Here are 1-3 brief analogies to describe Capri (CPRI):

• A smaller LVMH, focused on luxury fashion and accessories brands like Versace and Michael Kors.
• A luxury fashion conglomerate akin to a more concentrated Kering.

• Michael Kors: This brand offers luxury accessories, ready-to-wear apparel, footwear, watches, jewelry, and eyewear.
• Versace: Known for its high fashion apparel, luxury accessories, haute couture, footwear, fragrances, and home furnishings.
• Jimmy Choo: Specializes in luxury footwear, handbags, and fashion accessories, including small leather goods and fragrances.

Capri Holdings (CPRI), which owns the luxury fashion brands Versace, Jimmy Choo, and Michael Kors, primarily sells its products directly to individuals through its company-operated retail stores and e-commerce websites. While the company also operates a significant wholesale business with department stores and specialty retailers (B2B), the majority of its revenue (approximately 71% in fiscal year 2023) comes from direct-to-consumer sales. Therefore, its major customers are individual consumers, who can be broadly categorized as:

1. Affluent Luxury Shoppers: These customers prioritize brand prestige, exquisite craftsmanship, and unique design, seeking high-end and often exclusive products. They are typically less price-sensitive and value the full luxury experience associated with brands like Versace and Jimmy Choo.
2. Aspirational & Accessible Luxury Shoppers: This segment desires designer style and quality but is often more price-conscious. They purchase entry-level luxury items, accessories, or save for specific pieces, reflecting a desire to participate in luxury fashion without the top-tier price points. Michael Kors, in particular, caters strongly to this category.
3. Fashion-Conscious Consumers: These individuals are highly attuned to current trends, stylish designs, and brand recognition. They seek fashionable items that reflect contemporary aesthetics and often mix and match brands. They value variety and staying up-to-date with seasonal collections across Capri's diverse portfolio.

The key risks to Capri Holdings (CPRI) include:

1. Volatile Business Performance and Changing Consumer Preferences in Fashion: Capri Holdings faces significant risk from the volatile nature of the fashion industry and rapidly changing consumer preferences, which have led to inconsistent business performance over the long term. The company has experienced losses in four of the last ten years and has not consistently grown its earnings per share during this period. This volatile demand impacts sales and profitability, as seen with the recovery in 2022-2023 due to pent-up demand, followed by losses in 2023-2024 due to weak consumer demand.
2. Weakening Demand for Luxury Goods and Macroeconomic Headwinds: The company is highly vulnerable to recessions and economic slowdowns, which significantly impact consumer spending on luxury items. A global downturn in demand for luxury goods has resulted in substantial shortfalls in sales projections and double-digit revenue declines across Capri's brands, including Versace, Jimmy Choo, and Michael Kors. This softening demand for fashion luxury goods globally is a key external risk, particularly affecting the accessible luxury segment.
3. Financial Health Concerns and High Debt Burden: Capri Holdings has encountered significant challenges in maintaining profitability, evidenced by negative net margins and a notable decline in operating margins. The company carries a considerable debt burden, with a debt-to-EBITDA ratio indicating significant financial leverage. Furthermore, its financial strength is considered poor, with an Altman Z-Score placing it in a distress zone, suggesting a potential risk of bankruptcy within the next two years. The failed acquisition by Tapestry for $8.5 billion also left Capri in a challenging financial position and damaged shareholder value.

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Capri Holdings Limited (CPRI) operates through its iconic luxury brands: Michael Kors, Versace, and Jimmy Choo. These brands primarily offer products across luxury fashion categories including apparel, footwear, handbags, other accessories, and fragrances. The addressable markets for these main product categories globally are sized as follows:

• Global Luxury Fashion Market: The overall global luxury fashion market was valued at approximately USD 289.05 billion in 2024.
• Global Luxury Apparel Market: The global luxury apparel market size was estimated at USD 103.08 billion in 2024.
• Global Luxury Footwear Market: The global luxury footwear market was valued at approximately USD 38.66 billion in 2024.
• Global Luxury Handbags Market: The global luxury handbags market reached an estimated value of USD 67.56 billion in 2024.
• Global Luxury Perfume Market: The global luxury perfume market size was approximately USD 25.1 billion in 2024.

Capri Holdings (CPRI) is expected to drive future revenue growth over the next two to three years through several key strategic initiatives, primarily focusing on its core Michael Kors and Jimmy Choo brands. The company anticipates a return to revenue and earnings growth in fiscal 2027.

1. Brand Revitalization and Strategic Initiatives for Michael Kors: Capri Holdings is focusing on product updates, refined pricing architecture, and enhanced marketing to drive a positive turnaround in the Michael Kors full-price channel. Additionally, a "quality of sales initiative" in the outlet channel aims to strengthen brand health and increase average unit retails (AURs) for Michael Kors.
2. Global Retail Expansion and Store Renovations for Jimmy Choo: A significant driver involves the plan to renovate approximately 50% of Jimmy Choo's store fleet and key department store locations over the next three years, incorporating experiential elements to enhance the customer experience and revitalize growth. Retail sales for Jimmy Choo have also shown sequential improvement.
3. Enhanced Omnichannel Capabilities and Customer Engagement: Major investments in omnichannel capabilities and advanced analytics are underway to improve conversion rates and customer engagement for both Michael Kors and Jimmy Choo. This integrated approach aims to create a seamless shopping experience across various platforms.
4. Geographic Expansion, particularly in Asia: Michael Kors has experienced substantial retail channel growth in Asia, with a 25% increase in revenue for the region. Continued focus on expanding market presence and leveraging growth opportunities in key international markets, especially in Asia and Europe, is expected to contribute to overall revenue.
5. Strengthened Financial Position post-Versace Divestiture: Following the anticipated sale of Versace, Capri Holdings plans to use the proceeds to repay the majority of its debt. This substantial strengthening of the balance sheet is expected to provide greater financial flexibility, enabling the company to invest more effectively in growth initiatives for its remaining core brands.

Share Repurchases

• Capri Holdings authorized a new $1 billion share repurchase program, which is expected to commence in fiscal year 2027.
• The company's annual share buybacks were $661 million in 2022 and $107 million in 2024.
• The trailing twelve months (TTM) annual share buybacks for CPRI stock amounted to $666,667.

Capital Expenditures

• Capital expenditures for fiscal years ending March 2021 to 2025 averaged $157 million, with a peak of $226 million in April 2023.
• Expected capital expenditures for fiscal year 2026 are approximately $110 million.
• A primary focus for capital expenditures over the next three years is the renovation of approximately 50% of the store fleet and key department store locations, including experiential elements.