On August 8, luxury leader Capri Holdings Limited (NYSE: CPRI) announced its financial results for the first quarter of Fiscal 2025, which ended on June 29, 2024.
The company behind Versace, Jimmy Choo, and Michael Kors has encountered significant hurdles, including a global dip in luxury goods demand, leading to a 13.2% drop in revenue year-over-year. With total revenue reaching $1.07 billion, the company posted a net loss of $14 million, a stark contrast to the $48 million profit recorded in the same period last year. Adjusted net income also plummeted to $4 million from last year’s $88 million, reflecting the tough landscape currently facing the luxury fashion industry.
Below are the financial highlights for the first quarter of FY2025 for Capri Holdings:
Key Financial Highlights:
- Revenue: Decreased by 13.2% on a reported basis and 12.1% on a constant currency basis.
- Gross Profit: Gross profit was $689 million, with a gross margin of 64.6%, down from 66.1% last year.
- Operating Margin: Adjusted operating margin was 1.5%, with an operating loss of $8 million (compared to $80 million in operating income last year).
- Earnings Per Share: Adjusted earnings per share were $0.04, a significant decrease from $0.74 last year.
- Net Loss: Net loss was $14 million, with a diluted net loss per share of $0.11 (compared to $0.41 in net income per share last year).
- Inventory Management: The company’s ongoing inventory management efforts were reflected in a 23% reduction in net inventory compared to the previous year.
- Cash Flow: Operating cash flow was a positive $83 million, with free cash flow of $40 million (compared to a negative $10 million last year).
John D. Idol, Chairman and CEO of Capri Holdings, expressed disappointment in the quarter’s performance, citing global challenges faced by the luxury fashion industry:
“Overall, we were disappointed with our first quarter results as performance continued to be impacted by softening demand globally for fashion luxury goods. We are continuing to manage our operating expenses and inventory levels carefully in light of the challenging global retail environment. Looking forward, we remain focused on executing our strategic initiatives to deliver long-term sustainable growth across each of our luxury houses.”
Performance by Brand:
- Versace: Revenue decreased by 15.4%, with declines in the Americas (15%), EMEA (22%), and Asia (3%). The brand recorded an operating loss of $17 million.
- Jimmy Choo: Revenue decreased by 5.5%, with a 6% increase in the Americas but declines in EMEA (5%) and Asia (17%). The brand secured an operating income of $4 million.
- Michael Kors: Revenue decreased by 14.2%, with declines in the Americas (10%), EMEA (21%), and Asia (23%). The brand maintained an operating income of $75 million.
According to the press release, Capri Holdings is now focusing on completing its acquisition agreement with Tapestry, Inc., which is currently facing legal challenges from the Federal Trade Commission (FTC). The company remains confident that this transaction will bring new growth opportunities to its brands and deliver significant value to shareholders.
Additionally, due to the ongoing negotiations with Tapestry, Capri Holdings has decided not to provide financial guidance or hold a conference call for this quarter.