Capri Reports Decline in Revenue at Michael Kors, Versace, Jimmy Choo

General view outside the Michael Kors location

Christopher Joo | Michael Kors | Getty Images

Shares of owner Michael Kors Capri Holdings fell 20% in early trading on Wednesday after the company fell short of earnings expectations and lowered its full-year profit guidance.

Fashion companies outperformed many other industries last year amid years of inflation, but rising prices have forced some consumers to cut back on luxury goods. Some industry experts expected brands like Michael Kors, which has a younger and less affluent customer base, to be hit harder than more expensive brands like Hermès.

Here’s how the company did it:

  • Earnings per share: According to Refinitiv, $1.84 vs. $2.22 expected by analysts.
  • Income: According to Refinitiv, $1.51 billion versus $1.53 billion expected by analysts.

Clothing manufacturer reported 6% drop in revenue compared to last year. Capri reported a net income of $225 million, up from $322 million a year earlier.

The company’s luxury brand revenue fell: Michael Kors’ revenue fell 7.2% year-on-year to $1.1 billion, Jimmy Choo’s revenue fell 5.6% to $168 million, and Versace’s revenue fell 0.8% to $249. million dollars.

Each division reported a double-digit decline in revenue in Asia as a result of declining store traffic following China’s cancellation of its zero-Covid policy.

Capri also reported a 21% increase in net inventory as of December 31 to $1.19 billion. The company said it expects additional promotional activity to ease by the end of the current quarter.

“Overall, our results in the third quarter were more challenging than we expected,” said CEO John Idol. income statement. “We were disappointed with the results of our global wholesale business this quarter, resulting in deleveraging and lower operating margins.”

Idol said the company has begun trying to “better align operating expenses with changes in revenue.”

Capri said it now expects 2023 sales of $5.56 billion, below analysts’ expectations of $5.72 billion, according to Refinitiv. The company cut its full-year earnings-per-share guidance to $6.10 from its previous guidance of $6.85.

Capri’s fiscal 2024 guidance also came in below estimates, with the company expecting earnings per share of $6.40 on estimated revenue of $5.8 billion. Analysts polled by Refinitiv had expected earnings per share of $7.24 and revenue of $6.03 billion.

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