Capri Holdings Limited

First-quarter revenue was $769 million, down 3.5% reported and 4.1% in constant currency. EPS was $0.67, up approximately 30% year over year, and operating income was $28 million, up approximately 40%, with operating margin expanding 110 basis points to 3.6%. Gross margin was 65%, up 200 basis points, driven mainly by higher full-price sell-throughs and lower tariff rates. By brand, Michael Kors revenue was $590 million, down 7.1% reported, with gross margin at 63.9% (+280 bps) and operating margin at 9.3%; Jimmy Choo revenue was $179 million, up 10.5% reported, with gross margin at 68.7% and operating margin at 7.3%. For the year, Capri now expects revenue of about $3.4 billion, gross margin of about 64%, operating expenses of about $2 billion, operating income of about $170 million, and EPS of about $2.15. Second-quarter guidance is for revenue of about $780 million, operating income of about $10 million, and EPS of about $0.20. By brand, Q2 revenue is expected to be about $645 million for Michael Kors and $135 million for Jimmy Choo. Capri said Michael Kors full-year revenue is now expected to be about $2.765 billion and Jimmy Choo about $635 million.

John Idol said the quarter showed progress in building a stronger, more profitable business, with improved sales quality, better consumer engagement and stronger product reception at both brands. He emphasized a multi-pronged strategy centered on brand storytelling, design innovation, elevated customer experiences, analytics and disciplined cash use, including store renovations and share repurchases. His tone was constructive, but he acknowledged near-term headwinds at Michael Kors from lower inventory, softer EMEA trends and foreign exchange.

Tyler Reddien focused on the financial mechanics behind the quarter and guidance. He said gross margin of 65% expanded 200 basis points, operating expenses fell $10 million, net debt improved to $224 million from about $1.5 billion last year, cash was $114 million, debt was $338 million, and the company repurchased about $50 million of stock while keeping $871 million available under its authorization. He also highlighted inventory of $624 million, down 20% year over year, and said the company cut full-year operating expense guidance by $70 million while assuming 10% to 12.5% tariff rates on imports into the U.S. as of July 24.

Analysts focused heavily on Michael Kors retail trends, especially the split between full-price and outlet, the impact of lower markdown inventory, and whether second-half growth still looked achievable. Management said full-price trends improved and AURs rose, while outlet was still pressured by limited new product; John Idol said Michael Kors should turn positive in the back half, with Q3 described as a key inflection point. Questions also centered on the inventory shortfall and pricing changes; management said about half of the inventory issue was lower markdown inventory and half was delayed receipts, and said outlet pricing is being raised gradually while more new product arrives later in the year. One analyst asked about expense management and interest income, and Tyler said the $70 million SG&A reduction reflects targeted cost actions while protecting marketing, store refurbishments and IT/digital investments.