Jimmy Choo owner Capri Holdings recorded lower third-quarter sales, but earnings and free cash flow surpassed expectations as the group sharply reduced net debt.
For the three months to 27 December 2025, the luxury group said revenue from continuing operations fell 4% year on year to $1.025bn, or 5.9% at constant currency.
Operating margin improved to 4.5% from 2.4%, while net income from continuing activities climbed to $57m from $6m a year earlier.
Gross profit declined to $623m, producing a margin of 60.8%, compared with $674m and 63.1% previously.
Adjusted operating margin stood at 7.7%.
Diluted earnings per share from continuing operations rose to $0.47 from $0.05, with adjusted diluted EPS increasing to $0.81 from $0.63.
Operating cash flow reached $271m, and after $19m of capital expenditure the group generated $252m in free cash flow.
Cash and cash equivalents totalled $154m at quarter end, with borrowings of $234m, leaving net debt of $80m, down from $1.17bn a year earlier.
By brand, Michael Kors posted revenue of $858m, down 5.6% on a reported basis and 7.3% in constant currency, while operating income totalled $119m for a margin of 13.9%.
Jimmy Choo delivered revenue of $167m, up 5% reported and 1.9% in constant currency, and swung to an operating profit of $3m from a $6m loss.
Regionally, Americas sales declined to $646m from $696m, EMEA rose to $268m from $256m, and Asia slipped to $111m from $116m.
For the nine months to 27 December 2025, Capri reported revenue of $2.67bn, compared with $2.79bn in the prior year, while net income attributable to the group reached $141m after a $537m loss previously.
The company ended the quarter with 908 retail outlets, down from 971 a year earlier, comprising 694 Michael Kors stores and 214 Jimmy Choo locations.
Looking ahead, Capri issued adjusted guidance for fiscal 2026 from continuing operations, projecting revenue of about $3.45bn to $3.475bn.
For Michael Kors, the group anticipates revenue of around $2.86bn to $2.87bn with an operating margin in the high single digits.
Jimmy Choo is forecast to generate $590m to $600m in sales, with an operating margin in the negative low single-digit range.
Capri said its outlook remains exposed to global macroeconomic conditions, potential tariff increases, inflation, weaker consumer sentiment and currency fluctuations.
Capri Holdings chairman and CEO John Idol said: “We were pleased with our third quarter performance which exceeded our expectations. Looking ahead, we remain confident that these strategies will support a return to growth in fiscal 2027 as well as establish the groundwork for sustainable performance well into the future.”
