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By Angela Christy M
Feb 3 (Reuters) - Capri Holdings reported a sixth straight quarter of decline in sales for its key Michael Kors brand, dragging the company’s shares down 10% on Tuesday despite a forecast bump and holiday quarter revenue that edged past Wall Street estimates.
Consumers in the U.S. have been picky about their big-ticket discretionary spending as inflation weighs on budgets. This has shifted focus to marketing, with some brands such as Tapestry’s Coach seeing strong demand from younger consumers, while others like Michael Kors struggle.
"Michael Kors has consistently been slower than rivals to react to fast-moving trends, particularly around collaborations, youth-driven marketing and quick-turn product launches," Patrick Ricciardi, an analyst at Third Bridge said.
On Capri’s post-earnings call, executives also attributed a reduction in promotional activity to the sales hit.
Sales under its Michael Kors label, which accounts for over 80% of the company’s revenue, fell 5.6% in the quarter. In contrast, Jimmy Choo sales rose 5%.
Import duties have also crimped margins for companies such as Capri, which sources products from tariff-hit countries such as Vietnam and China and noted a higher-than-expected tariff impact in the third quarter.
The company has been working to stabilize its core portfolio after selling Versace to Prada late last year. It is also curtailing promotions to target full-price sales in order to shield margins, which rose about 70 basis points in the quarter.
Capri had warned of an unmitigated tariff impact of about $85 million in fiscal 2026, with the third and fourth quarters bearing the bulk of the hit.
The company now expects fiscal year 2026 revenue in the range of $3.45 billion to $3.48 billion, up from its prior forecast of $3.38 billion to $3.45 billion.
Its quarterly revenue of $1.03 billion edged past estimates of $1 billion, according to data compiled by LSEG.
Adjusted earnings per share for the quarter came in at 81 cents, beating estimates of 77 cents.
