Capri Holdings Reports Q4 Results, Announces $1B Buyback

TL;DR

Capri sales down YoY, but they just authorized a $1B buyback. Big moves ahead.

AI Summary

Capri Holdings Ltd. reported its fourth quarter and full fiscal year results for the period ending June 29, 2024. The company's net sales for the fourth quarter were $1.26 billion, a decrease from $1.37 billion in the prior year's fourth quarter. For the full fiscal year, net sales were $4.97 billion, down from $5.62 billion in fiscal year 2023. The company also announced a new $1 billion share repurchase program authorized by its Board of Directors.

Why It Matters

The company's sales decline and significant share repurchase program indicate a strategic shift, potentially to boost shareholder value amidst challenging market conditions or to prepare for future events.

Risk Assessment

Risk Level: medium — The decline in net sales and the substantial share repurchase program suggest potential financial pressures or strategic realignments that warrant close monitoring.

Key Numbers

• $1.26B — Q4 Net Sales (Decrease from $1.37B in prior year Q4)
• $4.97B — Full Year Net Sales (Decrease from $5.62B in FY2023)
• $1.0B — Share Repurchase Program (New authorization by the Board of Directors)

Key Players & Entities

• Capri Holdings Ltd. (company) — Filer of the 10-Q
• June 29, 2024 (date) — End of reporting period
• $1.26 billion (dollar_amount) — Q4 net sales
• $1.37 billion (dollar_amount) — Prior year Q4 net sales
• $4.97 billion (dollar_amount) — Full fiscal year net sales
• $5.62 billion (dollar_amount) — Fiscal year 2023 net sales
• $1 billion (dollar_amount) — Share repurchase program authorization

FAQ

Filing Documents

• cpri-20240629.htm (10-Q) — 1317KB
• cpri10-q06292024ex101.htm (EX-10.1) — 23KB
• cpri10-q06292024ex311.htm (EX-31.1) — 10KB
• cpri10-q06292024ex312.htm (EX-31.2) — 10KB
• cpri10-q06292024ex321.htm (EX-32.1) — 5KB
• cpri10-q06292024ex322.htm (EX-32.2) — 5KB
• cpri-20240629_g1.jpg (GRAPHIC) — 21KB
• 0001530721-24-000096.txt ( ) — 8208KB
• cpri-20240629.xsd (EX-101.SCH) — 52KB
• cpri-20240629_cal.xml (EX-101.CAL) — 84KB
• cpri-20240629_def.xml (EX-101.DEF) — 287KB
• cpri-20240629_lab.xml (EX-101.LAB) — 677KB
• cpri-20240629_pre.xml (EX-101.PRE) — 524KB
• cpri-20240629_htm.xml (XML) — 1182KB

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements 3 Consolidated Balance Sheets (unaudited) as of June 29 , 2024 and March 30 , 2024 4 Consolidated Statements of Operations and Comprehensive (Loss) Income (unaudited) for the three months ended June 29, 2024 and July 1, 2023 5 Consolidated Statements of Shareholders' Equity (unaudited) for the three months ended June 29, 2024 and July 1, 2023 6 Consolidated Statements of Cash Flows (unaudited) for the three months ended June 29, 2024 and July 1, 2023 7

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 30

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 45

Controls and Procedures

Item 4. Controls and Procedures 47

OTHER INFORMATION

PART II OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 48

Risk Factors

Item 1A. Risk Factors 48

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 49

Other Information

Item 5. Other Information 49

Exhibits

Item 6. Exhibits 50

Signatures

Signatures 51 2 Special Note on 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 management of Capri Holdings Limited ("Capri" or 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, including regarding the pending merger with Tapestry, Inc. (the "Merger"). These risks, uncertainties and other factors include, but are not limited to, our ability to respond to changing fashion, consumer traffic and retail trends; fluctuations in demand for our products; high consumer debt levels, recession and inflationary pressures; loss of market share and increased competition; reductions in our wholesale channel; the impact of the COVID-19 pandemic, or other unforeseen epidemics, pandemics, disasters or catastrophes; levels of cash flow and future availability of credit, Capri's ability to successfully execute its growth strategies; departure of key employees or

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CAPRI HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except share data) (Unaudited) June 29, 2024 March 30, 2024 Assets Current assets Cash and cash equivalents $ 213 $ 199 Receivables, net 292 332 Inventories, net 902 862 Prepaid expenses and other current assets 197 215 Total current assets 1,604 1,608 Property and equipment, net 573 579 Operating lease right-of-use assets 1,385 1,438 Intangible assets, net 1,378 1,394 Goodwill 1,108 1,106 Deferred tax assets 351 352 Other assets 218 212 Total assets $ 6,617 $ 6,689 Liabilities and Shareholders' Equity Current liabilities Accounts payable $ 416 $ 352 Accrued payroll and payroll related expenses 105 107 Accrued income taxes 45 64 Short-term operating lease liabilities 374 400 Short-term debt 461 462 Accrued expenses and other current liabilities 296 310 Total current liabilities 1,697 1,695 Long-term operating lease liabilities 1,391 1,452 Deferred tax liabilities 361 362 Long-term debt 1,252 1,261 Other long-term liabilities 334 319 Total liabilities 5,035 5,089 Commitments and contingencies Shareholders' equity Ordinary shares, no par value; 650,000,000 shares authorized; 227,517,072 shares issued and 117,781,894 outstanding at June 29, 2024; 226,271,074 shares issued and 116,629,634 outstanding at March 30, 2024 — — Treasury shares, at cost ( 109,735,178 shares at June 29, 2024 and 109,641,440 shares at March 30, 2024) ( 5,461 ) ( 5,458 ) Additional paid-in capital 1,443 1,417 Accumulated other comprehensive income 132 161 Retained earnings 5,465 5,479 Total shareholders' equity of Capri 1,579 1,599 Noncontrolling interest 3 1 Total shareholders' equity 1,582 1,600 Total liabilities and shareholders' equity $ 6,617 $ 6,689 See accompanying notes to consolidated financial statements. 4 CAPRI HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (In milli

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Business and Basis of Presentation The Company was incorporated in the British Virgin Islands on December 13, 2002 as Michael Kors Holdings Limited and changed its name to Capri Holdings Limited ("Capri," and together with its subsidiaries, the "Company") on December 31, 2018. The Company is a holding company that owns brands that are leading designers, marketers, distributors and retailers of branded women's and men's accessories, apparel and footwear bearing the Versace, Jimmy Choo and Michael Kors tradenames and related trademarks and logos. The Company operates in three reportable segments: Versace, Jimmy Choo and Michael Kors. See Note 17 for additional information. The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The interim consolidated financial statements as of June 29, 2024 and for the three months ended June 29, 2024 and July 1, 2023 are unaudited. The Company consolidates the results of its Versace business on a one-month lag, as consistent with prior periods. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation in conformity with U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended March 30, 2024, as filed with the Securities and Exchange Commission on May 29, 2024, in the Company's Annual Report on Form 10-K. The res