Michael Kors owner Capri forecasts upbeat revenue, shares jump

By Anuja Bharat Mistry and Samantha Marshak

Aug 6 (Reuters) - Capri Holdings CPRI.N forecast second-quarter revenue above estimates on Wednesday, after its turnaround strategy and improving demand for luxury handbags and footwear helped the Michael Kors owner defy a broader retail slowdown.

The company also beat estimates for quarterly profit and revenue, sending its shares up more than 12% in midday trading, even as Capri forecast a bigger tariff impact on costs than earlier estimated.

Investors have been hoping for signs of strength from Capri, after it lost nearly 44% of its stock value over the past year and competitors gained more market share.

In an attempt to stem the declines, Capri kicked off a turnaround strategy that included shedding its struggling Versace label to Italy's Prada 1913.F earlier this year.

It is also implementing cost-saving measures such as headcount reductions, store renovations and efficiency improvements across its supply chain.

To power sales, the company has been ramping up its marketing efforts, building out its social media presence and expanding its network of influencer partnerships, CEO John Idol said during a post-earnings call.

As a result, Michael Kors revenue, which represents 68% of Capri's total, fell only 5.9% in the quarter, compared with a 14.2% drop a year ago.

"The sequential improvement in demand suggests that Capri's focus on making its brand more desirable - through marketing and more exciting product launches - are beginning to resonate with shoppers," said Rachel Wolff, analyst with eMarketer.

It expects tariffs on products shipped into the U.S. to increase costs by about $85 million in fiscal 2026, compared with $60 million projected earlier.

The company - which imports the majority of U.S. products from Vietnam, Cambodia, Indonesia, Bangladesh and China - plans to offset the impact through sourcing optimization, cost efficiencies with partners, and price hikes.

It also expects second-quarter revenue of about $815 million to $835 million, compared with estimates of $819.1 million, per data compiled by LSEG.

Profit of 50 cents per share beat estimates of 13 cents.

Net revenue fell 6% to $797 million, compared with estimates of $793.1 million.