UPDATE 2-Michael Kors-Capri owner cuts holiday forecast on China’s slow recovery

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Nov 9 (Reuters) – Michael Kors owner Capri Holdings Ltd on Wednesday lowered its sales and profit forecast for the holiday season, blaming a slow recovery in demand in China due to ongoing COVID-19 restrictions and uncertainty about the global economy.

Luxury goods firms have managed to pass on rising costs to affluent shoppers, but China remains a sore spot as Beijing’s “dynamic zero-COVID” policy is hampering consumers’ return to high fashion stores.

The COVID-related disruptions in China also weighed heavily on Kering’s Gucci, Canada Goose Holdings and L’Oréal.

Capri, which also owns Versace and Jimmy Choo, cut its sales forecast for the holiday quarter to $1.53 billion from $1.65 billion and lowered its profit forecast to $2.20 per share against $2.45 per share.

Although sales of luxury goods in the United States are holding up well against cheaper brands, data from three credit card companies showed that Americans have also reduced their purchases of luxury goods, including clothing and designer accessories, in the past two months.

According to industry experts, accessible luxury brands such as Michael Kors are likely to feel a greater pinch than more expensive brands such as Hermès and Dior, due to their younger and less affluent customer base than the traditional customer base of the luxury industry.

Capri’s total revenue rose 8.6% to $1.41 billion in the second quarter ending Oct. 1, slightly above analysts’ average estimate of $1.40 billion , according to IBES data from Refinitiv.

It forecast revenue of $5.70 billion for fiscal 2023, down from a previous estimate of around $5.85 billion. (Reporting by Uday Sampath in Bengaluru; Editing by Vinay Dwivedi)

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