Capri Holdings Limited reports lower earnings results for the luxury goods group
The third quarter results of Capri Holdings Limited, owner of the Michael Kors, Jimmy Choo and Versace brands, were released on 8 February and the news is rather mitigated: sales and net profit are down.
By Eva Morletto08 février 2023
The group saw its sales fall by -6% to 1.51 billion dollars in the quarter ended 31 December 2022, whereas analysts' estimates were more optimistic, expecting 1.53 billion dollars. Following the announcement of these results, the share price fell by 24% (before closing) to 50 dollars.
As a consequence, the company's management has lowered its guidance for the fourth fiscal quarter of 2023. The stock is also expected to be impacted, with EPS - earnings per common share - forecast at $0.90-0.95, while analysts were unanimously predicting $1.39. The entire fiscal year could be impacted, with overall sales expected to be $5.56 billion, compared to the $5.72 billion initially forecast.
Among the factors influencing the negative decline in results was the health situation in China: the festive season was heavily impacted by the upsurge of the pandemic in several parts of the Asian market, limiting demand for luxury goods as a result.
Although the figures do not live up to the initial optimism generated by Michael Kors' good performance and growth in the first two quarters of the 2023 financial year (the first quarter ended with an increase in sales of +8.5%, followed by an equally promising second quarter with a turnover of 1, 41 billion and a jump of +8.6%), Capri Holdings intends to perform better in other geographical areas, in particular the US domestic market, where Michael Kors accessories are becoming iconic (in the second quarter, sales climbed +9.2% in the US).
Michael Kors is even about to invest more in its marketing strategies, following the recent appointment of new CEO Cedric Wilmotte, who intends to inject new energy into the brand.
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