Updated 4:29 p.m. EST on Nov. 4
With Versace headed for the exit — through a $1.4 billion sale to Prada — Capri Holdings is turning toward its own future with Michael Kors and Jimmy Choo.
And chief executive officer John Idol said the company had more traction in the fiscal second quarter than it did at the start of the year.
Revenue for the quarter ended Sept. 27 fell 2.5 percent to $856 million.
You May Also Like
Related Articles
In constant currencies, sales fell 4.2 percent — an improvement from the 7.7 percent logged in the first quarter.
Adjusted operating income totaled $20 million, for an operating margin of 2.3 percent, down from 4.2 percent a year earlier.
Net losses tallied $34 million.
“We are encouraged by our second quarter results,” Idol said in a statement. “Trends continued to improve sequentially, which resulted in revenue, gross margin and operating income exceeding our expectations. This performance demonstrates the progress we are making as we execute against our strategic initiatives to energize our fashion luxury houses.
“With the Versace sale expected to close in our fiscal third quarter, we are now fully focused on the growth of our two iconic brands, Michael Kors and Jimmy Choo,” he said. “We plan to use the proceeds of the sale to repay the majority of our debt, substantially strengthening our balance sheet and providing greater financial flexibility to both invest in our growth as well as return capital to shareholders in the future.”
Michael Kors’ revenues fell 1.8 percent to $725 million, a decline of 3.3 percent in constant currencies during the quarter. Jimmy Choo revenues slipped 6.4 percent to $131 million, a drop of 9.3 percent in constant currencies.
Idol said retail trends would improve in the second half and that the company would return to growth next year.
“We are pleased with the fact that we’re starting to see stabilization in the Michael Kors business,” the CEO said on a conference call with Wall Street analysts. “Our full-price comps turned positive during the quarter. And we believe that’s a consumer response to our strategic initiatives.
“That starts first with our branding,” Idol said. “And we think that the way the consumer is seeing the modern jet set marketing based around traveling the world in style and really we’re doing that from a storytelling point of view — our hotel stories delivered with a large group of influencers is really helping consumers engage with the brand.”
The Michael Kors brand is also updating its product.
“Our real kind of focus is on standout style,” Idol said. “We want to make sure that when we’re delivering product it’s first, on trend. But secondly, Michael has a very, very strong point of view on style and styling. And as we’ve reinterpreted that for a more modern point of view, the consumer is really engaging with us on that.”
For their part, investors have yet to really reengage, but the company is stepping in itself.
Shares of Capri ended the day down 1 cent to $20.71, leaving the company with a market capitalization of $2.5 billion.
At that price and with a big chunk of its debt paid down after the Versace deal, Capri likes its own stock as an investment.
The company’s board authorized a $1 billion three-year share repurchase plan that it will start implementing next year.