Yahoo Finance Capri Holdings’ CEO ‘Disappointed’ With Fourth-quarter Results
Capri Holdings sales continued to dip for fiscal 2024, the company reported Wednesday.
Reporting its fourth-quarter and full-year fiscal 2024 results, Capri saw total revenue drop about 7.6 percent to $5.17 billion from $5.6 billion for fiscal-year 2023.
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Declines ran across brands, with Michael Kors generating $3.5 billion in sales compared to $3.88 billion for the prior year, Versace having just over $1 billion in revenue versus about $1.1 billion the prior year, and Jimmy Choo posting $618 million compared to $633 million in the year before.
The disappointing numbers came as questions surround Tapestry Inc.’s $8.5 billion acquisition of Capri Holdings. The company did not offer any financial guidance Wednesday, since that deal, which was announced in August, is pending.
That potential merger would bring together Tapestry’s Coach, Kate Spade and Stuart Weitzman brands with Capri’s portfolio of Michael Kors, Versace and Jimmy Choo, but the deal has been challenged by the U.S. Federal Trade Commission.
For the fourth quarter, Michael Kors’ revenue of $822 million decreased 9.7 percent on a reported basis and 9.2 percent on a constant currency basis. For the same time period, Versace’s revenue of $264 million dipped 3.6 percent on a reported basis and 2.9 percent on a constant currency basis, driven by what the company described as softening demand globally for fashion luxury goods. Jimmy Choo’s revenue of $137 million dropped by 9.3 percent on both a reported and constant currency basis.
Capri’s chairman and chief executive officer John Idol said in a statement Wednesday, “Overall, we were disappointed with our results as performance in the fourth quarters continued to be impacted by softening demand globally for fashion luxury goods. In our retail channel, sales trends improved sequentially in the Americas and EMEA, while trends slowed in Asia. In our wholesale channel, sales remained challenged.”
Idol also said that Versace, Jimmy Choo and Michael Kors “continued to resonate with consumers,” having added 11.6 million consumers across its databases, which was a 14 percent uptick versus last year.
For the year, the company also slightly increased the number of its stores to 1,239 doors from 1,272 in fiscal 2023. Versace now has 236 locations compared to 223; Jimmy Choo has whittled away a few with 234 outposts compared to 237, and Michael Kors has also reduced it storefronts to 769 compared to 812.
For the fourth quarter 2024, sales were $1.2 billion — an 8.4 percent year-over-year decline. Adjusted operating margin was 6.4 percent for the fourth quarter and the adjusted earnings per share were 42 cents.
Idol addressed the acquisition and referenced how the Federal Trade Commission had filed “an unprecedented” lawsuit in April to block the proposed transaction. “Strongly disagreeing” with the FTC’s decision, Idol said, “The market realities, which the government’s challenge ignores, overwhelmingly demonstrate that this transaction will not limit, reduce or constrain competition.”
At that time, the FTC said in a statement, “If allowed, the deal would eliminate direct head-to-head competition between Tapestry’s and Capri’s brands. It would also give Tapestry a dominant share of the ‘accessible luxury’ handbag market, a term coined by Tapestry to describe quality leather and craftsmanship handbags at an affordable price.”
He added that Tapestry and Capri operate in the “fiercely competitive and highly fragmented global fashion luxury industry. Consumers have hundreds of handbag choices at every price point, across all channels and barriers to entry are low.”
Idol reiterated Capri’s intention to “vigorously defend this case in court alongside Tapestry and we look forward to the successful completion of the pending acquisition.”
He added that the combination will deliver value to shareholders and provide new opportunities for employees globally “as Capri becomes part of a larger and more diversified company.”
When Tapestry’s chief executive officer Joanne Crevoiserat signed on the dotted line in August, the price on Capri was $57 a share, valuing all the company’s shares at $6.7 billion. Capri closed at $34.18 Wednesday, and Tapestry closed at $41.52.
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