Jimmy Choo & Versace See Big Gains at Capri in Q1 as China Lockdowns Hit Profits
Shares for Capri Holdings dipped 4.9% on Tuesday despite beating expectations in the first quarter of 2023 and seeing strong momentum across all three of its luxury houses.
Much of the concern from investors came as CEO John Idol said on Tuesday sales in China still proved to be a sore spot due to recurring COVID-19 lockdowns with supply chain disruptions and rising prices still cutting into quarterly profits.
Overall though, the company, which owns Michael Kors, Jimmy Choo and Versace, reported a 8.5% revenue increase of $1.36 billion in Q1. Profits fell, however, to $201 million, down from $219 million a year ago.
By brand, Jimmy Choo had the most success in the first quarter, with revenue increasing 21.1% over last year to $172 million. Versace grew 14.6% in Q1 with revenues of $275 million and Michael Kors saw a yearly increase of 4.8% with revenues of $913 million. Across all brands, the biggest drops in revenue stemmed from the Asia region.
Footwear and accessories remain as the key to growth across all brands at Capri. On the company’s earnings conference call on Tuesday, Idol reemphasized that the return to work, weddings and travel have helped sales in these two categories to continue to soar. “Sales in our retail channel increased strong double digits,” Idol said. “We continue to see strength in dress styles driven by a return to office, social events and special occasions.”
At Versace, women’s footwear sales in the company’s retail channel increased about 50% in Q1. Idol maintained that performance was driven by dress styles, which increased approximately 75% compared to prior year as consumers responded positively to styles featuring a range of Versace codes, including Greca and Medusa.
At Jimmy Choo, Idol said that the brand’s JC logo jacquard slides “quickly became a summer wardrobe foundation” for its customers. In sneakers, Jimmy Choo also saw strong reaction to the new Rome trainer in both women and men’s. Styles embellished with pearls and its Crystal “C” collection were also highlights.
And at Michael Kors, Idol mentioned that consumers “responded positively” to the “elevated execution” of the brand’s seasonal flats and sandals in the quarter. Branded hardware and bold studding performed “exceptionally well” for the brand, Idol added.
These results come just weeks after Idol laid out plans for the future of the company’s three brands at an Investor Day in New York. Idol, who took the reins of Michael Kors in 2003, built the designer brand into a major business and then bought Jimmy Choo in 2017 and Versace in 2018, when the company was renamed Capri.
Over the long term, Michael Kors’ revenues are projected to increase by just over $1 billion to $5 billion as Versace is seen adding another $900 million to $2 billion and Jimmy Choo is expected to add $387 million to hit $1 billion.
Looking ahead, Capri Holdings expects total revenue of approximately $5.85 billion for the full year fiscal 2023. By brand, the company expects Versace to reach $1.175 billion this year, with Jimmy Choo bringing in $650 million in revenues in 2023. As for Michael Kors, Capri expects revenues of approximately $4.025 billion for the year.
