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.
First Quarter Fiscal 2022 Highlights
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:
Versace First Quarter Fiscal 2022 Results:
Jimmy Choo First Quarter Fiscal 2022 Results:
Michael Kors First Quarter Fiscal 2022 Results:
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.
For Versace, the Company expects the following.
For Jimmy Choo, the Company expects the following.
For Michael Kors, the Company expects the following.
Second Quarter Fiscal 2022 Outlook
For Capri Holdings, the Company expects the following.
For Versace, the Company expects the following.
For Jimmy Choo, the Company expects the following.
For Michael Kors, the Company expects the following.
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,
|
|
June 27,
|
||||
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,
|
March 27,
|
June 27,
|
|||||||||
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,
|
|
June 27,
|
||||||
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,
|
June 27,
|
||
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,
|
|
June 27,
|
|
As
|
|
Constant
|
||||||
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
|
|
Restructuring
|
|
COVID-19
|
|
ERP
|
|
As
|
||||||||||
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
|
Restructuring
|
COVID-19
|
ERP
|
As
|
|||||||||||||||
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. |
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