By Aditi Sebastian
(Reuters) -Capri Holdings Ltd on Wednesday lifted its annual revenue and profit forecast ahead of the all-important holiday season as the Michael Kors owner expects to counter higher costs arising from global supply chain snags with raised prices.
Shares of the company, which posted better-than-expected second-quarter results and announced a $1 billion share buyback program, soared over 15%.
The forecast raise comes at a time when Capri, like its peers Ralph Lauren (NYSE:RL), is battling surging transportation and freight costs, but said the impact was cushioned by strong demand, more full-priced sales and higher prices for its brands such as Michael Kors and Jimmy Choo.
"The success of these (strategic) initiatives is currently offsetting the COVID-19 related industry headwinds including supply chain delays and increased transportation costs" Capri Chief Executive Officer John Idol said.
In the second quarter, sales of the Versace owner's luxury apparel, handbags and heels rose due to pent-up demand from shoppers looking to glam up as they head out to social events and parties as restrictions ease.
Several celebrities including rapper Lil Nas X, actor Channing Tatum and Lupita Nyong'o wore Versace to the high-profile Met Gala event in September, which helped boost the image of the brand that posted a 45% jump in revenue in the quarter.
The strong results helped Capri to forecast annual revenue of about $5.4 billion, up from a prior estimate of about $5.3 billion, and profit at $5.30 per share up from $4.50.
And while, extended factory closures in Vietnam and port logjams stemming from the pandemic-induced lockdowns, and loss of workers have led to merchandise delays, especially at Michael Kors, chief executive Idol said Capri will meet consumer demand heading into the upcoming holiday season.