Michael Kors owner beats quarterly estimates on resilient luxury demand

People walk past a Michael Kors store in Lakewood, Colorado June 1, 2016. REUTERS/Rick Wilking/File Photo

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Aug 9 (Reuters) – Michael Kors owner Capri Holdings Ltd (CPRI.N) beat quarterly revenue and profit estimates on Tuesday, helped by unwavering demand for luxury goods from high-income consumers who remain largely spared from high inflation for decades.

Shares of the company, which also owns Versace and Jimmy Choo, rose about 3% in premarket trading. They have fallen by 21% this year.

Rising prices had little impact on middle- and upper-income households who happily spent on designer brands, having racked up substantial savings during the pandemic when restrictions made everything more difficult from holidays to stranger to dining out.

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European rivals LVMH (LVMH.PA) and Gucci owner Kering (PRTP.PA) also saw a surge in sales, benefiting from some luxury spending shifting to Europe, with US tourists enjoying a stronger dollar. Read more

Capri said total revenue rose 8.5% to $1.36 billion in the first quarter ended July 2, beating analysts’ average estimate of $1.29 billion, according to IBES data from Refinitiv.

Excluding items, Capri earned $1.50 a share, beating estimates for earnings of $1.36.

However, Asian revenues for Michael Kors, Capri’s biggest brand, fell more than 16% as a new round of closures in China hit demand in the key luxury goods market. Jimmy Choo and Versace also saw declines.

Capri also said its net inventory at the end of the first quarter was up 66% from a year ago, reflecting its initiatives to accelerate shipments of seasonal products.

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Reporting by Uday Sampath in Bangalore; Editing by Shinjini Ganguli

Our standards: The Thomson Reuters Trust Principles.

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