Capri Holdings Limited (NYSE:CPRI), a global fashion luxury group, today announced its financial results for the second quarter of Fiscal 2024 ended September 30, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20231109706319/en/

(Photo: Business Wire)

Second Quarter Fiscal 2024 Highlights

  • Revenue decreased 8.6% on a reported basis and 10.1% in constant currency
  • Adjusted operating margin of 12.2%
  • Adjusted earnings per share of $1.13

John D. Idol, the Company's Chairman and Chief Executive Officer, said, "Capri Holdings' second quarter results were below our expectations due to macro-economic headwinds as well as Ecommerce implementation related challenges. In early July, we implemented a new Ecommerce platform for Michael Kors in the Americas. While we are excited about the long-term benefits, the transition negatively impacted our second quarter results. Additionally, during the quarter consumer demand for fashion luxury goods softened primarily in the Americas.”

Mr. Idol continued, “Despite near-term challenges, we remain focused on executing our strategic initiatives to drive long term sustainable growth at all three of our luxury houses. Versace, Jimmy Choo and Michael Kors continued to resonate with consumers as evidenced by the 11.4 million new consumers added across our databases, representing 15% growth over the last year. This reflects the strong brand equity and enduring value of our three iconic houses.”

Mr. Idol concluded, “We look forward to the successful completion of the merger transaction with Tapestry in calendar year 2024. We are confident that this combination will deliver value to our shareholders as well as provide new opportunities for our dedicated employees around the world as Capri Holdings becomes part of a larger and more diversified company. By joining with Tapestry, we will have greater resources and capabilities to accelerate the expansion of our global reach while preserving the unique DNA of our brands.”

Michael Kors Americas New Ecommerce Platform Implementation Update

In July 2023 the Company implemented a new state of the art Ecommerce platform for Michael Kors in the Americas. While the new platform is designed to improve the user experience and enhance consumer engagement, the transition created greater than anticipated challenges which negatively impacted Michael Kors revenue by approximately $50 million in the quarter. While trends have begun to improve, third quarter revenue will continue to be impacted. We believe the situation will be fully resolved during the fourth quarter.

Second Quarter Fiscal 2024 Results

Financial Results and non-GAAP Reconciliation

The Company’s results are reported in this press release in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and on an adjusted, non-GAAP basis. A reconciliation of GAAP to non-GAAP financial information is provided at the end of this press release.

Overview of Capri Holdings Second Quarter Fiscal 2024 Results

  • Total revenue of $1.29 billion decreased 8.6% compared to last year. On a constant currency basis, total revenue decreased 10.1%. Total company retail sales declined in the high-single-digits with trends being impacted by softening consumer demand primarily in the Americas as well as the Michael Kors Americas Ecommerce implementation issues discussed above. In wholesale, revenue decreased low-double-digits given softer demand in the Americas.
  • Gross profit was $832 million and gross margin was 64.4%, compared to $951 million and 67.4% in the prior year. Adjusted gross profit was $832 million and adjusted gross margin was 64.4%, compared to $948 million and 67.1% in the prior year. Gross profit margin decreased relative to prior year primarily related to lower full price sell throughs, mainly in the Americas, partially offset by lower supply chain costs.
  • Income from operations was $100 million and operating margin was 7.7%, compared to $252 million and 17.8% in the prior year. Adjusted income from operations was $157 million and operating margin was 12.2%, compared to $280 million and 19.8% in the prior year. The decline in operating margin reflects lower gross margin, increased marketing investments and expense deleverage on lower revenue.
  • Net income was $90 million, or $0.77 per diluted share, compared to $224 million, or $1.63 per diluted share, in the prior year. Adjusted net income was $133 million, or $1.13 per diluted share, compared to $245 million, or $1.79 per diluted share, in the prior year period.
  • Net inventory as of September 30, 2023 was $1.1 billion, a 7% decrease compared to the prior year reflecting the Company's ongoing diligent inventory management. Management expects inventory levels to remain below prior year in the back half of fiscal 2024.
  • On an annual basis, Capri Holdings expects to generate strong free cash flow, in line with historical levels. As a result, the Company expects to significantly reduce net debt by the end of the fiscal year.

Versace Second Quarter Fiscal 2024 Results

  • Versace revenue of $280 million decreased 9.1% on a reported basis and 11.7% on a constant currency basis. The decline was primarily driven by softening consumer demand, mainly in the Americas, as well as the lapping of the successful Spring 22 Fendace collaboration. Revenue in the Americas declined 20.0%, while revenue in EMEA decreased 3.8% and revenue in Asia increased 1.7%. Versace’s global database increased by 1.6 million new names, representing 30% growth over the last year.
  • Versace operating income was $35 million and operating margin was 12.5%, compared to $62 million and 20.1% in the prior year. The decline in operating margin rate was primarily due to the lapping of strong Fendace full-price sell-throughs in the prior year and the deleveraging of operating expenses on lower revenues.

Jimmy Choo Second Quarter Fiscal 2024 Results

  • Jimmy Choo revenue of $132 million decreased 7.0% on a reported basis and 9.2% on a constant currency basis driven primarily by softening consumer demand, mainly in the Americas. Revenue in the Americas declined 11.6%, while revenue in EMEA was flat and revenue in Asia declined 11.9%. Jimmy Choo’s global database increased by 0.8 million new names, representing 16% growth over the last year.
  • Jimmy Choo operating loss was $9 million and operating margin was (6.8)%, compared to operating income of $8 million and 5.6% in the prior year. The decline in operating margin rate was primarily due to higher store related costs and the deleveraging of operating expenses on lower revenues.

Michael Kors Second Quarter Fiscal 2024 Results

  • Michael Kors revenue of $879 million decreased 8.6% on a reported basis and 9.7% on a constant currency basis. The decline versus prior year was primarily attributable to softening consumer demand, mainly in the Americas, as well as the Michael Kors Americas Ecommerce implementation issues discussed above. Revenue in the Americas declined 13.5%, while revenue in EMEA increased 2.8% and revenue in Asia decreased 1.9%. Michael Kors’ global database increased by 9.0 million new names, representing 14% growth over the last year.
  • Michael Kors operating income was $169 million and operating margin was 19.2%, compared to $248 million and 25.8% in the prior year. The decline in operating margin rate was primarily related to lower full price sell throughs, mainly in the Americas, as well as increased marketing investments, and the deleveraging of operating expenses on lower revenues.

Outlook

Given the proposed merger transaction of Capri Holdings Limited by Tapestry, Inc., the Company does not intend to provide financial guidance.

Use of Non-GAAP Financial Measures

Constant currency effects are non-GAAP financial measures, which are provided to supplement our reported operating results to facilitate comparisons of our operating results and trends in our business, excluding the effects of foreign currency rate fluctuations. Because we are a global company, foreign currency exchange rates may have a significant effect on our reported results. We calculate constant currency measures and the related foreign currency impacts by translating the current year’s reported amounts into comparable amounts using prior year’s foreign exchange rates for each currency. All constant currency performance measures discussed below should be considered a supplement to and not in lieu of our operating performance measures calculated in accordance with U.S. GAAP. Additionally, this earnings release includes certain non-GAAP financial measures that exclude certain costs associated with restructuring and other charges, ERP implementation costs, Capri transformation costs, merger related costs and long-lived asset impairments. The Company uses non-GAAP financial measures, among other things, to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. The Company believes that excluding these items helps its management and investors compare operating performance based on its ongoing operations. While the Company considers the non-GAAP measures to be useful supplemental measures in analyzing its results, they are not intended to replace, nor act as a substitute for, any amounts presented in its consolidated financial statements prepared in conformity with U.S. GAAP and may be different from non-GAAP measures reported by other companies.

About Capri Holdings Limited

Capri Holdings is a global fashion luxury group consisting of iconic, founder-led brands Versace, Jimmy Choo and Michael Kors. Our commitment to glamorous style and craftsmanship is at the heart of each of our luxury brands. We have built our reputation on designing exceptional, innovative products that cover the full spectrum of fashion luxury categories. Our strength lies in the unique DNA and heritage of each of our brands, the diversity and passion of our people and our dedication to the clients and communities we serve. Capri Holdings Limited is publicly listed on the New York Stock Exchange under the ticker CPRI.

Forward-Looking Statements

This report contains statements which are, or may be deemed to be, “forward-looking statements.” Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Capri about future events and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. All statements other than statements of historical facts included herein, may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words “plans”, “believes”, “expects”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “might” or similar words or phrases, are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions, which could cause actual results to differ materially from those projected or implied in any forward-looking statements, including regarding the proposed merger transaction with a wholly-owned subsidiary of Tapestry, Inc. (the "Merger"). These risks, uncertainties and other factors include the impact of the COVID-19 pandemic; changes in consumer traffic and retail trends; the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed Merger that could delay or result in the termination of the proposed Merger, the occurrence of any other event, change or other circumstances that could give rise to the termination of the merger agreement entered into in connection with the proposed Merger, the risk that the parties to the merger agreement may not be able to satisfy the conditions to the proposed Merger in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the proposed Merger, the risk that any announcements relating to the proposed Merger could have adverse effects on the market price of Capri's shares, the risk of any unexpected costs or expenses resulting from the proposed Merger, the risk of any litigation relating to the proposed Merger, the risk that the proposed Merger and its announcement could have an adverse effect on the ability of Capri to retain customers and retain and hire key personnel and maintain relationships with customers, suppliers, employees, shareholders and other business relationships and on its operating results and business generally, and the risk the pending proposed Merger could divert the attention of Capri’s management; as well as those risks that are outlined in Capri’s disclosure filings and materials, which you can find on http://www.capriholdings.com, such as its Form 10-K, Form 10-Q and Form 8-K reports that have been filed with the SEC. Please consult these documents for a more complete understanding of these risks and uncertainties. Any forward-looking statement in this press release speaks only as of the date made and Capri disclaims any obligation to update or revise any forward-looking or other statements contained herein other than in accordance with legal and regulatory obligations.

SCHEDULE 1

 

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

September 30, 2023

 

October 1, 2022

 

September 30, 2023

 

October 1, 2022

Total revenue

 

$

1,291

 

 

$

1,412

 

 

$

2,520

 

$

2,772

 

Cost of goods sold

 

 

459

 

 

 

461

 

 

 

876

 

 

920

 

Gross profit

 

 

832

 

 

 

951

 

 

 

1,644

 

 

1,852

 

Total operating expenses

 

 

732

 

 

 

699

 

 

 

1,464

 

 

1,369

 

Income from operations

 

 

100

 

 

 

252

 

 

 

180

 

 

483

 

Other income, net

 

 

(1

)

 

 

(1

)

 

 

 

 

(1

)

Interest expense, net

 

 

3

 

 

 

5

 

 

 

11

 

 

1

 

Foreign currency (gain) loss

 

 

(3

)

 

 

(11

)

 

 

18

 

 

(7

)

Income before income taxes

 

 

101

 

 

 

259

 

 

 

151

 

 

490

 

Provision for income taxes

 

 

11

 

 

 

35

 

 

 

13

 

 

63

 

Net income

 

 

90

 

 

 

224

 

 

 

138

 

 

427

 

Less: Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

2

 

Net income attributable to Capri

 

$

90

 

 

$

224

 

 

$

138

 

$

425

 

Weighted average ordinary shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

116,674,030

 

 

 

136,037,449

 

 

 

117,052,986

 

 

138,975,518

 

Diluted

 

 

117,563,573

 

 

 

137,051,575

 

 

 

117,923,103

 

 

140,392,780

 

Net income per ordinary share:

 

 

 

 

 

 

 

 

Basic

 

$

0.77

 

 

$

1.64

 

 

$

1.18

 

$

3.06

 

Diluted

 

$

0.77

 

 

$

1.63

 

 

$

1.17

 

$

3.03

 

SCHEDULE 2

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)

 

 

 

September 30, 2023

 

April 1, 2023

 

October 1, 2022

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

238

 

 

$

249

 

 

$

215

 

Receivables, net

 

 

383

 

 

 

369

 

 

 

441

 

Inventories, net

 

 

1,099

 

 

 

1,057

 

 

 

1,180

 

Prepaid expenses and other current assets

 

 

270

 

 

 

195

 

 

 

249

 

Total current assets

 

 

1,990

 

 

 

1,870

 

 

 

2,085

 

Property and equipment, net

 

 

542

 

 

 

552

 

 

 

470

 

Operating lease right-of-use assets

 

 

1,307

 

 

 

1,330

 

 

 

1,333

 

Intangible assets, net

 

 

1,676

 

 

 

1,728

 

 

 

1,634

 

Goodwill

 

 

1,268

 

 

 

1,293

 

 

 

1,256

 

Deferred tax assets

 

 

308

 

 

 

296

 

 

 

228

 

Other assets

 

 

255

 

 

 

226

 

 

 

196

 

Total assets

 

$

7,346

 

 

$

7,295

 

 

$

7,202

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

355

 

 

$

475

 

 

$

370

 

Accrued payroll and payroll related expenses

 

 

95

 

 

 

154

 

 

 

117

 

Accrued income taxes

 

 

82

 

 

 

73

 

 

 

68

 

Short-term operating lease liabilities

 

 

406

 

 

 

429

 

 

 

396

 

Short-term debt

 

 

15

 

 

 

5

 

 

 

15

 

Accrued expenses and other current liabilities

 

 

291

 

 

 

314

 

 

 

312

 

Total current liabilities

 

 

1,244

 

 

 

1,450

 

 

 

1,278

 

Long-term operating lease liabilities

 

 

1,291

 

 

 

1,348

 

 

 

1,387

 

Deferred tax liabilities

 

 

508

 

 

 

508

 

 

 

513

 

Long-term debt

 

 

2,079

 

 

 

1,822

 

 

 

1,585

 

Other long-term liabilities

 

 

312

 

 

 

318

 

 

 

296

 

Total liabilities

 

 

5,434

 

 

 

5,446

 

 

 

5,059

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

Ordinary shares, no par value; 650,000,000 shares authorized; 225,768,777 shares issued and 116,140,358 outstanding at September 30, 2023; 224,166,250 shares issued and 117,347,045 outstanding at April 1, 2023 and 223,706,873 shares issued and 131,088,991 outstanding at October 1, 2022

 

 

 

 

 

 

 

 

 

Treasury shares, at cost (109,628,419 shares at September 30, 2023, 106,819,205 shares at April 1, 2023 and 92,617,882 shares at October 1, 2022)

 

 

(5,457

)

 

 

(5,351

)

 

 

(4,650

)

Additional paid-in capital

 

 

1,392

 

 

 

1,344

 

 

 

1,311

 

Accumulated other comprehensive income

 

 

130

 

 

 

147

 

 

 

(35

)

Retained earnings

 

 

5,846

 

 

 

5,708

 

 

 

5,517

 

Total shareholders’ equity of Capri

 

 

1,911

 

 

 

1,848

 

 

 

2,143

 

Noncontrolling interest

 

 

1

 

 

 

1

 

 

 

 

Total shareholders’ equity

 

 

1,912

 

 

 

1,849

 

 

 

2,143

 

Total liabilities and shareholders’ equity

 

$

7,346

 

 

$

7,295

 

 

$

7,202

 

 

 

 

 

 

 

 

SCHEDULE 3

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED SEGMENT DATA

($ in millions)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

September 30, 2023

 

October 1, 2022

 

September 30, 2023

 

October 1, 2022

Revenue by Segment and Region:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Versace

 

The Americas

 

$

96

 

 

$

120

 

 

$

178

 

 

$

235

 

 

 

EMEA

 

 

125

 

 

 

130

 

 

 

241

 

 

 

237

 

 

 

Asia

 

 

59

 

 

 

58

 

 

 

120

 

 

 

111

 

Versace Revenue

 

 

280

 

 

 

308

 

 

 

539

 

 

 

583

 

 

 

 

 

 

 

 

 

 

 

 

Jimmy Choo

 

The Americas

 

 

38

 

 

 

43

 

 

 

87

 

 

 

97

 

 

 

EMEA

 

 

57

 

 

 

57

 

 

 

138

 

 

 

123

 

 

 

Asia

 

 

37

 

 

 

42

 

 

 

90

 

 

 

94

 

Jimmy Choo Revenue

 

 

132

 

 

 

142

 

 

 

315

 

 

 

314

 

 

 

 

 

 

 

 

 

 

 

 

Michael Kors

 

The Americas

 

 

556

 

 

 

643

 

 

 

1,057

 

 

 

1,268

 

 

 

EMEA

 

 

219

 

 

 

213

 

 

 

394

 

 

 

404

 

 

 

Asia

 

 

104

 

 

 

106

 

 

 

215

 

 

 

203

 

Michael Kors Revenue

 

 

879

 

 

 

962

 

 

 

1,666

 

 

 

1,875

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

1,291

 

 

$

1,412

 

 

$

2,520

 

 

$

2,772

 

 

 

 

 

 

 

 

 

 

Income (loss) from Operations:

 

 

 

 

 

 

 

 

Versace

 

 

 

$

35

 

 

$

62

 

 

$

38

 

 

$

114

 

Jimmy Choo

 

 

 

 

(9

)

 

 

8

 

 

 

7

 

 

 

27

 

Michael Kors

 

 

 

 

169

 

 

 

248

 

 

 

299

 

 

 

470

 

Total segment income from operations

 

 

195

 

 

 

318

 

 

 

344

 

 

 

611

 

Less: Corporate expenses

 

 

(71

)

 

 

(55

)

 

 

(142

)

 

 

(115

)

Impairment of assets

 

 

(20

)

 

 

(11

)

 

 

(20

)

 

 

(11

)

Merger related costs

 

(4

)

 

 

 

 

 

(4

)

 

 

 

Restructuring and other (expense) income

 

 

 

 

 

(3

)

 

 

2

 

 

 

(6

)

COVID-19 related charges

 

 

 

 

3

 

 

 

 

 

 

4

 

Total Income from Operations

 

$

100

 

 

$

252

 

 

$

180

 

 

$

483

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margin (Loss):

 

 

 

 

 

 

 

 

 

 

Versace

 

 

 

 

12.5

%

 

 

20.1

%

 

 

7.1

%

 

 

19.6

%

Jimmy Choo

 

 

 

 

(6.8

)%

 

 

5.6

%

 

 

2.2

%

 

 

8.6

%

Michael Kors

 

 

 

 

19.2

%

 

 

25.8

%

 

 

17.9

%

 

 

25.1

%

Capri

 

 

 

 

7.7

%

 

 

17.8

%

 

 

7.1

%

 

 

17.4

%

SCHEDULE 4

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

SUPPLEMENTAL RETAIL STORE INFORMATION

(Unaudited)

 

 

 

 

 

As of

Retail Store Information:

 

September 30, 2023

 

October 1, 2022

Versace

 

230

 

217

Jimmy Choo

 

237

 

238

Michael Kors

 

802

 

821

Total number of retail stores

 

 

 

1,269

 

1,276

SCHEDULE 5

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSTANT CURRENCY DATA

(In millions)

(Unaudited)

 

 

 

Three Months Ended

 

% Change

 

 

September 30, 2023

 

October 1, 2022

 

As Reported

 

Constant Currency

Total Revenue:

 

 

 

 

 

 

 

 

Versace

 

$

280

 

$

308

 

(9.1

)%

 

(11.7

)%

Jimmy Choo

 

 

132

 

 

142

 

(7.0

)%

 

(9.2

)%

Michael Kors

 

 

879

 

 

962

 

(8.6

)%

 

(9.7

)%

Total Revenue

 

$

1,291

 

$

1,412

 

(8.6

)%

 

(10.1

)%

 

 

Six Months Ended

 

% Change

 

 

September 30, 2023

 

October 1, 2022

 

As Reported

 

Constant Currency

Total Revenue:

 

 

 

 

 

 

 

 

Versace

 

$

539

 

$

583

 

(7.5

)%

 

(9.1

)%

Jimmy Choo

 

 

315

 

 

314

 

0.3

%

 

(0.3

)%

Michael Kors

 

 

1,666

 

 

1,875

 

(11.1

)%

 

(11.5

)%

Total Revenue

 

$

2,520

 

$

2,772

 

(9.1

)%

 

(9.7

)%

SCHEDULE 6

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

(Unaudited)

 

 

 

Three Months Ended September 30, 2023

 

 

As Reported

 

Impairment Charges

 

Restructuring and Other Expense (1)

 

ERP Implementation(2)

 

Capri Transformation (3)

 

Merger Related Costs

 

As Adjusted

Gross profit

 

$

832

 

 

$

 

 

$

 

$

 

 

$

 

 

$

 

 

$

832

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

732

 

 

$

(20

)

 

$

 

$

(4

)

 

$

(29

)

 

$

(4

)

 

$

675

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total income from operations

 

$

100

 

 

$

20

 

 

$

 

$

4

 

 

$

29

 

 

$

4

 

 

$

157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency gain

 

$

(3

)

 

$

 

 

$

 

$

 

 

$

 

 

$

 

 

$

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

$

101

 

 

$

20

 

 

$

 

$

4

 

 

$

29

 

 

$

4

 

 

$

158

 

Provision for income taxes

 

$

11

 

 

$

4

 

 

$

 

$

1

 

 

$

8

 

 

$

1

 

 

$

25

 

Net income attributable to Capri

 

$

90

 

 

$

16

 

 

$

 

$

3

 

 

$

21

 

 

$

3

 

 

$

133

 

Diluted net income per ordinary share - Capri

 

$

0.77

 

 

$

0.13

 

 

$

 

$

0.03

 

 

$

0.18

 

 

$

0.02

 

 

$

1.13

 

______________________

(1)

Amounts impacting operating expenses primarily include a gain related to the termination of certain leases offset by expenses related to equity awards associated with the acquisition of Gianni Versace S.r.l.

(2)

Represents a multi-year ERP implementation which includes accounting, finance and wholesale and retail inventory solutions in order to create standardized finance IT applications across our organization. This ERP implementation will continue through Fiscal 2026 and we expect expenditures up to $170 million.

(3)

The Capri transformation program represents a multi-year, multi-project initiative extending through Fiscal 2026 intended to improve the operating effectiveness and efficiency of our organization by creating best in class shared platforms across our brands and by expanding our digital capabilities. These initiatives cover multiple aspects of our operations including supply chain, marketing, omni-channel customer experience, e-commerce, data analytics and IT infrastructure. Through Fiscal 2026, we expect expenditures up to $220 million related to these efforts.

SCHEDULE 7

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

(Unaudited)

 

 

 

Six Months Ended September 30, 2023

 

 

As Reported

 

Impairment Charges

 

Restructuring and Other Expense (1)

 

ERP Implementation (2)

 

Capri Transformation (3)

 

Merger Related Costs

 

As Adjusted

Gross profit

 

$

1,644

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

1,644

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

1,464

 

$

(20

)

 

$

2

 

 

$

(9

)

 

$

(57

)

 

$

(4

)

 

$

1,376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total income from operations

 

$

180

 

$

20

 

 

$

(2

)

 

$

9

 

 

$

57

 

 

$

4

 

 

$

268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency loss

 

$

18

 

$

 

 

$

(17

)

 

$

 

 

$

 

 

$

 

 

$

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

$

151

 

$

20

 

 

$

15

 

 

$

9

 

 

$

57

 

 

$

4

 

 

$

256

Provision for income taxes

 

$

13

 

$

4

 

 

$

3

 

 

$

2

 

 

$

12

 

 

$

1

 

 

$

35

Net income attributable to Capri

 

$

138

 

$

16

 

 

$

12

 

 

$

7

 

 

$

45

 

 

$

3

 

 

$

221

Diluted net income per ordinary share - Capri

 

$

1.17

 

$

0.14

 

 

$

0.10

 

 

$

0.06

 

 

$

0.38

 

 

$

0.02

 

 

$

1.87

______________________

(1)

Amounts impacting operating expenses primarily includes a gain on the sale of a long-lived corporate asset partially offset by expenses related to equity awards associated with the acquisition of Gianni Versace S.r.l.. The foreign currency exchange loss represents a charge recognized in conjunction with restructuring activities to rationalize certain legal entities within our structure.

(2)

Represents a multi-year ERP implementation which includes accounting, finance and wholesale and retail inventory solutions in order to create standardized finance IT applications across our organization. This ERP implementation will continue through Fiscal 2026 and we expect expenditures up to $170 million.

(3)

The Capri transformation program represents a multi-year, multi-project initiative extending through Fiscal 2026 intended to improve the operating effectiveness and efficiency of our organization by creating best in class shared platforms across our brands and by expanding our digital capabilities. These initiatives cover multiple aspects of our operations including supply chain, marketing, omni-channel customer experience, e-commerce, data analytics and IT infrastructure. Through Fiscal 2026, we expect expenditures up to $220 million related to these efforts.

SCHEDULE 8

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

(Unaudited)

 

 

 

Three Months Ended October 1, 2022

 

 

As Reported

 

Impairment Charges

 

Restructuring and Other Expense (1)

 

COVID-19 Related Expenses

 

ERP Implementation

 

Capri Transformation

 

As Adjusted

Gross profit

 

$

951

 

$

 

 

$

 

 

$

(3

)

 

$

 

 

$

 

 

$

948

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

699

 

$

(11

)

 

$

(3

)

 

$

 

 

$

(7

)

 

$

(10

)

 

$

668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total income from operations

 

$

252

 

 

11

 

 

$

3

 

 

$

(3

)

 

$

7

 

 

$

10

 

 

$

280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

$

259

 

$

11

 

 

$

3

 

 

$

(3

)

 

$

7

 

 

$

10

 

 

$

287

Provision for income taxes

 

$

35

 

$

2

 

 

$

1

 

 

$

(1

)

 

$

2

 

 

$

3

 

 

$

42

Net income attributable to Capri

 

$

224

 

$

9

 

 

$

2

 

 

$

(2

)

 

$

5

 

 

$

7

 

 

$

245

Diluted net income per ordinary share - Capri

 

$

1.63

 

$

0.07

 

 

$

0.01

 

 

$

(0.01

)

 

$

0.04

 

 

$

0.05

 

 

$

1.79

______________________

(1) 

 

Primarily Includes expenses related to equity award associated with the acquisition of Gianni Versace S.r.l.

SCHEDULE 9

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

(Unaudited)

 

 

 

Six Months Ended October 1, 2022

 

 

As Reported

 

Impairment Charges

 

Restructuring and Other Charges(1)

 

COVID-19 Related Charges

 

ERP Implementation

 

Capri Transformation

 

As Adjusted

Gross profit

 

$

1,852

 

$

 

 

$

 

 

$

(4

)

 

$

 

 

$

 

 

$

1,848

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

1,369

 

$

(11

)

 

$

(6

)

 

$

 

 

$

(16

)

 

$

(19

)

 

$

1,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total income from operations

 

$

483

 

$

11

 

 

$

6

 

 

$

(4

)

 

$

16

 

 

$

19

 

 

$

531

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

$

490

 

$

11

 

 

$

6

 

 

$

(4

)

 

$

16

 

 

$

19

 

 

$

538

Provision for income taxes

 

$

63

 

$

2

 

 

$

2

 

 

$

(1

)

 

$

4

 

 

$

6

 

 

$

76

Net income attributable to Capri

 

$

425

 

$

9

 

 

$

4

 

 

$

(3

)

 

$

12

 

 

$

13

 

 

$

460

Diluted net income per ordinary share - Capri

 

$

3.03

 

$

0.06

 

 

$

0.03

 

 

$

(0.02

)

 

$

0.09

 

 

$

0.09

 

 

$

3.28

______________________

(1) 

 

Primarily Includes expenses related to equity award associated with the acquisition of Gianni Versace S.r.l.

 

Investor Relations: Jennifer Davis +1 (201) 514-8234 Jennifer.Davis@CapriHoldings.com

Media: Press@CapriHoldings.com

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