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What changed in Capri Holdings Ltd's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Capri Holdings Ltd's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+496 added−473 removedSource: 10-K (2024-05-29) vs 10-K (2022-06-01)

Top changes in Capri Holdings Ltd's 2024 10-K

496 paragraphs added · 473 removed · 320 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

93 edited+24 added−34 removed46 unchanged
Biggest changeIn addition, we have licensing agreements through which we license to third parties the use of our Versace, Jimmy Choo and Michael Kors brand names and trademarks, certain production rights and sales and/or distribution rights with respect to our brands. 7 Table of Contents The following table details our revenue by segment and geographic location (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Versace revenue - the Americas $ 408 $ 201 $ 186 Versace revenue - EMEA 425 276 420 Versace revenue - Asia 255 241 237 Total Versace revenue 1,088 718 843 Jimmy Choo revenue - the Americas 175 102 107 Jimmy Choo revenue - EMEA 229 146 282 Jimmy Choo revenue - Asia 209 170 166 Total Jimmy Choo revenue 613 418 555 Michael Kors revenue - the Americas 2,627 1,869 2,822 Michael Kors revenue - EMEA 835 607 821 Michael Kors revenue - Asia 491 448 510 Total Michael Kors revenue 3,953 2,924 4,153 Total revenue - the Americas 3,210 2,172 3,115 Total revenue - EMEA 1,489 1,029 1,523 Total revenue - Asia 955 859 913 Total revenue $ 5,654 $ 4,060 $ 5,551 Competitive Strengths We believe that the following strengths differentiate us from our competitors: Global Fashion Luxury Group Led by a World-Class Management Team and Renowned Designers .
Biggest changeIn addition, we have licensing agreements through which we license to third-parties the use of our Versace, Jimmy Choo and Michael Kors brand names and trademarks, certain production rights and sales and/or distribution rights with respect to our brands. 8 Table of Contents The following table details our revenue by segment and geographic location (in millions): Fiscal Years Ended March 30, 2024 April 1, 2023 April 2, 2022 Versace - the Americas $ 338 $ 408 $ 408 Versace - EMEA 444 468 425 Versace - Asia 248 230 255 Total Versace revenue 1,030 1,106 1,088 Jimmy Choo - the Americas 176 196 175 Jimmy Choo - EMEA 266 255 229 Jimmy Choo - Asia 176 182 209 Total Jimmy Choo revenue 618 633 613 Michael Kors - the Americas 2,298 2,616 2,627 Michael Kors - EMEA 791 819 835 Michael Kors - Asia 433 445 491 Total Michael Kors revenue 3,522 3,880 3,953 Total - the Americas 2,812 3,220 3,210 Total - EMEA 1,501 1,542 1,489 Total - Asia 857 857 955 Total revenue $ 5,170 $ 5,619 $ 5,654 Competitive Strengths We believe that the following strengths differentiate us from our competitors: Global Fashion Luxury Group Led by a World-Class Management Team and Renowned Designers .
Michael Kors Our Michael Kors brand was launched over 40 years ago by Michael Kors, a world-renowned designer, whose vision has taken the Company from its beginnings as an American luxury sportswear house to a global accessories, footwear and ready-to-wear company with a global distribution network that has presence in over 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners.
Michael Kors Our Michael Kors brand was launched over 40 years ago by Michael Kors, a world-renowned designer, whose vision has taken the Company from its beginnings as an American luxury sportswear house to a global accessories, ready-to-wear and footwear company with a global distribution network that has presence in over 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners.
“Risk Factors” — “A material delay or disruption in our information technology systems or e-commerce websites or our failure or inability to upgrade our information technology systems precisely and efficiently could have a material adverse effect on our business, results of operations and financial condition.” Human Capital Management At Capri Holdings, we strive to create workplaces where our employees and the workers across our supply chain thrive.
“Risk Factors” — “A material delay or disruption in our information technology systems or e-commerce websites or our failure or inability to upgrade our information technology systems precisely and efficiently could have a material adverse effect on our business, results of operations and financial condition.” Human Capital Management At Capri, we strive to create workplaces where our employees and the workers across our supply chain thrive.
Over the past several decades, the House of Versace has grown globally from its roots in haute couture, expanding into the design, manufacturing, distribution and retailing of accessories, ready-to-wear, footwear, eyewear, watches, jewelry, fragrance and home furnishings businesses. Versace’s design team is led by Donatella Versace, who has been the brand’s Artistic Director for over 20 years.
Over the past several decades, the House of Versace has grown globally from its roots in haute couture, expanding into the design, manufacturing, distribution and retailing of ready-to-wear, accessories, footwear, eyewear, watches, jewelry, fragrance and home furnishings. Versace’s design team is led by Donatella Versace, who has been the brand’s Artistic Director for over 20 years.
Michael Kors primary distribution facility in the United States is a leased facility in Whittier, California, which is directly operated and services our Michael Kors retail stores, e-commerce site and wholesale operations in the United States. We also engage in omni-channel order fulfillment by filling online orders through our Michael Kors retail stores and through our click-and-collect service offerings.
Michael Kors’ primary distribution facility in the United States is a leased facility in Whittier, California, which is directly operated and services our Michael Kors retail stores, e-commerce site and wholesale operations in the United States. We also engage in omni-channel order fulfillment by filling online orders through our Michael Kors retail stores and through our click-and-collect service offerings.
In addition to these reportable segments, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including Enterprise Resource Planning (“ERP”) system implementation costs and Capri transformation program costs.
In addition to these reportable segments, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to its segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including enterprise resource planning (“ERP”) system implementation costs and Capri transformation program costs.
Our brands introduce their new collections annually with fashion shows and other fashion events. These fashion events, in addition to celebrity red carpet dressing moments, generate extensive domestic and international media and social media coverage. The Versace and Michael Kors semi-annual runway shows and Jimmy Choo celebrity placements generate extensive media coverage.
Our brands introduce their new collections with fashion shows and other fashion events. These fashion events, in addition to celebrity red carpet dressing moments, generate extensive domestic and international media and social media coverage. The Versace and Michael Kors semi-annual runway shows and Jimmy Choo celebrity placements generate extensive media coverage.
E-commerce distribution for the United States market is conducted through third party providers in New Jersey. Versace’s wholesale business is mainly serviced from three central warehouses located in Italy, the United States and Japan. Jimmy Choo’s primary distribution facility is our Company-owned and operated distribution facility in the Netherlands.
E-commerce distribution for the United States market is conducted through third-party providers in New Jersey. Versace’s wholesale business is mainly serviced from three central warehouses located in Italy and the United States. Jimmy Choo’s primary distribution facility is our Company-owned and operated distribution facility in the Netherlands.
Finally, we plan to leverage our group’s expertise to expand Versace’s women’s and men’s accessories to 50% of the brand’s revenues over time, while maintaining Versace’s authoritative presence in women’s and men’s ready-to-wear. Continue to execute on our strategies to grow the Jimmy Choo brand.
Finally, we plan to leverage our group’s expertise to expand Versace’s women’s and men’s accessories to 50% of the brand’s revenues over time, while maintaining Versace’s authoritative presence in women’s and men’s ready-to-wear. Continue to execute on our strategies to grow Jimmy Choo.
At the same time, we plan to continue to grow footwear sales by capitalizing on the success of glamour while expanding our fashion active and casual offerings. Continue to leverage the strength of our Michael Kors brand, which remains the foundation for our fashion luxury group.
At the same time, we plan to continue to grow footwear sales by capitalizing on the success of glamour while expanding our fashion active and casual offerings. Continue to leverage the strength of Michael Kors, which remains the foundation for our fashion luxury group.
Our growing e-commerce businesses provide us with an opportunity to increase the size of our customer database and to communicate with our consumers to increase online and physical store sales, as well as to continue to build global brand awareness for our brands.
Our e-commerce businesses provide us with an opportunity to increase the size of our customer database and to communicate with our consumers to increase online and physical store sales, as well as to continue to build global brand awareness for our brands.
Michael Kors collection stores are located in some of the world’s most prestigious shopping areas and average approximately 2,900 square feet in size. The Michael Kors lifestyle stores are located in some of the world’s most frequented metropolitan shopping locations and leading regional shopping centers, and average approximately 2,700 square feet in size.
Michael Kors collection stores are located in some of the world’s most prestigious shopping areas and average approximately 2,900 gross square feet in size. The Michael Kors lifestyle stores are located in some of the world’s most frequented metropolitan shopping locations and leading regional shopping centers, and average approximately 2,700 gross square feet in size.
The strength of our Michael Kors luxury collection and our accessible luxury MICHAEL Michael Kors line have allowed us to expand our brand awareness and position Michael Kors as one of the leading global luxury brands in the accessories product categories.
The strength of our Michael Kors Collection and our MICHAEL Michael Kors line have allowed us to expand our brand awareness and position Michael Kors as one of the leading global luxury brands in the accessories product categories.
We plan to continue to implement our growth strategies for Jimmy Choo with a goal of reaching $1 billion in revenues over time. Our overarching strategy is rooted in reinforcing the brand’s glamorous DNA through consumer experience and communications, as well as through product – from formal to casual, across accessories and footwear.
We plan to continue to implement our growth strategies for Jimmy Choo with a goal of reaching $1 billion in revenues over time. Our overarching strategy is rooted in reinforcing the brand’s glamorous DNA through client experience and communications, as well as through product – from formal to casual, across accessories and footwear.
Jimmy Choo Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, jewelry, scarves and belts, as well as men’s luxury shoes and accessory business.
Jimmy Choo Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, jewelry, scarves and belts, as well as men’s luxury shoes and accessories.
The manufacturing contractors for our brands operate under the close supervision of our global manufacturing divisions and buying agents located in North America, Europe and Asia. All products are produced according to our specifications. Production staff monitors manufacturing at supplier facilities in order to correct problems prior to shipment of the final product.
The manufacturing contractors for our brands operate under the close supervision of our global production team and buying agents located in North America, Europe and Asia. All products are produced according to our specifications. Production staff monitors manufacturing at supplier facilities in order to correct problems prior to shipment of the final product.
In addition, we pursue counterfeiters in the United States, Europe, the Middle East, Asia and elsewhere in the world in both online and offline channels, working with our network of customs authorities, law enforcement, legal representatives and brand specialists around the world as well as involvement with industry associations and anti-counterfeiting organizations.
In addition, we pursue counterfeiters in the United States, Europe, the Middle East, Asia and elsewhere in the world in both online and offline channels, working with a network of customs authorities, law enforcement, legal representatives and brand specialists around the world as well as involvement with industry associations and anti-counterfeiting organizations.
All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance. For additional financial information regarding our segments and corporate unallocated expenses, see Note 19 to the accompanying consolidated financial statements for additional information. Industry We operate in the global personal luxury goods industry.
All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance. For additional financial information regarding our segments and corporate unallocated expenses, see Note 20 to the accompanying consolidated financial statements. Industry We operate in the global personal luxury goods industry.
We plan to grow the Versace business to at least $2 billion in revenues over time. To achieve this goal, we plan to build on Versace’s iconic brand codes - Virtus, La Medusa and La Greca. Additionally, we will capitalize on Versace’s high brand awareness through bold and engaging consumer communication.
We plan to grow the Versace business to at least $2 billion in revenues over time. To achieve this goal, we plan to build on Versace’s iconic brand codes - Barocco, La Medusa and La Greca. Additionally, we will capitalize on Versace’s high brand awareness through bold and engaging consumer communication.
The brand offers classic and timeless luxury products, as well as innovative products that are intended to set and lead fashion trends. Jimmy Choo is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.
The brand offers classic and timeless luxury products, alongside innovative collections that are intended to set and lead fashion trends. Jimmy Choo is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.
We also have a regional Michael Kors distribution center in Canada, which is leased, as well as regional Michael Kors distribution centers in New Jersey, Mainland China, Hong Kong, Japan, South Korea and Taiwan, which are operated by third-parties. 13 Table of Contents Intellectual Property We own VERSACE, JIMMY CHOO and MICHAEL KORS trademarks, as well as other material trademarks, copyrights, design and patent rights related to the production, marketing and distribution of our products, both in the United States and in other countries in which our products are principally sold.
We also have a regional Michael Kors distribution center in Canada, which is leased, as well as regional Michael Kors distribution centers in the United States, Mainland China, Hong Kong, Japan, South Korea and Taiwan, which are operated by third-parties. 14 Table of Contents Intellectual Property We own VERSACE, JIMMY CHOO and MICHAEL KORS trademarks, as well as other material trademarks, copyrights, design and patent rights related to the production, marketing and distribution of our products, both in the United States and in other countries in which our products are principally sold.
Versace distributes its products through a worldwide distribution network, which includes boutiques in some of the world’s most glamorous cities, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.
Versace distributes its products through a worldwide distribution network, which includes boutiques in some of the world’s most fashionable cities, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.
In addition, certain categories, such as fragrance and eyewear, are produced under licensing agreements. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic.
In addition, certain categories, including fragrance and eyewear, are produced under licensing agreements. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic.
We will also continue to prioritize the development of our e-commerce 9 Table of Contents platforms and omni-channel capabilities for our brands, leveraging our broad expertise and capabilities in this area. We see a number of opportunities to create long-term operational synergies as we combine our global competencies and footprint.
We will also continue to prioritize the development of our e-commerce platforms and omni-channel capabilities for our brands, leveraging our broad expertise and capabilities in this area. We see a number of opportunities to create long-term operational synergies as we combine our global competencies and footprint.
Information Systems Each of our three brands currently operates using their legacy systems for finance and accounting, supply chain, inventory control, point-of-sale transactions, store replenishment and other functions. Our long-term strategy includes consolidating certain systems across our brands over time to create operational efficiencies.
Information Systems Each of our three brands currently operate using certain legacy systems for finance and accounting, supply chain, inventory control, point-of-sale transactions, store replenishment and other functions. Our long-term strategy includes consolidating certain systems across our brands over time to create operational efficiencies.
Jimmy Choo is also the leading brand in editorial coverage for women’s luxury shoes globally. We believe our renowned brand founders, as well as our high-profile brand ambassadors and well-known social media influencers across our marketing programs help expand brand awareness and drive cultural relevance. In Fiscal 2022, we recognized approximately $329 million in advertising and marketing expenses globally.
Jimmy Choo is also the leading brand in editorial coverage for women’s luxury shoes globally. We believe our renowned brand founders, as well as our high-profile brand ambassadors and well-known social media influencers across our marketing programs help expand brand awareness and drive cultural relevance. In Fiscal 2024, we recognized approximately $412 million in advertising and marketing expenses globally.
With an average of 25 years of experience in the retail industry, including at a number of public companies, and an average of 19 years experience with our brands, our senior management team has strong creative and operational experience and a successful track record. For over 20 years, Donatella Versace has been the Artistic Director, molding Versace’s iconic style.
With an average of 26 years of experience in the retail industry, including at a number of public companies, and an average of 22 years of experience with our brands, our senior management team has strong creative and operational experience and a successful track record. For over 20 years, Donatella Versace has been Versace’s Artistic Director, molding Versace’s iconic style.
We have omni-channel capabilities from best-in-class digital platforms to state-of-the-art distribution facilities globally, which we leverage across businesses. As part of our plan to continue to implement omni-channel capabilities throughout our businesses, we have begun leveraging our distribution centers globally to serve multiple brands. Strong Relationships with Premier Department Stores .
We have omni-channel capabilities from best-in-class digital platforms to state-of-the-art distribution facilities globally, which we leverage across businesses. We will continue to implement omni-channel capabilities throughout our businesses, we have begun leveraging our distribution centers globally to serve multiple brands. Strong Relationships with Premier Department Stores .
We also extend our reach to additional consumer groups through our outlet stores, which average approximately 4,400 square feet in size. In addition, we also operate Michael Kors e-commerce sites in North America, China, Japan, South Korea, certain parts of Europe, the Middle East, Africa and Oceania. World-class Omni and CRM Capabilities.
We also extend our reach to additional consumer groups through our outlet stores, which average approximately 4,500 gross square feet in size. In addition, we also operate Michael Kors e-commerce sites in North America, China, Japan, South Korea, certain parts of Europe, the Middle East, Africa, Asia Pacific and Oceania. World-class Omni and CRM Capabilities.
Michael Kors’ largest manufacturing contractor, who produces its products in Asia and who Michael Kors has worked with for approximately 20 years, accounted for the production of approximately 17% of its finished products, based on dollar volume in Fiscal 2022. Nearly all of our Michael Kors products were produced in Asia in Fiscal 2022.
Michael Kors’ largest manufacturing contractor, who produces its products in Asia and who Michael Kors has worked with for approximately 20 years, accounted for the production of approximately 12% of its finished products, based on dollar volume in Fiscal 2024. Nearly all of our Michael Kors products were produced in Asia in Fiscal 2024.
Jimmy Choo Jimmy Choo is a leading global luxury accessories brand and offers a distinctive, glamorous and fashion-forward product range, whose core product offerings are women’s luxury shoes, complemented by accessories, including handbags, small leather goods, jewelry, scarves and belts, as well as a men’s luxury shoes and accessories business.
Jimmy Choo Jimmy Choo is a leading global luxury accessories brand offering a distinctive, glamorous and fashion-forward product range, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, jewelry, scarves and belts, as well as a men’s luxury shoes and accessories business.
Documents filed with the SEC are also available on the SEC’s website at www.sec.gov . 17 Table of Contents
Documents filed with the SEC are also available on the SEC’s website at www.sec.gov . 18 Table of Contents
We partner with leading wholesale customers, such as Macy’s, Saks Fifth Avenue, Bloomingdale’s and Holt Renfrew in North America, as well as Harrods, Harvey Nichols, Printemps, Selfridges and Galeries Lafayette in Europe. These relationships enable us to access large numbers of our key consumers in a targeted manner.
We partner with leading wholesale customers, such as Bloomindale’s, Macy’s, Dillard’s and Saks Fifth Avenue in North America, as well as Galeries Lafayette, Harrods, Harvey Nichols, Printemps and Selfridges in Europe. These relationships enable us to access large numbers of our key consumers in a targeted manner.
Additionally, we plan to expand Jimmy Choo’s distribution by accelerating e-commerce and omni-channel developments and increasing our global retail footprint to 300 retail stores in the most fashionable shopping destinations around the world. We also have a significant opportunity to increase women’s accessories to approximately 50% of Jimmy Choo’s revenue over time by expanding the breadth of new collections.
Additionally, we plan to expand Jimmy Choo’s distribution by accelerating e-commerce and omni-channel developments and investing in our global retail footprint in the most fashionable shopping destinations around the world. We also have a significant opportunity to increase women’s accessories to approximately 30% of Jimmy Choo’s revenue over time by expanding the breadth of new collections.
Versace also has a leased warehouse near Novara operated by the same third party, which serves as a distribution point for other Versace lines. From these warehouses, products are shipped to regional warehouses that are operated by third parties in New Jersey, Hong Kong, Mainland China and Japan, and supports the Versace retail and e-commerce businesses.
Versace also has a leased warehouse near Novara operated by the same third-party, which serves as a distribution point for other Versace lines. From these warehouses, products are shipped to regional warehouses that are operated by third-parties in the United States, Hong Kong, South Korea, Mainland China and Japan, and supports the Versace retail and e-commerce businesses.
The remaining production occurs elsewhere in Europe and a small portion is produced in Asia or North Africa. 12 Table of Contents Jimmy Choo products are manufactured by independent third-party manufacturing contractors and our Italian atelier and shoe manufacturer.
The remaining production occurs elsewhere in Europe and a small portion is produced in Asia or North Africa. 13 Table of Contents Jimmy Choo products are manufactured by independent third-party manufacturing contractors as well as by our owned Italian atelier and shoe manufacturer.
Through our benefits packages, learning and development programs, focus on diversity and inclusion, wellness programs and supply chain empowerment initiatives, we continue to make significant investments in our Capri community. Governance and Oversight.
Through our benefits and compensation packages, learning and development programs, focus on diversity and inclusion, employee engagement, wellness and safety programs and supply chain empowerment initiatives, we continue to make significant investments in our Capri community. Governance and Oversight.
Benefits include, among others, medical, dental and vision plans, life insurance, short and long-term disability coverage, retirement plans (with matching contributions where applicable), paid parental leave for all parents, gender reassignment coverage and fertility support benefits in the United States, and a wellness program focused on mental wellbeing, including several digital therapeutic programs to assist with therapy, anxiety and worry and sleep.
Benefits include, among others, medical, dental and vision plans, life insurance, short and long-term disability coverage, retirement plans (with matching contributions where applicable), paid parental leave for all parents, gender reassignment coverage and fertility support benefits in the United States, and a wellness program focused employees’ physical, emotional, financial and social wellness, including several digital therapeutic programs to assist with therapy, anxiety and worry and sleep.
These synergies will be primarily focused on opportunities in our supply chain, information systems, back office support and manufacturing. Continue to increase our presence in Asia.
These 10 Table of Contents synergies will be primarily focused on opportunities in our supply chain, information systems, back office support and manufacturing. Continue to increase our presence in Asia.
Information relating to corporate governance at our Company, including our Corporate Governance Guidelines, our Code of Business Conduct and Ethics for all directors, officers, and employees, and information concerning our directors, Committees of the Board, including Committee charters, and transactions in Company securities by directors and executive officers, is available at our website under the captions “Governance” and “Financials” and then “SEC Filings.” Paper copies of these filings and corporate governance documents are available to shareholders free of charge by written request to Investor Relations, Capri Holdings Limited, 33 Kingsway, London, United Kingdom, WC2B 6UF.
Information relating to corporate governance at our Company, including our Corporate Governance Guidelines, our Code of Business Conduct and Ethics for all directors, officers, and employees, and information concerning our directors, Committees of the Board, including Committee charters, and transactions in Company securities by directors and executive officers, is available at our website under the captions “Governance” and “Financials” and then “SEC Filings.” Paper copies of these filings and corporate governance documents are available to shareholders free of charge by written request to Investor Relations, Capri Holdings Limited, 90 Whitfield Street, 2nd Floor, London, United Kingdom, W1T 4EZ.
Generally, Michael Kors fashion watches retail from $200 to $600, Michael Kors ACCESS smartwatches retail from $250 to $450, Michael Kors jewelry retails from $50 to $500, Michael Kors eyewear retails from $100 to $350 and Michael Kors fragrance and related products generally retail from $30 to $150.
Generally, Michael Kors watches retail from $200 to $600, Michael Kors jewelry retails from $50 to $500, Michael Kors eyewear retails from $100 to $350 and Michael Kors fragrance and related products generally retail from $30 to $150.
From haute-couture, to ready-to-wear, footwear, accessories and home decor, Versace delivers a unique lifestyle that welcomes customers in its elegant yet glamorous universe. Generally, Versace’s haute couture retails up to $250,000, ready-to-wear retails from $220 to $17,000, accessories retail from $55 to $3,900 and footwear retails from $300 to $4,100.
From haute-couture to ready-to-wear, footwear, accessories and home decor, Versace delivers a unique lifestyle that welcomes customers in its elegant yet glamorous universe. Generally, Versace’s haute couture retails up to $250,000, ready-to-wear retails from $200 to $15,000, accessories retail from $100 to $4,000 and footwear retail from $350 to $3,000.
Our community extends beyond our direct employees and our corporate social responsibility program drives us toward greater engagement with our suppliers. We are dedicated to conducting our operations throughout the world on principles of ethical business practice and recognition of the dignity of workers.
Our community extends beyond our direct employees and our corporate social responsibility program drives us toward greater engagement with and support of supply chain workers in the global fashion industry. We are dedicated to conducting our operations throughout the world on principles of ethical business practice and recognition of the dignity of workers.
In addition, certain other costs are not allocated to segments, including restructuring and other charges, impairment costs, COVID-19 related charges, charitable donations and the war in Ukraine. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance.
In addition, certain other costs are not allocated to segments, including Merger related costs, impairment charges, the impact of the war in Ukraine, restructuring and other expense and COVID-19 related expenses. The segment structure is consistent with how the Company’s chief operating decision maker (“CODM”) plans and allocates resources, manages the business and assesses performance.
Generally, Jimmy Choo eyewear retails from $200 to $550 and Jimmy Choo fragrances retail from $80 to $220. Michael Kors Michael Kors has three primary collections that offer accessories, footwear and apparel: Michael Kors Collection, MICHAEL Michael Kors and Michael Kors Mens.
Generally, Jimmy Choo fragrances and beauty retail from $50 to $220 and Jimmy Choo eyewear retails from $300 to $600. Michael Kors Michael Kors has three primary collections that offer accessories, footwear and apparel: Michael Kors Collection, MICHAEL Michael Kors and Michael Kors Mens.
Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with growing brand awareness in other international markets. Michael Kors features distinctive designs, materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude.
Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with growing brand awareness in other international markets. Michael Kors features distinctive designs, materials and craftsmanship that combines stylish elegance and a sporty attitude. Michael Kors offers three primary collections: the Michael Kors Collection line, the MICHAEL Michael Kors line and the Michael Kors Mens line.
We plan to continue to diversify our group’s global footprint with an emphasis on the Asia market, where we believe each of our three brands continue to have the potential to significantly grow market share in the region. Integrate Versace and continue to build on the brand ’ s luxury image.
We plan to continue to diversify our group’s global footprint with an emphasis on the Asia market, where we believe each of our three brands continue to have the potential to significantly grow market share in the region. Continue to execute our strategies to grow Versace.
In addition, we operate Jimmy Choo e-commerce sites in the United States, certain parts of Europe, Japan and China. We operated 825 Michael Kors stores as of April 2, 2022 with four primary retail store formats: collection stores, lifestyle stores, outlet stores and e-commerce sites.
In addition, we operate Jimmy Choo e-commerce sites in the United States, certain parts of Europe, Japan, China, Australia and Korea. We operated 769 Michael Kors stores as of March 30, 2024 with four primary retail formats: collection stores, lifestyle stores, outlet stores and e-commerce sites.
We also believe that sound environmental and social policies are both ethically correct and fiscally responsible. To that end, we are committed to improving the way we work in order to better the world in which we live. We plan to achieve our business strategy by focusing on the following strategic initiatives: Leverage group expertise and capabilities.
To that end, we are committed to improving the way we work in order to better the world in which we live. We plan to achieve our business strategy by focusing on the following strategic initiatives: Leverage group expertise and capabilities.
Additionally, we plan to grow our men’s business by leading with accessories and maximizing our Signature brand codes. Our strategy to enhance customer experience by expanding our omni-channel capabilities also remains a key priority. Finally, we plan to double Michael Kors revenue in Asia over time. Execute on our corporate social responsibility strategy.
In accessories, we continue to refresh and celebrate brand icons while evolving styles with newness. Additionally, we plan to grow our men’s business by leading with accessories and maximizing our brand codes. Our strategy to enhance customer experience by expanding our omni-channel capabilities also remains a key priority. Finally, we plan to double Michael Kors revenue in Asia over time.
Generally, Jimmy Choo women’s and men’s luxury shoes retail from $400 to $5,500 and accessories retail from $200 to $4,500. Certain product categories, such as Jimmy Choo fragrance and eyewear, are produced under product licensing agreements. Interparfums SA is the exclusive licensee for Jimmy Choo fragrances and Safilo SpA is the exclusive licensee for Jimmy Choo eyewear.
Generally, Jimmy Choo women’s and men’s luxury shoes retail from $400 to $6,000 and accessories retail from $200 to $6,000. Certain product categories, including Jimmy Choo fragrance and eyewear, are produced under product licensing agreements. Interparfums SA is the exclusive licensee for Jimmy Choo fragrances and beauty and EssilorLuxottica SA is the exclusive licensee for Jimmy Choo eyewear.
Generally, the Michael Kors Collection women’s handbags and small leather goods retail from $300 to $6,000, footwear retails from $300 to $1,500 and ready-to-wear retails from $400 to $7,500.
Generally, the Michael Kors Collection women’s handbags and small leather goods retail from $900 to $4,000, footwear retails from $400 to $1,800 and ready-to-wear retails from $400 to $10,000.
Exceptional Retail Store Footprint. Versace operates in three primary retail formats: boutiques, outlet and e-commerce. We operated 209 Versace retail stores as of April 2, 2022 in some of the most fashionable cities and the most sought-after shopping destinations around the world.
Versace operates in three primary retail formats: boutiques, outlet and e-commerce. We operated 236 Versace retail stores as of March 30, 2024 in some of the most fashionable cities and the most sought-after shopping destinations around the world.
Approximately 11,000 of our employees were engaged in retail selling and administrative positions and our remaining employees were engaged in other aspects of our business as of April 2, 2022. As of April 2, 2022, we have approximately 2,600 employees covered by collective bargaining agreements in certain European countries.
Approximately 11,100 of our employees were engaged in retail selling and administrative positions and our remaining employees were engaged in other aspects of our business as of March 30, 2024. As of March 30, 2024, we have approximately 3,400 employees covered by collective bargaining agreements in certain European countries.
In addition, we operate Versace e-commerce sites in the United States, certain parts of Europe and China (covering 85 countries worldwide). We operated 237 Jimmy Choo retail stores as of April 2, 2022, in some of the most premier locations worldwide. Jimmy Choo retail stores, comprised of full-price stores and outlets, average approximately 1,400 square feet.
In addition, we operate Versace e-commerce sites in the United States, Europe and China (covering 90 countries worldwide). We operated 234 Jimmy Choo retail stores as of March 30, 2024, in some of the most premier locations worldwide. Jimmy Choo retail stores, comprised of full-price stores and outlets, average approximately 1,500 gross square feet.
For certain product categories, Michael Kors also has relationships with various agents who source finished goods with numerous manufacturing contractors on its behalf. This multi-supplier strategy provides specialized skills, scalability, flexibility and speed to market, as well as diversifies risk.
For certain product categories, Michael Kors also has relationships with various agents who source finished goods with numerous manufacturing contractors on its behalf. This multi-supplier strategy provides specialized skills, scalability, flexibility and speed to market, as well as diversifies risk. In Fiscal 2024, one third-party buying agent sourced approximately 14% of Michael Kors finished goods purchases, based on dollar volume.
Our key sustainability goals, our plans for getting there, and an update on the progress we have made can be found in our annual CSR report located at www.capriholdings.com/responsibility.
We continue to take steps to advance our CSR strategy and to support the United Nations Sustainable Development Goals. Our key sustainability goals, our plans for getting there, and an update on the progress we have made can be found in our annual CSR report located at www.capriholdings.com/CSR.
Our goal is to increase Versace’s women’s and men’s accessories penetration from 20% of revenues in Fiscal 2022 to 50% of Versace’s revenues over time and to increase Jimmy Choo’s women’s accessories penetration from approximately 20% of revenues in Fiscal 2022 to 30% of Jimmy Choo’s revenues over the next few years and to 50% over time.
Our goal is to increase Versace’s women’s and men’s accessories penetration from approximately 20% of revenues in Fiscal 2024 to 50% of Versace’s revenues over time and to increase Jimmy Choo’s women’s accessories penetration from approximately 20% of revenues in Fiscal 2024 to 30% of Jimmy Choo’s revenues over time. Exceptional Retail Store Footprint.
During Fiscal 2022, we completed renovations at approximately 50% of our Versace retail stores to incorporate our new store design and will continue with these renovations in Fiscal 2023. Versace’s products are distributed worldwide through a global network of highly specialized stores, which average approximately 1,800 square feet.
During Fiscal 2024, we completed renovations at approximately 75% of our Versace retail stores to incorporate our new store design and have continued with these renovations in Fiscal 2025. Versace’s products are distributed worldwide through a global network of highly specialized stores, which average approximately 2,900 gross square feet.
Our Segments We operate in three reportable segments as follows: • Versace — accounted for approximately 19% of our total revenue in Fiscal 2022 and includes worldwide sales of Versace products through 209 retail stores (including concessions) and e-commerce sites, through 803 wholesale doors (including multi-brand stores), as well as through product and geographic licensing arrangements. • Jimmy Choo — accounted for approximately 11% of our total revenue in Fiscal 2022 and includes worldwide sales of Jimmy Choo products through 237 retail stores (including concessions) and e-commerce sites, through 446 wholesale doors (including multi-brand stores), as well as through product and geographic licensing arrangements. • Michael Kors — accounted for approximately 70% of our total revenue in Fiscal 2022 and includes worldwide sales of Michael Kors products through 825 retail stores (including concessions) and e-commerce sites, through 2,742 wholesale doors, as well as through product and geographic licensing arrangements.
Our Segments We operate in three reportable segments as follows: • Versace — accounted for approximately 20% of our total revenue in Fiscal 2024 and includes worldwide sales of Versace products through 236 retail stores (including concessions) and e-commerce sites, through wholesale doors (including multi-brand stores), as well as through product and geographic licensing arrangements. • Jimmy Choo — accounted for approximately 12% of our total revenue in Fiscal 2024 and includes worldwide sales of Jimmy Choo products through 234 retail stores (including concessions) and e-commerce sites, through wholesale doors (including multi-brand stores), as well as through product and geographic licensing arrangements. • Michael Kors — accounted for approximately 68% of our total revenue in Fiscal 2024 and includes worldwide sales of Michael Kors products through 769 retail stores (including concessions) and e-commerce sites, through wholesale doors, as well as through product and geographic licensing arrangements.
The content on this website and the content in our CSR reports are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. 10 Table of Contents Collections and Products Our total revenue by major product category is as follows (in millions): Fiscal Years Ended April 2, 2022 % of Total March 27, 2021 % of Total March 28, 2020 % of Total Accessories $ 2,901 51.3% $ 2,158 53.2% $ 2,933 52.8% Footwear 1,208 21.4% 796 19.6% 1,100 19.8% Apparel 1,027 18.2% 720 17.7% 1,069 19.3% Licensed product 241 4.3% 185 4.6% 222 4.0% Licensing revenue 212 3.7% 155 3.8% 201 3.6% Other 65 1.1% 46 1.1% 26 0.5% Total revenue $ 5,654 $ 4,060 $ 5,551 Versace Versace is one of the leading international fashion design houses, representing the brand’s creative vision through a wide range of products.
The content on this website and the content in our CSR reports are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. 11 Table of Contents Collections and Products Our total revenue by major product category is as follows (in millions): Fiscal Years Ended March 30, 2024 % of Total April 1, 2023 % of Total April 2, 2022 % of Total Accessories $ 2,570 49.7% $ 2,826 50.3% $ 2,901 51.3% Footwear 1,151 22.3% 1,217 21.7% 1,208 21.4% Apparel 965 18.7% 1,107 19.7% 1,027 18.2% Licensed product 230 4.4% 222 4.0% 241 4.3% Licensing revenue 219 4.2% 211 3.8% 212 3.7% Other 35 0.7% 36 0.5% 65 1.1% Total revenue $ 5,170 $ 5,619 $ 5,654 Versace Versace is one of the leading international fashion design houses, representing the brand’s creative vision through a wide range of products.
MICHAEL Michael Kors is the accessible luxury collection and offers women’s accessories, primarily handbags and small leather goods, as well as footwear and apparel and is carried in all of the Michael Kors lifestyle stores and leading department stores around the world.
The MICHAEL Michael Kors collection offers women’s accessories, primarily handbags and small leather goods, as well as footwear and apparel and is carried in all of the Michael Kors lifestyle stores and leading department stores around the world. MICHAEL Michael Kors offers handbags designed to meet the fashion and functional requirements of our broad and diverse consumer base.
Geographic Information We generate revenue globally through our three reportable segments, as described above. We sell our Versace, Jimmy Choo and Michael Kors products through retail and wholesale channels in three principal geographic markets: the Americas (United States, Canada and Latin America), EMEA (Europe, Middle East and Africa) and Asia (Asia and Oceania).
We sell our Versace, Jimmy Choo and Michael Kors products through retail and wholesale channels in three principal geographic markets: the Americas (United States, Canada and Latin America), EMEA (Europe, Middle East and Africa) and Asia (Asia and Oceania). We also have wholesale arrangements pursuant to which we sell products to geographic licensees.
We have engaged with our wholesale customers on various initiatives and have continued to enter into supply chain partnerships designed to increase the speed at which our luxury fashion products reach the ultimate consumer.
We have engaged with our wholesale customers on various initiatives and have continued to enter into supply chain partnerships designed to increase the speed at which our luxury fashion products reach the ultimate consumer. For Michael Kors, we continue to optimize deliveries with the intent to drive more full-price sell-through in the wholesale channel.
Michael Kors Mens is an innovative collection of men’s ready-to-wear, accessories and footwear with a modern American style. 11 Table of Contents Michael Kors Mens apparel generally retails from $50 to $1,000, men’s accessories generally retail from $50 to $800 and men’s footwear generally retails from $150 to $400.
Generally, MICHAEL Michael Kors handbags retail from $200 to $750, small leather goods retail from 12 Table of Contents $50 to $250, footwear retails from $50 to $300 and apparel retails from $75 to $700. Michael Kors Mens is an innovative collection of men’s ready-to-wear, accessories and footwear with a modern American style.
Our goal is to continue to elevate Michael Kors to become a stronger and more profitable brand. We are capitalizing on high brand awareness and consumer engagement by embracing Michael Kors jet set heritage through a modern lens.
Our goal is to continue to elevate Michael Kors to become a stronger and more profitable brand. We are capitalizing on high brand awareness and consumer engagement by embracing Michael Kors heritage through a modern lens. Reinforcing our highly recognizable brand codes including the MK monogram and MK hardware across all product categories remains a core growth strategy.
On at least an annual basis, our sustainability goals and action plans are presented to the Governance, Nominating and CSR Committee for review and approval, along with CSR progress updates which are presented quarterly. Additional information can be found at www.capriholdings.com/responsibility.
The Board has delegated oversight of ESG activities to the Governance, Nominating and CSR Committee (the “Governance Committee”). On at least an annual basis, our sustainability goals and action plans are presented to the Governance Committee for review and approval, along with CSR progress updates which are generally presented quarterly.
Michael Kors offers three primary collections: the Michael Kors Collection luxury line, the MICHAEL Michael Kors accessible luxury line and the Michael Kors Mens line. The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried by select retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world.
The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried by select retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world. MICHAEL Michael Kors has a strong focus on accessories, in addition to offering ready-to-wear and footwear.
Within each of our three foundational pillars are key CSR focus areas that guide our work in support of the United Nations Sustainable Development Goals (SDGs).
We remain steadfast in our commitment to support our philanthropic partners and to drive positive change in the communities where we live and work. Within each of our four foundational pillars are key CSR focus areas that guide our work in support of the United Nations Sustainable Development Goals (SDGs).
Generally, Versace Jeans Couture retail from $45 to $2,000, Versace eyewear retails from $240 to $500, Versace fragrances retail from $50 to $400, Versace watches retail from $480 to $3,500 and Versace home furnishings, which include a variety of products, generally retails from $990 to $100,000.
Generally, Versace Jeans Couture retail from $75 to $1,300, Versace eyewear retails from $280 to $700, Versace fragrances retail from $50 to $330, Versace watches retail from $490 to $9,000 and Versace home furnishings, which include a variety of products, generally retail from $850 to $100,000.
Donatella’s most recent collections for Versace are a testament to her bold and fearless design vision that celebrate Versace’s Italian heritage and unapologetic glamour. Versace designs have been worn by the world’s most famous celebrities and most sought-after super models.
Donatella’s most recent collections for Versace are a testament to her bold and fearless design vision that celebrate Versace’s Italian heritage and unapologetic glamour. Versace designs are often worn by the world’s most famous celebrities. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the Jimmy Choo brand since its inception in 1996.
Future growth will be driven by e-commerce, Chinese consumers and younger generations. By 2025, Bain studies estimate that approximately 30% of personal luxury goods sales will occur online, Chinese consumers will represent nearly half of total global personal luxury goods sales and Gen Z and Gen Y combined will make up at least two-thirds of the market.
By 2030, Bain* studies estimate that approximately 30% of personal luxury goods sales will occur online, Chinese consumers will represent approximately 35-40% of total global personal luxury goods sales and Gen Z and Alpha, combined, will make up approximately one-third of the market.
Michael Kors has received a number of awards, which 8 Table of Contents recognize the contribution he and his team have made to the fashion industry and our Company. Some of the most widely recognized global trendsetters and celebrities wear our Michael Kors brand collections. Expertise in the Accessories Category. We have strong group expertise in accessories.
Some of the most widely recognized global trendsetters and celebrities wear our Michael Kors brand collections. Expertise in the Accessories Category. We have strong group expertise in accessories.
We are committed to creating meaningful opportunities for our diverse Capri community to grow. • Our Philanthropy – Giving back is embedded in Capri’s culture. We are dedicated to supporting and driving positive change in the communities where we live and work.
Our Company strives to create inclusive workplaces where all of our employees are empowered and respected. We are committed to creating meaningful opportunities for our diverse Capri community to grow. • Our Philanthropy – Giving back is embedded in Capri’s culture.
Through our Code of Conduct for Business Partners and Factory Social Compliance Program, we partner with our suppliers on important human rights, health and safety, environmental and compliance issues. Capri is also signatory to the UN Women’s Empowerment Principles, and partnered with the Fashion Makes Change campaign to support the empowerment and education of women in the fashion supply chain.
Through our Code of Conduct for Business Partners and supply chain compliance program, we partner with our suppliers on important human rights, health and safety, environmental and compliance issues.
Finally, Capri launched its first employee resource group focused on the LGBTQ+ community within Capri, Pride@Capri. Through The Capri Holdings Foundation for the Advancement in Diversity in Fashion, we are driving diversity, inclusion and equality throughout the fashion industry by working collaboratively with colleges and high schools to create meaningful opportunities in fashion for underrepresented communities.
Through The Capri Holdings Foundation for the Advancement in Diversity in Fashion, we are also driving diversity, inclusion and equality throughout the fashion industry by working collaboratively with educational institutions to create meaningful opportunities in fashion for historically underrepresented communities, including the Black, Indigenous and People of Color (BIPOC) community.
At the end of Fiscal 2022, 2021 and 2020, we had approximately 14,600, 13,800 and 17,000 total employees, respectively. As of April 2, 2022, we had approximately 9,700 full-time employees and approximately 4,900 part-time employees.
At the end of Fiscal 2024, 2023 and 2022, we had approximately 15,100, 15,500 and 14,600 total employees, respectively. As of March 30, 2024, we had approximately 10,200 full-time employees and approximately 4,900 part-time employees.
Capri Talent - Differences in ideas and experiences allow our Company to thrive. We are attracting, advancing and advocating for a workforce that reflects the diversity of the world around us. Capri Community - Through diversity and inclusion comes understanding and strength.
We aim to build an inclusive space where all employees have the opportunity to realize their full potential and excel, while contributing to our success in a meaningful way. Capri Talent - Differences in ideas and experiences allow our Company to thrive. We are attracting, advancing and advocating for a workforce that reflects the diversity of the world around us.
MICHAEL Michael Kors has a strong focus on accessories, in addition to offering footwear and ready-to-wear, and addresses the significant demand opportunity in accessible luxury goods. We have also been developing our 6 Table of Contents men’s business in recognition of the significant opportunity afforded by the Michael Kors brand’s established fashion authority and the expanding men’s market.
We have also been developing our men’s business in recognition of the significant opportunity afforded by the Michael Kors brand’s established fashion authority 7 Table of Contents and the expanding men’s market. Taken together, our Michael Kors collections target a broad customer base while retaining our premium luxury image.
We believe that the Michael Kors brand name has become synonymous with luxurious fashion that is timeless and elegant, expressed through the brand’s sophisticated accessories and ready-to-wear collections. Each of our Michael Kors brand collections exemplifies the jet-set lifestyle and features high quality designs, materials and craftsmanship.
The Michael Kors brand was launched over 40 years ago by Michael Kors, a world-renowned designer, who is responsible for conceptualizing and directing the design of our Michael Kors brand products. We believe that the Michael Kors brand name has become synonymous with luxurious fashion that is timeless and elegant, expressed through the brand’s sophisticated accessories and ready-to-wear collections.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may also incur additional costs in the future related to the implementation of additional security measures to protect against new or enhanced data security and privacy threats, or to comply with current and new state, federal and international laws governing the unauthorized disclosure of confidential information which are continuously being enacted and proposed, such as the General Data Protection Regulation in the EU, the California Consumer Privacy Act, the Virginia Consumer Data Protection Act and the Colorado Privacy Act (CPA) in the United States and the Personal Information Protection Law in China, as well as increased cyber security protection costs such as organizational changes, deploying additional personnel and protection technologies, training employees, engaging third party experts and consultants and lost revenues resulting from unauthorized use of proprietary information.
Biggest changeAdditionally, we may incur increased costs and experience a significant strain on our resources to account for implementation of additional required security measures and technologies to protect personal data and confidential information or to comply with current and new state, federal and international laws governing the unauthorized disclosure of confidential information which are continuously being enacted and proposed, such as the General Data Protection Regulation (“GDPR”) in the EU and the UK, various consumer privacy and data privacy and protection acts in the United States, including, but not limited to, the American Data Privacy and Protection Act, the California Consumer Privacy Act as amended by the California Privacy Rights Act, the Virginia Consumer Data Protection Act, the Colorado Privacy Act, the Utah Consumer Privacy Act, the Connecticut Data Privacy Act, the Iowa Consumer Data Protection Act, the Montana Consumer Data Privacy Act, the Oregon Consumer Privacy Act, the Washington MY Health My Data Act, the Florida Digital Bill of Rights, the Texas Data Privacy and Security Act and the Personal Information Protection Law in China.
We require our independent manufacturing contractors to operate in compliance with applicable laws, rules and regulations regarding working conditions, employment practices and environmental compliance, as well as our Supplier Code of Conduct and other compliance policies under our Factory Social Compliance Program.
We require our independent manufacturing contractors to operate in compliance with applicable laws, rules and regulations regarding working conditions, employment practices and environmental compliance, as well as our Supplier Code of Conduct and other compliance policies under our Factory Social and Environmental Compliance Program.
We are susceptible to others imitating our products and infringing our intellectual property rights in the Americas, EMEA, Asia and elsewhere in the world in both online and offline channels. Our brands enjoy significant worldwide consumer recognition and the generally higher pricing of our products creates additional incentive for counterfeiters to infringe on our brands.
We are susceptible to others imitating our products and infringing on our intellectual property rights in the Americas, EMEA, Asia and elsewhere in the world in both online and offline channels. Our brands enjoy significant worldwide consumer recognition and the generally higher pricing of our products creates additional incentive for counterfeiters to infringe on our brands.
As a result, we are subject to the risks of doing business internationally, including: • political or civil unrest, including protests and other civil disruption; • unforeseen public health crises, such as pandemic and epidemic diseases, including the ongoing COVID-19 pandemic and any variants thereof; • economic instability and unsettled regional and global conflicts (such as the current war in Ukraine), which may negatively affect consumer spending by foreign tourists and local consumers in the various regions where we operate; • laws, regulations and policies of foreign governments (including sanctions and retaliatory actions by the United States, European Union and others); • potential negative consequences from changes in taxation policies; • natural disasters or other extreme weather events, including those attributed to climate change; and • acts of terrorism, military actions or other conditions over which we have no control.
As a result, we are subject to the risks of doing business internationally, including: • political or civil unrest, including protests and other civil disruption; • unforeseen public health crises, such as pandemic and epidemic diseases, including COVID-19 and any variants thereof; • economic instability and unsettled regional and global conflicts (such as the current war in Ukraine), which may negatively affect consumer spending by foreign tourists and local consumers in the various regions where we operate; • laws, regulations and policies of foreign governments (including sanctions and retaliatory actions by the United States, European Union and others); • potential negative consequences from changes in taxation policies; • natural disasters or other extreme weather events, including those attributed to climate change; and • acts of terrorism, military actions or other conditions over which we have no control.
As a company engaged in sourcing on a global scale, we are subject to the risks inherent in such activities, including, but not limited to: • disease pandemics, epidemics and health-related concerns, including related to COVID-19 or variants thereof; • political or labor instability, labor shortages (stemming from labor disputes or otherwise), or increases in costs of labor or production in countries where manufacturing contractors and suppliers are located; • labor disputes or strikes at the location of the source of our goods and/or at ports of entry; • disruptions, delays or reductions in shipments, including port delays and congestion, and/or capacity constraints on transportation of goods or at our factories due to COVID-19 or otherwise; • significant increase in freight, shipping and other logistics costs, including as a result of disruptions at ports of entry; • political or military conflict (such as the current war in Ukraine); • heightened terrorism security concerns; • a significant decrease in availability or an increase in the cost of raw materials or other limitations on our ability to use raw materials or goods produced in a country that is a major provider due to political, human rights, labor, environmental or other concerns; • the migration and development of manufacturing contractors; • product quality issues; • imposition of regulations, quotas and safeguards relating to imports and our ability to adjust in a timely manner to changes in trade regulations; • increases in the costs of fuel (including volatility in the price of oil), travel and transportation (including vessel and freight); • imposition of duties, taxes and other charges on imports; • significant fluctuation of the value of the United States dollar against foreign currencies; • restrictions on transfers of funds out of countries where our foreign licensees are located; • compliance by our independent manufacturers and suppliers with our Supplier Code of Conduct and other applicable compliance policies; • compliance with United States laws regarding the identification and reporting on the use of “conflict minerals” sourced from the Democratic Republic of the Congo in the Company’s products and the United States Foreign Corrupt Practices Act, U.K.
As a company engaged in sourcing on a global scale, we are subject to the risks inherent in such activities, including, but not limited to: • pandemics, epidemics and health-related concerns, including related to COVID-19 or variants thereof; • political or labor instability, labor shortages (stemming from labor disputes or otherwise), or increases in costs of labor or production in countries where manufacturing contractors and suppliers are located; • labor disputes or strikes at the location of the source of our goods and/or at ports of entry; • disruptions, delays or reductions in shipments, including port delays and congestion, and/or capacity constraints on transportation of goods or at our factories; • significant increase in freight, shipping and other logistics costs, including as a result of disruptions at ports of entry; • political or military conflict (such as the current war in Ukraine); • heightened terrorism security concerns; 24 Table of Contents • a significant decrease in availability or an increase in the cost of raw materials, including sustainable materials, or other limitations on our ability to use raw materials or goods produced in a country that is a major provider due to political, human rights, labor, environmental or other concerns; • the migration and development of manufacturing contractors; • product quality issues; • imposition of regulations, quotas and safeguards relating to imports and our ability to adjust in a timely manner to changes in trade regulations; • increases in the costs of fuel (including volatility in the price of oil), travel and transportation (including vessel and freight); • imposition of duties, taxes and other charges on imports; • significant fluctuation of the value of the United States dollar against foreign currencies; • restrictions on transfers of funds out of countries where our foreign licensees are located; • compliance by our independent manufacturers and suppliers with our Supplier Code of Conduct and other applicable compliance policies; • compliance with United States laws regarding the identification and reporting on the use of “conflict minerals” sourced from the Democratic Republic of the Congo in the Company’s products and the United States Foreign Corrupt Practices Act, U.K.
We believe that our success is largely dependent on the images of our brands and ability to anticipate and respond promptly to changing consumer demands and fashion trends in the design, styling, production, merchandising and pricing of products.
We believe that our success is largely dependent on the images of our brands and our ability to anticipate and respond promptly to changing consumer demands and fashion trends in the design, styling, sustainability production, merchandising and pricing of products.
Bribery Act and other global anti-corruption laws, as applicable; and • regulation or prohibition of the transaction of business with specific individuals or entities and their affiliates or goods manufactured in certain regions, such as the listing of a person or entity as a SDN (Specially Designated Nationals and Blocked Persons) by the United States Department of the Treasury’s Office of Foreign Assets Control and the issuance of withhold release orders by CBP .
Bribery Act and other global anti-corruption laws, as applicable; and • regulation or prohibition of the transaction of business with specific individuals or entities and their affiliates or goods manufactured in certain regions, such as the listing of a person or entity as a SDN (Specially Designated Nationals and Blocked Persons) by the United States Department of the Treasury’s Office of Foreign Assets Control and the issuance of withhold release orders, or detentions of product, by CBP .
Generally, the areas in which the courts will intervene are the following: (i) an act complained of which is outside the scope of the authorized business or is illegal or not capable of ratification by the majority; (ii) acts that constitute fraud on the minority where the wrongdoers control the Company; (iii) acts that infringe on the personal rights of the shareholders, such as the right to vote; and (iv) acts where the Company has not complied with provisions requiring approval of a special or extraordinary majority of shareholders, which are more limited than the rights afforded to minority shareholders under the laws of many states in the United States.
Generally, the areas in which the courts will intervene are the following: (i) an act complained of which is outside the scope of the authorized business or is illegal or not capable of ratification by the majority; (ii) acts that constitute fraud on the minority where the wrongdoers control the Company; (iii) acts that infringe on the personal rights of the shareholders, such as the right to vote; and 34 Table of Contents (iv) acts where the Company has not complied with provisions requiring approval of a special or extraordinary majority of shareholders, which are more limited than the rights afforded to minority shareholders under the laws of many states in the United States.
We may not be able to respond to changing fashion and retail trends in a timely manner, which could have a material adverse effect on our brands, business, results of operations and financial condition. The accessories, footwear and apparel industries have historically been subject to rapidly changing fashion trends and consumer preferences.
Risks Related to Our Business We may not be able to respond to changing fashion and retail trends in a timely manner, which could have a material adverse effect on our brands, business, results of operations and financial condition. The accessories, footwear and apparel industries have historically been subject to rapidly changing fashion trends and consumer preferences.
If the United States dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions could impact our consolidated results of operations. In addition, we have intercompany notes amongst certain of our non-United States subsidiaries, which may be denominated in a currency other than the local currency of a particular reporting entity.
If the United States dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions could impact our consolidated results of operations. In addition, we have intercompany notes amongst certain of our non-United States subsidiaries, which may be denominated in a currency other than the functional currency of a particular reporting entity.
On October 5, 2015, the Organization for Economic Co-operation and Development (“OECD”), an international association of thirty four countries, including the United States and United Kingdom., released the final reports from its Base Erosion and Profit Shifting (“BEPS”) Action Plans. The BEPS recommendations covered a number of issues, including country-by-country reporting, permanent establishment rules, transfer pricing rules and tax treaties.
On October 5, 2015, the Organization for Economic Co-operation and Development (“OECD”), an international association of 34 countries, including the United States and United Kingdom, released the final reports from its Base Erosion and Profit Shifting (“BEPS”) Action Plans. The BEPS recommendations covered a number of issues, including country-by-country reporting, permanent establishment rules, transfer pricing rules and tax treaties.
A significant breach of customer, employee or Company data could damage our reputation, our relationship with customers and our brands, and could result in lost sales, sizable fines, significant breach-notification and other costs and lawsuits, as well as adversely affect our results of operations.
A significant breach of customer, employee or Company data could damage our reputation, our relationship with customers and our brands, and could result in lost sales, sizable fines, significant breach-notifications and other costs and lawsuits, as well as adversely affect our results of operations.
As the techniques used to obtain unauthorized access to IT systems become more varied and sophisticated (as cybercriminals are finding new ways to launch their attacks) and if the occurrence of such security breaches becomes more frequent, we and our third-party service providers may be unable to adequately anticipate these techniques and implement appropriate preventative measures.
As the techniques used to obtain unauthorized access to IT systems become more varied 28 Table of Contents and sophisticated (as cybercriminals are finding new ways to launch their attacks) and if the occurrence of such security breaches becomes more frequent, we and our third-party service providers may be unable to adequately anticipate these techniques and implement appropriate preventative measures.
We use a combination of insurance and self-insurance programs, including a wholly-owned captive insurance entity, to provide for the potential liabilities for certain risks including, employee health-care benefits, workers’ compensation, employer 30 Table of Contents liability, general liability, marine transport and inventory, property damage, cyber risk and business interruption. Claims are difficult to predict and may be volatile.
We use a combination of insurance and self-insurance programs, including a wholly-owned captive insurance entity, to provide for the potential liabilities for certain risks including, employee health-care benefits, workers’ compensation, employer liability, general liability, marine transport and inventory, property damage, cyber risk and business interruption. Claims are difficult to predict and may be volatile.
A substantial weakening of foreign 26 Table of Contents currencies against the United States dollar could require us to raise our retail prices or reduce our profit margins in various locations outside of the United States. In addition, our sales and profitability could be negatively impacted if consumers in those markets were unwilling to purchase our products at increased prices.
A substantial weakening of foreign currencies against the United States dollar could require us to raise our retail prices or reduce our profit margins in various locations outside of the United States. In addition, our sales and profitability could be negatively impacted if consumers in those markets were unwilling to purchase our products at increased prices.
Our results of operations for our international subsidiaries are exposed to foreign exchange rate fluctuations as the financial results of the applicable subsidiaries are translated from the local currency into United States dollar during financial statement consolidation.
Our business is exposed to foreign currency exchange rate fluctuations. Our results of operations for our international subsidiaries are exposed to foreign exchange rate fluctuations as the financial results of the applicable subsidiaries are translated from the local currency into United States dollar during financial statement consolidation.
In addition, our ability to access the credit and capital markets in the future as a source of funding, and the borrowing costs associated with such financing, is dependent upon market conditions and our credit rating and outlook. We are currently rated investment grade by two of the Company’s three credit rating agencies.
In addition, our ability to access credit and capital markets in the future as a source of funding, and the borrowing costs associated with such financing, is dependent upon market conditions and our credit rating and outlook. We are currently rated 32 Table of Contents investment grade by two of the Company’s three credit rating agencies.
Increases in commodity prices, tariffs, sanctions, customs trade orders and/or manufacturing labor costs could increase our production costs and negatively impact our revenues, results of operations and financial condition. We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods.
Increases in commodity prices, tariffs, 27 Table of Contents sanctions, customs trade orders and/or manufacturing labor costs could increase our production costs and negatively impact our revenues, results of operations and financial condition. We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods.
We work with customs authorities, law enforcement, legal representatives and brand specialists globally in an effort to prevent the sale of counterfeit products, but we cannot guarantee the extent to which our efforts to prevent counterfeiting of our brands and other intellectual property infringement will be successful.
We work with customs authorities, law enforcement, legal representatives and brand specialists globally in an effort to prevent the sale of counterfeit products, but we cannot guarantee the extent to which our efforts to 31 Table of Contents prevent counterfeiting of our brands and other intellectual property infringement will be successful.
In addition, if due to COVID-19, or otherwise, there is a change in consumer behavior such that customers shift to utilizing e-commerce more than, or even instead, of traditional brick-and-mortar stores, and we or our wholesale partners are unable to attract consumers who previously made in-store purchases to our digital commerce channels, our financial and operating results may be negatively affected.
In addition, if there is a change in consumer behavior such that customers shift to utilizing e-commerce more than, or even instead, of traditional brick-and-mortar stores, and we or our wholesale partners are unable to attract consumers who previously made in-store purchases to our digital commerce channels, our financial and operating results may be negatively affected.
While we believe we conduct appropriate due diligence before entering into agreements with these third parties, the failure of any of these third parties to provide the expected services, provide them on a timely basis or to provide them at the prices we expect could disrupt or harm our business.
While we believe we conduct appropriate due diligence before entering into agreements with these third-party service providers, the failure of any of these third-parties to provide the expected services, provide them on a timely basis or to provide them at the prices we expect could disrupt or harm our business.
The 2018 Credit Facility and the Indenture governing our senior notes contain certain restrictive covenants, including restrictions on our ability to: • incur additional indebtedness and guarantee indebtedness; • pay dividends or make other distributions or repurchase or redeem capital stock; • make loans and investments, including acquisitions; • sell assets; • incur liens; • enter into transactions with affiliates; and • consolidate, merge or sell all or substantially all of our assets which collectively may limit our ability to engage in acts that may be in our long-term best interest.
The 2022 Credit Facility, the 2022 Versace Credit Facility and the Indenture governing our senior notes also contain certain restrictive covenants, including restrictions on our and certain of our subsidiaries ability to: • incur additional indebtedness and guarantee indebtedness; • pay dividends or make other distributions or repurchase or redeem capital stock; • make loans and investments, including acquisitions; • sell assets; • incur liens; • enter into transactions with affiliates; and • consolidate, merge or sell all or substantially all of our assets which collectively may limit our ability to engage in acts that may be in our long-term best interest.
A breach of the covenants or restrictions under the documents that govern our indebtedness could result in an event of default under the applicable indebtedness. Such a default may allow creditors to accelerate the related debt and may result in the 31 Table of Contents acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
A breach of the covenants or restrictions under the documents that govern our indebtedness could result in an event of default under the applicable indebtedness. Such a default may allow creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.
Furthermore, consumer demand and behavior, as well as tastes and purchasing trends may differ in these countries 19 Table of Contents and, as a result, sales of our product may not be successful, or the gross margins on those sales may not be in line with those we currently anticipate.
Furthermore, consumer demand and behavior, as well as tastes and purchasing trends may differ in these countries and, as a result, sales of our product may not be successful, or the gross margins on those sales may not be in line with those we currently anticipate.
We are undergoing a multi-year ERP implementation. The implementation of the ERP will require a significant investment in human and financial resources. Implementing new systems also carries substantial risk, including failure to operate as designed, failure to properly integrate with other systems, potential loss of data or information, cost overruns, implementation delays and disruption of operations.
We are undergoing a multi-year Enterprise Resource Planning (“ERP”) implementation. The implementation of the ERP will require a significant investment in human and financial resources. Implementing new systems also carries substantial risk, including failure to operate as designed, failure to properly integrate with other systems, potential loss of data or information, cost overruns, implementation delays and disruption of operations.
The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect of any such action, may result in the rights of shareholders of a British Virgin Islands' company being more 33 Table of Contents limited than those of shareholders of a company organized in the United States.
The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect of any such action, may result in the rights of shareholders of a British Virgin Islands’ company being more limited than those of shareholders of a company organized in the United States.
If our sales prices decline and we fail to sufficiently reduce our product costs or operating expenses, our profitability may decline, which could have a material adverse effect on our business, results of operations and financial condition.
If our sales prices decline and we fail to sufficiently reduce our product costs or operating expenses, our 21 Table of Contents profitability may decline, which could have a material adverse effect on our business, results of operations and financial condition.
Our inability to promptly replace manufacturing contractors that terminate their relationships with us or cease to provide high quality products in a timely and cost-efficient manner could have a material adverse effect on our business, results of operations and financial condition and impact the cost and availability of our goods.
Our inability to promptly replace manufacturing contractors or third-party sourcing agents that terminate their relationships with us or cease to provide high quality products in a timely and cost-efficient manner could have a material adverse effect on our business, results of operations and financial condition and impact the cost and availability of our goods.
Since e-commerce growth is critical to our overall growth strategy, we plan to accelerate Versace’s and Jimmy Choo’s e-commerce and omni-channel development and we are also in the process of re-platforming our brands’ e-commerce sites to expand our global capabilities.
Since e-commerce growth is critical to our overall growth strategy, we plan to accelerate our e-commerce and omni-channel development and we are also in the process of re-platforming our brands’ e-commerce sites to expand our global capabilities.
In such cases, we may be required to negotiate a lease exit with the applicable landlord or remain obligated under the applicable lease for, among other things, payment of the base rent for the balance of the lease term.
In such cases, we may be required to negotiate a lease exit with the applicable landlord or remain obligated under the 26 Table of Contents applicable lease for, among other things, payment of the base rent for the balance of the lease term.
In addition, any disruptions or malfunctions affecting our ERP implementation plan could cause critical information upon which we rely to be delayed, defective, corrupted, inadequate, inaccessible or lost or 29 Table of Contents otherwise cause delays or disruptions to our operations, and we may have to make significant investments to fix or replace impacted systems.
In addition, any disruptions or malfunctions affecting our ERP implementation plan could cause critical information upon which we rely to be delayed, defective, corrupted, inadequate, inaccessible or lost or otherwise cause delays or disruptions to our operations, and we may have to make significant investments to fix or replace impacted systems.
Reduced travel resulting from economic conditions, fuel shortages, increased fuel prices, travel restrictions, travel concerns and other circumstances, including adverse weather conditions, disease pandemics (including COVID-19), epidemics and other health-related concerns, war, terrorist attacks or the perceived threat of war or terrorist attacks, or unsettled regional 20 Table of Contents and global conflicts (such as the current war in Ukraine) could have a material adverse effect on us, particularly if such events impact our customers’ desire to travel to our retail stores.
Reduced travel resulting from economic conditions (including a recession or inflationary pressures), fuel shortages, increased fuel prices, travel restrictions, travel concerns and other circumstances, including adverse weather conditions, disease pandemics (including COVID-19), epidemics and other health-related concerns, war, terrorist attacks or the perceived threat of war or terrorist attacks, or unsettled regional and global conflicts (such as the current war in Ukraine) could have a material adverse effect on us, particularly if such events impact our customers’ desire to travel to our retail stores.
These factors may cause us to reduce our sales prices to our wholesale customers and retail consumers, which could cause our gross margins to decline if we are unable to appropriately manage inventory levels and/or otherwise offset price reductions with comparable reductions in our 24 Table of Contents operating costs.
These factors may cause us to reduce our sales prices to our wholesale customers and retail consumers, which could cause our gross margins to decline if we are unable to appropriately manage inventory levels and/or otherwise offset price reductions with comparable reductions in our operating costs.
Rights of shareholders under British Virgin Islands law differ from those under United States law, and, accordingly, our shareholders may have fewer protections. Our corporate affairs are governed by our Memorandum and Articles, the BVI Business Companies Act, 2004 (as amended, the “BVI Act”) and the common law of the British Virgin Islands.
Rights of shareholders under British Virgin Islands law differ from those under United States law, and, accordingly, our shareholders may have fewer protections. Our corporate affairs are governed by our Memorandum and Articles, the BVI Business Companies Act (Revised Edition 2020) (as amended) (the “BVI Act”) and the common law of the British Virgin Islands.
Item 1A. Risk Factors You should carefully read this entire report, including, without limitation, the following risk factors and the section of this annual report entitled “Note Regarding Forward-Looking Statements.” Any of the following factors could materially adversely affect our business, results of operations and financial condition.
Item 1A. Risk Factors You should carefully read this entire report, including, without limitation, the following risk factors and the section of this annual report entitled “Special Note On Forward-Looking Statements.” Any of the following factors could materially adversely affect our business, results of operations and financial condition.
Our business is subject to risks associated with importing products, and the imposition of additional duties, tariffs or trade restrictions could have a material adverse effect on our business, results of operations and financial condition. There are risks inherent to importing our products.
Risks Related to Tax, Legal and Regulatory Matters Our business is subject to risks associated with importing products, and the imposition of additional duties, tariffs or trade restrictions could have a material adverse effect on our business, results of operations and financial condition. There are risks inherent to importing our products.
In addition, the risks applicable to the business of our partners may be different than the risks applicable to our business, including risks associated with each such partner’s ability to: • obtain capital; • exercise operational and financial control over its business; • manage its labor relations; • maintain relationships with suppliers; • manage its credit and bankruptcy risks which may be exacerbated by the impact of COVID-19; and • maintain customer relationships.
In addition, the risks applicable to the business of our partners may be different than the risks applicable to our business, including risks associated with each such partner’s ability to: • obtain capital; • exercise operational and financial control over its business; • manage its labor relations; • maintain relationships with suppliers; • manage its credit and bankruptcy risks; and • maintain customer relationships.
As a result of operating retail stores and concessions in various countries outside of the United States, we are also exposed to market risk from fluctuations in foreign currency exchange rates, primarily the Euro, the British Pound, the Chinese Renminbi, the Japanese Yen, the Korean Won and the Canadian dollar, among others.
In addition, because we operate retail stores and concessions in various countries outside of the United States, we are also exposed to market risk from fluctuations in foreign currency exchange rates, primarily the Euro, the British Pound, the Chinese Renminbi, the Japanese Yen, the Korean Won and the Canadian dollar, among others.
Because our direct and third-party fulfillment centers include automated and computer-controlled equipment, they are susceptible to risks including power interruptions, hardware and system failures, software viruses, security breaches and other technological and operational disruptions and of which could cause shipping delays or otherwise adversely affect our business.
Because our direct and third-party fulfillment centers include automated and computer-controlled equipment, they are susceptible to risks including power interruptions, hardware and system failures, software viruses, security breaches and other technological and operational disruptions and of which could cause shipping delays or otherwise adversely affect our business. We are dependent on third-parties to perform certain outsourced functions.
In addition, our current business strategies include pursuing selective international expansion in a number of countries around the world and through a number of channels. If our international expansion plans are unsuccessful, it could have a material adverse effect on our business, results of operations and financial condition.
In addition, we pursue selective international expansion in a number of countries around the world and through a number of channels. If our international expansion plans are unsuccessful, it could have a material adverse effect on our business, results of operations and financial condition.
Our ability to attract, develop, motivate and retain employees is influenced by our ability to offer competitive compensation and benefits, employee morale, our reputation, recruitment by other employers, perceived internal opportunities, non-competition and non-solicitation agreements and macro unemployment rates.
Competitors may use aggressive tactics to recruit our employees. Our ability to attract, develop, motivate and retain employees is influenced by our ability to offer competitive compensation and benefits, employee morale, our reputation, recruitment by other employers, perceived internal opportunities, non-competition and non-solicitation agreements and macro unemployment rates.
If we are unable to attract, develop, motivate and retain talented employees with the necessary skills and experience, or if changes to our organizational structure, operating results, or business model, including as a result of the ongoing COVID-19 pandemic, adversely affect morale, hiring and/or retention, we may not achieve our objectives and our results of operations could be adversely impacted.
If we are unable to attract, develop, motivate and retain talented employees with the necessary skills and experience, or if changes to our organizational structure, operating results or business model adversely affect morale, hiring and/or retention, we may not achieve our objectives and our results of operations could be adversely impacted.
The failure to 27 Table of Contents make timely deliveries may cause customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on us. We do not have written agreements with any of our third-party manufacturing contractors.
The failure to make timely deliveries may cause customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on us. We do not have long-term agreements with any of our third-party manufacturing contractors or third-party sourcing agents.
In addition, the geographic areas subject to our licensing agreements could be impacted by geopolitical risks.
The geographic areas subject to our licensing agreements could also be impacted by geopolitical risks.
Any or all of the foregoing could have a material adverse effect on our business results and operations. The accessories, footwear and apparel industries are heavily influenced by general macroeconomic cycles that affect consumer spending and a prolonged period of depressed consumer spending could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Macroeconomic Conditions The accessories, footwear and apparel industries are heavily influenced by general macroeconomic cycles that affect consumer spending and a prolonged period of depressed consumer spending could have a material adverse effect on our business, results of operations and financial condition.
For example, as of April 2, 2022, we were party to operating leases associated with our retail stores that we operate directly throughout the globe, as well as other global corporate facilities, requiring future minimum lease payments aggregating to $1.6 billion through Fiscal 2027 and approximately $426 million thereafter through Fiscal 2044.
For example, as of March 30, 2024, we were party to operating leases associated with our retail stores that we operate directly throughout the globe, as well as other global corporate facilities, requiring future minimum lease payments aggregating to $1.6 billion through Fiscal 2029 and approximately $600 million thereafter through Fiscal 2044.
In addition, other factors that could impact the success of our retail stores include: (i) the location of the mall or the location of a particular store within the mall; (ii) the other tenants occupying space at the mall; (iii) vacancies within the mall; (iv) stores and malls having to re-close due to personnel or customer illness or further government restrictions; (v) increased competition in areas where the malls are located; (vi) the amount of advertising and promotional dollars spent on attracting consumers to the malls; and (vii) a shift toward online shopping.
In addition, other factors that could impact consumer traffic at our retail stores include: (i) the location of the mall or the location of a particular store within the mall; (ii) the other tenants occupying space at the mall; (iii) vacancies or extended store closures within the mall; (iv) increased competition in areas where the malls are located; (v) the amount of advertising and promotional dollars spent on attracting consumers to the malls; and (vi) a shift toward online shopping.
Additionally, certain of our wholesale customers, particularly those located in the United States, have become highly promotional and have aggressively marked down their merchandise. We expect that such markdowns may continue to be exacerbated because of the impact of COVID-19. Such promotional activity could negatively impact our business. Acquisitions may not achieve intended benefits and may not be successfully integrated.
Additionally, certain of our wholesale customers, particularly those located in the United States, have become highly promotional and have aggressively marked down their merchandise. We expect that such markdowns may continue to be exacerbated because of the current macroeconomic environment. Such promotional activity could negatively impact our business.
If any of these distribution facilities were to shut down or otherwise become inoperable or inaccessible for any reason 25 Table of Contents (including due to the ongoing COVID-19 pandemic), we could suffer a substantial loss of inventory and/or disruptions of deliveries to our customers.
If any of these distribution facilities were to shut down or otherwise become inoperable or inaccessible for any reason, we could suffer a substantial loss of inventory and/or disruptions of deliveries to our customers.
In addition, an event of default under the credit agreement governing our 2018 Credit Facility would permit the lenders under our 2018 Credit Facility to terminate all commitments to extend further credit under that facility.
In addition, an event of default under the credit agreement governing our 2022 Credit Facility or the Versace 2022 Credit Facility would permit the lenders under those credit facilities to terminate all commitments to extend further credit under such facility.
Their capabilities in these areas may enable them to better withstand periodic downturns in the accessories, footwear and apparel industries (including those related to the ongoing COVID-19 pandemic and/or recent inflationary pressures), compete more effectively on the basis of price and production and more quickly develop new products.
Their capabilities in these areas may enable them to better withstand periodic downturns in the accessories, footwear and apparel industries (including as a result of recent inflationary pressures and other macroeconomic factors), compete more effectively on the basis of price and production and more quickly develop new products.
We are also subject to collective bargaining agreements with respect to employees in certain European countries. Compliance with these laws and regulations, as well as collective bargaining agreements, may lead to increased costs and operational complexity and may increase our exposure to governmental investigations or litigation.
Compliance with these laws and regulations, as well as collective bargaining agreements, may lead to increased costs and operational complexity and may increase our exposure to governmental investigations or litigation.
We are dependent on information technology (“IT”) systems and networks for a significant portion of our direct-to-consumer sales, including our e-commerce sites and retail business credit card transaction authorization and processing.
Risks Related to Information Technology and Data Security Privacy breaches and other cyber security risks related to our business could negatively affect our reputation, credibility and business. We are dependent on information technology (“IT”) systems and networks for a significant portion of our direct-to-consumer sales, including our e-commerce sites and retail business credit card transaction authorization and processing.
Likewise, our obligation to continue making lease payments in respect of leases for closed retail spaces could have a material adverse effect on our business, financial condition and results of operations.
Our inability to secure desirable retail space or favorable lease terms could impact our ability to grow. Likewise, our obligation to continue making lease payments with respect to leases for closed retail spaces could have a material adverse effect on our business, financial condition and results of operations.
As a result of these restrictions, we may be: • limited in how we conduct our business; • unable to raise additional debt or equity financing to operate during general economic or business downturns, including as a result of the ongoing COVID-19 pandemic and recent inflationary pressures and possible recession; or • unable to compete effectively or to take advantage of new business opportunities.
As a result of these restrictions, we may be: • limited in how we conduct our business; • unable to raise additional debt or equity financing to operate during general economic or business downturns, including during a recessions or other times of economic uncertainty; or • unable to compete effectively or to take advantage of new business opportunities.
As a result, our overall effective tax rate is affected by the proportion of earnings from the various tax jurisdictions. We record tax expense based on our estimates of taxable income and required reserves for uncertain tax positions in multiple tax jurisdictions. At any time, there are multiple tax years that are subject to examinations by various taxing authorities.
We record tax expense based on our estimates of taxable income and required reserves for uncertain tax positions in multiple tax jurisdictions. At any time, there are multiple tax years that are subject to examinations by 30 Table of Contents various taxing authorities.
Our products are primarily produced by, and purchased or procured from, independent manufacturing contractors located mainly in Asia and Europe. A manufacturing contractor’s failure to ship products to us in a timely manner or to meet the required quality standards could cause us to miss the delivery date requirements of our customers for those items.
A manufacturing contractor’s failure to ship products to us in a timely manner or to meet the required quality standards could cause us to miss the delivery date requirements of our customers for those items.
Any such disruption or uncertainty could generate a negative public perception and/or have a material adverse impact on our results of operations, financial condition, and the market price of our ordinary shares.
Any such disruption or uncertainty could generate a negative public perception and/or have a material adverse impact on our results of operations, financial condition, and the market price of our ordinary shares. Competition for qualified personnel in the fashion industry is intense and turnover in the industry for retail associates is generally high.
In addition, as each of our leases expire, we may be unable to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close retail stores in desirable locations. Our inability to secure desirable retail space or favorable lease terms could impact our ability to grow.
In some instances, we may be unable to close an underperforming retail store due to continuous operation clauses in our lease agreements. In addition, as each of our leases expire, we may be unable to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close retail stores in desirable locations.
There can be no assurance that any or all of these events will not have a material adverse effect on our business, results of operations and financial condition. Our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments.
There can be no assurance that any or all of these events will not have a material adverse effect on our business, results of operations and financial condition.
E-commerce is approximately 17% of our net revenues and has been our fastest growing business over the last several years, particularly in light of the ongoing COVID-19 pandemic.
E-commerce represents approximately 18% of our net revenues and has been our fastest growing business over the last several years.
Even if we react appropriately to changes in fashion trends and consumer preferences, consumers may consider our brands to be outdated or associate our brands with styles that are no longer popular or trend-setting. We have also recently begun to increase the price of our products.
Even if we react appropriately to changes in fashion trends and consumer preferences, consumers may consider our brands to be outdated or associate our brands with styles that are no longer popular or trend-setting. Any of these outcomes could have a material adverse effect on our brands, business, results of operations and financial condition.
The terms of our indebtedness contain affirmative and negative covenants that impose operating and financial restrictions on us and may restrict our ability to engage in future business opportunities or pursue our strategies. The Company’s 2018 Credit Facility requires us to maintain a quarterly maximum permitted net leverage ratio of no greater than 4.0 to 1.0.
The terms of our indebtedness contain affirmative and negative covenants that impose operating and financial restrictions on us and may restrict our ability to engage in future business opportunities or pursue our strategies.
A decline in future comparable store sales and/or store profitability or failure to meet market expectations or the occurrence of impairment charges relating to our retail store fleet could have a material adverse effect on our business, results of operations and financial condition.
A decline in future comparable store sales and/or store profitability or failure to meet market expectations or the occurrence of impairment charges relating to our retail store fleet could have a material adverse effect on our business, results of operations and financial condition. 23 Table of Contents If we are unable to effectively execute our e-commerce business strategy and provide a reliable digital experience for our customers, our reputation and operating results may be harmed.
Future tax reform resulting from this development may result in changes to long-standing tax principles, which could adversely affect our effective tax rate and/or result in higher cash tax liabilities. In late 2021, the OECD published model legislation and the EU issued a draft directive related to the global minimum tax (“Pillar Two Model Rules”).
Future tax reform resulting from this development may result in changes to long-standing tax principles, which could adversely affect our effective tax rate and/or result in higher cash tax liabilities.
Our business is susceptible to the risks associated with climate change and other environmental impacts which could negatively affect our business and operations. Our retail stores, distribution centers and manufacturing facilities, including those operated by third-parties, are subject to risks relating to climate change and other environmental impacts from our operations.
Our business, including our retail, distribution and manufacturing operations, is susceptible to the physical and transitional risks associated with climate change and other environmental impacts that could negatively affect our business and operations.
Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting, which could harm our business and cause a decline in the price of our ordinary shares. As a public company, we are required to document and test our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act.
As a result, the market price of our ordinary shares could be adversely affected. Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting, which could harm our business and cause a decline in the price of our ordinary shares.
This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
Our ability to make payments on and refinance our debt obligations and to fund planned capital expenditures depends on our ability to generate cash from our operations. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.
Increased scrutiny from investors and others regarding our corporate social responsibility initiatives, including environmental, social and other matters of significance relating to sustainability, could result in additional costs or risks and adversely impact our reputation. Investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders and customers have increasingly focused on ESG or “sustainability” practices of companies.
Risks Related to Environmental, Social and Governance Issues Increased scrutiny from investors and others regarding our corporate social responsibility initiatives, including environmental, social and other matters of significance relating to sustainability, and changing regulatory requirements around ESG could result in additional costs or risks and adversely impact our reputation.
The retail industry has experienced a great deal of consolidation and other ownership changes over the past several years and a number of wholesale accounts were forced to file bankruptcy or undergo restructurings due to the impact of COVID-19 on their business.
The retail industry has also experienced a great deal of consolidation and other ownership changes over the past several years and a number of wholesale accounts were forced to file bankruptcy or undergo restructurings. We expect that the risk of consolidation, bankruptcy, restructurings or reorganizations by department stores and other retailers will continue to exist for the foreseeable future.
As a result of the ongoing COVID-19 pandemic, many of our wholesale customers have experienced, and may continue to experience, liquidity constraints or other financial difficulties, causing a reduction in the amount of merchandise purchased from us and our product licensing partners, an increase in order cancellations and/or the need to extend payment terms.
Reductions in the amount of merchandise purchased from us by our wholesale partners or an increase in order cancellations by our wholesale partners could further reduce our revenues and have a material adverse effect on our profitability. In addition, many of our wholesale customers have experienced, and may continue to experience, liquidity constraints or other financial difficulties.
Risks Related to Our Business We face risks associated with operating globally and our strategy to continue to expand internationally. We operate on a global basis, with approximately 47% of our total revenue from operations outside of the United States during Fiscal 2022.
We operate on a global basis, with approximately 51% of our total revenue from operations outside of the United States during Fiscal 2024.
Any or all of these measures could substantially reduce our revenue and have a material adverse effect on our profitability. In addition, these actions could lead to larger outstanding accounts receivable balances, delays in collection of accounts receivable, increased expenses associated with collection efforts, increase in excess inventory, increases in credit losses and reduced cash flows.
These challenges could lead to the need to extend payment terms, larger outstanding accounts receivable balances, delays in collection of accounts receivable, increased expenses associated with collection efforts, increases in excess inventory, increases in credit losses and reduced cash flows.
We look for opportunities to cost effectively enhance capability of business services.
We are increasingly looking for opportunities to cost effectively enhance the capability of business services, which includes outsourcing certain functions.
Our business is affected by global economic conditions and the related impact on levels of consumer spending worldwide.
Global economic conditions and the related impact on levels of consumer spending worldwide have impacted, and are likely to continue to impact, our business and the accessories, footwear and apparel industry overall.
Recent changes in our executive management team, the departure of key employees or our failure to attract and retain qualified personnel could have a material adverse effect on our business. As we announced on March 7, 2022, Mr. Joshua Schulman, Chief Executive Officer of Michael Kors and expected successor Chief Executive Officer to Mr.
The departure of key employees or our failure to attract and retain qualified personnel could have a material adverse effect on our business.
The current vessel container and other transportation shortages, labor shortages and port congestion globally, as well as disruptions in factory production in certain countries where we source our products has delayed, and is expected to continue to delay, inventory orders and impact product availability in our channels, including our e-commerce sites, and have resulted in increased freight and logistics costs.
Transportation shortages, labor shortages and port congestion as well as disruptions in factory production in certain countries where we source our products may delay inventory orders and impact product availability in our channels, including our e-commerce sites, which could result in customer dissatisfaction, and have an adverse effect on our business and harm our reputation.
Risks Related to Macroeconomic Conditions The COVID-19 pandemic may continue to have a material adverse effect on our business and results of operations. The ongoing COVID-19 pandemic has caused significant disruption to the global economy, consumer spending and behavior, tourism and to financial markets.
The COVID-19 pandemic may adversely affect our business and results of operations. The COVID-19 pandemic caused significant disruption to the global economy, consumer spending and behavior, tourism and to financial markets and negatively impacted our business during fiscal years 2020 through 2023.
Fluctuations in our tax obligations and changes in tax laws, treaties and regulations may have a material adverse impact on our future effective tax rates and results of operations. Our subsidiaries are subject to taxation in the United States and various foreign jurisdictions, with the applicable tax rates varying by jurisdiction.
If additional tariffs or trade restrictions are implemented by the United States or other countries, the cost of our products could increase which could adversely affect our business. Fluctuations in our tax obligations and changes in tax laws, treaties and regulations may have a material adverse impact on our future effective tax rates and results of operations.
If additional tariffs or trade restrictions are implemented by the United States or other countries, the cost of our products could increase which could adversely affect our business. We are subject to risks associated with leasing retail space subject to long-term and non-cancelable leases. We may be unable to renew leases at the end of their terms.
The misuse of our brand by a licensing or joint venture partner could have a material adverse effect on our business, results of operations and financial condition. We are subject to risks associated with leasing retail space subject to long-term and non-cancelable leases. We may be unable to renew leases at the end of their terms.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Use Approximate Square Footage Whittier, CA Michael Kors United States Distribution Center 1,181,000 Venlo, Netherlands Michael Kors and Jimmy Choo European Distribution Center 1,096,000 New York, NY Michael Kors, Versace and Jimmy Choo United States Corporate Offices 284,000 Montreal, Quebec Michael Kors Canadian Corporate Office and Distribution Center 150,000 Novara, Italy Versace European Distribution Center 109,000 Milan, Italy Versace Corporate Offices 90,000 Milan, Italy Versace Showroom 54,000 Novara, Italy Versace Manufacturing and Distribution Center 46,000 East Rutherford, NJ Michael Kors United States Corporate Offices 43,000 Pistoia, Italy Capri Luxury Shoe Factory 41,000 Milan, Italy Michael Kors Regional Corporate Office and Showroom 25,000 Shangai, China Michael Kors, Versace and Jimmy Choo Regional Corporate Offices 25,000 London, England Jimmy Choo Corporate Offices 24,000 Manno, Switzerland Michael Kors European Corporate Offices 18,000 London, England Capri Corporate Headquarters and Michael Kors Regional Corporate Office 18,000 As of April 2, 2022, we also occupied 1,271 leased retail stores worldwide (including concessions).
Biggest changeLocation Use Approximate Square Footage Whittier, CA Michael Kors United States Distribution Center 1,179,000 Venlo, Netherlands Michael Kors and Jimmy Choo European Distribution Center 1,096,000 New York, NY Michael Kors, Versace and Jimmy Choo United States Corporate Offices 211,000 Montreal, Quebec Michael Kors and Jimmy Choo Canada Corporate Offices and Distribution Center 150,000 Novara, Italy Versace European Distribution Center 109,000 Milan, Italy Versace Corporate Offices 90,000 Milan, Italy Versace Showroom 54,000 Novara, Italy Versace Manufacturing and Distribution Center 46,000 Hong Kong, China Michael Kors, Versace and Jimmy Choo Hong Kong Office 45,000 Pistoia, Italy Capri Luxury Shoe Factory 41,000 East Rutherford, NJ Michael Kors United States Corporate Offices 31,000 Milan, Italy Michael Kors Regional Corporate Office and Showroom 25,000 Shanghai, China Michael Kors, Versace and Jimmy Choo Regional Corporate Offices 25,000 London, England Jimmy Choo Corporate Offices 24,000 London, England Capri Corporate Headquarters and Michael Kors Regional Corporate Office 19,000 Manno, Switzerland Michael Kors European Corporate Offices 18,000 As of March 30, 2024, we also occupied 1,239 leased retail stores worldwide (including concessions).
Other than the land and building for our Michael Kors and Jimmy Choo European distribution center in the Netherlands, our Versace central warehouse in Italy and our Capri luxury shoe factory in Italy, property and equipment related to our stores (e.g. leasehold improvements, fixtures, etc.) and computer equipment, we did not own any material property as of April 2, 2022.
Other than the land and building for our Michael Kors and Jimmy Choo European distribution center in the Netherlands, our Versace central warehouse in Italy and our Capri luxury shoe factory in Italy, property and equipment related to our stores (e.g. leasehold improvements, fixtures, etc.) and computer equipment, we did not own any material property as of March 30, 2024.
Item 2. Properties The following table sets forth the location, use and size of our significant distribution and corporate facilities as of April 2, 2022, all of which are leased with the exception of our distribution center in the Netherlands, our central warehouse in Italy and luxury shoe factory in Italy, which are owned.
Item 2. Properties The following table sets forth the location, use and size of our significant distribution and corporate facilities as of March 30, 2024, all of which are leased with the exception of our distribution center in the Netherlands, our central warehouse in Italy and luxury shoe factory in Italy, which are owned.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings We are involved in various routine legal proceedings incident to the ordinary course of our business. We believe that the outcome of all pending legal proceedings in the aggregate will not have a material adverse effect on our business, results of operations and financial condition. 34 Table of Contents
Biggest changeItem 3. Legal Proceedings Ordinary Course Litigation. We are involved in various routine legal proceedings incident to the ordinary course of our business. We believe that the outcome of all pending ordinary course legal proceedings, in the aggregate, will not have a material adverse effect on our business, results of operations and financial condition. Shareholder Complains.
Added
In connection with the Merger Agreement, a number of complaints have been filed in federal and state court as individual actions, which we refer to collectively as the “Complaints”.
Added
The Complaints allege that the preliminary proxy statement filed by Capri on September 8, 2023 in connection with the Merger Agreement (the “Preliminary Proxy”) or the definitive proxy statement filed by Capri on September 20, 2023 (the “Definitive Proxy,” and together with the Preliminary Proxy, the “Merger Proxy”), as applicable, misrepresents and/or omits certain purportedly material information.
Added
The Complaints also assert violations of Sections 14(a) and 20(a) of the U.S. Securities Exchange Act of 1934, as amended, and Rule 14a-9 promulgated thereunder against Capri and the Board of Directors.
Added
The Complaints seek, among other things: (i) an injunction enjoining the consummation of the Merger and the other transactions contemplated by the Merger Agreement; (ii) rescission or rescissory damages in the event the Merger and the other transactions contemplated by the Merger Agreement are consummated; (iii) direction that defendants account for all damages suffered as a result of any wrongdoing; (iv) costs of the action, including plaintiffs’ attorneys’ and expert fees and expenses; and (v) other relief the court may deem just and proper.
Added
In addition to the Complaints, purported shareholders of Capri have sent demand letters (which we refer to as the “Demands,” and together with the Complaints, the “Matters”) alleging similar deficiencies regarding the disclosures made in the Merger Proxy.
Added
However, in order to avoid the risk that the Matters delay or otherwise adversely affect the Merger, and to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, Capri provided supplemental 37 Table of Contents disclosures to the Merger Proxy in Capri's Current Report on Form 8-K, filed with the SEC on October 17, 2023.
Added
Capri management believes that the Matters are without merit. Capri cannot provide assurance regarding the outcomes of the Matters and may be subject to additional demands or filed actions. If additional similar complaints or demands are filed or sent, absent new or significantly different allegations, Capri will not necessarily disclose such additional filings or demands. Federal Trade Commission Lawsuit .
Added
As previously disclosed, on August 10, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Tapestry, Inc. (“Tapestry”), Sunrise Merger Sub, Inc.
Added
(“Merger Sub”), a direct wholly owned subsidiary of Tapestry and Capri, pursuant to which, among other things, Merger Sub will merge with and into Capri (the “Merger”) with Capri surviving the Merger and continuing as a wholly owned subsidiary of Tapestry. In connection with Tapestry’s pending acquisition of Capri, on April 22, 2024, the U.S.
Added
FTC filed a lawsuit in the United States District Court for the Southern District of New York against Tapestry and us seeking to block the Merger, claiming that the Merger would violate Section 7 of the Clayton Act and that the Merger Agreement and the Merger constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act and should be enjoined.
Added
We believe the FTC’s claims are without merit, and we, together with Tapestry, intend to vigorously defend the lawsuit. If the Merger is blocked, there can be no assurance that any other transaction acceptable to us will be offered and our business, prospects and/or results of operations may be adversely affected.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShare Performance Graph The line graph below compares the cumulative total shareholder return on our ordinary shares with the Standard & Poor’s (“S&P”) 500 Stock Index and the S&P 500 Apparel, Accessories & Luxury Goods Index for the five-year period from March 31, 2017 through April 1, 2022, the last business day of our fiscal year.
Biggest changeShare Performance Graph The line graph below compares the cumulative total shareholder return on our ordinary shares with the Standard & Poor’s (“S&P”) 500 Stock Index and the S&P 500 Apparel, Accessories & Luxury Goods Index for the five-year period from March 29, 2019 through March 30, 2024, the last business day of our fiscal year.
Also as of that date, we had approximately 127 ordinary shareholders of record.
Also as of that date, we had approximately 128 ordinary shareholders of record.
The graph below assumes an investment of $100 made at the close of trading on March 31, 2017, in our ordinary shares and each of the indices presented.
The graph below assumes an investment of $100 made at the close of trading on March 29, 2019, in our ordinary shares and each of the indices presented.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our ordinary shares trade on the NYSE under the symbol “CPRI”. At April 2, 2022, there were 142,806,269 ordinary shares outstanding, and the closing price of our ordinary shares was $50.99.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our ordinary shares trade on the NYSE under the symbol “CPRI”. At March 30, 2024, there were 116,629,634 ordinary shares outstanding, and the closing price of our ordinary shares was $45.30.
Removed
Issuer Purchases of Equity Securities During the first quarter of Fiscal 2022, we reinstated our $500 million share repurchase program, which was previously suspended during the first quarter of Fiscal 2021 in response to the impact of the COVID-19 pandemic and the provisions of the Second Amendment of the 2018 Credit Facility.
Added
Issuer Purchases of Equity Securities The following table provides information regarding our ordinary share repurchases during the three months ended March 30, 2024: Total Number of Shares (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Remaining Dollar Value of Shares That May Be Purchased Under the Programs (in millions) December 31, 2023 – January 27, 2024 — $ — — $ 300 January 28, 2024 – February 24, 2024 — $ — — $ 300 February 25, 2024 – March 30, 2024 — $ — — $ 300 — — (1) Share repurchases may be made in open market or privately negotiated transactions and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s 39 Table of Contents insider trading policy and other relevant factors; however, pursuant to the terms of the Merger Agreement, and subject to certain limited exceptions, we may not repurchase our ordinary shares other than the acceptance of our ordinary shares as payment of the exercise price of options or for withholding taxes with respect to our equity awards.
Removed
Subsequently, on November 3, 2021, we announced that our Board of Directors terminated the Company’s existing $500 million share repurchase program (the “Prior Plan”), which had $250 million of availability remaining at the time, and authorized a new share repurchase program (the “Fiscal 2022 Plan”) pursuant to which we may, from time to time, repurchase up to $1.0 billion of our outstanding ordinary shares within a period of two years from the effective date of the program.
Added
Accordingly, we did not repurchase any ordinary shares during the three months ended March 30, 2024 pursuant to the Existing Share Repurchase Plan, and we do not expect to repurchase any of our ordinary shares in connection with the Existing Share Repurchase Plan prior to the Merger or earlier termination of the Merger Agreement, except withhold to cover.
Removed
We also have in place a “withhold to cover” repurchase program, which allows us to withhold ordinary shares from certain executive officers and directors to satisfy minimum tax withholding obligations relating to the vesting of their restricted share awards.
Removed
On June 1, 2022, we announced that our Board of Directors has terminated our Fiscal 2022 Plan, with $500 million of availability remaining, and authorized a new share repurchase program pursuant to which we may, from time to time, repurchase up to $1.0 billion of our outstanding ordinary shares within period of two years from the effective date of the program.
Removed
Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, 36 Table of Contents applicable legal requirements, trading restrictions under our insider trading policy and other relevant factors. The program may be suspended or discontinued at any time.
Removed
The following table provides information regarding our ordinary share repurchases during the three months ended April 2, 2022: Total Number of Shares Average Price Paid per Share Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximated Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (in millions) December 26, 2021 – January 22, 2022 — $ — — $ 800 January 23, 2022 – February 19, 2022 943,978 $ 66.40 943,978 $ 737 February 20, 2022 – April 2, 2022 4,146,860 $ 57.36 4,136,319 $ 500 5,090,838 5,080,297 37 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe increase in cash used by financing activities of $373 million was primarily due to an increase in net debt repayments of $474 million, partially offset by a decrease of $101 million in cash payments to repurchase our ordinary shares during Fiscal 2021. 56 Table of Contents Debt Facilities The following table presents a summary of the Company’s borrowing capacity and amounts outstanding as of April 2, 2022 and March 27, 2021 (dollars in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 Senior Secured Revolving Credit Facility: Revolving Credit Facility (excluding up to a $500 million accordion feature) (1) Total Availability $ 1,000 $ 1,000 Borrowings outstanding (2) 175 — Letter of credit outstanding 21 27 Remaining availability $ 804 $ 973 Term Loan Facility ($1.6 billion) Borrowings Outstanding, net of debt issuance costs (2) $ 495 $ 865 Remaining availability $ — $ — 364 Credit Facility ($230 million) Total availability $ — $ 230 Remaining availability $ — $ 230 Senior Notes due 2024 Borrowings Outstanding, net of debt issuance costs and discount amortization (2) $ 448 $ 447 Other Borrowings (3) $ 42 $ 21 Hong Kong Uncommitted Credit Facility: Total availability (80 million and 100 million Hong Kong Dollar) (4) $ 10 $ 13 Borrowings outstanding — — Remaining availability (80 million and 100 million Hong Kong Dollar) $ 10 $ 13 China Uncommitted Credit Facility: Total availability (45 million and 100 million Chinese Yuan) (4) $ 7 $ 15 Borrowings outstanding — $ — Remaining availability (45 million and 100 million Chinese Yuan) $ 7 $ 15 Japan Credit Facility: Total availability (1.0 billion Japanese Yen) $ 8 $ 9 Borrowings outstanding (0.0 billion and 1.0 billion Japanese Yen) (5) — 9 Remaining availability (1.0 billion and 0.0 billion Japanese Yen) $ 8 $ — Versace Uncommitted Credit Facility: Total availability (48 million and 57 million Euro) (4) $ 52 $ 67 Borrowings outstanding (0 million Euro) — — Remaining availability (48 million and 57 million Euro) $ 52 $ 67 Total borrowings outstanding (1) $ 1,160 $ 1,342 Total remaining availability $ 881 $ 1,298 (1) The financial covenant in our 2018 Credit Facility requiring us to maintain a ratio of the sum of total indebtedness plus the capitalized amount of all operating lease obligations for the last four fiscal quarters to Consolidated EBITDAR of no greater than 3.75 to 1 was previously waived through the fiscal quarter ending June 26, 2021.
Biggest changeThe decrease in cash used in financing activities of $24 million was primarily due to an increase in net debt borrowings of $774 million, partially offset by a $703 million increase in cash payments to repurchase our ordinary shares. 57 Table of Contents Debt Facilities The following table presents a summary of our borrowing capacity and amounts outstanding as of March 30, 2024 and April 1, 2023 (in millions): Fiscal Years Ended March 30, 2024 April 1, 2023 Revolving Credit Facility (excluding up to a $500 million accordion feature) (1) Total availability $ 1,500 $ 1,500 Borrowings outstanding (2) 764 874 Letter of credit outstanding 2 3 Remaining availability $ 734 $ 623 Versace Term Loan (450 Million Euro) Borrowings outstanding, net of debt issuance costs (3) $ 485 $ 487 Senior Notes due 2024 Borrowings outstanding, net of debt issuance costs and discount amortization (2) $ 450 $ 449 Other Borrowings (4) $ 24 $ 17 Hong Kong Uncommitted Credit Facility: Total availability (70 million Hong Kong Dollars) (5) $ 9 $ 9 Borrowings outstanding — — Remaining availability (70 million Hong Kong Dollars) $ 9 $ 9 China Uncommitted Credit Facility: Total availability (75 million Chinese Yuan) (5) $ 10 $ 11 Borrowings outstanding — — Total and remaining availability (75 million Chinese Yuan) $ 10 $ 11 Japan Credit Facility: Total availability (1.0 billion Japanese Yen) $ 7 $ 8 Borrowings outstanding — — Remaining availability (1.0 billion Japanese Yen) $ 7 $ 8 Versace Uncommitted Credit Facilities: Total availability (40 million Euro) (5) $ 43 $ 43 Borrowings outstanding — — Remaining availability (40 million Euro) $ 43 $ 43 Total borrowings outstanding (1) $ 1,723 $ 1,827 Total remaining availability $ 803 $ 694 (1) The financial covenant in our 2022 Credit Facility requires us to comply with the quarterly maximum net leverage ratio test of 4.00 to 1.0.
Our Michael Kors brand was launched 40 years ago by Michael Kors, a world-renowned designer, whose vision has taken the Company from its beginnings as an American luxury sportswear house to a global accessories, footwear and ready-to-wear company with a global distribution network that has presence in over 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners.
Our Michael Kors brand was launched over 40 years ago by Michael Kors, a world-renowned designer, whose vision has taken the Company from its beginnings as an American luxury sportswear house to a global accessories, ready-to-wear, and footwear company with a global distribution network that has presence in over 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners.
Our Michael Kors e-commerce business includes e-commerce sites in the United States, Canada and EMEA and Asia. We also sell Michael Kors products directly to department stores, primarily located across the Americas and EMEA, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of EMEA, Asia and Brazil.
Our Michael Kors e-commerce business includes e-commerce sites in the United States, Canada, EMEA and Asia. We also sell Michael Kors products directly to department stores, primarily located across the Americas and EMEA, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of EMEA, Asia and Brazil.
Inventory related costs are recorded within costs of goods sold and severance expense and credit losses are recorded within selling, general and administrative expenses in the consolidated statements of operations and comprehensive income (loss). (3) These charges primarily relate to incremental credit losses and inventory reserves which are a direct impact of the war in Ukraine.
Inventory related costs are recorded within costs of goods sold and severance expense and credit losses are recorded within selling, general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income. (3) These charges primarily relate to incremental credit losses and inventory reserves which are a direct impact of the war in Ukraine.
Credit losses are recorded within selling, general and administrative expenses and inventory related costs are recorded within costs of goods sold in the consolidated statements of operations and comprehensive income (loss).
Credit losses are recorded within selling, general and administrative expenses and inventory related costs are recorded within costs of goods sold in the consolidated statements of operations and comprehensive (loss) income.
We elected to perform quantitative impairment analyses for the Versace and Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair values of reporting units. We also elected to perform an impairment analysis for the Versace and Jimmy Choo brand intangible assets using an income approach to estimate the fair values.
We elected to perform quantitative impairment analyses for the Versace and Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair values of reporting units. We also elected to perform a quantitative impairment analysis for the Versace and Jimmy Choo brand intangible assets using an income approach to estimate the fair values.
The net gain or loss on the net investment hedge is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income on our consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest (income) expense, net, in our consolidated statements of operations and comprehensive income (loss).
The net gain or loss on the net investment hedge is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income on our consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense (income), net, in our consolidated statements of operations and comprehensive (loss) income.
Over the past several decades, the House of Versace has grown globally from its roots in haute couture, expanding into the design, manufacturing, distribution and retailing of accessories, ready-to-wear, footwear, eyewear, watches, jewelry, fragrance and home furnishings businesses. Versace’s design team is led by Donatella Versace, who has been the brand’s Artistic Director for over 20 years.
Over the past several decades, the House of Versace has grown globally from its roots in haute couture, expanding into the design, manufacturing, distribution and retailing of ready-to-wear, accessories, footwear, eyewear, watches, jewelry, fragrance and home furnishings. Versace’s design team is led by Donatella Versace, who has been the brand’s Artistic Director for over 20 years.
The global financing activities are related to our previously disclosed 2014 move of our principal executive office from Hong Kong to the U.K. and decision to become a U.K. tax resident. In connection with this decision, we funded our international growth strategy through intercompany debt financing arrangements between certain of our United States, United Kingdom and Hungarian subsidiaries.
The global financing activities are related to our previously disclosed 2014 move of our principal executive office from Hong Kong to the U.K. and decision to become a U.K. tax resident. In connection with this decision, we funded our international growth strategy through intercompany debt financing arrangements between certain of our United States and United Kingdom subsidiaries.
Unallocated Corporate Expenses In addition to the reportable segments discussed above, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including ERP system implementation costs and Capri transformation program costs.
Unallocated Corporate Expenses In addition to the reportable segments discussed above, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including system implementation costs and Capri transformation program costs.
Accordingly, due to the difference in the statutory income tax rates between these jurisdictions, we realized a lower effective tax rate on consolidated pre-tax income. Our effective tax rate may fluctuate from time to time due to the effects of changes in United States state and local taxes and tax rates in foreign jurisdictions.
Accordingly, due to the difference in the statutory income tax rates between these jurisdictions, we realized a lower effective tax rate on consolidated pre-tax income. Our effective tax rate may fluctuate from time to time due to the effects of changes in United States federal, state and local taxes and tax rates in foreign jurisdictions.
Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated. We are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations.
Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold or liquidated. We are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations.
For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency (gain) loss in our consolidated statements of operations and comprehensive income (loss).
For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency loss in our consolidated statements of operations and comprehensive (loss) income.
The brand offers classic and timeless luxury products, as well as innovative products that are intended to set and lead fashion trends. Jimmy Choo is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.
The brand offers classic and timeless luxury products, alongside innovative collections that are intended to set and lead fashion trends. Jimmy Choo is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.
While our significant accounting policies are detailed in Note 2 to the accompanying financial statements, our critical accounting policies are discussed below and include revenue recognition, inventories, long-lived assets, goodwill and other indefinite-lived intangible assets, share-based compensation, derivatives and income taxes.
While our significant accounting policies are detailed in Note 3 to the accompanying financial statements, our critical accounting policies are discussed below and include revenue recognition, inventories, long-lived assets, goodwill and other indefinite-lived intangible assets, share-based compensation, derivatives and income taxes.
Derivative Financial Instruments Forward Foreign Currency Exchange Contracts We use forward foreign currency exchange contracts to manage our exposure to fluctuations in foreign currency for certain transactions. We, in our normal course of business, enter into transactions with foreign suppliers and seeks to minimize risks related to these transactions.
Derivative Financial Instruments Forward Foreign Currency Exchange Contracts We use forward foreign currency exchange contracts to manage our exposure to fluctuations in foreign currency for certain transactions. We, in our normal course of business, enter into transactions with foreign suppliers and seek to minimize risks related to these transactions.
Compensation expense for performance-based RSUs is recognized over the employees’ requisite service period when attainment of the performance goals is deemed probable, which involves judgment as to achievement of certain performance metrics. We use our own historical experience in determining the expected holding period and volatility of our time-based share option awards.
Compensation expense for performance-based RSUs is recognized over the employees’ requisite service period when attainment of the performance goals is deemed probable, which involves judgment as to achievement of certain performance metrics. 48 Table of Contents We use our own historical experience in determining the expected holding period and volatility of our time-based share option awards.
During the fourth quarter of Fiscal 2022, we performed our annual goodwill and indefinite-lived intangible assets impairment analysis. Based on qualitative impairment assessment of the Michael Kors reporting units, we concluded that it is more likely than not that the fair value of the Michael Kors reporting units exceeded its carrying value and, therefore, was not impaired.
During the fourth quarter of Fiscal 2024, we performed our annual goodwill and indefinite-lived intangible assets impairment analysis. Based on a qualitative impairment assessment of the Michael Kors reporting units, we concluded that it is more likely than not that the fair value of the Michael Kors reporting units exceeded its carrying value and, therefore, was not impaired.
This approach is dependent on many factors, including estimates of future revenue growth rates, royalty rates and discount rates. Actual future results may differ from these estimates. An impairment loss is recognized when the estimated fair value of the brand intangible assets is less than its carrying amount.
This approach is dependent on many factors, including estimates of future revenue growth rates, royalty rates and discount rates. Actual future results may 47 Table of Contents differ from these estimates. An impairment loss is recognized when the estimated fair value of the brand intangible assets is less than its carrying amount.
If additional tariffs or trade restrictions are implemented by the United States or other countries, the cost of our products could increase which could adversely affect our business. In addition, commodity prices and tariffs may have an impact on our revenues, results of operations and cash flows.
If additional tariffs or trade restrictions are implemented by the United States or other countries, the cost of our products could increase which could adversely affect 42 Table of Contents our business. In addition, commodity prices and tariffs may have an impact on our revenues, results of operations and cash flows.
See Note 11 in the accompanying consolidated financial statements for detailed information relating to our credit facilities and debt obligations.
See Note 12 in the accompanying consolidated financial statements for detailed information relating to our credit facilities and debt obligations.
We believe that the cash generated from our operations, together with borrowings available under our revolving credit facilities and available cash and cash equivalents, will be sufficient to meet our working capital needs for the next 12 months and beyond, including investments made and expenses incurred in connection with our store growth plans, investments in corporate and distribution facilities, continued systems development, e-commerce and marketing initiatives.
We believe that the cash generated from our operations, together with borrowings available under our revolving credit facilities and available cash and cash equivalents, will be sufficient to meet our working capital needs for the next 12 months and beyond, including investments made and expenses incurred in connection with our store opening and renovation plans, investments in corporate and distribution facilities, continued IT system development, e-commerce and marketing initiatives.
In addition, certain categories, such as fragrances and eyewear are produced under licensing agreements. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic.
In addition, certain categories, including fragrance and eyewear, are produced under licensing agreements. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic.
“Risk Factors” — “We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods and our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments.” for additional discussion. Costs of manufacturing, tariffs and import regulations.
“Risk Factors” — “We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods” and “Our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments” for additional discussion. Costs of manufacturing, tariffs and import regulations.
The above table excludes current liabilities (other than short-term debt and short-term operating lease liabilities) recorded as of April 2, 2022, as these items will be paid within one year, and non-current liabilities that have no cash outflows associated with them (e.g., deferred taxes).
The above table excludes current liabilities (other than short-term debt and short-term operating lease liabilities) recorded as of March 30, 2024, as these items will be paid within one year, and non-current liabilities that have no cash outflows associated with them (e.g., deferred taxes).
Our performance is affected by trends in the luxury goods industry, global consumer spending, macroeconomic factors, overall levels of consumer travel and spending on discretionary items as well as shifts in demographics and changes in lifestyle preferences.
Luxury goods trends and demand for our accessories and related merchandise . Our performance is affected by trends in the luxury goods industry, global consumer spending, macroeconomic factors, overall levels of consumer travel and spending on discretionary items as well as shifts in demographics and changes in lifestyle preferences.
Our impairment testing is based on our best estimate of the future operating cash flows. If the sum of our estimated undiscounted future cash flows associated with the asset is less than the asset’s carrying value, we would recognize an impairment charge, which is measured as the amount by which the carrying value exceeds the fair value of the asset.
If the sum of our estimated undiscounted future cash flows associated with the asset is less than the asset’s carrying value, we would recognize an impairment charge, which is measured as the amount by which the carrying value exceeds the fair value of the asset.
The period of these contracts is directly related to the foreign transaction they are intended to hedge. Net Investment Hedges We also use fixed-to-fixed cross currency swap agreements to hedge our net investments in foreign operations against future volatility in the exchange rates between the United States dollar and the associated foreign currencies.
The period of these contracts is directly related to the foreign transaction they are intended to hedge. Net Investment Hedges We also use cross currency swap agreements to hedge our net investments in foreign operations against future volatility in the exchange rates between different currencies.
As of April 2, 2022, there were 25 financial institutions participating in the facility, with none maintaining a maximum commitment percentage in excess of 10%. We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the 2018 Credit Facility.
As of March 30, 2024, there were 17 financial institutions participating in the facility, with none maintaining a maximum commitment percentage in excess of 10%. We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the 2022 Credit Facility.
New Accounting Pronouncements Please refer to Note 2 to the accompanying consolidated financial statements for detailed information relating to recently adopted and recently issued accounting pronouncements and the associated impacts. 49 Table of Contents Results of Operations A discussion regarding our results of operations for Fiscal 2022 compared to Fiscal 2021 is presented below.
New Accounting Pronouncements Please refer to Note 3 to the accompanying consolidated financial statements for detailed information relating to recently adopted and recently issued accounting pronouncements and the associated impacts. 51 Table of Contents Results of Operations A discussion regarding our results of operations for Fiscal 2024 compared to Fiscal 2023 is presented below.
In addition, certain other costs are not allocated to segments, including restructuring and other charges, impairment costs, COVID-19 related charges, charitable donations and the war in Ukraine. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance.
In addition, certain other costs are not allocated to segments, including Merger related costs, impairment 43 Table of Contents charges, the impact of the war in Ukraine, restructuring and other expenses and COVID-19 related expenses. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance.
A discussion regarding our results of operations for Fiscal 2021 compared to Fiscal 2020 can be found under Item 7 in our Annual Report on Form 10-K for the year ended March 27, 2021, filed with the SEC on May 26, 2021, which is available on the SEC’s website at www.sec.gov and our investor website at www.capriholdings.com .
A discussion regarding our results of operations for Fiscal 2023 compared to Fiscal 2022 can be found under Item 7 in our Annual Report on Form 10-K for the year ended April 1, 2023, filed with the SEC on May 31, 2023, which is available on the SEC’s website at www.sec.gov and our investor website at www.capriholdings.com .
The amounts reserved for retail sales returns were $22 million, $20 million and $12 million at April 2, 2022, March 27, 2021 and March 28, 2020, respectively. Net sales for wholesale equals gross sales, reduced by provisions for estimated future returns based on current expectations, as well as trade discounts, markdowns, allowances, operational chargebacks, and certain cooperative selling expenses.
The amounts reserved for retail sales returns were $18 million, $22 million and $22 million at March 30, 2024, April 1, 2023 and April 2, 2022, respectively. Net sales for wholesale equals gross sales, reduced by provisions for estimated future returns based on current expectations, as well as trade discounts, markdowns, allowances, operational chargebacks, and certain cooperative selling expenses.
Cash Used in Financing Activities Net cash used in financing activities was $800 million during Fiscal 2022, as compared to $870 million during Fiscal 2021.
Net cash used in financing activities was $776 million during Fiscal 2023, as compared to $800 million during Fiscal 2022.
Future events could cause us to conclude that impairment indicators exist and goodwill may be impaired. 46 Table of Contents When performing a quantitative impairment assessment of our brand intangible assets, the fair value of the Versace and the Jimmy Choo brands is estimated using a discounted cash flow analysis based on the “relief from royalty” method, assuming that a third party would be willing to pay a royalty in lieu of ownership for this intangible asset.
When performing a quantitative impairment assessment of our brand intangible assets, the fair value of the Versace and the Jimmy Choo brands is estimated using a discounted cash flow analysis based on the “relief from royalty” method, assuming that a third-party would be willing to pay a royalty in lieu of ownership for this intangible asset.
During Fiscal 2022, Fiscal 2021 and Fiscal 2020, we recorded impairment charges of $83 million, $158 million and $357 million, respectively, which were primarily related to operating lease right-of-use assets and fixed assets of our retail store locations. Please refer to Note 7 and Note 13 of the accompanying consolidated financial statements for additional information.
During Fiscal 2024, Fiscal 2023 and Fiscal 2022, we recorded impairment charges of $88 million, $36 million and $83 million, respectively, which were primarily related to operating lease right-of-use assets and fixed assets of our retail store locations. Please refer to Note 8 and Note 14 of the accompanying consolidated financial statements for additional information.
Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with growing brand awareness in other international markets. Michael Kors features distinctive designs, materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude.
Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with growing brand awareness in other international markets. Michael Kors features distinctive designs, materials and craftsmanship that combines stylish elegance and a sporty attitude. Michael Kors offers three primary collections: the Michael Kors Collection line, the MICHAEL Michael Kors line and the Michael Kors Mens line.
Total sales reserves for wholesale were $70 million, $78 million and $154 million at April 2, 2022, March 27, 2021 and March 28, 2020, respectively. These estimates are based on such factors as historical trends, actual and forecasted performance and market conditions, which are reviewed by management on a quarterly basis.
Total sales reserves for wholesale were $61 million, $73 million and $70 million at March 30, 2024, April 1, 2023 and April 2, 2022, respectively. These estimates are based on such factors as historical trends, actual and forecasted performance and market conditions, which are reviewed by management on a quarterly basis.
During Fiscal 2021, we recognized asset impairment charges of approximately $316 million, primarily related to the impairment of Jimmy Choo goodwill and its brand intangible assets, as well as the impairment of operating lease right-of-use assets (see Note 13 to the accompanying consolidated financial statements for additional information).
During Fiscal 2023, we recognized asset impairment charges of approximately $142 million, primarily related to the impairment of the Jimmy Choo Retail and Wholesale reporting units’ goodwill and Jimmy Choo brand intangible assets, as well as the impairment of certain operating lease right-of-use assets (see Note 14 to the accompanying consolidated financial statements for additional information).
In addition to the commitments in the above table, our off-balance sheet commitments relating to our outstanding letters of credit were $36 million at April 2, 2022, including $15 million in letters of credit issued outside of the 2018 Credit Facility.
In addition to the commitments in the above table, our off-balance sheet commitments relating to our outstanding letters of credit were $32 million at March 30, 2024, including $30 million in letters of credit issued outside of the 2022 Credit Facility.
In addition, as of April 2, 2022, bank guarantees of approximately $30 million were supported by our various credit facilities.
In addition, as of March 30, 2024, bank guarantees of approximately $39 million were supported by our various credit facilities.
Interest, net represents the estimated net interest expense associated with our term loan based on the current interest rate and interest from our interest rate swap. It also includes the estimated net interest income from our net investment hedges. Inventory purchase obligations represent contractual obligations for future purchases of inventory.
Interest, net represents the estimated net interest income from our net investment hedges and the estimated interest expense associated with our Revolving Credit Facility, Versace Term Loan and Senior Notes based on their current interest rate. Inventory purchase obligations represent contractual obligations for future purchases of inventory.
Foreign Currency (Gain) Loss During Fiscal 2022 and Fiscal 2021, we recognized a net foreign currency loss of $8 million and a net foreign currency gain of $20 million, respectively, primarily attributable to the remeasurement of intercompany loans with certain of our subsidiaries.
During Fiscal 2023, we recognized a net foreign currency loss of $10 million primarily attributable to the remeasurement of intercompany loans with certain of our subsidiaries.
The net realizable value of our inventory is estimated based on historical experience, current and forecasted demand and market conditions. In addition, reserves for inventory losses are estimated based on historical experience and inventory counts. Our inventory reserves are estimates, which could vary significantly from actual results if future economic conditions, customer demand or competition differ from expectations.
In addition, reserves for inventory losses are estimated based on historical experience and inventory counts. Our inventory reserves are estimates, which could vary significantly from actual results if future economic conditions, customer demand or competition differ from expectations. Our historical estimates of these adjustments have not differed materially from actual results.
(3) The balance as of April 2, 2022 consists of $21 million related to our supplier finance program recorded within short-term debt in our consolidated balance sheets, $18 million related to the sale of certain Versace tax receivables, with $8 million and $10 million, respectively, recorded within short-term debt and long-term debt in our consolidated balance sheets and $3 million of other loans recorded as long-term debt in our consolidated balance sheets.
The balance as of April 1, 2023 consists of primarily of $4 million related to our supplier finance program recorded within short-term debt in our consolidated balance sheets and $11 million related to the sale of certain Versace tax receivables, with $1 million and $10 million recorded within short-term debt and long-term debt, respectively, in our consolidated balance sheets.
(4) The balance as of April 2, 2022 represents the total availability of the credit facility, which excludes bank guarantees. (5) Recorded as short-term debt in our consolidated balance sheets as of March 27, 2021. We believe that our 2018 Credit Facility is adequately diversified with no undue concentration in any one financial institution.
(5) The balance as of March 30, 2024 and April 1, 2023 represents the total availability of the credit facility, which excludes bank guarantees. We believe that our 2022 Credit Facility is adequately diversified with no undue concentration in any one financial institution.
During the first quarter of Fiscal 2022, we modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $2.875 billion to hedge its net investment in Euro denominated subsidiaries.
During the first quarter of Fiscal 2024, we entered into multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $2.5 billion to hedge our net investment in Swiss Franc (“CHF”) denominated subsidiaries.
We spent $131 million on capital expenditures during Fiscal 2022 and expect to spend approximately $300 million during Fiscal 2023. This anticipated increase reflects continued expenditures related to our retail operations (including e-commerce), ERP system implementation and Capri transformation programs. The majority of the Fiscal 2022 expenditures related to our retail operations (including e-commerce) and our corporate offices.
We spent $189 million on capital expenditures during Fiscal 2024 and expect to spend approximately $135 million during Fiscal 2025. The majority of the Fiscal 2024 expenditures related to our retail operations (including e-commerce), ERP system implementation and Capri transformation programs.
Formal hedge documentation is prepared for all derivative instruments designated as hedges, including a description of the hedged item and the hedging instrument and the risk being hedged. The changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income until the hedged item affects earnings.
The changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income until the hedged item affects earnings.
Our historical estimates of these adjustments have not differed materially from actual results. Long-lived Assets We evaluate all long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable.
Long-lived Assets We evaluate all long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. For the purposes of impairment testing, we group long-lived assets at the lowest level of identifiable cash flow.
In addition, revenue is generated through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of products, including fragrances and eyewear. 42 Table of Contents Michael Kors We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our products, as well as licensed products bearing our name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia.
Michael Kors We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our products, as well as licensed products bearing our name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia.
In order to mitigate counterparty credit risk, we only enter into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. During the fourth quarter of Fiscal 2020, we terminated all of our net investment hedges related to our Euro-denominated subsidiaries.
In order to mitigate counterparty credit risk, we only enter into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure.
However, in 2020, due to the impact of the COVID-19 crisis, the personal luxury goods market declined 23%. Market studies indicate that the personal luxury goods market returned to 2019 levels in 2021, and the market is predicted to increase at a 10% compound annual growth rate between 2020 and 2025.
However, in 2020, due to the impact of the COVID-19 crisis, the personal luxury goods market declined 23%. In 2023, the global personal luxury goods market grew 8% and is predicted to increase at a 6-7% compound annual growth rate between 2023 and 2030.
Net cash used in financing activities was $870 million during Fiscal 2021, as compared to $497 million during Fiscal 2020.
Cash Used in Financing Activities Net cash used in financing activities was $208 million during Fiscal 2024, as compared to $776 million during Fiscal 2023.
Versace distributes its products through a worldwide distribution network, which includes boutiques in some of the world’s most glamorous cities, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide. 40 Table of Contents Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, jewelry, scarves and belts, as well as a growing men’s luxury shoe and accessory business.
Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessory brand, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, jewelry, scarves and belts, as well as men’s luxury shoe and accessory business.
For the purposes of impairment testing, we group long-lived assets at the lowest level of identifiable cash flow. Our leasehold improvements are typically amortized over the life of the store lease, including reasonably assured renewals and our shop-in-shops are amortized over a useful life of three to five years.
Our leasehold improvements are typically amortized over the life of the store lease, including reasonably assured renewals and our shop-in-shops are amortized over a useful life of three to five years. Our impairment testing is based on our best estimate of the future operating cash flows.
We employ these contracts to hedge the our cash flows, as they relate to foreign currency transactions. Certain of these contracts are designated as hedges for accounting purposes, while others remain undesignated.
We employ these contracts to hedge our cash flows, as they relate to foreign currency transactions. Certain of these contracts are designated as hedges for accounting purposes, while others remain undesignated. All of our derivative instruments are recorded in our consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation.
The $61 million improvement in interest (income) expense, net, is primarily due to an increase of interest income from higher average notional amounts outstanding on our net investment hedges in the current year and a decrease in interest expense attributable to lower average borrowings outstanding (see Note 11 and Note 14 to the accompanying consolidated financial statements for additional information).
The $18 million decrease in interest expense, net, is primarily due to higher interest income of $57 million from our net investment hedges, partially offset by higher effective interest rates and higher average borrowings on our outstanding debt (see Note 12 and Note 15 to the accompanying consolidated financial statements for additional information).
The $186 million increase in cash used in investing activities was primarily attributable to a $298 million settlement of net investment hedges during Fiscal 2020, partially offset by a $112 million decrease in capital expenditures compared to Fiscal 2020.
The increase in net cash used in investing activities were primarily attributable to the lower settlement of net investment hedges of $355 million, partially offset by lower capital expenditures of $37 million compared to prior year. Net cash provided by investing activities was $183 million during Fiscal 2023, as compared to $58 million during Fiscal 2022.
Any future disruptions in our shipping and distribution network, including impacts on our supply chain due to temporary closures of our manufacturing partners and shipping and fulfillment constraints, could have a negative impact on our results of operations. See Item 1A.
Any disruptions in our shipping and distribution network, including port congestion, vessel availability, container shortages and temporary factory closures, could have a negative impact on our results of operations. See Item 1A.
The balance as of March 27, 2021 consists of $17 million related to our supplier finance program recorded within short term debt in our consolidated balance sheets and $4 million of other loans recorded as long-term debt in our consolidated balance sheets.
(4) The balance as of March 30, 2024 consists of primarily of $11 million related to our supplier financing program recorded within short-term debt in our consolidated balance sheets, $11 million related to the sale of certain Versace tax receivables, with $1 million and $10 million recorded within short-term debt and long-term debt, respectively, in our consolidated balance sheets and $2 million of other loans recorded as long-term debt in our consolidated balance sheets.
Michael Kors offers three primary collections: the Michael Kors Collection luxury line, the MICHAEL Michael Kors accessible luxury line and the Michael Kors Mens line. The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried by select retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world.
The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried by select retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world. MICHAEL Michael 41 Table of Contents Kors has a strong focus on accessories, in addition to offering ready-to-wear and footwear.
The following table presents our total revenue and income (loss) from operations by segment for Fiscal 2022, Fiscal 2021 and Fiscal 2020 (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Total revenue: Versace $ 1,088 $ 718 $ 843 Jimmy Choo 613 418 555 Michael Kors 3,953 2,924 4,153 Total revenue $ 5,654 $ 4,060 $ 5,551 Income (loss) from operations: Versace $ 185 $ 21 $ (8) Jimmy Choo 13 (55) (13) Michael Kors 1,005 595 850 Total segment income from operations 1,203 561 829 Less: Corporate expenses (190) (152) (152) Impairment of assets (1) (73) (316) (708) COVID-19 related charges (2) 14 (42) (119) Impact of war in Ukraine (3) (9) — — Restructuring and other charges (42) (32) (42) Total income (loss) from operations $ 903 $ 19 $ (192) (1) Impairment of assets during Fiscal 2022 includes $50 million, $19 million and $4 million of impairment charges related to the Michael Kors, Versace and Jimmy Choo reportable segments, respectively.
The following table presents our total revenue and (loss) income from operations by segment for Fiscal 2024, Fiscal 2023 and Fiscal 2022 (in millions): Fiscal Years Ended March 30, 2024 April 1, 2023 April 2, 2022 Total revenue: Versace $ 1,030 $ 1,106 $ 1,088 Jimmy Choo 618 633 613 Michael Kors 3,522 3,880 3,953 Total revenue $ 5,170 $ 5,619 $ 5,654 Income from operations: Versace $ 25 $ 152 $ 185 Jimmy Choo 3 38 13 Michael Kors 634 868 1,005 Total segment income from operations 662 1,058 1,203 Less: Corporate expenses (275) (233) (190) Impairment of assets (1) (575) (142) (73) Merger related costs (20) — — COVID-19 related charges (2) — 9 14 Impact of war in Ukraine (3) — 3 (9) Restructuring and other expense (4) (33) (16) (42) Total (loss) income from operations $ (241) $ 679 $ 903 (1) Impairment of assets during Fiscal 2024 includes $283 million, $267 million and $25 million of impairment charges related to the Versace, Jimmy Choo and Michael Kors reportable segments, respectively.
Impairment of assets during Fiscal 2021 includes $191 million, $91 million and $34 million of impairment charges related to the Jimmy Choo, Michael Kors and Versace reportable segments, respectively. Impairment of assets during Fiscal 2020 includes $434 million, $187 million and $87 million of impairment charges related to the Jimmy Choo, Michael Kors and Versace reportable segments, respectively.
Impairment of assets during Fiscal 2023 includes $110 million, $30 million and $2 million of impairment charges related to the Jimmy Choo, Michael Kors and Versace reportable segments, respectively. Impairment of assets during Fiscal 2022 includes $50 million, $19 million and $4 million of impairment charges related to the Michael Kors, Versace and Jimmy Choo reportable segments, respectively.
Based on the results of these assessment, we concluded that the fair values of the Versace and Jimmy Choo reporting units and the brand intangible assets exceeded the related carrying amounts and no impairment was required.
Further, based on the results of these assessments, we determined that there was no impairment for the Versace Retail and Licensing reporting units as the fair values of these reporting units significantly exceeded the related carrying amounts.
(2) COVID-19 related charges during Fiscal 2022 primarily include net inventory credits of $16 million as a result of better than expected sell-through and severance expense of $2 million, respectively. Net inventory credits during 43 Table of Contents Fiscal 2022 is change of estimate from better than expected sell-through.
(2) COVID-19 related charges during Fiscal 2023 primarily include net inventory credits of $9 million. COVID-19 related charges during Fiscal 2022 primarily include net inventory credits and severance expense of $16 million and $2 million, respectively.
Provision for Income Taxes During Fiscal 2022, we recognized $92 million of income tax expense on pre-tax income of $915 million compared with $66 million of income tax expense on a pre-tax income of $3 million for Fiscal 2021.
(Benefit) Provision for Income Taxes During Fiscal 2024, we recognized $54 million of an income tax benefit on a pre-tax loss of $283 million compared with $29 million of income tax expense on a pre-tax income of $648 million for Fiscal 2023.
These valuations are affected by certain estimates, including future revenue growth rates, future operating expense growth rates, gross margins and discount rates.
These valuations are affected by certain estimates, including future revenue growth rates, future operating expense growth rates, gross margins, discount rates and market multiples. Future events could cause us to conclude that impairment indicators exist and goodwill may be impaired.
The following table sets forth key indicators of our liquidity and capital resources (in millions): As of April 2, 2022 March 27, 2021 Balance Sheet Data: Cash and cash equivalents $ 169 $ 232 Working capital $ 325 $ (75) Total assets $ 7,480 $ 7,481 Short-term debt $ 29 $ 123 Long-term debt $ 1,131 $ 1,219 Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Cash flows provided by (used in): Operating activities $ 704 $ 624 $ 859 Investing activities 58 (124) 62 Financing activities (800) (870) (497) Effect of exchange rate changes (24) 12 (4) Net (decrease) increase in cash, cash equivalents and restricted cash $ (62) $ (358) $ 420 Cash Provided by Operating Activities Cash provided by operating activities increased $80 million to $704 million during Fiscal 2022, as compared to $624 million for Fiscal 2021, which was due to an increase in our net income after non-cash adjustments, partially offset by decreases related to changes in our working capital.
The following table sets forth key indicators of our liquidity and capital resources (in millions): As of March 30, 2024 April 1, 2023 Balance Sheet Data: Cash and cash equivalents $ 199 $ 249 Working capital $ (87) $ 420 Total assets $ 6,689 $ 7,295 Short-term debt $ 462 $ 5 Long-term debt $ 1,261 $ 1,822 Fiscal Years Ended March 30, 2024 April 1, 2023 April 2, 2022 Cash flows provided by (used in): Operating activities $ 309 $ 771 $ 704 Investing activities (135) 183 58 Financing activities (208) (776) (800) Effect of exchange rate changes (17) (94) (24) Net (decrease) increase in cash, cash equivalents and restricted cash $ (51) $ 84 $ (62) Cash Provided by Operating Activities Net cash provided by operating activities was $309 million during Fiscal 2024, as compared to $771 million for Fiscal 2023.
Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $38 million, or 25.0%, to $190 million for Fiscal 2022, compared to $152 million for Fiscal 2021, primarily due to an increase in professional fees related to the ERP system implementation and Capri transformation projects and an increase in compensation expense.
Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $42 million, or 18.0%, to $275 million for Fiscal 2024, compared to $233 million for Fiscal 2023, primarily due to significant transformation costs for projects which are largely complete.
The following table presents our global network of retail stores and wholesale doors: As of April 2, 2022 March 27, 2021 March 28, 2020 Number of full price retail stores (including concessions): Versace 149 153 157 Jimmy Choo 181 176 179 Michael Kors 524 529 568 854 858 904 Number of outlet stores: Versace 60 57 49 Jimmy Choo 56 51 47 Michael Kors 301 291 271 417 399 367 Total number of retail stores 1,271 1,257 1,271 Total number of wholesale doors: Versace 803 868 824 Jimmy Choo 446 450 554 Michael Kors 2,742 2,852 2,982 3,991 4,170 4,360 The following table presents our retail stores by geographic location: As of As of April 2, 2022 March 27, 2021 Versace Jimmy Choo Michael Kors Versace Jimmy Choo Michael Kors Store count by region: The Americas 39 45 334 34 44 353 EMEA 55 73 176 57 74 176 Asia 115 119 315 119 109 291 209 237 825 210 227 820 44 Table of Contents Key Performance Indicators and Statistics We use a number of key indicators of operating results to evaluate our performance, including the following (dollars in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Total revenue $ 5,654 $ 4,060 $ 5,551 Gross profit as a percent of total revenue 66.2 % 64.0 % 58.9 % Income (loss) from operations $ 903 $ 19 $ (192) Income (loss) from operations as a percent of total revenue 16.0 % 0.5 % (3.5) % Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S.
(4) See Note 11 for details on the Company's restructuring program. 44 Table of Contents The following table presents our global network of retail stores: As of March 30, 2024 April 1, 2023 April 2, 2022 Number of full price retail stores (including concessions): Versace 174 160 149 Jimmy Choo 177 182 181 Michael Kors 461 508 524 812 850 854 Number of outlet stores: Versace 62 63 60 Jimmy Choo 57 55 56 Michael Kors 308 304 301 427 422 417 Total number of retail stores 1,239 1,272 1,271 The following table presents our retail stores by geographic location: As of As of March 30, 2024 April 1, 2023 Versace Jimmy Choo Michael Kors Versace Jimmy Choo Michael Kors Store count by region: The Americas 45 43 293 42 43 319 EMEA 60 68 156 58 70 173 Asia 131 123 320 123 124 320 236 234 769 223 237 812 45 Table of Contents Key Performance Indicators and Statistics We use a number of key indicators of operating results to evaluate our performance, including the following (dollars in millions): Fiscal Years Ended March 30, 2024 April 1, 2023 April 2, 2022 Total revenue $ 5,170 $ 5,619 $ 5,654 Gross profit as a percent of total revenue 64.6 % 66.3 % 66.2 % (Loss) income from operations $ (241) $ 679 $ 903 (Loss) income from operations as a percent of total revenue (4.7) % 12.1 % 16.0 % Critical Accounting Policies and Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S.
During Fiscal 2021, we recognized restructuring and other charges of $32 million, which included other costs of $27 million, primarily related to equity awards associated with the acquisition of Versace and the closure of certain corporate locations and $5 million related to our Capri Retail Store Optimization Program.
We anticipate that up to $5 million of the restructuring charges will be related to lease termination and other store closure costs. During Fiscal 2023, we recognized restructuring and other expense of $16 million, primarily relating to equity awards associated with the acquisition of Versace.
Income from Operations As a result of the foregoing, income from operations increased $884 million to $903 million during Fiscal 2022, compared to $19 million for Fiscal 2021. Income from operations as a percentage of total revenue increased to 16.0% in Fiscal 2022, compared to 0.5% in Fiscal 2021.
(Loss) Income from Operations As a result of the foregoing, loss from operations was $241 million during Fiscal 2024, compared to income from operations of $679 million for Fiscal 2023. (Loss) income from operations as a percentage of total revenue was a loss of 4.7% in Fiscal 2024, compared to income of 12.1% in Fiscal 2023.
Inventories Our inventory costs include amounts paid to independent manufacturers, plus duties and freight to bring the goods to the Company’s warehouses, as well as shipments to stores.
Inventories Our inventory costs include amounts paid to independent manufacturers, plus duties and freight to bring the goods to the Company’s warehouses, as well as shipments to stores. The combined total of raw materials and work in process recorded on our consolidated balance sheets as of March 30, 2024 and April 1, 2023 were $45 million and $47 million, respectively.
Restructuring and Other Charges During Fiscal 2022, we recognized restructuring and other charges of $42 million, which included other costs of $33 million, primarily related to equity awards associated with the acquisition of Versace and severance for an executive officer and $9 million related to our Capri Retail Store Optimization Program (see Note 10 to the accompanying consolidated financial statements for additional information).
Restructuring and Other Expense During Fiscal 2024, we recognized restructuring and other expense of $33 million, primarily relating to severance costs in connection with the Global Optimization Plan and equity awards associated with the acquisition of Versace partially offset by a $10 million gain on the sale of a long-lived corporate asset (see Note 11 to the accompanying consolidated financial statements for additional information).
Contractual Obligations and Commercial Commitments As of April 2, 2022, our contractual obligations and commercial commitments were as follows (in millions): Fiscal Years Fiscal 2023 Fiscal 2024-2025 Fiscal 2026-2027 Fiscal 2028 and thereafter Total Operating leases $ 482 $ 734 $ 422 $ 426 $ 2,064 Interest, net (1) — — — — — Inventory purchase obligations 1,016 — — — 1,016 Other commitments 77 26 5 — 108 Short-term debt 29 — — — 29 Long-term debt — 1,135 — — 1,135 Total $ 1,604 $ 1,895 $ 427 $ 426 $ 4,352 (1) Beginning in Fiscal 2023, we will be in an interest income position, therefore we would not have interest expense obligations due through the above periods.
See Note 16 to the accompanying consolidated financial statements for additional information. 59 Table of Contents Contractual Obligations and Commercial Commitments As of March 30, 2024, our contractual obligations and commercial commitments were as follows (in millions): Fiscal Years Fiscal 2025 Fiscal 2026-2027 Fiscal 2028-2029 Fiscal 2030 and thereafter Total Operating leases $ 464 $ 663 $ 433 $ 600 $ 2,160 Interest, net (1) — — — — — Inventory purchase obligations 582 — — — 582 Other commitments 62 26 — — 88 Short-term debt 462 — — — 462 Long-term debt — 498 764 — 1,262 Total $ 1,570 $ 1,187 $ 1,197 $ 600 $ 4,554 (1) Beginning in Fiscal 2025, we expect to be in an interest income position, therefore we would not expect to have net interest expense obligations through the above periods.
Comparison of Fiscal 2022 with Fiscal 2021 The following table details the results of our operations for Fiscal 2022 and Fiscal 2021 and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions): Fiscal Years Ended $ Change % Change % of Total Revenue for Fiscal 2022 % of Total Revenue for Fiscal 2021 April 2, 2022 March 27, 2021 Statements of Operations Data: Total revenue $ 5,654 $ 4,060 $ 1,594 39.3 % Cost of goods sold 1,910 1,463 447 30.6 % 33.8 % 36.0 % Gross profit 3,744 2,597 1,147 44.2 % 66.2 % 64.0 % Selling, general and administrative expenses 2,533 2,018 515 25.5 % 44.8 % 49.7 % Depreciation and amortization 193 212 (19) (9.0) % 3.4 % 5.2 % Impairment of assets 73 316 (243) (76.9) % 1.3 % 7.8 % Restructuring and other charges 42 32 10 31.3 % 0.7 % 0.8 % Total operating expenses 2,841 2,578 263 10.2 % 50.2 % 63.5 % Income from operations 903 19 884 NM 16.0 % 0.5 % Other income, net (2) (7) 5 71.4 % — % (0.2) % Interest (income) expense, net (18) 43 (61) NM (0.3) % 1.1 % Foreign currency loss (gain) 8 (20) 28 NM 0.1 % (0.5) % Income before provision for income taxes 915 3 912 NM 16.2 % 0.1 % Provision for income taxes 92 66 26 39.4 % 1.6 % 1.6 % Net income (loss) 823 (63) 886 NM Less: Net income (loss) attributable to noncontrolling interests 1 (1) 2 NM Net income (loss) attributable to Capri $ 822 $ (62) $ 884 NM NM Not meaningful Total Revenue Total revenue increased $1.594 billion, or 39.3%, to $5.654 billion for Fiscal 2022, compared to $4.060 billion for Fiscal 2021, which included net favorable foreign currency effects of $25 million primarily related to the strengthening of the British Pound against the United States dollar in Fiscal 2022, as compared to Fiscal 2021.
Comparison of Fiscal 2024 with Fiscal 2023 The following table details the results of our operations for Fiscal 2024 and Fiscal 2023 and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions): Fiscal Years Ended $ Change % Change % of Total Revenue for Fiscal Year Ended March 30, 2024 April 1, 2023 March 30, 2024 April 1, 2023 Statements of Operations Data: Total revenue $ 5,170 $ 5,619 $ (449) (8.0) % Cost of goods sold 1,831 1,895 (64) (3.4) % 35.4 % 33.7 % Gross profit 3,339 3,724 (385) (10.3) % 64.6 % 66.3 % Selling, general and administrative expenses 2,784 2,708 76 2.8 % 53.8 % 48.2 % Depreciation and amortization 188 179 9 5.0 % 3.6 % 3.2 % Impairment of assets 575 142 433 NM 11.1 % 2.5 % Restructuring and other expense 33 16 17 NM 0.6 % 0.3 % Total operating expenses 3,580 3,045 535 17.6 % 69.2 % 54.2 % (Loss) income from operations (241) 679 (920) NM (4.7) % 12.1 % Other income, net (1) (3) 2 66.7 % — % (0.1) % Interest expense, net 6 24 (18) (75.0) % 0.1 % 0.4 % Foreign currency loss 37 10 27 NM 0.7 % 0.2 % (Loss) income before (benefit) provision for income taxes (283) 648 (931) NM (5.5) % 11.5 % (Benefit) provision for income taxes (54) 29 (83) NM (1.0) % 0.5 % Net (loss) income (229) 619 (848) NM Less: Net income attributable to noncontrolling interests — 3 (3) NM Net (loss) income attributable to Capri $ (229) $ 616 $ (845) NM NM Not meaningful Total Revenue Total revenue decreased $449 million, or 8.0%, to $5.170 billion for Fiscal 2024, compared to $5.619 billion for Fiscal 2023, which included net favorable foreign currency effects of $24 million as a result of the weakening of the United States dollar against the Euro partially offset by the strengthening of the United States dollar compared to the Chinese Renminbi and Japanese Yen in Fiscal 2024, as compared to Fiscal 2023.
We use commercially reasonable efforts to source from localities that suit our manufacturing standards and result in more favorable labor driven costs to our product.
We use commercially reasonable efforts to source from localities that suit our manufacturing standards and result in more favorable labor driven costs of our product. Implementing and updating information technology systems. During Fiscal 2024, we began implementing a new state of the art e-commerce platform across our brands which is expected to continue through Fiscal 2025.
Cash provided by operating activities decreased $235 million to $624 million during Fiscal 2021, as compared to $859 million for Fiscal 2020, which was due to a decrease in our net income after non-cash adjustments, primarily driven by a decrease in impairments and a decrease in net loss, partially offset by increases related to changes in our working capital, primarily attributable to fluctuations in the timing of payments and receipts due to the impact of COVID-19.
Net cash provided by operating activities increased $67 million to $771 million during Fiscal 2023, as compared to $704 million for Fiscal 2022, which was as a result of the improvement in our working capital partially offset by a decrease in our net income after non-cash adjustments compared to prior year.
The impairment charges were recorded within impairment of assets on our consolidated statement of operations and comprehensive income (loss) for the fiscal years ended March 27, 2021 and March 28, 2020. See Note 8 to the accompanying financial statements for information relating to the annual impairment analysis performed during the fourth quarters of Fiscal 2022, Fiscal 2021 and Fiscal 2020.
See Note 9 to the accompanying financial statements for information relating to the annual impairment analysis performed during the fourth quarters of Fiscal 2024, Fiscal 2023 and Fiscal 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

20 edited+5 added−2 removed0 unchanged
Biggest changeBased on the net investment hedges outstanding as of April 2, 2022, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of April 2, 2022, would result in a potential net increase or decrease upon settlement of approximately $432 million in the fair value of this contract, which include mandatory early termination dates between August 2025 and February 2026, while the remaining contracts have maturity dates between March 2024 and February 2051.
Biggest changeBased on the net investment hedges outstanding as of March 30, 2024, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of March 30, 2024, would result in a net increase or decrease, respectively, of approximately $107 million in the fair value of these contracts.
Accordingly, the changes in the fair value of the majority of these contracts at the balance sheet date are recorded in our equity as a component of accumulated other comprehensive income, and upon maturity (settlement) are recorded in, or reclassified into, our cost of goods sold or operating expenses, in our consolidated statements of operations and comprehensive income (loss), as applicable to the transactions for which the forward currency exchange contracts were established.
Accordingly, the changes in the fair value of the majority of these contracts at the balance sheet date are recorded in equity as a component of accumulated other comprehensive income, and upon maturity (settlement) are recorded in, or reclassified into, our cost of goods sold or operating expenses, in our consolidated statements of operations and comprehensive (loss) income, as applicable to the transactions for which the forward foreign currency exchange contracts were established.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to certain market risks during the normal course of our business, such as risk arising from fluctuations in foreign currency exchange rates, as well as fluctuations in interest rates. In order to manage these risks, we employ certain strategies to mitigate the effect of these fluctuations.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to certain market risks during the normal course of our business, such as credit risk, risk arising from fluctuations in foreign currency exchange rates, as well as fluctuations in interest rates. In order to manage these risks, we employ certain strategies to mitigate the effect of these fluctuations.
These contracts are recorded at fair value in our consolidated balance sheets as either an asset or liability, and are derivative contracts to hedge cash flow risks. Certain of these contracts are designated as hedges for hedge accounting purposes, while other contracts are not designated as hedges for accounting purposes.
These contracts are recorded at fair value in our consolidated balance sheets as either an asset or liability and are derivative contracts to hedge cash flow risks. Certain of these contracts are designated as hedges for hedge accounting purposes, while certain of these contracts are not designated as hedges for accounting purposes.
We do not use derivatives for trading or speculative purposes. 59 Table of Contents Foreign Currency Exchange Risk Forward Foreign Currency Exchange Contracts We are exposed to risks on certain purchase commitments to foreign suppliers based on the value of our purchasing subsidiaries’ local currency relative to the currency requirement of the supplier on the date of the commitment.
We do not use derivatives for trading or speculative purposes. 60 Table of Contents Foreign Currency Exchange Risk Forward Foreign Currency Exchange Contracts We are exposed to risks on certain purchase commitments to foreign suppliers based on the value of our purchasing subsidiaries’ local currency relative to the currency requirement of the supplier on the date of the commitment.
As such, we enter into forward currency exchange contracts that generally mature in 12 months or less and are consistent with the related purchase commitments, to manage our exposure to the changes in the value of the Euro and the Canadian dollar.
As such, we may enter into forward foreign currency exchange contracts that generally mature in 12 months or less and are consistent with the related purchase commitments to manage our exposure to the changes in the value of the Euro and the Canadian Dollar.
Our Versace Credit Facility carries interest at a rate set by the bank on the date of borrowing that is tied to the European Central Bank. Therefore, our consolidated statements of operations and comprehensive income (loss) and cash flows are exposed to changes in those interest rates.
Our Uncommitted Versace Credit Facilities carries interest at a rate set by the bank on the date of borrowing that is tied to the European Central Bank. Therefore, our consolidated statements of operations and comprehensive (loss) income and cash flows are exposed to changes in those interest rates.
Our China Credit Facility carries interest at a rate that is tied to the People’s Bank of China’s Benchmark lending rate. Our Japan Credit Facility carries interest at a rate posted by the Mitsubishi UFJ Financial Group.
Our Hong Kong Credit Facility carries interest at a rate that is tied to the Hong Kong Interbank Offered Rate. Our China Credit Facility carries interest at a rate that is tied to the People’s Bank of China’s Benchmark lending rate. Our Japan Credit Facility carries interest at a rate posted by the Mitsubishi UFJ Financial Group.
Our Senior Notes interest rate payable may be subject to adjustments from time to time if either Moody’s or S&P (or a substitute rating agency), downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Senior Notes. See Note 20 to the accompanying consolidated financial statements for additional information.
Our Senior Notes interest rate payable may be subject to adjustments from time to time if either Moody’s or S&P (or a substitute rating agency), downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Senior Notes.
As of April 2, 2022, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $4 billion to hedge our net investment in Euro-denominated subsidiaries and $194 million to hedge our net investments in Japanese Yen-denominated subsidiaries against future volatility in the exchange rates between the United States dollar and this currency.
As of March 30, 2024, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $2.5 billion to hedge our net investment in CHF denominated subsidiaries against future volatility in the exchange rates between the United States dollar and CHF.
Based on all foreign currency exchange contracts outstanding as of April 2, 2022, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of April 2, 2022, would result in a potential net increase and decrease upon settlement of approximately $15 million in the fair value of these contracts.
Based on the net investment hedges outstanding as of March 30, 2024, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of March 30, 2024, would result in a net increase or decrease, respectively, of approximately $252 million in the fair value of these contracts.
At April 2, 2022, we had $175 million borrowings outstanding under our Revolving Credit Facility, $495 million, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and no borrowings outstanding under our Versace Credit Facilities.
At April 1, 2023, we had $874 million borrowings outstanding under our 2022 Credit Facility, $487 million outstanding, net of debt issuance costs, under our Versace Term Loan and no borrowings outstanding under all other Credit Facilities.
Our 2018 Credit Facility carries interest rates that are tied to LIBOR and the prime rate, among other institutional lending rates (depending on the particular origination of borrowing), as further described in Note 11 to the accompanying consolidated financial statements. Our Hong Kong Credit Facility carries interest at a rate that is tied to the Hong Kong Interbank Offered Rate.
Our 2022 Credit Facility carries interest rates that are tied to the prime rate and other institutional lending rates (depending on the particular origination of borrowing), as further described in Note 12 to the accompanying consolidated financial statements. Our Versace Term Loan carries interest rates that are tied to EURIBOR.
These balances are not indicative of future balances that may be outstanding under our revolving credit facilities that may be subject to fluctuations in interest rates.
These balances are not indicative of future balances that may be outstanding under our revolving credit facilities that may be subject to fluctuations in interest rates. Any increases in the applicable interest rate(s) would cause an increase to the interest expense relative to any outstanding balance at that date.
Under the term of these contracts, we will exchange the semi-annual fixed rate payments on United States denominated debt for fixed rate payments of 0% to 3.565% in Euros and 0% to 3.408% in Japanese Yen.
Under the terms of these contracts, we will exchange the semi-annual fixed rate payments on United States notional amounts for fixed rate payments of 0% in CHF.
Interest Rate Risk We are exposed to interest rate risk in relation to borrowings outstanding under our 2018 Term Loan Facility, our Credit Facility, our Hong Kong Credit Facility, our Japan Credit Facility and our Versace Credit Facilities. Our 2018 Term Loan Facility carries interest at a rate that is based on LIBOR.
These contracts have maturity dates between January 2027 and April 2027. Interest Rate Risk We are exposed to interest rate risk in relation to borrowings outstanding under our 2022 Credit Facility, our Versace Term Loan, our Hong Kong Credit Facility, our China Credit Facility, our Japan Credit Facility and our Uncommitted Versace Credit Facilities.
We enter into foreign currency forward contracts to manage our foreign currency exposure to the fluctuations of certain foreign currencies. The use of these instruments primarily helps to manage our exposure to our foreign purchase commitments and better control our product costs.
We may enter into foreign currency forward contracts, net investment hedges and fair value hedges to manage our foreign currency exposure to the fluctuations of certain foreign currencies.
Any increases in the applicable interest rate(s) would cause an increase to the interest expense relative to any outstanding balance at that date. 60 Table of Contents Credit Risk As of April 2, 2022, our $450 million Senior Notes, due in 2024, bear interest at a fixed rate equal to 4.500% per year, payable semi-annually.
Credit Risk As of March 30, 2024, our $450 million Senior Notes, due in November 2024, bear interest at a fixed rate equal to 4.250% per year, payable semi-annually.
Net Investment Hedges We are exposed to adverse foreign currency exchange rate movements related to our net investment hedges.
There were no forward foreign currency exchange contracts outstanding as of March 30, 2024, we are not providing a sensitivity analysis. Net Investment Hedges We are exposed to adverse foreign currency exchange rate movements related to our net investment hedges.
At March 27, 2021, we had no borrowings outstanding under our Revolving Credit Facility, $865 million, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and no borrowings outstanding under our Versace Credit Facility.
At March 30, 2024, we had $764 61 Table of Contents million borrowings outstanding under our 2022 Credit Facility, $485 million, outstanding, net of debt issuance costs, under our Versace Term Loan and no borrowings outstanding under all other Credit Facilities, as further described in Note 12 to the accompanying consolidated financial statements.
Removed
We perform a sensitivity analysis on our forward currency contracts, both designated and not designated as hedges for accounting purposes, to determine the effects of fluctuations in foreign currency exchange rates. For this sensitivity analysis, we assume a hypothetical change in United States dollar against foreign exchange rates.
Added
These contracts have maturity dates between September 2024 and June 2028. As of March 30, 2024, we have multiple float-to-float cross-currency swap agreements with aggregate notional amounts of $1 billion to hedge our net investment in Euro denominated subsidiaries against future volatility in the exchange rates between the United States dollar and Euro.
Removed
In addition, certain other contracts are supported by a credit support annex (“CSA”) which provides for collateral exchange with the earliest effective date being November 2023. If the outstanding position of a contract exceeds a certain threshold governed by the aforementioned CSA’s, either party is required to post cash collateral.
Added
We will exchange Euro floating rate payments based on EURIBOR for the United States dollar floating rate amounts based on SOFR CME Term over the life of the agreement. The fixed rate component of semi-annual Euro payments range from 1.149% to 1.215%.
Added
These contracts have maturity dates between May 2028 and August 2030. As of March 30, 2024, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $350 million to hedge our net investment in Euro denominated subsidiaries against future volatility in the exchange rates between the United States dollar and Euro.
Added
Under the terms of these contracts, we will exchange the semi-annual fixed rate payments on United States dollar notional amounts for fixed rate payments of 0% in Euro.
Added
Based on the net investment hedges outstanding as of March 30, 2024, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of March 30, 2024, would result in a net increase or decrease, respectively, of approximately $32 million in the fair value of these contracts.

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