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Revenue Recognition
 6 Months Ended
Sep. 26, 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 trademarks.
Retail
The Company generates sales through directly operated stores and e-commerce sites throughout the Americas (U.S., Canada and Latin America), EMEA (Europe, Middle East and Africa) and certain parts of Asia, including Australia.
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 September 26, 2020 and March 28, 2020, 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 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 September 26, 2020 and March 28, 2020, is recorded as a reduction to revenue in the consolidated statements of operations and comprehensive income (loss) 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, certain guaranteed minimums for Versace are multi-year based. As of September 26, 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$12 
Fiscal 202226 
Fiscal 202323 
Fiscal 202420 
Fiscal 202517 
Fiscal 2026 and thereafter81 
 Total
$179 
Sales Returns
The refund liability recorded as of September 26, 2020 and March 28, 2020 was $40 million and $37 million, respectively, and the related asset for the right to recover returned product as of September 26, 2020 and March 28, 2020 was $12 million and $14 million, respectively.
Contract Balances
Total contract liabilities were $14 million and $22 million as of September 26, 2020 and March 28, 2020, respectively. For the three and six months ended September 26, 2020, the Company recognized $2 million and $5 million, respectively, in revenue which related to contract liabilities that existed at March 28, 2020. For the three and six months ended September 28, 2019, the Company recognized $3 million and $17 million, respectively, in revenue which related to contract liabilities that existed at March 30, 2019. There were no material contract assets recorded as of September 26, 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 revenue disaggregated by geographic location (in millions):
 Three Months EndedSix Months Ended
 September 26,
2020		September 28,
2019		September 26,
2020		September 28,
2019
Versace revenue - the Americas$60 $48 $75 $92 
Versace revenue - EMEA80 121 107 213 
Versace revenue - Asia55 59 106 130 
 Total Versace
195 228 288 435 
Jimmy Choo revenue - the Americas33 21 39 51 
Jimmy Choo revenue - EMEA46 64 62 143 
Jimmy Choo revenue - Asia43 40 72 89 
Total Jimmy Choo122 125 173 283 
Michael Kors revenue - the Americas494 733 650 1,388 
Michael Kors revenue - EMEA185 224 264 413 
Michael Kors revenue - Asia114 132 186 269 
 Total Michael Kors
793 1,089 1,100 2,070 
Total revenue - the Americas587 802 764 1,531 
Total revenue - EMEA311 409 433 769 
Total revenue - Asia212 231 364 488 
Total revenue$1,110 $1,442 $1,561 $2,788 
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.