Leo Wu and Lareina Song front the Michael Kors Chinese Valentine's Day campaign.

A number of fashion brands have issued stark warnings that they will be forced to raise prices if the administration pulls the trigger on its plan to introduce yet more tariffs next month.

Michael Kors will not be among them. Its parent company Capri Holdings Ltd., which also owns Versace and Jimmy Choo, made a defiant stand Wednesday, stating that it would not raise the cost for customers in the wake of tariffs.

“Our intent is not to raise prices,” chief executive officer John Idol told analysts during an earnings call. “Michael Kors, the brand, will return to flat and even positive comp store growth in the back half of the year. And we think it’s very important that we continue to maintain our pricing strategy that we have both domestically and globally.”

He also explained that even if tariffs on apparel and footwear rise to 25 percent from the expected 10 percent, it would not impact Capri’s overall earnings.

This is despite the fact that a “significant” amount of the group’s footwear and ready-to-wear collections are produced in China, although it refrained from divulging specific numbers.

“We believe we have enough opportunity to mitigate some of those issues,” Idol added. “So we’re comfortable that both in this year and as we move forward, that will not impact our earnings projections.”

Tariffs were not the only issue analysts wanted to probe the global company about, and they also touched on the impact of the Hong Kong protests and increasing pressure from the resale market in North America.

Addressing the first point, Idol lamented that the situation in Hong Kong “appears to be getting worse, not better,” and as of yet he can’t speculate on what the implications for Capri might be.

“We just don’t know, but we have a very strong and significant business there with all of our brands and it does concern us. Again, in the total scheme of things it won’t be immaterial to the overall group, but it definitely impacts in that region itself,” he said.

Asked about pressure from resale, he responded that there is “no question” that it has impacted the Michael Kors accessories business, but was fairly vague on the specifics.

“There’s a substantial amount of product that is resold on numerous web sites, which we do not do business with directly. We don’t sell those companies directly, but you can find our product on there and it is consumers reselling accessories, in particular,” he said.

“And that, we believe, has had an impact on the overall performance of the accessible luxury market in North America. And as you know, on the luxury side, it is a growing business. I can’t comment to what that will or won’t mean for us. But we know it exists. We know it’s there, and we’ll continue to watch it carefully,” the ceo said.

Idol’s remarks came as the group revealed first-quarter sales that missed Wall Street estimates, dragged down by the Michael Kors brand.

Total revenue for the quarter ended June 29 came in at $1.35 billion. While this was up 12 percent compared to last year, it was below analysts’ average estimate of $1.37 billion, according to Refinitiv, with incremental revenue from Versace partially offset by lower results from Jimmy Choo and Michael Kors.

Net income was $45 million, or 30 cents a diluted share, down from $186 million, or $1.22 a diluted share in the prior year. This year includes a $97 million store impairment charge largely attributable to the Michael Kors retail fleet. On an adjusted basis, it was $145 million, or 95 cents a diluted share.

A breakdown of the sales numbers revealed that Michael Kors revenue was $981 million, down 4.8 percent compared to the prior year, while comparable store sales decreased low-single digits. Excluding the impact of watch declines, the company reported that comparable sales number would have been positive.

Jimmy Choo revenue, meanwhile, fell 8.7 percent to $158 million due to the pound weakening, and Versace‘s revenue was $207 million on the back of its smaller size bags and new vintage logo products performing well.

For the full year, Capri is now expecting total revenue of about $5.8 billion, down from $6 billion, with the largest proportion of the revenue reduction set to occur in the third quarter. According to Capri’s chief financial officer Tom Edwards, about half of this reduction is driven by additional unfavorable foreign exchange translation due to the strengthening of the U.S. dollar and half is related to reduced Michael Kors revenue in the Americas.

Capri’s share price closed up 3.1 percent to $32.56 in trading on Wednesday and Randal J. Konik, an analyst at Jefferies, wrote in a note to clients that “shares appear to be finding a bottom.”

“Valuation appears extremely cheap for this portfolio of global brands with high margins and strong cash flow. We acknowledge enthusiasm for the stock is dampened on continued investment spend, but we expect spending moderation to begin in fiscal year 2021, which should result in a re-acceleration of the margin profile of the company,” he said.

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