Breaking Down Capri Holdings Limited (CPRI) Financial Health: Key Insights for Investors

You're looking at Capri Holdings Limited (CPRI) right now and wondering how to reconcile the numbers after the Tapestry merger fell apart, and honestly, that's the right question to ask because the luxury group is defintely at a crossroads. The company's fiscal second-quarter 2025 results were a mixed bag that shows the core challenge: while revenue came in strong at $856 million, beating expectations, the company posted an earnings per share (EPS) loss of -$0.03, missing the forecast by over 120%. Management is still guiding for full-year revenue between $3.375 billion and $3.45 billion, but with gross margin contracting to 61% and net debt sitting at roughly $1.6 billion, the pressure is on the Michael Kors and Jimmy Choo brands to execute their turnaround without the safety net of the proposed $8.5 billion Tapestry deal. This isn't just a balance sheet review; it's a deep dive into whether a standalone CPRI can generate the necessary free cash flow to justify its current valuation and drive growth in a competitive accessible-luxury market.

Revenue Analysis

You need a clear picture of where Capri Holdings Limited (CPRI) makes its money, and honestly, the headline for fiscal year 2025 is a sharp contraction. Total revenue for the year ended March 29, 2025, came in at approximately $4.44 billion, a significant drop of 14.1% from the prior fiscal year. This isn't just a minor headwind; it's a clear signal of the softening global demand for fashion luxury goods, especially in the core Michael Kors brand.

Breakdown of Primary Revenue Sources

Capri Holdings Limited generates revenue primarily through its three distinct luxury houses: Michael Kors, Versace, and Jimmy Choo. The revenue streams are split between direct-to-consumer (retail sales) and wholesale channels, but the brand segment contribution is the most critical metric for investors right now. The Michael Kors brand remains the dominant, albeit challenged, revenue engine for the group.

Here's the quick math on how each segment contributed to the FY2025 revenue of approximately $4.44 billion:

Year-over-Year Revenue Growth Rate and Segment Performance

The overall year-over-year revenue decrease of 14.1% for FY2025 tells a story of broad-based weakness. While the full-year segment revenue decline rates aren't uniformly available, the Q4 FY2025 results highlight the immediate pressure points. For context, Michael Kors revenue decreased 15.6% in Q4, and Versace saw a steep drop of 21.2% in the same quarter. Jimmy Choo was slightly more resilient, decreasing by 2.9% in Q4, but still in the red. This shows a luxury market where even the high-end brands are struggling to maintain pricing power and volume.

What this estimate hides is the regional pain. In Q1 FY2025, for example, Michael Kors saw revenue declines across the board: Americas down 10%, EMEA (Europe, Middle East, and Africa) down 21%, and Asia down 23%. That's a global problem, not a regional one.

Analysis of Significant Changes and Near-Term Risk

The biggest structural change impacting Capri Holdings Limited's future revenue streams is the definitive agreement to sell Versace to Prada Group for $1.375 billion in cash. This transaction is expected to close in the second half of calendar 2025, meaning Versace will be classified as a discontinued operation starting in fiscal year 2026. This is a massive shift.

• Near-Term Revenue Risk: The company's own guidance for fiscal year 2026 projects total revenue to decline further, to a range of approximately $3.3 to $3.4 billion.
• Strategic Focus: Post-Versace sale, the company will be intensely focused on the turnaround of Michael Kors and the growth of Jimmy Choo, using the sale proceeds to substantially reduce debt.
• Product Mix: The core product mix remains heavily weighted toward accessories and footwear, which are sensitive to discretionary spending cuts.

The company is trying to manage its operating expenses and inventory levels carefully, but the environment is defintely challenging. Before making any investment decision, you should check out the Mission Statement, Vision, & Core Values of Capri Holdings Limited (CPRI). to understand the long-term strategy behind these immediate financial moves.

Profitability Metrics

The direct takeaway for Capri Holdings Limited's (CPRI) Fiscal Year (FY) 2025 profitability is stark: the company posted a significant net loss, primarily driven by a non-cash accounting charge and a challenging global demand environment. While the gross margin remains high, the operational leverage broke down, which is a red flag for cost management.

You need to look past the high top-line margin to see the real operational pressure. Here's the quick math on the key profitability ratios for the fiscal year ended March 29, 2025.

• Gross Profit Margin: The margin was 63.6% for FY2025.
• Operating Profit Margin (GAAP): The company reported a significant operating loss, which, when calculated against the full-year revenue of approximately $4.44 billion, shows the high cost of selling, general, and administrative expenses (SG&A) relative to sales.
• Net Profit Margin (GAAP): With a net loss of $645 million, the net profit margin for the year was approximately -14.53%. This is defintely a tough number to digest.

Gross Margin and Operational Efficiency

Capri Holdings Limited's gross profit margin of 63.6% in FY2025 is still impressive, reflecting the pricing power of its luxury brands like Michael Kors and Jimmy Choo. But, honestly, the trend is concerning. That 63.6% figure is actually a five-year low, having decreased from 64.6% in 2024. This 100-basis-point drop signals a few things:

• Lower Full-Price Sell-Throughs: They're likely moving more inventory at a discount, especially in the Michael Kors brand, to clear stock in a soft demand environment.
• Cost Management Headwinds: The decline in the operating margin is directly tied to lower gross margin plus 'expense deleverage on lower revenue.' It means fixed costs-like rent and salaries-are eating up a larger percentage of every dollar of sales because revenue is shrinking.

Net Profit: A Closer Look at the Loss

The net loss of $645 million is a headline number that requires context. It includes a massive, non-cash tax valuation allowance of $545 million taken against the company's deferred tax assets. This is an accounting move that acknowledges the company might not generate enough future taxable income to use those tax assets. So, while the underlying operational loss is still substantial, the one-time tax charge makes the GAAP net loss look much worse.

What this estimate hides is the operational drag. Even the adjusted net loss, which excludes the tax charge and other one-time items, was a loss of $581 million for the full year. That's the real measure of the cash burn from operations.

Benchmarking Against the Luxury Sector

When you compare Capri Holdings Limited's profitability to the broader luxury retail industry, the gap is clear. Top-tier luxury groups operate with net profit margins well into the double digits. For instance, in a prior period, PVH Corp., a multi-brand peer, reported a net profit margin of 10.40%. The industry's best, like LVMH, can reach over 18%. Capri Holdings Limited's negative net margin of approximately -14.53% puts it far outside the healthy range for the sector, highlighting the need for a strategic turnaround, which you can read more about here: Mission Statement, Vision, & Core Values of Capri Holdings Limited (CPRI).

Here's a snapshot of the core metrics:

The company has a high gross margin, but its SG&A expenses are simply too high for the current revenue base. That's the core operational problem.

Debt vs. Equity Structure

You need to know how Capri Holdings Limited (CPRI) pays for its growth, and the short answer is that the company leans heavily on debt, especially compared to its peers. The financial health picture for the fiscal year ending March 29, 2025, shows a highly leveraged balance sheet, but this is set to change dramatically due to a major strategic move.

The company's reliance on borrowing is clear when you look at the Debt-to-Equity (D/E) ratio, which measures how much debt a company uses to finance its assets relative to the value of shareholders' equity. For the full fiscal year 2025, Capri Holdings Limited's D/E ratio stood at 4.03.

Here's the quick math on that leverage, showing the debt structure at the close of fiscal year 2025:

• Total Long-Term Debt: $1,466 million
• Total Short-Term Debt: $24 million
• Total Borrowings: $1.5 billion
• Total Shareholders' Equity: $372 million

A D/E ratio of 4.03 is high. To be fair, the average for the broader Apparel Retail industry is around 1.2 as of late 2025. Capri Holdings Limited is using roughly four times more debt than equity to fund its operations, which introduces a higher risk profile, but it's a calculated risk with a clear, near-term exit strategy.

Recent Refinancing and the Path to De-Leveraging

The company has been proactive in managing its existing debt obligations. In February 2025 (Q3 Fiscal 2025), Capri Holdings Limited executed a significant refinancing, entering into an amended credit agreement. This move replaced the existing $1.5 billion revolving credit facility and added a new term loan of $700 million. The primary action was to use this new capital to repay the $450 million delayed draw term loan and the €450 million Versace term loan, pushing the maturity date out to July 2027. That's smart treasury work, buying them time.

The real game-changer for the debt-to-equity balance is the planned sale of the Versace brand to Prada Group, which is expected to close in the second half of calendar year 2025 (Q3 Fiscal 2026). Capri Holdings Limited has explicitly stated they plan to use the proceeds from this sale to repay the majority of their debt. This action is the company's clear strategy to shift away from heavy debt financing and substantially strengthen the balance sheet, providing greater financial flexibility for the remaining Michael Kors and Jimmy Choo brands. This is the core of their capital structure pivot.

For a deeper dive into the full financial picture, including valuation and strategic frameworks, you can check out the full article: Breaking Down Capri Holdings Limited (CPRI) Financial Health: Key Insights for Investors

Liquidity and Solvency

You need to know how easily Capri Holdings Limited (CPRI) can cover its short-term bills, especially with the luxury market facing headwinds. The short answer is that their immediate liquidity is tight, but a major strategic move is set to dramatically improve their solvency picture later in 2025.

Analyzing the most recent figures, Capri Holdings Limited's liquidity positions show a reliance on converting inventory to cash. The company's current ratio, which compares current assets to current liabilities, was reported at approximately 1.17 for the fiscal period ending in 2025. For a quick gut check, a ratio of 1.5 to 2.0 is generally considered healthy, so a 1.17 ratio indicates limited short-term financial flexibility.

The quick ratio (or acid-test ratio) is even more telling, as it strips out inventory-which can be slow to liquidate in the fashion sector. Capri Holdings Limited's quick ratio stood at a low 0.61. This means that for every dollar of short-term debt, the company only has about 61 cents in cash or near-cash assets (excluding inventory) to cover it. This low ratio is a clear near-term risk, even when factoring in the industry's reliance on accounts receivable.

Here's the quick math on their short-term capacity:

• Current Ratio: 1.17 (Limited flexibility)
• Quick Ratio: 0.61 (Reliance on inventory conversion)
• Cash Ratio (Q1 FY2026): 0.09 (Very low cash on hand)

The working capital trend, however, shows the management is being proactive. Net inventory as of December 28, 2024 (Q3 FY2025), was $892 million, marking a 13% decrease compared to the prior year. This diligent inventory management is a positive sign, as it reduces the risk of markdowns and frees up cash that was tied up in slow-moving stock. This is a critical component of their working capital strategy, helping to mitigate the low quick ratio.

Looking at the cash flow statements for Fiscal Year 2025, the operating cash flow has shown strength in the latter half of the year. For the third quarter of FY2025 (ended December 28, 2024), cash flow from operating activities was a significant inflow of $309 million. This translated into a free cash flow inflow of $278 million for the quarter. This operating strength is what keeps the lights on and is a key counterpoint to the tight balance sheet ratios.

The biggest factor changing Capri Holdings Limited's financial health is the pending sale of Versace. The company plans to use the proceeds from this transaction-expected to close in the second half of calendar year 2025-to repay the majority of its debt. This move will substantially strengthen the balance sheet, providing greater financial flexibility. As of December 28, 2024, total borrowings were $1.48 billion, resulting in net debt of $1.12 billion. Reducing this debt load is the single most important action that will improve their solvency and overall financial profile moving into Fiscal Year 2026.

For a deeper dive into the company's long-term vision, you can review their Mission Statement, Vision, & Core Values of Capri Holdings Limited (CPRI).

What this estimate hides is the execution risk of the Versace sale. If the deal is delayed or faces unforeseen complications, the current liquidity pressure will remain, especially given the low quick ratio. Still, the anticipated debt reduction is a defintely game-changer for their long-term solvency.

Here is a snapshot of the cash flow trends for the first three quarters of Fiscal Year 2025:

Valuation Analysis

You're looking at Capri Holdings Limited (CPRI) and asking the core question: is it a buy, a hold, or a sell? Right now, the valuation metrics paint a complex picture, suggesting the stock is a turnaround play with a high-risk profile, not a textbook value investment. The consensus leans toward a 'Moderate Buy,' but the underlying ratios, especially the negative book value, demand a careful look.

The market is clearly pricing in a recovery or the potential impact of the proposed sale of Versace, but the current trailing twelve-month (TTM) earnings are still negative.

• Focus on forward-looking metrics for a clearer view.

Key Valuation Multiples (November 2025)

When we break down the core valuation multiples, we see the impact of recent performance challenges. The Price-to-Earnings (P/E) ratio, which compares the stock price to its earnings per share, is currently -5.32x on a trailing twelve-month basis. A negative P/E is a red flag, simply meaning the company had a net loss over the last year. That's why we pivot to other metrics.

The forward P/E, based on estimated future earnings, is a more palatable 14.07x. This suggests analysts expect a return to profitability. However, the Price-to-Book (P/B) ratio is a serious concern. It sits at -35.58x, indicating that the company's liabilities exceed its assets, resulting in a negative shareholders' equity (book value). This is a significant structural issue you defintely need to consider.

A better metric for a company with negative earnings is Enterprise Value-to-EBITDA (EV/EBITDA), which looks at the total company value (equity plus net debt) relative to its operating cash flow proxy (Earnings Before Interest, Taxes, Depreciation, and Amortization). Capri Holdings Limited's TTM EV/EBITDA is high at 18.3x as of mid-November 2025. For context, the five-year average for this ratio is closer to 11.77x, suggesting the stock is trading at a premium relative to its historical operating performance.

Stock Price Movement and Analyst Sentiment

Capri Holdings Limited's stock has been volatile, but it has shown resilience. Over the last 12 months, the stock has increased by approximately 12.05%, despite the significant corporate and financial headwinds. The 52-week trading range is wide, from a low of $11.86 to a high of $26.23. This volatility reflects the uncertainty surrounding the company's turnaround efforts and the on-again, off-again nature of the luxury market.

The analyst community is cautiously optimistic. The consensus rating is a 'Moderate Buy'. Out of 15 analysts covering the stock, you have one sell, six hold, and eight buy/strong buy recommendations. Here's the quick math: the average 12-month price target is approximately $24.69. With the stock trading around $22.41 in November 2025, that target implies an upside of about 9.96%.

As for income investors, Capri Holdings Limited is not a dividend stock. The company has a dividend yield of 0% and has not paid a dividend recently. The focus is entirely on capital appreciation through operational improvements and strategic changes. For more on the strategic direction, you should review the Mission Statement, Vision, & Core Values of Capri Holdings Limited (CPRI).

Risk Factors

You're looking at Capri Holdings Limited (CPRI) and seeing iconic brands, but honestly, the near-term investment picture is shadowed by a few major risks you need to map to your strategy. The direct takeaway is this: external market softness and internal brand execution issues are converging, creating financial pressure that's visible in their fiscal 2025 numbers.

The company's performance has been defintely challenged by a continued softening demand globally for fashion luxury goods. This isn't just a Capri Holdings Limited problem, but it hits them hard because of their reliance on the accessible luxury segment. Their total revenue for the fourth quarter of fiscal 2025 dropped to $1.0 billion, a 15% decrease year-over-year. That's a clear sign that global consumer confidence is a huge external risk.

• External Market Conditions: Softening demand for luxury goods globally.
• Regulatory & Political: Escalating tariff costs and trade uncertainty.
• Competition: Loss of market share in the accessible luxury space.

Operational and Financial Headwinds

The biggest operational risk is the weakness in their core brands, particularly Michael Kors, whose revenue decreased 16% in Q4 fiscal 2025. This points to a deeper issue of brand fatigue and the need for successful product innovation to drive full-price sales. The ongoing reduction in the wholesale channel, a key part of their business, also complicates their revenue stabilization efforts.

Financially, the numbers show the strain. Capri Holdings Limited reported an adjusted net loss of $581 million in the fourth quarter of fiscal 2025. Here's the quick math: this loss was heavily influenced by a non-cash tax valuation allowance of $545 million, which reflects a more cautious outlook on their ability to use deferred tax assets in the future. That's a massive writedown.

Another major financial risk is the unmitigated tariff exposure, which management projects will be a substantial drag of $85 million in fiscal 2026, up from $60 million previously. This raises the cost of goods sold and puts direct pressure on gross margins, which were already down to 61% in Q4 FY2025.

Strategic Uncertainty and Debt Load

The strategic landscape is messy right now. The pending sale of Versace to Prada S.p.A., announced in April 2025, introduces significant uncertainty. While the sale is intended to help reduce debt, the mere pendency of the transaction can disrupt relationships with customers, vendors, and employees. What this estimate hides is the potential for further disruption if the sale falls through, or if the remaining brands, Michael Kors and Jimmy Choo, cannot execute their standalone growth plans effectively.

The company also took a significant hit in fiscal 2025 from impairment charges totaling $671 million related to the goodwill and intangible assets of Jimmy Choo and Versace, which signals a reassessment of the value of these brands under current market conditions. Plus, the debt load is substantial; net debt stood at approximately $1.3 billion at the end of fiscal 2025, with a net debt to adjusted EBITDA leverage ratio of 3.2 times. That's high for a company in a turnaround phase.

To summarize the core financial risks you should focus on:

Mitigation and Next Steps

Management is not sitting still, which is key. They are focusing on a few clear mitigation strategies. They are carefully managing operating expenses and inventory levels, which helped bring inventory down in the mid-single-digit range by the end of fiscal 2025. They are also working to make the tariff impact 'tariff-neutral' through sourcing optimization and pricing adjustments.

The long-term play hinges on their strategic initiatives: investing in omnichannel capabilities and advanced analytics to improve customer engagement and conversion. They are counting on brand revitalization to drive growth in the remaining core brands. You need to monitor the execution of these plans closely. For a deeper dive into the company's long-term vision, you should review their Mission Statement, Vision, & Core Values of Capri Holdings Limited (CPRI).

Your next step is simple: track the Q3 fiscal 2026 results for any sequential improvement in Michael Kors' full-price sales and a reduction in the net debt figure following the Versace sale. If they can't show progress on both, the risk profile remains elevated.

Growth Opportunities

You're looking at Capri Holdings Limited (CPRI) right now and seeing a company in a deep strategic pivot, so the growth story is less about immediate acceleration and more about a calculated, focused turnaround. The direct takeaway is that management is trading short-term revenue for long-term margin health by streamlining the portfolio and doubling down on its core luxury assets.

The most significant strategic move, which acts as a massive growth driver by freeing up capital, is the definitive agreement to sell Versace to Prada S.p.A. for $1.375 billion in cash. This transaction, expected to close in the second half of calendar 2025, is a clear signal to concentrate resources on the Michael Kors and Jimmy Choo brands. The proceeds are earmarked to significantly reduce the company's debt, which will enhance financial flexibility for future investments and shareholder returns, including a planned $1 billion share repurchase program starting in fiscal 2027.

Here's the quick math on the near-term outlook: the company is projecting full-year fiscal 2026 revenue guidance between $3.375 billion and $3.450 billion, which is a decline from the prior year's $4.44 billion total revenue for fiscal 2025. This revenue dip is expected, but the earnings per share (EPS) is forecast to swing back to profitability, ranging from $1.20 to $1.40 per share for fiscal 2026, compared to a substantial loss of $10.00 per share in fiscal 2025. That's a huge margin swing, even if revenue is lower.

• Focus on Michael Kors and Jimmy Choo will drive future revenue.
• Michael Kors is targeting $4 billion in long-term revenue.
• Jimmy Choo is targeting $800 million in long-term revenue.

Strategic Initiatives and Brand Revitalization

The growth path hinges on executing specific brand revitalization plans. For Michael Kors, the strategy involves optimizing the retail footprint by closing 75 stores and renovating half of the existing store fleet. This is about quality over quantity, focusing on new product launches and reducing promotional activities to elevate the brand's premium luxury image. Plus, they are making major investments in omnichannel capabilities and advanced analytics, which should improve customer engagement and conversion rates.

The core competitive advantage for Capri Holdings Limited now lies in its multi-brand luxury portfolio, specifically the global recognition and established distribution networks of Michael Kors and Jimmy Choo. This includes a global network of company-operated retail stores, wholesale partnerships, and a growing e-commerce presence. The company's ability to maintain strong gross profit margins, which were around 63.6% in the first quarter of fiscal 2026, also provides a significant buffer for reinvestment in growth.

To be fair, the Michael Kors brand is anticipated to achieve an operating margin in the high single-digit range for fiscal 2026, while Jimmy Choo is still projected to have an operating margin in the negative mid-single-digit range. This shows the turnaround is defintely a work in progress. The expectation is for trends to improve in the back half of fiscal 2026, paving the way for a return to revenue and earnings growth by fiscal 2027. You can read more about the company's current financial standing in this deep dive: Breaking Down Capri Holdings Limited (CPRI) Financial Health: Key Insights for Investors.

Here is a snapshot of the fiscal 2026 outlook for the remaining core brands: