Updates shares in paragraph 2, adds analyst comment in paragraph 7

By Sanskriti Shekhar and Danielle Kaye

May 27 (Reuters) - Capri Holdings CPRI.N forecast another quarter of declining sales on Wednesday but provided an upbeat annual profit target as it bets on a turnaround strategy focused on reviving demand for its Michael Kors brand.

The company's shares reversed course from early premarket gains and were down about 3% in early trading after it also forecast current-quarter revenue below estimates.

Capri is trying to draw in a broader customer base, especially younger and wealthier shoppers, who continue to spend on nice-to-have items such as handbags despite inflationary pressures from higher gas and food costs.

"We expect a more meaningful and sustained improvement in sales once a broader assortment is fully introduced in the fall season," said CEO John Idol on a post-earnings call.

The company was trying to reduce promotional activity to help drive a reset at Michael Kors, executives added.

Capri reported another quarterly decline for its Michael Kors brand, which makes up the bulk of its sales. Revenue fell 5.5% to $656 million, the company said.

"We are encouraged by management's optimism for the business," analysts at Goldman Sachs said in a note. "That said, Michael Kors revenues remain under pressure."

The Michael Kors brand has faced criticism in recent years for its lack of design innovation. Its consecutive quarters of sales decline stand in contrast to handbag rival Coach, owned by Tapestry TPR.N, which saw a 31% revenue jump in its most recent quarter.

It expects first-quarter total revenue of about $750 million, compared with an estimate of $789.7 million, according to data compiled by LSEG.

Capri sold Italian brand Versace last year - which it had bought just seven years earlier - to Prada, as the U.S.-based fashion group zeroes in on boosting its Michael Kors and Jimmy Choo labels.

The company failed to capitalize on the inclusion of Versace in its portfolio, and the sale highlighted Capri's push to raise cash and pay down its debt.

Capri's fourth-quarter revenue of $796 million was largely in line with expectations, but adjusted earnings per share of 22 cents topped an estimate of 11 cents per share.

The company's gross margin for the three months ended March 28 was 64.8%, up from 59.9% a year ago.

Capri plans to recover all tariffs paid under the International Emergency Economic Powers Act as of March 28 and has recorded a refund of $65 million to be received, it said.

It expects fiscal year 2027 profit per share of about $2.15, compared to analysts' expectation of $1.83 per share, according to data compiled by LSEG.