Capri Holdings cuts annual revenue forecast on Michael Kors weakness
Capri Holdings Revises Financial Outlook Amid Michael Kors Challenges
Aug 5 (Reuters) - Capri Holdings cut its annual revenue forecast on Wednesday, citing second-quarter inventory delays at its key Michael Kors brand and softer demand for its pricey handbags and accessories in some markets.
Shares of the New York-based firm were down 2% in premarket trading.
Impact on Michael Kors Brand
Inventory Delays and Demand Weakness
The New York-based luxury group said Michael Kors, its largest brand by revenue, would take a $50 million hit in the second quarter from inventory delays and a further $50 million for the fiscal year from weaker demand in Europe and emerging markets due to the Middle East conflict.
Revised Revenue Forecast
Capri now expects fiscal 2027 revenue of about $3.40 billion, down from its previous forecast of about $3.53 billion.
Cost Management Strategies
However, it reaffirmed its adjusted annual earnings per share forecast of about $2.15, saying it would reduce operating expenses to offset the weaker sales.
Market Trends and Competitive Landscape
Luxury Sector Headwinds
U.S. luxury companies have been grappling with uneven demand as inflation-weary consumers pull back on discretionary purchases, while economic uncertainty weighs on spending in key international markets.
Brand Perception and Competition
Michael Kors has also faced criticism for its design innovation in recent years, in contrast to handbag rival Coach, owned by Tapestry, which has established itself as a leading brand for Gen Z.
Sales Performance
Revenue at Michael Kors fell to $590 million in the quarter ended June 27, from $635 million a year earlier, marking the brand's 15th consecutive quarter of sales declines.
Performance of Other Capri Brands
Jimmy Choo's Growth
Capri said it expects Jimmy Choo to continue growing and return to profitability, with revenue for the brand rising 10.5% to $179 million for the quarter.
Overall Financial Results
The company's first-quarter revenue fell 3.5% to $769 million, compared with analysts' average estimate of $752.7 million, according to data compiled by LSEG.
It reported quarterly adjusted earnings per share of 67 cents, compared with an estimate of 40 cents per share.
(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Tasim Zahid)
