cpri-20220809

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 9, 2022

(Exact name of Registrant as Specified in its Charter)

(Commission File Number)


British Virgin Islands						N/A
(State or other jurisdiction of incorporation)						(I.R.S. Employer Identification No.)

London, United Kingdom

(Address of Principal Executive Offices)

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Ordinary Shares, no par value	CPRI	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).


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.			☐


ITEM 2.02			RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On August 9, 2022, Capri Holdings Limited issued a press release containing its unaudited financial results for its first fiscal quarter ended July 2, 2022. A copy of the press release is attached hereto as Exhibit 99.1.


ITEM 9.01			FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.


Exhibit No.
99.1						Press Released issued by Capri Holdings Limited, dated August 9, 2022
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

Exhibit 99.1 is furnished to comply with Item 2.02 and Item 9.01 of Form 8-K. Exhibit 99.1 is not to be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall Exhibit 99.1 be deemed incorporated by reference in any filing under the Securities Act of 1933 (except as shall be expressly set forth by specific reference in such filing).

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		CAPRI HOLDINGS LIMITED
Date: August 9, 2022
	By:	/s/ Thomas J. Edwards, Jr.
	Name:	Thomas J. Edwards, Jr.
	Title:	Executive Vice President, Chief Financial Officer and Chief Operating Officer

Capri Holdings Limited Announces First Quarter Fiscal 2023 Results

Achieved Record First Quarter Revenue and Adjusted Earnings Per Share

London — August 9, 2022 — Capri Holdings Limited (NYSE:CPRI), a global fashion luxury group, today announced its financial results for the first quarter of Fiscal 2023 ended July 2, 2022.

First Quarter Fiscal 2023 Highlights

•Revenue increased 8.5% on a reported basis and 15.2% in constant currency, with better than anticipated results across all three luxury houses

•Adjusted operating margin of 18.5%

•Adjusted earnings per share of $1.50

John D. Idol, the Company's Chairman and Chief Executive Officer, said, "We are pleased with our first quarter performance with revenue, gross margin, operating margin and earnings per share all exceeding our expectations. Better than anticipated results were driven by strong momentum across all three luxury houses reflecting the power of our brands as they continue to deepen consumer desire and engagement."

Mr. Idol continued, "Looking forward, we remain optimistic about the long-term growth potential for Versace, Jimmy Choo and Michael Kors. With our portfolio of iconic, founder-led fashion luxury brands, Capri Holdings is positioned to deliver multiple years of revenue and earnings growth."

First Quarter Fiscal 2023 Results

Financial Results and non-GAAP Reconciliation

The Company’s results are reported in this press release in accordance with accounting principles generally accepted in the United States ("GAAP") and on an adjusted, non-GAAP basis. A reconciliation of GAAP to non-GAAP financial information is provided at the end of this press release. Due to the current and ongoing impact of the COVID-19 pandemic, the Company will not be providing comparable store sales results. The Company believes the most comprehensive measure of performance in this environment is total revenues compared to the same period in the prior year.

Overview of Capri Holdings First Quarter Fiscal 2023 Results:

•Total revenue of $1.36 billion increased 8.5% compared to last year. On a constant currency basis, total revenue increased 15.2%.

•Gross profit was $901 million and gross margin was 66.3%, compared to $856 million and 68.3% in the prior year. Adjusted gross profit was $900 million and adjusted gross margin was 66.2%, compared to $853 million and 68.1% in the prior year.

•Income from operations was $231 million and operating margin was 17.0%, compared to $258 million and 20.6% in the prior year. Adjusted income from operations was $251 million and operating margin was 18.5%, compared to $261 million and 20.8% in the prior year.

•Net income was $201 million, or $1.40 per diluted share, compared to $219 million, or $1.41 per diluted share, in the prior year. Adjusted net income was $215 million, or $1.50 per diluted share, compared to $221 million or, $1.42 per diluted share, in the prior year.

•Net inventory on July 2, 2022 was $1.265 billion, a 66% increase compared to the prior year. Relative to pre-COVID levels, first quarter inventory increased 25%. Higher inventory was planned reflecting the Company's new programs to receive seasonal merchandise earlier as well as hold more core inventory.

Versace First Quarter Fiscal 2023 Results:

•Versace revenue of $275 million increased 14.6% compared to the prior year. On a constant currency basis, total revenue increased 29.6%.

•Versace operating income was $52 million and operating margin was 18.9%, compared to $48 million and 20.0% in the prior year.

Jimmy Choo First Quarter Fiscal 2023 Results:

•Jimmy Choo revenue of $172 million increased 21.1% compared to the prior year. On a constant currency basis, total revenue increased 30.3%.

•Jimmy Choo operating income was $19 million and operating margin was 11.0%, compared to $11 million and 7.7% in the prior year.

Michael Kors First Quarter Fiscal 2023 Results:

•Michael Kors revenue of $913 million increased 4.8% compared to the prior year. On a constant currency basis, total revenue increased 8.7%.

•Michael Kors operating income was $222 million and operating margin was 24.3%, compared to $240 million and 27.6% in the prior year.

Share Repurchase Program

During the first quarter, the Company repurchased approximately 6.1 million ordinary shares for approximately $300 million in open market transactions. As of July 2, 2022, the remaining availability under the Company's share repurchase authorization was $700 million.

The following guidance is provided on an adjusted, non-GAAP basis. Due to the ongoing dynamic nature of the COVID-19 pandemic, financial results could differ materially from the current outlook due to a number of external events which are not reflected in our guidance, including any significant additional store closures or new government restrictions that could further impact traffic and sales trends as well as any greater supply chain disruptions that could further extend inventory delays or increase transportation expenses.

Fiscal Year 2023 Outlook

For Capri Holdings, the Company expects the following:

•Total revenue of approximately $5.85 billion

•Gross margin approximately flat to fiscal 2022

•Operating margin of approximately 18%

•Net interest income of approximately $10 million

•Effective tax rate of approximately 10%

•Weighted average diluted shares outstanding of approximately 140 million

•Diluted earnings per share of approximately $6.85

•Ending inventory to be below prior year

For Versace, the Company expects the following:

•Total revenue of approximately $1.175 billion

•Operating margin of approximately 16%

For Jimmy Choo, the Company expects the following:

•Total revenue of approximately $650 million

•Operating margin of approximately 5%

For Michael Kors, the Company expects the following:

•Total revenue of approximately $4.025 billion

•Operating margin of approximately 24%

Second Quarter Fiscal 2023 Outlook

For Capri Holdings, the Company expects the following:

•Total revenue of approximately $1.4 billion

•Operating margin of approximately 17%

•Net interest income of approximately $3 million

•Effective tax rate of approximately 11%

•Weighted average diluted shares outstanding of approximately 139 million

•Diluted earnings per share of approximately $1.55

For Versace, the Company expects the following:

•Total revenue of approximately $300 million

•Operating margin in the mid teens

For Jimmy Choo, the Company expects the following:

•Total revenue of approximately $140 million

•Operating margin slightly positive

For Michael Kors, the Company expects the following:

•Total revenue of approximately $960 million

•Operating margin in the low-to-mid 20% range

Fiscal Year 2023 Quarterly Outlook

For Capri Holdings, the Company expects the following:

Second Quarter

Third Quarter

Fourth Quarter

FY2023

Revenue

~$1.40B

~$1.65B

~$1.44B

~$5.85B

Adjusted Operating Margin

~17%

~22%

~14%

~18%

Adjusted EPS

~$1.55

~$2.45

~$1.35

~$6.85

Conference Call Information

A conference call to discuss first quarter Fiscal 2023 results is scheduled for today, August 9, 2022 at 8:30 a.m. ET. A live webcast of the conference call will be available on the Company’s website, www.capriholdings.com. In addition, a replay will be available shortly after the conclusion of the call and remain available until August 16, 2022. To access the telephone replay, listeners should dial 1-844-512-2921 or 1-412-317-6671 for international callers. The access code for the replay is 13731647. A replay of the webcast will also be available within two hours of the conclusion of the call.

Use of Non-GAAP Financial Measures

Constant currency effects are non-GAAP financial measures, which are provided to supplement our reported operating results to facilitate comparisons of our operating results and trends in our business, excluding the effects of foreign currency rate fluctuations. Because we are a global company, foreign currency exchange rates may have a significant effect on our reported results. We calculate constant currency measures and the related foreign currency impacts by translating the current year’s reported amounts into comparable amounts using prior year’s foreign exchange rates for each currency. All constant currency performance measures discussed should be considered a supplement to and not in lieu of our operating performance measures calculated in accordance with U.S. GAAP. Additionally, this earnings release includes certain non-GAAP financial measures that exclude certain costs associated with COVID-19 related charges, ERP implementation costs, Capri transformation costs, restructuring and other charges. The Company uses non-GAAP financial measures, among other things, to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. The Company believes that excluding these items helps its management and investors compare operating performance based on its ongoing operations. While the Company considers the non-GAAP measures to be useful supplemental measures in analyzing its results, they are not intended to replace, nor act as a substitute for, any amounts presented in its consolidated financial statements prepared in conformity with U.S. GAAP and may be different from non-GAAP measures reported by other companies.

About Capri Holdings Limited

Capri Holdings Limited is a global fashion luxury group, consisting of iconic brands Versace, Jimmy Choo and Michael Kors that are industry leaders in design, style and craftsmanship. Its brands cover the full spectrum of

fashion luxury categories including women’s and men’s accessories, footwear and ready-to-wear as well as wearable technology, watches, jewelry, eyewear and a full line of fragrance products. The Company’s goal is to continue to extend the global reach of its brands while ensuring that they maintain their independence and exclusive DNA. Capri Holdings Limited is publicly listed on the New York Stock Exchange under the ticker CPRI.

Forward-Looking Statements

This press release contains statements which are, or may be deemed to be, “forward-looking statements.” Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Capri Holdings Limited (the “Company”) about future events and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. All statements other than statements of historical facts included herein, may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words “plans”, “believes”, “expects”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “might” or similar words or phrases, are forward-looking statements. These forward-looking statements are not guarantees of future financial performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions, which could cause actual results to differ materially from those projected or implied in any forward-looking statements. These risks, uncertainties and other factors include the impact of the COVID-19 pandemic; levels of cash flow and future availability of credit; compliance with restrictive covenants under the Company’s credit agreement; the Company’s ability to integrate successfully and to achieve anticipated benefits of any acquisition and to successfully execute our growth strategies; the risk of disruptions to the Company’s businesses; risks associated with operating in international markets and our global sourcing activities, including disruptions or delays in manufacturing or shipments; the risk of cybersecurity threats and privacy of data security breaches; the negative effects of events on the market price of the Company’s ordinary shares and its operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the Company’s businesses; fluctuations in demand for the Company’s products; levels of indebtedness (including the indebtedness incurred in connection with acquisitions); the timing and scope of future share buybacks, which may be made in open market or privately negotiated transactions, and are subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors, and which share repurchases may be suspended or discontinued at any time; the level of other investing activities and uses of cash; changes in consumer traffic and retail trends; high consumer debt levels, recession and inflationary pressures; loss of market share and industry competition; fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen epidemics and pandemics, disasters or catastrophes; extreme weather conditions and natural disasters; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions including acts of war and other geopolitical conflicts; as well as those risks set forth in the Company’s filings with the U.S. Securities and Exchange Commission (the "SEC"), including the Company’s Annual Report on Form 10-K for the fiscal year ended April 2, 2022 (File No. 001-35368). Any forward-looking statement in this press release speaks only as of the date made and the Company disclaims any obligation to update or revise any forward-looking or other statements contained herein other than in accordance with legal and regulatory obligations.

Jennifer.Davis@CapriHoldings.com

Press@CapriHoldings.com

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)


	Three Months Ended
	July 2, 2022		June 26, 2021
Total revenue	$	1,360	$	1,253
Cost of goods sold	459		397
Gross profit	901		856
Total operating expenses	670		598
Income from operations	231		258

Interest (income) expense, net	(4)		1
Foreign currency loss	4		1
Income before income taxes	231		256
Provision for income taxes	28		37
Net income	203		219
Less: Net income attributable to noncontrolling interests	2		—
Net income attributable to Capri	$	201	$	219
Weighted average ordinary shares outstanding:
Basic	141,913,586		151,312,103
Diluted	143,733,984		154,890,483
Net income per ordinary share:
Basic	$	1.42	$	1.45
Diluted	$	1.40	$	1.41

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


	July 2, 2022		April 2, 2022		June 26, 2021
Assets
Current assets
Cash and cash equivalents	$	221	$	169	$	356
Receivables, net	394		434		382
Inventories, net	1,265		1,096		760
Prepaid expenses and other current assets	201		192		209
Total current assets	2,081		1,891		1,707
Property and equipment, net	466		476		472
Operating lease right-of-use assets	1,388		1,358		1,468
Intangible assets, net	1,739		1,847		1,996
Goodwill	1,336		1,418		1,512
Deferred tax assets	231		240		281
Other assets	369		250		188
Total assets	$	7,610	$	7,480	$	7,624
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	540	$	555	$	464
Accrued payroll and payroll related expenses	123		165		131
Accrued income taxes	136		52		101
Short-term operating lease liabilities	399		414		442
Short-term debt	37		29		127
Accrued expenses and other current liabilities	379		351		297
Total current liabilities	1,614		1,566		1,562
Long-term operating lease liabilities	1,465		1,467		1,594
Deferred tax liabilities	476		432		443
Long-term debt	1,382		1,131		1,206
Other long-term liabilities	295		326		369
Total liabilities	5,232		4,922		5,174
Commitments and contingencies

Shareholders’ equity
Ordinary shares, no par value; 650,000,000 shares authorized; 223,503,792 shares issued and 137,956,977 outstanding at July 2, 2022; 221,967,599 shares issued and 142,806,269 outstanding at April 2, 2022 and 220,973,560 shares issued and 151,942,484 outstanding at June 26, 2021	—		—		—
Treasury shares, at cost (85,546,815 shares at July 2, 2022, 79,161,330 shares at April 2, 2022 and 69,031,076 shares at June 26, 2021)	(4,299)		(3,987)		(3,385)
Additional paid-in capital	1,294		1,260		1,201
Accumulated other comprehensive income	89		194		147
Retained earnings	5,293		5,092		4,489
Total shareholders’ equity of Capri	2,377		2,559		2,452
Noncontrolling interest	1		(1)		(2)
Total shareholders’ equity	2,378		2,558		2,450
Total liabilities and shareholders’ equity	$	7,610	$	7,480	$	7,624

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED SEGMENT DATA


		Three Months Ended
		July 2, 2022			June 26, 2021
Revenue by Segment and Region:

Versace	The Americas	$	115		$	87
	EMEA	107			87
	Asia	53			66
Versace Revenue		275			240

Jimmy Choo	The Americas	54			38
	EMEA	66			50
	Asia	52			54
Jimmy Choo Revenue		172			142

Michael Kors	The Americas	625			590
	EMEA	191			165
	Asia	97			116
Michael Kors Revenue		913			871

Total Revenue		$	1,360		$	1,253

Income from Operations:
Versace		$	52		$	48
Jimmy Choo		19			11
Michael Kors		222			240
Total segment income from operations		293			299
Less: Corporate expenses		(60)			(41)
Restructuring and other charges		(3)			(3)

COVID-19 related charges		1			3
Total Income from Operations		$	231		$	258

Operating Margin:
Versace		18.9		%	20.0		%
Jimmy Choo		11.0		%	7.7		%
Michael Kors		24.3		%	27.6		%
Capri Operating Margin		17.0		%	20.6		%

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

SUPPLEMENTAL RETAIL STORE INFORMATION


	As of
Retail Store Information:	July 2, 2022	June 26, 2021
Versace	208	208
Jimmy Choo	236	233
Michael Kors	821	820
Total number of retail stores	1,265	1,261

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSTANT CURRENCY DATA


	Three Months Ended				% Change
	July 2, 2022		June 26, 2021		As Reported		Constant Currency
Total Revenue:
Versace	$	275	$	240	14.6	%	29.6	%
Jimmy Choo	172		142		21.1	%	30.3	%
Michael Kors	913		871		4.8	%	8.7	%
Total Revenue	$	1,360	$	1,253	8.5	%	15.2	%

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)


	Three Months Ended July 2, 2022
	As Reported		Restructuring and Other Charges (1)		COVID-19 Related Charges		ERP Implementation		Capri Transformation		As Adjusted
Gross profit	$	901	$	—	$	(1)	$	—	$	—	$	900


Operating expenses	$	670	$	(3)	$	—	$	(9)	$	(9)	$	649


Total income from operations	$	231	$	3	$	(1)	$	9	$	9	$	251

Income before provision for income taxes	$	231	$	3	$	(1)	$	9	$	9	$	251
Provision for income taxes	$	28	$	1	$	—	$	2	$	3	$	34
Net income attributable to Capri	$	201	$	2	$	(1)	$	7	$	6	$	215

Diluted net income per ordinary share - Capri	$	1.40	$	0.01	$	—	$	0.05	$	0.04	$	1.50

______________________

(1)Primarily Includes other costs recorded in connection with the acquisitions of Gianni Versace S.r.l and costs related to other restructuring initiatives.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)


	Three Months Ended June 26, 2021
	As Reported		Restructuring and Other Charges (1)		COVID-19 Related Charges		ERP Implementation		As Adjusted
Gross profit	$	856	$	—	$	(3)	$	—	$	853

Operating expenses	$	598	$	(3)	$	—	$	(3)	$	592

Total income from operations	$	258	$	3	$	(3)	$	3	$	261


Income before provision for income taxes	$	256	$	3	$	(3)	$	3	$	259
Provision for income taxes	$	37	$	1	$	(1)	$	1	$	38
Net income attributable to Capri	$	219	$	2	$	(2)	$	2	$	221

Diluted net income per ordinary share - Capri	$	1.41	$	0.01	$	(0.01)	$	0.01	$	1.42

______________________

(1)Includes store closure costs which have been incorporated into the Capri Retail Store Optimization Program, other restructuring initiatives, and other costs recorded in connection with the acquisitions of Gianni Versace S.r.l. and Jimmy Choo Group Limited.

Cover Page Cover Page	Aug. 09, 2022
Cover [Abstract]
Entity Registrant Name	CAPRI HOLDINGS LTD
Document Period End Date	Aug. 09, 2022
Entity Emerging Growth Company	false
Title of 12(b) Security	Ordinary Shares, no par value
Pre-commencement Issuer Tender Offer	false
Pre-commencement Tender Offer	false
Soliciting Material	false
Written Communications	false
Entity Address, Country	GB
Entity Address, Postal Zip Code	WC2B 6UF
Entity Incorporation, State or Country Code	D8
Entity File Number	001-35368
Document Type	8-K
Trading Symbol	CPRI
Security Exchange Name	NYSE
Entity Address, Address Line One	33 Kingsway
Entity Address, City or Town	London
Entity Address, State or Province	44
City Area Code	207
Local Phone Number	632 8600
Entity Central Index Key	0001530721
Amendment Flag	false

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