Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Photo/Multimedia, Conference Call, Webcast, Stock Sale/Buyback

Capri Holdings Limited Announces First Quarter Fiscal 2023 Results


Capri Holdings Limited (NYSE:CPRI), a global fashion luxury group, today announced its financial results for the first quarter of Fiscal 2023 ended July 2, 2022.

First Quarter Fiscal 2023 Highlights

John D. Idol, the Company's Chairman and Chief Executive Officer, said, "We are pleased with our first quarter performance with revenue, gross margin, operating margin and earnings per share all exceeding our expectations. Better than anticipated results were driven by strong momentum across all three luxury houses reflecting the power of our brands as they continue to deepen consumer desire and engagement."

Mr. Idol continued, "Looking forward, we remain optimistic about the long-term growth potential for Versace, Jimmy Choo and Michael Kors. With our portfolio of iconic, founder-led fashion luxury brands, Capri Holdings is positioned to deliver multiple years of revenue and earnings growth."

First 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. 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 2023 Results:

Versace First Quarter Fiscal 2023 Results:

Jimmy Choo First Quarter Fiscal 2023 Results:

Michael Kors First Quarter Fiscal 2023 Results:

Share Repurchase Program

During the first quarter, the Company repurchased approximately 6.1 million ordinary shares for approximately $300 million in open market transactions. As of July 2, 2022, the remaining availability under the Company's share repurchase authorization was $700 million.

Outlook

The following guidance is provided on an adjusted, non-GAAP basis. Due to the ongoing dynamic nature of the COVID-19 pandemic, financial results could differ materially from the current outlook due to a number of external events which are not reflected in our guidance, including any significant additional store closures or new government restrictions that could further impact traffic and sales trends as well as any greater supply chain disruptions that could further extend inventory delays or increase transportation expenses.

Fiscal Year 2023 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 2023 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:

Fiscal Year 2023 Quarterly Outlook

For Capri Holdings, the Company expects the following:

 

Second Quarter

Third Quarter

Fourth Quarter

FY2023

Revenue

~$1.40B

~$1.65B

~$1.44B

~$5.85B

Adjusted Operating Margin

~17%

~22%

~14%

~18%

Adjusted EPS

~$1.55

~$2.45

~$1.35

~$6.85

Conference Call Information

A conference call to discuss first quarter Fiscal 2023 results is scheduled for today, August 9, 2022 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 16, 2022. 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 13731647. 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, 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 Versace, Jimmy Choo and Michael Kors 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 impact of 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 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; changes in consumer traffic and retail trends; high consumer debt levels, recession and inflationary pressures; 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

 

 

July 2,
2022

 

June 26,
2021

Total revenue

 

$

1,360

 

 

$

1,253

Cost of goods sold

 

 

459

 

 

 

397

Gross profit

 

 

901

 

 

 

856

Total operating expenses

 

 

670

 

 

 

598

Income from operations

 

 

231

 

 

 

258

Interest (income) expense, net

 

 

(4

)

 

 

1

Foreign currency loss

 

 

4

 

 

 

1

Income before income taxes

 

 

231

 

 

 

256

Provision for income taxes

 

 

28

 

 

 

37

Net income

 

 

203

 

 

 

219

Less: Net income attributable to noncontrolling interests

 

 

2

 

 

 

?

Net income attributable to Capri

 

$

201

 

 

$

219

Weighted average ordinary shares outstanding:

 

 

 

 

Basic

 

 

141,913,586

 

 

 

151,312,103

Diluted

 

 

143,733,984

 

 

 

154,890,483

Net income per ordinary share:

 

 

 

 

Basic

 

$

1.42

 

 

$

1.45

Diluted

 

$

1.40

 

 

$

1.41

 

SCHEDULE 2

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)

 

 

 

July 2,
2022

 

April 2,
2022

 

June 26,
2021

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

221

 

 

$

169

 

 

$

356

 

Receivables, net

 

 

394

 

 

 

434

 

 

 

382

 

Inventories, net

 

 

1,265

 

 

 

1,096

 

 

 

760

 

Prepaid expenses and other current assets

 

 

201

 

 

 

192

 

 

 

209

 

Total current assets

 

 

2,081

 

 

 

1,891

 

 

 

1,707

 

Property and equipment, net

 

 

466

 

 

 

476

 

 

 

472

 

Operating lease right-of-use assets

 

 

1,388

 

 

 

1,358

 

 

 

1,468

 

Intangible assets, net

 

 

1,739

 

 

 

1,847

 

 

 

1,996

 

Goodwill

 

 

1,336

 

 

 

1,418

 

 

 

1,512

 

Deferred tax assets

 

 

231

 

 

 

240

 

 

 

281

 

Other assets

 

 

369

 

 

 

250

 

 

 

188

 

Total assets

 

$

7,610

 

 

$

7,480

 

 

$

7,624

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

540

 

 

$

555

 

 

$

464

 

Accrued payroll and payroll related expenses

 

 

123

 

 

 

165

 

 

 

131

 

Accrued income taxes

 

 

136

 

 

 

52

 

 

 

101

 

Short-term operating lease liabilities

 

 

399

 

 

 

414

 

 

 

442

 

Short-term debt

 

 

37

 

 

 

29

 

 

 

127

 

Accrued expenses and other current liabilities

 

 

379

 

 

 

351

 

 

 

297

 

Total current liabilities

 

 

1,614

 

 

 

1,566

 

 

 

1,562

 

Long-term operating lease liabilities

 

 

1,465

 

 

 

1,467

 

 

 

1,594

 

Deferred tax liabilities

 

 

476

 

 

 

432

 

 

 

443

 

Long-term debt

 

 

1,382

 

 

 

1,131

 

 

 

1,206

 

Other long-term liabilities

 

 

295

 

 

 

326

 

 

 

369

 

Total liabilities

 

 

5,232

 

 

 

4,922

 

 

 

5,174

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

Ordinary shares, no par value; 650,000,000 shares authorized; 223,503,792 shares issued and 137,956,977 outstanding at July 2, 2022; 221,967,599 shares issued and 142,806,269 outstanding at April 2, 2022 and 220,973,560 shares issued and 151,942,484 outstanding at June 26, 2021

 

 

?

 

 

 

?

 

 

 

?

 

Treasury shares, at cost (85,546,815 shares at July 2, 2022, 79,161,330 shares at April 2, 2022 and 69,031,076 shares at June 26, 2021)

 

 

(4,299

)

 

 

(3,987

)

 

 

(3,385

)

Additional paid-in capital

 

 

1,294

 

 

 

1,260

 

 

 

1,201

 

Accumulated other comprehensive income

 

 

89

 

 

 

194

 

 

 

147

 

Retained earnings

 

 

5,293

 

 

 

5,092

 

 

 

4,489

 

Total shareholders' equity of Capri

 

 

2,377

 

 

 

2,559

 

 

 

2,452

 

Noncontrolling interest

 

 

1

 

 

 

(1

)

 

 

(2

)

Total shareholders' equity

 

 

2,378

 

 

 

2,558

 

 

 

2,450

 

Total liabilities and shareholders' equity

 

$

7,610

 

 

$

7,480

 

 

$

7,624

 

 

 

 

 

 

 

 

SCHEDULE 3

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED SEGMENT DATA

($ in millions)

(Unaudited)

 

 

 

Three Months Ended

 

 

July 2,
2022

 

June 26,
2021

Revenue by Segment and Region:

 

 

 

 

 

 

 

 

 

 

 

Versace

 

The Americas

 

$

115

 

 

$

87

 

 

 

EMEA

 

 

107

 

 

 

87

 

 

 

Asia

 

 

53

 

 

 

66

 

Versace Revenue

 

 

275

 

 

 

240

 

 

 

 

 

 

 

 

Jimmy Choo

 

The Americas

 

 

54

 

 

 

38

 

 

 

EMEA

 

 

66

 

 

 

50

 

 

 

Asia

 

 

52

 

 

 

54

 

Jimmy Choo Revenue

 

 

172

 

 

 

142

 

 

 

 

 

 

 

 

Michael Kors

 

The Americas

 

 

625

 

 

 

590

 

 

 

EMEA

 

 

191

 

 

 

165

 

 

 

Asia

 

 

97

 

 

 

116

 

Michael Kors Revenue

 

 

913

 

 

 

871

 

 

 

 

 

 

Total Revenue

 

$

1,360

 

 

$

1,253

 

 

 

 

 

 

Income from Operations:

 

 

 

 

Versace

 

$

52

 

 

$

48

 

Jimmy Choo

 

 

19

 

 

 

11

 

Michael Kors

 

 

222

 

 

 

240

 

Total segment income from operations

 

 

293

 

 

 

299

 

Less: Corporate expenses

 

 

(60

)

 

 

(41

)

Restructuring and other charges

 

 

(3

)

 

 

(3

)

COVID-19 related charges

 

1

 

 

 

3

 

Total Income from Operations

 

$

231

 

 

$

258

 

 

 

 

 

 

 

 

Operating Margin:

 

 

 

 

Versace

 

 

18.9

%

 

 

20.0

%

Jimmy Choo

 

 

11.0

%

 

 

7.7

%

Michael Kors

 

 

24.3

%

 

 

27.6

%

Capri Operating Margin

 

 

17.0

%

 

 

20.6

%

 

SCHEDULE 4

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

SUPPLEMENTAL RETAIL STORE INFORMATION

(Unaudited)

 

 

 

As of

Retail Store Information:

 

July 2,
2022

 

June 26,
2021

Versace

 

208

 

208

Jimmy Choo

 

236

 

233

Michael Kors

 

821

 

820

Total number of retail stores

 

1,265

 

1,261

 

SCHEDULE 5

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSTANT CURRENCY DATA

(In millions)

(Unaudited)

 

 

 

Three Months Ended

 

% Change

 

 

July 2,
2022

 

June 26,
2021

 

As

Reported

 

Constant

Currency

Total Revenue:

 

 

 

 

 

 

 

 

Versace

 

$

275

 

$

240

 

14.6

%

 

29.6

%

Jimmy Choo

 

 

172

 

 

142

 

21.1

%

 

30.3

%

Michael Kors

 

 

913

 

 

871

 

4.8

%

 

8.7

%

Total Revenue

 

$

1,360

 

$

1,253

 

8.5

%

 

15.2

%

 

SCHEDULE 6

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 Charges (1)

 

COVID-19 Related Charges

 

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 other costs recorded in connection with the acquisitions of Gianni Versace S.r.l and costs related to other restructuring initiatives.

SCHEDULE 7

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except 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.

 


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