First Quarter Results Slightly Ahead of
Expectations
Announced Planned Acquisition of Capri
Holdings Limited by Tapestry, Inc.
Capri Holdings Limited (NYSE:CPRI), a global
fashion luxury group, today announced its financial results for the
first quarter of Fiscal 2024 ended July 1, 2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230810662808/en/
(Photo: Business Wire)
First Quarter Fiscal 2024 Highlights
- Revenue decreased 9.6% on a reported basis and 9.3% in constant
currency
- Adjusted operating margin of 9.0%
- Adjusted earnings per share of $0.74
John D. Idol, the Company's Chairman and Chief Executive
Officer, said, "As announced earlier today, the planned acquisition
of Capri Holdings by Tapestry marks a major milestone for our
company. It is a testament to all that our teams have achieved in
building Versace, Jimmy Choo and Michael Kors into the iconic and
powerful luxury fashion houses they are today. We are confident
this combination will deliver immediate value to our shareholders.
It will also 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."
First 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 First Quarter Fiscal 2024
Results
- Total revenue of $1.23 billion decreased 9.6% compared to last
year. On a constant currency basis, total revenue decreased
9.3%.
- Gross profit was $812 million and gross margin was 66.1%,
compared to $901 million and 66.3% in the prior year. Adjusted
gross profit was $812 million and adjusted gross margin was 66.1%,
compared to $900 million and 66.2% in the prior year.
- Income from operations was $80 million and operating margin was
6.5%, compared to $231 million and 17.0% in the prior year.
Adjusted income from operations was $111 million and operating
margin was 9.0%, compared to $251 million and 18.5% in the prior
year.
- Net income was $48 million, or $0.41 per diluted share,
compared to $201 million, or $1.40 per diluted share, in the prior
year. Adjusted net income was $88 million, or $0.74 per diluted
share, compared to $215 million, or $1.50 per diluted share, in the
prior year.
- Net inventory as of July 1, 2023 was $1.166 billion, an 8%
decrease compared to the prior year.
Versace First Quarter Fiscal 2024 Results
- Versace revenue of $259 million decreased 5.8% on both a
reported and constant currency basis.
- Versace operating income was $3 million and operating margin
was 1.2%, compared to $52 million and 18.9% in the prior year.
Jimmy Choo First Quarter Fiscal 2024 Results
- Jimmy Choo revenue of $183 million increased 6.4% compared to
the prior year. On a constant currency basis, total revenue
increased 7.0%.
- Jimmy Choo operating income was $16 million and operating
margin was 8.7%, compared to $19 million and 11.0% in the prior
year.
Michael Kors First Quarter Fiscal 2024 Results
- Michael Kors revenue of $787 million decreased 13.8% compared
to the prior year. On a constant currency basis, total revenue
decreased 13.4%.
- Michael Kors operating income was $130 million and operating
margin was 16.5%, compared to $222 million and 24.3% in the prior
year.
Outlook
Given the planned acquisition of Capri Holdings Limited by
Tapestry, Inc., the Company does not intend to provide financial
guidance at this time and has withdrawn its previously issued
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 (income) expense, ERP
implementation costs, Capri transformation costs, COVID-19 related
expenses 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.
Additional Information and Where to Find It
This communication relates to the proposed transaction involving
Capri. In connection with the proposed transaction, Capri will file
relevant materials with the SEC, including Capri’s proxy statement
on Schedule 14A (the “Proxy
Statement”). This communication is not a substitute for the
Proxy Statement or for any other document that Capri may file with
the SEC and send to its shareholders in connection with the
proposed transaction. The proposed transaction will be submitted to
Capri’s shareholders for their consideration. Before making any
voting decision, Capri’s shareholders are urged to read all
relevant documents filed or to be filed with the SEC, including the
Proxy Statement, as well as any amendments or supplements to those
documents, when they become available because they will contain
important information about the proposed transaction.
Capri’s shareholders will be able to obtain a free copy of the
Proxy Statement, as well as other filings containing information
about Capri, without charge, at the SEC’s website (www.sec.gov).
Copies of the Proxy Statement and the filings with the SEC that
will be incorporated by reference therein can also be obtained,
without charge, by directing a request to Capri Holdings Limited,
90 Whitfield Street, 2nd Floor, London, United Kingdom W1T 4EZ,
Attention: Investor Relations; telephone +1 (201) 514-8234, or from
Capri’s website www.capriholdings.com.
Participants in the Solicitation
Capri and certain of its directors, executive officers and
employees may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information
regarding Capri’s directors and executive officers is available in
Capri’s proxy statement for its 2023 annual meeting of
shareholders, which was filed with the SEC on June 15, 2023. Other
information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the Proxy
Statement and other relevant materials to be filed with the SEC in
connection with the proposed transaction when they become
available. Free copies of the Proxy Statement and such other
materials may be obtained as described in the preceding
paragraph.
Forward-Looking Statements
This communication 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. 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, including regarding the proposed
transaction. These risks, uncertainties and other factors include
changes in consumer traffic and retail trends; high consumer debt
levels, recession and inflationary pressures; loss of market share
and industry competition; the impact of the COVID-19 pandemic,
levels of cash flow and future availability of credit, compliance
with restrictive covenants under Capri’s credit agreement, Capri’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 Capri’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 Capri’s ordinary shares and its operating
results; significant transaction costs; unknown liabilities; the
risk of litigation and/or regulatory actions related to Capri’s
businesses; fluctuations in demand for Capri’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 Capri’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; 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; the timing, receipt and terms and
conditions of any required governmental and regulatory approvals
for the proposed transaction that could delay or result in the
termination of the proposed transaction, 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 transaction, the possibility that Capri’s
shareholders may not approve the proposed transaction, the risk
that the parties to the merger agreement may not be able to satisfy
the conditions to the proposed transaction in a timely manner or at
all, risks related to disruption of management time from ongoing
business operations due to the proposed transaction, the risk that
any announcements relating to the proposed transaction could have
adverse effects on the market price of Capri’s ordinary shares, the
risk of any unexpected costs or expenses resulting from the
proposed transaction, the risk of any litigation relating to the
proposed transaction, the risk that the proposed transaction 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
transaction 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
July 1, 2023
July 2, 2022
Total revenue
$
1,229
$
1,360
Cost of goods sold
417
459
Gross profit
812
901
Total operating expenses
732
670
Income from operations
80
231
Other expense, net
1
—
Interest expense (income), net
8
(4
)
Foreign currency loss
21
4
Income before income taxes
50
231
Provision for income taxes
2
28
Net income
48
203
Less: Net income attributable to
noncontrolling interest
—
2
Net income attributable to Capri
$
48
$
201
Weighted average ordinary shares
outstanding:
Basic
117,431,941
141,913,586
Diluted
118,282,633
143,733,984
Net income per ordinary share:
Basic
$
0.41
$
1.42
Diluted
$
0.41
$
1.40
SCHEDULE 2
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In millions, except share
data)
(Unaudited)
July 1, 2023
April 1, 2023
July 2, 2022
Assets
Current assets
Cash and cash equivalents
$
238
$
249
$
221
Receivables, net
300
369
394
Inventories, net
1,166
1,057
1,265
Prepaid expenses and other current
assets
216
195
201
Total current assets
1,920
1,870
2,081
Property and equipment, net
551
552
466
Operating lease right-of-use assets
1,359
1,330
1,388
Intangible assets, net
1,737
1,728
1,739
Goodwill
1,308
1,293
1,336
Deferred tax assets
312
296
231
Other assets
222
226
369
Total assets
$
7,409
$
7,295
$
7,610
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable
$
476
$
475
$
540
Accrued payroll and payroll related
expenses
121
154
123
Accrued income taxes
82
73
136
Short-term operating lease liabilities
416
429
399
Short-term debt
13
5
37
Accrued expenses and other current
liabilities
340
314
379
Total current liabilities
1,448
1,450
1,614
Long-term operating lease liabilities
1,354
1,348
1,465
Deferred tax liabilities
505
508
476
Long-term debt
1,924
1,822
1,382
Other long-term liabilities
366
318
295
Total liabilities
5,597
5,446
5,232
Commitments and contingencies
Shareholders’ equity
Ordinary shares, no par value; 650,000,000
shares authorized; 225,684,542 shares issued and 116,064,396
outstanding at July 1, 2023; 224,166,250 shares issued and
117,347,045 outstanding at April 1, 2023 and 223,503,792 shares
issued and 137,956,977 outstanding at July 2, 2022
—
—
—
Treasury shares, at cost (109,620,146
shares at July 1, 2023, 106,819,205 shares at April 1, 2023 and
85,546,815 shares at July 2, 2022)
(5,457
)
(5,351
)
(4,299
)
Additional paid-in capital
1,375
1,344
1,294
Accumulated other comprehensive income
137
147
89
Retained earnings
5,756
5,708
5,293
Total shareholders’ equity of Capri
1,811
1,848
2,377
Noncontrolling interest
1
1
1
Total shareholders’ equity
1,812
1,849
2,378
Total liabilities and shareholders’
equity
$
7,409
$
7,295
$
7,610
SCHEDULE 3
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONSOLIDATED SEGMENT
DATA
($ in millions)
(Unaudited)
Three Months Ended
July 1, 2023
July 2, 2022
Revenue by Segment and Region:
Versace
The Americas
$
82
$
115
EMEA
116
107
Asia
61
53
Versace Revenue
259
275
Jimmy Choo
The Americas
49
54
EMEA
81
66
Asia
53
52
Jimmy Choo Revenue
183
172
Michael Kors
The Americas
501
625
EMEA
175
191
Asia
111
97
Michael Kors Revenue
787
913
Total Revenue
$
1,229
$
1,360
Income from Operations:
Versace
$
3
$
52
Jimmy Choo
16
19
Michael Kors
130
222
Total segment income from operations
149
293
Less: Corporate expenses
(71
)
(60
)
Restructuring and other income
(expense)
2
(3
)
COVID-19 related charges
—
1
Total Income from Operations
$
80
$
231
Operating Margin:
Versace
1.2
%
18.9
%
Jimmy Choo
8.7
%
11.0
%
Michael Kors
16.5
%
24.3
%
Capri
6.5
%
17.0
%
SCHEDULE 4
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
SUPPLEMENTAL RETAIL STORE
INFORMATION
(Unaudited)
As of
Retail Store Information:
July 1, 2023
July 2, 2022
Versace
224
208
Jimmy Choo
237
236
Michael Kors
810
821
Total number of retail stores
1,271
1,265
SCHEDULE 5
CAPRI HOLDINGS LIMITED AND
SUBSIDIARIES
CONSTANT CURRENCY DATA
(In millions)
(Unaudited)
Three Months Ended
% Change
July 1, 2023
July 2, 2022
As
Reported
Constant
Currency
Total Revenue:
Versace
$
259
$
275
(5.8
)%
(5.8
)%
Jimmy Choo
183
172
6.4
%
7.0
%
Michael Kors
787
913
(13.8
)%
(13.4
)%
Total Revenue
$
1,229
$
1,360
(9.6
)%
(9.3
)%
SCHEDULE 6
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In millions, except per share
data)
(Unaudited)
Three Months Ended July 1,
2023
As
Reported
Restructuring and Other (Income)
Expense (1)
ERP Implementation (2)
Capri Transformation (3)
As
Adjusted
Gross profit
$
812
$
—
$
—
$
—
$
812
Operating expenses
$
732
$
2
$
(5
)
$
(28
)
$
701
Total income from operations
$
80
$
(2
)
$
5
$
28
$
111
Foreign currency loss
$
21
$
(17
)
$
—
$
—
$
4
Income before provision for income
taxes
$
50
$
15
$
5
$
28
$
98
Provision for income taxes
$
2
$
3
$
1
$
4
$
10
Net income attributable to Capri
$
48
$
12
$
4
$
24
$
88
Diluted net income per ordinary share -
Capri
$
0.41
$
0.10
$
0.03
$
0.20
$
0.74
______________________
(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. and
severance expenses. 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 7
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In millions, except per share
data)
(Unaudited)
Three Months Ended July 2,
2022
As Reported
Restructuring and Other Expense
(1)
COVID-19 Related Expenses
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 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/20230810662808/en/
Investor Relations: Jennifer Davis +1 (201) 514-8234
Jennifer.Davis@CapriHoldings.com Media: Press@CapriHoldings.com
Capri (NYSE:CPRI)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
Capri (NYSE:CPRI)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024