Barclays on Monday increased its price target for Capri Holdings (CPRI) to $32.00 from $31.00 and reiterated an Overweight rating, also naming the luxury fashion house to its 2026 Top Ideas list. The new target implies roughly a 59% upside from the stock's then-current trading level of $20.08. Analyst targets for the company span a wide range, from $23 to $45.
The market response to Capri's fiscal third-quarter 2026 release was muted-to-negative: the shares fell 12% on the day, while the S&P 500 slipped about 1% as of 3:00 PM ET on Monday.
Barclays highlighted a "positive sales-to-inventory inflection" recorded in the third quarter and said it expects inventory productivity to improve in coming quarters. The bank noted, however, that gross margin missed expectations in the period. Barclays attributed that miss in part to higher-than-expected sell-through of newer product assortments that were subject to tariffs.
Despite the recent margin miss, Capri continues to report high gross profit margins, recorded at 63.36%. At the same time, analyst consensus points to an anticipated 22% sales decline for the current fiscal year. Barclays' view frames Capri as a classic retail turnaround, with management execution centered on inventory discipline and boosting full-price selling.
The research firm expects a consolidated gross margin inflection in the second half of calendar 2026 and projects that such a margin recovery would precede a return to positive comparable sales growth. Capri is not currently profitable on a company-wide basis; analysts surveyed expect earnings of $1.40 per share for the fiscal year.
Management's recovery actions detailed by Barclays include closing underperforming stores, remodeling roughly 50% of the store fleet over the next three years, reducing wholesale exposure and scaling back promotional activity in outlet channels. Barclays believes those moves should strengthen brand affinity and full-price sell-through over time, even as they may weigh on near-term revenue.
The company continues to operate with a substantial debt burden, a factor flagged among several key observations in Capri's research coverage. In its most recent quarterly results, Capri topped analyst expectations: third-quarter EPS came in at $0.81 versus a $0.77 forecast, and revenue reached $1.03 billion against an anticipated $1.00 billion, producing a positive earnings surprise.
Market participants reacted cautiously to the print, reflecting concern about the path to sustainable growth and the macro backdrop. There were no announced developments related to mergers or acquisitions, and there have not been recent analyst upgrades or downgrades reported. Investors remain attentive to the company's operational progress and the timing of the projected margin inflection.
Summary
Barclays raised its Capri Holdings price target to $32 and kept an Overweight rating, citing improving sales-to-inventory dynamics and an expected gross margin recovery in the second half of calendar 2026. Capri beat fiscal Q3 estimates on EPS and revenue, but the stock declined sharply following the report. Management initiatives to close stores, remodel locations, and reduce wholesale and outlet promotions are central to the turnaround plan, while a sizable debt load and near-term revenue headwinds remain key considerations.
Key points
- Barclays increased its price target to $32 from $31 and added Capri to its 2026 Top Ideas list, implying significant upside from the then-current price of $20.08 - impact on investor sentiment and equity valuations in consumer discretionary and retail sectors.
- Capri reported fiscal Q3 EPS of $0.81 and revenue of $1.03 billion, both above expectations; yet the stock fell 12% as investors weighed growth trajectory and margin drivers - relevant to equities and credit markets given the company's leverage.
- Management's turnaround actions - store closures, a plan to remodel 50% of stores over three years, lower wholesale exposure and reduced outlet promotions - aim to improve full-price selling and brand affinity, affecting retail operations and supply chain inventory planning.
Risks and uncertainties
- Near-term revenue pressure: Steps to boost full-price selling and reduce outlet promotions may depress short-term top-line results, impacting retail sales metrics and same-store sales.
- Profitability timeline: Capri is not currently profitable and faces a path to restored earnings; analysts forecast $1.40 per share for the fiscal year, but execution risks remain.
- Balance-sheet leverage: The company's significant debt burden could constrain investment flexibility and expose it to interest-rate and credit-market movements, with implications for retail and financial markets.