Dive Brief:
- Capri Holdings Limited saw revenue drop 5.6% to $1.43 billion in its third-quarter earnings for fiscal 2024, reported on Thursday.
- All of Capri’s brands saw a year-over-year revenue decline. Michael Kors revenue decreased 5.6% to $1.03 billion; Jimmy Choo revenue fell 1.2% to $166 million; and Versace revenue dropped 8.8% to $227 million.
- John Idol, Capri CEO and chairman, attributed the revenue decrease to a “softening demand for fashion luxury goods.” However, Tapestry Inc., which is expected to acquire Capri later this year, saw revenue increase 3% in its quarterly results, also reported Thursday.
Dive Insight:
Capri’s impending merger with Tapestry, which owns Coach, Kate Spade and Stuart Weitzman, could create the fourth-largest luxury house in the world, according to Wells Fargo analysts.
The $8.5 billion-deal was approved by Capri’s shareholders in October 2023, and is expected to close in 2024.
“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,” Idol said in the release. “By joining with Tapestry, we will have greater resources and capabilities to accelerate the expansion of our global reach while preserving the unique DNA of our brands.”
Michael Kors has been a pain point for the company since it implemented its e-commerce platform in July. In Q2, the platform’s roll out negatively impacted the brand’s revenue by approximately $50 million. At the time, Capri said Q3 revenue would be impacted but would be resolved by the fourth quarter.
Idol noted that the platform has been fixed and is now running smoothly. Though the e-commerce platform issue mainly impacted Michael Kors’ Americas results, brand revenue decreased in all regions, with a 7% decline in the Americas, 2% drop in EMEA and a 2% dip in Asia.
When the deal with Tapestry was announced, an analyst with GlobalData warned that Michael Kors would be the brand would be a “big problem” for the new group to solve, as it the biggest chunk of Capri’s revenue.
