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Versace boosts Capri Q1 results and then causes China storm

Capri Holdings, the group that comprises the Jimmy Choo, Michael Kors and Versace brands, announced revenues of more than $1.3 billion for the first quarter of its current fiscal year, the three-month period to the end of June.

This figure represents an increase of 11.9% compared to the corresponding quarter in 2018.

Michael Kors contributed $981 million towards the group total, slipping 4.7% year on year. Jimmy Choo’s contribution was $158 million, a reduction of 8.7% compared to the same quarter last year. Versace’s contribution of $207 million for the quarter is what led to the group figure showing an increase because Versace only became part of the group at the end of 2018.

Chief executive of Capri, John Idol, said on announcing the results that the group was pleased with its performance in the first quarter. He said this fiscal year will be “an investment year” for the group and that it intends to invest substantially in Versace and Jimmy Choo in particular to position these brands for long-term revenue growth and margin expansion.

Mr Idol commented: “With the power of Versace and Jimmy Choo, and the strength of Michael Kors, we remain confident that our three iconic, founder-led fashion brands position Capri Holdings to grow revenue to $8 billion over time and deliver multiple years of earnings growth.”

Shortly after the release of the first-quarter figures, however, Versace became the latest Italian luxury brand to face negative publicity in China. The controversy was over something as simple as a T-shirt, designed to show the global reach of the Versace brand. It listed important fashion cities around the world and the countries they are in. Among these were Shanghai and Beijing, but the T-shirt also listed Macau and Hong Kong as being countries in their own right, provoking an angry reaction among Chinese commentators.

Model, actress and singer Yang Mi quickly terminated her contract with the group and Versace’s artistic director and figurehead, Donatella Versace, issued a public apology, insisting that she had no intention of showing disrespect to China’s national sovereignty. In the most recent quarterly figures, 34.3% of Versace revenues came from Asia.

Late in 2018, Dolce & Gabbana wounded Chinese sensitivities by depicting consumers from there trying to eat pizza with chopsticks. Co-founder, Stefano Gabbana, was then alleged to have made negative comments about China on social media platform Instagram (he has claimed his account was hacked), which made matters much worse. Mr Gabbana and co-founder Domenico Dolce decided to make a video to apologise, but this appeared to do little to heal the hurt.

Between January and April 2019, engagement on Chinese social media platform Weibo with Dolce & Gabbana was down by 95% compared to the same months the year before, according to figures compiled by research group Gartner. No Chinese celebrity would appear on the platform endorsing the Italian brand and its products were absent from major Chinese e-commerce platforms.

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