Luxury brands are typically considered recession-resistant. Yet recent store closures suggest that luxury is not always enough to keep a business afloat amid shifting consumer habits and economic challenges.
McKinsey & Company reveals an important shift in consumer behavior: Emotional connection is now a top driver of purchasing decisions, ahead of traditional luxury markers such as craftsmanship, heritage, and exclusivity.
“In the United States, luxury clients are most interested in lifestyle experiences, such as travel and well-being-related activities. That means luxury labels now compete with boutique hotels, private clubs, wellness destinations, and cultural institutions for consumers’ time and attention,” writes McKinsey & Company.
I recently reported on iconic fashion handbag retailer Vera Bradley closing 13 stores, supporting the trend of consumers becoming more interested in luxury travel than nicely designed bags. However, there was more to that story, as experts say Vera Bradley had lost sight of what made it successful.
Nonetheless, other luxury giant downsizing moves do suggest there’s something going on within the high-end fashion industry.
In 2025, Kering shut down 133 stores, announcing plans to close 100 more, while Ferragamo said it planned to close roughly 70 stores.
On top of that, earlier this year, prominent luxury retail conglomerate Saks Global navigated a high-profile Chapter 11 bankruptcy restructuring, recently emerging under an optimized footprint, and Macy’s also confirmed plans to shutter 150 locations.
Now, another historic luxury brand joins the group as it quietly downsizes.
Capri Holdings closes 139 Michael Kors stores in 3 years
On May 27, Capri Holdings, the parent company behind fashion icons such as Michael Kors, Versace (recently sold), and Jimmy Choo, disclosed its financial results for the fourth quarter and full year Fiscal 2026 ended March 28, 2026.
The fashion giant reported fourth-quarter total revenue of $796 million, down from $827 million in the same period of fiscal 2025.
Capri Holdings Q4 fiscal 2026 earnings summary:
- Gross profit amounted to $516 million, compared to $496 million in the fourth quarter of the prior year.
- Net loss was $3 million, versus a loss of $644 million in the corresponding period of 2025.
- Total operating expenses were $543 million, compared to $552 million in the fourth quarter of last year.
Source: Capri Holdings earnings press release
The document further revealed that as of March 28, 2026, Capri Holdings owned 673 Michael Kors and 211 Jimmy Choo stores, while on March 29, 2025, there were 711 Michael Kors and 219 Jimmy Choo stores.
The data reveals that in 12 months, Capri Holdings has closed 38 Michael Kors stores.
After analyzing Capri Holdings’ previous financial filings, I discovered that it has been closing more than 46 Michael Kors stores on average per year since 2023.
Michael Kors year-by-year store closures:
- 2023 to 2024: Dropped from 812 to 769 stores (43 stores closed).
- 2024 to 2025: Dropped from 769 to 711 stores (58 stores closed).
- 2025 to 2026: Dropped from 711 to 673 stores (38 stores closed).
Sources: FY23 Form 10-K SEC Filing, FY24 Form 10-K SEC Filing, and FY25 Form 10-K SEC Filing
The numbers show an intentional pullback, as Capri Holdings has closed 139 Michael Kors stores, reducing the total number by more than 17% in three years.
HJBC / Getty Images
Why has Michael Kors been closing so many stores per year?
A closer look at the company’s financial timeline shows that the store closures track a multi-year revenue decline.
According to official regulatory filings, the Michael Kors brand has watched its global sales plummet by more than $860 million in three years.
The year-by-year Michael Kors revenue breakdown:
- Fiscal 2023: $3.88 billion in total net sales, according to the brand’s historical FY23 Form 10-K.
- Fiscal 2024: $3.52 billion in total net sales, representing a single-year drop of over $350 million, based on Capri Holdings’ FY24 Form 10-K.
- Fiscal 2025: $3.02 billion in total net sales, representing a 22% revenue drop from 2023, as disclosed in FY25 Form 10-K.
Footwear as “biggest issue,” along with overpricing and more
During the full-year fiscal 2026 earnings call with Wall Street analysts, CEO John Idol explicitly deflected the brand’s core issue away from handbags, pinpointing a failure in their footwear category layout as the primary drag on retail performance.
“Our biggest issue inside the company actually is not the accessories, it’s our footwear. And we are going through a strategic repositioning of our footwear business in Michael Kors,” Idol said, according to a transcript provided by The Motley Fool.
The company is refocusing on the casual footwear category and is in the process of renovating about 100 stores this year, Idol added. In fact, he noted that traffic and sales in the renovated stores were up, “and in those stores, quite frankly, there’s a much higher percentage of new customers coming to those stores.”
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Moreover, Capri Holdings adjusted pricing on Michael Kors product to better align with consumer trends, reported Retail Dive.
“We went through a period of time where we raised the prices too far,” Idol said. “About a year and change ago, we went back to our historical pricing structure, and that’s worked really well for us in full price.”
Idol added that Michael Kors’ fourth-quarter revenue decline of 5% year over year was driven mostly by the company’s quality of sale initiatives, which included reduction of promotional activity, third-party sales, and off-price shipments.
“As our strategic initiatives continue to take hold, we are seeing clear evidence of progress across the business,” the CEO highlighted.
Experts say Capri Holdings’ failed merger may also have impacted sales
The last few years have been turbulent for the luxury giant, as the company’s merger plans failed, and it subsequently agreed to sell its world-renowned brand Versace.
In November 2024, Capri Holdings confirmed a mutual termination of its merger agreement with Tapestry Inc., under which Tapestry was to acquire Capri for approximately $8.5 billion, according to Form 10-K.
Both companies mutually agreed to terminate the deal “less than a month after a federal judge blocked the acquisition, which the US Federal Trade Commission had sued to stop, arguing that it would unfairly eliminate competition in the market for affordable handbags,” reported Business of Fashion.
According to David Swartz, senior equity analyst for Morningstar Research Services, the proposed merger, though it failed, has impacted the company’s operations.
“Capri…has been really struggling. The merger has seemingly been a big distraction and has hurt Michael Kors’ results,” Swartz told Fashion Dive.
Additionally, Neil Saunders, managing director of GlobalData, told Retail Dive that Capri Holdings neglected its brand, planning the merger. After the merger failed, the company was left with needing “an enormous amount of corrective action” to get back on track.
Saunders highlighted that for Tapestry, the deal termination was “a lucky escape,” given Capri’s declining results.
“Tapestry would also have inherited a whole host of problems from multiple broken brands and, while it could likely fix these, it would have sapped a great deal of time and resources,” Saunders said.
Selling Versace “at a discount,” and Capri Holdings‘ next moves
Upon terminating the deal, Idol said he remains confident in “Capri’s long-term growth potential,” as the company continued to focus on its three iconic luxury houses.
Since then, however, the company retained only two luxury brands, as it decided to sell its Versace business to Italian fashion giant Prada at a discount, according to the BBC.
In December 2025, Prada acquired Versace for $1.375 billion, “well below the roughly $2bn that Versace’s former parent company, Capri Holdings, paid for the brand in 2018.” reported BBC.
“With the successful completion of the sale of Versace, we plan to use the proceeds to repay the majority of our debt, which will substantially strengthen our balance sheet. As a result, this transaction will significantly reduce our leverage ratio and provide greater financial flexibility to both invest in our growth as well as return capital to shareholders in the future,” Idol stated.
The CEO added that he believes the company is on track to stabilize its business this year, while “establishing a solid foundation for a return to growth in fiscal 2027.”
Capri expects a fiscal 2027 revenue of about $3.5 billion, including about $2.9 billion for Michael Kors and about $625 million for Jimmy Choo.
Raj Mehta, Michael Kors CFO and former interim CFO at Capri, told analysts that retail revenue growth will be “partially offset by a planned decline in our Michael Kors wholesale channel as we continue to reduce off-price shipments.
“Our guidance now assumes an additional 10% tariff on products coming into the United States,” Mehta added. “Operating expense dollars are expected to increase modestly relative to fiscal 2026. We expect full-year operating income to be approximately $190 million, a 60% increase year over year.”
The company expects Michael Kors operating margin in the low double-digit range, while Jimmy Choo returns to profitability with operating margin in the low single-digit range.
Although the broader luxury sector has seen some major retailers reduce their brick-and-mortar footprints amid shifting consumer behavior, Capri executives and analysts suggest Michael Kors’ challenges also stem from brand-specific issues, such as merchandising, pricing, and the failed merger.
And while closing 139 stores in three years is a serious contraction, the company’s executives view the strategy as part of a broader effort to improve profitability.
With store renovations, pricing adjustments, and wholesale distribution reductions underway, fiscal 2027 will be a test for Michael Kors’ latest turnaround strategy.
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