It’s not all doom and gloom across earnings reports this week as Capri Holdings Ltd., parent to Jimmy Choo, Versace and Michael Kors, today posted results that topped expectations across the board.
The luxury conglomerate said this morning that its revenues for the first quarter ended June 27 declined 67% to $451 million, but was stronger than the company’s own forecasts and better than Wall Street’s anticipated $427.3 million. (When it reported fourth-quarter results in early July, the company had warned it could record a “significant” loss per share as well as a 70% decline in revenues for Q1.)
Nevertheless, sales tumbled across all three banners, with Versace down 55% to $93 million; Jimmy Choo slipping 68% to $51 million; and Michael Kors falling 69% to $307 million.
Overall, net losses amounted to $180 million, or $1.21 per share, compared with the prior year’s net income of $45 million, or 30 cents per diluted share. On an adjusted basis, net losses were $1.04 per share, outpacing analysts’ forecasts for a loss of $1.11 per share.
“Looking at our progress in the fiscal first quarter, we were encouraged by trends across all three of our luxury houses, with sales and margin performance ahead of our initial expectations,” said Capri chairman and CEO John Idol. “We were particularly pleased with the strong growth of our e-commerce business, as well the sequential improvement in overall revenue trends through the first quarter and into July.”
The results were enough to rally Capri shares, which advanced more than 8.2% in premarket trading this morning. As of 10 a.m. ET, the stock remained up 10.5% to $15.52.
“During these unprecedented times, we plan to continue to execute on our strategic growth initiatives and remain confident in the long-term opportunities for each of our unique global luxury houses,” Idol said. “Capri Holdings has a portfolio of three iconic, founder-led fashion luxury brands that have enduring value and a long history of successfully navigating challenging periods. We will continue to carefully guide our business through the current retail environment, while positioning the company to resume its growth trajectory in fiscal 2022.”
Over the past few months, the retail group has taken several steps in a bid to preserve liquidity, including cutting back on operating expenses, reducing capital expenditures and suspending its share repurchase program. In June, it also entered into a new $230 million revolving credit facility to improve its cash flow.
The company today declined to provide an outlook for fiscal year 2021 citing “the lack of visibility surrounding the pandemic, macroeconomic fundamentals and tourism.”
Capri is the latest retail firm this week to report earnings and sales that, though they declined significantly, were significantly better than market watchers expected. Athletic footwear and apparel maker Under Armour and VF Corp., parent to Timberland, Vans and The North Face, also posted results that beat forecasts this week. Wolverine World Wide Inc., parent to Sperry, Merrell and Saucony, also topped Wall Street’s bets today, when it reported Q2.