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Capri Holdings Limited Announces First Quarter Fiscal 2022 Results

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Revenue and Earnings Significantly Exceeded Expectations

Raised Full Year Adjusted Earnings Per Share Outlook

Q1 2022 Earnings Presentation

LONDON, July 30, 2021--(BUSINESS WIRE)--Capri Holdings Limited (NYSE:CPRI), a global fashion luxury group, today announced its financial results for the first quarter of fiscal 2022 ended June 26, 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210730005115/en/

Versace (Photo: Business Wire)

First Quarter Fiscal 2022 Highlights

  • Revenue increased 178%, with better than anticipated results across all three luxury houses

  • Adjusted gross margin expanded 90 basis points versus prior year

  • Adjusted operating margin of 20.8%

  • Adjusted earnings per share of $1.42

  • Raised full year adjusted earnings per share outlook to $4.50

John D. Idol, the Company's Chairman and Chief Executive Officer, said, "We were pleased by our first quarter performance which reflected the strength of Capri Holdings' three global fashion luxury houses, Versace, Jimmy Choo and Michael Kors. All of our luxury houses significantly exceeded our revenue and earnings expectations for the quarter, as they continued to deepen consumer desire and engagement. As a result of this encouraging start to the year, we are raising our Fiscal 2022 revenue and earnings outlook."

Mr. Idol concluded, "Looking forward, we are confident in the growth opportunities for Versace, Jimmy Choo and Michael Kors as the world continues to recover from the impact of the global pandemic. As we execute on our strategic initiatives, Capri Holdings is positioned to deliver multiple years of revenue and earnings growth."

First Quarter Fiscal 2022 Results

Financial Results and non-GAAP Reconciliation

The Company’s results are reported in this press release in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and on an adjusted, non-GAAP basis. A reconciliation of GAAP to non-GAAP financial information is provided at the end of this press release. Due to the current and ongoing impact of the COVID-19 pandemic, the Company will not be providing comparable store sales results. The Company believes the most comprehensive measure of performance in this environment is total revenues compared to the same period in the prior year.

Overview of Capri Holdings First Quarter Fiscal 2022 Results:

  • Total revenue of $1.25 billion increased 178% compared to last year. On a constant currency basis, total revenue increased 164%.

  • Gross profit was $856 million and gross margin was 68.3%, compared to $302 million and 67.0% in the prior year. Adjusted gross profit was $853 million and adjusted gross margin was 68.1%, compared to $303 million and 67.2% in the prior year.

  • Income from operations was $258 million and operating margin was 20.6%, compared to a loss from operations of $162 million and operating margin of (35.9)% in the prior year. Adjusted income from operations was $261 million and operating margin was 20.8%, compared to a loss from operations of $147 million and operating margin of (32.6)% in the prior year.

  • Net income was $219 million, or $1.41 per diluted share, compared to a net loss of $180 million, or $(1.21) per share, in the prior year. Adjusted net income was $221 million, or $1.42 per diluted share, compared to a net loss of $156 million or, $(1.04) per share, in the prior year.

  • Net inventory at June 26, 2021 was $760 million, a 20% decrease compared to the prior year.

Versace First Quarter Fiscal 2022 Results:

  • Versace revenue of $240 million increased 158% compared to the prior year. On a constant currency basis, total revenue increased 136%.

  • Versace operating income was $48 million and operating margin was 20.0% compared to a loss of $41 million and operating margin of (44.1)% in the prior year.

Jimmy Choo First Quarter Fiscal 2022 Results:

  • Jimmy Choo revenue of $142 million increased 178% compared to the prior year. On a constant currency basis, total revenue increased 147%.

  • Jimmy Choo operating income was $11 million and operating margin was 7.7%, compared to an operating loss of $29 million and operating margin of (56.9)% in the prior year.

Michael Kors First Quarter Fiscal 2022 Results:

  • Michael Kors revenue of $871 million increased 184% compared to the prior year. On a constant currency basis, total revenue increased 175%.

  • Michael Kors operating income was $240 million and operating margin was 27.6%, compared to an operating loss of $48 million and operating margin of (15.6)% in the prior year.

Share Repurchase Program

During the first quarter, the Company repurchased approximately 0.9 million ordinary shares for approximately $50 million in open market transactions. As of June 26, 2021, the remaining availability under the Company's share repurchase authorization was $350 million.

Outlook

The following guidance is provided on an adjusted, non-GAAP basis. Guidance does not incorporate any significant additional store closures, extensions of closures, or new government restrictions that could further impact traffic and sales trends.

The Company also notes that fiscal 2022 includes a 53rd week in its fiscal fourth quarter.

Fiscal Year 2022 Outlook

For Capri Holdings, the Company expects the following.

  • Total revenue of approximately $5.3 billion

  • Operating margin of approximately 16%

  • Net interest expense of approximately $5 million

  • Effective tax rate of approximately 17%

  • Weighted average diluted shares outstanding of approximately 156 million

  • Diluted earnings per share of approximately $4.50

For Versace, the Company expects the following.

  • Total revenue of approximately $1.025 billion

  • Operating margin in the low double digit range

For Jimmy Choo, the Company expects the following.

  • Total revenue of approximately $550 million

  • Operating margin in the negative low single digit range

For Michael Kors, the Company expects the following.

  • Total revenue of approximately $3.725 billion

  • Operating margin in the mid 20% range

Second Quarter Fiscal 2022 Outlook

For Capri Holdings, the Company expects the following.

  • Total revenue of approximately $1.25 billion

  • Operating margin of approximately 13%

  • Diluted earnings per share of approximately $0.90

For Versace, the Company expects the following.

  • Total revenue of approximately $260 million

  • Operating margin in the low double digit range

For Jimmy Choo, the Company expects the following.

  • Total revenue of approximately $120 million

  • Operating margin in the negative low double digit range

For Michael Kors, the Company expects the following.

  • Total revenue of approximately $870 million

  • Operating margin in the low 20% range

Conference Call Information

A conference call to discuss first quarter fiscal 2022 results is scheduled for today, July 30, 2021 at 8:30 a.m. ET. A live webcast of the conference call will be available on the Company’s website, www.capriholdings.com. In addition, a replay will be available shortly after the conclusion of the call and remain available until August 6, 2021. To access the telephone replay, listeners should dial 1-844-512-2921 or 1-412-317-6671 for international callers. The access code for the replay is 13721359. A replay of the webcast will also be available within two hours of the conclusion of the call.

Use of Non-GAAP Financial Measures

Constant currency effects are non-GAAP financial measures, which are provided to supplement our reported operating results to facilitate comparisons of our operating results and trends in our business, excluding the effects of foreign currency rate fluctuations. Because we are a global company, foreign currency exchange rates may have a significant effect on our reported results. We calculate constant currency measures and the related foreign currency impacts by translating the current year’s reported amounts into comparable amounts using prior year’s foreign exchange rates for each currency. All constant currency performance measures discussed below should be considered a supplement to and not in lieu of our operating performance measures calculated in accordance with U.S. GAAP. Additionally, this earnings release includes certain non-GAAP financial measures that exclude certain costs associated with COVID-19 related charges, ERP implementation costs, Capri transformation costs, restructuring and other charges. The Company uses non-GAAP financial measures, among other things, to evaluate its operating performance and in order to represent the manner in which the Company conducts and views its business. The Company believes that excluding these items helps its management and investors compare operating performance based on its ongoing operations. While the Company considers the non-GAAP measures to be useful supplemental measures in analyzing its results, they are not intended to replace, nor act as a substitute for, any amounts presented in its consolidated financial statements prepared in conformity with U.S. GAAP and may be different from non-GAAP measures reported by other companies.

About Capri Holdings Limited

Capri Holdings Limited is a global fashion luxury group, consisting of iconic brands that are industry leaders in design, style and craftsmanship. Its brands cover the full spectrum of fashion luxury categories including women’s and men’s accessories, footwear and ready-to-wear as well as wearable technology, watches, jewelry, eyewear and a full line of fragrance products. The Company’s goal is to continue to extend the global reach of its brands while ensuring that they maintain their independence and exclusive DNA. Capri Holdings Limited is publicly listed on the New York Stock Exchange under the ticker CPRI.

Forward-Looking Statements

This press release contains statements which are, or may be deemed to be, "forward-looking statements." Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Capri Holdings Limited (the "Company") about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. All statements other than statements of historical facts included herein, may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words "plans", "believes", "expects", "intends", "will", "should", "could", "would", "may", "anticipates", "might" or similar words or phrases, are forward-looking statements. These forward-looking statements are not guarantees of future financial performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions, which could cause actual results to differ materially from those projected or implied in any forward-looking statements. These risks, uncertainties and other factors include the effect of the COVID-19 pandemic and its potential material and significant impact on the Company’s future financial and operational results if retail stores are forced to close again and the pandemic is prolonged, including that our estimates could materially differ if the severity of the COVID-19 situation worsens, the length and severity of such outbreak across the globe and the pace of recovery following the COVID-19 pandemic, levels of cash flow and future availability of credit, compliance with restrictive covenants under the Company’s credit agreement, the Company’s ability to integrate successfully and to achieve anticipated benefits of any acquisition; the risk of disruptions to the Company’s businesses; the negative effects of events on the market price of the Company’s ordinary shares and its operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the Company’s businesses; fluctuations in demand for the Company’s products; levels of indebtedness (including the indebtedness incurred in connection with acquisitions); the timing and scope of future share buybacks, which may be made in open market or privately negotiated transactions, and are subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors, and which share repurchases may be suspended or discontinued at any time, the level of other investing activities and uses of cash; changes in consumer traffic and retail trends; loss of market share and industry competition; fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen epidemics and pandemics, disasters or catastrophes; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions, as well as those risks set forth in the Company’s filings with the U.S. Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the fiscal year ended March 27, 2021 (File No. 001-35368). Any forward-looking statement in this press release speaks only as of the date made and the Company disclaims any obligation to update or revise any forward-looking or other statements contained herein other than in accordance with legal and regulatory obligations.

SCHEDULE 1

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)

(Unaudited)

Three Months Ended

June 26,
2021

June 27,
2020

Total revenue

$

1,253

$

451

Cost of goods sold

397

149

Gross profit

856

302

Total operating expenses

598

464

Income (loss) from operations

258

(162

)

Other income, net

(1

)

Interest expense, net

1

17

Foreign currency loss (gain)

1

(3

)

Income (loss) before provision for income taxes

256

(175

)

Provision for income taxes

37

5

Net income (loss)

219

(180

)

Less: Net income attributable to noncontrolling interests

Net income (loss) attributable to Capri

$

219

$

(180

)

Weighted average ordinary shares outstanding:

Basic

151,312,103

149,556,310

Diluted

154,890,483

149,556,310

Net income (loss) per ordinary share:

Basic

$

1.45

$

(1.21

)

Diluted

$

1.41

$

(1.21

)

SCHEDULE 2

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)

June 26,
2021

March 27,
2021

June 27,
2020

Assets

Current assets

Cash and cash equivalents

$

356

$

232

$

207

Receivables, net

382

373

183

Inventories, net

760

736

948

Prepaid expenses and other current assets

209

205

151

Total current assets

1,707

1,546

1,489

Property and equipment, net

472

485

541

Operating lease right-of-use assets

1,468

1,504

1,641

Intangible assets, net

1,996

1,992

1,977

Goodwill

1,512

1,498

1,490

Deferred tax assets

281

278

226

Other assets

188

178

169

Total assets

$

7,624

$

7,481

$

7,533

Liabilities and Shareholders’ Equity

Current liabilities

Accounts payable

$

464

$

512

$

596

Accrued payroll and payroll related expenses

131

116

94

Accrued income taxes

101

126

34

Short-term operating lease liabilities

442

447

431

Short-term debt

127

123

191

Accrued expenses and other current liabilities

297

297

243

Total current liabilities

1,562

1,621

1,589

Long-term operating lease liabilities

1,594

1,657

1,751

Deferred tax liabilities

443

397

465

Long-term debt

1,206

1,219

1,577

Other long-term liabilities

369

430

144

Total liabilities

5,174

5,324

5,526

Commitments and contingencies

Shareholders’ equity

Ordinary shares, no par value; 650,000,000 shares authorized; 220,973,560 shares issued and 151,942,484 outstanding at June 26, 2021; 219,222,937 shares issued and 151,280,011 outstanding at March 27, 2021 and 218,272,709 shares issued and 150,340,192 outstanding at June 27, 2020

Treasury shares, at cost 69,031,076 shares at June 26, 2021, 67,942,926 shares at March 27, 2021 and 67,932,517 shares at June 27, 2020

(3,385

)

(3,326

)

(3,326

)

Additional paid-in capital

1,201

1,158

1,109

Accumulated other comprehensive income

147

56

71

Retained earnings

4,489

4,270

4,152

Total shareholders’ equity of Capri

2,452

2,158

2,006

Noncontrolling interest

(2

)

(1

)

1

Total shareholders’ equity

2,450

2,157

2,007

Total liabilities and shareholders’ equity

$

7,624

$

7,481

$

7,533

SCHEDULE 3

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED SEGMENT DATA

($ in millions)

(Unaudited)

Three Months Ended

June 26,
2021

June 27,
2020

Revenue by Segment and Region:

Versace

The Americas

$

87

$

15

EMEA

87

27

Asia

66

51

Versace Revenue

240

93

Jimmy Choo

The Americas

38

6

EMEA

50

16

Asia

54

29

Jimmy Choo Revenue

142

51

Michael Kors

The Americas

590

156

EMEA

165

79

Asia

116

72

Michael Kors Revenue

871

307

Total Revenue

$

1,253

$

451

Income (loss) from Operations:

Versace

$

48

$

(41

)

Jimmy Choo

11

(29

)

Michael Kors

240

(48

)

Total segment income (loss) from operations

299

(118

)

Less: Corporate expenses

(41

)

(31

)

Restructuring and other charges

(3

)

(8

)

COVID-19 related charges

3

(5

)

Total Income (loss) from Operations

$

258

$

(162

)

Operating Margin:

Versace

20.0

%

(44.1

)%

Jimmy Choo

7.7

%

(56.9

)%

Michael Kors

27.6

%

(15.6

)%

Capri Operating Margin

20.6

%

(35.9

)%

SCHEDULE 4

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

SUPPLEMENTAL RETAIL STORE INFORMATION

(Unaudited)

As of

Retail Store Information:

June 26,
2021

June 27,
2020

Versace

208

204

Jimmy Choo

233

228

Michael Kors

820

822

Total number of retail stores

1,261

1,254

SCHEDULE 5

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSTANT CURRENCY DATA

(In millions)

(Unaudited)

Three Months Ended

% Change

June 26,
2021

June 27,
2020

As
Reported

Constant
Currency

Total revenue:

Versace

$

240

$

93

158.1

%

135.5

%

Jimmy Choo

142

51

178.4

%

147.1

%

Michael Kors

871

307

183.7

%

175.2

%

Total revenue

$

1,253

$

451

177.8

%

163.9

%

SCHEDULE 6

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except share and per share data)

(Unaudited)

Three Months Ended June 26, 2021

As
Reported

Restructuring
and Other
Charges (1)

COVID-19
Related
Charges

ERP
Implementation

As
Adjusted

Gross profit

$

856

$

$

(3

)

$

$

853

Operating expenses

$

598

$

(3

)

$

$

(3

)

$

592

Total income from operations

$

258

$

3

$

(3

)

$

3

$

261

Income before provision for income taxes

$

256

$

3

$

(3

)

$

3

$

259

Provision for income taxes

$

37

$

1

$

(1

)

$

1

$

38

Net income attributable to Capri

$

219

$

2

$

(2

)

$

2

$

221

Diluted net income per ordinary share - Capri

$

1.41

$

0.01

$

(0.01

)

$

0.01

$

1.42

____________________

(1)

Includes store closure costs which have been incorporated into the Capri Retail Store Optimization Program, other restructuring initiatives, and other costs recorded in connection with the acquisitions of Gianni Versace S.r.l. and Jimmy Choo Group Limited.

SCHEDULE 7

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In millions, except share and per share data)

(Unaudited)

Three Months Ended June 27, 2020

As
Reported

Restructuring
and Other
Charges (1)

COVID-19
Related
Charges

ERP
Implementation

As
Adjusted

Gross profit

$

302

$

$

1

$

$

303

Operating expenses

$

464

$

(8

)

$

(4

)

$

(2

)

$

450

Total loss from operations

$

(162

)

$

8

$

5

$

2

$

(147

)

Loss before provision for income taxes

$

(175

)

$

8

$

5

$

2

$

(160

)

Provision for (benefit from) income taxes

$

5

$

(5

)

$

(3

)

$

(1

)

$

(4

)

Net loss attributable to Capri

$

(180

)

$

13

$

8

$

3

$

(156

)

Diluted net loss per ordinary share - Capri

$

(1.21

)

$

0.09

$

0.06

$

0.02

$

(1.04

)

____________________

(1)

Includes store closure costs which have been incorporated into the Capri Retail Store Optimization Program, other restructuring initiatives, and other costs recorded in connection with the acquisitions of Gianni Versace S.r.l. and Jimmy Choo Group Limited.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210730005115/en/

Contacts

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

Media:
Dinesh Kandiah
+1 (917) 934-2427
Press@CapriHoldings.com

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