Capri posts bigger-than-expected drop in quarterly revenue on tepid demand
6:39 pm Thursday, November 07th, 2024
By Anuja Bharat Mistry
(Reuters) -Versace-parent Capri Holdings posted a bigger-than-expected drop in quarterly revenue on Thursday, hurt by execution missteps across brands and a global slowdown in luxury goods demand, sending its shares down about 6% in extended trading.
The results were in contrast to those of Coach-parent Tapestry, whose $8.5 billion deal to buy the company was blocked by a U.S. judge last month.
Capri said Michael Kors’ quarterly revenue, which contributed 68% to its total sales in 2024, declined 16%, compared with an 8.6% drop a year earlier.
The company’s quarterly margin was 64.3%, compared with 64.4% a year earlier, as it was forced to offer more discounts and deal with higher expenses.
Last month, peer LVMH’s results suggested that the French luxury retailer struggled to lift demand in key markets such as China and Japan.
Consumers have been cutting back on expensive non-essentials to limit their expenses, hurting demand for high-end brands including Capri, LVMH and Estee Lauder.
Capri’s net revenue fell 16.4% to $1.08 billion from a year earlier. Analysts were expecting an 8.7% fall to $1.18 billion, according to data compiled by LSEG.
Earlier this month, Telsey Advisory Group analysts noted that Capri has struggled to implement a new e-commerce platform for Michael Kors and missed opportunities to revitalize the brand and boost profitability for Jimmy Choo and Versace brands, potentially weakening its market position.
Tapestry also said on Thursday that it had paused Capri integration plans as both companies have jointly appealed a U.S. judge’s decision to block its deal for the Michael Kors owner.
Excluding items, its profit of 65 cents per share, missing estimates of 75 cents per share.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Anil D’Silva)
