher full-price sell-throughs and lower tariffs. Part of the beat came from about $20 million of wholesale shipments that moved into the quarter early.

Michael Kors Declines While Jimmy Choo Grows

Michael Kors revenue fell 8.6% to $663 million, with inventory delays costing about $50 million, 40% less markdown inventory and about 50% fewer promotional days. Its Operating Margin was 10.3%. Jimmy Choo revenue rose 11.5% to $146 million at a 1.4% operating margin.

Management said monthly trends improved sequentially, driven by a strong response to new products such as Hamilton Soft. A TikTok shop ran about four times above expectations.

Raised FY27 Guidance and Balance Sheet Repair

Capri now guides to FY27 revenue of about $3.42 billion, with Michael Kors at $2.77 billion and Jimmy Choo at $650 million. It also guides to a gross margin near 64%, operating income of about $175 million, up 50%, and diluted EPS of about $2.20, up 45%. Third-quarter guidance calls for revenue just over $1 billion and EPS of about $0.95.

Net debt fell to $336 million from $1.6 billion a year earlier. The FY27 buyback target rose by $100 million to $300 million, with $721 million remaining under authorization, and inventory fell 7% to $712 million.

Price Targets and Valuation After the Rebound

TD Cowen and UBS raised targets to $19, Wells Fargo to $18 and Bernstein to $24, and another research firm lifted its target to $20, mostly with Hold-type ratings. Shares sit well above their 52-week low of $12.40 but below the $28.27 high. The company has a market Capitalization of about $2.32 billion and a trailing price-to-earnings ratio of 11.49.

Third-Quarter Michael Kors Trend to Track

Management expects Michael Kors full-price sales to turn positive in the third quarter, with revenue returning to growth in the fourth quarter and the total company growing in the second half. Long-term targets include $4 billion of Michael Kors revenue at a low-20% operating margin and $800 million at Jimmy Choo at a low double-digit margin. Plans call for 50 to 75 new Michael Kors stores in FY28 and 300 renovations, with 50 completed so far.