For spring, the Michael Kors Collection ad campaign was photographed by Inez van Lamsweerde and Vinoodh Matadin. Shot on the grounds of a Beverly Hills estate, the campaign features models Ugbad Abdi and Rianne Van Rompaey. “My spring collection is a celebration of the best of American style,” said Michael Kors. “The Collection campaign focuses on a mix of ease and glamour that is inherently American, and the layers of sophistication, irreverence and romance found in the images complement that juxtaposition.” Crisply tailored separates and soft romantic dresses are featured. The global campaign breaks this month, with print ads running in spring issues worldwide. The images will also appear in digital outlets, as well as social media platforms and traditional outdoor media placement. — Lisa Lockwood

Capri Holdings Ltd. is making a comeback — and the fashion house has Jimmy Choo and Versace to thank for that. The brands have been resonating with shoppers as the likes of Jennifer Lopez and Kaia Gerber act as ambassadors for the businesses. 

That’s good news for Michael Kors’ parent company, which reported quarterly earnings Wednesday, causing shares to surge 8.3 percent to $33.31. The group warned that the ongoing coronavirus crisis will have a severe impact on its results in the next quarter — and potentially even a greater one depending on how long the health emergency lasts.

For the three-month period ending Dec. 28, total revenue jumped 9.2 percent to $1.57 billion, compared with $1.43 billion the same time last year. Net income also rose, to $210 million, compared with $200 million a year earlier. 

“For the third quarter, we were pleased to deliver revenue and earnings per share above our expectations,” Capri’s chairman and chief executive officer John D. Idol said in a statement. “Our revenue increase reflected the addition of Versace and growth from Jimmy Choo, while Michael Kors revenue was better than anticipated. The strategic initiatives for our recent acquisitions, Versace and Jimmy Choo, continue to gain traction, and we believe we are on the right path to position Michael Kors for future growth. Longer term, as we continue to execute against our strategies, we are confident in our ability to deliver multiple years of revenue and earnings growth.”

Still, it wasn’t all good news. The company’s largest brand, Michael Kors, continued to lag. Sales fell 5.1 percent to $1.21 billion, down from $1.27 billion the same time last year. One noticeable slump was in the brand’s watch business.

“Clearly the customer voted for those watches in the tech ecosystem,” Idol said on the conference call with analysts Wednesday morning. “It’s very difficult for us to compete with them. We’re trying, but it’s definitely an uphill battle.”

He estimated that the decline in watch sales will negatively impact North American comps for the rest of the fiscal year.

Another potential headwind could be Macy’s recent announcement to close stores. The Michael Kors business is heavily tied to the department store.

But Idol said it will only have a small impact on the business.

The majority of our business is done with e-commerce and the top 200 [Macy’s] stores,” he said. 

Meanwhile, the Versace and Jimmy Choo businesses added a boost. 

Versace, which the company acquired in December 2018, had total sales of $195 million during the quarter.

“We feel that Versace is absolutely on track,” Idol said. “The customer is absolutely responding to what we’re working on. We’re super positive about how that [acquisition] is going to impact us long-term.” 

The company anticipates Versace revenues growing to $2 billion.

Jimmy Choo also did well. Total sales at accessories company Jimmy Choo rose 1.9 percent to $165 million, compared with $162 million the same time last year. 

But moving forward, Capri expects the ongoing coronavirus to reduce revenues by about $100 million next quarter. 

“We are in the midst of a dynamic global health emergency related to the coronavirus,” Idol said. “Our thoughts and prayers go out to the people of China, including our own employees located in this region, as well as all of those affected by the virus globally. We hope for a speedy and positive resolution to this crisis. The situation in China and the measures being taken to protect the population are having a material impact on our business. Given our current visibility, we now anticipate annual revenue of approximately $5.65 billion and adjusted earnings per share of $4.45 to $4.50. This estimate could materially change if the severity of the situation in China worsens.”

The company closed about 150 stores in China as of Feb. 5. Executives on the conference call added that the virus could impact nearby markets, such as South Korea and Japan. 

That’s going to be painful,” Idol said. “There’s definitely going to be an impact on all of our brands in [the first quarter] because of the virus. We’ve taken the trends today and we’ve assumed that nothing gets better through the end of March.”

Still, he added that “China will return and it will be a major growth pillar.”

In December, the company said it was expanding its portfolio with the purchase of Italian atelier and shoe manufacturer Alberto Gozzi Srl in Pistoia, Tuscany. The amount of the transaction, which is expected to close in the fourth quarter, was not disclosed.

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