Michael Kors owner Capri Holdings Ltd cut its annual profit forecast on Wednesday, hurt by a slowdown in demand for its luxury handbags and apparel in department stores, sending its shares tumbling 20 percent before the bell.

High-end fashion companies weathered decades-high inflation better than other industries for most of last year as affluent shoppers dipped into pandemic savings, but persistently increasing prices have now prompted even high-end spenders to stem their splurging on designer labels.

Industry experts have warned that accessible luxury brands like Michael Kors are likely to feel a bigger pinch than higher-priced brands like Hermès and Dior due to their core young customer base having less wealth than the luxury goods industry’s traditional clientele.

Michael Kors revenue from the Americas fell 4.5 percent to $777 million in the company’s third quarter ended Dec. 31.

The brand’s revenue from Asia fell nearly 18 percent as China’s decision to dismantle its zero-Covid policy late last year spurred a surge of infections in the world’s second-largest economy and dulled store traffic.

Capri, which also owns the Jimmy Choo and Versace brands, said it now expects annual sales of $5.56 billion, down from its prior estimate of $5.70 billion. It cut its earnings per share forecast to $6.10 from $6.85.

The company earned $1.84 per share, excluding items, in the third quarter, missing analysts’ estimates of $2.22, according to Refinitiv IBES data.

It also forecast fiscal 2024 earnings per share of $6.40 on revenue of $5.8 billion. Analysts expect earnings per share of $7.24 on revenue of $6.03 billion.

By Uday Sampath and Anne Florentyna Gnanaraja Sekar; Editor: Maju Samuel

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