Data-Driven Marketing And Renovations Will Boost Brand Appeal

Key Takeaways

• Strategic brand revitalization, advanced analytics, and omnichannel investments are improving consumer engagement, store productivity, and long-term revenue growth prospects.
  
• Expansion into new product categories and regions, coupled with supply chain and pricing initiatives, supports margin sustainability and increased market diversification.
  
• Sustained revenue stagnation, tariff pressures, operational cost cuts, and brand fatigue signal deep structural and demand challenges threatening Capri Holdings' long-term profitability and growth.

Catalysts

Engages in the design, marketing, distribution, and retail of branded women’s and men’s apparel, footwear, and accessories in the United States, Canada, Latin America, Europe, the Middle East, Africa, Asia, and the Oceania.

• Sequential improvement in full-price store traffic, reduced discounting, and growing success of new product launches, supported by data-driven marketing and influencer engagement, signal effective brand revitalization and are expected to drive AUR and revenue growth.
  
• Expanded use of advanced analytics and digital platforms is improving consumer targeting and engagement, setting the stage for higher conversion rates, increased customer database size, and improved net margins as omnichannel strategies mature.
  
• Planned investment in major store renovations and selective new store openings in high-potential urban centers is expected to elevate customer experience and brand perception, resulting in higher store-level productivity and stronger revenue growth.
  
• Supply chain optimization, targeted cost efficiencies, and strategic pricing initiatives are expected to offset tariff headwinds by fiscal 2027, supporting sustainable gross margin expansion and operating earnings growth.
  
• Brand expansion into day bags, casual footwear, and broader price points-especially in underpenetrated regions like Asia-Pacific-positions Capri to capture rising demand from growing global affluence, directly enhancing long-term top-line growth and market diversification.

Capri Holdings Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Capri Holdings's revenue will decrease by 5.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from -25.7% today to 9.6% in 3 years time.
• Analysts expect earnings to reach $351.8 million (and earnings per share of $3.33) by about August 2028, up from $-1.1 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.3x on those 2028 earnings, up from -2.3x today. This future PE is lower than the current PE for the US Luxury industry at 19.4x.
• Analysts expect the number of shares outstanding to grow by 0.98% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.33%, as per the Simply Wall St company report.

Capri Holdings Future Earnings Per Share Growth

Risks

• Ongoing revenue declines across both Michael Kors and Jimmy Choo, with no growth planned in any channel for the current year and only tentative hopes for a return to growth in fiscal 2027, signal continued softness in both retail and wholesale; this stagnation threatens long-term top-line revenue expansion.
  
• Significant exposure to rising tariffs and trade policy risk (e.g., $85 million estimated unmitigated tariff impact in fiscal 2026, up from a prior $60 million) raises cost of goods sold and compresses gross margins, especially as cost offsets through pricing or sourcing optimization may lag or prove insufficient.
  
• Persistent reliance on aggressive cost reduction (SG&A, fleet optimization, promotional cutbacks) and store closures over organic revenue growth-combined with an aged store fleet requiring $350 million in renovations-reflects structural operational challenges that could constrain net margin recovery if top-line growth does not materialize.
  
• Continued brand fatigue in core Michael Kors product lines, with prior discounting driven by lack of consumer response and ongoing underperformance in categories like footwear, highlight risks of overexposure, waning pricing power, and the need for successful design and marketing innovation to avoid further erosion of gross margins and brand equity.
  
• Elevated inventory levels (up 10.8% year-over-year) and reliance on sequential "leading indicators" from improved marketing and influencer strategies underscore risks of demand uncertainty; if anticipated improvements do not convert to sustainable, broad-based sales increases, Capri risks higher markdowns, pressured earnings, and further revenue or margin instability.

Valuation

• The analysts have a consensus price target of $25.083 for Capri Holdings based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $45.0, and the most bearish reporting a price target of just $17.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.7 billion, earnings will come to $351.8 million, and it would be trading on a PE ratio of 12.3x, assuming you use a discount rate of 12.3%.
• Given the current share price of $21.36, the analyst price target of $25.08 is 14.8% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.