Luxury fashion company Capri Holdings reported its financial results for the first-quarter of fiscal 2020, revealing double-digit sales growth, held back by a slower demand at its Michael Kors and Jimmy Choo brands.
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The London-headquartered Capri said first-quarter sales leapt forward 11.9% to $1.346 billion for the three months ending June 29, 2019. On a constant currency basis, total revenue increased 13.8%, said the owner of Michael Kors, Jimmy Choo, and Versace.
Versace, which was acquired by Capri Holdings in January, saw revenue total $207 million, while comparable store sales at the Italian fashion house increased double digits on a constant currency basis compared to stand-alone results from the prior year.
Jimmy Choo revenue amounted to $158 million, down 8.7%. On a constant currency basis, total revenue decreased 5.8%, while comparable store sales were flat.
Finally, Michael Kors revenue fell to $981 million, down 4.8%, or 3% on a constant currency basis. Michael Kors comparable sales decreased low single digits.
Capri Holding’s net income plummeted to $45 million, or $0.30 per diluted share from $186 million, or $1.22 per diluted share last year.
Profits were hit by a $97 million store impairment charge, “primarily related to lease assets recorded in connection with the adoption of the new lease accounting standard and largely attributable to the Michael Kors retail fleet,” the company added.
Capri Holdings chairman and CEO, John Idol was upbeat on the close to 12% revenue growth, highlighting the company’s better-than-expected operating margin and earnings per share as a sign of strong full-year results.
“These results continue to position our company to execute against our strategic initiative,” said Idol, adding that the company expects its earnings per share for fiscal 2020 to be in line with prior forecasts, even with the strengthening U.S. dollar and additional tariffs on imports from China.
“As previously stated, fiscal 2020 will be an investment year for Capri Holdings. We are investing in Versace and Jimmy Choo to position these preeminent luxury houses for long-term revenue growth and margin expansion. We are also executing on our strategic initiatives at Michael Kors to return the brand to growth,” he continued.
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“With the power of Versace and Jimmy Choo, and the strength of Michael Kors, we remain confident that our three iconic, founder-led fashion brands position Capri Holdings to grow revenue to $8 billion over time and deliver multiple years of earnings growth,” he added.