Author: Aurora Vinti
Capri holding Limited is a global fashion luxury group incorporate in the British Virgin Islands funded by Michael Kors in 1981 and it was originally known as Michael Kors Holding Limited. The holding acquired in 2017 Jimmy Choo for £897 million, and Versace in 2018 when it was valued at $2.1 billion. In 2019, the company was renamed Capri Holdings.
As of the first quarter of 2024, the company reported revenues of approximately $5.17 billion, marking a decrease from the previous year’s $5.28 billion. Revenues were distributed as follows:
- Michael Kors: approximately 68.1% of total revenues
- Versace: approximately 19.9%
- Jimmy Choo: approximately 12%
Most revenues were generated in the European and Middle East Market, while the Americas registered the lowest percentage of all. The 2025 year has been projected to register roughly $4.4 billion revenues, with another considerable decrease of revenues. Similar losses are projected for 2026 as well at approximately $4.1 billion.
The decline of the company wasn’t an unexpected one, quite the opposite, it was well predictable given the latest unfortunate events it was involved in.
The company has been in turmoil since the 2023 failed merger with Tapestry Inc., a $8.5 billion deal with the parent company of Coach and Kate Spade that could have exposed both companies to a larger audience but failed due to antitrust concerns raised by the Federal Trade Commission. In that occasion, Capri shareholder David Hurwitz alleged the company mislead shareholders regarding the regulatory risks at play in the deal and its chance of passing regulatory controls. Following such allegations, both Capri Holdings and Tapestry’s top executives faces securities class action lawsuit with the accusation of having intentionally concealed material information about the obvious antitrust risks that could have stood in the way of the merger.
The merge aimed at creating an American conglomerate capable of competing with the European counterparts. The failed operation left Capri in a challenging position, facing declining revenues and underperforming brands. In announcing the termination of the merger with Tapestry, Capri took the occasion to update investors regarding the strategy the brand was intending to pursue. The company was counting on being able to improve retail store sales densities, stabilize revenues by better aligning with consumer preferences and increase marketing investment. In spite of that, as previously said, the financial performance has only gone downhill.
The difficult position of Capri Holding was enhanced by recent events. In fact, Thomas Edwards, formerly the finance and operations head at Capri Holdings, has transitioned to Macy’s as the new CFO and COO. This move occurs amidst Capri’s efforts to recover from the collapse of its $8.5 billion deal with Tapestry and rumours of Prada’s interest in acquiring Versace. Even so, this is not the only recent change as also Donatella Versace has transitioned from Chief Creative Officer to Chief Brand Ambassador amid reports of declining sales and strategic shift of the brand. Indeed, a strategic shift seems to be exactly what Capri Holdings needs to reinforce its market and brand identity as well as reconquer investors’ trust.
Analysis have positioned the company below industry benchmarks as the market capitalization faces constraints in size. Overall, the -11.63% decline in revenues indicating a decrease in top-line earnings compared to industry peers, and the growth rate lower than the average of the market, signal a significant decline influenced by failed operations and enhanced by the loss of key figures. The company also registers below industry net margin, suggesting challenges in maintaining strong profitability. In addition, both the ROE and ROA register negative losses, indicating inefficiently in utilizing equity capital and achieving optimal financial performance.
The company has struggled in balancing brand heritage with strategic initiatives to enhance its market positioning. It is reportedly exploring the potential sale of Versace in order to streamline operations and focus on core assets. Another option for the company would be going private to facilitate restructuring away from public market pressure. The brand aims at reflecting the evolving landscape of the luxury fashion industry and adapt to market dynamics. These changes could strengthen the company’s market positioning and reinforce the dedication to its clientele.
