Capri Holdings Ltd. - Q3 2025 (Ended Dec 28, 2024) Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended December 28, 2024 (Fiscal Q3 2025). Capri Holdings Ltd. operates three luxury fashion brands: Versace, Jimmy Choo, and Michael Kors. The reporting period was significantly impacted by the termination of the proposed merger with Tapestry, Inc. in November 2024, following a preliminary injunction granted by a U.S. District Court at the request of the FTC.
Key Financial Metrics
| Metric | Q3 2025 (3 Months) | Q3 2024 (3 Months) | YTD 2025 (9 Months) | YTD 2024 (9 Months) |
|---|---|---|---|---|
| Total Revenue | $1,261 million | $1,427 million | $3,407 million | $3,947 million |
| Gross Profit | $812 million (64.4%) | $928 million (65.0%) | $2,195 million (64.4%) | $2,572 million (65.2%) |
| Operating (Loss) Income | $(590) million | $122 million | $(636) million | $302 million |
| Net (Loss) Income | $(546) million | $105 million | $(535) million | $243 million |
| Diluted EPS | $(4.61) | $0.88 | $(4.54) | $2.06 |
| Cash from Operations (YTD) | $442 million | |||
| Total Debt (Carrying Value) | $1,479 million | |||
| Cash & Equivalents | $356 million |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 11.6% in Q3 and 13.7% YTD compared to the prior year. On a constant currency basis, declines were 11.4% (Q3) and 13.3% (YTD). All three brands reported revenue decreases, with Versace down 15.0% (Q3) and Michael Kors down 12.1% (Q3).
- Significant Impairment Charges: The company recorded $675 million in impairment charges for Q3 and $718 million YTD. This includes $430 million in goodwill impairment (Versace and Jimmy Choo) and $231 million in intangible asset impairment. These charges were driven by the termination of the Tapestry merger, a decline in share price, and softening global demand.
- Operating Margin Compression: Operating margin turned negative at -46.8% for Q3 and -18.7% YTD, compared to positive margins of 8.5% and 7.7% in the prior year periods, primarily due to the non-cash impairment charges.
- Merger Termination: The merger with Tapestry was terminated in November 2024. Capri received a $45 million reimbursement from Tapestry for expenses, recorded as income within SG&A.
Guidance, Outlook, and Risks
- Outlook: Management cites continued softening of consumer demand for luxury goods globally and the impact of brand repositioning efforts at Versace and Michael Kors. The company paused certain IT transformation projects in Fiscal 2024 and plans to reassess them in Fiscal 2026.
- Liquidity: The company maintains $978 million in remaining availability under its revolving credit facility and $356 million in cash. It recently entered into a new credit agreement in February 2025 (subsequent event) to refinance existing debt.
- Risks:
- Legal Proceedings: Two putative class action lawsuits were filed in late December 2024 and January 2025 alleging securities law violations related to the terminated merger.
- Future Impairments: Management warns that further goodwill or intangible asset impairments could occur if business conditions or strategies change.
- Macroeconomic Factors: Inflation, high consumer debt, and geopolitical instability continue to impact discretionary spending.
Investor Verification Checklist
- Impairment Methodology: Verify the assumptions used in the fair value assessments for Versace and Jimmy Choo reporting units that led to the $671 million impairment charge.
- Merger Litigation Exposure: Monitor the status of the shareholder class action lawsuits filed regarding the terminated Tapestry merger and potential liability.
- Debt Refinancing: Review the terms of the new credit agreement entered into on February 4, 2025, and its impact on future interest expenses and covenants.
- Brand Repositioning Impact: Assess whether the strategic shifts at Versace and Michael Kors are stabilizing revenue trends in upcoming quarters.
- Store Optimization: Track the progress of the Global Optimization Plan, including store closures and associated lease termination gains/losses.