Wealthy shoppers are filling their closets with designer footwear as they return to events, work and travel, fueling the luxury sector’s ongoing recovery.
On Friday, Capri Holdings Ltd. reported quarterly earnings that surpassed expectations as sales at Versace, Jimmy Choo, and Michael Kors rebounded strongly over the previous year — and in the case of Versace, exceeded even pre-pandemic levels. The fashion group brought in revenue of $1.25 billion in the quarter ended June 26, an increase of 178% over the year prior, with net income of $219 million.
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For Versace, the company touted its new retail destinations — a Paris flagship that opened in December and a store on Manhattan’s Greene Street that opened earlier this week. The brand brought in $240 million in revenue during the quarter, up 158% year-over-year. Capri CEO and chairman John D. Idol credited the results to strong consumer interest in several of the collections the brand has introduced since 2019, including La Greca, Virtus and La Medusa.
“The momentum that we’re seeing in accessories is coming much quicker than we had anticipated,” Idol said on a call with investors and analysts. “The pillars that we’ve put in place today are really resonating with the customer — and interestingly, with a younger customer, which is something we’ve hoped for.”
At Jimmy Choo, the brand’s bid to ramp up its high-end sneaker business has been successful, and sales reached $142 million during the quarter, an increase of 178% over the prior year. As customers — especially those in North America and China — have started attending events and dressing up for special occasions again, the brand has seen “strong signs of recovery in dress styles,” Idol said, adding that the bridal business is also rebounding.
Michael Kors, too, showed positive signs, with revenue increasing 184% year-over-year to $871 million, though executives cautioned that the company’s real focus with its biggest brand has been steering the business away from discounting and toward healthier profit margins and a more elevated positioning.
While Kors especially has faced challenges at department stores in recent years as the channel has struggled against online competition and lack of differentiation, Idol said that throughout the group, “The wholesale business has rebounded really, really positively.”
“People are absolutely returning to shopping in department stores, which is really exciting to see,” he continued.
Signs of recovery in luxury have been a consistent theme throughout 2021, as fashion houses throughout Europe and the U.S. have returned to or approached pre-pandemic levels.
“It’s clear that consumers still want to buy luxury goods, and this, along with the brands’ ability to adapt and innovate, is driving a return to growth in the market,” explained Claudia D’Arpizio, a partner at Bain & Co., in a May report on the sector’s trajectory. The management consulting firm forecast that the market could reach 250 billion to 295 billion euros (or about $304 billion to $358 billion at current exchange) this year, depending on the pace of recovery.