Capri Holdings Limited SWOT & PESTLE

SWOT

SWOT Matrix for Capri Holdings Ltd

Detailed SWOT Analysis of Capri Holdings Ltd

The detailed SWOT analysis for Capri Holdings Limited is presented below:

Strength

1. Global fashion luxury group led by world-class management team and founder-designers: Capri Holdings Limited, comprising of three iconic international fashion brands; Versace, Jimmy Choo and Michael Kors, provides their customers with fashion luxury products having a reputation for world-class design and innovation. The company is well supported by their founder-designers Donatella Versace, Sandra Choi and Michael Kors and their respective design teams and Capri’s own experienced senior management team having strong creative and operational experience and successful track records. The management team has an average of 24 years of experience in the retail industry and 12 years of experience with Capri’s brands, with expertise in various segments including design, sales, marketing, public relations, merchandising, real estate, supply chain and finance. Donatella Versace’s unique design vision and 20 years of experience in fashion industry provides Versace brand unique advantage to maintain brand’s continued relevance. Sandra Choi, the Creative Director of Jimmy Choo brand, with her design team offers classic and timeless luxury products which are unique, naturally seductive and elegant. Launched 35 years ago by world-class designer Michael Kors, Michael Kors brand provides timeless and elegant luxury sophisticated accessories and apparel collections which has global recognitions and recipient of number of awards. Designs of the above three brands have been worn by famous celebrities and have a strong red carpet presence.

2. Strong relationship with leading wholesale partners: Capri Holdings Limited has strong partnership with some of the world’s leading wholesale departmental stores which enables Capri to reach a large number of target customers and boost their overall sales. In North America, Capri has established its partnerships with some of the premier departmental stores Neiman Marcus, Bloomingdale’s, Bergdorf Goodman, Macy’s and Saks Fifth Avenue. Similarly in Europe, Capri maintains partnership with Harvey Nichols, Harrods, Printemps, Galeries Lafayette and Selfridges. These shops in departmental stores are a lot different from general retail stores and hence are specifically designed with customized flooring, wall casing, fixtures and decorative items and specially trained staffs are employed in these shops for attracting target customers and providing them with exceptional shopping experience. Capri has managed to engage themselves with these wholesale partners on various innovative and well-planned initiatives which have helped them to reach their target customers in a speedy and efficient manner. Capri has planned to increase the presence of their newly acquired brands, Versace and Jimmy Choo, in luxury departmental stores, and for Michael Kors, it has taken initiatives to increase full-price sell through these wholesale channels by strategically reducing their shipments.

Weakness

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Opportunity

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Threat

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POLITICAL

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ECONOMIC

1. Impact of volatility in costs and trade tariffs: Capri Holdings Limited operates in such an industry which is subject to volatility in various manufacturing costs and trade tariffs imposed on its products. The reason for volatility is due to sharp increase or decrease of the commodity prices over a very short period of time. This is mainly found in the various raw materials and labour required by Capri for manufacturing its products. In addition, Capri’s costs of products are significantly affected by various trade tariffs imposed on them, or, because of hike in taxes due to changes in trade terms. For example, Capri is facing major problems because the U.S. has increased the tariff rate on imports of selected product categories from China worth $200 million from 10% to 25% (w.e.f. May 10, 2019). Also, U.S. President Donald Trump has announced that there is a high potential that these tariffs, pertaining to all products entering the U.S. from China, may further increase, which includes apparels, footwear and men’s products. Hence there is a high possibility that the costs of Capri’s products will increase significantly in the future, if additional trade barriers or tariffs are further implemented by the U.S. or by other countries. This will drastically affect Capri’s business by creating a material impact on Capri’s revenues, operational outcomes and cash flows. So far, Capri has been using commercially reasonable efforts for sourcing their products, as efficiently as possible, to tackle these effects of volatility in trade tariffs. Similarly, to manage fluctuating manufacturing and labour costs, Capri sources raw materials and labour from local regions which suits their manufacturing standards, resulting in more sustainable labour driven costs to their products.

SOCIAL

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TECHNOLOGICAL

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LEGAL

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ENVIRONMENTAL

1. Ensuring adherence to various environmental and liability laws: Companies in fashion industry are not expected to create same level of pollution as that created by an oil company or a steel manufacturing company. Hence different industries have different environmental standards for different countries across the globe, which they should comply to in order to avoid becoming easy targets in that country. Even different states of a particular country may have different environmental laws and liability laws. For example, states like Texas and Florida of United States have different liability norms for environmental disasters and mishaps. Also, many European countries give reliefs to companies investing in and operating through renewable energy. Customers also show interests for the companies who have more ethical views and also think about the welfare of the environment. Various laws are made, which vary from country to country, to limit the amount of pollution and wastes created by imposing pollution tax/quota and fines. Capri may invest in green technologies and recycle waste materials in order to minimize environmental pollution and earn reputation and recognition in form of brand loyalty and new customers. Hence, before entering a country, Capri should have a proper environmental analysis on certain factors like environmental laws, pollution regulations, climatic conditions and attitudes of customers towards green products and renewable energy.