Capri Holdings (CPRI), working to regain momentum across its brands, faces several risks to its fiscal 2027 outlook, including tariff uncertainty and a challenging macro and competitive backdrop, UBS Securities said Wednesday in a report.
Tariffs remain a key swing factor for gross margins, with the outlook assuming a 10% rate on US imports for the full year and a $25 million tariff-refund benefit flowing through cost of goods sold H1, UBS said.
Capri is expected to lean heavily on fiscal H2, creating heightened delivery risk, while ongoing macro pressure and competitive dynamics may slow the company's fundamental recovery, the report said.
The company expects $75 million of pressure on Michael Kors' H1 sales from its quality-of-sales actions, including reduced promotions, lower third-party and off-price sales, and continued store closures, the report said.
UBS raised its fiscal 2027 EPS estimate to $2.15, driven largely by higher gross-margin expectations tied to the tariff refund. Beyond fiscal 2027, the firm models low single-digit revenue growth and about 50 basis points of operating-margin contraction, resulting in EPS of $1.95 in fiscal 2028 and $1.90 in fiscal 2029.
UBS lowered its price target on Capri stock to $20 from $22 and maintained its neutral rating.
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