Capri Holdings' Q4 Revenue Surpasses Expectations, Driven by Michael Kors Revitalization

Capri Holdings, the parent company of Michael Kors, announced that its fourth-quarter revenue surpassed expectations. This achievement is attributed to a successful strategy of revitalizing the Michael Kors brand through innovative designs, which has effectively drawn consumers back to the brand. Following the unsuccessful merger attempt with Tapestry, the parent company of Coach, last year, Capri has shifted its focus to the Michael Kors fashion brand. In April, the company sold the underperforming Versace brand to Italian competitor Prada for 1.38 billion dollars.

Capri's CEO, John Idol, expressed confidence in the company's ability to drive Michael Kors' revenue to 4 billion dollars and Jimmy Choo's revenue to 800 million dollars, while restoring the operating profit margin to double digits. However, the new tariffs have increased supply chain costs, leading to concerns among consumers about potential price hikes for both essential and non-essential goods in the coming months. As a result, demand for high-end goods in North America has begun to decline.

The company currently projects annual total revenue to be between 3.3 billion dollars and 3.4 billion dollars, with the Versace business already classified as a discontinued operation. Capri noted that this forecast does not account for changes in the global macroeconomic environment, adjustments in tariff rates, high inflation, or weakening consumer confidence.

For the quarter ending March 29, the company's revenue decreased by 15.4% year-over-year to 1.04 billion dollars, outperforming analysts' average expectation of a 19.3% decline to 986.57 million dollars. This performance highlights the effectiveness of Capri's strategy to revitalize the Michael Kors brand and its ability to navigate the challenging economic environment.