Capri Holdings Q4: Earnings Miss, Margins Squeeze Amid Sales Slump And Tariff Uncertainty

Capri Holdings Limited (NYSE:CPRI) shares are trading lower on Wednesday after reporting fourth-quarter adjusted earnings per share of $4.90 loss, missing the Street view of 14 cents loss.

Quarterly sales of $1.035 billion (down 15.4% year over year) outpaced the analyst consensus estimate of $986.57 million. On a constant currency basis, total revenue decreased 14.1%.

Gross profit was $631 million, down from $767 million a year earlier. Gross margin declined to 61.0% from 62.7% in the prior year.

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Adjusted loss from operations totaled $33 million, compared to adjusted operating income of $78 million in the prior year. Adjusted operating margin declined to (3.2)% from 6.4% a year ago.

“While there is uncertainty around the impact of tariffs on the global economic environment, we remain focused on executing against our new strategic initiatives that are designed to return Capri Holdings to future growth,” said chief executive officer John D. Idol.

Michael Kors reported revenue of $694 million, reflecting a 15.6% decline on a reported basis and a 14.4% fall on a constant currency basis.

Jimmy Choo generated revenue of $133 million, down 2.9% on a reported basis and 1.5% on a constant currency basis.

“We are confident in our ability to grow Michael Kors to $4 billion in revenue and Jimmy Choo to $800 million over time while restoring operating margin to the double-digit range,” Idol added.

Versace revenue of $208 million decreased 21.2% on a reported basis and 19.7% on a constant currency basis.

On April 10, Capri Holdings said it would sell Versace to Prada for $1.375 billion in cash. The deal is expected to close in the second half of 2025. Starting in fiscal 2026, Versace will be reported as a discontinued operation.

“This transaction positions us to invest in our future growth, substantially reduce our debt levels and reinstate a share repurchase program in the future,” Idol said.

The company’s quarterly results include a non-cash tax valuation allowance of $545 million taken against the company’s deferred tax assets, of which $119 million was related to Versace.

Capri Holdings exited the quarter with cash and equivalents worth $166 million and net inventories worth $869 million.

The company’s long-term debt expanded to $1.476 billion at the end of the quarter under review, up from $1.261 billion a year ago.

Outlook: Capri Holdings expects adjusted EPS for fiscal 2026 to range between $1.20 and $1.40, above the $1.06 analyst estimate.

The company lowered its fiscal 2026 sales guidance to $3.30 billion–$3.40 billion, down from a prior outlook of $4.10 billion and below the $4.11 billion consensus.

For the first quarter, the company sees total revenue of approximately $765 million to $780 million versus the $959.91 million estimate.

The firm projects earnings per share of approximately $0.10 to $0.15 versus the $0.10 estimate.

PriceAction: CPRI shares are trading lower by 4.56% to $16.75 premarket at last check Wednesday.

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