Capri Holdings (CPRI) Q1 FY27 earnings call: guidance and Q&A

Breakdown of Q1 high single-digit retail sales decline (full-price vs. outlet), Q2 retail sales expectations, and changes to back-half outlook beyond EMEA macro.

John Idol highlighted improved quality of sales, higher full-price sell-throughs, and increased AURs. Full-price retail sales were positive in North America and Asia, but EMEA declined due to conflict and reduced tourism. Outlet trends remained down due to limited new product, but new product flow is expected in Q3. Q2 will see a final step back in markdown inventory reduction and delayed new product, impacting sales, but Q3 is seen as a significant inflection point with new product and cycling of third-party sales.

“Our full price sell-throughs at both companies were up. Our AURs at both companies were up. And when I look at the health of the sale to the customer, it's getting better each quarter.”

asked by Matthew Boss · answered by John Idol

Details on the $70 million expense reduction (one-time vs. go-forward) and changes in the interest income line.

Tyler Reddien confirmed a $70 million reduction in full-year SG&A expectations, achieved through targeted actions while protecting investments in marketing, store refurbishments, and IT/digital. He stated the company will continue to evaluate efficiency opportunities. The interest income guidance was revised based on Q1 performance.

“We are reducing our expectations for spend by $70 million relative to our prior guidance. We are taking targeted expense reduction actions across the SG&A pool in order to ensure that we are driving down our overall SG&A level.”

asked by Paul Lejuez · answered by Tyler Reddien

Elaboration on lower-than-anticipated inventory (causes, markdown vs. full-price split, seasonal vs. recoupable sales) and John Idol's perspective on the quality of sales journey (current full-price percentage, timeframe).

Tyler Reddien attributed inventory delays to port congestion in Asia, impacting Q2 sales but expected to normalize by Q3. John Idol clarified that the inventory reduction was about 50% due to delays and 50% due to intentional markdown reduction ($50 million). He emphasized the long-term vision for quality of sales, noting AURs and full-price sales are climbing. He expects Q3 to be a significant inflection point for Michael Kors, with new product and cycling of third-party sales.

“it's about a 50-50 split, and it comes in at about $50 million in lower markdown inventory, just to give you a size of the magnitude of the reduction in markdown inventory. And I think it's a very important thing to highlight because that is intentional.”

asked by Simeon Siegel · answered by Tyler Reddien

How long will daigou/off-price/markdown headwinds persist, and what does the back-half growth look like geographically for Michael Kors given EMEA softness?

John Idol stated that daigou/third-party sales headwinds (approx. $150 million last year) should mitigate post-October/November. Markdown/clearance inventory will remain at historic lows, hopefully becoming less of a headwind in H2. Promotional activity reductions will be lapped. Geographically, North America is expected to see the biggest increase, with full-price comps positive and wholesale turning positive. Asia, particularly China, is also expected to improve. EMEA is not expected to improve and is reflected in guidance.

“I would say the area where we see the biggest increase will be in North America. We're seeing that North America full price comps are once again comp positive. We told you that our wholesale business turned positive in North America at point of sale.”

asked by Rick Patel · answered by John Idol

Early reads from new product launches in North America outlet, confidence drivers for H2 inflection, and changes in traffic/consumer engagement/NPS.

John Idol noted North American outlet trends haven't changed much, but new styles are getting positive results, and prices are being raised. He mentioned new products like Saimy, Ashton, and Bailey. He acknowledged potential loss of some historical customers but emphasized attracting new, younger consumers through increased marketing spend (almost 200 bps increase, close to 10% of sales in H2) and platforms like Amazon and TikTok.

“We're getting close to -- we're going to raise it by almost 200 basis points. We're getting close to 10% of sales, especially in the back half of the year. We're going to be able to focus a lot more initiative around the younger Gen Z consumer.”

asked by Brooke Roach · answered by John Idol

Update on pricing journey (raising prices relative to past), channel interplay, and quality of sales.

John Idol first discussed Jimmy Choo's strong performance, broad pricing architecture ($750-$6,000 for bags, $350-$3,000 for shoes), and increased AURs/full-price sell-throughs. For Michael Kors, he reiterated lowering full-price prices in Spring last year and introducing under-$200 bags to attract Gen Z. In outlet, prices are being raised by 5-10%, with another increase planned for early next calendar year, alongside reduced promotional activity. He noted that 5-6% of outlet sales are now full-price product.

“In the outlet channel, as I mentioned before, we're actually raising prices. We had gotten too inexpensive for the value of the product that we were delivering. I'd say prices have been raised anywhere from 5% to sort of 10%.”

asked by Oliver Chen · answered by John Idol

How are minor pricing adjustments messaged, how is customer acquisition shifting, and is the full-price/outlet spread normalized?

John Idol clarified that full-price price reductions from last year have anniversaried. Q2 will see a final large reduction in markdown inventory, impacting full-price comps negatively, and a further step down in seasonal promotions in Q4. In outlet, price increases are just beginning, and while some historical customers might be lost, increased marketing spend (focused on top-of-funnel and brand storytelling) aims to attract new, younger customers, especially those who haven't shopped with them before.

“In full price, as I said earlier, the one last step that we're -- well, there's 2 last steps. Number one, you will see one further step down in certain seasonal promotional activity that we have done historically for some 10-plus years, that will change in Q4.”

asked by Adrienne Yih-Tennant · answered by John Idol