Capri Holdings has exceeded expectations after selling Versace: despite lower sales, the owner of Michael Kors and Jimmy Choo managed to achieve profit growth through cost-cutting measures.
Sales drop after Versace sale
Sales dropped 6 % to 797 million dollars (690 million euros) in the first quarter (ending 28 June), following the sale of Versace to Prada in April. However, both remaining brands also declined in sales: Michael Kors recorded a 5.9 % drop to 635 million dollars, while Jimmy Choo lost 6.4 % and ended at 162 million dollars.
Nevertheless, Capri managed to improve its operating result: by significantly cutting costs, it raised its operating profit from 11 million to 16 million dollars. Net profit even jumped from 5 million to 56 million dollars (48 million euros). By comparison, last year there was still a 14 million dollar loss – mainly due to setbacks at Versace.
Strategy bears first fruit
CEO John Idol sees the developments as confirmation of the holding’s new policy: both sales and earnings per share have exceeded his expectations. “Although we are only at the beginning, we are now noticing the first positive effects”, the CEO stated.
As a result, the luxury group faces the year with confidence and is raising its revenue forecast slightly, to a range of 3.37 billion to 3.45 billion dollars for the current fiscal year. The profit forecast remains maintained around 100 million dollars (85 million euros).
