Capri Holdings — parent company of Michael Kors, Jimmy Choo, and Versace — today announced its third-quarter fiscal 2021 results ended December 26, 2020, which reflect the ongoing negative effects of the COVID-19 pandemic on the global level, tempered by positive growth in mainland China.
According to a company release, Capri Holdings recorded total revenue of 1.3 billion for the quarter, a 17.1 decline compared to last year and a decrease of 19.5 percent on a constant currency basis. Gross profit reached 848 million, down from 934 million one year prior.
Despite expectations that lingering global economic uncertainty could suppress high-end spending throughout most of 2021 at least, the group’s results offer some relatively bright spots. Capri Holdings announced 65 percent growth in e-commerce sales in third-quarter fiscal 2021 and double-digit global retail growth at Versace. (Although the brand saw revenue remain flat compared to the prior year, and total revenue decreasing 6.7 percent on a constant currency basis.)
Portfolio brands Michael Kors and Jimmy Choo faced a very difficult quarter as well, with the former recording an 18.6 percent decrease in revenue compared to the prior year (20.6 percent on a constant currency basis) and the latter a 26.7 percent drop in revenue (27.3 percent on a constant currency basis).
As John D. Idol, Capri Holdings Chairman and Chief Executive Officer, said, “As the world continues to emerge from this crisis, we are increasingly optimistic about the outlook for the fashion luxury industry and Capri Holdings. By fiscal 2023, we anticipate revenue and earnings per share will exceed pre-pandemic levels. We remain confident that our three luxury houses position Capri Holdings to deliver multiple years of revenue and earnings growth as well as increase shareholder value.”
Until Capri Holdings’ fortunes turn around on a global scale, China remains arguably the group’s most important market at the moment, with Capri Holdings recording double-digit growth in the mainland China market.
Moving forward, however, it will be interesting to see how recent marketing effort to capitalize on the momentum in China’s apparel and luxury markets impact revenue in the months ahead. In particular, Versace has seen interest rise among Chinese consumers to the brand’s presence in the Netflix reality show The Bling Dynasty and the unveiling of a Lunar New Year capsule collection collaboration with Chinese designer Ren Jialun.
But the key for Capri Holdings in the current quarter will be the strength of domestic luxury shopping in China around the Lunar New Year holiday, which may see less-than-anticipated consumption due to a sharp decrease in travel influenced by clusters of COVID-19. On January 28, the official first day of the holiday period, Chinese airlines cancelled more than half of their flights, while Bloomberg reported a 75 percent decline in trips in the final days of January compared to 2019 and 2020 levels. As a result of more people staying home, it is expected that Chinese consumers will spend less on tourism, entertainment, and naturally, luxury goods and apparel — exactly what Capri Holdings doesn’t want or need.