As Capri Holdings prepares to finalize the sale of Versace in its fiscal third quarter, the company is entering a new era focused on rebuilding its two remaining fashion houses: Michael Kors and Jimmy Choo.
“With the Versace sale expected to close, we are now fully focused on the growth of our two iconic brands,” said John Idol, chairman and CEO, on Tuesday’s Q2 fiscal 2026 earnings call. Capri plans to use the sale proceeds to pay down most of its $1.8 billion debt and strengthen its balance sheet ahead of a planned $1 billion share repurchase program set to begin in fiscal 2027.
The company reported adjusted earnings per share (EPS) of ($0.03), missing guidance due to a higher-than-expected tax rate, but operational performance exceeded expectations. Revenue fell 2.5% to $856 million, a smaller decline than the 6% drop analysts anticipated. Gross margin contracted 130 basis points to 61%, slightly better than the consensus of 60.9%, while operating income reached $20 million, translating to a 2.3% margin versus expectations of 1.2%. Capri maintained its full-year outlook, projecting $3.375 billion to $3.45 billion in revenue and EPS between $1.20 and $1.40.
“The quarter showed better sales and expense control than expected,” said Dana Telsey, CEO and chief research officer of Telsey Advisory Group. “Operationally, results were solid — the only major drag was the higher tax rate.” She added that Capri’s fiscal 2026 outlook “reflects cautious stabilization, with management focused on returning to growth in fiscal 2027.”
Michael Kors remains Capri’s largest and most crucial brand, accounting for roughly 80% of total revenue. In the second quarter, Kors’s full-price comps turned positive for the first time in several quarters, led by strong handbag sell-throughs. Idol credited the improvement to more modern styling, new pricing architecture and a tighter product edit. “The consumer is really responding to standout style,” he said. “Our Hamilton Modern and Laila [collections] are exceeding expectations, and these styles aren’t even included in our full-price promotions.”
At the same time, average unit retail prices in full-price stores were down slightly due to deliberate price recalibration meant to engage younger shoppers. Idol described Gen-Z consumers as “more price-sensitive” than older cohorts, but also increasingly receptive to Kors’s refreshed “modern jet-set” positioning. According to the company, the brand generated 5.5 billion impressions globally during New York Fashion Week, ranking as the second-most engaged fashion brand, based on internal metrics that typically reflect Launchmetrics data. The momentum helped drive a 9% year-over-year increase in the Michael Kors consumer database, which now exceeds 90 million names.
Capri is also investing in store renovations to elevate the brand experience. Michael Kors’s New York flagship reopened with a “Jet Set Lounge” café — the first of several experiential retail concepts, also planned for Paris, Tokyo and Las Vegas. Idol said renovated locations are already seeing “significant” traffic and sales lifts.
While full-price performance improved, Capri’s outlet business remained under pressure due to a self-imposed “quality of sale” reset. Idol said the company has been reducing promotions, raising outlet price points and cutting its once-lucrative daigou business, which resold discounted products overseas. Roughly 60% of outlet sales declines stemmed from that change alone. “We’ve had to reeducate the consumer that Michael Kors is a brand that will sell at a slightly higher price,” he said. “We’re focusing on fashion in our outlet channel, not just core basics.”
At Jimmy Choo, revenue declined 6% year over year, but retail comps improved sequentially. The brand’s next growth phase centers on accessories, particularly handbags under $1,500. Idol said early reads on new launches — including the Bar Hobo, Curve and Bonbon collections — have been strong. “Over time, we expect this initiative to drive significant growth in our accessories business,” he said.
Telsey noted that Capri’s efforts are beginning to show progress but still require patience. “The Michael Kors brand positioning remains a work in progress after 11 consecutive quarters of sales declines,” she said. “Management is focused on stabilizing trends over the next year and a half, with the intention of creating a healthier base for growth.”
With its two remaining brands stabilizing and its balance sheet set to improve post-Versace, Capri’s reset looks less like a retrenchment and more like a strategic redefinition. “We’re not calling victory,” Idol said, “but the consumer response is telling us we’re moving in the right direction.”
