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Versace profits grew by 55.5% during the pandemic
But the brand's group, Capri Holdings, has reported losses of 551 million dollars
Fashion
July 3rd, 2020
July 3rd, 2020
For Capri Holdings, the group that owns Versace, Jimmy Choo and Michael Kors, the last quarter of the fiscal year, which ended March 28, was catastrophic: the lockdown caused losses of 551 million dollars and, for the current quarter, is expected to further decline by 70% in sales. But the situation is more complicated than that: if, in fact, as Jing Daily reports, the revenue of Jimmy Choo and Michael Kors fell by 23% and 18.4% respectively, those of Versace have even increased by 55.5%, a figure that translates into a profit of 213 million dollars – performance attributed by the CEO of Capri Holdings, John Idol, to the elimination of the Versace Collection and Versus lines. Despite this, the losses were severe: the brand stores were only open at the end of May and saw sales traffic even halved compared to before, inventory damage alone amounted to 92 million dollars and good e-commerce performance was not enough to cover the damage.
For this reason, the industrial group began to tighten its belt: stop to discretionary spending, stop to marketing campaigns run by third parties and stop to opening new locations. Even Donatella Versace, Michael Kors, Jimmy Choo's Sandra Choi and group CEO John Idol will forgo their wages for fiscal year 2021, WWD reports. But the lockdown-induced losses won't stop the group's plans: the plans are an expansion of Versace's and Jimmy Choo's retail networks, which are expected to reach the mark-up of 300 boutiques each, as well as plans to increase Versace's revenue to two billion dollars a year. This expansion will come at the expense of Michael Kors stores, with 170 boutiques closing in the next two years.
The current quarter is expected to close for Capri Holdings with USD 1.1 billion in liquidity and 1.8 billion in debt. However, CEO John Idol has made secret that the ascent will be tough:
«We view our opportunity to resume growth in 2022. I really have to talk about fiscal 2022 because 2021, we just don’t know when we’ll be back to a more normalized rate. We believe in the future and making investments in luxury takes time».
