By
with contributions from Kellie Ell
 on February 6, 2019
A Michael Kors store rendering.

It was still a tale of two brands in the third quarter for Capri Holdings, which is only now starting to incorporate the recently acquired Versace into its overall results.

The company’s former namesake, Michael Kors, weathered a decline in jewelry and watch sales for the quarter, but an increase in demand for Jimmy Choo shoes over the holiday season managed to save the day.

Shares of Capri closed up 11 percent to $48.47 after the firm gave its financial update. Net income for the quarter ended Dec. 29 slipped 9.1 percent to $199.6 million, or $1.33 a diluted share, but adjusted earnings of $1.76 a share easily topped Wall Street’s forecast of $1.58 a share.

Choo’s revenues were the stand out, rising 40.9 percent to $162 million from $115 million. That helped make up for a less-rosy picture at Michael Kors, which saw sales drop 4 percent to $1.44 billion. Overall revenues at Capri dipped slightly to $1.44 billion and came in below analysts’ expectations for $1.46 billion.

Since London-based Capri only recently completed its $2.1 billion purchase of Versace, it did not break out any third-quarter numbers for the Italian fashion house.

Jimmy Choo delivered strong performance, as we continued to execute on our accelerated growth plans,” said John Idol, chairman and chief executive officer of Capri. “In Michael Kors, we remain focused on executing our Runway 2020 strategic initiatives and expect our efforts will return the brand to growth next year.”

The Michael Kors brand has been struggling, with revenues falling by low-single digits in the Americas and high-single digits in Europe, but the brand did post slight gains in Asia.

Capri is looking to return Kors to growth next year, while Versace will also boost revenues going forward and help increase the company’s Asian footprint.

For the full year, Capri expects total revenue to be about $5.22 billion, up from a previous forecast of $5.13 billion, with Michael Kors contributing $4.51 billion after a low-single digit comparable sales decline. Jimmy Choo’s revenue is expected to be about $580 million, a slight reduction from prior guidance reflecting an unfavorable foreign currency impact, while Versace revenue is forecast to contribute about $130 million.

Guidance includes Versace results for two months, as the company will report Versace on a one-month lag, and includes a full three months of interest costs related to the acquisition.

For fiscal 2020, Capri is penciling in total revenue to be about $6.1 billion, including about $900 million for Versace, $650 million for Jimmy Choo and $4.55 billion for Michael Kors.

Michael Kors Holdings Ltd. officially changed its name to Capri Holdings at the beginning of last month after it completed the acquisition of Versace.

The new addition will be closely watched for how it performs under its fresh ownership, although there will be many constants for the business, including Donatella Versace who is staying on as chief creative officer of the Versace brand.

During a call with investors, Idol reiterated Capri’s plans for Versace to open 100 more stores, taking the total count to 300, as its attempts to grow its revenues from $890 million in 2018 to $2 billion, although he didn’t divulge a timeframe.

“The house of Versace is one of the most storied luxury brands in the world and fits perfectly into our group strategy to focus on international fashion luxury brands that are leaders in style and trend,” Idol said.

“With the power of Versace and Jimmy Choo as well as the strength of Michael Kors, we believe our three iconic founder-led fashion brands position Capri Holdings to accelerate revenue to $8 billion and deliver multiple years of earnings growth,” the ceo said.