Capri Holdings says Coronavirus outbreak in China can lead to a $100 million hit to its revenue

Capri Holdings, more prominently known as the current owner of Michael Kors, warned on Wednesday that its revenue is likely to take a major hit worth $100 million due to the recent outbreak of Coronavirus in China. Amidst the health emergency, 150 of its regional stores have so far been closed while the rising travel restrictions, as per the company, are expected to weigh further on the performance since tourists driven spending will remain under pressure. However, due to the sharp increase in sales during the holiday quarter, specifically in the American and European regions, the stock was seen trading up by 10% on Wednesday. Capri Holdings cited greater demand for its Versace products including dresses and handbags to have fueled the sales in the recent quarter.

Capri Holdings Has Lost 20% In The Stock Market In 2020 So Far

On a year to date basis, however, the company has lost around 20% in the stock market in 2020 much of which was attributed to the virus outbreak in China that has so far killed around 500 people. China has resorted to temporarily shutting factories and stores that have weighed on the business operations at large. China marks a critical market for Capri Holdings ascribed to its rapidly expanding upper-middle class. The virus outbreak, therefore, is expected to turn into a massive decline in Capri’s luxury fashion labels regional sales. Excluding items, the company made $1.66 of earnings per share in the recent quarter. Analysts, on the other hand, had expected its EPS at a lower $1.59. Capri had bought Versace for $2 billion in 2018. In the third quarter, Versace generated $195 million in revenue for Capri Holdings.

Capri Holding’s Quarterly Revenue Climbed 9.2% In Q3

Versace’s new designs that featured Gianni’s signature (her brother) and Barocco V (company logo) were reported to have fueled higher revenue for the company in the third quarter. While experts had forecast the quarterly revenue to grow at 6.9%, the company boasted a much higher 9.2% increase in revenue in the recent quarter. Following the earnings report, Capri gave guidance for fiscal 2020 that downgraded its forecast for revenue to $5.65 billion from the previously announced $5.8 billion. Profit estimate for 2020, Capri added, is currently at $4.45 to $4.50 of earnings per share from the previously highlighted $4.95. Capri’s performance in the stock market remained flat on average in 2019 with the company having closed the year at almost the same level at which it opened in January.