Versace and Jimmy Choo Parent’s Stock Surges Double Digits on Earnings and Sales Beat

Samantha McDonald
·2 min read
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Shares for Capri Holdings Ltd. are surging in Thursday premarket trading after the fashion group posted better-than-anticipated earnings and sales.

For the second quarter, the Versace, Jimmy Choo and Michael Kors parent posted adjusted profits of $137 million, or 90 cents per diluted share, compared to $177 million or $1.16 per diluted share in the prior year. Still, it soundly trounced Wall Street’s expectations of earnings of 4 cents per share. Revenues also declined 23% to $1.1 billion but trumped analysts’ forecasts of $924.91 million.

As of 8:30 a.m. ET, Capri’s stock was up more than 12% to $26.00.

“Our performance demonstrates the power and desirability of the Versace, Jimmy Choo and Michael Kors brands,” chairman and CEO John Idol said in a statement. “Through creativity and innovation, our luxury houses inspire excitement and passion, creating an emotional connection with our consumers. We are also attracting new consumers to each of our luxury houses as evidenced by the double-digit increase in our consumer databases.”

During the period ended Sept. 26, sales at all of Capri’s banners plummeted as the coronavirus pandemic continued to impact its business: Versace’s revenues fell 14.5% to $195 million, while those at Michael Kors sank 27.2% to $793 million. Jimmy Choo, however, recorded a smaller drop of 2.4% to $122 million.

Overall, the company’s e-commerce sales improved roughly 60%. It noted positive sales across all of its luxury houses in the Mainland China area, as well as positive global retail sales at Versace for the three months.

Over the past few months, the luxury conglomerate has taken several steps in a bid to preserve liquidity, such as cutting back on operating expenses, reducing capital expenditures and suspending its share repurchase program. It also entered into a new $230 million revolving credit facility in June to improve its cash flow.

Like many retailers, Capri opted against providing an outlook for the 2021 fiscal year due to uncertainties stemming from the COVID-19 outbreak, including macroeconomic headwinds and tourism traffic flows.

“As the world continues to emerge from this crisis, we are increasingly optimistic about the outlook for the fashion luxury industry and Capri Holdings,” Idol added. “We have an incredible portfolio of luxury houses, each with their rich heritage, exclusive DNA and strong brand loyalty. We are uniquely positioned to drive multiple years of strong growth as we continue to execute on our strategic initiatives.”

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