© Reuters. FILE PHOTO: People walk by a Michael Kors store in Lakewood, Colorado June 1, 2016. REUTERS/Rick Wilking/
(Reuters) -Michael Kors owner Capri Holdings (NYSE:) Ltd cut its full-year sales and profit forecasts on Wednesday, hurt by a surge in COVID-19 infections in China, as well as a slowdown in demand for luxury handbags and apparel in department stores.
Shares of the company, which also owns which owns the Jimmy Choo and Versace brands, fell 17% in premarket trading.
Beijing’s decision to dismantle its zero-COVID policy late last year spurred a surge of infections in the world’s second-largest economy and caused more pain for luxury goods companies that have already endured the sales hit from suffered three years from intermittent lockdowns.
Europe’s LVMH and Canada Goose Holdings (NYSE:) Inc have also flagged hits to their businesses from due to disruption in China, a major market for high-end fashion.
Capri said it was taking measures to adjust its operating expenses with the slowdown in revenue in global wholesale channels.
The company said it now expects annual sales of $5.56 billion, down from its prior estimate of $5.70 billion. It cut its earnings per share forecast to $6.10 from $6.85.
The company’s revenue fell 6% to $1.51 billion in the third quarter ended Dec. 31, compared with analysts’ estimates of $1.53 billion, according to Refinitiv IBES data.
The company also forecast fiscal 2024 earnings per share of $6.40 on revenue of $5.8 billion. Analysts expect earnings per share of $7.24 on revenue of $6.03 billion.
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