Michael Kors-owner Capri cuts holiday forecasts on slow China recovery

November 09, 2022 11:21 PM AEDT | By Reuters
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(Reuters) -Michael Kors-owner Capri Holdings Ltd on Wednesday lowered its sales and profit forecasts for the holiday period, blaming a slow demand recovery in China due to persistent COVID-19 curbs and uncertainty about the global economy.

Luxury goods companies have managed to pass on higher costs to affluent shoppers, but China remains a sore spot as Beijing's "dynamic zero-COVID" policy hampers the return of consumers to high-fashion stores. COVID disruptions in China have also weighed heavily on Kering's Gucci, Canada Goose Holdings and L'Oreal.

Capri, which also owns Versace and Jimmy Choo, cut its holiday-quarter sales forecast to $1.53 billion, from $1.65 billion, and lowered its profit forecast to $2.20 per share from $2.45 per share.

Although U.S. luxury sales are still holding up well compared with cheaper brands, data from three credit-card companies showed that Americans have also cut back on buying luxury goods including designer clothing and accessories over the past two months.

Accessible luxury brands such as Michael Kors are likely to feel a bigger pinch than higher-priced brands including Hermes and Dior, due to their core young customer base having less wealth than the luxury goods industry's traditional clientele, according to industry experts.

Capri's total revenue rose 8.6% to $1.41 billion in the second quarter ending Oct. 1, slightly above analysts' average estimate of $1.40 billion, according to IBES data from Refinitiv.

It forecast fiscal 2023 revenue of $5.70 billion, compared with its prior estimate of about $5.85 billion.

(Reporting by Uday Sampath in Bengaluru; Editing by Vinay Dwivedi)


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