Capri Holdings (CPRI -3.96%), luxury goods distributor of brands Michael Kors, Versace, and Jimmy Choo, saw sales decline 11.3% in its fourth quarter, which ended March 28, 2020 and included China store closures as well as about a week of the U.S. shutdown related to the coronavirus pandemic.
However, the company said it's expecting a 70% decline year over year and a significant loss per share in the first quarter of 2021.
Growth on hold
Capri, which was originally the Kors brand, bought Jimmy Choo in 2017 and Versace in 2018 to beef up its sagging sales. In the first three quarters of 2020 the brand saw strong improvements, but these came undone with the coronavirus pandemic in the fourth quarter.
Total 2020 sales grew 6%. Adjusted earnings per share were $0.11, which included a tax valuation allowance of negative $0.44. Adjusted earnings per share for fiscal year 2020 were $3.89, which included the same tax valuation allowance.
Starting up again
Ninety percent of Capri stores are up and running following government guidelines, including 70% of the 455 stores in the Americas region, 98% of the 316 stores in the EMEA (Europe, Middle East, and Africa) region, and 98% of the 500 stores in the Asia region.
The company said that since stores have reopened, getting into the first quarter of 2021, sales have ranged from 50% to 75% of the previous year's sales. The strongest results were in mainland China, but overall sales have continued to strengthen.
Digital sales increased in the fourth quarter and have gained by double digits in the first quarter of 2021.
The wholesale segment is suffering as partners are limiting orders, but open partner stores have seen similar trends to the direct-to-customer stores. Capri is also seeing reduced sales from the retail travel section.