Despite a disappointing fourth quarter, Capri Holdings CEO John Idol is optimistic the company can return to sales gains with help from a mix of strong brands and ample expansion plans.
Footwear is also a key component in Capri’s growth strategy as the company pushes ahead in fiscal 2024, Idol said on the company’s quarterly earnings call on Wednesday. “We continued to grow footwear across all brands with retail sales of women’s footwear increasing low double digits at Versace and Michael Kors as well as high single digits at Jimmy Choo,” Idol said.
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At Versace, Idol noted that footwear performed well as the company continued to build its core offering focused on iconic brand codes. In fiscal ’23, women’s footwear sales in Versace’s own retail channel increased double digits as the brand continued to gain authority in women’s luxury fashion footwear, the executive said.
At Jimmy Choo, footwear sales in fiscal 2023 were driven primarily by growth in occasion dressing. “This category performed well as people continue to embrace social activities and enjoy special events,” said Idol. “Sneakers also performed well, driven by our new Diamond Maxi.”
And at Michael Kors, Capri remains confident that it can significantly expand the brand’s range of footwear to drive incremental revenue. “Footwear sales in our retail channel increased double digits as we delivered exciting fashion featuring iconic hardware branding elements and signature detailing,” said Idol.
“We remain confident that we have the right strategies in place to grow Versace to at least $2 billion in revenue over time,” he said, adding he was also “confident” Choo would hit $1 billion and “optimistic” that Kors would top $5 billion.
Earlier on Wednesday, Capri stated that its total revenue for the fourth quarter of 2023 was down 10.5 percent to $1.335 billion compared to the same quarter the prior year.
By brand, Versace revenues fell 13 percent in Q4 to $274 million, revenue at Jimmy Choo dipped 3.2 percent to $151 million, and revenue at Michael Kors dropped 10.9 percent to $910 million in the quarter.
The disappointing drop in sales comes as Americans are spending less on luxury goods, with inflation, high interest rates and the threat of recession impacting consumer buying habits.
“We definitely saw a sequential decline in North America,” Idol told analysts on Wednesday’s call. “We saw it first in the North American department stores, and it wasn’t just the Michael Kors piece of the business. We saw it on the luxury side as well with Versace and Jimmy Choo. And we saw that accelerate in the first calendar quarter of this year.”
But, Idol is confident consumers will return to spend on luxury in the near future. “We are starting to see some movement with spring merchandise and some of the summer deliveries,” Idol said of North America. “We see the consumer getting a little bit more confident. I don’t want to say there’s a step change of any significance. But we see them responding definitely to newness that’s being delivered inside the stores, and that’s across all three of the houses.”
And like most companies reporting earnings the past few weeks, Idol said that business is expected to look better in the fall. “We’re up against softer comparables in the back half of the year,” Idol said. “While we still think North America will have some just minor increases, we think that Europe and Asia will continue to move forward in a very positive manner.”
For fiscal 2024, the company said net revenues would rise to $5.7 billion — but that marked a downgrade from the company’s prior forecast of $5.8 billion due to changes in currency prices and weakness in North America.
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