Capri’s Q4 Revenue Dips as Luxury Fashion Demand Softens Globally

Fashnopsis:

• Capri Q4 Sales Plunge 8.4% as Luxury Demand Weakens.
• Versace Sales Rise Amidst Industry Downturn.
• Capri Widens Losses Despite Gross Margin Decline.
• Capri CEO Blames Global Slowdown, Merger Uncertainty Lingers.
• Full-Year 2024 Reflects Similar Trends to Q4.

Luxury fashion group Capri, owner of Versace, Jimmy Choo, and Michael Kors, saw its total revenue for the fourth quarter (Q4) of fiscal year 2024 (FY24) decline by a significant 8.4% to $1.22 billion. This marks a drop compared to the $1.33 billion reported in the same period of FY23.

Weakening Demand Hits Retail Sales

Retail sales across Capri’s brands experienced a mid-single-digit decline during the quarter, reflecting a global slowdown in demand for luxury fashion goods. However, Versace sales managed to buck the trend with a mid-single-digit increase. Jimmy Choo and Michael Kors faced challenges, with sales dropping by low-single-digit and high-single-digit percentages respectively.

Widening Losses and Margin Contraction

Capri’s net loss in Q4 FY24 widened considerably to $472 million, compared to a net loss of $34 million in the corresponding quarter of the previous year. The company’s gross profit for the quarter also decreased to $767 million, down from $867 million in Q4 FY23. This decline was reflected in a lower gross margin of 62.7% compared to 64.9% in the same period last year. The loss from operations for the quarter was substantial, at $543 million, compared to a loss of $40 million a year earlier.

Capri CEO Expresses Disappointment

John Idol, Chairman and CEO of Capri, commented on the results stating, “We were disappointed with our overall performance. Q4 continued to be impacted by a global softening in demand for luxury fashion goods. While retail sales trends improved sequentially in the Americas and EMEA regions (Europe, Middle East, and Africa), trends slowed in Asia. Wholesale sales also remained challenging.”

Full-Year Performance Reflects Similar Trends

For the full fiscal year 2024, Capri’s total revenue declined to $5.17 billion compared to $5.61 billion in FY23. The company reported a net loss of $229 million for the year, a significant downturn from a net income of $619 million in the previous year. Gross profit for FY24 was $3.33 billion, down from $3.72 billion in FY23.

Merger Uncertainty Lingers Capri has not provided financial guidance due to its pending merger with Tapestry, which was announced in August 2023. The $8.5 billion deal faces hurdles, with the US Federal Trade Commission initiating legal action in April 2023 to block it, citing potential competition concerns.

Image Source: Capri Holdings