Capri Holdings Q2 losses widen ahead of Versace sale

Capri Holdings has reported that revenues from continuing operations fell 2.5% to $856m (£675m) for the second quarter ended 27 September, as the company prepares to complete the sale of its Versace brand to Prada. 

On a constant currency basis, sales were down 4.2% at the New York-listed luxury group during the second quarter and its operating margin stood at negative 1.4%, with an adjusted operating margin of 2.3%.

In brand results, Michael Kors revenue fell 1.8% to $725m (£556m), while Jimmy Choo sales declined 6.4% to $131m (£100m). Michael Kors posted an operating margin of 10.1%, compared with a 6.9% operating loss at Jimmy Choo.

While Capri recorded a loss of $34m (£26m), compared with a profit of $42m (£32.2m) a year earlier, chief executive John Idol maintained that the business had seen “improving trends” and results ahead of expectation, adding that the company was making progress on strategic plans “to energise fashion luxury houses”.  

The group had $120m (£92m) in cash and $1.76bn (£1.35bn) in borrowings at the end of the quarter, with net debt rising slightly to $1.64bn (£1.2bn).

Idol confirmed that Capri’s focus would turn to its Michael Kors and Jimmy Choo brands once the Versace sale concludes in the third quarter of the financial year, as the proceeds of the sale would repay the majority of Capri’s debt. 

The Versace sale, agreed in April with Prada for $1.375bn (£1.05bn) in cash, is expected to complete in the second half of 2025 subject to regulatory approval.

The board has also authorised a $1bn (£770m) share repurchase programme to begin in the 2027 financial year. Capri said it expected to return to growth in fiscal 2027 as retail conditions improve.

Looking ahead, Capri forecast full-year revenues between $3.38bn (£2.59bn) and $3.45bn (£2.65bn) and operating income of around $100m (£76.7m).