Revenue and Earnings Significantly Exceeded
Expectations
Raised Full Year Adjusted Earnings Per Share
Outlook
Q1 2022 Earnings Presentation
Capri Holdings Limited (NYSE:CPRI), a global fashion luxury
group, today announced its financial results for the first quarter
of fiscal 2022 ended June 26, 2021.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20210730005115/en/
Versace (Photo: Business Wire)
First Quarter Fiscal 2022 Highlights
- Revenue increased 178%, with better than anticipated results
across all three luxury houses
- Adjusted gross margin expanded 90 basis points versus prior
year
- Adjusted operating margin of 20.8%
- Adjusted earnings per share of $1.42
- Raised full year adjusted earnings per share outlook to
$4.50
John D. Idol, the Company's Chairman and Chief Executive
Officer, said, "We were pleased by our first quarter performance
which reflected the strength of Capri Holdings' three global
fashion luxury houses, Versace, Jimmy Choo and Michael Kors. All of
our luxury houses significantly exceeded our revenue and earnings
expectations for the quarter, as they continued to deepen consumer
desire and engagement. As a result of this encouraging start to the
year, we are raising our Fiscal 2022 revenue and earnings
outlook."
Mr. Idol concluded, "Looking forward, we are confident in the
growth opportunities for Versace, Jimmy Choo and Michael Kors as
the world continues to recover from the impact of the global
pandemic. As we execute on our strategic initiatives, Capri
Holdings is positioned to deliver multiple years of revenue and
earnings growth."
First Quarter Fiscal 2022 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. 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 2022
Results:
- Total revenue of $1.25 billion increased 178% compared to last
year. On a constant currency basis, total revenue increased
164%.
- Gross profit was $856 million and gross margin was 68.3%,
compared to $302 million and 67.0% in the prior year. Adjusted
gross profit was $853 million and adjusted gross margin was 68.1%,
compared to $303 million and 67.2% in the prior year.
- Income from operations was $258 million and operating margin
was 20.6%, compared to a loss from operations of $162 million and
operating margin of (35.9)% in the prior year. Adjusted income from
operations was $261 million and operating margin was 20.8%,
compared to a loss from operations of $147 million and operating
margin of (32.6)% in the prior year.
- Net income was $219 million, or $1.41 per diluted share,
compared to a net loss of $180 million, or $(1.21) per share, in
the prior year. Adjusted net income was $221 million, or $1.42 per
diluted share, compared to a net loss of $156 million or, $(1.04)
per share, in the prior year.
- Net inventory at June 26, 2021 was $760 million, a 20% decrease
compared to the prior year.
Versace First Quarter Fiscal 2022 Results:
- Versace revenue of $240 million increased 158% compared to the
prior year. On a constant currency basis, total revenue increased
136%.
- Versace operating income was $48 million and operating margin
was 20.0% compared to a loss of $41 million and operating margin of
(44.1)% in the prior year.
Jimmy Choo First Quarter Fiscal 2022 Results:
- Jimmy Choo revenue of $142 million increased 178% compared to
the prior year. On a constant currency basis, total revenue
increased 147%.
- Jimmy Choo operating income was $11 million and operating
margin was 7.7%, compared to an operating loss of $29 million and
operating margin of (56.9)% in the prior year.
Michael Kors First Quarter Fiscal 2022 Results:
- Michael Kors revenue of $871 million increased 184% compared to
the prior year. On a constant currency basis, total revenue
increased 175%.
- Michael Kors operating income was $240 million and operating
margin was 27.6%, compared to an operating loss of $48 million and
operating margin of (15.6)% in the prior year.
Share Repurchase Program
During the first quarter, the Company repurchased approximately
0.9 million ordinary shares for approximately $50 million in open
market transactions. As of June 26, 2021, the remaining
availability under the Company's share repurchase authorization was
$350 million.
Outlook
The following guidance is provided on an adjusted, non-GAAP
basis. Guidance does not incorporate any significant additional
store closures, extensions of closures, or new government
restrictions that could further impact traffic and sales
trends.
The Company also notes that fiscal 2022 includes a 53rd week in
its fiscal fourth quarter.
Fiscal Year 2022 Outlook
For Capri Holdings, the Company expects the following.
- Total revenue of approximately $5.3 billion
- Operating margin of approximately 16%
- Net interest expense of approximately $5 million
- Effective tax rate of approximately 17%
- Weighted average diluted shares outstanding of approximately
156 million
- Diluted earnings per share of approximately $4.50
For Versace, the Company expects the following.
- Total revenue of approximately $1.025 billion
- Operating margin in the low double digit range
For Jimmy Choo, the Company expects the following.
- Total revenue of approximately $550 million
- Operating margin in the negative low single digit range
For Michael Kors, the Company expects the following.
- Total revenue of approximately $3.725 billion
- Operating margin in the mid 20% range
Second Quarter Fiscal 2022 Outlook
For Capri Holdings, the Company expects the following.
- Total revenue of approximately $1.25 billion
- Operating margin of approximately 13%
- Diluted earnings per share of approximately $0.90
For Versace, the Company expects the following.
- Total revenue of approximately $260 million
- Operating margin in the low double digit range
For Jimmy Choo, the Company expects the following.
- Total revenue of approximately $120 million
- Operating margin in the negative low double digit range
For Michael Kors, the Company expects the following.
- Total revenue of approximately $870 million
- Operating margin in the low 20% range
Conference Call Information
A conference call to discuss first quarter fiscal 2022 results
is scheduled for today, July 30, 2021 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 6, 2021. 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 13721359.
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 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 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 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 effect of the COVID-19 pandemic and its
potential material and significant impact on the Company’s future
financial and operational results if retail stores are forced to
close again and the pandemic is prolonged, including that our
estimates could materially differ if the severity of the COVID-19
situation worsens, the length and severity of such outbreak across
the globe and the pace of recovery following 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; the risk of disruptions to
the Company’s businesses; 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;
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; political or economic instability in principal
markets; adverse outcomes in litigation; and general, local and
global economic, political, business and market conditions, as well
as those risks set forth in the Company’s filings with the U.S.
Securities and Exchange Commission, including the Company’s Annual
Report on Form 10-K for the fiscal year ended March 27, 2021 (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.
SCHEDULE 1
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions, except share and
per share data)
(Unaudited)
Three Months Ended
June 26, 2021
June 27, 2020
Total revenue
$
1,253
$
451
Cost of goods sold
397
149
Gross profit
856
302
Total operating expenses
598
464
Income (loss) from operations
258
(162
)
Other income, net
—
(1
)
Interest expense, net
1
17
Foreign currency loss (gain)
1
(3
)
Income (loss) before provision for income
taxes
256
(175
)
Provision for income taxes
37
5
Net income (loss)
219
(180
)
Less: Net income attributable to
noncontrolling interests
—
—
Net income (loss) attributable to
Capri
$
219
$
(180
)
Weighted average ordinary shares
outstanding:
Basic
151,312,103
149,556,310
Diluted
154,890,483
149,556,310
Net income (loss) per ordinary share:
Basic
$
1.45
$
(1.21
)
Diluted
$
1.41
$
(1.21
)
SCHEDULE 2
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In millions, except share
data)
(Unaudited)
June 26, 2021
March 27, 2021
June 27, 2020
Assets
Current assets
Cash and cash equivalents
$
356
$
232
$
207
Receivables, net
382
373
183
Inventories, net
760
736
948
Prepaid expenses and other current
assets
209
205
151
Total current assets
1,707
1,546
1,489
Property and equipment, net
472
485
541
Operating lease right-of-use assets
1,468
1,504
1,641
Intangible assets, net
1,996
1,992
1,977
Goodwill
1,512
1,498
1,490
Deferred tax assets
281
278
226
Other assets
188
178
169
Total assets
$
7,624
$
7,481
$
7,533
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable
$
464
$
512
$
596
Accrued payroll and payroll related
expenses
131
116
94
Accrued income taxes
101
126
34
Short-term operating lease liabilities
442
447
431
Short-term debt
127
123
191
Accrued expenses and other current
liabilities
297
297
243
Total current liabilities
1,562
1,621
1,589
Long-term operating lease liabilities
1,594
1,657
1,751
Deferred tax liabilities
443
397
465
Long-term debt
1,206
1,219
1,577
Other long-term liabilities
369
430
144
Total liabilities
5,174
5,324
5,526
Commitments and contingencies
Shareholders’ equity
Ordinary shares, no par value; 650,000,000
shares authorized; 220,973,560 shares issued and 151,942,484
outstanding at June 26, 2021; 219,222,937 shares issued and
151,280,011 outstanding at March 27, 2021 and 218,272,709 shares
issued and 150,340,192 outstanding at June 27, 2020
—
—
—
Treasury shares, at cost 69,031,076 shares
at June 26, 2021, 67,942,926 shares at March 27, 2021 and
67,932,517 shares at June 27, 2020
(3,385
)
(3,326
)
(3,326
)
Additional paid-in capital
1,201
1,158
1,109
Accumulated other comprehensive income
147
56
71
Retained earnings
4,489
4,270
4,152
Total shareholders’ equity of Capri
2,452
2,158
2,006
Noncontrolling interest
(2
)
(1
)
1
Total shareholders’ equity
2,450
2,157
2,007
Total liabilities and shareholders’
equity
$
7,624
$
7,481
$
7,533
SCHEDULE 3
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONSOLIDATED SEGMENT
DATA
($ in millions)
(Unaudited)
Three Months Ended
June 26, 2021
June 27, 2020
Revenue by Segment and Region:
Versace
The Americas
$
87
$
15
EMEA
87
27
Asia
66
51
Versace Revenue
240
93
Jimmy Choo
The Americas
38
6
EMEA
50
16
Asia
54
29
Jimmy Choo Revenue
142
51
Michael Kors
The Americas
590
156
EMEA
165
79
Asia
116
72
Michael Kors Revenue
871
307
Total Revenue
$
1,253
$
451
Income (loss) from Operations:
Versace
$
48
$
(41
)
Jimmy Choo
11
(29
)
Michael Kors
240
(48
)
Total segment income (loss) from
operations
299
(118
)
Less: Corporate expenses
(41
)
(31
)
Restructuring and other charges
(3
)
(8
)
COVID-19 related charges
3
(5
)
Total Income (loss) from
Operations
$
258
$
(162
)
Operating Margin:
Versace
20.0
%
(44.1
)%
Jimmy Choo
7.7
%
(56.9
)%
Michael Kors
27.6
%
(15.6
)%
Capri Operating Margin
20.6
%
(35.9
)%
SCHEDULE 4
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
SUPPLEMENTAL RETAIL STORE
INFORMATION
(Unaudited)
As of
Retail Store Information:
June 26, 2021
June 27, 2020
Versace
208
204
Jimmy Choo
233
228
Michael Kors
820
822
Total number of retail stores
1,261
1,254
SCHEDULE 5
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONSTANT CURRENCY DATA
(In millions)
(Unaudited)
Three Months Ended
% Change
June 26, 2021
June 27, 2020
As Reported
Constant Currency
Total revenue:
Versace
$
240
$
93
158.1
%
135.5
%
Jimmy Choo
142
51
178.4
%
147.1
%
Michael Kors
871
307
183.7
%
175.2
%
Total revenue
$
1,253
$
451
177.8
%
163.9
%
SCHEDULE 6
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In millions, except share and
per share data)
(Unaudited)
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.
SCHEDULE 7
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In millions, except share and
per share data)
(Unaudited)
Three Months Ended June 27,
2020
As Reported
Restructuring and Other Charges
(1)
COVID-19 Related Charges
ERP Implementation
As Adjusted
Gross profit
$
302
$
—
$
1
$
—
$
303
Operating expenses
$
464
$
(8
)
$
(4
)
$
(2
)
$
450
Total loss from operations
$
(162
)
$
8
$
5
$
2
$
(147
)
Loss before provision for income taxes
$
(175
)
$
8
$
5
$
2
$
(160
)
Provision for (benefit from) income
taxes
$
5
$
(5
)
$
(3
)
$
(1
)
$
(4
)
Net loss attributable to Capri
$
(180
)
$
13
$
8
$
3
$
(156
)
Diluted net loss per ordinary share -
Capri
$
(1.21
)
$
0.09
$
0.06
$
0.02
$
(1.04
)
____________________
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210730005115/en/
Investor Relations: Jennifer Davis +1 (201) 514-8234
Jennifer.Davis@CapriHoldings.com
Media: Dinesh Kandiah +1 (917) 934-2427
Press@CapriHoldings.com
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