Michael Kors owner Capri forecasts upbeat revenue, shares jump

A Michael Kors Holdings Limited retail store is shown.

Capri Holdings forecast second-quarter revenue above estimates on Wednesday, after its turnaround strategy and improving demand for luxury handbags and footwear helped the Michael Kors owner defy a broader retail slowdown.

The company also beat estimates for quarterly profit and revenue, sending its shares up 12 per cent in morning trading, even as Capri forecast a bigger tariff impact on costs than earlier estimated.

Investors have been hoping for signs of strength from Capri, after it lost nearly 44 per cent of its stock value over the past year and competitors gained more market share.

In an attempt to stem the declines, Capri kicked off a turnaround strategy that included shedding its struggling Versace label to Italy’s Prada earlier this year.

It is also implementing cost-saving measures such as headcount reductions, store renovations and efficiency improvements across its supply chain.

To power sales, the company has been ramping up its marketing efforts, building out its social media presence and expanding its network of influencer partnerships, CEO John Idol said during a post-earnings call.

As a result, Michael Kors revenue, which represents 68 per cent of Capri’s total, fell only 5.9 per cent in the quarter, compared with a 14.2 per cent drop a year ago.

“The sequential improvement in demand suggests that Capri’s focus on making its brand more desirable - through marketing and more exciting product launches - are beginning to resonate with shoppers,” said Rachel Wolff, analyst with eMarketer.

It expects tariffs on products shipped into the U.S. to increase costs by about $85 million in fiscal 2026, compared with $60 million projected earlier.

The company -which imports the majority of U.S. products from Vietnam, Cambodia, Indonesia, Bangladesh and China - plans to offset the impact through sourcing optimization, cost efficiencies with partners, and price hikes.

It also expects second-quarter revenue of about US$815 million to $835 million, compared with estimates of $819.1 million, per data compiled by LSEG.

Profit of 50 cents per share beat estimates of 13 cents.

Net revenue fell six per cent to $797 million, compared with estimates of $793.1 million.

(Reporting by Anuja Bharat Mistry in Bengaluru and Samantha Marshak in New York; Editing by Devika Syamnath)