On Friday, TD Cowen made a notable adjustment to Capri Holdings' (NYSE:CPRI) financial outlook, slashing the price target to $22 from the previous $57 while maintaining a Hold rating on the stock. The move comes in response to the weaker than anticipated performance of the company's Michael Kors brand, which accounts for approximately 70% of its revenue. In the second quarter, Michael Kors reported a 16% decline in revenue, and forecasts for the full year anticipate a 14% decrease.
The management at Capri Holdings has openly acknowledged the brand's struggles, particularly within the wholesale sector, as well as a general downturn in the accessory and handbag market. This candidness from the company has provided a clearer picture of the challenges faced and the factors contributing to the revised price target.
Michael Kors is planning to navigate this challenging period by reintroducing more of its signature and core products while also launching new items at moderate price points. The strategy is aimed at improving full-price sell-through, which has been identified as a necessary step for the brand to regain its footing in the market.
The analyst's commentary highlighted these strategic shifts, indicating that while the brand's path forward is outlined, the current market conditions and sales performance have necessitated a more conservative outlook on Capri Holdings' value. With the revised price target and Hold rating, investors are given a tempered expectation of the company's stock performance in the near term.
In other recent news, Capri Holdings faced a shortfall in its second quarter earnings, with adjusted earnings per share of $0.65, falling short of the anticipated $0.73, and revenues reported at $1.08 billion, below the projected $1.18 billion, marking a 16.4% YoY decrease. Despite these challenges, the company managed to add 10.9 million new consumers across its brands, indicating a 13% growth compared to the previous year. Telsey Advisory Group reduced the price target for Capri Holdings to $23.00 from the previous $26.00, while retaining a Market Perform rating on the stock, following the termination of a merger agreement.
Bernstein also maintained its Market Perform rating on Capri Holdings shares, with a steady price target of $19.00, suggesting a breakup could be the most beneficial move for shareholders. These recent developments underscore the dynamic nature of the business landscape Capri Holdings operates within.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Capri Holdings' (NYSE:CPRI) current financial situation, providing context to TD Cowen's revised outlook. The company's market capitalization stands at $2.44 billion, reflecting the market's current valuation of the firm amidst its challenges.
InvestingPro Tips highlight that Capri Holdings has impressive gross profit margins, which stood at 64.18% for the last twelve months as of Q2 2025. This suggests that despite the revenue decline, the company maintains strong pricing power and cost management in its product lines.
However, the company's recent performance aligns with TD Cowen's concerns. InvestingPro data shows a revenue decline of 10.64% over the last twelve months, with a more pronounced quarterly revenue drop of 16.42% in Q2 2025. This data corroborates the analyst's observations about Michael Kors' weakening performance.
The stock's recent performance has been particularly challenging, with InvestingPro reporting a one-month price total return of -52.32% and a year-to-date return of -59.16%. These figures underscore the market's reaction to the company's struggles and the subsequent downward revision of expectations.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Capri Holdings, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.