Capri Holdings, the parent company of luxury brands Versace, Michael Kors, and Jimmy Choo, is remaining optimistic about the future profitability of its trio of power brands despite facing a loss in the fourth quarter. The company reported better-than-expected revenue of $1.2 billion for Versace in Q4, while experiencing a net loss of $183 million.
Chairman and CEO John D Idol expressed his encouragement regarding the performance of all three luxury houses. He highlighted the sequential improvement in retail sales and the accelerated growth of e-commerce even after stores began reopening. These positive trends, along with a 340 basis point increase in gross margin and the attraction of nearly nine million new consumers, demonstrate double-digit growth for Capri Holdings.
Idol expressed confidence in the long-term plans for Versace and Jimmy Choo, emphasizing the recalibration of plans to elevate brand positioning and deliver higher profit margins for Michael Kors. While facing challenges in EMEA and Canada due to additional Covid restrictions, Capri Holdings saw strength in retail sales in the Americas and Asia during Q4. Idol attributed this improvement in store performance to local clienteling initiatives and improved traffic trends. Wholesale sales also showed sequential improvement.
The Asian region, particularly Mainland China, demonstrated the fastest recovery with retail sales increasing in double-digits year-on-year. Versace’s Q4 results exceeded expectations with a 10% increase in revenues and triple-digit growth in e-commerce. The brand performed strongly across categories, driven by the popularity of Virtus and the new La Medusa collection. Versace plans to boost revenues further with the introduction of the La Greca signature pattern, combining its Greek key motif with the Versace logo.
Jimmy Choo also outperformed expectations with a 16% revenue increase and strong growth in the retail channel worldwide. New designs by Sandra Choi, featuring styles adorned with crystals and pearls, blurred the lines between shoes and jewelry. The brand saw success in both dress footwear and casual styles. Collaborations, such as the one with Marine Serre, were also well-received.
Michael Kors showed improvement in Q4 with a sequential increase in revenue and double-digit growth in global retail sales. E-commerce sales accelerated, benefiting from targeted and personalized marketing through data analytics. The brand focused on increasing signature penetration across all categories and saw positive growth in accessory sales and the men’s category.
Despite the challenges posed by the pandemic, Capri Holdings remains confident in the recovery of its power brands. The sequential improvement in sales, along with the successful launch of new collections and collaborations, demonstrate the resilience and potential for future profitability. With a strong focus on elevating brand positioning and delivering higher profit margins, Capri Holdings aims to achieve its goal of reaching $7 billion in revenue.
