11:31 AM EST, 02/10/2025 (MT Newswires) -- Capri Holdings' ( CPRI ) earnings and sales have fallen for the past nine quarters, however, there's potential for recovery if the company sells non-core brands and focuses more on its core brand, Michael Kors, BofA Securities said in a note Monday.

The analysts said they expect non-core brands Jimmy Choo and Versace to be unprofitable in fiscal year 2026 and fiscal year 2027. After "strong years" in fiscal years 2022 and 2023, their performance has declined over the past year, especially at Versace, BofA said, adding that weak global luxury demand, particularly in China, and some product missteps have hurt both brands. A filing for the canceled Third Party Retail acquisition showed that several buyers were interested in Versace and Jimmy Choo. While management at Capri Holdings ( CPRI ) stated that they will listen to potential buyers, selling the brands is not the current strategy, according to the note.

The Michael Kors brand had focused too much on fashion and higher price points, which led to more promotions, the analysts said. Now, Kors is working on rebuilding its core and signature collections while reviewing its pricing strategy to boost full-price sales. However, due to product lead times, it will take a few quarters to see results, the note said, adding that on a positive note, units sold at Kors were up in the mid-single digits in H1 of fiscal 2025, indicating there is still a core customer base for Kors products.

BofA analysts said they view positively the company's actions to "improve its long-term positioning, including reducing wholesale exposure and rationalizing the Kors fleet." However, they said they expect the stock to "remain rangebound" over a transitional period as they have yet to see "clear evidence of a near-term turnaround."

BofA reinstated its neutral rating on Capri Holdings ( CPRI ) with a $23 price target.

CPRI shares were up 3.2% in recent trading.

Price: 22.30, Change: +0.61, Percent Change: +2.79