Capri Holdings sees 'challenging' quarter from global wholesale business

Capri Holdings Limited, owners of Versace, Jimmy Choo and Michael Kors, has set ambitious targets for the upcoming year, despite a disappointing 6% revenue decrease in Q3.

Its latest financial report for third quarter of fiscal 2023 revealed revenues decreased 6% on a reported basis and 0.5% in constant currency. The adjusted operating margin was 16.9% and adjusted earnings per share were £1.52 ($1.84).

Gross profit for the period ending 31 December 2022 stood at £910 million ($1.01 billion), with a gross margin of 66.5%.

Net income for Q3 reached £185 million ($225 million), compared to £265 million ($322 million) in the year prior. All three brands suffered a revenue knock year-on-year, with Michael Kors facing the most significant blow.

The individual brand's revenues were reported as follows:

• Michael Kors’s £900 million ($1.095 billion), down by 7.2%
• Jimmy Choo £138 million ($168 million), down by 5.6%
• Versace £205 million ($249 million), down by 0.8%

John D. Idol, Chairman and Chief Executive Officer, said: "Overall, our performance in the third quarter was more challenging than anticipated. However, many aspects of our business performed well, in particular, we were pleased with the continued growth in our own retail channel across all three of our luxury houses. This is a testament to the strength of our powerful iconic brands, as well as the success of our strategic initiatives.

"However, we were disappointed with the performance of our global wholesale business in the quarter which resulted in expense deleverage and a lower operating margin. We have begun taking measures to better align operating expenses with the change in revenue by channel. At the same time, we will continue to make strategic investments to drive long-term growth.

"As we look to fiscal 2024 we expect Capri Holdings to generate mid-single-digit revenue and earnings growth. We remain confident in our ability to achieve our long-term goals over time due to the resilience of the luxury industry, the strength of our portfolio of luxury houses and the talented group of employees executing our strategic initiatives."

The company expects a modest gross margin expansion over the continued fiscal year 2023. Capri Holdings has set a target of total revenues to reach £4.58 billion ($5.56 billion), up by 16%.