Capri Holdings Limited Releases Third Quarter Fiscal 2025 Results: A Strategic Reevaluation Amid Challenges
Capri Holdings Limited, a global leader in the luxury fashion industry, has announced its financial results for the third quarter of Fiscal 2025, which ended on December 28, 2024. The company, known for its iconic brands Versace, Jimmy Choo, and Michael Kors, reported a challenging quarter marked by declining revenues and adjusted earnings. Despite these setbacks, Capri Holdings remains optimistic about its long-term growth potential and is actively reevaluating its strategic initiatives to improve sales trends.
Third Quarter Fiscal 2025 Highlights
- Revenue Decline: Total revenue decreased by 11.6% on a reported basis and 11.4% in constant currency.
- Adjusted Operating Margin: The company achieved an adjusted operating margin of 6.0%.
- Earnings Per Share: Adjusted earnings per share stood at $0.45.
John D. Idol, Chairman and Chief Executive Officer of Capri Holdings, expressed disappointment with the quarter’s results but emphasized the company’s commitment to strategic reevaluation. “Overall, our business remained challenged during the quarter, and we were disappointed with our results,” said Mr. Idol. “We are reevaluating our strategic initiatives to improve current sales trends. Looking ahead, we expect our performance to improve throughout fiscal year 2026, positioning us to return to growth in fiscal 2027 and beyond.”
Mr. Idol concluded on a positive note, highlighting the enduring appeal of Capri’s portfolio of luxury brands. “Our portfolio of iconic fashion luxury brands—Versace, Jimmy Choo, and Michael Kors—are globally recognized and resonate with consumers. I am optimistic about Capri’s future and remain confident in our long-term growth potential.”
Detailed Financial Performance
Total Revenue and Gross Profit
- Total Revenue: $1.26 billion, a decrease of 11.6% compared to last year. On a constant currency basis, total revenue declined by 11.4%.
- Retail Sales: Decreased in the low-double-digits.
- Wholesale Revenue: Decreased in the low-teens.
- Gross Profit: $812 million with a gross margin of 64.4%, compared to $928 million and 65.0% in the prior year. The decline in gross profit margin by 60 basis points was primarily due to lower full-price sell-throughs.
Operating Income and Net Loss
- Loss from Operations: $590 million with an operating margin of (46.8)%, compared to income from operations of $122 million and an operating margin of 8.5% in the prior year. This loss was driven by a non-cash impairment charge of $675 million.
- Adjusted Income from Operations: $76 million with an adjusted operating margin of 6.0%, compared to $172 million and 12.1% in the prior year. The decline in operating margin reflects expense deleverage on lower revenue.
- Net Loss: $547 million, or $(4.61) per share, compared to net income of $105 million, or $0.88 per diluted share, in the prior year. The net loss was driven by a non-cash impairment charge of $602 million, or $5.08 per share.
- Adjusted Net Income: $54 million, or $0.45 per diluted share, compared to $142 million, or $1.20 per diluted share, in the prior year period.
Inventory and Cash Flow
- Net Inventory: $892 million as of December 28, 2024, a 13% decrease compared to the prior year.
- Cash Flow from Operating Activities: An inflow of $309 million.
- Free Cash Flow: An inflow of $278 million.
- Cash and Cash Equivalents: Totaled $356 million.
- Total Borrowings Outstanding: $1.48 billion, resulting in net debt of $1.12 billion as of December 28, 2024, versus $1.60 billion last year.
- Leverage Ratio: 2.77x as calculated under the terms of the Company’s credit facility.
Credit Facility Update
On February 4, 2025, Capri Holdings entered into an amended and restated senior secured credit agreement. This agreement replaces the company’s existing $1.5 billion revolving credit facility and adds a new term loan of $700 million. The proceeds were used to repay in full the company’s $450 million delayed draw term loan and, together with borrowings under the revolver, to repay in full the €450 million Versace term loan. The maturity date for both the revolving credit facility and the new term loan is July 2027.
Brand-Specific Performance
Versace
- Revenue: $193 million, a decrease of 15.0% on both a reported basis and constant currency basis compared to the prior year.
- Retail Sales: Decreased mid-teens.
- Wholesale Revenue: Decreased double-digits.
- Regional Performance: Americas (-21%), EMEA (-13%), Asia (-11%).
- Global Database Growth: Increased by 1.1 million new consumers, representing 15% growth over the last year.
- Operating Loss: $21 million with an operating margin of (10.9)%, compared to an operating loss of $14 million and an operating margin of (6.2)% in the prior year.
Jimmy Choo
- Revenue: $159 million, a decrease of 4.2% on both a reported basis and constant currency basis compared to the prior year.
- Retail Sales: In-line with the prior year.
- Wholesale Revenue: Decreased mid-teens.
- Regional Performance: Americas (-10%), EMEA (+9%), Asia (-17%).
- Global Database Growth: Increased by 0.7 million new consumers, representing 12% growth over the last year.
- Operating Loss: $6 million with an operating margin of (3.8)%, compared to operating income of $4 million and an operating margin of 2.4% in the prior year.
Michael Kors
- Revenue: $909 million, a decrease of 12.1% on a reported basis and 11.7% on a constant currency basis compared to the prior year.
- Retail Sales: Decreased low-teens.
- Wholesale Revenue: Declined high-single-digits.
- Regional Performance: Americas (-10%), EMEA (-13%), Asia (-27%).
- Global Database Growth: Increased by 9 million new consumers, representing 11% growth over the last year.
- Operating Income: $147 million with an operating margin of 16.2%, compared to $219 million and 21.2% in the prior year.
Outlook
Fiscal Year 2025 Outlook
- Total Revenue: Approximately $4.4 billion, including a negative impact of approximately $40 million from foreign currency.
- Adjusted Operating Income: Approximately $100 million.
- Ending Inventory: Expected to be below prior year.
Brand-Specific Outlook for Fiscal Year 2025
- Versace: Total revenue of approximately $810 million, including a negative impact of approximately $10 million from foreign currency. Operating margin in the negative high-single-digit range.
- Jimmy Choo: Total revenue of approximately $600 million, including a negative impact of approximately $5 million from foreign currency. Operating margin in the negative low-single-digit range.
- Michael Kors: Total revenue of approximately $3.0 billion, including a negative impact of approximately $25 million from foreign currency. Operating margin in the low-double-digit range.
Fiscal Year 2026 Outlook
- Total Revenue: Approximately $4.1 billion, including a negative impact of approximately $100 million from foreign currency.
- Adjusted Operating Income: Approximately $150 million.
Brand-Specific Outlook for Fiscal Year 2026
- Versace: Total revenue of approximately $800 million, including a negative impact of approximately $25 million from foreign currency. Operating margin of approximately break-even.
- Jimmy Choo: Total revenue of approximately $550 million, including a negative impact of approximately $15 million from foreign currency. Operating margin slightly negative.
- Michael Kors: Total revenue of approximately $2.75 billion, including a negative impact of approximately $60 million from foreign currency. Operating margin in the low-double-digit range.
