Michael Kors-owner Capri shares plunge after revenue falls across the retailer’s luxury brands

A general view outside the Michael Kors location

Christopher Joe Michael Kors | Getty Images

Michael Kors Owner Shares Capri Holdings It sank 20% in early trading on Wednesday after the company missed earnings expectations and cut its annual profit forecast.

High-end fashion companies outperformed many other industries last year amid decades of high inflation, but rising prices have forced some consumers to curb spending on luxury goods. Some industry experts expected brands like Michael Kors, whose customer base is younger and less affluent, to benefit more than higher-priced brands like Hermes.

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How the company did it:

  • Earnings per share: $1.84 vs. $2.22 expected by analysts, according to Refinitiv.
  • Income: $1.51 billion vs. $1.53 billion expected by analysts, according to Refinitiv.

The apparel maker reported 6 percent A decrease in revenue from the year-ago period. Capri reported that net income was $225 million, down from $322 million last year.

Revenues declined at the company’s luxury brands: Michael Kors revenue fell 7.2% year-over-year to $1.1 billion, Jimmy Choo revenue fell 5.6% to $168 million, and Versace revenue fell 0.8% to $249 million.

Every division in Asia posted double-digit revenue declines as a result of cheaper store traffic after China ended its zero-Covid policy.

Capri also reported a 21 percent increase in net inventory as of Dec. 31, totaling $1.19 billion. The company said it expects additional promotional activity to level off by the end of the current quarter.

“Overall, our performance in the third quarter was more challenging than expected,” CEO John Idle said in the earnings release. “We were disappointed with the performance of our global wholesale business in the quarter, which resulted in lower costs and lower operating margins.”

Idol said the company has begun efforts to “better align operating expenses with changes in revenue.”

Capri said it now expects full-year 2023 sales of $5.56 billion, below analysts’ expectations of $5.72 billion, according to Refinitiv. The company cut its full-year earnings per share forecast to $6.10 from a forecast of $6.85.

Capri’s fiscal 2024 forecast came in under estimates, as well: The company expects earnings per share of $6.40 on estimated revenue of $5.8 billion. Analysts polled by Refinitiv were expecting earnings of $7.24 per share and revenue of $6.03 billion.

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