QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
N/A | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on which Registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | ☒ | ☐ | No | |||||||||||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | ☒ | ☐ | No |
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | |||||||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | Yes | ☒ | No |
Page No. | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
December 30, 2023 | April 1, 2023 | ||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Receivables, net | |||||||||||
Inventories, net | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Deferred tax assets | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Shareholders’ Equity | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued payroll and payroll related expenses | |||||||||||
Accrued income taxes | |||||||||||
Short-term operating lease liabilities | |||||||||||
Short-term debt | |||||||||||
Accrued expenses and other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term operating lease liabilities | |||||||||||
Deferred tax liabilities | |||||||||||
Long-term debt | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Shareholders’ equity | |||||||||||
Ordinary shares, no par value; | |||||||||||
Treasury shares, at cost ( | ( | ( | |||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive income | |||||||||||
Retained earnings | |||||||||||
Total shareholders’ equity of Capri | |||||||||||
Noncontrolling interest | |||||||||||
Total shareholders’ equity | |||||||||||
Total liabilities and shareholders’ equity | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Cost of goods sold | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Impairment of assets | |||||||||||||||||||||||
Restructuring and other expense | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Income from operations | |||||||||||||||||||||||
Other income, net | ( | ( | |||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Foreign currency (gain) loss | ( | ( | ( | ||||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net income | |||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | |||||||||||||||||||||||
Net income attributable to Capri | $ | $ | $ | $ | |||||||||||||||||||
Weighted average ordinary shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Net income per ordinary share attributable to Capri: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Statements of Comprehensive Income: | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Foreign currency translation adjustments | ( | ( | ( | ||||||||||||||||||||
Net loss on derivatives | ( | ( | ( | ||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | |||||||||||||||||||||||
Comprehensive income attributable to Capri | $ | $ | $ | $ |
Ordinary Shares | Additional Paid-in Capital | Treasury Shares | Accumulated Other Comprehensive Income | Retained Earnings | Total Equity of Capri | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amounts | Shares | Amounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2023 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of restricted awards, net of forfeitures | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of ordinary shares | — | — | — | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 30, 2023 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ |
Ordinary Shares | Additional Paid-in Capital | Treasury Shares | Accumulated Other Comprehensive Income | Retained Earnings | Total Equity of Capri | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amounts | Shares | Amounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at April 1, 2023 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of restricted awards, net of forfeitures | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of employee share options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of ordinary shares | — | — | — | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 30, 2023 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary Shares | Additional Paid-in Capital | Treasury Shares | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Total Equity of Capri | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amounts | Shares | Amounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at October 1, 2022 | $ | $ | ( | $ | ( | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of restricted awards, net of forfeitures | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of ordinary shares | — | — | — | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ |
Ordinary Shares | Additional Paid-in Capital | Treasury Shares | Accumulated Other Comprehensive Income | Retained Earnings | Total Equity of Capri | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amounts | Shares | Amounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at April 2, 2022 | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | ( | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Vesting of restricted awards, net of forfeitures | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of employee share options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of ordinary shares | — | — | — | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ |
Nine Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Share-based compensation expense | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Impairment of assets | |||||||||||
Changes to lease related balances, net | ( | ( | |||||||||
Foreign currency loss | |||||||||||
Other non-cash adjustments | |||||||||||
Change in assets and liabilities: | |||||||||||
Receivables, net | |||||||||||
Inventories, net | ( | ||||||||||
Prepaid expenses and other current assets | ( | ( | |||||||||
Accounts payable | ( | ( | |||||||||
Accrued expenses and other current liabilities | |||||||||||
Other long-term assets and liabilities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities | |||||||||||
Capital expenditures | ( | ( | |||||||||
Settlement of net investment hedges | |||||||||||
Net cash (used in) provided by investing activities | ( | ||||||||||
Cash flows from financing activities | |||||||||||
Debt borrowings | |||||||||||
Debt repayments | ( | ( | |||||||||
Debt issuance costs | ( | ||||||||||
Repurchase of ordinary shares | ( | ( | |||||||||
Exercise of employee share options | |||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ( | |||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | ( | ||||||||||
Beginning of period | |||||||||||
End of period | $ | $ | |||||||||
Supplemental disclosures of cash flow information | |||||||||||
Cash paid for interest | $ | $ | |||||||||
Net cash paid for income taxes | $ | $ | |||||||||
Supplemental disclosure of non-cash investing and financing activities | |||||||||||
Accrued capital expenditures | $ | $ |
December 30, 2023 | April 1, 2023 | ||||||||||
Reconciliation of cash, cash equivalents and restricted cash | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash included within prepaid expenses and other current assets | |||||||||||
Total cash, cash equivalents and restricted cash shown on the consolidated statements of cash flows | $ | $ |
Nine Months Ended | ||||||||||||||||||||
December 30, 2023 | December 31, 2022 | |||||||||||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||
Operating cash flows used in operating leases | $ | $ | ||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income attributable to Capri | $ | $ | $ | $ | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Basic weighted average shares | |||||||||||||||||||||||
Weighted average dilutive share equivalents: | |||||||||||||||||||||||
Share options and restricted shares/units, and performance restricted share units | |||||||||||||||||||||||
Diluted weighted average shares | |||||||||||||||||||||||
Basic net income per share (1) | $ | $ | $ | $ | |||||||||||||||||||
Diluted net income per share (1) | $ | $ | $ | $ |
Contractually Guaranteed Minimum Fees | |||||
Remainder of Fiscal 2024 | $ | ||||
Fiscal 2025 | |||||
Fiscal 2026 | |||||
Fiscal 2027 | |||||
Fiscal 2028 | |||||
Fiscal 2029 and thereafter | |||||
Total | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Versace revenue - the Americas | $ | $ | $ | $ | |||||||||||||||||||
Versace revenue - EMEA | |||||||||||||||||||||||
Versace revenue - Asia | |||||||||||||||||||||||
Total Versace | |||||||||||||||||||||||
Jimmy Choo revenue - the Americas | |||||||||||||||||||||||
Jimmy Choo revenue - EMEA | |||||||||||||||||||||||
Jimmy Choo revenue - Asia | |||||||||||||||||||||||
Total Jimmy Choo | |||||||||||||||||||||||
Michael Kors revenue - the Americas | |||||||||||||||||||||||
Michael Kors revenue - EMEA | |||||||||||||||||||||||
Michael Kors revenue - Asia | |||||||||||||||||||||||
Total Michael Kors | |||||||||||||||||||||||
Total revenue - the Americas | |||||||||||||||||||||||
Total revenue - EMEA | |||||||||||||||||||||||
Total revenue - Asia | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ |
December 30, 2023 | April 1, 2023 | ||||||||||
Trade receivables (1) | $ | $ | |||||||||
Receivables due from licensees | |||||||||||
Less: allowances | ( | ( | |||||||||
Total receivables, net | $ | $ |
December 30, 2023 | April 1, 2023 | ||||||||||
Leasehold improvements | $ | $ | |||||||||
Computer equipment and software | |||||||||||
Furniture and fixtures | |||||||||||
Equipment | |||||||||||
Building | |||||||||||
In-store shops | |||||||||||
Land | |||||||||||
Total property and equipment, gross | |||||||||||
Less: accumulated depreciation and amortization | ( | ( | |||||||||
Subtotal | |||||||||||
Construction-in-progress | |||||||||||
Total property and equipment, net | $ | $ |
December 30, 2023 | April 1, 2023 | ||||||||||
Definite-lived intangible assets: | |||||||||||
Reacquired rights | $ | $ | |||||||||
Trademarks | |||||||||||
Customer relationships (1) | |||||||||||
Gross definite-lived intangible assets | |||||||||||
Less: accumulated amortization | ( | ( | |||||||||
Net definite-lived intangible assets | |||||||||||
Indefinite-lived intangible assets: | |||||||||||
Jimmy Choo brand (2) | |||||||||||
Versace brand (1) | |||||||||||
Net indefinite-lived intangible assets | |||||||||||
Total intangible assets, excluding goodwill | $ | $ | |||||||||
Goodwill (3) | $ | $ |
December 30, 2023 | April 1, 2023 | ||||||||||
Prepaid taxes | $ | $ | |||||||||
Prepaid contracts | |||||||||||
Interest receivable related to hedges | |||||||||||
Other accounts receivables | |||||||||||
Prepaid insurance | |||||||||||
Other | |||||||||||
Total prepaid expenses and other current assets | $ | $ |
December 30, 2023 | April 1, 2023 | ||||||||||
Return liabilities | $ | $ | |||||||||
Other taxes payable | |||||||||||
Accrued advertising and marketing | |||||||||||
Accrued capital expenditures | |||||||||||
Accrued rent (1) | |||||||||||
Professional services | |||||||||||
Accrued interest | |||||||||||
Gift cards and retail store credits | |||||||||||
Accrued litigation | |||||||||||
Accrued retail store expense | |||||||||||
Accrued purchases and samples | |||||||||||
Advance royalties | |||||||||||
Other | |||||||||||
Total accrued expenses and other current liabilities | $ | $ |
December 30, 2023 | April 1, 2023 | ||||||||||
Revolving Credit Facilities | $ | $ | |||||||||
Versace Term Loan | |||||||||||
Senior Notes due 2024 (1) | |||||||||||
Other | |||||||||||
Total debt | |||||||||||
Less: Unamortized debt issuance costs | |||||||||||
Total carrying value of debt | |||||||||||
Less: Short-term debt (1) | |||||||||||
Total long-term debt | $ | $ |
Fair value at December 30, 2023 using: | Fair value at April 1, 2023 using: | ||||||||||||||||||||||||||||||||||
Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||||||||||||||
Derivative assets: | |||||||||||||||||||||||||||||||||||
Net investment hedges | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Fair value hedges | |||||||||||||||||||||||||||||||||||
Total derivative assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Derivative liabilities: | |||||||||||||||||||||||||||||||||||
Net investment hedges | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Fair value hedges | |||||||||||||||||||||||||||||||||||
Total derivative liabilities | $ | $ | $ | $ | $ | $ |
December 30, 2023 | April 1, 2023 | ||||||||||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||||||||||
Revolving Credit Facilities | $ | $ | $ | $ | |||||||||||||||||||
Versace Term Loan | $ | $ | $ | $ | |||||||||||||||||||
Senior Notes due 2024 | $ | $ | $ | $ | |||||||||||||||||||
Three Months Ended December 30, 2023 | Nine Months Ended December 30, 2023 | ||||||||||||||||||||||||||||||||||
Carrying Value Prior to Impairment | Fair Value | Impairment Charge | Carrying Value Prior to Impairment | Fair Value | Impairment Charge | ||||||||||||||||||||||||||||||
Operating Lease Right-of-Use Assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Property and Equipment | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Three Months Ended December 31, 2022 | Nine Months Ended December 31, 2022 | ||||||||||||||||||||||||||||||||||
Carrying Value Prior to Impairment | Fair Value | Impairment Charge | Carrying Value Prior to Impairment | Fair Value | Impairment Charge | ||||||||||||||||||||||||||||||
Operating Lease Right-of-Use Assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Property and Equipment | |||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||||||||||||||
Notional Amounts | Assets | Liabilities | ||||||||||||||||||||||||||||||||||||
December 30, 2023 | April 1, 2023 | December 30, 2023 | April 1, 2023 | December 30, 2023 | April 1, 2023 | |||||||||||||||||||||||||||||||||
Designated net investment hedges | $ | $ | $ | (1) | $ | (2) | $ | (3) | $ | (4) | ||||||||||||||||||||||||||||
Designated fair value hedges | (2) | (4) | ||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Net Investment Hedges | Fair Value Hedges | ||||||||||||||||||||||
December 30, 2023 | April 1, 2023 | December 30, 2023 | April 1, 2023 | ||||||||||||||||||||
Assets subject to master netting arrangements | $ | $ | $ | $ | |||||||||||||||||||
Liabilities subject to master netting arrangements | $ | $ | $ | $ | |||||||||||||||||||
Derivative assets, net | $ | $ | $ | $ | |||||||||||||||||||
Derivative liabilities, net | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Pre-Tax (Losses) Gains Recognized in OCI | Pre-Tax Losses Recognized in OCI | Pre-Tax Losses Recognized in OCI | Pre-Tax Gains Recognized in OCI | ||||||||||||||||||||
Designated forward foreign currency exchange contracts | $ | $ | ( | $ | $ | ||||||||||||||||||
Designated net investment hedges | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||
Designated fair value hedge | $ | $ | $ | ( | $ | ||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||
Pre-Tax Gain Reclassified from Accumulated OCI | Location of Gain Recognized | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
Designated forward foreign currency exchange contracts | $ | $ | Cost of goods sold | ||||||||||||||||||||
Nine Months Ended | |||||||||||||||||||||||
Pre-Tax Gain Reclassified from Accumulated OCI | Location of Gain Recognized | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
Designated forward foreign currency exchange contracts | $ | $ | Cost of goods sold | ||||||||||||||||||||
Foreign Currency Adjustments (1) | Net Gain on Derivatives (2) | Other Comprehensive Income Attributable to Capri | |||||||||||||||
Balance at April 1, 2023 | $ | $ | $ | ||||||||||||||
Other comprehensive loss before reclassifications | ( | ( | |||||||||||||||
Less: amounts reclassified from AOCI to earnings | |||||||||||||||||
Other comprehensive loss, net of tax | ( | ( | ( | ||||||||||||||
Balance at December 30, 2023 | $ | $ | $ | ||||||||||||||
Balance at April 2, 2022 | $ | $ | $ | ||||||||||||||
Other comprehensive (loss) income before reclassifications | ( | ( | |||||||||||||||
Less: amounts reclassified from AOCI to earnings | |||||||||||||||||
Other comprehensive (loss) income, net of tax | ( | ( | ( | ||||||||||||||
Balance at December 31, 2022 | $ | $ | $ |
Options | Service-Based RSUs | Performance-Based RSUs | |||||||||||||||
Outstanding/Unvested at April 1, 2023 | |||||||||||||||||
Granted | |||||||||||||||||
Exercised/Vested | ( | ( | |||||||||||||||
Canceled/Forfeited | ( | ( | |||||||||||||||
Outstanding/Unvested at December 30, 2023 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Share-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Tax benefit related to share-based compensation expense | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Total revenue: | |||||||||||||||||||||||
Versace | $ | $ | $ | $ | |||||||||||||||||||
Jimmy Choo | |||||||||||||||||||||||
Michael Kors | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ | |||||||||||||||||||
Income (loss) from operations: | |||||||||||||||||||||||
Versace | $ | ( | $ | $ | $ | ||||||||||||||||||
Jimmy Choo | |||||||||||||||||||||||
Michael Kors | |||||||||||||||||||||||
Total segment income from operations | |||||||||||||||||||||||
Less: Corporate expenses | ( | ( | ( | ( | |||||||||||||||||||
Impairment of assets (1) | ( | ( | ( | ( | |||||||||||||||||||
Merger related costs | ( | ( | |||||||||||||||||||||
Restructuring and other expense | ( | ( | ( | ( | |||||||||||||||||||
COVID-19 related expenses | |||||||||||||||||||||||
Impact of war in Ukraine | |||||||||||||||||||||||
Total income from operations | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Depreciation and amortization: | |||||||||||||||||||||||
Versace | $ | $ | $ | $ | |||||||||||||||||||
Jimmy Choo | |||||||||||||||||||||||
Michael Kors | |||||||||||||||||||||||
Corporate | |||||||||||||||||||||||
Total depreciation and amortization | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
The Americas (United States, Canada and Latin America) (1) | $ | $ | $ | $ | |||||||||||||||||||
EMEA | |||||||||||||||||||||||
Asia | |||||||||||||||||||||||
Total revenue | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Total revenue: | |||||||||||||||||||||||
Versace | $ | 227 | $ | 249 | $ | 766 | $ | 832 | |||||||||||||||
Jimmy Choo | 166 | 168 | 481 | 482 | |||||||||||||||||||
Michael Kors | 1,034 | 1,095 | 2,700 | 2,970 | |||||||||||||||||||
Total revenue | $ | 1,427 | $ | 1,512 | $ | 3,947 | $ | 4,284 | |||||||||||||||
Income (loss) from operations: | |||||||||||||||||||||||
Versace | $ | (14) | $ | 24 | $ | 24 | $ | 138 | |||||||||||||||
Jimmy Choo | 4 | 18 | 11 | 45 | |||||||||||||||||||
Michael Kors | 219 | 251 | 518 | 721 | |||||||||||||||||||
Total segment income from operations | 209 | 293 | 553 | 904 | |||||||||||||||||||
Less: Corporate expenses | (68) | (56) | (210) | (171) | |||||||||||||||||||
Impairment of assets (1) | (6) | (1) | (26) | (12) | |||||||||||||||||||
Merger related costs | (8) | — | (12) | — | |||||||||||||||||||
Restructuring and other expense | (5) | (5) | (3) | (11) | |||||||||||||||||||
COVID-19 related expenses | — | 2 | — | 6 | |||||||||||||||||||
Impact of war in Ukraine | — | 3 | — | 3 | |||||||||||||||||||
Total income from operations | $ | 122 | $ | 236 | $ | 302 | $ | 719 |
As of | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Number of full price retail stores (including concessions): | |||||||||||
Versace | 170 | 161 | |||||||||
Jimmy Choo | 180 | 186 | |||||||||
Michael Kors | 493 | 520 | |||||||||
843 | 867 | ||||||||||
Number of outlet stores: | |||||||||||
Versace | 63 | 64 | |||||||||
Jimmy Choo | 57 | 56 | |||||||||
Michael Kors | 307 | 307 | |||||||||
427 | 427 | ||||||||||
Total number of retail stores | 1,270 | 1,294 | |||||||||
Total number of wholesale doors: | |||||||||||
Versace | 630 | 788 | |||||||||
Jimmy Choo | 525 | 517 | |||||||||
Michael Kors | 2,819 | 2,840 | |||||||||
3,974 | 4,145 |
As of | As of | ||||||||||||||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
Versace | Jimmy Choo | Michael Kors | Versace | Jimmy Choo | Michael Kors | ||||||||||||||||||||||||||||||
Store count by region: | |||||||||||||||||||||||||||||||||||
The Americas | 44 | 43 | 308 | 41 | 45 | 328 | |||||||||||||||||||||||||||||
EMEA | 61 | 69 | 171 | 59 | 72 | 173 | |||||||||||||||||||||||||||||
Asia | 128 | 125 | 321 | 125 | 125 | 326 | |||||||||||||||||||||||||||||
233 | 237 | 800 | 225 | 242 | 827 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||
Total revenue | $ | 1,427 | $ | 1,512 | $ | 3,947 | $ | 4,284 | |||||||||||||||
Gross profit as a percent of total revenue | 65.0 | % | 66.5 | % | 65.2 | % | 66.7 | % | |||||||||||||||
Income from operations | $ | 122 | $ | 236 | $ | 302 | $ | 719 | |||||||||||||||
Income from operations as a percent of total revenue | 8.5 | % | 15.6 | % | 7.7 | % | 16.8 | % |
Three Months Ended | $ Change | % Change | % of Total Revenue for the Three Months Ended | ||||||||||||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||
Statements of Operations Data: | |||||||||||||||||||||||||||||||||||
Total revenue | $ | 1,427 | $ | 1,512 | $ | (85) | (5.6) | % | |||||||||||||||||||||||||||
Cost of goods sold | 499 | 507 | (8) | (1.6) | % | 35.0 | % | 33.5 | % | ||||||||||||||||||||||||||
Gross profit | 928 | 1,005 | (77) | (7.7) | % | 65.0 | % | 66.5 | % | ||||||||||||||||||||||||||
Selling, general and administrative expenses | 749 | 720 | 29 | 4.0 | % | 52.5 | % | 47.6 | % | ||||||||||||||||||||||||||
Depreciation and amortization | 46 | 43 | 3 | 7.0 | % | 3.2 | % | 2.8 | % | ||||||||||||||||||||||||||
Impairment of assets | 6 | 1 | 5 | NM | 0.4 | % | 0.1 | % | |||||||||||||||||||||||||||
Restructuring and other expense | 5 | 5 | — | — | % | 0.4 | % | 0.3 | % | ||||||||||||||||||||||||||
Total operating expenses | 806 | 769 | 37 | 4.8 | % | 56.5 | % | 50.9 | % | ||||||||||||||||||||||||||
Income from operations | 122 | 236 | (114) | (48.3) | % | 8.5 | % | 15.6 | % | ||||||||||||||||||||||||||
Other income, net | — | (1) | 1 | NM | — | % | (0.1) | % | |||||||||||||||||||||||||||
Interest expense, net | 1 | 12 | (11) | (91.7) | % | 0.1 | % | 0.8 | % | ||||||||||||||||||||||||||
Foreign currency gain | (2) | (3) | 1 | (33.3) | % | (0.1) | % | (0.2) | % | ||||||||||||||||||||||||||
Income before income taxes | 123 | 228 | (105) | (46.1) | % | 8.6 | % | 15.1 | % | ||||||||||||||||||||||||||
Provision for income taxes | 18 | 3 | 15 | NM | 1.3 | % | 0.2 | % | |||||||||||||||||||||||||||
Net income | 105 | 225 | (120) | (53.3) | % | ||||||||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | — | — | — | — | % | ||||||||||||||||||||||||||||||
Net income attributable to Capri | $ | 105 | $ | 225 | $ | (120) | (53.3) | % |
Three Months Ended | % Change | ||||||||||||||||||||||||||||
(in millions) | December 30, 2023 | December 31, 2022 | $ Change | As Reported | Constant Currency | ||||||||||||||||||||||||
Versace | $ | 227 | $ | 249 | $ | (22) | (8.8) | % | (10.8) | % | |||||||||||||||||||
Jimmy Choo | 166 | 168 | (2) | (1.2) | % | (3.0) | % | ||||||||||||||||||||||
Michael Kors | 1,034 | 1,095 | (61) | (5.6) | % | (6.2) | % | ||||||||||||||||||||||
Total revenue | $ | 1,427 | $ | 1,512 | $ | (85) | (5.6) | % | (6.6) | % |
Three Months Ended | |||||||||||||||||||||||
(in millions) | December 30, 2023 | December 31, 2022 | $ Change | % Change | |||||||||||||||||||
Income (loss) from operations: | |||||||||||||||||||||||
Versace | $ | (14) | $ | 24 | $ | (38) | (158.3) | % | |||||||||||||||
Jimmy Choo | 4 | 18 | (14) | (77.8) | % | ||||||||||||||||||
Michael Kors | 219 | 251 | (32) | (12.7) | % | ||||||||||||||||||
Total segment income from operations | $ | 209 | $ | 293 | $ | (84) | (28.7) | % | |||||||||||||||
Operating Margin: | |||||||||||||||||||||||
Versace | (6.2) | % | 9.6 | % | |||||||||||||||||||
Jimmy Choo | 2.4 | % | 10.7 | % | |||||||||||||||||||
Michael Kors | 21.2 | % | 22.9 | % |
Nine Months Ended | $ Change | % Change | % of Total Revenue for the Nine Months Ended | ||||||||||||||||||||||||||||||||
December 30, 2023 | December 31, 2022 | December 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||
Statements of Operations Data: | |||||||||||||||||||||||||||||||||||
Total revenue | $ | 3,947 | $ | 4,284 | $ | (337) | (7.9) | % | |||||||||||||||||||||||||||
Cost of goods sold | 1,375 | 1,427 | (52) | (3.6) | % | 34.8 | % | 33.3 | % | ||||||||||||||||||||||||||
Gross profit | 2,572 | 2,857 | (285) | (10.0) | % | 65.2 | % | 66.7 | % | ||||||||||||||||||||||||||
Selling, general and administrative expenses | 2,102 | 1,984 | 118 | 5.9 | % | 53.3 | % | 46.3 | % | ||||||||||||||||||||||||||
Depreciation and amortization | 139 | 131 | 8 | 6.1 | % | 3.5 | % | 3.1 | % | ||||||||||||||||||||||||||
Impairment of assets | 26 | 12 | 14 | NM | 0.7 | % | 0.3 | % | |||||||||||||||||||||||||||
Restructuring and other expense | 3 | 11 | (8) | (72.7) | % | 0.1 | % | 0.3 | % | ||||||||||||||||||||||||||
Total operating expenses | 2,270 | 2,138 | 132 | 6.2 | % | 57.5 | % | 49.9 | % | ||||||||||||||||||||||||||
Income from operations | 302 | 719 | (417) | (58.0) | % | 7.7 | % | 16.8 | % | ||||||||||||||||||||||||||
Other income, net | — | (2) | 2 | NM | — | % | — | % | |||||||||||||||||||||||||||
Interest expense, net | 12 | 13 | (1) | (7.7) | % | 0.3 | % | 0.3 | % | ||||||||||||||||||||||||||
Foreign currency loss (gain) | 16 | (10) | 26 | NM | 0.4 | % | (0.2) | % | |||||||||||||||||||||||||||
Income before income taxes | 274 | 718 | (444) | (61.8) | % | 6.9 | % | 16.8 | % | ||||||||||||||||||||||||||
Provision for income taxes | 31 | 66 | (35) | (53.0) | % | 0.8 | % | 1.5 | % | ||||||||||||||||||||||||||
Net income | 243 | 652 | (409) | (62.7) | % | ||||||||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interest | — | 2 | (2) | NM | |||||||||||||||||||||||||||||||
Net income attributable to Capri | $ | 243 | $ | 650 | $ | (407) | (62.6) | % |
Nine Months Ended | % Change | ||||||||||||||||||||||||||||
(in millions) | December 30, 2023 | December 31, 2022 | $ Change | As Reported | Constant Currency | ||||||||||||||||||||||||
Versace | $ | 766 | $ | 832 | $ | (66) | (7.9) | % | (9.5) | % | |||||||||||||||||||
Jimmy Choo | 481 | 482 | (1) | (0.2) | % | (1.2) | % | ||||||||||||||||||||||
Michael Kors | 2,700 | 2,970 | (270) | (9.1) | % | (9.5) | % | ||||||||||||||||||||||
Total revenue | $ | 3,947 | $ | 4,284 | $ | (337) | (7.9) | % | (8.6) | % |
Nine Months Ended | |||||||||||||||||||||||
(in millions) | December 30, 2023 | December 31, 2022 | $ Change | % Change | |||||||||||||||||||
Income from operations: | |||||||||||||||||||||||
Versace | $ | 24 | $ | 138 | $ | (114) | (82.6) | % | |||||||||||||||
Jimmy Choo | 11 | 45 | (34) | (75.6) | % | ||||||||||||||||||
Michael Kors | 518 | 721 | (203) | (28.2) | % | ||||||||||||||||||
Total segment income from operations | $ | 553 | $ | 904 | $ | (351) | (38.8) | % | |||||||||||||||
Operating Margin: | |||||||||||||||||||||||
Versace | 3.1 | % | 16.6 | % | |||||||||||||||||||
Jimmy Choo | 2.3 | % | 9.3 | % | |||||||||||||||||||
Michael Kors | 19.2 | % | 24.3 | % |
As of | |||||||||||
December 30, 2023 | April 1, 2023 | ||||||||||
Balance Sheet Data: | |||||||||||
Cash and cash equivalents | $ | 249 | $ | 249 | |||||||
Working capital | $ | 103 | $ | 420 | |||||||
Total assets | $ | 7,617 | $ | 7,295 | |||||||
Short-term debt | $ | 461 | $ | 5 | |||||||
Long-term debt | $ | 1,383 | $ | 1,822 |
Nine Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Cash Flows Provided By (Used In): | |||||||||||
Operating activities | $ | 265 | $ | 616 | |||||||
Investing activities | $ | (139) | $ | 241 | |||||||
Financing activities | $ | (116) | $ | (651) | |||||||
Effect of exchange rate changes | $ | (11) | $ | (94) | |||||||
Net (decrease) increase in cash and cash equivalents | $ | (1) | $ | 112 |
As of | |||||||||||
December 30, 2023 | April 1, 2023 | ||||||||||
Senior Unsecured Revolving Credit Facility: | |||||||||||
Revolving Credit Facility (excluding up to a $500 million accordion feature) (1) | |||||||||||
Total availability | $ | 1,500 | $ | 1,500 | |||||||
Borrowings outstanding (2) | 874 | 874 | |||||||||
Letter of credit outstanding | 2 | 3 | |||||||||
Remaining availability | $ | 624 | $ | 623 | |||||||
Versace Term Loan (450 Million Euro) | |||||||||||
Borrowings outstanding, net of debt issuance costs (3) | $ | 496 | $ | 487 | |||||||
Senior Notes due 2024 | |||||||||||
Borrowings outstanding, net of debt issuance costs and discount amortization (2) | $ | 449 | $ | 449 | |||||||
Other Borrowings (4) | $ | 25 | $ | 17 | |||||||
Hong Kong Uncommitted Credit Facility: | |||||||||||
Total availability (70 million Hong Kong Dollars) (5) | $ | 9 | $ | 9 | |||||||
Borrowings outstanding | — | — | |||||||||
Remaining availability (70 million Hong Kong Dollars) | $ | 9 | $ | 9 | |||||||
China Uncommitted Credit Facility: | |||||||||||
Total availability (75 million Chinese Yuan) (5) | $ | 11 | $ | 11 | |||||||
Borrowings outstanding | — | — | |||||||||
Total and remaining availability (75 million Chinese Yuan) | $ | 11 | $ | 11 | |||||||
Japan Credit Facility: | |||||||||||
Total availability (1.0 billion Japanese Yen) | $ | 7 | $ | 8 | |||||||
Borrowings outstanding | — | — | |||||||||
Remaining availability (1.0 billion Japanese Yen) | $ | 7 | $ | 8 | |||||||
Versace Uncommitted Credit Facilities: | |||||||||||
Total availability (40 million Euro) (5) | $ | 44 | $ | 43 | |||||||
Borrowings outstanding | — | — | |||||||||
Remaining availability (40 million Euro) | $ | 44 | $ | 43 | |||||||
Total borrowings outstanding (1) | $ | 1,844 | $ | 1,827 | |||||||
Total remaining availability | $ | 695 | $ | 694 |
Nine Months Ended | |||||||||||
December 30, 2023 | December 31, 2022 | ||||||||||
Cost of shares repurchased under share repurchase program | $ | 100 | $ | 950 | |||||||
Fair value of shares withheld to cover tax obligations for vested restricted share awards | 7 | 14 | |||||||||
Total cost of treasury shares repurchased | $ | 107 | $ | 964 | |||||||
Shares repurchased under share repurchase program | 2,637,102 | 18,921,459 | |||||||||
Shares withheld to cover tax withholding obligations | 185,133 | 300,722 | |||||||||
2,822,235 | 19,222,181 |
Total Number of Shares(1) | Average Price per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Remaining Dollar Value of Shares That May Be Purchased Under the Programs (in millions) | ||||||||||||||||||||
October 1 - October 28 | — | $ | — | — | $ | 300 | |||||||||||||||||
October 29 - November 25 | — | $ | — | — | $ | 300 | |||||||||||||||||
November 26 - December 30 | 13,021 | $ | 49.28 | — | $ | 300 | |||||||||||||||||
13,021 | — |
CAPRI HOLDINGS LIMITED | ||||||||
By: | /s/ John D. Idol | |||||||
Name: | John D. Idol | |||||||
Title: | Chairman & Chief Executive Officer | |||||||
By: | /s/ Thomas J. Edwards, Jr. | |||||||
Name: | Thomas J. Edwards, Jr. | |||||||
Title: | Executive Vice President, Chief Financial Officer and Chief Operating Officer |
Exhibit No. | Description | |||||||
101.1 | The following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended December 30, 2023 formatted in Inline eXtensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements. |
By: | /s/ John D. Idol | ||||
John D. Idol | |||||
Chief Executive Officer |
By: | /s/ Thomas J. Edwards, Jr. | ||||
Thomas J. Edwards, Jr. | |||||
Chief Financial Officer |
/s/ John D. Idol | ||||||||
John D. Idol | ||||||||
Chief Executive Officer | ||||||||
(Principal Executive Officer) |
/s/ Thomas J. Edwards, Jr. | ||||||||
Thomas J. Edwards, Jr. | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial Officer) |
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CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares |
Dec. 30, 2023 |
Apr. 01, 2023 |
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Shareholders’ equity | ||
Ordinary shares, shares authorized (in shares) | 650,000,000 | 650,000,000 |
Ordinary shares, shares issued (in shares) | 225,904,103 | 224,166,250 |
Ordinary shares, shares outstanding (in shares) | 116,262,663 | 117,347,045 |
Treasury shares (in shares) | 109,641,440 | 106,819,205 |
Business and Basis of Presentation |
9 Months Ended |
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Dec. 30, 2023 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation | Business and Basis of Presentation Capri Holdings Limited (“Capri”, and together with its subsidiaries, the “Company”) was incorporated in the British Virgin Islands on December 13, 2002. The Company is a holding company that owns brands that are leading designers, marketers, distributors and retailers of branded women’s and men’s accessories, footwear and ready-to-wear bearing the Versace, Jimmy Choo and Michael Kors tradenames and related trademarks and logos. The Company operates in three reportable segments: Versace, Jimmy Choo and Michael Kors. See Note 17 for additional information. The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The interim consolidated financial statements as of December 30, 2023 and for the three and nine months ended December 30, 2023 and December 31, 2022 are unaudited. The Company consolidates the results of its Versace business on a one-month lag, as consistent with prior periods. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation in conformity with U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended April 1, 2023, as filed with the Securities and Exchange Commission on May 31, 2023, in the Company’s Annual Report on Form 10-K. The results of operations for the interim periods should not be considered indicative of results to be expected for the full fiscal year. The Company utilizes a 52- to 53-week fiscal year and the term “Fiscal Year” or “Fiscal” refers to that 52- or 53-week period. The results for the three and nine months ended December 30, 2023 and December 31, 2022 are based on 13-week and 39-week periods, respectively. The Company’s Fiscal Year 2024 is a 52-week period ending March 30, 2024.
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Merger Agreement |
9 Months Ended |
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Dec. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Merger Agreement | Merger Agreement On August 10, 2023, Capri entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tapestry, Inc., a Maryland corporation (“Tapestry”), and Sunrise Merger Sub, Inc., a British Virgin Islands business company limited by shares and a direct wholly owned subsidiary of Tapestry (“Merger Sub”). The Merger Agreement provides that, among other things and on the terms and subject to the conditions set forth therein, Tapestry will acquire Capri in an all-cash transaction by means of a merger of Merger Sub with and into Capri (the “Merger”), with Capri surviving the Merger as a wholly owned subsidiary of Tapestry. For additional information related to the Merger Agreement, please refer to Capri’s Definitive Proxy Statement on Schedule 14A filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 20, 2023, as well as the supplemental disclosures contained in Capri’s Current Report on Form 8-K filed with the SEC on October 17, 2023.
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Summary of Significant Accounting Policies |
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Dec. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. The most significant assumptions and estimates involved in preparing the financial statements include allowances for customer deductions, sales returns, sales discounts, credit losses, estimates of inventory net realizable value, the valuation of share-based compensation, the valuation of deferred taxes, goodwill, intangible assets, operating lease right-of-use assets and property and equipment, along with the estimated useful lives assigned to these assets. Actual results could differ from those estimates. Seasonality The Company experiences certain effects of seasonality with respect to its business. The Company generally experiences greater sales during its third fiscal quarter, primarily driven by holiday season sales, and the lowest sales during its first fiscal quarter. Cash, Cash Equivalents and Restricted Cash All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. Included in the Company’s cash and cash equivalents as of December 30, 2023 and April 1, 2023 are credit card receivables of $33 million and $22 million, respectively, which generally settle within two to three business days. A reconciliation of cash, cash equivalents and restricted cash as of December 30, 2023 and April 1, 2023 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):
Inventories, net Inventories primarily consist of finished goods with the exception of raw materials and work in process inventory. The combined total of raw materials and work in process inventory, net, recorded on the Company’s consolidated balance sheets was $46 million and $47 million as of December 30, 2023 and April 1, 2023, respectively. Derivative Financial Instruments Forward Foreign Currency Exchange Contracts The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these contracts to hedge the Company’s cash flows as they relate to foreign currency transactions. Certain of these contracts are designated as hedges for accounting purposes, while others remain undesignated. All of the Company’s derivative instruments are recorded in the Company’s consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation. The Company designates certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges. Formal hedge documentation is prepared for all derivative instruments designated as hedges, including a description of the hedged item and the hedging instrument and the risk being hedged. The changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income until the hedged item affects earnings. When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income are recognized within cost of goods sold. The Company uses regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item. If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income. The Company classifies cash flows relating to its forward foreign currency exchange contracts for purchases of inventory consistently with the classification of the hedged item, within cash flows from operating activities. The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign transaction they are intended to hedge. Net Investment Hedges The Company also uses cross-currency swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between different currencies. The Company has elected the spot method of designating these contracts under Accounting Standards Update (“ASU”) 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”, and has designated these contracts as net investment hedges. The net gain or loss on the net investment hedge is reported within foreign currency translation adjustments (“CTA”), as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense, net, in the Company’s consolidated statements of operations and comprehensive income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated. Fair Value Hedges When a cross-currency swap is designated as a fair value hedge and qualifies as highly effective, the fair value hedge will be recorded at fair value each period on the Company’s consolidated balance sheets, with the difference resulting from the changes in the spot rate recognized in foreign currency (gain) loss on the Company’s consolidated statements of operations and comprehensive income, which will offset the related foreign currency impact of the underlying transaction being hedged. Leases The Company leases retail stores, office space and warehouse space under operating lease agreements that expire at various dates through October 2043. The Company’s leases generally have terms of up to 10 years, generally require fixed annual rent and may require the payment of additional rent if store sales exceed negotiated amounts. Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through December 2028. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores from previous restructuring activities. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. The Company determines the sublease term based on the date it provides possession to the subtenant through the expiration date of the sublease. The Company recognizes operating lease right-of-use assets and lease liabilities at lease commencement date, based on the present value of fixed lease payments over the expected lease term. The Company uses its incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable for the Company’s leases. The Company’s incremental borrowing rates are based on the term of the leases, the economic environment of the leases and reflect the expected interest rate it would incur to borrow on a secured basis. Certain leases include one or more renewal options. The exercise of lease renewal options is generally at the Company’s sole discretion and as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company generally does not include renewal options in the expected lease term and the associated lease payments are not included in the measurement of the operating lease right-of-use asset and lease liability. Certain leases also contain termination options with an associated penalty. Generally, the Company is reasonably certain not to exercise these options and as such, they are not included in the determination of the expected lease term. The Company recognizes operating lease expense on a straight-line basis over the lease term. Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for its short-term leases on a straight-line basis over the lease term. The Company’s leases generally provide for payments of non-lease components, such as common area maintenance, real estate taxes and other costs associated with the leased property. The Company accounts for lease and non-lease components of its real estate leases together as a single lease component and, as such, includes fixed payments of non-lease components in the measurement of the operating lease right-of-use assets and lease liabilities for its real estate leases. Variable lease payments, such as percentage rentals based on sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred as variable lease costs and are not recorded on the balance sheet. The Company’s lease agreements do not contain any material residual value guarantees, material restrictions or covenants. The following table presents the Company’s supplemental cash flow information related to leases (in millions):
During the three and nine months ended December 30, 2023, the Company recorded sublease income of $2 million and $6 million, respectively, within selling, general and administrative expenses. During the three and nine months ended December 31, 2022, the Company recorded sublease income of $2 million and $7 million, respectively, within selling, general and administrative expenses. Net Income per Share The Company’s basic net income per ordinary share is calculated by dividing net income by the weighted average number of ordinary shares outstanding during the period. Diluted net income per ordinary share reflects the potential dilution that would occur if share options or any other potentially dilutive instruments, including restricted shares and restricted share units (“RSUs”), were exercised or converted into ordinary shares. These potentially dilutive securities are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods. Performance-based RSUs are included as diluted shares if the related performance conditions are considered satisfied as of the end of the reporting period and to the extent they are dilutive under the treasury stock method. The components of the calculation of basic net income per ordinary share and diluted net income per ordinary share are as follows (in millions, except share and per share data):
(1)Basic and diluted net income per share are calculated using unrounded numbers. During the three and nine months ended December 30, 2023, share equivalents of 192,867 and 307,375 shares, respectively, have been excluded from the above calculations due to their anti-dilutive effect. Share equivalents of 187,547 and 546,607 shares have been excluded from the above calculations for the three and nine months ended December 31, 2022, respectively, due to their anti-dilutive effect. See Note 2 in the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2023 for a complete disclosure of the Company’s significant accounting policies. Recently Adopted Accounting Pronouncements Supplier Finance Programs In September 2022, the FASB issued ASU 2022-04, “Disclosure of Supplier Finance Program Obligations” which makes a number of changes. The amendments require a buyer in a supplier finance program to disclose sufficient information about the program to allow users of the financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude. The amendments in this update do not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs. The Company adopted the update in the first quarter of Fiscal 2024 on a retrospective basis, except for the requirement to disclose rollforward information, which will be effective for the Company in the first quarter of Fiscal 2025 on a prospective basis. See Note 10 for the Company’s disclosures relating to this update. Recently Issued Accounting Pronouncements The Company has considered all new accounting pronouncements and, other than the recent pronouncements discussed below, has concluded that there are no new pronouncements that may have a material impact on the Company’s results of operations, financial condition or cash flows based on current information. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ending 2025, and subsequent interim periods, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, to enhance transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures
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Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition The Company accounts for contracts with its customers when there is approval and commitment from both parties, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectibility of consideration is probable. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. The Company sells its products through three primary channels of distribution: retail, wholesale and licensing. Within the retail and wholesale channels, substantially all of the Company’s revenues consist of sales of products that represent a single performance obligation where control transfers at a point in time to the customer. For licensing arrangements, royalty and advertising revenue is recognized over time based on access provided to the Company’s trademarks. Retail The Company generates sales through directly operated stores and e-commerce sites throughout the Americas (United States, Canada and Latin America), certain parts of EMEA (Europe, Middle East and Africa) and certain parts of Asia (Asia and Oceania). Gift Cards. The Company sells gift cards that can be redeemed for merchandise, resulting in a contract liability upon issuance. Revenue is recognized when the gift card is redeemed or upon “breakage” for the estimated portion of gift cards that are not expected to be redeemed. “Breakage” revenue is calculated under the proportional redemption methodology, which considers the historical pattern of redemption in jurisdictions where the Company is not required to remit the value of the unredeemed gift cards as unclaimed property. The contract liability related to gift cards, net of estimated “breakage”, was $15 million and $14 million as of December 30, 2023 and April 1, 2023, respectively, is included within accrued expenses and other current liabilities in the Company’s consolidated balance sheet. Loyalty Program. The Company offers a loyalty program, which allows its Michael Kors North America customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at Michael Kors retail stores and e-commerce sites. The Company defers a portion of the initial sales transaction based on the estimated relative fair value of the benefits based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed. Wholesale The Company’s products are sold primarily to major department stores, specialty stores and travel retail shops throughout the Americas, EMEA and Asia. The Company also has arrangements where its products are sold to geographic licensees in certain parts of EMEA, Asia and South America. Licensing The Company provides its third-party licensees with the right to access its Versace, Jimmy Choo and Michael Kors trademarks under product and geographic licensing arrangements. Under geographic licensing arrangements, third party licensees receive the right to distribute and sell products bearing the Company’s trademarks in retail and/or wholesale channels within certain geographical areas, including Brazil, the Middle East, Eastern Europe, South Africa and certain parts of Asia. The Company recognizes royalty revenue and advertising contributions based on the percentage of sales made by the licensees. Generally, the Company’s guaranteed minimum royalty amounts due from licensees relate to contractual periods that do not exceed 12 months, however, certain guaranteed minimums for Versace are multi-year based. As of December 30, 2023, contractually guaranteed minimum fees from the Company’s license agreements expected to be recognized as revenue during future periods were as follows (in millions):
Sales Returns The refund liability recorded as of December 30, 2023 was $65 million, and the related asset for the right to recover returned product as of December 30, 2023 was $16 million. The refund liability recorded as of April 1, 2023 was $54 million, and the related asset for the right to recover returned product as of April 1, 2023 was $17 million. Contract Balances Total contract liabilities were $26 million and $36 million as of December 30, 2023 and April 1, 2023, respectively. For the three and nine months ended December 30, 2023, the Company recognized $21 million and $28 million, respectively, in revenue which related to contract liabilities that existed at April 1, 2023. For the three and nine months ended December 31, 2022, the Company recognized $3 million and $11 million, respectively, in revenue which related to contract liabilities that existed at April 2, 2022. There were no material contract assets recorded as of December 30, 2023 and April 1, 2023. There were no changes in historical variable consideration estimates that were materially different from actual results. Disaggregation of Revenue The following table presents the Company’s segment revenue disaggregated by geographic location (in millions):
See Note 3 in the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2023 for a complete disclosure of the Company’s revenue recognition policy.
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Receivables, net |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables, net | Receivables, net Receivables, net, consist of (in millions):
(1)As of December 30, 2023 and April 1, 2023, $97 million and $96 million, respectively, of trade receivables were insured. Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and credit losses. Discounts are based on open invoices where trade discounts have been extended to customers. Markdowns are based on wholesale customers’ sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in revenues. The Company’s allowance for credit losses is determined through analysis of periodic aging of receivables and assessments of collectibility based on an evaluation of historic and anticipated trends, the financial condition of the Company’s customers and the impact of general economic conditions. The past due status of a receivable is based on its contractual terms. Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered. Allowance for credit losses was $11 million and $8 million as of December 30, 2023 and April 1, 2023, respectively. The Company had credit losses of $1 million and $3 million for the three and nine months ended December 30, 2023, respectively. The Company had immaterial credit losses for the three months ended December 31, 2022 and $2 million for the nine months ended December 31, 2022.
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Property and Equipment, net |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, net | Property and Equipment, net Property and equipment, net, consists of (in millions): Depreciation and amortization of property and equipment for the three and nine months ended December 30, 2023 was $35 million and $106 million, respectively. Depreciation and amortization of property and equipment was $32 million and $97 million for the three and nine months ended December 31, 2022, respectively. The Company recorded $1 million in property and equipment impairment charges for the three months ended December 30, 2023 and $7 million in property and equipment impairment charges for the nine months ended December 30, 2023. The Company recorded no property and equipment impairment charges for the three months ended December 31, 2022 and $2 million in property and equipment impairment charges for the nine months ended December 31, 2022.
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Intangible Assets and Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill | Intangible Assets and Goodwill The following table details the carrying values of the Company’s intangible assets and goodwill (in millions):
(1)The change in the carrying value since April 1, 2023 reflects the impact of foreign currency translation. (2)Includes accumulated impairment of $273 million as of December 30, 2023 and April 1, 2023. The change in the carrying value since April 1, 2023 reflects the impact of foreign currency translation. (3)Includes accumulated impairment of $347 million related to the Jimmy Choo reporting units as of December 30, 2023 and April 1, 2023. The change in the carrying value since April 1, 2023 reflects the impact of foreign currency translation. Amortization expense for the Company’s definite-lived intangible assets for the three and nine months ended December 30, 2023 was $11 million and $33 million, respectively. Amortization expense for the Company’s definite-lived intangible asset for the three and nine months ended December 31, 2022 was $11 million and $34 million, respectively.
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Current Assets and Current Liabilities |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Assets and Current Liabilities | Current Assets and Current Liabilities Prepaid expenses and other current assets consist of the following (in millions):
Accrued expenses and other current liabilities consist of the following (in millions):
(1)The accrued rent balance relates to variable lease payments.
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Restructuring and Other Expense |
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Dec. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Expense (Income) | Restructuring and Other Expense During the three months ended December 30, 2023, the Company recorded costs of $5 million, primarily related to equity awards associated with the acquisition of Versace and severance expenses incurred during the third quarter. During the nine months ended December 30, 2023, the Company recorded costs of $3 million, primarily related to expenses related to equity awards associated with the acquisition of Versace and severance for certain employees, partially offset by a $10 million gain on the sale of a long-lived corporate asset. During the three and nine months ended December 31, 2022, the Company recorded expenses of $5 million and $11 million, respectively, primarily related to equity awards associated with the acquisition of Versace
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Debt Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations | Debt Obligations The following table presents the Company’s debt obligations (in millions):
(1)As of December 30, 2023, the Senior Notes, due in November 2024, are recorded within short-term debt on the Company’s consolidated balance sheets. Senior Revolving Credit Facility On July 1, 2022, the Company entered into a revolving credit facility (the “2022 Credit Facility”) with, among others, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent (the “Administrative Agent”), which refinanced its existing senior unsecured revolving credit facility. The Company, a U.S. subsidiary of the Company, a Canadian subsidiary of the Company, a Dutch subsidiary of the Company and a Swiss subsidiary of the Company are the borrowers under the 2022 Credit Facility, and the borrowers and certain subsidiaries of the Company provide unsecured guaranties of the 2022 Credit Facility. The 2022 Credit Facility replaced the third amended and restated senior unsecured credit facility, dated as of November 15, 2018 (the “2018 Credit Facility”). The 2022 Credit Facility provides for a $1.5 billion revolving credit facility (the “2022 Revolving Credit Facility”), which may be denominated in U.S. dollars and other currencies, including Euros, Canadian Dollars, Pounds Sterling, Japanese Yen and Swiss Francs. The 2022 Revolving Credit Facility also includes sub-facilities for the issuance of letters of credit of up to $125 million and swing line loans at the Administrative Agent’s discretion of up to $100 million. The Company has the ability to expand its borrowing availability under the 2022 Credit Facility in the form of increased revolving commitments or one or more tranches of term loans by up to an additional $500 million, subject to the agreement of the participating lenders and certain other customary conditions. See Note 11 to the Company’s Fiscal 2023 Annual Report on Form 10-K for information regarding the Company’s interest rates associated with borrowings under the 2022 Credit Facility. The 2022 Credit Facility provides for an annual administration fee and a commitment fee equal to 7.5 basis points to 17.5 basis points per annum, which was 15.0 basis points as of December 30, 2023. The fees are based on the Company’s public debt ratings and/or net leverage ratio, applied to the average daily unused amount of the 2022 Credit Facility. Loans under the 2022 Credit Facility may be prepaid and commitments may be terminated or reduced by the borrowers without premium or penalty other than customary “breakage” costs with respect to loans bearing interest based upon Adjusted Term SOFR, the Adjusted EURIBOR Rate, the Adjusted CDOR Rate and the Adjusted TIBOR Rate. The 2022 Credit Facility requires the Company to maintain a net leverage ratio as of the end of each fiscal quarter of no greater than 4.0 to 1.0. Such net leverage ratio is calculated as the ratio of the sum of total indebtedness as of the date of the measurement plus the capitalized amount of all operating lease obligations, minus unrestricted cash and cash equivalents not to exceed $200 million, to Consolidated EBITDAR for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined as consolidated net income plus provision for taxes based on income, profits or capital, net interest expense, depreciation and amortization expense, consolidated rent expense and other non-cash losses, charges and expenses, subject to certain additions and deductions. The 2022 Credit Facility also includes covenants that limit additional indebtedness, liens, acquisitions and other investments, restricted payments and affiliate transactions. The 2022 Credit Facility also contains events of default customary for financings of this type, including, but not limited to, payment defaults, material inaccuracy of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy or insolvency, certain events under the Employee Retirement Income Security Act, material judgments, actual or asserted failure of any guaranty supporting the 2022 Credit Facility to be in full force and effect, and changes of control. If such an event of default occurs and is continuing, the lenders under the 2022 Credit Facility would be entitled to take various actions, including, but not limited to, terminating the commitments and accelerating amounts outstanding under the 2022 Credit Facility. As of December 30, 2023 and April 1, 2023, the Company had $874 million of borrowings outstanding under the 2022 Revolving Credit Facility. In addition, stand-by letters of credit of $2 million and $3 million were outstanding as of December 30, 2023 and April 1, 2023, respectively. As of December 30, 2023 and April 1, 2023, the amount available for future borrowings under the 2022 Revolving Credit Facility was $624 million and $623 million, respectively. The Company had $5 million and $6 million of deferred financing fees related to Revolving Credit Facilities for December 30, 2023 and April 1, 2023, respectively, and are recorded within other assets in the Company’s consolidated balance sheets. As of December 30, 2023, and the date these financial statements were issued, the Company was in compliance with all covenants related to the 2022 Credit Facility. Versace Term Loan On December 5, 2022, Gianni Versace S.r.l., a wholly owned subsidiary of Capri Holdings Limited, entered into a credit facility with Intesa Sanpaolo S.p.A., Banco Nazionale del Lavoro S.p.A., and UniCredit S.p.A., as arrangers and lenders, and Intesa Sanpaolo S.p.A., as agent, which provides a senior unsecured term loan (the “Versace Term Loan”) in an aggregate principal amount of €450 million. The Versace Term Loan is not subject to amortization and matures on December 5, 2025. The Company provides an unsecured guaranty of the Versace Term Loan. The Versace Term Loan bears interest at a rate per annum equal to the greater of EURIBOR for the applicable interest period and zero, plus a margin of 1.35%. The Versace Term Loan may be prepaid without premium or penalty other than customary “breakage” costs. The Versace Term Loan requires the Company to maintain a net leverage ratio as of the end of each fiscal quarter of no greater than 4.0 to 1.0. Such net leverage ratio is calculated as the ratio of the sum of total indebtedness as of the date of the measurement plus the capitalized amount of all operating lease obligations, minus unrestricted cash and cash equivalents not to exceed $200 million, to Consolidated EBITDAR for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined as consolidated net income plus provision for taxes based on income, profits or capital, net interest expense, depreciation and amortization expense, consolidated rent expense and other non-cash losses, charges and expenses, subject to certain additions and deductions. The Versace Term Loan also includes covenants that limit additional financial indebtedness, liens, acquisitions, loans and guarantees, restricted payments and mergers of GIVI Holding S.r.l., Gianni Versace S.r.l. and their respective subsidiaries. The Versace Term Loan contains events of default customary for financings of this type, including, but not limited to payment defaults, material inaccuracy of representations and warranties, covenant defaults, cross-defaults to material financial indebtedness, certain events of bankruptcy or insolvency, illegality or repudiation of any loan document under the Versace Term Loan or any failure thereof to be in full force and effect, and changes of control. If such an event of default occurs and is continuing, the lenders under the Versace Term Loan would be entitled to take various actions, including, but not limited to, accelerating amounts outstanding under the Versace Term Loan. As of December 30, 2023 and April 1, 2023, the carrying value of the Versace Term Loan was $496 million and $487 million, respectively, net of $1 million of deferred financing fees for both December 30, 2023 and April 1, 2023, which were recorded within long-term debt in the Company’s consolidated balance sheets. As of December 30, 2023, and the date these financial statements were issued, the Company was in compliance with all covenants related to the Versace Term Loan. Senior Notes On October 20, 2017, Michael Kors (USA), Inc. (the “Issuer”), the Company’s wholly owned subsidiary, completed its offering of $450 million aggregate principal amount senior notes due November 1, 2024 (the “Senior Notes”), pursuant to an exemption from registration under the Securities Act of 1933, as amended. The Senior Notes were issued under an indenture dated October 20, 2017, among the Issuer, the Company, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (the “Indenture”). As of December 30, 2023, the Senior Notes bear interest at a rate of 4.250% per year, subject to adjustments from time to time if either Moody’s or S&P (or a substitute rating agency therefore) downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Senior Notes. Interest on the Senior Notes is payable semi-annually on May 1 and November 1 of each year, beginning on May 1, 2018. The Senior Notes are unsecured and are guaranteed by the Company and its existing and future subsidiaries that guarantee or are borrowers under the 2022 Credit Facility (subject to certain exceptions, including subsidiaries organized in China). The Senior Notes may be redeemed at the Company’s option at any time in whole or in part at a price equal to 100% of the principal amount, plus accrued and unpaid interest, plus a “make-whole” amount calculated at the applicable Treasury Rate plus 30 basis points. The Indenture contains covenants, including those that limit the Company’s ability to create certain liens and enter into certain sale and leaseback transactions. In the event of a “Change of Control Triggering Event,” as defined in the Indenture, the Issuer will be required to make an offer to repurchase the Senior Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of the Senior Notes being repurchased plus any unpaid interest. These covenants are subject to important limitations and exceptions, as per the Indenture. As of both December 30, 2023 and April 1, 2023, the carrying value of the Senior Notes was $449 million, net of issuance costs and unamortized discount of $1 million, which were recorded within short-term debt and long-term debt in the Company’s consolidated balance sheets, respectively. Versace Facilities During Fiscal 2022, the Company's subsidiary, Versace, entered into an agreement with Banco BPM Banking Group debt (“the Bank”) to sell certain tax receivables to the Bank in exchange for cash. The arrangement was determined to be a financing arrangement as the de-recognition criteria for the receivables was not met at the time of the cash receipt from the Bank. As of December 30, 2023 and April 1, 2023, the outstanding balance was $11 million, with $1 million and $10 million recorded within short-term debt and long-term debt in the Company’s consolidated balance sheets, respectively. Supplier Financing Program The Company offers a supplier financing program which enables the Company’s inventory suppliers, at their sole discretion, to sell their receivables (i.e., the Company’s payment obligations to suppliers) to a financial institution on a non-recourse basis in order to be paid earlier than current payment terms provide. The Company’s obligations, including the amount due and scheduled payment dates, which generally do not exceed 90 days, are not impacted by a suppliers’ decision to participate in this program. The Company does not reimburse suppliers for any costs they incur to participate in the program and their participation is voluntary. The amount outstanding under this program as of December 30, 2023 and April 1, 2023 was $11 million and $4 million, respectively, and is presented as short-term debt in the Company’s consolidated balance sheets. See Note 11 to the Company’s Fiscal 2023 Annual Report on Form 10-K for additional information regarding the Company’s credit facilities and debt obligations.
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Commitments and Contingencies |
9 Months Ended |
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Dec. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are involved in various routine legal proceedings incident to the ordinary course of our business. We believe that the outcome of all pending legal proceedings, in the aggregate, will not have a material adverse effect on our business, results of operations and financial condition. See Item 1 Legal Proceedings to the accompanying Part II Other Information for additional information on Merger-Related Litigation. Please refer to the Contractual Obligations and Commercial Commitments disclosure within the Liquidity and Capital Resources section of the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2023 for a detailed disclosure of other commitments and contractual obligations as of April 1, 2023.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Financial assets and liabilities are measured at fair value using the three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date. Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data. Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. At December 30, 2023 and April 1, 2023, the fair values of the Company’s derivative contracts were determined using broker quotations, which were calculations derived from observable market information: the applicable currency rates at the balance sheet date and those forward rates particular to the contract at inception. The Company makes no adjustments to these broker obtained quotes or prices, but assesses the credit risk of the counterparty and would adjust the provided valuations for counterparty credit risk when appropriate. The fair value of hedges is included in prepaid expenses and other current assets, other assets, accrued expenses and other current liabilities, and in other long-term liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities of the Company and based on the maturity date of each individual hedge contract to classify as either short-term or long-term assets or liabilities. See Note 13 for further detail. All contracts are measured and recorded at fair value on a recurring basis and are categorized in Level 2 of the fair value hierarchy, as shown in the following table (in millions):
The Company’s debt obligations are recorded in its consolidated balance sheets at carrying values, which may differ from the related fair values. The fair value of the Company’s debt is estimated using external pricing data, including any available quoted market prices and based on other debt instruments with similar characteristics. Borrowings under revolving credit facilities, if outstanding, are recorded at carrying value, which approximates fair value due to the frequent nature of such borrowings and repayments. See Note 10 for detailed information related to carrying values of the Company’s outstanding debt. The following table summarizes the carrying values and estimated fair values of the Company’s debt, based on Level 2 measurements (in millions):
The Company’s cash and cash equivalents, accounts receivable and accounts payable are recorded at carrying value, which approximates fair value. Non-Financial Assets and Liabilities The Company’s non-financial assets include goodwill, intangible assets, operating lease right-of-use assets and property and equipment. Such assets are reported at their carrying values and are not subject to recurring fair value measurements. The Company’s goodwill and its indefinite-lived intangible assets (Versace and Jimmy Choo brands) are assessed for impairment at least annually, while its other long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The Company determines the fair values of these assets based on Level 3 measurements using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations. The Company recorded $6 million and $26 million of impairment charges during the three and nine months ended December 30, 2023, respectively. The Company recorded $1 million and $12 million of impairment charges during the three and nine months ended December 31, 2022, respectively. The following table details the carrying values and fair values of the Company’s assets that have been impaired during the three and nine months ended December 30, 2023 and the three and nine months ended December 31, 2022 (in millions):
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments Forward Foreign Currency Exchange Contracts The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currencies for certain of its transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to certain forecasted inventory purchases by using forward foreign currency exchange contracts. The Company only enters into derivative instruments with highly credit-rated counterparties. The Company does not enter into derivative contracts for trading or speculative purposes. Net Investment Hedges During the first quarter of Fiscal 2024, the Company entered into multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $2.5 billion to hedge its net investment in Swiss Franc (“CHF”) denominated subsidiaries. During the third quarter of Fiscal 2024, the Company modified these fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $2.5 billion to utilize additional CHF capacity and further hedge its investment in CHF denominated subsidiaries. Under the terms of these contracts, the Company will exchange semi-annual fixed rate payments on United States Dollar notional amounts for fixed rate payments of 0.0%. The increase in interest received from the CHF notional amounts will be offset by interest expense related to the financing component of this modification. These contracts have maturity dates between September 2024 and June 2028 and are designated as net investment hedges. During the first quarter of Fiscal 2024, the Company entered into multiple float-to-float cross-currency swap agreements with aggregate notional amounts of $1.0 billion to hedge its net investment in Euro denominated subsidiaries. The Company will exchange Euro floating rate payments based on EURIBOR for the United States dollar floating rate amounts based on SOFR CME Term over the life of the agreement. The fixed rate component of semi-annual Euro payments range from 1.149% to 1.215%. These contracts have maturity dates between May 2028 and August 2030 and are designated as net investment hedges. During the first quarter of Fiscal 2024, the Company entered into multiple fixed-to-fixed cross-currency swap agreements with an aggregate notional amount of $350 million to hedge its net investment in Euro denominated subsidiaries. Under the terms of these contracts, the Company will exchange the semi-annual fixed rate payments on United States Dollar notional amounts for fixed rate payments of 0.0% in Euro. These contracts have maturity dates between January 2027 and April 2027 and have been designated as net investment hedges. During the first quarter of Fiscal 2024, the Company entered into a fixed-to-fixed cross-currency swap agreement with an aggregate notional amount of €150 million to hedge its net investment in British Pound (“GBP”) denominated subsidiaries (the “GBP/EUR Net Investment Hedges”). As of December 30, 2023, the Company had multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of €1.15 billion to hedge its net investment in GBP denominated subsidiaries. Under the terms of these contracts, the Company will exchange the semi-annual fixed rate payments on GBP notional amounts for fixed rate payments of 0.0% in Euro. These contracts have maturity dates between November 2024 and November 2027 and are designated as net investment hedges. As of December 30, 2023, the Company had Japanese Yen net investment hedges with aggregate notional amounts of $294 million. Under the terms of these contracts, the Company will exchange the semi-annual fixed rate payments on United States notional amounts for fixed rate payments of 0% to 2.665% in Japanese Yen. These contracts have maturity dates between May 2027 and February 2051 and are designated as net investment hedges. Certain of these contracts are supported by a credit support annex (“CSA”) which provides for collateral exchange with the earliest effective date being September 2027. If the outstanding position of a contract exceeds a certain threshold governed by the aforementioned CSA’s, either party is required to post cash collateral. When a cross-currency swap is used as a hedging instrument in a net investment hedge assessed under the spot method, the cross-currency basis spread is excluded from the assessment of hedge effectiveness and is recognized as a reduction in interest expense in the Company’s consolidated statements of operations and comprehensive income. Accordingly, the Company recorded interest income of $26 million and $66 million during the three and nine months ended December 30, 2023, respectively. Additionally, the Company recorded interest income of $4 million and $32 million during the three and nine months ended December 31, 2022, respectively. Fair Value Hedges The Company is exposed to transaction risk from foreign currency exchange rate fluctuations with respect to various cross-currency intercompany loans which will impact earnings on a consolidated basis. To manage the foreign currency exchange rate risk related to these balances, during the fourth quarter of Fiscal 2023, the Company entered into fair value cross-currency swap agreements to hedge its exposure in GBP denominated subsidiaries (the “GBP Fair Value Hedge”) on a Euro denominated intercompany loan. As of December 30, 2023, the total notional values of outstanding fair value cross-currency swaps related to these loans were €1 billion. Under the term of these contracts, the Company will exchange the semi-annual fixed rate payments on GBP notional amounts for fixed rate payments of 0% in Euro. These contracts have maturity dates between March 2025 and March 2026 and are designated as fair value hedges. When a cross-currency swap is designated as a fair value hedge and qualifies as highly effective, the fair value hedge will be recorded at fair value each period on the Company’s consolidated balance sheets, with the difference resulting from the changes in the spot rate recognized in foreign currency (gain) loss on the Company’s consolidated statements of operations and comprehensive income, which will offset the earnings impact of the underlying transaction being hedged. Accordingly, the Company recorded a foreign currency gain of $2 million and $23 million during the three and nine months ended December 30, 2023, respectively. The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the consolidated balance sheets as of December 30, 2023 and April 1, 2023 (in millions):
(1)As of December 30, 2023, the Company recorded $1 million within prepaid expenses and other current assets and $8 million within other assets in the Company’s consolidated balance sheets. (2)Recorded within other assets in the Company’s consolidated balance sheets. (3)As of December 30, 2023, the Company recorded $25 million within accrued expenses and current liabilities and $235 million within other long-term liabilities in the Company’s consolidated balance sheets. (4)Recorded within other long-term liabilities in the Company’s consolidated balance sheets. The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheets on a gross basis, as shown in the above table. However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to set-off amounts for similar transactions denominated in the same currencies and with the same banks, the resulting impact as of December 30, 2023 and April 1, 2023 would be as follows (in millions):
Currently, the Company’s master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. Changes in the fair value of the Company’s forward foreign currency exchange contracts that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income and are reclassified from accumulated other comprehensive income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of goods sold within the Company’s consolidated statements of operations and comprehensive income. The net gain or loss on net investment hedges are reported within CTA as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets. Upon discontinuation of the hedge, such amounts remain in CTA until the related net investment is sold or liquidated. The net gain or loss on cross-currency swap contracts designated as fair value hedges and associated with cross-currency intercompany loans are recognized within foreign currency (gain) loss on the Company’s consolidated statements of operations and comprehensive income generally in the period in which the related balances being hedged are revalued. The following table summarizes the pre-tax impact of the gains and losses on the Company’s designated forward foreign currency exchange contracts and net investment hedges (in millions):
The following tables summarize the pre-tax impact of the gains within the consolidated statements of operations and comprehensive income related to the designated forward foreign currency exchange contracts for the three and nine months ended December 30, 2023 and December 31, 2022 (in millions):
As of December 30, 2023, there were no forward foreign currency contracts outstanding. Undesignated Hedges During both the three and nine months ended December 30, 2023, there was no gain or loss recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income as there were no undesignated hedges outstanding. During the three months ended December 31, 2022, there was no gain recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income, while during the nine months ended December 31, 2022, a $2 million gain was recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income as a result of the changes in the fair value of undesignated forward foreign currency exchange contracts.
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Shareholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity Share Repurchase Program On June 1, 2022, the Company announced its Board of Directors authorized a share repurchase program (the “Fiscal 2023 Plan”) pursuant to which the Company was permitted, from time to time, to repurchase up to $1.0 billion of its outstanding ordinary shares within a period of two years from the effective date of the program. On November 9, 2022, the Company announced its Board of Directors approved a new share repurchase program (the “Existing Share Repurchase Plan”) to purchase up to $1.0 billion of its outstanding ordinary shares, providing additional capacity to return cash to shareholders over the longer term. This new two-year program replaced the Fiscal 2023 Plan. Share repurchases may be made in open market or privately negotiated transactions and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors; however, pursuant to the terms of the Merger Agreement, and subject to certain limited exceptions, the Company may not repurchase its ordinary shares other than the acceptance of Company ordinary shares as payment of the exercise price of Company options or for withholding taxes in respect of Company equity awards. Accordingly, the Company did not repurchase any of its ordinary shares since entering into the Merger Agreement pursuant to the Existing Share Repurchase Plan, and the Company does not expect to repurchase any of its ordinary shares in connection with the Existing Share Repurchase Plan prior to the Merger or earlier termination of the Merger Agreement. During the nine months ended December 30, 2023, the Company purchased 2,637,102 shares for a total cost of approximately $100 million, including commissions, through open market transactions under the Existing Share Repurchase Plan. As of December 30, 2023, the remaining availability under the Company’s Existing Share Repurchase Plan was $300 million. During the nine months ended December 31, 2022, the Company purchased 18,921,459 shares for a total cost of approximately $950 million including commissions, through open market transactions, with 15,479,200 shares purchased for a total cost of $750 million including commissions under the Fiscal 2023 Plan and 3,442,259 shares purchased for a total cost of $200 million under the Existing Share Repurchase Plan. The Company also has in place a “withhold to cover” repurchase program, which allows the Company to withhold ordinary shares from certain executive officers and directors to satisfy minimum tax withholding obligations relating to the vesting of their restricted share awards. During the nine month periods ended December 30, 2023 and December 31, 2022, the Company withheld 185,133 shares and 300,722 shares, respectively, with a fair value of $7 million and $14 million, respectively, in satisfaction of minimum tax withholding obligations relating to the vesting of restricted share awards. Accumulated Other Comprehensive Income The following table details changes in the components of accumulated other comprehensive income (“AOCI”), net of taxes, for the nine months ended December 30, 2023 and December 31, 2022, respectively (in millions):
(1)Foreign currency translation adjustments for the nine months ended December 30, 2023 primarily include a $159 million loss, net of taxes of $59 million, relating to the Company’s net investment and fair value hedges partially offset by a net $47 million translation gain. Foreign currency translation adjustments for the nine months ended December 31, 2022 primarily include a net $310 million translation loss partially offset by a $219 million gain, net of taxes of $113 million, relating to the Company’s net investment hedges. (2)Reclassified amounts primarily relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations and comprehensive income. All tax effects were not material for the periods presented.
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Share-Based Compensation |
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Share-Based Compensation | Share-Based Compensation The Company grants equity awards to certain employees and directors of the Company at the discretion of the Company’s Compensation and Talent Committee. The Company has two equity plans, one stock option plan adopted in Fiscal 2008 (as amended and restated, the “2008 Plan”), and an Omnibus Incentive Plan adopted in the third fiscal quarter of Fiscal 2012 and amended and restated with shareholder approval in May 2015, and again in June 2020 (the “Incentive Plan”). The 2008 Plan only provided for grants of share options and was authorized to issue up to 23,980,823 ordinary shares. As of December 30, 2023, there were no shares available to grant equity awards under the 2008 Plan. The Incentive Plan allows for grants of share options, restricted shares and RSUs, and other equity awards, and authorizes a total issuance of up to 22,471,000 ordinary shares after amendments in August 2022. At December 30, 2023, there were 4,236,865 ordinary shares available for future grants of equity awards under the Incentive Plan. Option grants issued from the 2008 Plan generally expire ten years from the date of the grant, and those issued under the Incentive Plan generally expire seven years from the date of the grant. The following table summarizes the Company’s share-based compensation activity during the nine months ended December 30, 2023:
The weighted average grant date fair value of service-based and performance-based RSUs granted during the nine months ended December 30, 2023 was $36.90 and $36.82, respectively. The weighted average grant date fair value of service-based and performance-based RSUs granted during the nine months ended December 31, 2022 was $48.39 and $47.41, respectively. Share-Based Compensation Expense The following table summarizes compensation expense attributable to share-based compensation for the three and nine months ended December 30, 2023 and December 31, 2022 (in millions):
Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on historical forfeiture rates. The estimated value of future forfeitures for equity awards as of December 30, 2023 is approximately $11 million. See Note 16 in the Company’s Fiscal 2023 Annual Report on Form 10-K for additional information relating to the Company’s share-based compensation awards.
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Income Taxes |
9 Months Ended |
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Dec. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended December 30, 2023 was 14.6%. This rate differs from the United Kingdom (“U.K.”) federal statutory rate of 25% primarily due to the favorable impact of global financing activities and the release of valuation allowance on Korean deferred tax assets, partially offset by unfavorable changes in uncertain tax positions during the three months ended December 30, 2023. The Company’s effective tax rate for the nine months ended December 30, 2023 was 11.3%. This rate differs from the United Kingdom (“U.K.”) federal statutory rate of 25% primarily due to the favorable impact of global financing activities and the release of valuation allowance on Korean deferred tax assets during the nine months ended December 30, 2023 The Company’s effective tax rate for the three and nine months ended December 31, 2022 was 1.3% and 9.2%, respectively. For both periods, such rates differed from the U.K. federal statutory rate of 19% primarily due to the impact of global financing activities and the release of a valuation allowance on UK deferred tax assets. The global financing activities are related to the Company’s 2014 move of its principal executive office from Hong Kong to the U.K. and decision to become a U.K. tax resident. In connection with this decision, the Company funded its international growth strategy through intercompany debt financing arrangements. These debt financing arrangements reside between certain of our U.S. and U.K. subsidiaries. Due to the difference in the statutory income tax rates between these jurisdictions, the Company realized lower effective tax rates for the three and nine months ended December 30, 2023.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company operates its business through three operating segments — Versace, Jimmy Choo and Michael Kors, which are based on its business activities and organization. The reportable segments are segments of the Company for which separate financial information is available and for which operating results are evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to allocate resources, as well as in assessing performance. The primary key performance indicators are revenue and operating income for each segment. The Company’s reportable segments represent components of the business that offer similar merchandise, customer experience and sales/marketing strategies. The Company’s three reportable segments are as follows: •Versace — segment includes revenue generated through the sale of Versace luxury ready-to-wear, accessories and footwear through directly operated Versace boutiques throughout the Americas, certain parts of EMEA and certain parts of Asia, as well as through Versace outlet stores and e-commerce sites. In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements that allow third parties to use the Versace trademarks in connection with retail and/or wholesale sales of Versace branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of jeans, fragrances, watches, jewelry, eyewear and home furnishings. •Jimmy Choo — segment includes revenue generated through the sale of Jimmy Choo luxury footwear, handbags and small leather goods and accessories through directly operated Jimmy Choo retail and outlet stores throughout the Americas, certain parts of EMEA and certain parts of Asia, through its e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo trademarks in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide. In addition, revenue is generated through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of fragrances and eyewear. •Michael Kors — segment includes revenue generated through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce sites, through which the Company sells Michael Kors products, as well as licensed products bearing the Michael Kors name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia. The Company also sells Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops, and to its geographic licensees. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear. In addition to these reportable segments, the Company has certain corporate costs that are not directly attributable to its brands and, therefore, are not allocated to its segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information system expenses, including enterprise resource planning system implementation costs and Capri transformation program costs. In addition, certain other costs are not allocated to segments, including Merger related costs, impairment charges, the impact of the war in Ukraine, restructuring and other expense and COVID-19 related expenses. The segment structure is consistent with how the Company’s CODM plans and allocates resources, manages the business and assesses performance. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance. The following table presents the key performance information of the Company’s reportable segments (in millions):
(1)Impairment of assets during the three and nine months ended December 30, 2023 primarily relate to operating lease right-of-use assets at certain Versace and Michael Kors store locations. Impairment of assets during the nine months ended December 31, 2022 primarily relate to operating lease right-of-use assets at certain Michael Kors store locations. Depreciation and amortization expense for each segment are as follows (in millions):
Total revenue (based on country of origin) by geographic location are as follows (in millions):
(1)Total revenue earned in the U.S. was $764 million and $1.959 billion, respectively, for the three and nine months ended December 30, 2023. Total revenue earned in the U.S. was $840 million and $2.312 billion, respectively, for the three and nine months ended December 31, 2022.
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Subsequent Events |
9 Months Ended |
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Dec. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On February 7, 2024, the Board of Directors of the Company approved a Global Optimization Plan in order to streamline the Company’s operating model, maximize efficiency and support long-term profitable growth. As part of the Global Optimization Plan, the Company anticipates global headcount reductions and the closure of approximately 100 of its retail stores over the next 18 months. The Company also expects to record estimated one-time restructuring charges of approximately $30 million to $40 million, of which approximately $30 million to $35 million will be cash charges related to organizational efficiency initiatives, which consist primarily of severance and employee-related costs. The Company anticipates that up to $5 million of the restructuring charges will be related to lease termination and other store closure costs. Approximately $25 million to $30 million in pre-tax restructuring charges will be recognized in the fourth quarter of Fiscal 2024. See Item 5 – Other Information for additional information.
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Pay vs Performance Disclosure - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
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Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ 105 | $ 225 | $ 243 | $ 650 |
Insider Trading Arrangements |
3 Months Ended |
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Dec. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Dec. 30, 2023 | |
Accounting Policies [Abstract] | |
Consolidation | The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The interim consolidated financial statements as of December 30, 2023 and for the three and nine months ended December 30, 2023 and December 31, 2022 are unaudited. The Company consolidates the results of its Versace business on a one-month lag, as consistent with prior periods. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation in conformity with U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended April 1, 2023, as filed with the Securities and Exchange Commission on May 31, 2023, in the Company’s Annual Report on Form 10-K. The results of operations for the interim periods should not be considered indicative of results to be expected for the full fiscal year.
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Fiscal Period | The Company utilizes a 52- to 53-week fiscal year and the term “Fiscal Year” or “Fiscal” refers to that 52- or 53-week period. The results for the three and nine months ended December 30, 2023 and December 31, 2022 are based on 13-week and 39-week periods, respectively. The Company’s Fiscal Year 2024 is a 52-week period ending March 30, 2024.
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Use of Estimates | The preparation of financial statements in accordance with U.S. GAAP requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. The most significant assumptions and estimates involved in preparing the financial statements include allowances for customer deductions, sales returns, sales discounts, credit losses, estimates of inventory net realizable value, the valuation of share-based compensation, the valuation of deferred taxes, goodwill, intangible assets, operating lease right-of-use assets and property and equipment, along with the estimated useful lives assigned to these assets. Actual results could differ from those estimates.
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Seasonality | The Company experiences certain effects of seasonality with respect to its business. |
Inventories, net | Inventories primarily consist of finished goods with the exception of raw materials and work in process inventory. |
Derivative Financial Instruments | Forward Foreign Currency Exchange Contracts The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these contracts to hedge the Company’s cash flows as they relate to foreign currency transactions. Certain of these contracts are designated as hedges for accounting purposes, while others remain undesignated. All of the Company’s derivative instruments are recorded in the Company’s consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation. The Company designates certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges. Formal hedge documentation is prepared for all derivative instruments designated as hedges, including a description of the hedged item and the hedging instrument and the risk being hedged. The changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income until the hedged item affects earnings. When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income are recognized within cost of goods sold. The Company uses regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item. If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income. The Company classifies cash flows relating to its forward foreign currency exchange contracts for purchases of inventory consistently with the classification of the hedged item, within cash flows from operating activities. The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign transaction they are intended to hedge. Net Investment Hedges The Company also uses cross-currency swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between different currencies. The Company has elected the spot method of designating these contracts under Accounting Standards Update (“ASU”) 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”, and has designated these contracts as net investment hedges. The net gain or loss on the net investment hedge is reported within foreign currency translation adjustments (“CTA”), as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense, net, in the Company’s consolidated statements of operations and comprehensive income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated. Fair Value Hedges When a cross-currency swap is designated as a fair value hedge and qualifies as highly effective, the fair value hedge will be recorded at fair value each period on the Company’s consolidated balance sheets, with the difference resulting from the changes in the spot rate recognized in foreign currency (gain) loss on the Company’s consolidated statements of operations and comprehensive income, which will offset the related foreign currency impact of the underlying transaction being hedged.
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Leases | The Company leases retail stores, office space and warehouse space under operating lease agreements that expire at various dates through October 2043. The Company’s leases generally have terms of up to 10 years, generally require fixed annual rent and may require the payment of additional rent if store sales exceed negotiated amounts. Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through December 2028. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores from previous restructuring activities. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. The Company determines the sublease term based on the date it provides possession to the subtenant through the expiration date of the sublease. The Company recognizes operating lease right-of-use assets and lease liabilities at lease commencement date, based on the present value of fixed lease payments over the expected lease term. The Company uses its incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable for the Company’s leases. The Company’s incremental borrowing rates are based on the term of the leases, the economic environment of the leases and reflect the expected interest rate it would incur to borrow on a secured basis. Certain leases include one or more renewal options. The exercise of lease renewal options is generally at the Company’s sole discretion and as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company generally does not include renewal options in the expected lease term and the associated lease payments are not included in the measurement of the operating lease right-of-use asset and lease liability. Certain leases also contain termination options with an associated penalty. Generally, the Company is reasonably certain not to exercise these options and as such, they are not included in the determination of the expected lease term. The Company recognizes operating lease expense on a straight-line basis over the lease term. Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for its short-term leases on a straight-line basis over the lease term. The Company’s leases generally provide for payments of non-lease components, such as common area maintenance, real estate taxes and other costs associated with the leased property. The Company accounts for lease and non-lease components of its real estate leases together as a single lease component and, as such, includes fixed payments of non-lease components in the measurement of the operating lease right-of-use assets and lease liabilities for its real estate leases. Variable lease payments, such as percentage rentals based on sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred as variable lease costs and are not recorded on the balance sheet. The Company’s lease agreements do not contain any material residual value guarantees, material restrictions or covenants.
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Net Income per Share | The Company’s basic net income per ordinary share is calculated by dividing net income by the weighted average number of ordinary shares outstanding during the period. Diluted net income per ordinary share reflects the potential dilution that would occur if share options or any other potentially dilutive instruments, including restricted shares and restricted share units (“RSUs”), were exercised or converted into ordinary shares. These potentially dilutive securities are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods. Performance-based RSUs are included as diluted shares if the related performance conditions are considered satisfied as of the end of the reporting period and to the extent they are dilutive under the treasury stock method.
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Recently Adopted and Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements Supplier Finance Programs In September 2022, the FASB issued ASU 2022-04, “Disclosure of Supplier Finance Program Obligations” which makes a number of changes. The amendments require a buyer in a supplier finance program to disclose sufficient information about the program to allow users of the financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude. The amendments in this update do not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs. The Company adopted the update in the first quarter of Fiscal 2024 on a retrospective basis, except for the requirement to disclose rollforward information, which will be effective for the Company in the first quarter of Fiscal 2025 on a prospective basis. See Note 10 for the Company’s disclosures relating to this update. Recently Issued Accounting Pronouncements The Company has considered all new accounting pronouncements and, other than the recent pronouncements discussed below, has concluded that there are no new pronouncements that may have a material impact on the Company’s results of operations, financial condition or cash flows based on current information. In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ending 2025, and subsequent interim periods, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, to enhance transparency and decision usefulness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted. We are evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures
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Revenue Recognition | The Company accounts for contracts with its customers when there is approval and commitment from both parties, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectibility of consideration is probable. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. The Company sells its products through three primary channels of distribution: retail, wholesale and licensing. Within the retail and wholesale channels, substantially all of the Company’s revenues consist of sales of products that represent a single performance obligation where control transfers at a point in time to the customer. For licensing arrangements, royalty and advertising revenue is recognized over time based on access provided to the Company’s trademarks. Retail The Company generates sales through directly operated stores and e-commerce sites throughout the Americas (United States, Canada and Latin America), certain parts of EMEA (Europe, Middle East and Africa) and certain parts of Asia (Asia and Oceania). Gift Cards. The Company sells gift cards that can be redeemed for merchandise, resulting in a contract liability upon issuance. Revenue is recognized when the gift card is redeemed or upon “breakage” for the estimated portion of gift cards that are not expected to be redeemed. “Breakage” revenue is calculated under the proportional redemption methodology, which considers the historical pattern of redemption in jurisdictions where the Company is not required to remit the value of the unredeemed gift cards as unclaimed property. The contract liability related to gift cards, net of estimated “breakage”, was $15 million and $14 million as of December 30, 2023 and April 1, 2023, respectively, is included within accrued expenses and other current liabilities in the Company’s consolidated balance sheet. Loyalty Program. The Company offers a loyalty program, which allows its Michael Kors North America customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at Michael Kors retail stores and e-commerce sites. The Company defers a portion of the initial sales transaction based on the estimated relative fair value of the benefits based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed. Wholesale The Company’s products are sold primarily to major department stores, specialty stores and travel retail shops throughout the Americas, EMEA and Asia. The Company also has arrangements where its products are sold to geographic licensees in certain parts of EMEA, Asia and South America. Licensing The Company provides its third-party licensees with the right to access its Versace, Jimmy Choo and Michael Kors trademarks under product and geographic licensing arrangements. Under geographic licensing arrangements, third party licensees receive the right to distribute and sell products bearing the Company’s trademarks in retail and/or wholesale channels within certain geographical areas, including Brazil, the Middle East, Eastern Europe, South Africa and certain parts of Asia. The Company recognizes royalty revenue and advertising contributions based on the percentage of sales made by the licensees. Generally, the Company’s guaranteed minimum royalty amounts due from licensees relate to contractual periods that do not exceed 12 months, however, certain guaranteed minimums for Versace are multi-year based.
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Receivables, net | Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and credit losses. Discounts are based on open invoices where trade discounts have been extended to customers. Markdowns are based on wholesale customers’ sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in revenues. The Company’s allowance for credit losses is determined through analysis of periodic aging of receivables and assessments of collectibility based on an evaluation of historic and anticipated trends, the financial condition of the Company’s customers and the impact of general economic conditions. The past due status of a receivable is based on its contractual terms. Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered.
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Fair Value Measurements | At December 30, 2023 and April 1, 2023, the fair values of the Company’s derivative contracts were determined using broker quotations, which were calculations derived from observable market information: the applicable currency rates at the balance sheet date and those forward rates particular to the contract at inception. The Company makes no adjustments to these broker obtained quotes or prices, but assesses the credit risk of the counterparty and would adjust the provided valuations for counterparty credit risk when appropriate. The fair value of hedges is included in prepaid expenses and other current assets, other assets, accrued expenses and other current liabilities, and in other long-term liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities of the Company and based on the maturity date of each individual hedge contract to classify as either short-term or long-term assets or liabilities.The Company’s debt obligations are recorded in its consolidated balance sheets at carrying values, which may differ from the related fair values. The fair value of the Company’s debt is estimated using external pricing data, including any available quoted market prices and based on other debt instruments with similar characteristics. Borrowings under revolving credit facilities, if outstanding, are recorded at carrying value, which approximates fair value due to the frequent nature of such borrowings and repayments. The Company’s cash and cash equivalents, accounts receivable and accounts payable are recorded at carrying value, which approximates fair value.
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Non-Financial Assets and Liabilities | The Company’s non-financial assets include goodwill, intangible assets, operating lease right-of-use assets and property and equipment. Such assets are reported at their carrying values and are not subject to recurring fair value measurements. The Company’s goodwill and its indefinite-lived intangible assets (Versace and Jimmy Choo brands) are assessed for impairment at least annually, while its other long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The Company determines the fair values of these assets based on Level 3 measurements using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.
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Summary of Significant Accounting Policies (Tables) |
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash and Cash Equivalents | A reconciliation of cash, cash equivalents and restricted cash as of December 30, 2023 and April 1, 2023 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):
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Schedule of Restrictions on Cash and Cash Equivalents | A reconciliation of cash, cash equivalents and restricted cash as of December 30, 2023 and April 1, 2023 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):
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Schedule of Net Lease Costs and Supplemental Cash Flow Information | The following table presents the Company’s supplemental cash flow information related to leases (in millions):
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Schedule of Components of Calculation of Basic Net Income Per Ordinary Share and Diluted Net Income Per Ordinary Share | The components of the calculation of basic net income per ordinary share and diluted net income per ordinary share are as follows (in millions, except share and per share data):
(1)Basic and diluted net income per share are calculated using unrounded numbers.
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Revenue Recognition (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Contractually Guaranteed Minimum Fees | As of December 30, 2023, contractually guaranteed minimum fees from the Company’s license agreements expected to be recognized as revenue during future periods were as follows (in millions):
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Schedule of Revenue Disaggregation | The following table presents the Company’s segment revenue disaggregated by geographic location (in millions):
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Receivables, net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Receivables | Receivables, net, consist of (in millions):
(1)As of December 30, 2023 and April 1, 2023, $97 million and $96 million, respectively, of trade receivables were insured.
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Property and Equipment, net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment, Net | Property and equipment, net, consists of (in millions):
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Intangible Assets and Goodwill (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Indefinite-Lived Intangible Assets | The following table details the carrying values of the Company’s intangible assets and goodwill (in millions):
(1)The change in the carrying value since April 1, 2023 reflects the impact of foreign currency translation. (2)Includes accumulated impairment of $273 million as of December 30, 2023 and April 1, 2023. The change in the carrying value since April 1, 2023 reflects the impact of foreign currency translation. (3)Includes accumulated impairment of $347 million related to the Jimmy Choo reporting units as of December 30, 2023 and April 1, 2023. The change in the carrying value since April 1, 2023 reflects the impact of foreign currency translation.
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Schedule of Finite-Lived Intangible Assets | The following table details the carrying values of the Company’s intangible assets and goodwill (in millions):
(1)The change in the carrying value since April 1, 2023 reflects the impact of foreign currency translation. (2)Includes accumulated impairment of $273 million as of December 30, 2023 and April 1, 2023. The change in the carrying value since April 1, 2023 reflects the impact of foreign currency translation. (3)Includes accumulated impairment of $347 million related to the Jimmy Choo reporting units as of December 30, 2023 and April 1, 2023. The change in the carrying value since April 1, 2023 reflects the impact of foreign currency translation.
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Current Assets and Current Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following (in millions):
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Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following (in millions):
(1)The accrued rent balance relates to variable lease payments.
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Debt Obligations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Obligations | The following table presents the Company’s debt obligations (in millions):
(1)As of December 30, 2023, the Senior Notes, due in November 2024, are recorded within short-term debt on the Company’s consolidated balance sheets.
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value and Carrying Value of Assets | All contracts are measured and recorded at fair value on a recurring basis and are categorized in Level 2 of the fair value hierarchy, as shown in the following table (in millions):
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Schedule of Fair Value Measurement of Long-term Debt | The following table summarizes the carrying values and estimated fair values of the Company’s debt, based on Level 2 measurements (in millions):
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Schedule of Long-lived Assets, Nonrecurring | The following table details the carrying values and fair values of the Company’s assets that have been impaired during the three and nine months ended December 30, 2023 and the three and nine months ended December 31, 2022 (in millions):
|
Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Derivative Contracts Recorded on Gross Basis in Consolidated Balance Sheets | The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the consolidated balance sheets as of December 30, 2023 and April 1, 2023 (in millions):
(1)As of December 30, 2023, the Company recorded $1 million within prepaid expenses and other current assets and $8 million within other assets in the Company’s consolidated balance sheets. (2)Recorded within other assets in the Company’s consolidated balance sheets. (3)As of December 30, 2023, the Company recorded $25 million within accrued expenses and current liabilities and $235 million within other long-term liabilities in the Company’s consolidated balance sheets. (4)Recorded within other long-term liabilities in the Company’s consolidated balance sheets.
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Schedule of Derivative Instruments on The Balance Sheets, Net Basis | However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to set-off amounts for similar transactions denominated in the same currencies and with the same banks, the resulting impact as of December 30, 2023 and April 1, 2023 would be as follows (in millions):
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Schedule of Reclassification out of Accumulated Other Comprehensive Income | The following table summarizes the pre-tax impact of the gains and losses on the Company’s designated forward foreign currency exchange contracts and net investment hedges (in millions):
The following tables summarize the pre-tax impact of the gains within the consolidated statements of operations and comprehensive income related to the designated forward foreign currency exchange contracts for the three and nine months ended December 30, 2023 and December 31, 2022 (in millions):
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Shareholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Components of Accumulated Other Comprehensive Income (Loss), Net of Taxes | The following table details changes in the components of accumulated other comprehensive income (“AOCI”), net of taxes, for the nine months ended December 30, 2023 and December 31, 2022, respectively (in millions):
(1)Foreign currency translation adjustments for the nine months ended December 30, 2023 primarily include a $159 million loss, net of taxes of $59 million, relating to the Company’s net investment and fair value hedges partially offset by a net $47 million translation gain. Foreign currency translation adjustments for the nine months ended December 31, 2022 primarily include a net $310 million translation loss partially offset by a $219 million gain, net of taxes of $113 million, relating to the Company’s net investment hedges. (2)Reclassified amounts primarily relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations and comprehensive income. All tax effects were not material for the periods presented.
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Share-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation Activity | The following table summarizes the Company’s share-based compensation activity during the nine months ended December 30, 2023:
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Schedule of Compensation Expense Attributable to Share-Based Compensation | The following table summarizes compensation expense attributable to share-based compensation for the three and nine months ended December 30, 2023 and December 31, 2022 (in millions):
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Key Performance Information of Reportable Segments | The following table presents the key performance information of the Company’s reportable segments (in millions):
(1)Impairment of assets during the three and nine months ended December 30, 2023 primarily relate to operating lease right-of-use assets at certain Versace and Michael Kors store locations. Impairment of assets during the nine months ended December 31, 2022 primarily relate to operating lease right-of-use assets at certain Michael Kors store locations.
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Schedule of Depreciation and Amortization Expense for Each Segment | Depreciation and amortization expense for each segment are as follows (in millions):
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Schedule of Total Revenue (as Recognized Based on Country of Origin) | Total revenue (based on country of origin) by geographic location are as follows (in millions):
(1)Total revenue earned in the U.S. was $764 million and $1.959 billion, respectively, for the three and nine months ended December 30, 2023. Total revenue earned in the U.S. was $840 million and $2.312 billion, respectively, for the three and nine months ended December 31, 2022.
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Business and Basis of Presentation (Details) |
9 Months Ended |
---|---|
Dec. 30, 2023
segment
| |
Accounting Policies [Abstract] | |
Number of reportable segments | 3 |
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
Apr. 01, 2023 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Credit card receivables | $ 33 | $ 33 | $ 22 | ||
Raw materials inventory and work in process inventory | 46 | 46 | $ 47 | ||
Sublease income | $ 2 | $ 2 | $ 6 | $ 7 | |
Anti-dilutive securities excluded from calculation of basic and diluted net income per ordinary share (in shares) | 192,867 | 187,547 | 307,375 | 546,607 | |
Maximum | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Term of lease | 10 years | 10 years |
Summary of Significant Accounting Policies - Schedule of Cash and Cash Equivalents and Restrictions on Cash and Cash Equivalents (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Apr. 01, 2023 |
Dec. 31, 2022 |
Apr. 02, 2022 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 249 | $ 249 | ||
Restricted cash included within prepaid expenses and other current assets | 6 | 7 | ||
Total cash, cash equivalents and restricted cash shown on the consolidated statements of cash flows | $ 255 | $ 256 | $ 284 | $ 172 |
Summary of Significant Accounting Policies - Schedule of Net Lease Costs and Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows used in operating leases | $ 386 | $ 373 |
Summary of Significant Accounting Policies - Schedule of Components of Calculation of Basic Net Income Per Ordinary Share and Diluted Net Income Per Ordinary Share (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Numerator: | ||||
Net income attributable to Capri | $ 105 | $ 225 | $ 243 | $ 650 |
Denominator: | ||||
Basic weighted average shares (in shares) | 116,795,382 | 128,849,793 | 116,967,118 | 135,600,276 |
Weighted average dilutive share equivalents: | ||||
Share options and restricted shares/units, and performance restricted share units (in shares) | 1,368,146 | 1,515,126 | 1,036,127 | 1,449,883 |
Diluted weighted average shares (in shares) | 118,163,528 | 130,364,919 | 118,003,245 | 137,050,159 |
Basic net income per share (in dollars per share) | $ 0.89 | $ 1.74 | $ 2.07 | $ 4.79 |
Diluted net income per share (in dollars per share) | $ 0.88 | $ 1.72 | $ 2.06 | $ 4.74 |
Revenue Recognition - Narrative (Details) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 30, 2023
USD ($)
distributionChannel
|
Dec. 31, 2022
USD ($)
|
Dec. 30, 2023
USD ($)
distributionChannel
|
Dec. 31, 2022
USD ($)
|
Apr. 01, 2023
USD ($)
|
|
Contract With Customer, Asset And Liability [Line Items] | |||||
Number of product distribution channels | distributionChannel | 3 | 3 | |||
Deferred loyalty program liabilities | $ 15,000,000 | $ 15,000,000 | $ 14,000,000 | ||
Return liabilities | 65,000,000 | 65,000,000 | 54,000,000 | ||
Right to recover returned product | 16,000,000 | 16,000,000 | 17,000,000 | ||
Contract liabilities | 26,000,000 | 26,000,000 | 36,000,000 | ||
Revenue recognized during period | 21,000,000 | $ 3,000,000 | 28,000,000 | $ 11,000,000 | |
Contract assets | 0 | 0 | 0 | ||
Gift Cards | |||||
Contract With Customer, Asset And Liability [Line Items] | |||||
Deferred loyalty program liabilities | $ 15,000,000 | $ 15,000,000 | $ 14,000,000 |
Receivables, net - Schedule of Receivables (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Apr. 01, 2023 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade receivables | $ 365 | $ 412 |
Receivables due from licensees | 25 | 14 |
Receivables, gross | 390 | 426 |
Less: allowances | (51) | (57) |
Total receivables, net | 339 | 369 |
Credit Risk Assumed by Insured | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade receivables | $ 97 | $ 96 |
Receivables, net - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
Apr. 01, 2023 |
|
Receivables [Abstract] | |||||
Allowance for doubtful accounts | $ 11 | $ 11 | $ 8 | ||
Credit losses | $ 1 | $ 0 | $ 3 | $ 2 |
Property and Equipment, net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Apr. 01, 2023 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 537 | $ 577 |
Computer equipment and software | 315 | 237 |
Furniture and fixtures | 191 | 216 |
Equipment | 126 | 106 |
Building | 50 | 48 |
In-store shops | 41 | 44 |
Land | 19 | 18 |
Total property and equipment, gross | 1,279 | 1,246 |
Less: accumulated depreciation and amortization | (782) | (784) |
Subtotal | 497 | 462 |
Construction-in-progress | 63 | 90 |
Total property and equipment, net | $ 560 | $ 552 |
Property and Equipment, net - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Property, Plant and Equipment [Line Items] | ||||
Depreciation and amortization of property and equipment | $ 35,000,000 | $ 32,000,000 | $ 106,000,000 | $ 97,000,000 |
Impairment of assets | 6,000,000 | 1,000,000 | 26,000,000 | 12,000,000 |
Property and Equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Impairment of assets | $ 1,000,000 | $ 0 | $ 7,000,000 | $ 2,000,000 |
Intangible Assets and Goodwill - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 11 | $ 11 | $ 33 | $ 34 |
Current Assets and Current Liabilities - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Apr. 01, 2023 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaid taxes | $ 197 | $ 105 |
Prepaid contracts | 24 | 22 |
Interest receivable related to hedges | 23 | 10 |
Other accounts receivables | 9 | 10 |
Prepaid insurance | 4 | 2 |
Other | 53 | 46 |
Total prepaid expenses and other current assets | $ 310 | $ 195 |
Current Assets and Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Apr. 01, 2023 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Return liabilities | $ 65 | $ 54 |
Other taxes payable | 52 | 32 |
Accrued advertising and marketing | 42 | 26 |
Accrued capital expenditures | 25 | 33 |
Accrued rent | 22 | 18 |
Professional services | 20 | 14 |
Accrued interest | 18 | 16 |
Gift cards and retail store credits | 15 | 14 |
Accrued litigation | 11 | 12 |
Accrued retail store expense | 11 | 9 |
Accrued purchases and samples | 9 | 8 |
Advance royalties | 5 | 18 |
Other | 102 | 60 |
Total accrued expenses and other current liabilities | $ 397 | $ 314 |
Restructuring and Other Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Restructuring and Related Activities [Abstract] | ||||
Restructuring and other expense | $ 5 | $ 5 | $ 3 | $ 11 |
Gain on sale of long-lived corporate asset | $ 10 |
Debt Obligations - Schedule of Debt Obligations (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Apr. 01, 2023 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 1,846 | $ 1,829 |
Less: Unamortized debt issuance costs | 2 | 2 |
Total carrying value of debt | 1,844 | 1,827 |
Less: Short-term debt | 461 | 5 |
Total long-term debt | 1,383 | 1,822 |
Line of Credit | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Less: Unamortized debt issuance costs | 5 | 6 |
Line of Credit | Revolving Credit Facility | 2022 Credit Facility | ||
Debt Instrument [Line Items] | ||
Total debt | 874 | 874 |
Line of Credit | Term Loan | Versace Term Loan | ||
Debt Instrument [Line Items] | ||
Total debt | 497 | 488 |
Less: Unamortized debt issuance costs | 1 | 1 |
Total carrying value of debt | 496 | 487 |
Senior Notes due 2024 | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Total debt | 450 | 450 |
Other | ||
Debt Instrument [Line Items] | ||
Total debt | $ 25 | $ 17 |
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Other long-lived asset impairment charges | $ 6 | $ 1 | $ 26 | $ 12 |
Significant unobservable inputs (Level 3) | Nonrecurring | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Other long-lived asset impairment charges | $ 6 | $ 1 | $ 26 | $ 12 |
Derivative Financial Instruments - Schedule of Derivative Instruments on The Balance Sheets, Net Basis (Details) - USD ($) $ in Millions |
Dec. 30, 2023 |
Apr. 01, 2023 |
---|---|---|
Net investment hedges | Net Investment Hedges | ||
Derivative [Line Items] | ||
Assets subject to master netting arrangements | $ 9 | $ 1 |
Liabilities subject to master netting arrangements | 260 | 36 |
Derivative assets, net | 0 | 1 |
Derivative liabilities, net | 251 | 36 |
Fair value hedges | Fair Value Hedges | ||
Derivative [Line Items] | ||
Assets subject to master netting arrangements | 9 | 0 |
Liabilities subject to master netting arrangements | 0 | 3 |
Derivative assets, net | 9 | 0 |
Derivative liabilities, net | $ 0 | $ 3 |
Derivative Financial Instruments - Schedule of Pre-tax Impact of Gains (Losses) on Derivative (Details) - Designated as Hedging Instrument - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Designated forward foreign currency exchange contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Pre-Tax (Losses) Gains Recognized in OCI | $ 0 | $ (3) | $ 0 | $ 8 |
Designated net investment hedges | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Pre-Tax (Losses) Gains Recognized in OCI | (238) | (33) | (213) | 332 |
Designated fair value hedge | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Pre-Tax (Losses) Gains Recognized in OCI | $ 4 | $ 0 | $ (5) | $ 0 |
Derivative Financial Instruments - Schedule of Pretax Impact of Gain Reclassified from AOCI (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Forward Currency Exchange Contracts | Designated as Hedging Instrument | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Pre-Tax Gain Reclassified from Accumulated OCI | $ 0 | $ 3 | $ 4 | $ 10 |
Share-Based Compensation - Schedule of Share-based Compensation Activity (Details) |
9 Months Ended |
---|---|
Dec. 30, 2023
shares
| |
Options | |
Options | |
Outstanding at beginning of period (in shares) | 229,675 |
Granted (in shares) | 0 |
Exercised/Vested (in shares) | (14,503) |
Canceled/Forfeited (in shares) | (23,205) |
Outstanding at end of period (in shares) | 191,967 |
Service-Based RSUs | |
RSUs | |
Unvested at beginning of period (in shares) | 3,181,926 |
Granted (in shares) | 1,941,815 |
Exercised/Vested (in shares) | (1,805,667) |
Canceled/Forfeited (in shares) | (189,248) |
Unvested at end of period (in shares) | 3,128,826 |
Performance-Based RSUs | |
RSUs | |
Unvested at beginning of period (in shares) | 165,239 |
Granted (in shares) | 203,693 |
Exercised/Vested (in shares) | 0 |
Canceled/Forfeited (in shares) | 0 |
Unvested at end of period (in shares) | 368,932 |
Share-Based Compensation - Schedule of Compensation Expense Attributable to Share-Based Compensation (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Share-Based Payment Arrangement [Abstract] | ||||
Share-based compensation expense | $ 18 | $ 16 | $ 65 | $ 60 |
Tax benefit related to share-based compensation expense | $ 2 | $ 2 | $ 9 | $ 9 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 14.60% | 1.30% | 11.30% | 9.20% |
Segment Information - Narrative (Details) |
9 Months Ended |
---|---|
Dec. 30, 2023
segment
retailStore
| |
Segment Reporting Information [Line Items] | |
Number of operating segments | 3 |
Number of reportable segments | 3 |
Michael Kors | |
Segment Reporting Information [Line Items] | |
Number of retail store formats | retailStore | 4 |
Segment Information - Schedule of Depreciation and Amortization Expense for Each Segment (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Segment Reporting Information [Line Items] | ||||
Total depreciation and amortization | $ 46 | $ 43 | $ 139 | $ 131 |
Operating Segments | Versace | ||||
Segment Reporting Information [Line Items] | ||||
Total depreciation and amortization | 14 | 12 | 40 | 36 |
Operating Segments | Jimmy Choo | ||||
Segment Reporting Information [Line Items] | ||||
Total depreciation and amortization | 7 | 7 | 22 | 21 |
Operating Segments | Michael Kors | ||||
Segment Reporting Information [Line Items] | ||||
Total depreciation and amortization | 20 | 22 | 61 | 70 |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Total depreciation and amortization | $ 5 | $ 2 | $ 16 | $ 4 |
Segment Information - Schedule of Total Revenue (as Recognized Based on Country of Origin) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Dec. 30, 2023 |
Dec. 31, 2022 |
Dec. 30, 2023 |
Dec. 31, 2022 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | $ 1,427 | $ 1,512 | $ 3,947 | $ 4,284 |
The Americas (United States, Canada and Latin America) | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 843 | 916 | 2,165 | 2,516 |
U.S. | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 764 | 840 | 1,959 | 2,312 |
EMEA | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 376 | 395 | 1,149 | 1,159 |
Asia | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | $ 208 | $ 201 | $ 633 | $ 609 |
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