Capri Holdings’ 2018 (+10.9%): Versace weighs, Jimmy Choo flies high, Kors doesn’t 

Jimmy Choo’sshoes do well, Michael Korsdoesn’t, while Versaceweighs on the group’s costs: Capri Holdings’2018 has its ups and downs, because revenue increases, but profitability decreases. The US-based group, active in the premium segment closed its balance sheet with 5.2 billion USDof revenue (+10.9%), but net profits decreased from 592 million USD to 542 due to Versace’s acquisition, which was finalized last December. Ebitda also fell 16.3% on yearly base, at 621 million USD. While with regards to individual brands’ performances: Jimmy Choo’s performance is booming, which sales increasing from 223 million USD to 590 million, while the goal for next year is of 650 million USD. Michael Kors year was flat (+0.33%), with revenue stable at 4.51 billion USD, and an expected performance of 4.45 billion this year. Versace, meanwhile, closed the last quarter of the year with sales for 137 million USD, with “high single digit” growth in comparison to the previous period, but it still recorded operating losses of 11 million USDand an 8million loss as the final result.

Capri Holdings set a revenue target of 900 million USDfor the end of the current year for the Italian brand. In the first quarter of the fiscal year (ending June 2019), Versace’s total turnover should be 200 million, or 5%higher than the previous period in 2018. Moreover, regarding the first quarter, Capri Holdings gave an outlook that is less than the forecasted performance, particularly regarding net profits, as the group expects to be making relevant investmentsinto Versace and revitalization strategies for Michael Kors.

The horizons

According to what reported by Reuters, the group is strengthening Versace’s online presence, expanding the footwear and accessories segments at the same time, with the objective of incrementing the brand’s annual reveneue to 2 billion USD. “We expect to be making Versace grow from a revenue of 900 million to 2 billion USD– stated the group’s ceo John Idol-, expand Jimmy Choo from 600 million to 1 billion USD, and grow Michael Kors revenue by 500 million, to reach 5 billion in revenue”. With regards to Michael Kors, Capri Holdings announced the shut-down of 50 stores this year. Camilla Yanushevsky, from consulting firm CFRA, writes on Market Watch how she fears that investments made to push Versace’s growth “will reduce the cash flow positionof Capri Holdingsconsiderably, increasing the group’s debt”.

 

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