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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Capri Holdings Limited | NYSE:CPRI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.68 | 2.09% | 33.14 | 33.13 | 32.21 | 32.39 | 1,876,029 | 01:00:00 |
Capri Holdings Limited (NYSE:CPRI), a global fashion luxury group, today announced its financial results for the second quarter of Fiscal 2024 ended September 30, 2023.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20231109706319/en/
(Photo: Business Wire)
Second Quarter Fiscal 2024 Highlights
John D. Idol, the Company's Chairman and Chief Executive Officer, said, "Capri Holdings' second quarter results were below our expectations due to macro-economic headwinds as well as Ecommerce implementation related challenges. In early July, we implemented a new Ecommerce platform for Michael Kors in the Americas. While we are excited about the long-term benefits, the transition negatively impacted our second quarter results. Additionally, during the quarter consumer demand for fashion luxury goods softened primarily in the Americas.”
Mr. Idol continued, “Despite near-term challenges, we remain focused on executing our strategic initiatives to drive long term sustainable growth at all three of our luxury houses. Versace, Jimmy Choo and Michael Kors continued to resonate with consumers as evidenced by the 11.4 million new consumers added across our databases, representing 15% growth over the last year. This reflects the strong brand equity and enduring value of our three iconic houses.”
Mr. Idol concluded, “We look forward to the successful completion of the merger transaction with Tapestry in calendar year 2024. We are confident that this combination will deliver value to our shareholders as well as provide new opportunities for our dedicated employees around the world as Capri Holdings becomes part of a larger and more diversified company. By joining with Tapestry, we will have greater resources and capabilities to accelerate the expansion of our global reach while preserving the unique DNA of our brands.”
Michael Kors Americas New Ecommerce Platform Implementation Update
In July 2023 the Company implemented a new state of the art Ecommerce platform for Michael Kors in the Americas. While the new platform is designed to improve the user experience and enhance consumer engagement, the transition created greater than anticipated challenges which negatively impacted Michael Kors revenue by approximately $50 million in the quarter. While trends have begun to improve, third quarter revenue will continue to be impacted. We believe the situation will be fully resolved during the fourth quarter.
Second Quarter Fiscal 2024 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 ("U.S. 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.
Overview of Capri Holdings Second Quarter Fiscal 2024 Results
Versace Second Quarter Fiscal 2024 Results
Jimmy Choo Second Quarter Fiscal 2024 Results
Michael Kors Second Quarter Fiscal 2024 Results
Outlook
Given the proposed merger transaction of Capri Holdings Limited by Tapestry, Inc., the Company does not intend to provide financial guidance.
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 below 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 restructuring and other charges, ERP implementation costs, Capri transformation costs, merger related costs and long-lived asset impairments. 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 is a global fashion luxury group consisting of iconic, founder-led brands Versace, Jimmy Choo and Michael Kors. Our commitment to glamorous style and craftsmanship is at the heart of each of our luxury brands. We have built our reputation on designing exceptional, innovative products that cover the full spectrum of fashion luxury categories. Our strength lies in the unique DNA and heritage of each of our brands, the diversity and passion of our people and our dedication to the clients and communities we serve. Capri Holdings Limited is publicly listed on the New York Stock Exchange under the ticker CPRI.
Forward-Looking Statements
This report 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 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. 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, including regarding the proposed merger transaction with a wholly-owned subsidiary of Tapestry, Inc. (the "Merger"). These risks, uncertainties and other factors include the impact of the COVID-19 pandemic; changes in consumer traffic and retail trends; the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed Merger that could delay or result in the termination of the proposed Merger, the occurrence of any other event, change or other circumstances that could give rise to the termination of the merger agreement entered into in connection with the proposed Merger, the risk that the parties to the merger agreement may not be able to satisfy the conditions to the proposed Merger in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the proposed Merger, the risk that any announcements relating to the proposed Merger could have adverse effects on the market price of Capri's shares, the risk of any unexpected costs or expenses resulting from the proposed Merger, the risk of any litigation relating to the proposed Merger, the risk that the proposed Merger and its announcement could have an adverse effect on the ability of Capri to retain customers and retain and hire key personnel and maintain relationships with customers, suppliers, employees, shareholders and other business relationships and on its operating results and business generally, and the risk the pending proposed Merger could divert the attention of Capri’s management; as well as those risks that are outlined in Capri’s disclosure filings and materials, which you can find on http://www.capriholdings.com, such as its Form 10-K, Form 10-Q and Form 8-K reports that have been filed with the SEC. Please consult these documents for a more complete understanding of these risks and uncertainties. Any forward-looking statement in this press release speaks only as of the date made and Capri disclaims any obligation to update or revise any forward-looking or other statements contained herein other than in accordance with legal and regulatory obligations.
SCHEDULE 1
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
(Unaudited)
Three Months Ended
Six Months Ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
Total revenue
$
1,291
$
1,412
$
2,520
$
2,772
Cost of goods sold
459
461
876
920
Gross profit
832
951
1,644
1,852
Total operating expenses
732
699
1,464
1,369
Income from operations
100
252
180
483
Other income, net
(1
)
(1
)
—
(1
)
Interest expense, net
3
5
11
1
Foreign currency (gain) loss
(3
)
(11
)
18
(7
)
Income before income taxes
101
259
151
490
Provision for income taxes
11
35
13
63
Net income
90
224
138
427
Less: Net income attributable to noncontrolling interest
—
—
—
2
Net income attributable to Capri
$
90
$
224
$
138
$
425
Weighted average ordinary shares outstanding:
Basic
116,674,030
136,037,449
117,052,986
138,975,518
Diluted
117,563,573
137,051,575
117,923,103
140,392,780
Net income per ordinary share:
Basic
$
0.77
$
1.64
$
1.18
$
3.06
Diluted
$
0.77
$
1.63
$
1.17
$
3.03
SCHEDULE 2
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
September 30, 2023
April 1, 2023
October 1, 2022
Assets
Current assets
Cash and cash equivalents
$
238
$
249
$
215
Receivables, net
383
369
441
Inventories, net
1,099
1,057
1,180
Prepaid expenses and other current assets
270
195
249
Total current assets
1,990
1,870
2,085
Property and equipment, net
542
552
470
Operating lease right-of-use assets
1,307
1,330
1,333
Intangible assets, net
1,676
1,728
1,634
Goodwill
1,268
1,293
1,256
Deferred tax assets
308
296
228
Other assets
255
226
196
Total assets
$
7,346
$
7,295
$
7,202
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable
$
355
$
475
$
370
Accrued payroll and payroll related expenses
95
154
117
Accrued income taxes
82
73
68
Short-term operating lease liabilities
406
429
396
Short-term debt
15
5
15
Accrued expenses and other current liabilities
291
314
312
Total current liabilities
1,244
1,450
1,278
Long-term operating lease liabilities
1,291
1,348
1,387
Deferred tax liabilities
508
508
513
Long-term debt
2,079
1,822
1,585
Other long-term liabilities
312
318
296
Total liabilities
5,434
5,446
5,059
Commitments and contingencies
Shareholders’ equity
Ordinary shares, no par value; 650,000,000 shares authorized; 225,768,777 shares issued and 116,140,358 outstanding at September 30, 2023; 224,166,250 shares issued and 117,347,045 outstanding at April 1, 2023 and 223,706,873 shares issued and 131,088,991 outstanding at October 1, 2022
—
—
—
Treasury shares, at cost (109,628,419 shares at September 30, 2023, 106,819,205 shares at April 1, 2023 and 92,617,882 shares at October 1, 2022)
(5,457
)
(5,351
)
(4,650
)
Additional paid-in capital
1,392
1,344
1,311
Accumulated other comprehensive income
130
147
(35
)
Retained earnings
5,846
5,708
5,517
Total shareholders’ equity of Capri
1,911
1,848
2,143
Noncontrolling interest
1
1
—
Total shareholders’ equity
1,912
1,849
2,143
Total liabilities and shareholders’ equity
$
7,346
$
7,295
$
7,202
SCHEDULE 3
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED SEGMENT DATA
($ in millions)
(Unaudited)
Three Months Ended
Six Months Ended
September 30, 2023
October 1, 2022
September 30, 2023
October 1, 2022
Revenue by Segment and Region:
Versace
The Americas
$
96
$
120
$
178
$
235
EMEA
125
130
241
237
Asia
59
58
120
111
Versace Revenue
280
308
539
583
Jimmy Choo
The Americas
38
43
87
97
EMEA
57
57
138
123
Asia
37
42
90
94
Jimmy Choo Revenue
132
142
315
314
Michael Kors
The Americas
556
643
1,057
1,268
EMEA
219
213
394
404
Asia
104
106
215
203
Michael Kors Revenue
879
962
1,666
1,875
Total Revenue
$
1,291
$
1,412
$
2,520
$
2,772
Income (loss) from Operations:
Versace
$
35
$
62
$
38
$
114
Jimmy Choo
(9
)
8
7
27
Michael Kors
169
248
299
470
Total segment income from operations
195
318
344
611
Less: Corporate expenses
(71
)
(55
)
(142
)
(115
)
Impairment of assets
(20
)
(11
)
(20
)
(11
)
Merger related costs
(4
)
—
(4
)
—
Restructuring and other (expense) income
—
(3
)
2
(6
)
COVID-19 related charges
—
3
—
4
Total Income from Operations
$
100
$
252
$
180
$
483
Operating Margin (Loss):
Versace
12.5
%
20.1
%
7.1
%
19.6
%
Jimmy Choo
(6.8
)%
5.6
%
2.2
%
8.6
%
Michael Kors
19.2
%
25.8
%
17.9
%
25.1
%
Capri
7.7
%
17.8
%
7.1
%
17.4
%
SCHEDULE 4
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
SUPPLEMENTAL RETAIL STORE INFORMATION
(Unaudited)
As of
Retail Store Information:
September 30, 2023
October 1, 2022
Versace
230
217
Jimmy Choo
237
238
Michael Kors
802
821
Total number of retail stores
1,269
1,276
SCHEDULE 5
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSTANT CURRENCY DATA
(In millions)
(Unaudited)
Three Months Ended
% Change
September 30, 2023
October 1, 2022
As Reported
Constant Currency
Total Revenue:
Versace
$
280
$
308
(9.1
)%
(11.7
)%
Jimmy Choo
132
142
(7.0
)%
(9.2
)%
Michael Kors
879
962
(8.6
)%
(9.7
)%
Total Revenue
$
1,291
$
1,412
(8.6
)%
(10.1
)%
Six Months Ended
% Change
September 30, 2023
October 1, 2022
As Reported
Constant Currency
Total Revenue:
Versace
$
539
$
583
(7.5
)%
(9.1
)%
Jimmy Choo
315
314
0.3
%
(0.3
)%
Michael Kors
1,666
1,875
(11.1
)%
(11.5
)%
Total Revenue
$
2,520
$
2,772
(9.1
)%
(9.7
)%
SCHEDULE 6
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)
Three Months Ended September 30, 2023
As Reported
Impairment Charges
Restructuring and Other Expense (1)
ERP Implementation(2)
Capri Transformation (3)
Merger Related Costs
As Adjusted
Gross profit
$
832
$
—
$
—
$
—
$
—
$
—
$
832
Operating expenses
$
732
$
(20
)
$
—
$
(4
)
$
(29
)
$
(4
)
$
675
Total income from operations
$
100
$
20
$
—
$
4
$
29
$
4
$
157
Foreign currency gain
$
(3
)
$
—
$
—
$
—
$
—
$
—
$
(3
)
Income before provision for income taxes
$
101
$
20
$
—
$
4
$
29
$
4
$
158
Provision for income taxes
$
11
$
4
$
—
$
1
$
8
$
1
$
25
Net income attributable to Capri
$
90
$
16
$
—
$
3
$
21
$
3
$
133
Diluted net income per ordinary share - Capri
$
0.77
$
0.13
$
—
$
0.03
$
0.18
$
0.02
$
1.13
______________________
(1)Amounts impacting operating expenses primarily include a gain related to the termination of certain leases offset by expenses related to equity awards associated with the acquisition of Gianni Versace S.r.l.
(2)Represents a multi-year ERP implementation which includes accounting, finance and wholesale and retail inventory solutions in order to create standardized finance IT applications across our organization. This ERP implementation will continue through Fiscal 2026 and we expect expenditures up to $170 million.
(3)The Capri transformation program represents a multi-year, multi-project initiative extending through Fiscal 2026 intended to improve the operating effectiveness and efficiency of our organization by creating best in class shared platforms across our brands and by expanding our digital capabilities. These initiatives cover multiple aspects of our operations including supply chain, marketing, omni-channel customer experience, e-commerce, data analytics and IT infrastructure. Through Fiscal 2026, we expect expenditures up to $220 million related to these efforts.
SCHEDULE 7
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)
Six Months Ended September 30, 2023
As Reported
Impairment Charges
Restructuring and Other Expense (1)
ERP Implementation (2)
Capri Transformation (3)
Merger Related Costs
As Adjusted
Gross profit
$
1,644
$
—
$
—
$
—
$
—
$
—
$
1,644
Operating expenses
$
1,464
$
(20
)
$
2
$
(9
)
$
(57
)
$
(4
)
$
1,376
Total income from operations
$
180
$
20
$
(2
)
$
9
$
57
$
4
$
268
Foreign currency loss
$
18
$
—
$
(17
)
$
—
$
—
$
—
$
1
Income before provision for income taxes
$
151
$
20
$
15
$
9
$
57
$
4
$
256
Provision for income taxes
$
13
$
4
$
3
$
2
$
12
$
1
$
35
Net income attributable to Capri
$
138
$
16
$
12
$
7
$
45
$
3
$
221
Diluted net income per ordinary share - Capri
$
1.17
$
0.14
$
0.10
$
0.06
$
0.38
$
0.02
$
1.87
______________________
(1)Amounts impacting operating expenses primarily includes a gain on the sale of a long-lived corporate asset partially offset by expenses related to equity awards associated with the acquisition of Gianni Versace S.r.l.. The foreign currency exchange loss represents a charge recognized in conjunction with restructuring activities to rationalize certain legal entities within our structure.
(2)Represents a multi-year ERP implementation which includes accounting, finance and wholesale and retail inventory solutions in order to create standardized finance IT applications across our organization. This ERP implementation will continue through Fiscal 2026 and we expect expenditures up to $170 million.
(3)The Capri transformation program represents a multi-year, multi-project initiative extending through Fiscal 2026 intended to improve the operating effectiveness and efficiency of our organization by creating best in class shared platforms across our brands and by expanding our digital capabilities. These initiatives cover multiple aspects of our operations including supply chain, marketing, omni-channel customer experience, e-commerce, data analytics and IT infrastructure. Through Fiscal 2026, we expect expenditures up to $220 million related to these efforts.
SCHEDULE 8
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)
Three Months Ended October 1, 2022
As Reported
Impairment Charges
Restructuring and Other Expense (1)
COVID-19 Related Expenses
ERP Implementation
Capri Transformation
As Adjusted
Gross profit
$
951
$
—
$
—
$
(3
)
$
—
$
—
$
948
Operating expenses
$
699
$
(11
)
$
(3
)
$
—
$
(7
)
$
(10
)
$
668
Total income from operations
$
252
11
$
3
$
(3
)
$
7
$
10
$
280
Income before provision for income taxes
$
259
$
11
$
3
$
(3
)
$
7
$
10
$
287
Provision for income taxes
$
35
$
2
$
1
$
(1
)
$
2
$
3
$
42
Net income attributable to Capri
$
224
$
9
$
2
$
(2
)
$
5
$
7
$
245
Diluted net income per ordinary share - Capri
$
1.63
$
0.07
$
0.01
$
(0.01
)
$
0.04
$
0.05
$
1.79
______________________
(1)
Primarily Includes expenses related to equity award associated with the acquisition of Gianni Versace S.r.l.
SCHEDULE 9
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In millions, except per share data)
(Unaudited)
Six Months Ended October 1, 2022
As Reported
Impairment Charges
Restructuring and Other Charges(1)
COVID-19 Related Charges
ERP Implementation
Capri Transformation
As Adjusted
Gross profit
$
1,852
$
—
$
—
$
(4
)
$
—
$
—
$
1,848
Operating expenses
$
1,369
$
(11
)
$
(6
)
$
—
$
(16
)
$
(19
)
$
1,317
Total income from operations
$
483
$
11
$
6
$
(4
)
$
16
$
19
$
531
Income before provision for income taxes
$
490
$
11
$
6
$
(4
)
$
16
$
19
$
538
Provision for income taxes
$
63
$
2
$
2
$
(1
)
$
4
$
6
$
76
Net income attributable to Capri
$
425
$
9
$
4
$
(3
)
$
12
$
13
$
460
Diluted net income per ordinary share - Capri
$
3.03
$
0.06
$
0.03
$
(0.02
)
$
0.09
$
0.09
$
3.28
______________________
(1)
Primarily Includes expenses related to equity award associated with the acquisition of Gianni Versace S.r.l.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231109706319/en/
Investor Relations: Jennifer Davis +1 (201) 514-8234 Jennifer.Davis@CapriHoldings.com
Media: Press@CapriHoldings.com
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