“We were disappointed with our first quarter results as performance continued to be impacted by softening demand globally for fashion luxury goods,” John Idol, Capri Holding’s chairman and chief executive officer, began in a statement to the press as the company slid into the red. Indeed, the luxury group continued to tackle dampening demand during the quarter ended June 29, 2024, after seeing impact from the “challenging global retail environment” that has already been ravaging its financials over the past year.
For this first quarter of fiscal year 2025, Capri reported a 13.2 percent drop in revenue compared to the same period last year, amounting to 1.07 billion dollars. On a constant currency basis, total revenue fell 12.1 percent. Gross profit, meanwhile, also took a hit, dropping from 812 million dollars to 689 million dollars, while gross margin fell from 66.1 to 64.6 percent.
Capri fell into the red as its net loss grew to 14 million dollars compared to a prior net income of 48 million dollars. Adjusted net income was four million dollars, down from 88 million dollars in the year prior. Loss from operations came to eight million dollars, with an operating margin of -0.7 percent, compared to a prior income from operations of 80 million dollars and operating margin of 6.5 percent.
Versace takes biggest hit with 15.4 percent drop in revenue
Versace took the biggest hit over the period, with revenue dropping 15.4 percent to 219 million dollars on a reported basis and 14.3 percent on a constant currency basis. Retail sales for the brand decreased high-single-digits, while wholesale revenue decreased to double-digits. Operating loss for the label came to 17 million dollars, with an operating margin of -7.8 percent.
Michael Kors was next to follow, seeing revenues fall 14.2 percent on a reported basis to 675 million dollars. Retail sales declined to low-teens, while wholesale revenue decreased to high-teens. Jimmy Choo was the least impacted. The shoe brand’s revenue dropped 5.5 percent to 173 million dollars, with retail sales falling to mid-single digits and wholesale revenue in the low-single-digits.
Idol further addressed Capri’s attempt to takeover luxury competitor Tapestry, which has been contested in a lawsuit brought by the Federal Trade Commission (FTC) in the US. Idol reaffirmed the company’s decision, commenting: “As we previously stated, Capri intends to vigorously defend this case alongside Tapestry and we look forward to the successful completion of the pending acquisition. This combination will deliver value to our shareholders as well as provide new opportunities for our dedicated employees around the world as Capri Holdings becomes part of a larger and more diversified company. By joining with Tapestry, our brands will have greater resources and capabilities to accelerate the expansion of their global reach while preserving their unique DNA.”
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