https://www.capriholdings.com/3Q23Presentation
Capri Holdings Limited (NYSE:CPRI), a global fashion luxury
group, today announced its financial results for the third quarter
of Fiscal 2023 ended December 31, 2022.
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Third Quarter Fiscal 2023 Highlights
- Revenue decreased 6.0% on a reported basis and 0.5% in constant
currency
- Adjusted operating margin of 16.9%
- Adjusted earnings per share of $1.84
John D. Idol, the Company's Chairman and Chief Executive
Officer, said, "Overall, our performance in the third quarter was
more challenging than anticipated. However, many aspects of our
business performed well, in particular we were pleased with the
continued growth in our own retail channel across all three of our
luxury houses. This is a testament to the strength of our powerful
iconic brands, as well as the success of our strategic
initiatives."
Mr. Idol continued, "However, we were disappointed with the
performance of our global wholesale business in the quarter which
resulted in expense deleverage and a lower operating margin. We
have begun taking measures to better align operating expenses with
the change in revenue by channel. At the same time we will continue
to make strategic investments to drive long term growth."
Mr. Idol concluded, "As we look to fiscal 2024 we expect Capri
Holdings to generate mid-single-digit revenue and earnings growth.
We remain confident in our ability to achieve our long-term goals
over time due to the resilience of the luxury industry, the
strength of our portfolio of luxury houses and the talented group
of employees executing our strategic initiatives."
Third 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.
Overview of Capri Holdings Third Quarter Fiscal 2023
Results:
- Total revenue of $1.51 billion decreased 6.0% compared to last
year. On a constant currency basis, total revenue decreased
0.5%.
- Gross profit was $1.01 billion and gross margin was 66.5%,
compared to $1.05 billion and 65.1% in the prior year. Adjusted
gross profit was $1.00 billion and adjusted gross margin was 66.3%,
compared to $1.05 billion and 65.1% in the prior year.
- Income from operations was $236 million and operating margin
was 15.6%, compared to $331 million and 20.6% in the prior year.
Adjusted income from operations was $256 million and operating
margin was 16.9%, compared to $359 million and 22.3% in the prior
year.
- Net income was $225 million, or $1.72 per diluted share,
compared to $322 million, or $2.11 per diluted share, in the prior
year. Adjusted net income was $240 million, or $1.84 per diluted
share, compared to $339 million, or $2.22 per diluted share, in the
prior year.
- Net inventory as of December 31, 2022 was $1.188 billion, a 21%
increase compared to the prior year. This represents a sequential
improvement and management continues to expect inventory levels to
be below prior year by the end of the fourth quarter.
Versace Third Quarter Fiscal 2023 Results:
- Versace revenue of $249 million decreased 0.8% compared to the
prior year. On a constant currency basis, total revenue increased
11.2%.
- Versace operating income was $24 million and operating margin
was 9.6%, compared to $32 million and 12.7% in the prior year.
Jimmy Choo Third Quarter Fiscal 2023 Results:
- Jimmy Choo revenue of $168 million decreased 5.6% compared to
the prior year. On a constant currency basis, total revenue
increased 3.4%.
- Jimmy Choo operating income was $18 million and operating
margin was 10.7%, compared to $16 million and 9.0% in the prior
year.
Michael Kors Third Quarter Fiscal 2023 Results:
- Michael Kors revenue of $1.095 billion decreased 7.2% compared
to the prior year. On a constant currency basis, total revenue
decreased 3.6%.
- Michael Kors operating income was $251 million and operating
margin was 22.9%, compared to $335 million and 28.4% in the prior
year.
Share Repurchase Program
During the third quarter, the Company repurchased approximately
5.7 million ordinary shares for approximately $300 million in open
market transactions.
Outlook
The following guidance is provided on an adjusted, non-GAAP
basis. Financial results could differ materially from the current
outlook due to a number of external events which are not reflected
in our guidance, including changes in global macroeconomic
conditions, greater than anticipated inflationary pressures,
further considerable fluctuations in foreign currency exchange
rates, COVID-19 variants and other COVID related disruptions.
Fiscal Year 2023 Outlook
For Capri Holdings, the Company expects the following:
- Total revenue of approximately $5.56 billion
- Modest gross margin expansion
- Operating margin of approximately 16.0%
- Net interest expense and foreign currency gains of
approximately $12 million
- Effective tax rate of approximately 7%
- Weighted average diluted shares outstanding of approximately
134 million
- Diluted earnings per share of approximately $6.10
- Ending inventory to be below prior year
For Versace, the Company expects the following:
- Total revenue of approximately $1.1 billion
- Operating margin of approximately 15%
For Jimmy Choo, the Company expects the following:
- Total revenue of approximately $610 million
- Operating margin of approximately 4%
For Michael Kors, the Company expects the following:
- Total revenue of approximately $3.83 billion
- Operating margin of approximately 22%
Fourth Quarter Fiscal 2023 Outlook
For Capri Holdings, the Company expects the following:
- Total revenue of approximately $1.275 billion
- Operating margin of approximately 8.5%
- Net interest expense of approximately $11 million
- Effective tax rate of approximately (20)%
- Weighted average diluted shares outstanding of approximately
126 million
- Diluted earnings per share of $0.90-$0.95
For Versace, the Company expects the following:
- Total revenue of approximately $280 million
- Operating margin of approximately 10%
For Jimmy Choo, the Company expects the following:
- Total revenue of approximately $130 million
- Operating margin of approximately (14)%
For Michael Kors, the Company expects the following:
- Total revenue of approximately $865 million
- Operating margin of approximately 15%
Fiscal Year 2024 Outlook
For Capri Holdings, the Company expects the following:
- Total revenue of approximately $5.8 billion
- Modest gross margin expansion
- Operating margin of approximately 16.5%
- Effective tax rate in the mid-teens range
- Diluted earnings per share of approximately $6.40
For Versace, the Company expects the following:
- Total revenue of approximately $1.25 billion
- Operating margin in the mid-teens range
For Jimmy Choo, the Company expects the following:
- Total revenue of approximately $650 million
- Operating margin in the high-single-digit range
For Michael Kors, the Company expects the following:
- Total revenue of approximately $3.9 billion
- Operating margin in the low-20% range
Conference Call Information
A conference call to discuss third quarter Fiscal 2023 results
is scheduled for today, February 8, 2023 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 February 15, 2023. 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 13735207.
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, the impact of the war in Ukraine,
ERP implementation costs, Capri transformation costs, impairment
charges, 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 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 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; changes in
consumer traffic and retail trends; high consumer debt levels,
recession and inflationary pressures; 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; 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.
SCHEDULE 1
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions, except share and
per share data)
(Unaudited)
Three Months Ended
Nine Months Ended
December 31, 2022
December 25, 2021
December 31, 2022
December 25, 2021
Total revenue
$
1,512
$
1,609
$
4,284
$
4,162
Cost of goods sold
507
561
1,427
1,374
Gross profit
1,005
1,048
2,857
2,788
Total operating expenses
769
717
2,138
2,004
Income from operations
236
331
719
784
Other income, net
(1
)
—
(2
)
(2
)
Interest expense (income), net
12
(7
)
13
(11
)
Foreign currency (gain) loss
(3
)
(4
)
(10
)
1
Income before income taxes
228
342
718
796
Provision for income taxes
3
19
66
54
Net income
225
323
652
742
Less: Net income attributable to
noncontrolling interest
—
1
2
1
Net income attributable to Capri
$
225
$
322
$
650
$
741
Weighted average ordinary shares
outstanding:
Basic
128,849,793
149,717,485
135,600,276
150,975,773
Diluted
130,364,919
152,375,294
137,050,159
153,834,120
Net income per ordinary share:
Basic
$
1.74
$
2.15
$
4.79
$
4.91
Diluted
$
1.72
$
2.11
$
4.74
$
4.82
SCHEDULE 2
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In millions, except share
data)
(Unaudited)
December 31, 2022
April 2, 2022
December 25, 2021
Assets
Current assets
Cash and cash equivalents
$
281
$
169
$
261
Receivables, net
372
434
449
Inventories, net
1,188
1,096
978
Prepaid expenses and other current
assets
243
192
384
Total current assets
2,084
1,891
2,072
Property and equipment, net
546
476
460
Operating lease right-of-use assets
1,369
1,358
1,401
Intangible assets, net
1,743
1,847
1,895
Goodwill
1,358
1,418
1,447
Deferred tax assets
247
240
178
Other assets
207
250
227
Total assets
$
7,554
$
7,480
$
7,680
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable
$
519
$
555
$
593
Accrued payroll and payroll related
expenses
131
165
149
Accrued income taxes
65
52
166
Short-term operating lease liabilities
412
414
437
Short-term debt
19
29
26
Accrued expenses and other current
liabilities
413
351
381
Total current liabilities
1,559
1,566
1,752
Long-term operating lease liabilities
1,392
1,467
1,503
Deferred tax liabilities
531
432
443
Long-term debt
1,521
1,131
976
Other long-term liabilities
328
326
231
Total liabilities
5,331
4,922
4,905
Commitments and contingencies
Shareholders’ equity
Ordinary shares, no par value; 650,000,000
shares authorized; 223,781,728 shares issued and 125,398,217
outstanding at December 31, 2022; 221,967,599 shares issued and
142,806,269 outstanding at April 2, 2022 and 221,322,510 shares
issued and 147,252,018 outstanding at December 25, 2021
—
—
—
Treasury shares, at cost (98,383,511
shares at December 31, 2022, 79,161,330 shares at April 2, 2022 and
74,070,492 shares at December 25, 2021)
(4,951
)
(3,987
)
(3,686
)
Additional paid-in capital
1,327
1,260
1,238
Accumulated other comprehensive income
105
194
213
Retained earnings
5,742
5,092
5,011
Total shareholders’ equity of Capri
2,223
2,559
2,776
Noncontrolling interest
—
(1
)
(1
)
Total shareholders’ equity
2,223
2,558
2,775
Total liabilities and shareholders’
equity
$
7,554
$
7,480
$
7,680
SCHEDULE 3
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONSOLIDATED SEGMENT
DATA
($ in millions)
(Unaudited)
Three Months Ended
Nine Months Ended
December 31, 2022
December 25, 2021
December 31, 2022
December 25, 2021
Revenue by Segment and Region:
Versace
The Americas
$
85
$
89
$
320
$
283
EMEA
113
99
350
304
Asia
51
63
162
186
Versace Revenue
249
251
832
773
Jimmy Choo
The Americas
54
51
151
127
EMEA
70
69
193
175
Asia
44
58
138
155
Jimmy Choo Revenue
168
178
482
457
Michael Kors
The Americas
777
814
2,045
1,960
EMEA
212
237
616
616
Asia
106
129
309
356
Michael Kors Revenue
1,095
1,180
2,970
2,932
Total Revenue
$
1,512
$
1,609
$
4,284
$
4,162
Income from Operations:
Versace
$
24
$
32
$
138
$
135
Jimmy Choo
18
16
45
28
Michael Kors
251
335
721
795
Total segment income from operations
293
383
904
958
Less: Corporate expenses
(56
)
(37
)
(171
)
(123
)
Impairment of assets
(1
)
—
(12
)
(33
)
Restructuring and other charges
(5
)
(14
)
(11
)
(25
)
COVID-19 related charges
2
(1
)
6
7
Impact of war in Ukraine
3
—
3
—
Total Income from Operations
$
236
$
331
$
719
$
784
Operating Margin:
Versace
9.6
%
12.7
%
16.6
%
17.5
%
Jimmy Choo
10.7
%
9.0
%
9.3
%
6.1
%
Michael Kors
22.9
%
28.4
%
24.3
%
27.1
%
Capri Operating Margin
15.6
%
20.6
%
16.8
%
18.8
%
SCHEDULE 4
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
SUPPLEMENTAL RETAIL STORE
INFORMATION
(Unaudited)
As of
Retail Store Information:
December 31, 2022
December 25, 2021
Versace
225
212
Jimmy Choo
242
240
Michael Kors
827
834
Total number of retail stores
1,294
1,286
SCHEDULE 5
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONSTANT CURRENCY DATA
(In millions)
(Unaudited)
Three Months Ended
% Change
December 31, 2022
December 25, 2021
As
Reported
Constant
Currency
Total Revenue:
Versace
$
249
$
251
(0.8
) %
11.2
%
Jimmy Choo
168
178
(5.6
) %
3.4
%
Michael Kors
1,095
1,180
(7.2
) %
(3.6
) %
Total Revenue
$
1,512
$
1,609
(6.0
) %
(0.5
) %
Nine Months Ended
% Change
December 31, 2022
December 25, 2021
As
Reported
Constant
Currency
Total Revenue:
Versace
$
832
$
773
7.6
%
22.9
%
Jimmy Choo
482
457
5.5
%
15.1
%
Michael Kors
2,970
2,932
1.3
%
5.6
%
Total Revenue
$
4,284
$
4,162
2.9
%
9.9
%
SCHEDULE 6
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In millions, except per share
data)
(Unaudited)
Three Months Ended December
31, 2022
As Reported
Impairment Charges
Restructuring and Other Charges
(1)
COVID-19 Related Charges
ERP Implementation
Capri Transformation
War in Ukraine
As Adjusted
Gross profit
$
1,005
$
—
$
—
$
(2
)
$
—
$
—
$
—
$
1,003
Operating expenses
$
769
$
(1
)
$
(5
)
$
—
$
(4
)
$
(15
)
$
3
$
747
Total income from operations
$
236
$
1
$
5
$
(2
)
$
4
$
15
$
(3
)
$
256
Income before provision for income
taxes
$
228
$
1
$
5
$
(2
)
$
4
$
15
$
(3
)
$
248
Provision for income taxes
$
3
$
—
$
1
$
—
$
1
$
4
$
(1
)
$
8
Net income attributable to Capri
$
225
$
1
$
4
$
(2
)
$
3
$
11
$
(2
)
$
240
Diluted net income per ordinary share -
Capri
$
1.72
$
0.01
$
0.03
$
(0.02
)
$
0.02
$
0.09
$
(0.01
)
$
1.84
- Primarily Includes other charges recorded in connection with
the acquisition of Gianni Versace S.r.l.
SCHEDULE 7
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In millions, except per share
data)
(Unaudited)
Nine Months Ended December 31,
2022
As Reported
Impairment Charges
Restructuring and Other
Charges(1)
COVID-19 Related Charges
ERP Implementation
Capri Transformation
War in Ukraine
As Adjusted
Gross profit
$
2,857
$
—
$
—
$
(6
)
$
—
$
—
$
—
$
2,851
Operating expenses
$
2,138
$
(12
)
$
(11
)
$
—
$
(20
)
$
(34
)
$
3
$
2,064
Total income from operations
$
719
$
12
$
11
$
(6
)
$
20
$
34
$
(3
)
$
787
Income before provision for income
taxes
$
718
$
12
$
11
$
(6
)
$
20
$
34
$
(3
)
$
786
Provision for income taxes
$
66
$
2
$
3
$
(1
)
$
5
$
10
$
(1
)
$
84
Net income attributable to Capri
$
650
$
10
$
8
$
(5
)
$
15
$
24
$
(2
)
$
700
Diluted net income per ordinary share -
Capri
$
4.74
$
0.07
$
0.06
$
(0.04
)
$
0.11
$
0.18
$
(0.01
)
$
5.11
- Primarily Includes other charges recorded in connection with
the acquisition of Gianni Versace S.r.l.
SCHEDULE 8
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In millions, except per share
data)
(Unaudited)
Three Months Ended December
25, 2021
As Reported
Restructuring and Other Charges
(1)
COVID-19 Related Charges
ERP Implementation
Capri Transformation
As Adjusted
Gross profit
$
1,048
$
—
$
(1
)
$
—
$
—
$
1,047
Operating expenses
$
717
$
(14
)
$
(2
)
$
(3
)
$
(10
)
$
688
Total income from operations
$
331
$
14
$
1
$
3
$
10
$
359
Income before provision for income
taxes
$
342
$
14
$
1
$
3
$
10
$
370
Provision for income taxes
$
19
$
1
$
1
$
1
$
8
$
30
Net income attributable to Capri
$
322
$
13
$
—
$
2
$
2
$
339
Diluted net income per ordinary share -
Capri
$
2.11
$
0.09
$
—
$
0.01
$
0.01
$
2.22
- 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 9
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In millions, except per share
data)
(Unaudited)
Nine Months Ended December 25,
2021
As Reported
Impairment Charges
Restructuring and Other
Charges(1)
COVID-19 Related Charges
ERP Implementation
Capri Transformation
As Adjusted
Gross profit
$
2,788
$
—
$
—
$
(9
)
$
—
$
—
$
2,779
Operating expenses
$
2,004
$
(33
)
$
(25
)
$
(2
)
$
(11
)
$
(15
)
$
1,918
Total income from operations
$
784
$
33
$
25
$
(7
)
$
11
$
15
$
861
Income before provision for income
taxes
$
796
$
33
$
25
$
(7
)
$
11
$
15
$
873
Provision for income taxes
$
54
$
8
$
2
$
—
$
4
$
9
$
77
Net income attributable to Capri
$
741
$
25
$
23
$
(7
)
$
7
$
6
$
795
Diluted net income per ordinary share -
Capri
$
4.82
$
0.16
$
0.15
$
(0.05
)
$
0.05
$
0.04
$
5.17
- 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/20230208005359/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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