Capri’s sales have plummeted for the first quarter, with management attributing the decline to softening demand for luxury goods.

However, GlobalData MD Neil Saunders said the company cannot pin all the blame for its poor numbers on the market, as the slowdown is not anywhere near the margin of Capri’s 13.2 per cent drop in sales.

Compared to the same period in pre-pandemic 2019, sales have fallen 20.7 per cent, an erosion seen in very few other retailers, Saunders continued.

“All of this points to some deep-seated problems which are specific to Capri. It also speaks to the consistent failure of management to address these issues,” he added.

Most of the decline came from Michael Kors where sales dipped 14.2 per cent. The brand is very exposed to the middle-income consumer where financial pressures have bitten into spending, while its higher-priced products are not compelling enough, according to the analyst.

At Jimmy Choo, sales fell 5.5 per cent, with growth in North America more than offset by a torrid performance in Asia.

Versace sales decreased 15.4 per cent. Saunders assessed that the brand’s bold statement pieces have become misaligned with a trend towards less ostentatious luxury.

On the bottom line, the company swung to a net loss of $14 million from last year’s net income of $48 million.

Saunders believes there is little incentive for management to restructure or reinvent the brands, while the merger with Tapestry, which the company “desperately needs”, still faces the FTC’s “unnecessary” intervention.

“The best thing for Capri would be for the merger with Tapestry to go ahead as soon as possible so that a new management team can start the process of rebuilding the business,” he added.

That said, Tapestry could also question the high valuation it put on the deal following Capri’s string of terrible numbers, the analyst said.