Michael Kors shares tumble after trimming sales projection
Shares in Capri Holdings, the company behind Michael Kors and other luxury brands, tumbled the most in almost seven months after it trimmed its sales projection for the year amid foreign currency weakness and lower wholesale revenue.
Capri’s revenue of $6bn (€5.4bn) for its current financial year is down from a previous outlook of $6.1bn, with same-store sales for the Michael Kors brand seen as flat. That measure, a key gauge of retail success, is expected to grow for the smaller Versace and Jimmy Choo brands. Shares fell by 10%.
The company — formerly known as Michael Kors — is reinventing itself as a house of luxury brands, after acquiring fashion labels Versace for $2.2bn and Jimmy Choo for $1.2bn, in the past two years.
Chief executive John Idol said this is an “investment year” for the company. Michael Kors has been cleaning up its US operations after years of heavy discounting took a toll on the business.
Executives have worked to clear inventory and restore the brand’s lustre, but comparable sales slid 1% in the latest quarter on a constant currency basis, a bigger drop than analysts predicted. Management aims to more than double Versace’s sales to $2bn annually.
Mr Idol said he expected growth at Versace and Jimmy Choo will drive much of the company’s goal of increasing its annual revenue to a range of $6bn-$8bn.
