On the surface, Capri Holdings had another soft quarter. The American group behind Michael Kors and Jimmy Choo reported that revenue slipped 4.1 percent to 769 million dollars on a constant currency basis in its fiscal first quarter. For a company that has spent the past couple of years fighting to steady itself, a fourth consecutive decline is not the headline anyone wants.
Look past the top line, though, and a different and more encouraging story appears. The result actually came in ahead of the company's own expectations, gross margin widened by two full percentage points to 65 percent, and the balance sheet has been transformed. This was a quarter about quality over quantity, and about a business that has just shed an enormous weight.
The Versace sale changes everything
That weight was debt. Capri closed the quarter with 114 million dollars in cash against 338 million dollars of debt, leaving net debt of just 224 million dollars. A year earlier that figure stood at a daunting 1.5 billion dollars. The swing is not the product of a magical trading turnaround. It is the direct result of a single decision, the December 2025 sale of Versace to the Prada Group for 1.4 billion dollars.
Selling one of its three houses was a drastic move, and it leaves Capri a smaller company. But it also hands the group room to breathe, freeing it from the interest payments and pressure that had come to define its story. A business drowning in borrowing cannot invest in its brands. A business with almost none can.
A tale of two brands
What remains is a portfolio pulling in two directions. Jimmy Choo is the bright spot, with revenue up 9.3 percent to 179 million dollars and growth across every region, led by a striking 26 percent jump in the Americas, followed by gains of 5 percent in Europe and 3 percent in Asia. For a brand that has spent years searching for consistency, that breadth is meaningful.
Michael Kors, still the largest piece of the company, remains the harder problem. Its revenue fell 7.6 percent to 590 million dollars, dragged down by declines of 10 percent in the Americas and 5 percent in Europe. The one encouraging note came from Asia, where the brand managed 6 percent growth, a hint that the label can still find momentum in the right markets.
Betting on healthier sales
Chief executive John Idol struck an upbeat tone, saying the company was pleased with the results and pointing to the shift he cares about most, the quality of its sales rather than the sheer volume. He noted that full price sell throughs and average unit retails were up at both brands, a sign that Capri is leaning less on discounting to move product and protecting the perceived value of its labels in the process.
That discipline underpins the outlook. Capri expects roughly 3.4 billion dollars in revenue for the full year, and is forecasting that Michael Kors will return to growth in the second half while Jimmy Choo swings back to profit. It is a modest, believable set of promises rather than a grand rescue narrative, which may be exactly the point.
The company that emerges from this quarter is smaller, less indebted, and more focused than the one that entered it. Whether that is enough to revive Michael Kors is the question the next two quarters will answer. For now, Capri has done the hard, unglamorous work of clearing its debt, and given itself the one thing it lacked for years, the freedom to play a longer game.
