While fashion has fixated on just how Versace’s sale to Prada Group is going to ripple through the brand, there’s also plenty of change happening over at Capri Holdings.
For starters, the New York group has lost one of its foundational pieces.
The company took on the name Capri in 2018 when it bought Versace for $2.1 billion, setting it up alongside Michael Kors, its biggest brand, and Jimmy Choo.
At the time, the company pointed to the island of Capri and its “spectacular three-rock formation” as “symbolic of the timeless heritage and strong foundation that is at the core of each of the three founder-led brands in our global fashion luxury group.”
That symbolism didn’t hold and Capri ended up selling Versace for roughly $1.4 billion — a loss of $600 million, although the company also reaped the rewards of owning the brand for seven years.
But the deal seems to have reinvigorated chief executive officer John Idol, who detailed what comes next for the company at the Morgan Stanley consumer and retail conference in New York on Wednesday.
Idol called the deal “a very important event for us because that will give us tremendous financial flexibility to continue to execute on our strategic initiatives, around Michael Kors in particular. It also gives us a situation where we will have a very small amount of debt on the company.
“We think that this is kind of a seminal moment for us to really reset and to take these two wonderful brands, Michael Kors, with about 44 years of history, and Jimmy Choo, with about 29 years of history, and to refocus our initiatives on growing those two wonderful brands,” the CEO said.
While sources said Capri also looked at selling off Jimmy Choo earlier this year, Idol has since declared it’s not for sale and expressed confidence that the brand could add another $200 million in sales and hit $800 million over the next few years.
But the real opportunity is Michael Kors, which Idol first joined in 2003 and helped turn into a giant.
“We’ve obviously had some difficult years the last few years — some of that more recently where the company looked at a complete transformation of the Michael Kors brand,” Idol said. “That was a mistake that really went off the core values or the core identity, DNA that Michael Kors has. Most people recognize the brand for our jet-set image, and that is something that we are really reengaging deeply with the consumer around, but in a modern way.”
The brand is getting back to its travel-based roots with marketing themed around “hotel stories.”
Idol described it as “more modern in the sense of what people have an aspirational dream for is to travel and go away and enjoy time for yourself or your family or just relaxation.”
“We know that that doesn’t mean that you are flying off to Capri or Central Park or to Aspen,” he said. “That might mean going from uptown to downtown for dinner, but we want to be the brand that you think of when you are trying to really think about your style.”
Micahel Kors has also doubled down with influencers, which Idol described as a “very, very big part of our marketing initiative and very successful.”
Influencers have helped bring new customers into the brand and brought former customers back into the fold.
And when shoppers come back to Michael Kors, they’re finding a business in the midst of a major reworking.
The brand has reset its pricing architecture, raising prices in outlets and lowering prices in its regular channels, driving full-price sell-throughs higher.
The store fleet is also being remade.
Michael Kors closed around 125 stores over the past three years and has a few more to go, bringing the store count down to about 700.
“We’re going to start to open stores again,” Idol said. “And as we see the renovations work, the new product work, the pricing architecture work, there’s a big gap between where we were and where we are today and where we could be.”
The trick, of course, is getting from here to there.
