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Revenue Recognition
 3 Months Ended
Jun. 27, 2020
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 collectability 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 brands.
The Company has chosen to utilize the exemption allowing it not to disclose the amount of the transaction price allocated to the remaining performance obligations that have an expected duration of twelve months or less.
Retail
The Company generates sales through directly operated stores and e-commerce throughout the Americas (U.S., Canada and Latin America), EMEA (Europe, Middle East and Africa) and certain parts of Asia.
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 patterns 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,” of $11 million as of both June 27, 2020 and March 28, 2020, is included in 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 U.S. 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. The contract liability, net of an estimated “breakage,” of $2 million as of both June 27, 2020 and March 28, 2020, is recorded as a reduction to revenue in the consolidated statements of operations and comprehensive (loss) income and within accrued expenses and other current liabilities in the Company’s consolidated balance sheet and is expected to be recognized within the next 12 months.
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, certain parts of Asia and Australia.
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, some of our guaranteed minimums for Versace are multi-year based. As of June 27, 2020, contractually guaranteed minimum fees from our license agreements expected to be recognized as revenue during future periods were as follows (in millions):
Contractually Guaranteed Minimum Fees
Remainder of Fiscal 2021$19  
Fiscal 202227  
Fiscal 202323  
Fiscal 202420  
Fiscal 202517  
Fiscal 2026 and thereafter82  
 Total
$188  
Sales Returns
The refund liability recorded as of June 27, 2020 and March 28, 2020 was $35 million and $37 million, respectively, and the related asset for the right to recover returned product as of June 27, 2020 and March 28, 2020 was $10 million and $14 million, respectively.
Contract Balances
Total contract liabilities were $21 million and $22 million as of June 27, 2020 and March 28, 2020, respectively. For the three months ended June 27, 2020, the Company recognized $3 million in revenue which related to contract liabilities that existed at March 28, 2020. For the three months ended June 29, 2019, the Company recognized $14 million in revenue which related to contract liabilities that existed at March 30, 2019. There were no contract assets recorded as of June 27, 2020 and March 28, 2020.
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 revenues disaggregated by geographic location (in millions):
 Three Months Ended
 June 27,
2020		June 29,
2019
Versace revenue - the Americas$15  $44  
Versace revenue - EMEA27  92  
Versace revenue - Asia51  71  
 Total Versace
93  207  
Jimmy Choo revenue - the Americas6  30  
Jimmy Choo revenue - EMEA16  79  
Jimmy Choo revenue - Asia29  49  
Total Jimmy Choo51  158  
Michael Kors revenue - the Americas156  655  
Michael Kors revenue - EMEA79  189  
Michael Kors revenue - Asia72  137  
 Total Michael Kors
307  981  
Total revenue - the Americas177  729  
Total revenue - EMEA122  360  
Total revenue - Asia152  257  
Total revenue$451  $1,346  
See Note 3 in the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2020 for a complete disclosure of the Company’s revenue recognition policy.