Michael Kors owner Capri pins hopes on Versace, raises 2019 sales forecast
today Feb 6, 2019
Capri Holdings Ltd, formerly Michael Kors, beat quarterly profit estimates on Wednesday and raised its full-year revenue forecast on expectations of strong sales at its recently acquired Versace brand, sending its shares up 11 percent.
The company paid about $2 billion for the Italian luxury brand last year to tap Europe’s wealthy, who prefer European brands such as Versace, Louis Vuitton and Kering’s Gucci over their American counterparts.
The company closed the deal in December, turning itself into a global house for luxury brands that also include Michael Kors handbags as well as high-end footwear maker Jimmy Choo.
“Taken together, we believe our three iconic, founder-led fashion brands position Capri Holdings to accelerate revenue to $8 billion dollars and deliver multiple years of earnings growth,” Chief Executive Officer John Idol said.
Capri’s overall third-quarter profit got a boost from better operating margins at its Michael Kors’ wholesale business as it managed to pull back inventory from off-price retailers.
Excluding certain items, the company earned $1.76 per share, beating analysts’ average estimate of $1.58 per share, according to IBES data from Refinitiv.
However, total revenue remained largely flat at $1.44 billion, missing the average analyst estimate of $1.46 billion, hurt by weakness at Kors’ retail stores.
The company raised its 2019 revenue forecast to $5.22 billion from its earlier estimate of $5.13 billion, with the company expecting about a $130 million boost from Versace.
© Thomson Reuters 2019 All rights reserved.