Beijing's 'zero-COVID' policy has hit sales
Michael Kors Asia revenue drops 4.5%
Americans cutting back on luxury spending - data
(Adds analyst comment, stock movement)
By Uday Sampath Kumar
Nov 9 (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.
Michael Kors, Capri's biggest revenue generator, posted a 4.5% fall in Asia sales in the second quarter. Revenue from Europe slipped 0.5%.
"There is more caution around luxury in China due to lockdowns and in Europe where consumers have faced pressure from soaring energy costs," said Jessica Ramirez, an analyst at research firm Jane Hali and Associates.
Ramirez added that "affordable" luxury labels such as Michael Kors were likely to feel the pinch of an inflation-induced slowdown in demand before more premium brands such as Hermes and Versace.
U.S. luxury sales are still holding up well compared with cheaper brands, but data from three credit-card companies showed that Americans were starting to cut back on buying luxury goods including designer clothing and accessories.
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 outlook to $2.20 per share from $2.45 per share.
The company expects fiscal 2023 revenue of $5.70 billion, compared with its prior estimate of about $5.85 billion.
Excluding items, Capri earned $1.79 per share in the second quarter ending Oct. 1, topping estimates of $1.54.
Shares of the fashion house, rose about 1% in premarket trading as it announced a new $1 billion share buyback program.
(Reporting by Uday Sampath in Bengaluru; Editing by Vinay Dwivedi)