In a surprising turn of events, Capri Holdings defies expectations post-Versace sale, sparking questions about its future strategy. But here's where it gets controversial: can shedding a luxury giant like Versace truly pave the way for sustainable growth in its remaining brands? Let’s dive in.
Capri Holdings, the parent company behind Michael Kors and Jimmy Choo, reported a 5.9% year-over-year decline in revenues on a constant currency basis, reaching $1.03 billion in the third quarter of fiscal 2026, which ended on December 27. Despite this drop, the results surpassed both internal forecasts and analyst predictions, leaving many wondering about the company’s resilience. This quarter marks Capri’s first since the high-profile sale of Versace to Prada Group in December 2025, a move that has reshaped its financial landscape.
John D. Idol, Capri’s chair and CEO, framed the Versace sale as a strategic decision to fortify the company’s financial foundation. He emphasized that the proceeds would provide the flexibility needed to support Michael Kors and Jimmy Choo’s long-term initiatives and enhance shareholder value. But is this enough to convince skeptics that Capri can thrive without one of its most iconic brands? And this is the part most people miss: the sale’s $1.4 billion in proceeds has already been put to work, significantly reducing Capri’s debt. By the end of the quarter, the company’s net debt had plummeted to approximately $80 million, down from $1.6 billion in the previous quarter—a dramatic turnaround that interim CFO Rajal Mehta highlighted during investor discussions.
Breaking it down by brand, Michael Kors saw a 7.3% year-over-year revenue decline to $858 million, while Jimmy Choo bucked the trend with a modest 1.9% increase to $167 million. Idol expressed satisfaction with the quarter’s performance, noting that both brands are advancing strategic initiatives to secure their long-term success. But here’s the bold question: can Michael Kors and Jimmy Choo truly fill the void left by Versace, or is Capri setting itself up for a future where it’s just another player in a crowded luxury market?
Geographically, the results were mixed. Revenues in the Americas dipped 7% to $646 million, though Mehta pointed to encouraging retail trends in North America for Michael Kors. EMEA (Europe, the Middle East, and Africa) saw a 5% increase to $268 million, while Asia revenues slipped 4% to $111 million. These regional variations raise another point of contention: is Capri’s focus on EMEA and North America enough to offset its struggles in Asia?
Adding to the complexity is Capri’s exposure to Saks Global’s recent bankruptcy. The company is owed $33 million, though Mehta downplayed the impact, calling it ‘not very material.’ Capri has reserved $15 million for the loss and remains optimistic about working with Saks’s new management team, which has experience navigating similar challenges with Neiman Marcus. But this raises a provocative question: is Capri’s confidence in Saks’s turnaround justified, or is it risking further financial exposure?
Looking ahead, Capri expects its tariff mitigation efforts to continue into 2027, with a majority of the impact offset by the end of the year. The company anticipates full-year 2027 revenues between $3.45 and $3.475 billion, with Michael Kors contributing $2.86 to $2.875 billion and Jimmy Choo adding $590 to $600 million. Idol remains optimistic about sustainable growth for both brands, but the real test will be whether these projections hold up in an increasingly competitive luxury market.
So, what do you think? Is Capri’s post-Versace strategy a bold move toward a brighter future, or a risky gamble that could leave it struggling to compete? Share your thoughts in the comments—we’d love to hear your take on this evolving story.
