Capri Holdings Limited — Second Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Total revenue for the quarter was $809 million, a 5.5% decrease on a reported basis and 4.9% in constant currency compared to the prior year; approximately $20 million of revenue was attributable to earlier-than-anticipated timing of wholesale shipments.
• Gross profit was $512 million with a gross margin of 63.3%, compared to $522 million and 61.0% in the prior year; the 230 basis point increase was driven by higher full-price sell-throughs, brand mix, and lower tariff rates.
• Income from operations was $10 million with an operating margin of 1.2%, compared to a loss of $12 million and a margin of (1.4)% in the prior year.
• Adjusted income from operations was $31 million with an adjusted operating margin of 3.8%, compared to $20 million and 2.3% in the prior year.
• Net income was $27 million, or $0.25 per diluted share, compared to a net loss of $34 million, or $(0.28) per diluted share, in the prior year.
• Adjusted net income was $45 million, or $0.42 per diluted share, compared to an adjusted net loss of $4 million, or $(0.03) per diluted share, in the prior year.
• Net inventory decreased 7% year-over-year to $712 million as of September 26, 2026.
• Cash flow provided by operating activities was $51 million; capital expenditures were $15 million, resulting in free cash flow of $36 million.
• Cash and cash equivalents totaled $125 million, and total borrowings were $461 million, resulting in net debt of $336 million, down from $1.6 billion as of September 27, 2025.

Guidance and Future Outlook:

• For Fiscal Year 2027, the Company expects total revenue of approximately $3.42 billion and operating income of approximately $175 million.
• Fiscal Year 2027 adjusted diluted earnings per share is expected to be approximately $2.20, with an effective tax rate in the low-teens percent range.
• For the Third Quarter of Fiscal 2027, the Company expects total revenue of approximately $1.005 billion, including the impact of $20 million of wholesale shipments shifted from Q3 to Q2.
• Third Quarter Fiscal 2027 adjusted diluted earnings per share is expected to be approximately $0.95, with an effective tax rate in the mid-teens percent range.
• Michael Kors full-year revenue is expected to be approximately $2.77 billion with an operating margin in the low-double-digit percent range.
• Jimmy Choo full-year revenue is expected to be approximately $650 million with an operating margin in the low-single-digit percent range.
• Guidance assumes an incremental 10% tariff rate on imports into the United States through July 24, 2026, and 10% to 12.5% thereafter.

Business Segments and Product Lines:

• Michael Kors revenue was $663 million, a decrease of 8.6% reported and 8.0% in constant currency; approximately $15 million was due to shipment timing.
• Michael Kors gross margin increased 220 basis points to 61.5%, driven by higher full-price sell-throughs and lower tariff rates.
• Michael Kors operating income was $68 million with an operating margin of 10.3%, compared to $73 million and 10.1% in the prior year.
• Jimmy Choo revenue was $146 million, an increase of 11.5% reported and 12.2% in constant currency; approximately $5 million was due to shipment timing.
• Jimmy Choo gross margin increased 100 basis points to 71.2%, driven by higher full-price sell-throughs.
• Jimmy Choo operating income was $2 million with an operating margin of 1.4%, compared to an operating loss of $9 million and a margin of (6.9)% in the prior year.

Market and Competitive Landscape:

• Management noted that trends improved sequentially each month across both luxury houses during the second quarter.
• Initiatives to sharpen product assortments, elevate brand desirability, and strengthen consumer engagement are beginning to position brands for sustainable growth.
• The Company expects total company revenue to return to growth in the second half of fiscal 2027, supported by new collections, increased marketing investments, and a focus on elevating the consumer experience.

Risks and Challenges:

• Forward-looking statements are subject to risks including macroeconomic pressures, changes in global economic conditions, and weakening consumer confidence.
• Risks include the imposition of new or additional duties, tariffs, or trade restrictions, as well as fluctuations in foreign currency exchange rates.
• Potential challenges include inflationary pressures, high consumer debt levels, recession, and disruptions in manufacturing or shipments.
• The Company faces risks related to cybersecurity threats, privacy breaches, and the loss of market share or increased competition.

Management Commentary and Tone:

• Chairman and CEO John D. Idol stated the Company is encouraged by the momentum building at both Michael Kors and Jimmy Choo.
• Management expressed confidence in the ability to deliver sustainable growth and create meaningful value for shareholders over time.
• The tone reflected optimism regarding the progress of strategic initiatives and the expectation of revenue growth in the second half of the fiscal year.

Other Key Points:

• The Company completed the sale of its Versace business to Prada S.p.A. on December 2, 2025; Versace results are classified as discontinued operations.
• During the second quarter, the Company spent $150 million to repurchase approximately 10.3 million ordinary shares at an average cost of $14.56 per share.
• As of September 26, 2026, the remaining availability under the share repurchase program was $721 million.
• The total number of retail stores decreased to 860 as of September 26, 2026, from 907 in the prior year (Michael Kors: 655 vs. 691; Jimmy Choo: 205 vs. 216).
• The Company is unable to provide a reconciliation of the non-GAAP financial outlook to GAAP measures without unreasonable effort due to the challenge in quantifying foreign currency fluctuations, taxes, increased tariffs, and future restructuring charges.