A year of strategic realignment and brand consolidation

A year ago, the US fashion group Capri Holdings agreed to sell Versace. Since then, the group of companies has gone through a phase of strategic change. It is now entering a new phase that is characterized less by expansion than by realignment. The focus is on stabilizing the remaining brands Michael Kors and Jimmy Choo. Initial progress can already be seen, but the strategy itself is not yet complete.

Here’s a rundown of what’s happened so far.

April 2025: Sale of Versace announced

On April 10, 2025, Capri formally agreed to sell Versace to the Italian Prada Group. The sale price was a discounted sum of $1.38 billion. This move followed a failed merger attempt with fellow US competitor Tapestry. This prevented the implementation of a consolidation strategy with which Capri wanted to react to the increasingly weak results of the brands – especially Michale Kors.

The sale of Versace signaled that Capri had abandoned its goal of competing as a multi-brand luxury group with European groups such as LVMH. Instead, the company now wanted to establish itself as a focused, financially stable provider in the mid-range luxury segment. The goal was to strengthen finances rather than expand the brand.

A few days after the announcement, Chairman and CEO John D. Idol confirmed the development of plans to increase the company’s value. The balance sheet should also be strengthened through strategic initiatives that were already addressed at a previous investor day. This left the manager focused on growing Capri’s remaining brands – Michael Kors and British brand Jimmy Choo – as part of a company-wide realignment.

August 2025: Early stabilization

Capri began reporting as a dual-brand company. Despite “better than expected” results, which saw the company make a profit compared to the same period last year, data for the first quarter of the 2025/26 financial year showed a six percent decline in sales. Margins were also lower, particularly at Michael Kors.

During this time, Capri officially entered a transition phase without a specific growth engine. Instead, the company focused on cost discipline and repositioning its brands. Idol said at the time that its first quarter results were encouraging. They had shown strategic progress in revitalizing the two brands.

September 2025: Physical Revival

Early signs of revitalization were evident in the revamped Michael Kors store in London. There, Capri seemed to focus on intimacy, visual storytelling and a curated experience. This change was in line with a broader trend in retail to create thoughtful, experiential spaces.

November 2025: Slipping into the red

Despite continuing to exceed management expectations, Capri slipped into the red in the second quarter of the 2025/26 financial year. Sales fell by 2.5 percent compared to the same period last year. The operating loss rose from $6 million to $12 million despite significant cost reductions.

The bottom line was a net loss attributable to shareholders of $28 million, after a profit of $24 million in the same quarter of the previous year. These results marked Capri’s operational nadir, with a negative operating margin and poor performance from Jimmy Choo.

However, the company emphasized that it planned to pay down debt using the proceeds from the Versace sale. Future share buybacks also indicated a shift towards a model focused on shareholder returns. Idol remained optimistic, saying trends had improved.

Share buyback program

Capri announced the launch of a $1 billion share repurchase program starting in fiscal year 2027. During this period, the company also wants to get back on track for growth. The initiative demonstrates confidence in cash flow post-restructuring. It also shows a shift toward financial discipline rather than new acquisitions.

December 2025: From “missing” to “modern glamour”

A pivotal moment came in December when Idol admitted that Michael Kors’ previous repositioning had been “missed.” He noted that the brand had strayed from its core identity. This public admission of brand mismanagement was a rare moment in the industry. Idol admitted that attempts to upgrade the brand, which is in the affordable luxury segment, had failed.

In addition, over-expansion and changes to the product range had alienated regular customers. This forced the team to rethink their approach. Instead, Idol emphasized the intention to restore Michael Kors’ identity as “modern glamour.” The brand should return to its “jet-set” roots.

This will be achieved through storytelling in hotels, the renovation of over 50 percent of global stores and a new focus on ready-to-wear. The latter will have a larger presence in the renovated locations. The brand’s pricing architecture will also be restructured to reflect this revised aesthetic. The plan is to reduce dependence on discount campaigns and restore value.

Sale of Versace completed

That same month, Prada completed its purchase of Versace, officially taking over the Italian luxury brand from Capri. This move initiated an immediate financial transformation for Capri. Net debt was dramatically reduced from $1.17 billion to $80 million, creating capacity for reinvestment.

In Capri’s new mini-conglomerate structure, Michael Kors was positioned as a key revenue driver. Jimmy Choo was considered a smaller but still important asset. This dispelled previous speculation that the shoe brand could also be sold after Versace.

February 2026: Adjustment of the balance sheet

In the third quarter of the 2025/26 financial year, Capri presented itself as a financially stable company but weak in terms of trading. Total sales fell by four percent. This was driven by a 5.6 percent decline at Michael Kors, but was tempered by five percent growth at Jimmy Choo. The brand thus returned to the growth path.

Operating profit rose to $46 million, while net profit increased from $6 million to $57 million. However, tariff developments caused the company’s gross margin to fall to 60.8 percent. Although the surprisingly solid numbers were promising for the turnaround, the continued decline in sales showed that these efforts were not yet reflected in a recovery in demand.

The Michael Kors 45th Anniversary Show

Michael Kors’ Fall/Winter 2026 show at New York Fashion Week served as a virtual visualization of Capri’s turnaround efforts. Themed “New York Chic,” the collection embodied the “modern glamour” aesthetic that Idol strived for. This was evident in a range of reinterpreted classics in Kors’ signature color palette.

March 2026: From “cautious” to “optimistic”

At the 2026 Citi conference, Idol said Capri had moved from “cautiously optimistic” to “optimistic.” This confidence was based on initial success in the full-price channels, the results of the renovated stores and the growth of Jimmy Choo.

Michael Kors consolidated

At Michael Kors, Capri has committed to a $300 million investment to renovate 350 stores. 100 of them are to be redesigned in the 2026 financial year. The company also plans to launch its “Jet Set Lounges” globally. They are a contemporary expression of the brand’s “jet-set spirit”. The first opened in Beijing a few days ago.

Elsewhere, the company continues to realign its pricing strategy. This comes after increasing full-price sales while reducing reliance on markdowns and off-price channels. Idol said the realignment resulted in higher full-price sell-through and increased engagement. This was achieved after successfully correcting a misjudgment of price elasticity.

Jimmy Choo as a pillar of growth

At Jimmy Choo the perspective has fundamentally changed. The brand transformed from a disposable asset to a serious growth pillar. The company is targeting sales of $800 million. The sale of accessories is said to make up 40 percent of sales.

This shift is reflected in the move away from a focus on shoes for special occasions to a broader lifestyle focus. The brand is positioned as a strategic bridge between luxury and accessible luxury.

New head of marketing for Michael Kors

The recent appointment of former Google executive Corey Moran as Michael Kors’ chief marketing officer builds on efforts to place greater emphasis on data-driven marketing and customer engagement. The focus is on integrating brand storytelling. Moran’s background suggests a shift toward performance-based marketing, particularly in digital channels, where Capri has already increased investment.

Conclusion: What’s next for Capri

Capri has undergone a clear structural change in the past year. The company has moved away from its ambitions as a multi-brand luxury group and is now pursuing a focused turnaround model built on two core brands. The strategy is based on revitalizing the two brands. Margin improvement, inventory discipline and return on capital also remain key elements.

Regionally, North America and Europe are showing resilience, while Asian markets – especially China – are recovering. Still, the next phase of the deal will be marked by a number of tensions. The company must restore the desirability of the brand without undermining accessibility.