Joshua Schulman, a retail executive, appeared to be an ideal candidate to run Capri Holdings, a new-era fashion firm comprising of Michael Kors, Versace, and Jimmy Choo.
His expertise heading Bergdorf Goodman, Coach, and, in a former incarnation, Jimmy Choo made him an apparent successor to John Idol, who amassed a fortune establishing Michael Kors. Idol had acquired Versace and Jimmy Choo in recent years in an effort to create a US conglomerate that could compete with the likes of LVMH and Kering and was ready to move back from day-to-day management of the company.
Capri, on the other hand, said on Monday that Idol was not going away and that Schulman, who had been poised to succeed him as CEO of the group, had resigned.
According to a study by J.P. Morgan's Matthew Boss, Schulman's substantial leave deal — which includes a $1.3 million annual pay for the next two years, plus an additional $5.2 million — suggests his departure is not connected to a disciplinary action. Capri also reduced his non-compete clause from two years to six months, allowing him to begin working for a competitor as soon as September.
So, why did Capri let Schulman go?
When Schulman was hired from Coach in 2020 — he had to wait out a year-long non-compete – Michael Kors, Capri's largest business, was floundering. Idol's strategy was to move away from Macy's-like department shops and off-price players and into the luxury arena, where margins are higher.
We believed that the luxury sector will experience the most sustained growth over the next 20 to 30 years," Idol told BoF in 2019. "We were lucky to be able to purchase two firms so fast, both of which were founded by founders."
Given his background in luxury, Schulman made sense as the executive to undertake this transformation. His abrupt exit, however, did not completely destabilize investor confidence. Capri's stock dropped 15% after the news, although it appeared to be part of a larger selloff, since PVH, Tapestry, and other competitors were also down significantly.
Mr Schulman was an essential element of our investment thesis on [Capri] because of his vast knowledge in luxury and at the Coach brand," Cowen analyst Oliver Chen wrote in a note about the departure. "However, we feel the current management is agile, seasoned, and has a great playbook to keep the momentum in the MK business going." Regrettably, the succession plan did not go as intended."
Idol, noted for his strict leadership style, is credited for turning the Michael Kors business into the juggernaut it is today, despite the fact that he is only in his early 60s, which is still considered young in CEO terms. Michael Kors was already back on track by the time Schulman joined the company in 2021, with increased margins indicating a drive upmarket. Kors' operating margin was 27.6 percent in the first quarter of its most recent fiscal year, up from -15.6 percent a year earlier and 20.5 percent pre-pandemic.
Perhaps Idol wanted to see his vision through after righting the ship to some measure — and the board agreed, hence the large contract for Schulman, who was expected to oversee the entire Capri business, not just Kors. A spokesperson for Capri declined to comment beyond the public statements. Schulman did not respond to a request for comment.
