Capri Holdings has reported lower sales for the second quarter, as growth at Jimmy Choo was more than offset by the persistent decline at Michael Kors.
The company’s revenue fell 5.5 per cent year-on-year to $809 million in the quarter ended September 26 (down 4.9 per cent on a constant currency basis).
Performance was divided between brands, which GlobalData MD Neil Saunders described as a “tale of two handbags”.
Jimmy Choo continued to strengthen during the period, with sales up by a solid 11.5 per cent. Saunders attributed this to more versatile collections, which increasingly emphasize everyday elegance rather than focusing on occasions.
Handbags now have stronger design codes that more closely mirror the footwear offering, and styling is also arguably sharper, as is marketing, the analyst added.
Michael Kors told a very different story, as sales remained stubbornly in decline with an 8.6 per cent drop, which also worsened compared to the 7.1 per cent dip in the first quarter.
“It is worth remembering that just five years ago, Michael Kors was pulling in over a billion dollars in second quarter revenue. It is now down 40.3 per cent from that high point.
“While this is not a new trend, it underlines the degree to which the brand has fallen out of favor with consumers which, in turn, has produced an abysmal underperformance,” Saunders said.
While management is sacrificing revenue through fewer promotions and a more disciplined assortment with tighter distribution, the analyst said the brand’s problems run much deeper.
“From a consumer perspective, the brand remains blurry and tarnished, and lacks both the distinctiveness and the cultural relevance of other labels. Building this is possible, but it will take considerably more time and effort for this to show up in the revenue numbers,” he said.
On the bottom line, Capri swung to a net income of $27 million from a loss of $34 million a year ago.
For the full year, the company expects revenue of approximately $3.42 billion, down 1.4 per cent compared to FY26.
“Making more money from fewer sales is one thing; making more money from more sales is quite another. The latter will be the acid test of a true recovery at Capri,” said Saunders.
