Capri raises revenue forecast as luxury fashion demand soars

People walk near a Michael Kors store in Lakewood, Colorado June 1, 2016. REUTERS/Rick Wilking

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Feb 2 (Reuters) – Michael Kors owner Capri Holdings Ltd (CPRI.N) reported a 24% rise in holiday quarter sales on Wednesday and raised its outlook for the full year, extending a streak of good performance of luxury goods companies as demand for high fashion soars.

Shares of the company, which also owns Versace and Jimmy Choo, jumped 11% in premarket trading as it also forecast revenue and profit for the next fiscal year above estimates.

Capri’s better-than-expected sales follow similar reports from European peers LVMH (LVMH.PA), Burberry (BRBY.L) and Prada which showed a strong rebound from the worst lows of the COVID-19 pandemic, thanks to a desire among locked-in consumers to indulge in designer handbags and clothing. Read more

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The company’s total revenue hit $1.61 billion in the third quarter ended Dec. 25, rebounding above pre-pandemic levels on the back of higher prices and fewer promotions. On an adjusted basis, the company earned $2.22 per share in the quarter, above analysts’ estimate of $1.69 per share.

The higher prices helped boost the company’s profit margins amid increased shipping and manufacturing expenses.

“Capri continues to impress on revenue and margins as they have used the pandemic to reshape their business,” said BMO Capital Markets analyst Simeon Siegel.

The company now expects revenue of $5.56 billion in fiscal 2022, down from an earlier estimate of around $5.4 billion. It raised its earnings per share forecast for the full year to $6, from its earlier estimate of around $5.30 per share.

“We believe they’re one of the few brands emerging healthier from the pandemic,” Siegel said.

Capri also forecast fiscal 2023 revenue of about $6.1 billion, higher than analyst estimates of $5.97 billion, while it forecast fiscal 2023 profit of $6.60 per share – above expectations of $6.05 per share.

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Reporting by Ananya Mariam Rajesh and Uday Sampath in Bengaluru; edited by Uttaresh.V

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