Capri Holdings Faces Significant Revenue Drop

By Anuja Bharat Mistry

(Reuters) – Versace-parent Capri Holdings (NYSE:CPRI) posted a larger-than-expected drop in quarterly revenue on Thursday, affected by execution missteps across brands and a global slowdown in luxury goods demand, resulting in a 6% decline in shares during extended trading.

The results contrasted with those of Coach-parent Tapestry (NYSE:TPR), whose $8.5 billion acquisition of the company was blocked by a U.S. judge last month.

Capri reported that Michael Kors' quarterly revenue, contributing 68% to its total sales in 2024, fell by 16%, compared to an 8.6% decline the previous year.

The company’s quarterly margin stood at 64.3%, compared to 64.4% a year prior, as it faced higher costs and the necessity to offer more discounts.

Last month, reports indicated that LVMH, the French luxury retailer, also struggled to boost demand in critical markets like China and Japan.

Consumers have been reducing expenditures on luxury non-essentials, adversely impacting the demand for high-end brands including Capri, LVMH, and Estee Lauder (NYSE:EL).

Capri's net revenue decreased by 16.4%, dropping to $1.08 billion from the previous year, which was below analysts' expectations of an 8.7% decline to $1.18 billion, as per data compiled by LSEG.

Earlier this month, analysts from Telsey Advisory Group remarked that Capri has faced challenges implementing a new e-commerce platform for Michael Kors and has missed chances to rejuvenate the brand as well as enhance profitability for Jimmy Choo and Versace, potentially undermining its market position.

Tapestry announced on Thursday that it had paused its integration plans with Capri as both companies have appealed a U.S. judge's ruling blocking the acquisition of Michael Kors.

Excluding one-time items, Capri's profit was 65 cents per share, which fell short of estimates of 75 cents per share.