While recent headlines have been dominated by retail bankruptcies and concerns about recovery across the sector, there is a bright spot that’s definitely worth talking about.
Capri Holdings Ltd. CEO John Idol said in the company’s quarterly earnings call today that Michael Kors, Jimmy Choo and Versace are doing “quite well” in department stores. What’s driving the performance? The retailers’ intense focus on digital.
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“We’ve had a few weeks at some of our partners where we’re actually beating last year, which is quite interesting,” Idol noted. “And that’s being driven by the depth and reach of their digital operations.” The CEO said Capri’s labels had always had strong online penetration with department store partners — and now it’s paying off in the pandemic.
“Oddly enough, the North American department stores are the best equipped right now because they have very robust e-commerce businesses,” Idol said, comparing them to European counterparts that haven’t fully tapped into digital.
More broadly, Idol said the EMEA region is seeing the slowest recovery compared to other parts of the world.
“The reason for that is because of the tourist travel. And again, we’re at the peak season of where tourists would be coming to London and Paris and Milan and Florence and Barcelona, and all these very important cities where we do huge volume. And obviously, that’s not going to happen this year,” he noted.
In addition, hard-hit specialty stores and family retailers in Europe make up a large percentage of Capri’s European sales — and many of these businesses are still struggling.
Asia, where revenue was down 41% in the quarter, is seeing results very greatly by region. Mainland China is seeing solid performance, driven by domestic consumption. But key markets like Hong Kong, Macau and other parts of Asia, recovery is lagging.
Capri said this morning that revenues for the first quarter ended June 27 declined 67% to $451 million, but the results were stronger than the company’s own forecasts and beat Wall Street’s anticipated $427.3 million. As expected, sales were down sharply across all three nameplates, with Versace declining 55% to $93 million; Jimmy Choo slipping 68% to $51 million; and Michael Kors falling 69% to $307 million.
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