Capri Holdings, the parent company of Michael Kors, Jimmy Choo and, since September last year, Versace, is moving its portfolio upmarket, and yesterday revealed its most recent quarterly financials, Q3, that beat analyst expectations.
However, the group’s CEO John Idol told an investors’ conference call that the only blot on an otherwise impressive report is in the fashion watch category.
“The fashion watch category continues to see declines globally, and we are being impacted by this secular trend,” Mr Idol said on the fiscal third-quarter conference call. “We now expect declines in watches to continue in the fourth quarter and into next year at a greater rate than we had anticipated.”
Michael Kors watches are made and distributed under license by Fossil Group, which has been trying to build a floor under a difficult few years by launching families of connected hybrid and full touchscreen smartwatches.
There have been signs that the strategy is working, and the group’s stock tripled in price from around $10 at the start of 2018 to $30 in the summer of last year on the back of positive reports on connected watch sales.
However, the stock has since halved in price to around $15 today, almost 90% off its peak in 2013 amid broader fears that tech companies such as Apple and Samsung are pealing away traditional watch customers, or that the younger generation is turning its back on watches altogether.
