Gross profit for the quarter was $623 million, with a gross margin of 60.8 percent, compared to $674 million and 63.1 percent a year earlier. The company noted that underlying gross margins expanded by 70 basis points, although this was offset by higher-than-expected tariffs.
Capri Holdings reported revenue of $1.025 billion in Q3FY26, down 4 percent year-over-year, while operating margin improved to 4.5 percent. Adjusted EPS rose to $0.81. Strong cash flow and the divestment of Versace reduced net debt to $80 million. Michael Kors experienced a drop in revenue, while Jimmy Choo achieved growth. The company expects to return to growth in FY27.
Revenue from operations increased to $46 million, compared to $26 million a year earlier. On an adjusted basis, revenue from operations was $79 million, down from $97 million in the same period last year. Net income rose sharply to $57 million, while adjusted net income hit $98 million, Capri Holdings said in a news release.
Net inventory decreased 6.5 percent year-on-year to $663 million. Operating cash flow for the quarter was $271 million, while capital expenditures totaled $19 million, resulting in free cash flow of $252 million. Cash and cash equivalents totaled $154 million, with total debt of $234 million, slashing net debt from $1.17 billion a year earlier to $80 million.
Michael Kors reported third-quarter revenue of $858 million, down 5.6 percent on a reported basis and down 7.3 percent in constant currency terms. Gross margin decreased from 62.6 percent to 59.7 percent, while operating income fell to $119 million, resulting in an operating margin of 13.9 percent.
By contrast, Jimmy Choo achieved growth during the quarter, with revenue increasing 5 percent on a reported basis and 1.9 percent in constant currency terms to $167 million. Gross margin improved slightly to 66.5 percent. The brand posted operating income of $3 million, reversing an operating loss of $6 million in the prior year.
The company completed the sale of its Versace business on December 2, 2025, following an agreement signed with Prada SpA in April 2025. As a result, Versace has been classified as discontinued operations, and reported results focus solely on continuing operations.
“We are pleased with our performance in the third quarter, which exceeded our expectations. At both Michael Kors and Jimmy Choo, we continue to advance our strategic initiatives to position our iconic brands for long-term success. Looking ahead, we remain confident that these strategies will support a return to growth in fiscal 2027, as well as lay the foundation for sustainable performance going forward,” he said. John D Idol, President and CEO of Capri Holdings.
“We recently completed the sale of Versace, which was a thoughtful decision to strengthen our financial foundation, ensuring we have the flexibility to support Michael Kors and Jimmy Choo's strategic initiatives and enhance long-term shareholder value. The proceeds from the sale were used to significantly reduce our debt levels and we ended the quarter with $80 million of net debt,” Idol added.
Looking ahead, Capri Holdings provided adjusted, non-GAAP guidance for all of FY26 based on continuing operations. The company expects total revenue of approximately $3.45 billion-$3.47 billion and operating income of around $100 million. Diluted earnings per share are projected in the range of $1.3 to $1.4, with capital spending of approximately $100 million.
For Michael Kors, the company expects revenue between $2.86 billion and $2.87 billion and an operating margin in the high single digits. Jimmy Choo is expected to generate revenue of between $590 million and $600 million, with an operating margin in the negative single digit range.
Fiber2Fashion News Desk (SG)
