Oct 30, 2026: a gap up on margin and a higher guide
Capri reported at 7:00am. Premarket trading began at $15.78 at 4:00am and rose to $18.25 by 8:50am. The stock opened at $17.66, set a low of $17.60, and climbed to $19.14. It was $18.67 at 11:45am, on 4.5 million shares.
What happened:
- Earnings doubled the estimate. Adjusted earnings were $0.42 a share against about $0.21. Reported earnings were $0.25 a share, and the adjusted operating margin was 3.8%.
- Sales fell, with a timing boost. Revenue fell 5.5% to $809 million. About $20 million, $15 million at Michael Kors and $5 million at Jimmy Choo, was wholesale shipments that moved up from the third quarter.
- Margins rose. Gross margin rose to 63.3% from 61.0%, driven by "higher full-price sell-throughs, brand mix and lower tariff rates."
- The brands split. Michael Kors revenue fell 8.6% to $663 million. Jimmy Choo rose 11.5% to $146 million.
- A slightly higher outlook. Capri now expects fiscal 2027 revenue of about $3.42 billion, operating income of about $175 million and adjusted earnings of about $2.20 a share, up from $3.4 billion, $170 million and $2.15 in its first-quarter release.
- Buybacks continued. Capri spent $150 million on about 10.3 million shares at about $14.56 each, and had $721 million left on its program.
From the Oct 29 close, at about 11:45am:
| Stock or fund | Change |
|---|---|
| Capri (CPRI) | +16.3% |
| PVH (PVH) | +2.0% |
| V.F. Corp. (VFC) | -0.2% |
| Coach owner (TPR) | -0.7% |
| Retail fund (XRT) | -0.7% |
| Ralph Lauren (RL) | -0.8% |
The move was Capri's alone: the Coach owner, its closest peer, and the retail fund both slipped. More of the day's swings are in today's biggest stock moves.
After the jump, RSI(14) stood at 73, the shares sat 28% above their 50-day average and 4% above their 200-day average, and the stock was 34% below its 52-week high of $28.27. These are context, not signals.
What the numbers say
The beat came from margins, not sales. Gross profit fell to $512 million from $522 million even as the margin rose, because revenue fell. Michael Kors gross margin rose 220 basis points to 61.5%, and Jimmy Choo reached 71.2%.
The higher outlook matters less than it looks. The full-year revenue guide rose by $20 million, about the size of the shipments pulled into the second quarter. The third-quarter guide of about $1.005 billion already includes $20 million of shipments that will not be there. Our guide to guidance changes covers why the size of a raise matters as much as its direction.
At $18.67 the market value is about $2.1 billion. The $2.20 earnings guide puts the stock at about 8.5 times this year's earnings, which our piece on forward and trailing P/E explains how to read. Analysts' consensus target is $20.57, with a range of $16 to $25.
The bull case
- Margins are improving. More full-price selling and lower tariff rates lifted gross margin at both brands.
- A stronger balance sheet. Net debt fell to $336 million from $1.6 billion a year earlier.
- Buybacks at low prices. The $150 million of repurchases averaged about $14.56 a share. Our guide to buybacks as catalysts covers when these matter.
- Jimmy Choo is growing. Revenue rose 11.5% and the brand's margin is above 70%.
- A low multiple. About 8.5 times guided earnings.
The risks
- Michael Kors is still shrinking. The brand is more than 80% of revenue and fell 8.6%.
- Borrowed sales. About $20 million of second-quarter revenue came from the third quarter.
- Tariffs. The guide assumes a 10% to 12.5% incremental U.S. tariff rate, and the release lists higher rates as a risk.
- The price caught up. The stock is within 10% of the consensus target. Our piece on estimate revisions covers how targets follow results.
What comes next
The holiday season through late December decides whether Capri returns to growth in the second half, as management has said it will. Third-quarter results, which will show it, are due in early February 2027, with a guide of about $1.005 billion of revenue and $0.95 of adjusted earnings a share.