Michael Kors, Versace Parent Company Loses $182 Million

Capri Holdings Ltd. continues to navigate the pandemic with mounting losses. 

The fashion group — parent company to the Michael Kors, Versace and Jimmy Choo brands — revealed quarterly earnings Wednesday morning before the market opened, falling short on top-line revenues at the Michael Kors and Versace brands and posting a $182 million loss for the quarter. Still, the company’s progress — and positive outlook for the future — was enough to tame investor fears. The stock shot up nearly 3 percent in pre-market hours. 

“Looking back on fiscal 2021, the COVID-19 pandemic has had a profound effect on the entire world. The unprecedented challenges tested our business and industry in ways we could never have imagined,” John D. Idol, Capri’s chairman and chief executive officer, said in a statement. “Despite these challenges, we were encouraged by the performance of all three of our luxury houses, with revenue and earnings significantly exceeding our expectations. These results are a testament to the strength of our brands as well as the dedication, resilience and agility of the entire Capri Holdings team.”

Total revenues for the three-month period ending March 27 were $1.19 billion, roughly the same as last year. 

By brand, revenues at Michael Kors the company’s largest brand were $838 million for the quarter, down from $872 million a year earlier. Jimmy Choo registered $124 million in sales for the quarter, up from $107 million the same time last year, while Versace had $235 million in sales, up from $213 million a year earlier. 

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Tailwinds included the firm’s e-commerce business, where sales increased 80 percent during the quarter. 

Still, the company lost $182 million in the quarter. That’s on top of a $552 million loss a year earlier. 

For the year, the company logged more than $4 billion in total revenues, down from $5.5 billion in 2020’s fiscal year. Full-year revenues at Michael Kors were $2.9 billion, down from $4.1 billion a year earlier. Sales at Jimmy Choo totaled $418 million for the year, compared with $555 million a year earlier, and Versace revenues were $718 million for the full year, compared with $843 million a year earlier. 

Capri Holdings added to its losses for the full year, with $62 million more in losses. That’s in addition to a loss of $225 million a year earlier. 

The company ended the quarter with $1.2 billion in long-term debt and $232 million in cash and cash equivalents. The retailer also ended the quarter with 1,257 stores, or 820 Michael Kors, 227 Jimmy Choo and 210 Versace locations. Approximately 60 percent of the company’s stores in Europe, the Middle East and Africa and 40 percent in Canada were closed during the quarter. 

The firm is now expecting its revenues to be more than $1 billion in each quarter for the 2022 fiscal year, or in the range of $5.1 billion for the full year.  

“During the year, we reevaluated and refined Capri Holding’s strategic direction to ensure the company emerges from the pandemic stronger and more profitable,” Idol said. “For Versace and Jimmy Choo, we reaffirmed our long-term plans and are even more enthusiastic about the prospects of these luxury houses. For Michael Kors, we recalibrated our plans to further elevate the brand positioning and deliver higher profit margins.

“Looking forward, we remain optimistic about the outlook for the fashion luxury industry and Capri Holdings,” he continued. “As the world starts to recover from the pandemic, we are confident in our growth opportunities for Versace, Jimmy Choo and Michael Kors. We believe our three luxury houses position Capri Holdings to deliver multiple years of revenue and earnings growth, as well as increase shareholder value.”

Shares of Capri Holdings, which closed down 0.40 percent Tuesday to $52.94 apiece, are up more than 222 percent, year-over-year.

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