Michael Kors parent Capri Holdings Ltd on Wednesday beat estimates for fourth-quarter revenue and profit, buoyed by a rebound in China demand following easing of pandemic-related curbs late last year.
Chinese consumers, unshackled from COVID-19 restrictions, have returned to splurging on handbags and apparel, countering a slowdown in demand from the company’s North American market which accounted for more than half of the group’s revenue in 2022.
The company has benefited from easing freight costs and better product management with inventory declining 3.6 per cent in the quarter compared to a 21 per cent increase in the prior quarter.
Earlier this month, Coach handbag maker Tapestry Inc raised its annual profit outlook, betting on demand recovery in China and strong sales of its handbags.
Quarterly revenue from Michael Kors, which made up 70 per cent of Capri’s sales in 2022, fell nearly 11 per cent to $910 million, with Asia being the only region that saw some growth.
“While we recognize that there are near-term uncertainties in the Americas, we are encouraged by the strong trends in Asia and continued growth in EMEA,” Capri CEO John Idol said.
The company, however, lowered its revenue outlook for the full year to $5.7 billion from a prior forecast of about $5.8 billion.
Shares of the luxury group, which also owns Versace and Jimmy Choo brands, were marginally lower in premarket trading after rising as much as 5 per cent. So far this year, shares have fallen 31 per cent.
For the fourth quarter, Capri posted adjusted earnings per share of 97 cents, higher than 94 cents that analysts had expected.
The company reported quarterly revenue of $1.34 billion, compared with analysts’ average estimate of $1.28 billion, according to IBES data from Refinitiv.