Total sales grew 15.1 percent to $1.4 billion, compared with $1.25 billion the same time last year thanks to the addition of Versace, which was purchased in December 2018. Meanwhile, total income fell to just $73 million, down from $138 million a year earlier.
By brand, revenues at Versace were $228 million. Revenues at Jimmy Choo rose 7.8 percent to $125 million, up from $116 million the same time last year. But sales at Michael Kors, the company’s largest brand, fell to $1.08 billion, down from $1.13 billion last year.
Even so, John D. Idol, Capri Holdings’ chairman and chief executive officer, said revenues at Michael Kors were in line with expectations, returning to positive same-store sales.
“We are successfully executing against [Michael Kors’] repositioning efforts to attract and engage Millennials and Generation Z consumers with Michael’s optimistic design vision and energetic marketing,” Idol said on Wednesday morning’s conference call with analysts.
He added that earnings across the company fell because of higher operating expenses and the protests in Hong Kong — an issue that has affected a number of international retailers, including Coach and Kate Spade parent Tapestry.
“For fiscal 2020, we remain focused on executing on our strategic growth initiatives and are reiterating our guidance for revenue of approximately $5.8 billion and adjusted earnings per share of approximately $4.95,” Idol said.
“From a longer-term perspective, we are encouraged with the progress we are making developing our global fashion luxury group,” Idol continued. “The integration of Versace is going smoothly, and Jimmy Choo continues to advance its strategic initiatives. Additionally, the Michael Kors brand repositioning efforts are resonating with customers. With continued focus on execution and investment to support our growth plans, we are confident that Capri Holdings remains on track to grow revenue to $8 billion over time and deliver multiple years of earnings growth.”
Capri is said to be on the hunt for a new ceo to lead the Michael Kors brand. (Jonathan Akeroyd leads the Versace brand as ceo and Pierre Denis is ceo of Jimmy Choo.) On Wednesday, representatives from Capri declined to comment on speculation that Capri is in search of a new ceo for the Michael Kors brand.
On the conference call, Idol added that — across the board — the consumer in North America is “relatively healthy.” Other bright spots include active footwear, which was a growth driver across all three brands, especially at Versace with the best-selling Chain Reaction collection.
The Versace brand, in particular, benefited from increased brand awareness after the spring 2020 runway show during Milan Fashion Week, in which Jennifer Lopez closed the show with the icon green and teal plunging dress that she debuted at the Grammy Awards in 2000.
“Versace’s continued momentum was driven by the positive response to Donatella’s fall collection,” Idol said on the conference call. “Customers were particularly enthusiastic about our new seasonal offerings which featured vivid furs, jewels and bright shoes that epitomize Versace’s rock ‘n’ roll legacy.”
Still, Idol conceded that the ongoing protests in Hong Kong have has “a material impact” on the Versace business in the region.
“We’ve got a very cautious view of how we’re planning the greater China business in total for Versace for the balance of the year. I think we’re going to see recovery from the T-shirt situation more in the fourth quarter and probably the first quarter of next year,” Idol said on the call, referring to the incident earlier this year in which some brands — including Versace — were criticized for listing Hong Kong as its country on merchandise, offending Chinese sovereignty in the process.
“But we’ve taken a very, very conservative point of view across the whole company for Hong Kong while we hope that the situation gets resolved,” Idol continued, but added, “We don’t see any end in sight. We don’t know what that means.”
Shares of Capri Holdings, which are down nearly 40 percent year-over-year, fell more than 4 percent during Wednesday’s trading session, closing down 0.91 percent to $33.78 a piece.
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