Michael Kors Turnaround a Work in Progress as Versace and Jimmy Choo Show Gains

Capri Holdings Ltd.’s “investment year” is here — but flagship label Michael Kors continues to face obstacles amid a challenging retail environment.

For the first quarter ended June 29, the fashion luxury group posted adjusted profits of $145 million, or earnings of 95 cents per diluted share, besting analysts’ bets of 90 cents a share. However, revenues just missed Wall Street’s estimates of $1.37 billion and climbed 11.9% to $1.35 billion.

Versace — which Capri acquired late last year in a $2 billion deal — flexed its muscle with sales of $207 million and comps that increased double-digits on a constant currency basis. Jimmy Choo’s revenues, on the other hand, declined 8.7% to $158 million, while Michael Kors dropped 4.8% to $981 million.

In a statement, chairman and CEO John D. Idol said, “We are investing in Versace and Jimmy Choo to position these preeminent luxury houses for long-term revenue growth and margin expansion. We are also executing on our strategic initiatives at Michael Kors to return the brand to growth.”

During the group’s call with investors, Idol noted strength in the fashion active footwear category across all banners — particularly through Versace’s Cross Chainer and Jimmy Choo’s Diamond sneakers as well as Michael Kors’ Georgie trainers.

The exec also pointed out Versace and Jimmy Choo’s presence at the 2019 Met Gala in May, calling the former “the most engaged brand across all social media channels” during the fashion event.

“With the power of Versace and Jimmy Choo, and the strength of Michael Kors, we remain confident that our three iconic, founder-led fashion brands position Capri Holdings to grow revenue to $8 billion over time and deliver multiple years of earnings growth,” Idol added.

For fiscal 2020, Capri still expects diluted earnings per share of $4.95 — taking into account the strengthening U.S. dollar and the impact of President Donald Trump’s 10% tariff on $300 billion worth of Chinese imports, which include shoes and ready-to-wear. It lowered its full-year revenues from $6 billion to $5.8 billion, while forecasting sales of about $650 million at Jimmy Choo and $900 million at Versace.

See Michael Kors, Spike Lee and more A-listers at the FNAAs.

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