Michael Kors and Versace to close 170 stores after 70% sales drop

Michael Kors bag in shop window
Photo: Radu Bercan / Shutterstock.com

American luxury group Capri (Jimmy Choo, Michael Kors, Versace) fears a 70% loss of sales due to the corona pandemic. The group will therefore close 170 stores over the next two years.

 

Returning to profit in 2021

Capri ended its financial year right in the middle of the corona crisis, on 28 March. In the last quarter, sales fell by 11.3%, while profits plummeted from 19 million dollars a year earlier to 551 million dollars (half a billion euros) below zero.

 

However, according to the luxury group, the worst is yet to come: in the quarter to the end of June, the holding company expects a loss in sales of no less than 70%. Although sales in the company's own reopened stores are back to between 50% and 75% of previous year's levels, mainly thanks to China, sales in the - often longer closed - department stores have crashed.

 

Capri is therefore considering closing 170 stores over the next two years. Until there is a vaccine, customers are less likely to continue to go to the stores, top man John Idol argues. To ease the pressure, the group says it will save another 120 million euros in the new financial year. As a result, the fashion company predicts to be profitable again in the first half of calendar year 2021.

 

Jimmy Choo biggest loser

In the quarter to the end of March, Jimmy Choo had the worst performance of all Capri brands, with sales down 23% and an operating loss of 23 million dollars. At Michael Kors - already on a downward trend for some time - sales declined by 18.4%.

 

One of the consequences of the corona-pandemic was that people were less able to go outdoors and needed less festive clothing or luxury accessories. This is a trend that will continue for at least the next two quarters, Inside Retail Asia warns.

 

However, Versace's growth was remarkable: sales rose by no less than 55.5%. Although this has a lot to do with the ailing figures in the same quarter last year, due to the recent acquisition.