Capri Posts $809 Million in Revenue, Returns to Profit in Second Quarter
Key Facts
Capri reported revenue of $809 million in the second quarter of its fiscal 2027, down 5.5% year over year, but returned to profitability with net income of $27 million, according to results published on October 30. Revenue in the same period a year earlier was $856 million, while the decline narrowed to 4.9% excluding the impact of foreign exchange rates. Revenue exceeded the average estimate of $785.85 million, while adjusted earnings per share of $0.42 also beat analysts’ estimate of $0.21, according to Investing.com. The site reported that the company’s stock rose 8.29% following the results, without specifying the measurement window for that move. The stock closed at $16.06 on October 29, according to EL7 data.
The profit marked a reversal from a net loss of $34 million, or $0.28 per diluted share, a year earlier; adjusted net income was $45 million, compared with an adjusted loss of $4 million. Adjusted earnings per share rose to $0.42 from a loss of $0.03 in the prior period. The company posted operating income of $10 million and an operating margin of 1.2%, after an operating loss of $12 million and a negative margin of 1.4% a year earlier. On an adjusted basis, operating income rose to $31 million from $20 million, and margin improved to 3.8% from 2.3%. This shows an improvement in reported and operating profitability despite lower overall sales.
Gross profit was $512 million, compared with $522 million a year earlier, but gross margin widened to 63.3% from 61.0%, an increase of 230 basis points. Capri attributed the improvement mainly to higher full-price sales, brand mix and lower tariff rates compared with the year-earlier quarter. At Michael Kors, revenue fell 8.6% to $663 million, or 8.0% on a constant-currency basis. As the brand’s gross profit fell to $408 million from $430 million, its gross margin improved to 61.5% from 59.3%. The company said improved full-price sales and lower tariffs supported the 220-basis-point margin increase.
By contrast, Jimmy Choo revenue rose 11.5% to $146 million, an increase of 12.2% on a constant-currency basis. Its gross margin was 71.2%, compared with 70.2% a year earlier, while gross profit rose to $104 million from $92 million. The brand’s operating performance turned to income of $2 million and a margin of 1.4%, after an operating loss of $9 million and a negative margin of 6.9% in the prior period. Chief Executive John Idol said trends improved month by month at both brands during the quarter. He attributed this to actions aimed at improving product assortments, strengthening brand appeal and deepening consumer engagement.
Operating activities generated cash flow of $51 million, and capital expenditures were $15 million, producing free cash flow of $36 million. On September 26, net debt was $336 million, compared with $1.6 billion on September 27 of the prior year. Net inventory was $712 million on September 26, down 7% year over year. Capri spent $150 million to repurchase about 10.3 million shares during the quarter, at an average price of $14.56 per share. A further $721 million remained available under the repurchase program on September 26.
Capri forecast revenue of about $3.42 billion and adjusted diluted earnings of about $2.20 per share for fiscal 2027; a Wall Street Journal summary said the revenue forecast was unchanged from prior guidance, while the company raised its earnings target. For the third quarter, it estimated revenue of about $1.005 billion and diluted earnings per share of about $0.95. The revenue estimate includes $20 million in wholesale shipments whose timing shifted from the third quarter to the second, the same amount the company said contributed to revenue in the quarter ended. The guidance assumed additional tariffs of 10% on imports into the United States would remain in place through July 24, 2026, followed by a range of 10% to 12.5%. The results call was scheduled for October 30, 2026, at 10:00 a.m. Eastern time, with a replay available through November 6.