Capri Holdings Limited, a US luxury fashion group that owns the Michael Kors, Versace and Jimmy Choo brands, fell short of its own expectations in the second quarter of the current financial year, ended 30 September.
Total sales came in at 1.29 billion US dollars, falling by 8.6 percent compared to the previous year. On a constant currency basis, total sales fell by 10.1 percent. In the retail sector, total sales fell in the high single-digit range, which is primarily due to the declining demand in North and South America as well as issues surrounding the launch of Michael Kors Americas e-commerce.
Sales fall for all three brands
All three brands are affected by the decline: Michael Kors' sales fell by 8.6 percent to 879 million US dollars, Versace by 9.1 percent to 280 million US dollars and Jimmy Choo by 7 percent to 132 million US dollars.
Gross profit totalled 832 million US dollars, compared to 951 million US dollars in the previous year. The gross profit margin also declined, primarily due to lower full-price sales, mainly in North and South America, partially offset by lower supply chain costs.
John D. Idol, chairman and CEO of Capri, said: "Capri Holdings' second quarter results were below our expectations due to macroeconomic headwinds and e-commerce implementation challenges. In early July, we launched a new e-commerce platform for Michael Kors in the Americas. Although we are excited about the long-term benefits, the transition negatively impacted our results in the second quarter. In addition, consumer demand for fashion luxury goods weakened during the quarter, particularly in North and South America."
Diversification through merger with Tapestry
Looking ahead to the coming months, Idol is confident, especially with regard to the planned merger with competitor Tapestry, which includes the Coach, Kate Spade and Stuart Weitzman brands: "We look forward to the successful completion of the merger transaction with Tapestry in calendar year 2024. We are confident that this merger will deliver value to our shareholders and provide new opportunities for our dedicated employees around the world as Capri Holdings becomes part of a larger and more diversified company. By joining forces with Tapestry, we will have greater resources and capabilities to accelerate the expansion of our global reach while preserving the unique DNA of our brands."
In the first quarter of the 2023/24 financial year, the US fashion group Tapestry Inc. was able to increase its sales to a new record level of around 1.51 billion US dollars. Revenue thus increased by 0.4 percent (currency-adjusted +2 percent) compared to the same period of the previous year and reached a new all-time high in the company's history. Growth was driven primarily by the Coach brand.