Happy Halloween. The scariest number in fashion this weekend might be two euros. Starting tomorrow, that's what the European Union adds to the charge on cheap parcels coming into the bloc, on top of the three euros it already collects. And a Commission document says those charges could bring in six billion euros a year. Trick or treat, depending on whether you're Brussels or Shein. You're listening to Fashion Business Daily. It's Saturday, October 31, and we have three stories. Capri Holdings shrinks again but raises its outlook, and the stock jumps. Reuters puts a number on Europe's parcel fees. And Nanushka, the Hungarian label, has closed all its stores and cut down to twenty staff.
John Idol, chairman and chief executive of Capri Holdings, in Friday's second-quarter release:
Throughout the second quarter, trends improved sequentially each month across both of our luxury houses, reflecting the actions we have taken to sharpen our product assortments, elevate brand desirability and strengthen consumer engagement.
Capri reported on Friday, October 30, for the quarter that ended September 26. It sold Versace to Prada last December, so the group is now two houses, Michael Kors and Jimmy Choo. Company-reported revenue was 809 million dollars, down 5.5 percent, or 4.9 percent in constant currency. Net income was 27 million dollars, against a 34 million dollar loss a year earlier. Sales went down and the stock went up? Up about 16 percent on Friday morning, according to Vogue. Expectations were low. Quartz cites a Wall Street Journal consensus of 786.5 million dollars in revenue and 21 cents of adjusted earnings per share, and Capri delivered 42 cents. One asterisk on the beat: about 20 million dollars of revenue came from wholesale shipments that went out earlier than planned, moved from the third quarter into the second. Capri has taken that out of its third-quarter guidance. Split it by brand, because these are two different stories. Jimmy Choo rose 11.5 percent to 146 million, and its operating margin went from minus 6.9 percent to plus 1.4. Michael Kors fell 8.6 percent to 663 million. And some of the Kors decline is deliberate. Glossy reports from the call that the brand cut promotional days by about half and had roughly 40 percent less markdown inventory. Kors gross margin rose 220 basis points to 61.5 percent, which Capri puts down to more full-price sell-through and lower tariff rates. Group inventory is down 7 percent. That's the right call. You can't be a luxury brand that's on sale every weekend. And there's a product signal too. Idol says the Hamilton Soft bag, at 359 dollars and fifty cents, quickly became one of the brand's bestsellers, with influencers talking it up on their own, and Capri is chasing inventory. He says they haven't seen sell-throughs like it in five or six years. Then TikTok Shop, launched this quarter, is running at almost four times what they expected. In Idol's words, Gen Z "almost didn't know who we were." Capri didn't disclose how its TikTok Shop pricing or vouchers compare with its other channels, so we can't tell yet whether that channel fits the full-price strategy. On guidance, full-year revenue is now about 3.42 billion dollars, up from 3.4 billion, and diluted earnings per share about 2.20, up from 2.15, according to Vogue. Net debt is 336 million dollars, against 1.6 billion a year earlier, before the Versace sale closed. And Idol thinks Kors on its own can get to 4 billion. Puck says he told analysts Kors revenue could rise 39 percent to 4 billion dollars, with no timeline attached. Puck also writes that reports suggest Idol is talking to investors about a possible take-private. That's Puck pointing to other reports, and Capri hasn't said anything about it. The nearer test is the company's own promise that revenue returns to growth in the second half. Third-quarter guidance is about 1.005 billion dollars.
Helen Reid, reporting for Reuters from London:
European Union charges on cheap ecommerce packages entering the bloc, which target Chinese platforms such as Shein and Temu, could raise €6 billion a year for the EU budget from 2028 to 2034, a Commission document seen by Reuters on Friday showed.
Reuters saw that document on Friday, October 30. The Commission says about 5.8 billion parcels worth under 150 euros entered the EU last year, up 26 percent, and it estimates most of them were undervalued to avoid customs duties. A three-euro charge has applied since the start of July. The extra two euros takes effect tomorrow, Sunday, November 1. The six billion figure already assumes fewer parcels as retailers adjust. So who actually pays it? That's still open, and each platform is answering it differently. The Commission declined to comment on the estimate. Temu's owner, PDD, said in August that the fees would have a considerable impact on parts of its business, without giving a number, and Reuters saw screenshots of Temu offering some shoppers a discount on the fees. AliExpress says it's adding local warehouses. Amazon says 97 percent of the products it sells in the EU ship from warehouses inside the bloc, so very few of its shipments are affected. That's the whole game right there. Amazon already has the warehouses, so the fee barely touches it. The platforms shipping one five-euro dress at a time pay it on every parcel. And the lawmaker leading the customs reform, Dirk Gotink, called it "a highly toxic business model." He's not hiding whose side he's on. For Shein, this is the latest pressure in its first months as a public company. Reuters says Europe brings in about a third of Shein's revenue, and sales there were already falling before the fees, as it raised prices and cut ad spending. Shein says it's focused on keeping prices "competitive," and it's expanding warehouse space in Poland. On Thursday we covered the other front, Mexico's stalled courier permits, with DHL, UPS and FedEx due to expire on December 2. Stocking a Polish warehouse ahead of demand is exactly what Shein's model was built to avoid. Hold inventory, guess what sells, eat what doesn't. Congratulations, you're a normal retailer. Also watch who keeps the money. Member states currently keep 25 percent of the fees, and the Commission's estimate assumes 90 percent goes to Brussels. That split is still being negotiated.
Sarah Kent, writing for The Business of Fashion:
The label, which previously employed 150 people, has shrunk its headcount to just 20 and is continuing to downsize, board member Peter Baldaszti said in an email.
BoF published this on Friday, October 30, and credits the Hungarian weekly HVG with the first report. Baldaszti says Nanushka has closed all of its physical stores and paused sales of upcoming collections to wholesale partners. Its website is down. Employees and vendors are still owed money, and some creditors have started enforcement proceedings. This one stings. Sandra Sandor founded it in 2005, after London College of Fashion. BoF calls it once-buzzy, and that's fair. For a while it had real heat. The growth was real, by the company's account. Baldaszti joined as CEO in 2016 and brought in outside investment, and he says revenue went from 1 million euros to 34 million over the next five years, and the business turned a profit. Then a planned sale fell through at the end of 2022. It took on 10 million euros of debt in 2023 to stabilise, and then came the luxury slowdown and a crisis in the multi-brand stores it sold through. The ownership history is what I'd underline. Nanushka sat inside Vanguards Fashion Group, which Baldaszti co-founded in 2020 with backing from Hungary's Export Import Bank. Vanguards also invested in Sunnei and the knitwear label Aeron, and BoF says both have wound down. Last year, after attempts to bring in new investors failed, Nanushka's lender took ownership. Gather up indie labels with a promise to fund their growth, and when the money dries up, the brands are the ones left exposed. Baldaszti says he has since stepped away from Vanguards. Talks to refinance and restructure with new investment are ongoing, and the stated aim is to return to wholesale in time for the autumn-winter 2027 sales season with what he calls a stabilised operation. Gilmar on Wednesday, BHV the same day, now Nanushka. A lot of this week's distress runs through wholesale and department stores. And a target season is not a financing deal. Until an investor signs, what's concrete is twenty staff, closed stores and suppliers waiting to be paid.
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My holiday call: the Hamilton Soft is hard to find before Black Friday on November 27. Capri itself warned that some styles could be out of stock over the holidays, so it's not a brave bet. Fashion Business Daily is a Lantern Podcast. Our next episode arrives Monday, November 2.