Capri Holdings Ltd. - Q1 2027 (Ended June 27, 2026) Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the three-month period ended June 27, 2026 (Fiscal Q1 2027). Capri Holdings Limited operates two primary reportable segments: Michael Kors and Jimmy Choo. The Versace business was sold to Prada S.p.A. in December 2025 and is reported as discontinued operations. The Company is a large accelerated filer incorporated in the British Virgin Islands.
Key Financial Metrics
| Metric | Q1 2027 (Current) | Q1 2026 (Prior Year) |
|---|---|---|
| Total Revenue | $769 million | $797 million |
| Gross Profit | $500 million | $502 million |
| Gross Margin | 65.0% | 63.0% |
| Income from Continuing Operations | $17 million | $16 million |
| Net Income (Attributable to Capri) | $69 million | $53 million |
| Diluted EPS | $0.60 | $0.44 |
| Operating Cash Flow | $73 million | $20 million |
| Cash and Cash Equivalents | $114 million | $135 million |
| Total Debt | $338 million | $357 million |
| Working Capital | $182 million | $199 million |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 3.5% ($28 million) year-over-year. On a constant currency basis, revenue declined 4.1%.
- Segment Performance:
- Michael Kors: Revenue decreased 7.1% ($45 million) due to quality of sale initiatives and reduced promotional activity. Operating income fell 12.7% to $55 million.
- Jimmy Choo: Revenue increased 10.5% ($17 million) driven by growth across all channels. Operating income improved significantly to $13 million from $4 million.
- Margin Expansion: Gross margin improved 200 basis points to 65.0%, driven by higher full-price sell-throughs and lower U.S. import tariff costs compared to the prior year.
- Profitability: Net income attributable to Capri increased 30.2% to $69 million, primarily due to a $13 million increase in interest income (lower average borrowings) and a tax benefit.
- Share Repurchases: The Company repurchased 2.59 million shares for $50 million under its $1.0 billion program, leaving $871 million remaining.
Outlook, Risks, and Unusual Items
- Tariff Refunds: Following a U.S. Supreme Court ruling invalidating IEEPA tariffs, the Company recorded a $65 million receivable. As of July 31, 2026, $49 million had been collected. The Company expects to recover the full amount but notes risks regarding government processing delays.
- New Tariff Risks: On July 23, 2026, the U.S. Trade Representative imposed new tariffs (10% or 12.5%) on 60 economies effective July 24, 2026, creating uncertainty for future costs.
- Debt Restructuring: On June 24, 2026, the Company amended its credit facility, reducing total commitment from $1.5 billion to $1.0 billion and extending maturity to 2031. Remaining availability is $678 million.
- Legal Proceedings: Litigation regarding the terminated merger with Tapestry, Inc. remains pending. Plaintiffs filed an amended complaint in April 2026; the Company filed a motion to dismiss in June 2026.
- Capital Expenditures: CapEx was $25 million for the quarter. The Company expects to spend approximately $125 million in Fiscal 2027 for store renovations and IT enhancements.
Investor Verification Checklist
- Tariff Recovery: Verify the timeline and certainty of collecting the remaining $16 million of the IEEPA tariff refund receivable.
- Michael Kors Turnaround: Assess the sustainability of the "quality of sale" strategy given the 7.1% revenue decline and whether it will continue to pressure top-line growth.
- Debt Covenants: Confirm continued compliance with the 4.0x net leverage ratio covenant under the amended 2026 Revolving Credit Facility.
- Legal Exposure: Monitor the status of the securities class action lawsuit regarding the terminated Tapestry merger.
- FX Hedging: Review the impact of the $5.9 billion notional value of outstanding derivative contracts on future earnings volatility.