In the fiscal third quarter ended Dec. 31, Jimmy Choo posted revenues of $168 million, down by 5.6 percent year-over-year on a reported basis but up by 3.4 percent at constant currency rates. The brand’s performance was affected by the surge in Covid-19 cases in China as the country reopened. Excluding mainland China, revenues increased by 10 percent in local currencies. [Jimmy Choo's quarterly sales hit by Covid resurgence in China - shoeintelligence.com]
By geography, the brand’s quarterly revenues in the Americas grew by 6 percent. Sales in EMEA increased by 1 percent on a reported basis and 14 percent in constant currency. But, revenues in Asia decreased by 24 percent on a reported basis and by 13 percent in local currencies. Jimmy Choo’s global retail sales increased by a low single digit in constant currency.
The brand, which is owned by the U.S. luxury goods group Capri Holdings, posted an operating income of $18 million and an operating margin of 10.7 percent, compared to $16 million and 9.0 percent in the prior year.
“While revenue was below our expectations, primarily impacted by China, operating margin was better than anticipated,” noted Capri’s chairman and CEO, John Idol, during a conference call with financial analysts.
Idol pointed out that marketing initiatives helped Jimmy Choo’s global customer database grow 20 percent year-over-year in the third quarter.
“Overall, we were pleased with the progress at Jimmy Choo as we continue to execute on our strategic initiatives. Looking forward, we remain confident in the luxury house’s long-term growth potential as we reinforce Jimmy Choo’s brand codes, significantly grow accessories and expand our casual footwear offering,” he added.
In the fourth quarter, Jimmy Choo expects to post sales of about $130 million and a negative operating margin of around 14 percent. The top line would be down by 16 percent on a reported basis with a low double-digit decline in retail and an about 40 percent decline in wholesale.
For the whole of fiscal 2023, the footwear brand is expected to book sales of around $610 million, down by 7 percent at constant currency rates, and an adjusted operating margin of some 4 percent.
In fiscal 2024, Jimmy Choo is forecast to increase revenues to $650 million and improve its adjusted operating margin to a high-single digit percentage.
For the whole Capri group, which includes the brands Versace and Michael Kors, third-quarter sales totaled $1.51 billion, down by 6.0 percent on a reported basis and by 0.5 percent at constant currency rates.
The reported operating margin narrowed to 15.6 percent from 20.6 percent and the adjusted operating margin fell to 16.9 percent from 22.3 percent.
Net income was $225 million, or $1.72 per diluted share, compared to $322 million, or $2.11 per diluted share, in the prior year. Adjusted net income was $240 million, or $1.84 per diluted share, compared to $339 million, or $2.22 per diluted share.
For the full year, the group expects sales of $5.56 billion, an adjusted operating margin of about 16.0 percent and adjusted diluted earnings per share (EPS) of approximately $6.10.
In fiscal 2024, Capri anticipates revenues of $5.8 billion, an adjusted operating margin of approximately 16.5 percent and diluted EPS of about $6.40.
Versace and Michael expand in footwear
In the third quarter, Versace’s revenues decreased by 0.8 percent to $249 million. On a constant currency basis, the brand’s revenues increased by 11.2 percent. Meanwhile, Michael Kors posted revenues of $1.095 billion, down by 7.2 percent on a reported basis and by 3.6 percent in local currencies.
“Versace continued to gain authority as a women’s luxury footwear brand as we expanded our core offerings, with the introduction of the pinpoint collection, a new range of statement pumps characterized by a curved metal stiletto heel. Men’s and women’s sneakers also performed well, driven by our Trigreca, Greca and Odessa styles,” as the brand expands in footwear, explained Idol.
Turning to Michael Kors’s performance during the third quarter, Idol stated “we continue to believe we can significantly expand Michael Kors footwear to drive incremental revenue. Footwear sales in our retail channel increased low double digits as we delivered exciting fashion featuring iconic hardware branding elements and signature detailing.”
In fiscal 2023, Versace is expected to have total revenues of $1.1 billion and an adjusted operating margin of around 15 percent, and Michael Kors is seen posting sales of $3.83 billion and an adjusted operating margin of some 22 percent.
In fiscal 2024, Versace’s revenues are forecast at $1.25 billion and the adjusted operating margin in the mid-teens range while Michael Kors is seen reaching sales of $3.9 billion and an adjusted operating margin in the low-20 percent range.
