Capri Holdings Ltd beat holiday-quarter profit estimates on Wednesday as the luxury fashion house boosted its margins by selling more products at full price and cutting manufacturing costs.

The Michael Kors and Versace owner's shares rose 5% in premarket trade.

Capri has been selling more products through its own retail stores and e-commerce channels, lowering its dependence on COVID-19 battered department stores that often sell even luxury goods at discounted rates.

The company's adjusted gross margin expanded 520 basis points in the third quarter, compared to a year earlier.

Capri also said it saw double-digit quarterly growth in Mainland China, which bodes well for a broader recovery in high-end fashion in other markets, once coronavirus restrictions are eased.

The company said it expects to return to pre-pandemic revenue and earnings levels by fiscal 2023, which starts next year.

Capri's total revenue fell 17% to $1.30 billion in the third quarter ended Dec. 26 as store closures in major European markets crimped sales. Analysts had estimated a revenue of $1.33 billion, according to IBES data from Refinitiv.

The company reported a net attributable profit of $179 million, or $1.18 per share, down from $210 million, or $1.38 per share, a year earlier.

Excluding items, it earned $1.65 per share, beating analysts' expectations of $1.01 per share.