By Scott Kanowsky
Investing.com -- Shares in Michael Kors-owner Capri Holdings Ltd (NYSE:CPRI) shed nearly a fourth of their value on Wednesday, after the high-end retailer reported lower-than-expected third-quarter earnings and cut its financial guidance.
Adjusted net income at the group slipped by just under 30% to $240 million, $1.84 per share, in the three months ended on December 31. Bloomberg consensus estimates had seen the figure coming in at $2.21 a share.
Revenue at Michael Kors, which accounted for the bulk of its total sales during the period, dropped to $1.1B, missing forecasts. Demand in Asia was particularly weak, decreasing by almost 18%, as a spike in COVID-19 cases in China following the sudden relaxation of strict pandemic rules in the country late last year hit store traffic.
The top-line performance at Capri's Jimmy Choo brand was also below predictions, while the group's Versace unit posted a quarterly revenue beat despite the figure dipping by 0.8% to $249M.
In a statement, Chief Executive Officer John Idol called the quarterly performance in Capri's wholesale business "disappointing," saying trading conditions marked by high inflation and easing shopper demand were "more challenging than anticipated."
"We have begun taking measures to better align operating expenses with the change in revenue by channel. At the same time we will continue to make strategic investments to drive long term growth," Idol said.
Capri also slashed its fourth-quarter outlook for earnings per share to $0.90-$0.95 per share, down from its initial estimate of about $1.35 a share. Revenue is also seen at $1.28B in the final three months of its fiscal year, below the prior forecast of $1.50B.
The firm's guidance for full-year earnings per share and revenue were lowered as well.