Capri Holdings, the parent company of luxury brands Michael Kors, Versace, and Jimmy Choo, recently announced a decline in revenues for the third quarter. Sales decreased by 5.6%, amounting to $1.43 billion. This decline was primarily attributed to a softening in luxury consumer demand, especially in the Americas. The retail segment of the company’s sales was particularly affected by this trend, with the implementation of Michael Kors Americas e-commerce also contributing to the decline.
In terms of wholesale, Capri Holdings saw a decrease in revenue in the low-teens range. This decline was driven by weaker demand in both the Americas and EMEA (Europe, Middle East, and Africa) regions.
Breaking down the performance of each brand, Versace experienced an 8.8% decline in revenue, totaling $227 million. While there was a 10% increase in Asia, the Americas and EMEA regions dragged down the overall performance. Jimmy Choo also had a 1.3% decrease in revenue, amounting to $166 million. The brand saw flat sales in EMEA and a 9% increase in Asia, but this growth was offset by an 11% decline in the Americas. Lastly, Michael Kors brand sales fell by 5.6% to $1.03 billion, with declines seen in all markets.
Capri Holdings reported a net income of $105 million, or $0.88 per diluted share, compared to $225 million, or $1.72 per diluted share, in the previous year. The dip in demand for luxury fashion goods was cited as the primary factor impacting the company’s performance. However, there were some positive trends in the third quarter, with better results seen in the company’s own retail channel, while sales in the wholesale channel remained challenging.
Capri Holdings expressed satisfaction in resolving the issues related to Michael Kors Americas e-commerce implementation, which had been discussed in the previous quarter. The platform is now running smoothly. Despite the challenges, the company emphasized that Versace, Jimmy Choo, and Michael Kors brands continue to resonate with consumers. Capri Holdings added 10.7 million new consumers to their databases, representing a 13% growth compared to the previous year. The company’s customer database has now exceeded 90 million, reflecting the strong brand equity and enduring value of the three iconic houses.
This earnings update from Capri Holdings comes ahead of their planned merger with Tapestry Inc, a rival U.S. fashion conglomerate. Tapestry Inc also reported its financial performance for the September-December quarter on the same day, revealing that net sales rose to $2.08 billion during that period.