The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — Capri Holdings, the company behind Michael Kors, Jimmy Choo and now Versace, climbed as much as 11 percent in early trading after raising its forecast for full-year revenue.
Revenue will be about $5.22 billion, up from a previous outlook for $5.13 billion, the company said Wednesday. Analysts had projected $5.2 billion.
Key Insights
After years of heavy discounting that eroded the cachet of the Michael Kors brand, Chief Executive Officer John Idol said Wednesday he expects the label to return to growth next year. Same-store sales for Michael Kors retail declined 2.4 percent last quarter, compared with the 2 percent drop seen by analysts.
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The company completed its €1.83 billion ($2.2 billion) purchase of Gianni Versace last quarter. It said it expects about $900 million in revenue from the label in the next fiscal year.
Investors wanting more details have some waiting to do: The luxury house said it will give more guidance, including long-term expectations for its suite of brands, at its investor day in June.
Market Reaction
Shares of Capri Holdings climbed as high as $48.50 in premarket trading. The stock had jumped 15 percent this year through Tuesday’s close, outpacing the benchmark S&P 500 Index.
By Lisa Wolfson; editor: Anne Riley Moffat and Jonathan Roeder.
The group’s flagship Prada brand grew more slowly but remained resilient in the face of a sector-wide slowdown, with retail sales up 7 percent.
The guidance was issued as the French group released first-quarter sales that confirmed forecasts for a slowdown. Weak demand in China and poor performance at flagship Gucci are weighing on the group.
Consumers face less, not more, choice if handbag brands can't scale up to compete with LVMH, argues Andrea Felsted.
As the French luxury group attempts to get back on track, investors, former insiders and industry observers say the group needs a far more drastic overhaul than it has planned, reports Bloomberg.