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Michael Kors owner Capri cuts forecasts as demand slows, shares plunge 20%
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(Reuters) -Michael Kors owner Capri Holdings Ltd cut its annual profit forecast on Wednesday, hurt by a slowdown in demand for its luxury handbags and apparel in department stores, sending its shares tumbling 20% before the bell.
(Reuters) -Michael Kors owner Capri Holdings Ltd cut its annual profit forecast on Wednesday, hurt by a slowdown in demand for its luxury handbags and apparel in department stores, sending its shares tumbling 20% before the bell.
High-end fashion companies weathered decades-high inflation better than other industries for most of last year as affluent shoppers dipped into pandemic savings, but persistently increasing prices have now prompted even high-end spenders to stem their splurging on designer labels.
Industry experts have warned that accessible luxury brands like Michael Kors are likely to feel a bigger pinch than higher-priced brands like Hermes and Dior due to their core young customer base having less wealth than the luxury goods industry’s traditional clientele.
Michael Kors revenue from the Americas fell 4.5% to $777 million in the company’s third quarter ended Dec. 31.
The brand’s revenue from Asia fell nearly 18% as China’s decision to dismantle its zero-COVID policy late last year spurred a surge of infections in the world’s second-largest economy and dulled store traffic.
Capri, which also owns the Jimmy Choo and Versace brands, said it now expects annual sales of $5.56 billion, down from its prior estimate of $5.70 billion. It cut its earnings per share forecast to $6.10 from $6.85.
The company earned $1.84 per share, excluding items, in the third quarter, missing analysts’ estimates of $2.22, according to Refinitiv IBES data.
It also forecast fiscal 2024 earnings per share of $6.40 on revenue of $5.8 billion. Analysts expect earnings per share of $7.24 on revenue of $6.03 billion.
(Reporting by Uday Sampath and Anne Florentyna Gnanaraja Sekar in Bengaluru; Editing by Maju Samuel)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is often measured by the Consumer Price Index (CPI).
Luxury goods are high-quality products that are not essential but are desired for their quality, exclusivity, and prestige. They often come with a higher price tag.
Revenue is the total income generated by a company from its business activities, typically from sales of goods and services before any expenses are deducted.
Retail trade refers to the sale of goods and services to consumers for personal use. It encompasses various businesses, including stores, online shops, and markets.
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