Capri Holdings (CPRI) Bernstein Insights: 2nd Annual Retail Forum summary

Strategic focus and brand repositioning

• Capri is now focused on Michael Kors and Jimmy Choo after divesting Versace, aiming for renewed growth in both brands this fiscal year.

• Michael Kors is undergoing a multi-phase repositioning to modernize its image, attract younger consumers, and emphasize the Jet Set lifestyle, with storytelling campaigns and a focus on standout style.

• Product strategy includes narrowing SKUs to three core icons, adjusting pricing to historical levels, and introducing more affordable accessories to appeal to Gen Z and millennials.

• Store renovations, such as at Rockefeller Center, have driven significant sales increases, supporting the brand's turnaround.

• Jimmy Choo is leveraging its luxury heritage, expanding into new product categories, and modernizing its marketing to drive growth, especially among younger consumers.

Financial outlook and growth drivers

• Michael Kors targets a return to $4 billion in revenue, while Jimmy Choo aims for $800 million, supported by strategic initiatives and a strong balance sheet.

• Quality of sales initiatives, reduced promotions, and new product flows are expected to drive growth in the back half of the fiscal year.

• Marketing spend has increased, with a heavy focus on social media and influencer partnerships for both brands.

• Unit growth is expected to resume in fiscal 2028 after a temporary decline due to ongoing quality of sales initiatives.

• Both brands are targeting margin expansion through higher full-price sell-throughs, improved product efficiencies, and SG&A optimization.

Consumer trends and market environment

• Consumers are increasingly value-conscious, seeking quality and excitement in their purchases, with Gen Z focusing on cost per wear.

• North America remains relatively healthy, while Europe faces headwinds from reduced tourism and geopolitical uncertainty; China and Japan show positive trends, especially for accessible luxury.

• The luxury sector has slowed, but accessible luxury brands with strong product and marketing are positioned to gain market share.