Home » Business » Capri Holdings sees a 70% slump. And the debt (for Versace) is scary

Capri Holdings sees a 70% slump. And the debt (for Versace) is scary

Versace A/I 2020-21

The health emergency linked to Covid-19 will bring down the accounts of Capri Holdings. And the specter of an important debt looms, linked to the acquisitions, mainly Versace, capable of sending the American giant’s financial capabilities out of balance. In conjunction with the communication of the results for the fourth quarter of 2020 and the fiscal year 2020, all in all positive, the designer and owner of the group Michael Kors he said that for the current quarter he expects sales to fall by more than 70% compared to expected and significant losses. Far beyond what imagined by analysts who had actually predicted a 46.7% slowdown according to Refinitiv’s Ibes data. For about half of the current quarter, the group’s stores have been closed, reopening began at the end of May and today 90% of the stores have raised the shutter (70% in the United States). As far as the e-commerce segment sees double-digit growth, it is not enough to cover the losses related to traditional retail. In a conference call, the group announced that traffic in stores has currently fallen between 50 and 75% compared to last year’s levels.

As for recent data, the American group headed by Michael Kors, Versace e Jimmy Choo it closed the fourth quarter of the year ended March 28 with an 11.3% decrease in revenues, equal to approximately $ 1.2 billion with a quarterly net loss of € 551 million. The health emergency linked to Covid-19 has certainly impacted the negative results, but the group still manages to end the fiscal year with a 6% increase in turnover reaching a total of 5.51 billion dollars.

The Michael Kors brand had annual sales of $ 4.15 billion, down slightly from $ 4.51 the previous year. Versace has reached 843 million in revenues, thanks above all to the Emea area, Jimmy Choo has a turnover of 555 million, down on the 590 of last year.


But the real specter, in fact, is the huge debt that, in the face of a foreseeable cut in revenue, will become at risk. Not surprisingly, in early April Fitch downgraded to junk Capri Holding by lowering the rating from BBB- to BB + and its unsecured credit structure and debt rating went from BBB- to BB + / RR4. And, again, it is no coincidence that the holding’s title has taken a downward path since the acquisition of Versace in September 2018. In August 2019, the title was still worth $ 74.8. On September 21st still $ 72.6. A month after the acquisition, on October 26th, it had dropped to $ 55.6. Today, on the stock exchange, Capri Holding is worth $ 15.3.

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