Capri's Q2 Profits Dip 59.8%, Tapestry Lowers FY24 Sales Forecast Amid Slowing Demand

Capri suffers from weakening consumer demand and e-commerce challenges ahead of acquisition by Tapestry, while Tapestry trims FY24 sales forecast due to anticipated currency headwinds and a moderate outlook for Asia and North America.

Capri Holdings' Q2 net income fell 59.8% to $90 million, down from $224 million a year earlier, significantly impacted by weakening consumer demand and e-commerce related challenges. The company’s retail sales experienced a high-single-digit decline, while its wholesale business dropped by a low-double-digit.
Capri Holdings' key brands also recorded a drop in sales, with Michael Kors sales falling 8.6% to $879 million, Versace revenues falling 9.1% to $280 million and Jimmy Choo’s slipping by 7% to $132 million. The company attributes part of Michael Kors' sales loss to an e-commerce platform switch that created larger challenges than anticipated.
Tapestry Inc, set to acquire Capri Holdings, has trimmed its FY24 sales outlook from $6.9 billion to $6.7 billion, citing challenges including projected currency headwinds and a more passive business prospect for Asia and North America.
Tapestry Inc reported a first-quarter FY24 sales growth of 0.4% year-on-year to $1.51 billion, slightly missing the analyst consensus estimate of $1.53 billion. Despite a weaker performance in North America, the company successfully added roughly 1.2 million new customers in the market.
Both Capri Holdings and Tapestry express confidence despite financial hiccups, emphasizing their focus on long-term strategic growth and the potential benefits of their impending merger. Tapestry's acquisition of Capri is set to create an American fashion giant with over $12 billion in sales.