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Capri Bets On Accessories, Men’s and Acquisitions to Hit $8B Growth Goal

Capri Holdings Ltd. wants to reach $8 billion in annual volume over the next few years, and it will focus on growth in accessories and men’s for all three of its brands to expand from its current $6 billion in annual volume, and even more luxury acquisitions.

Capri chairman and chief executive officer John D. Idol on Tuesday led a team of executives at the firm’s Investor Day presentations for Wall Street analysts at The Pierre Hotel in Manhattan. Capri, parent company to Michael Kors, Jimmy Choo and Versace, outlined growth projections through fiscal 2023.

“We’re very excited about Capri Holdings and what we’ve been able to create in the past 18 months. We’ve had a vision to acquire luxury brands that had a global resonance, and brands that had leaders [where the] founders are deeply engaged in the vision and the future of the companies that they actually started,” Idol said at the outset.

Capri has plans to grow its Jimmy Choo brand to $1 billion in revenues from $650 million; Versace to $2 billion from $900 million and Michael Kors to $5 billion from $4.45 billion. Having all three brands diversifies Capri’s global product mix: accessories currently represent 51 percent, footwear 18 percent, men’s accounts for 13 percent, ready-to-wear at 11 percent, and licensed goods such as watches represent 7 percent of the business.

To reach its goal, Capri said growth will come from accessories—which includes footwear—and men’s.

“Footwear is one of the fastest growing categories in luxury today. It is soundly entrenched in Michael Kors, Jimmy Choo and will be in Versace,” Idol said.

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The company’s chairman believes growth of the luxury market provides enough runway for all three brands to grow in the sector. Citing an industry report by analysts from Bain Capital, Idol said the luxury market, on an annual compound annual growth rate, will grow to $384 billion by 2025 from $291 billion in 2018. By region, the Asian market is projected to grow to 50 percent of the total sector in 2025 from 37 percent in 2018; Europe, Middle East and Africa to 25 percent from 32 percent, and the Americas to 25 percent from 31 percent.

“We believe we will grow faster than this,” Idol said. He noted that Capri, formerly Michael Kors Holdings Ltd., has shown “resiliency” over the past few years, even with the economic downturn.

While both Versace and Jimmy Choo are expected to see double digit comp growth, Michael Kors is projected to grow in the low single digits.

As for the core Michael Kors brand, Idol said it will provide a “steady foundation” for the overall company. The plan is to stabilize retail comps via its accessories business, and continue to expand footwear and women’s RTW.

Idol said the company intends to grow the Michael Kors business in Asia to $1 billion and expand growth in the men’s business. One focus in men’s will be the expansion of its small leather goods offerings. At the end of fiscal 209, men’s posted $210 million in revenues. By fiscal 2022, Capri expects men’s revenues to be between $300 million to $400 million, with a goal of reaching $500 million in fiscal 2023.

Jonathan Akeroyd, CEO of the Versace brand, said the company plans an expansion into accessories over the “relatively short term,” a move he called a “gamechanger” for the brand. The company is set to introduce a new handbag featuring a novel Barocco V signature detail.

Where growth is concerned, the goal is grow men’s and women’s accessories and footwear to 60 percent from its current 35 percent. From there, Akeroyd said the brand will take that growth to between 42 percent to 47 percent by fiscal year 2022, and then to 60 percent in fiscal 2023.

For Versace, growth in men’s will mean expansion in key RTW categories, like denim. The company will also relaunch its underwear business next year, Akeroyd said. The accessories category will see a bigger presence in the form of backpacks, bum bags and small leather goods. While women’s has had a larger eyewear selection, Versace will also be developing a stronger eyewear line for its men’s business.

The biggest opportunity for the brand will be raising the productivity level in its stores, which Akeroyd acknowledged is “not what it should be.”

Between store renovations and a bigger focus on expanding the accessories merchandise so its not solely RTW, Akeroyd said Versace should be able to grow sales per square feet to $2,500, up from $1,500 in fiscal 2019 and $1,300 in fiscal 2017.

At Jimmy Choo, CEO Pierre Denis, said the brand has shifted beyond footwear to position itself as a 21st Century accessories brand. Choo has a new logo for the fall/winter 2019 advertising campaign and model Kaia Gerber as the face of the brand.

According to Denis, the new sneaker component of the business has resonated well, and accounts for roughly 20 percent of the business. The brand has plans to build out the men’s offering, expand the global retail footprint and grow accessories to represents 50 percent of the overall business. More importantly, Denis said Choo intends to reacquire its franchised businesses, and that the brand has started buying shoe factories in Italy, a move he said has “enabled an increase in speed-to-market,” as well as an increased ability for personalization.