Capri Holdings Limited Announces Fourth Quarter and Full Year Fiscal 2023 Results

Achieved Record Revenue at Versace and Jimmy Choo in Fiscal 2023

Returned $1.35 Billion to Shareholders in Fiscal 2023

https://www.capriholdings.com/4Q23Presentation

Capri Holdings Limited (NYSE:CPRI), a global fashion luxury group, today announced its financial results for the fourth quarter and full year fiscal 2023 ended April 1, 2023.

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Fourth Quarter Fiscal 2023 Highlights

• Revenue decreased 10.5% on a reported basis and 3.0% on a 52-week constant currency basis
• Adjusted gross margin expanded 90 basis points versus prior year
• Adjusted operating margin of 9.1%
• Adjusted earnings per share of $0.97

John D. Idol, the Company’s Chairman and Chief Executive Officer said, "Looking back on fiscal 2023, revenue increased high-single-digits and earnings per share increased mid-single-digits. These results were measured on a 52-week constant currency basis. We achieved several milestones in fiscal 2023, including record revenue at Versace and Jimmy Choo as well as mid-single-digit revenue growth at Michael Kors. Additionally, we generated strong free cash flow and returned $1.35 billion to shareholders. These results demonstrate the power of our business model, the strength of our luxury houses and the execution of our strategic initiatives."

Mr. Idol continued, "With Versace, Jimmy Choo and Michael Kors we have three incredibly powerful brands to drive our future growth. While we recognize that there are near-term uncertainties in the Americas, we are encouraged by the strong trends in Asia and continued growth in EMEA. Looking to fiscal 2024, we anticipate revenue will increase low-single-digits and earnings per share will increase mid-single-digits. Beyond fiscal 2024, we remain confident in our ability to achieve our long-term goals over time due to the resilience of the luxury industry, the strength of our three powerful iconic brands and the talented group of employees executing our strategic initiatives."

Fiscal 2023 Financial & Strategic Highlights (1)

• Drove high-single-digit revenue growth
• Achieved record revenue at Versace and Jimmy Choo, with double digit growth at both houses
• Generated mid-single-digit revenue growth at Michael Kors
• Accelerated growth of accessories across all houses, with retail sales of women’s accessories increasing over 40% at Versace, over 20% at Jimmy Choo and low-single-digits at Michael Kors
• Continued to grow footwear across all brands, with retail sales of women's footwear increasing low-double-digits at Versace and Michael Kors and high-single-digits at Jimmy Choo
• Drove customer awareness and brand engagement, adding 12.6 million new names to our databases which represented the largest increase in the Company’s history
• Returned $1.35 billion to shareholders through share repurchases, reflecting strong balance sheet and free cash flow generation

(1)Revenue growth rates on a 52-week constant currency basis

Fourth Quarter Fiscal 2023 Results

Financial Results and non-GAAP Reconciliation

The Company’s results are reported in this press release in accordance with accounting principles generally accepted in the United States (“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 Fourth Quarter Fiscal 2023 Results

The Company noted that fiscal year 2022 had 53 weeks versus 52 weeks in fiscal year 2023. As a result, the Company's results for the fiscal 2022 fourth quarter and fiscal year ended April 2, 2022, include approximately $70 million in revenue related to the 53rd week.

• Total revenue of $1.335 billion decreased 10.5% compared to last year. On a 13-week constant currency basis, total revenue decreased 3.0%.
• Gross profit was $867 million and gross margin was 64.9%, compared to $956 million and 64.1% in the prior year. Adjusted gross profit was $863 million and adjusted gross margin was 64.6%, compared to $951 million and 63.7% in the prior year.
• Loss from operations was $40 million and operating margin was (3.0)% compared to income from operations of $119 million and operating margin of 8.0% in the prior year. Adjusted income from operations was $121 million and operating margin was 9.1%, compared to $212 million and 14.2% in the prior year.
• Net loss was $34 million, or $(0.28) per diluted share, compared to net income of $81 million, or $0.54 per diluted share, in the prior year. Adjusted net income was $121 million, or $0.97 per diluted share, compared to $152 million, or $1.02 per diluted share, in the prior year.
• Net inventory at April 1, 2023 was $1.057 billion, a 3.6% decrease compared to the prior year.

Versace Fourth Quarter Fiscal 2023 Results

• Versace revenue of $274 million decreased 13.0% compared to the prior year. On a constant currency basis, total revenue decreased 8.6%.
• Versace operating income was $14 million and operating margin was 5.1% compared to an operating income of $50 million and operating margin of 15.9% in the prior year.

Jimmy Choo Fourth Quarter Fiscal 2023 Results

• Jimmy Choo revenue of $151 million decreased 3.2% compared to the prior year. On a 13-week constant currency basis, total revenue increased 5.6%.
• Jimmy Choo operating loss was $7 million and operating margin was (4.6)%, compared to $15 million and operating margin of (9.6)% in the prior year.

Michael Kors Fourth Quarter Fiscal 2023 Results

• Michael Kors revenue of $910 million decreased 10.9% compared to the prior year. On a 13-week constant currency basis, total revenue decreased 2.2%.
• Michael Kors operating income was $147 million and operating margin was 16.2%, compared to operating income of $210 million and operating margin of 20.6% in the prior year.

Share Repurchase Authorization

During the fourth quarter, the Company repurchased approximately 8.5 million ordinary shares for approximately $400 million in open market transactions. As of April 1, 2023 the remaining availability under the Company's share repurchase program was $400 million.

Outlook

The following guidance is provided on an adjusted, non-GAAP basis. Financial results could differ materially from the current outlook due to a number of external factors which are not reflected in our guidance, including changes in global macroeconomic conditions, greater than anticipated inflationary pressures, further considerable fluctuations in foreign currency exchange rates, COVID-19 variants and other COVID related disruptions.

Fiscal Year 2024 Outlook

For Capri Holdings, the Company expects the following:

• Total revenue of approximately $5.7 billion
• Modest gross margin expansion
• Operating margin of approximately 16.5%
• Net interest expense of approximately $20 million
• Effective tax rate of approximately 15%
• Weighted average diluted shares outstanding of approximately 122 million
• Diluted earnings per share of approximately $6.40
• Capital expenditures of approximately $260 million

For Versace, the Company expects the following:

• Total revenue of approximately $1.2 billion
• Operating margin in the mid-teens range

For Jimmy Choo, the Company expects the following:

• Total revenue of approximately $700 million
• Operating margin in the high-single-digit range

For Michael Kors, the Company expects the following:

• Total revenue of approximately $3.8 billion
• Operating margin in the low-20% range

First Quarter Fiscal 2024 Outlook

For Capri Holdings, the Company expects the following:

• Total revenue of approximately $1.2 billion
• Operating margin of approximately 8.5%
• Net interest expense of approximately $4 million
• Effective tax rate of approximately 15%
• Weighted average diluted shares outstanding of approximately 120 million
• Diluted earnings per share of approximately $0.70

For Versace, the Company expects the following:

• Total revenue of approximately $245 million
• Operating margin of break-even

For Jimmy Choo, the Company expects the following:

• Total revenue of approximately $180 million
• Operating margin in the high-single-digit range

For Michael Kors, the Company expects the following:

• Total revenue of approximately $775 million
• Operating margin in the mid-teens range

Fiscal Year 2024 Outlook

For Capri Holdings, the Company expects the following:

Conference Call Information

A conference call to discuss fourth quarter and full year fiscal 2023 results is scheduled for today, May 31, 2023 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 June 7, 2023. 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 13736113. A replay of the webcast will also be available within two hours of the conclusion of the call and will remain on the website for 90 days. Additionally, a fourth quarter fiscal 2023 earnings highlights presentation is posted on the company's website.

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, long-lived asset impairments, ERP implementation costs, Capri transformation costs, restructuring and other charges, charitable donations and the war in Ukraine. 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 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 changes in consumer traffic and retail trends; high consumer debt levels, recession and inflationary pressures; loss of market share and industry competition; the impact of the COVID-19 pandemic, levels of cash flow and future availability of credit, compliance with restrictive covenants under the Company’s credit agreement, the Company’s ability to integrate successfully and to achieve anticipated benefits of any acquisition and to successfully execute our growth strategies; the risk of disruptions to the Company’s businesses; risks associated with operating in international markets and our global sourcing activities, including disruptions or delays in manufacturing or shipments; the risk of cybersecurity threats and privacy of data security breaches; the negative effects of events on the market price of the Company’s ordinary shares and its operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the Company’s businesses; fluctuations in demand for the Company’s products; levels of indebtedness (including the indebtedness incurred in connection with acquisitions); the timing and scope of future share buybacks, which may be made in open market or privately negotiated transactions, and are subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors, and which share repurchases may be suspended or discontinued at any time, the level of other investing activities and uses of cash; fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen epidemics and pandemics, disasters or catastrophes; extreme weather conditions and natural disasters; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions including acts of war and other geopolitical conflicts; as well as those risks set forth in the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including the Company’s Annual Report on Form 10-K for the fiscal year ended April 2, 2022 (File No. 001-35368). Any forward-looking statement in this press release speaks only as of the date made and the Company disclaims any obligation to update or revise any forward-looking or other statements contained herein other than in accordance with legal and regulatory obligations.

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