Companies

Capri Holdings falls sharply as hopes of Tapestry merger fade

Nov 14, 2024 United States

The US-based luxury group has reported another weak quarterly performance amid weak global demand for luxury goods. Versace suffered the biggest fall, while Jimmy Choo returned to green

“Overall, we were disappointed with our second quarter results as performance continued to be impacted by softening demand globally for fashion luxury goods. Despite the challenging global retail environment, we remain focused on executing our strategic initiatives to deliver long-term sustainable growth across all three of our luxury houses”, commented John D. Idol, the company’s Chairman and Chief Executive Officer.

Second Quarter Results

In the second quarter of fiscal 2025, which ended on the 28^th of September, Capri’s total revenue amounted to 1.08 billion US dollars, a decrease of 16.4% on both a reported and a constant currency basis, as compared to the same period of last fiscal year. Both retail and wholesale performances were affected by weak global demand for luxury goods.

In this period, Versace recorded a decline in sales of 28.2% on both a reported and a constant currency basis to 201 million US dollars, on a comparable basis to the second quarter of fiscal 2024. The decline was more pronounced in the Americas region (-33%), followed by the EMEA (-28%) and Asia (-20%).

Michal Kors’ second quarter revenue dropped by 16.0% on a reported basis and by 15.9% on a constant currency basis to 738 million US dollars, as compared to the same period of the previous year. For this brand, the fall was more pronounced in the Asia region (-43%), followed by the EMEA region (-15%) and by the Americas region (-12%).

In contrast, Jimmy Choo recorded a revenue growth of 6.1% on a reported basis and 5.3% on a constant currency basis in the second quarter to 140 million US dollars against a similar period of the previous year. While in the EMEA region, its revenue increased by 25%, they declined by 8% in both the Asia and the Americas regions.

The company experienced an operating loss of 38 million US dollars and a reduced operating margin of 2.5%, as compared to a profit of 100 million US dollars and a 7.7% operating margin in the second quarter of fiscal 2024. Adjusted operating income also dropped from 157 million to 32 million US dollars, and the adjusted operating margin contracted from 12.2% to 3.0%. This decline is primarily attributed to expense deleverage.

Finally, in the second quarter of the current year, Capri Holdings reported a net income decline to 24 million US dollars from 90 million US dollars in the same period a year ago, and an adjusted net income decline to 77 million US dollars from 133 million US dollars in the same period a year ago.

The company’s net debt of 1.53 billion US dollars continues to weigh on its performance, although this was down from 1.86 billion US dollars in the same period last year.

Tapestry Merger

Capri’s CEO, John D. Idol, also commented on the recent District Court decision to block the merger with Tapestry, which was announced in August 2023. “The District Court recently granted the FTC’s motion for a preliminary injunction to enjoin the transaction pending the FTC’s in-house administrative proceeding. We are disappointed with the decision, and consistent with our obligations under the merger agreement, Tapestry and Capri have jointly filed a notice of appeal”, he said.

Image Credits: jimmychoo.com

United States Capri Jimmy Choo Luxury Michael Kors Quarter Results Results Versace