Capri looks to Versace to boost post-Covid recovery
New York-based fashion group Capri Holdings Ltd. revealed ambitious plans for the Versace brand on Thursday, as the company looks to get its business back on track in the wake of Covid-19.
In a presentation made at the Goldman Sachs Retail Conference, the company announced that, following a notable coronavirus-related dip running January through April of this year, its retail sales trends began to look up in May and improved sequentially in the first quarter and the second quarter through August.
The group, which also owns the Jimmy Choo and Michael Kors brands, put its progress in this challenging period down to a combination of solid consumer engagement and a powerful global distribution network. The company also underlined the value of its three founder-led brands, chief among them: Versace.
“Versace is comping up right now, which is extraordinary considering what’s happening around the world right now,” commented Capri CEO and chairman John D. Idol during the virtual conference. “We have a company, a brand and a luxury house, led by one of its original founders, Donatella, that has such an important message and voice in the fashion business, that we’ll be able to accelerate that, really with a laser focus.”
It should come as no surprise, then, that Capri’s projects for the future involve some purposeful targets for the Milan-based label. Notably, the company intends to grow the brand’s annual sales to $2 billion.
In order to do so, Capri plans to capitalize on the brand’s luxury runway momentum and strong marketing, while also accelerating the label’s e-commerce and omni-channel development, and increasing its retail footprint to 300 stores around the world.
The fashion group also intends to expand accessories and footwear to account for 60% of Versace’s revenue, boosting categories that continue to be strong performers across the company’s portfolio.
A solid performance from Versace would certainly help pick up some of the slack from the Jimmy Choo and Michael Kors brands, which together lost $731 million in the previous two quarters.
Capri’s plans for Jimmy Choo involve growing the brand’s annual revenue to $1 billion, increasing its luxury sneaker penetration and accelerating its e-commerce and omni-channel development. Here too, the company intends to expand the label’s retail footprint to 300 global stores, while accessories are projected to represent 50% of the brand’s revenues.
Over at Michael Kors – the company’s largest brand – the objective is to return the brand to revenue growth. According to Capri, this will involve increasing customer engagement and the penetration of successful signature offerings, while continuing to build on the label’s strong e-commerce growth.
The company also intends to double Michael Kors revenues in Asia and expand the brand’s growing men’s business.
Overall, Capri is aiming to achieve $7 billion in annual revenue and intends to expand its store base to 1,300 locations globally.
The company reported total revenues of $451 million in the first quarter ended June 27, 2020, down 66.5% from the prior-year period, while its net loss for the period came to $180 million, or $1.21 per diluted share.
This decline in quarterly revenues was less drastic than expected, thanks to an uptick in e-commerce sales and a recovery in demand for Versace and Jimmy Choo products in China.
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