Michael Kors-owner Capri Holdings Ltd on Wednesday lowered its sales and profit forecasts for the holiday period, blaming a slow demand recovery in China due to persistent Covid-19 curbs and uncertainty around the global economy.

Luxury goods companies have managed to pass on higher costs to affluent shoppers, but China remains a sore spot as sporadic business and movement restrictions due to Beijing’s “dynamic zero-Covid” policy prevent consumers from returning to high-fashion stores.

“(Covid curbs) have been causing a great deal of difficulty ... we think that it’s going to take time for (China) to recover for us,” Capri Chief Executive Officer John Idol said.

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Mainland China second-quarter revenue fell by “high teens” percentage, and business in the country has worsened over the last month due to a further slowdown in store traffic, Idol added.

Capri, which also owns Versace and Jimmy Choo, did not disclose its total revenue from China, but the region is typically the third biggest market for luxury companies behind the United States and Europe.

Kering’s Gucci and parka maker Canada Goose have also seen their China sales take a hit in recent months.

Idol said that demand for Michael Kors products was also slowing at U.S. wholesale retailers.

“Affordable” luxury labels such as Michael Kors were likely to feel the pinch of an inflation-induced slowdown in demand before more premium brands such as Versace, said Jessica Ramirez analyst at Jane Hali and Associates.

Capri cut its holiday-quarter sales forecast to $1.53 billion from $1.65 billion, and lowered its profit outlook to $2.20 per share from $2.45 per share.

Shares of the fashion house, however, rose about 2% as it beat earnings estimates and announced a new $1 billion share buyback program.