The handbag collection inside a Michael Kors store.

While Michael Kors Holdings Ltd. has made progress on its Runway 2020 strategic plan, investors punished the fashion group’s shares on Wednesday ­— sending them close to their 52-week low — now that the turnaround looks like it might need more time.

Kors on Wednesday posted second-quarter results in which adjusted earnings per share of $1.27 bested Wall Street’s consensus estimates, but a deeper dive into its sales results for the period suggests possible weakness in future quarters.

The company reported a 9.3 percent gain in total revenues to $1.25 billion, but that included a contribution of $116.7 million from the Jimmy Choo brand. Even with that, Kors missed Wall Street’s revenue estimate of $1.26 billion for the quarter.

During the conference call to Wall Street analysts, Kors chief financial officer Tom J. Edwards said the Kors brand saw revenues dip 0.8 percent. The Kors retail business was essentially flat for the quarter. Edwards said, “This performance reflects 11 net new store openings and higher sales from stores not in the comparable sales space, offset by 2.1 percent decline in comparable store sales, which was in line with expectations. Global e-commerce benefited comparable sales by 190 basis points.”

The somewhat good news seems to be that even though the Kors wholesale business revenue declined by 1 percent, there was stronger-than-anticipated growth in the Americas. The cfo also said European revenue was lower, reflecting the company’s strategy in the region to reduce inventory and increase sell-throughs.

Even though Kors chairman and chief executive officer John D. Idol said on the call that footwear sales at the Jimmy Choo brand grew at a “double-digit” pace, the business still posted an operating loss of $18.4 million. The Choo operating loss on an adjusted basis was $7.4 million.

Investors showed their concerns by sending shares of Kors down down 14.6 percent to close at $49.05 in Big Board trading. The 52-week low is $47.47.

Still, Idol was optimistic about plans for the company’s long-term future. He led the call with comments about the strategic vision for Capri Holdings, the new name for the group once it completes its acquisition of Versace. The $2.2 billion acquisition is set to close in the fiscal fourth quarter.

Idol said, “Looking ahead, we expect the addition of Versace will drive accelerated revenue growth for Capri Holdings.”

He said that under the leadership of chief creative officer Donatella Versace and ceo Jonathan Akeroyd, the Versace business is expected to deliver double-digit revenue growth and about a 50 percent increase in EBITDA this year. Idol said he’s already working with the Versace team on execution strategy, one that would grow the brand from $850 million in revenue in 2018 to $2 billion in revenues. He also said he has a five-step plan to achieve the revenue growth. That plan includes building on the brand’s luxury runway momentum with a New York show on Dec. 2, increase the marketing spend, increase Versace’s global retail footprint by opening 30 stores next year and accelerate the brand’s e-commerce and omnichannel development. He also has plans to expand the brand’s accessories and footwear business that the existing team has already created for fall 2019.

Since acquiring the Choo brand in November 2017, Idol said the store base has grown from 150 to more than 200. And while Sandra Choi’s designer vision has grown footwear sales, the company’s strategic focus is also to build out the fashion active category. There are plans to accelerate the pace of new collections in the next calendar year. Idol said the brand remains on track to achieve its $1 billion revenue target.

At Michael Kors, Idol said the company continues to make progress on its Runway 2020 strategy. He said an increased social media presence, enhancement of the customer experience via an expansion of omnichannel capabilities and upcoming store renovation program has the brand on track to “achieve $5 billion in revenues.”

Idol said the combined Capri Holdings of Kors, Jimmy Choo and Versace is positioned to “accelerate revenue to $8 billion and deliver multiple years of earnings growth.”

Idol went on to discuss specifics at the Kors and Choo brands. He said there was higher sell-through in the handbag category due to greater-than-anticipated performance of its logo category at the Kors brand. That raises questions about how well its non-logo handbag collections did, although Idol did say some of the newer offerings resonated well with consumers. In general, comparable-store sales and accessories declined in the low-single digits, driven mostly by a high single-digit decline in inventory levels. Handbags and accessories are the big key categories for the Kors brand.

The ceo explained later in the call: “Remember we had a strategy to reduce inventories to improve sell-throughs. And as I said earlier, we probably pulled those inventories back a little too hard versus what we should have. So that’s an overall statement and that wouldn’t have been in just handbags, but that would have been in ready-to-wear and active, footwear, etc.”

In comparison, comparable-store sales in footwear rose double digits, while comps in the quarter for women’s rtw rose midsingle digits. Growth is still expected in the men’s business, but the fashion watch business remains pressured. In the watch and jewelry segment, Access smartwatches outperformed the broader category, and there was growth in the new slim fashion watches and jewelry lines, although the ceo noted that growth in these categories was “not yet large enough to offset the overall declines in the fashion watch category.”

At Jimmy Choo, comparable-store sales grew in the low single-digits driven by strength in footwear, but partially offset by weaker handbag performance. The brand is transitioning to a new accessories platform. A shout out by Idol on new launches was how the brand’s fashion active sneaker “performed ahead of our expectations.”

Ike Boruchow at Wells Fargo Securities said the sales-comp miss on expectations was the first time the company missed the top-line in two years. And with eight to 10 quarters of negative North American comps, the company seemed to be heading in the right direction in the first quarter when it delivered positive comps, the analyst said. He added that the positive comps gave hope that the brand has been “cleaned up” and that the direct-to-consumer and wholesale channels can begin to grow again. But with North American comps back in negative territory in the second quarter, Boruchow said there are expectations that the issues “could linger over the next one to two quarters.”

The analyst said there are now questions concerning the Kors North American wholesale business, which had returned to growth after a 25 to 30 percent reduction over the past two to three years. Adding to the concerns regarding the “unfavorable trajectory” is the company’s upcoming acquisition of Versace, which Boruchow said “many investors already had a problem with” given that Kors is paying 22-times earnings before interest, taxes, depreciation and amortization for the Italian fashion house.

While the analysts said there’s the potential for a “75-cent M&A driven upside three years from now” — 25 cents in accretion from Choo and 50 cents in Versace by fiscal year 2021 — the concern is the slowdown in the Michael Kors brand.

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