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Yesterday, the owner of Michael Kors and Versace announced that it exceeded earnings estimates for the holiday quarter.
The luxury house Capri has unveiled very satisfactory results for the last quarter of 2020, exceeding profit estimates. Capri increased its margins by selling more products at full price and reducing manufacturing costs, resulting in an increase in its stock price of nearly 7%.
However, Capri has already forecast a decline for the current quarter, due to the closure of stores in several European countries following the resurgence of COVID-19 cases. Indeed, the company reports that approximately 50% of Capri stores in Europe, the Middle East, and the Africa region are still closed.
During the health crisis, Capri made the majority of its profits in its own stores and via its online sales platform, thus reducing its dependence on retailers impacted by the consequences of the crisis.
Capri‘s adjusted gross margin increased by 520 basis points in the third quarter compared to the previous year. The company also noted positive quarterly growth in mainland China, reassuring the brand about a possible gradual recovery in other regions of the world.
Regarding its total revenue in the third quarter of 2020, which ended on December 26, a 17% drop was reported to $1.30 billion, while according to Refinitiv’s IBES data, experts had estimated the revenue at $1.33 billion.
This drop is mainly due to the closure of physical stores, but also to the lack of seasonal novelties for the Jimmy Choo brand. The company expects a similar decline in revenues in the fourth quarter. Analysts expect revenues to decline by 5.4% and earnings by 66 cents per share.
However, Capri reported a third-quarter net income of $179 million or $1.18 per share, down from $210 million or $1.38 per share a year earlier. The company earned $1.65 per share, far exceeding experts’ expectations of $1.01 per share.
The company said it expects to return to pre-pandemic revenue and earnings levels by fiscal 2023, which begins next year.
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Featured Photo : © Versace[/vc_column_text][/vc_column][/vc_row]
