Capri Holdings (Michael Kors, Versace) said it would raise prices this fall and spring next year for Michael Kors, its biggest brand by sales that it planned to transform into a “smaller, more profitable business.”
The emphasis comes as the brand’s about 4% sales decline in the fourth quarter was in contrast to that at its Versace and Jimmy Choo businesses which grew 10% and 16%, respectively. Chief Executive Officer John Idol said the company plans to further Michael Kors’s appeal as a more luxurious brand in North America with fewer promotional merchandise on shelves by curtailing the amount of supply.
Idol said the company expanded its database for the brand by 18% in the fourth quarter, adding “it also means that the price increases are not stopping that customer from crossing the line and purchasing products.” Capri expects total revenue of about $5.1 billion for its fiscal 2022, higher than Wall Street projections of $4.99 billion, according to IBES data from Refinitiv. Gross margin is expected to increase about 50 basis points, even as transportation costs increase.
The company has kept a tight control over inventory during the pandemic that has bolstered its gross margin. Capri said e-commerce sales rose 80% in the fourth quarter, with retail sales rising 13%.
Bigger rivals LVMH, Hermes and Kering have also benefited as traditionally reluctant luxury products sellers invest heavily to take advantage of the shift to selling online.
Fourth-quarter revenue of $1.20 billion beat estimates of $1.02 billion. On an adjusted basis, the company earned 38 cents per share, handily topping the estimate of 2 cents.
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