Capri Holdings Ltd, the parent company of Michael Kors, is optimistic about its full-year revenue and profit outlook. The luxury fashion brand expects a rebound in demand, particularly in the United States where COVID-19 vaccinations are progressing rapidly.

To take advantage of the resurgence of shoppers, Capri Holdings plans to increase prices for its flagship brand, Michael Kors, during the upcoming fall and spring seasons. The company aims to make Michael Kors a smaller but more profitable business. Although the brand experienced a slight decline of about 4% in sales during the fourth quarter, its subsidiary brands, Versace and Jimmy Choo, saw growth of 10% and 16% respectively.

CEO John Idol outlined the company’s strategy to enhance Michael Kors’ status as a luxurious brand in North America. One approach is to reduce the amount of promotional merchandise available and tighten the supply. Despite this shift, Capri Holdings expanded its customer database for Michael Kors by 18% in the fourth quarter, suggesting that higher prices did not deter consumers from purchasing its products.

For fiscal 2022, Capri Holdings expects its total revenue to reach approximately $5.1 billion, surpassing Wall Street’s projection of $4.99 billion. The company also anticipates a gross margin increase of about 50 basis points despite rising transportation costs. Capri Holdings’ careful inventory management during the pandemic has contributed to the improvement of its gross margin.

The company reported a significant 80% surge in e-commerce sales in the fourth quarter, while retail sales also increased by 13%. Capri Holdings’ success in the online market aligns with the wider trend of luxury brands heavily investing in digital platforms. Industry giants such as LVMH, Hermes, and Kering have all benefited from the shift towards online sales.

Capri Holdings’ fourth-quarter revenue of $1.20 billion exceeded expectations of $1.02 billion. On an adjusted basis, the company earned 38 cents per share, surpassing the estimated 2 cents.

Overall, Capri Holdings and its brand Michael Kors are well-positioned for a strong recovery as luxury demand bounces back. With strategic plans to enhance the brand’s appeal and capitalize on the growing shift towards online sales, the company is confident in its ability to surpass market expectations and deliver strong financial performance in the coming year.

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