Luxury fashion conglomerate Capri Holdings, the parent company of Michael Kors, has projected annual profit that surpasses Wall Street expectations, fueled by a strategic overhaul aimed at revitalizing its core brands. The New York-based firm's shares edged up 1% in premarket trading, even as its stock has tumbled 24% this year amid broader declines in consumer demand for luxury goods.
Turnaround Strategy in Focus
The company's turnaround strategy centers on selling its handbags and footwear at full price while fostering innovation to attract a more affluent and diverse customer base. Capri Holdings also announced plans to recoup $65 million in tariffs paid under the International Emergency Economic Powers Act, which it has recorded as a refund.
Profit and Revenue Outlook
For fiscal year 2027, Capri anticipates earnings per share of approximately $2.15, compared with analysts' average estimate of $1.83, according to data compiled by LSEG. This optimistic projection comes despite recent challenges, including a sixth consecutive quarter of sales declines for the Michael Kors brand in February, which sent shares down 10% at the time. However, the company's holiday-quarter revenue slightly exceeded Wall Street forecasts.
Market Challenges and Competition
U.S. consumers have become more selective in their discretionary spending as inflation pressures persist, prompting luxury brands to intensify marketing efforts. While some labels, such as Tapestry's Coach, have experienced strong demand among younger shoppers, Michael Kors has struggled to maintain momentum. The brand's turnaround efforts aim to reverse this trend by emphasizing exclusivity and premium positioning.
