Capri Earnings: Results and Outlook Suggest Turnaround Will Be Slow; Shares Undervalued

Although unsightly, no-moat Capri’s fiscal third-quarter results were mostly in line with our forecast. However, the company's outlook for the fourth quarter and fiscal 2026 was disappointing and signals that improvement in sales and earnings may not come until fiscal 2027. We expect to lower our $50 fair value estimate by a high-single-digit percentage, but we still regard the shares as significantly undervalued. Even though the firm has struggled mightily during and after the failed merger with narrow-moat Tapestry, we think its brands have high awareness and potential for much better profitability.