Capri Holdings Ltd, the parent company of renowned luxury brands such as Versace, fell short of Wall Street projections for quarterly profits due to the repercussions of the ongoing protests in Hong Kong. The prolonged demonstrations have affected Versace’s sales in the region, particularly after a controversial incident involving a t-shirt that mistakenly labeled Hong Kong and Macau as separate countries, prompting backlash from Chinese consumers.
The fallout resulted in the termination of the contract with Chinese actress Yang Mi, who was Versace’s first Asian brand ambassador. This episode underscores the delicate balance that luxury brands must maintain when wading through geopolitical tensions and cultural sensitivities.
With Hong Kong being a pivotal hub for luxury shoppers and travelers in Asia, the impact of the protests has been keenly felt by luxury retailers, forcing many to shutter their stores and leading to a decline in sales and revenue.
Despite the challenges faced, Capri Holdings reported that Versace’s comparable sales remained stagnant compared to the previous year, falling short of expectations. The company anticipates third-quarter revenue to be below analysts’ forecasts, at $1.53 billion.
In Q2, adjusted net income dipped by 7.8% to $177 million, missing analysts’ projections. Total revenue, however, saw a 15.1% increase to $1.44 billion, aligning with estimates. Despite the setbacks, Capri Holdings remains positive about its future growth prospects and is actively navigating the complex retail landscape.
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