Jimmy Choo has reached breakeven in the second quarter and sees the opportunity to significantly increase its prices and to expand its casual footwear assortment.

The footwear brand posted sales of $122 million in the second quarter ended Sept. 26, 2020, down by a reported 2.4 percent, or 6.4 percent lower at constant exchange rates compared to a year earlier. The brand’s sales performance improved markedly from the first quarter, when both reported and constant currency sales tumbled by 67.7 percent. In the second quarter, Jimmy Choo also reached operating income breakeven, after reporting an operating loss of $10 million and operating margin of a negative 8.0 percent the year earlier.

During the quarter, the brand saw a “strong “ double-digit growth rate in retail sales in China and low single-digit growth in the Americas while e-commerce sales increased by a triple-digit growth rate. Trends in the EMEA region and the rest of Asia showed an improvement compared to the prior quarter but sales remained below the previous year, John Idol, the chief executive of Capri Holdings, the parent company of Jimmy Choo, said in a conference call with analysts.

Idol added that “significant price increases” for Jimmy Choo products were likely over the next year or so. “That brand has been clearly underpriced versus our luxury competitors and one or two of the shoe-only competitors. And again we, in the initial price increases we’ve taken, have not seen any negative consumer reaction to that.”

“We have a significant opportunity to expand Jimmy Choo’s casual footwear assortment beyond sneakers as demonstrated by our recent collaboration with Timberland that resulted in almost a 100 percent sell through,” he added.

Capri – which also owns the Versace and Michael Kors brands – saw revenues in the quarter fall by a reported 23.0 percent to $1,110 million. On a constant currency basis, revenues were down by 24.6 percent. Sales in its retail channel declined by approximately 17 percent.

As was the case after the release of first quarter figures, Capri said it is not providing annual earnings guidance for fiscal year 2021 due to the lack of visibility surrounding the progression of the Covid-19 pandemic, macroeconomic fundamentals, and tourism flows.

However, Thomas Edwards, Capri’s chief financial officer, said the company is now anticipating a full-year revenue decline of approximately 30 percent, an improvement versus its prior expectations. Third-quarter sales are seen declining in the double-digit rates although less than in the second quarter, while the company anticipates a more marked improvement in the fourth quarter, although sales are still seen below the prior year.

Gross margin is seen expanding about 150 basis points for the full year. In the second quarter, Capri’s gross margin was 64.0 percent, up from 60.6 percent in the prior year, while adjusted gross margin increased to 63.2 percent from 61.0 percent.

Income from operations in the quarter was $153 million and operating margin 13.8 percent, compared to $75 million and 5.2 percent in the year earlier. Net income was $122 million, or $0.81 per diluted share, versus $73 million, or $0.47 per share the year earlier. Adjusted net income fell to $137 million, or $0.90 per diluted share, from $177 million, or $1.16 per diluted share in the prior year.

Net inventory at Sept. 26 was $930 million, down by 13 percent on the year earlier.

Capri highlighted a strong improvement in e-commerce sales, which accelerated compared to the previous quarter and increased by approximately 60 percent year-over-year, and positive sales in Mainland China across all three brands.

In the second quarter, Versace’s sales declined by 14.5 percent to $195 million and were down by 18.9 percent at constant exchange rates, with a “positive” performance for global retail sales in the quarter. Operating income more than doubled, to $20 million from $9 million, with the operating margin widening to 10.3 percent from 3.9 percent.

Michael Kors’s revenues amounted to $793 million, down by a reported 27.2 percent and 27.9 percent lower at constant exchange. Its operating income fell to $190 million from $222 million in the second quarter of the previous year although the operating margin widened to 24.0 percent from 20.4 percent.

Jimmy Choo counted 227 stores at Sept. 26, 2020, up from 216 at the end of the previous fiscal year, while the number of Versace units expanded to 206 from 198. Michael Kors instead reduced its store total to 828 from 850.