Controversial Versace T-shirt dents Capri’s sales in China

08-Nov-2019 Intellasia | Reuters | 6:02 AM Print This Post

Capri Holdings Ltd (CPRI.N) blamed a controversy around a Versace T-shirt that labeled Hong Kong and Macau as countries for denting the luxury label’s sales in China, adding it would now take a “very cautious” approach to its business in the country.

Versace, which Capri bought last year for about $2 billion, came under fire over the T-shirt in August, forcing the Italian luxury label and its artistic director Donatella Versace to apologise.

Versace had then said it had made a mistake and as of July 24 had stopped selling and destroyed the T-shirts.

“We’ve got a very cautious view of how we’re planning the Greater China business in total for Versace for the balance of the year,” Capri Chief Executive Officer John Idol said on a post-earnings call on Wednesday. Idol, however, did not give details on the new strategy.

He added that the brand would likely see a recovery only next year. In the latest reported quarter, Versace accounted for 16 percent of the company’s total revenue.

The company also blamed protests in Hong Kong and higher expenses for a lower-than-expected second-quarter profit and forecast a dip in Hong Kong’s contribution to total revenue in fiscal 2020.

“Hong Kong, for the company, has had a far more material impact than we had ever thought,” Idol said.

Capri said comparable sales for Milan-based Versace was flat compared with a year earlier, while comparable store sales at Jimmy Choo declined in the mid-single digits.

Adjusted net income fell 7.8 percent to $177 million, or $1.16 per share, in the quarter ended September 28, from a year earlier and missed analysts’ expectation of $1.24 per share.

Total revenue rose 15.1 percent to $1.44 billion, in line with analysts’ estimates, according to IBES data from Refinitiv.

The company’s shares fell over 4 percent to $32.60 on Wednesday. Adjusted net income fell 7.8 percent to $177 million, or $1.16 per share, in the quarter ended September 28, from a year earlier and missed analysts’ expectation of $1.24 per share.

Total revenue rose 15.1 percent to $1.44 billion, in line with analysts’ estimates, according to IBES data from Refinitiv.

The company’s shares fell over 4 percent to $32.60 on Wednesday.

https://www.reuters.com/article/us-capri-holdings-results/capri-profit-misses-as-hong-kong-protests-hurt-versace-sales-idUSKBN1XG1OX

 

Category: Hong Kong

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