Michael Kors Owner Capri Posts Wider-Than-Estimated Q4 Loss, Lowers Outlook

Capri Holdings (CPRI) shares are declining in premarket trading after reporting a larger-than-expected adjusted Q4 loss of $4.90 per share, significantly below the expected loss of $0.16, despite revenue exceeding estimates at $1.04 billion. The company also lowered its full-year fiscal 2026 outlook, projecting revenue between $3.3 billion and $3.4 billion and EPS of $1.20 to $1.40, citing uncertainty related to tariffs and the global economic environment; this follows their agreement to sell Versace to Prada for $1.4 billion.

Analysis

Capri Holdings (CPRI) is navigating a challenging financial period, as demonstrated by its fiscal fourth-quarter adjusted loss of $4.90 per share, which significantly missed the analyst consensus estimate of a $0.16 loss per share, even as revenue of $1.04 billion surpassed the $986.6 million expectation. Consequently, the company has lowered its full-year fiscal 2026 outlook, now projecting total revenue between $3.3 billion and $3.4 billion and earnings per share (EPS) of $1.20 to $1.40; this is a substantial reduction from its third-quarter fiscal 2026 revenue forecast of approximately $4.1 billion. CEO John D. Idol attributed these challenges to a difficult fiscal 2025 and highlighted ongoing "uncertainty around the impact of tariffs on the global economic environment." This revised guidance and current performance occur amidst significant strategic shifts, including the recent agreement to sell the Versace brand to Prada for almost $1.4 billion, which will be classified as a discontinued business starting in fiscal 2026. The market has reacted negatively, with Capri shares, already down over 15% year-to-date, falling approximately 1% in premarket trading following these announcements, further compounded by the backdrop of a previously blocked merger with Tapestry.

Key Decisions for Investors

• Investors should exercise caution given Capri Holdings' substantial earnings miss and significantly reduced forward guidance, closely monitoring the execution of new strategic initiatives following the Versace divestiture.
• It is crucial to scrutinize upcoming financial reports for the tangible impact of tariffs on profitability and assess the company's ability to achieve its revised, lower fiscal 2026 targets.
• Re-evaluate investment positions in CPRI, considering the persistent share price underperformance, the implications of the Versace sale for the future brand portfolio and growth profile, and ongoing macroeconomic uncertainties mentioned by management.