Capri Holdings Ltd

Previous wording

On August 10, 2023, Capri entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tapestry, Inc., a Maryland corporation (“Tapestry”), and Sunrise Merger Sub, Inc., a British Virgin Islands business company limited by shares and a direct wholly owned subsidiary of Tapestry (“Merger Sub”). The Merger Agreement provides that, among other things and on the terms and subject to the conditions set forth therein, Tapestry will acquire Capri in an all-cash transaction by means of a merger of Merger Sub with and into Capri (the “Merger”), with Capri surviving the Merger as a wholly owned subsidiary of Tapestry. For additional information related to the Merger Agreement, please refer to Capri’s Definitive Proxy Statement on Schedule 14A filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 20, 2023, as well as the supplemental disclosures contained in Capri’s Current Report on Form 8-K filed with the SEC on October 17, 2023.

Current wording

On August 10, 2023, Capri entered into an Agreement and Plan of Merger with Tapestry, Inc., a Maryland corporation, and Sunrise Merger Sub, Inc., a British Virgin Islands business company limited by shares and a direct wholly owned subsidiary of Tapestry. The Merger Agreement provides that, among other things and on the terms and subject to the conditions set forth therein, Tapestry will acquire Capri in an all-cash transaction by means of a merger of Merger Sub with and into Capri, with Capri surviving the Merger as a wholly owned subsidiary of Tapestry. For additional information related to the Merger Agreement, please refer to Capri’s Definitive Proxy Statement on Schedule 14A filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 20, 2023, as well as the supplemental disclosures contained in Capri’s Current Report on Form 8-K filed with the SEC on October 17, 2023.

Previous wording

We are 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.

Current wording

Capri Holdings Limited 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.

Previous wording

Our Versace brand has long been recognized as one of the world’s leading international fashion design houses and is synonymous with Italian glamour and style. Founded in 1978 in Milan, Versace is known for its iconic and unmistakable style and unparalleled craftsmanship. 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. 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.

Current wording

Our Versace brand has long been recognized as one of the world’s leading international fashion design houses and is synonymous with Italian glamour and style. Founded in 1978 in Milan, Versace is known for its iconic and unmistakable style and unparalleled craftsmanship. 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 furnishing. Versace’s design team is led by Donatella Versace, who has been the brand’s Artistic Director for over 20 years. 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.

Previous wording

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 footwear, complemented by accessories, including handbags, small leather goods, scarves and belts, as well as a men’s luxury footwear and accessory business. 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 offers classic and timeless luxury products, as well as innovative products that are unique, instinctively seductive and chic. 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.

Current wording

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 shoes and accessories. 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. 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.

Previous wording

Our Michael Kors brand was launched over 40 years ago by Michael Kors, 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 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 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. 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 and luxury goods. 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 and the expanding men’s market. Taken together, our Michael Kors collections target a broad customer base while retaining our premium luxury image.

Current wording

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. 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. 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. 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 and the expanding men’s market. Taken together, our Michael Kors collections target a broad customer base while retaining our premium luxury image.

Previous wording

Macroeconomic conditions and inflationary pressures. Global economic conditions and the related impact on levels of consumer spending worldwide impacted our business in the third quarter of Fiscal 2024, and are likely to continue to impact our business and the premium accessories, footwear and apparel industry overall for the foreseeable future. Inflation, rising interest rates, higher fuel and energy costs and commodity prices, reductions in net worth based on market declines and uncertainty, home prices, credit availability and consumer debt levels, concerns of a global banking crisis, political instability due to war or other geopolitical factors and other macroeconomic pressures and general uncertainty regarding the overall future economic environment have led to recession fears and created a challenging retail environment, which is expected to continue in the near term. Purchases of discretionary luxury items, such as the accessories, footwear and apparel that we produce, tend to decline when disposable income is lower or when there are recessions, inflationary pressures or other economic uncertainty which could negatively affect our financial condition and results of operations.

Current wording

Macroeconomic conditions and inflationary pressures. Global economic conditions and the related impact on levels of consumer spending worldwide impacted our business in the first quarter of Fiscal 2025, and are likely to continue to impact our business and the luxury accessories, footwear and apparel industry overall for the foreseeable future. Inflation, rising interest rates, higher fuel and energy costs and commodity prices, reductions in net worth based on market declines and uncertainty, home prices, credit availability and consumer debt levels, concerns of a global banking crisis, political instability due to war or other geopolitical factors, including national elections such as the upcoming U.S. presidential election, and other macroeconomic pressures and general uncertainty regarding the overall future economic environment have created a challenging retail environment, which is expected to continue in the near term. Purchases of discretionary luxury items, such as the accessories, footwear and apparel that we produce, tend to decline when disposable income is lower or when there are recessions, inflationary pressures or other economic uncertainty which could negatively affect our financial condition and results of operations.

Previous wording

Luxury goods trends and demand for 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. Through 2019, the personal luxury goods market grew at a mid-single digit rate over the past 20 years. 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. Future growth is expected to be driven by e-commerce, Chinese consumers and younger generations; however, growth may be limited by concerns over inflation, the possibility of a global recession, foreign currency volatility or worsening economic conditions.

Current wording

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. Future growth is expected to be driven by e-commerce, Chinese consumers and younger generations, however, growth may be limited by concerns over inflation, the possibility of a global recession, foreign currency volatility or worsening economic conditions.

Previous wording

Disruptions or delays in shipping and distribution and other supply chain constraints. 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 — “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” of our Annual Report on Form 10-K for the fiscal year ended April 1, 2023 for additional discussion.

Current wording

Disruptions or delays in shipping and distribution and other supply chain constraints. 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. These disruptions include the recent attacks on commercial shipping vessels in the Red Sea that have led to disruption and instability in global supply chains, which have resulted in shipment delays. These shipping disruptions have also resulted in, and may continue to result in, increased freight costs. See Item 1A — “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” of our Annual Report on Form 10-K for the fiscal year ended March 30, 2024 for additional discussion.

Previous wording

Costs of manufacturing, tariffs, and import regulations. Our industry is subject to volatility in costs related to certain raw materials used in the manufacturing of our products. This volatility applies primarily to costs driven by commodity prices, which can increase or decrease dramatically over a short period of time. In addition, our costs may be impacted by sanction tariffs imposed on our products due to changes in trade terms. We rely on free trade agreements and other supply chain initiatives in order to maximize efficiencies relating to product importation. We are also subject to government import regulations, including United States Customs and Border Protection (“CBP”) withhold release orders. The imposition of taxes, duties and quotas, the withdrawal from or material modification to trade agreements, and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on our business, results of operations and financial condition. 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. We use commercially reasonable efforts to mitigate these effects by sourcing our products as efficiently as possible and diversifying the countries where we produce. In addition, manufacturing labor costs are also subject to degrees of volatility based on local and global economic conditions. We use commercially reasonable efforts to source from localities that suit our manufacturing standards and result in more favorable labor driven costs to our products.

Current wording

Costs of manufacturing, tariffs, and import regulations. Our industry is subject to volatility in costs related to certain raw materials used in the manufacturing of our products. This volatility applies primarily to costs driven by commodity prices, which can increase or decrease dramatically over a short period of time. In addition, our costs may be impacted by sanction tariffs imposed on our products due to changes in trade terms. We rely on free trade agreements and other supply chain initiatives in order to maximize efficiencies relating to product importation. We are also subject to government import regulations, including United States Customs and Border Protection (“CBP”) withhold release orders. The imposition of taxes, duties and quotas, the withdrawal from or material modification to trade agreements, and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on our business, results of operations and financial condition. 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. We use commercially reasonable efforts to mitigate these effects by sourcing our products as efficiently as possible and diversifying the countries where we produce. In addition, manufacturing labor costs are also subject to degrees of volatility based on local and global economic conditions. 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.

Previous wording

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. While the new platform is designed to improve the user experience and enhance consumer engagement, the transition created unanticipated challenges which have negatively impacted our results of operations. The continued implementation of this platform may also negatively impact our future results of operations. See Item 1A — “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” of our Annual Report on Form 10-K for the fiscal year ended April 1, 2023 for additional discussion.

Current wording

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. While the new platform is designed to improve the user experience and enhance consumer engagement, the transition created unanticipated challenges which negatively impacted our results of operations. The continued implementation of this platform may also negatively impact our future results of operations. See Item 1A — “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” of our Annual Report on Form 10-K for the fiscal year ended March 30, 2024 for additional discussion.

Previous wording

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. 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 our chief operating decision maker plans and allocates resources, manages the business and assesses performance. The following table presents our total revenue and income from operations by segment for the three and nine months ended December 30, 2023 and December 31, 2022 (in millions):

Current wording

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. In addition, certain other costs are not allocated to segments, including Merger related costs and restructuring and other (expense) income. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance. The following table presents our total revenue and income from operations by segment for the three months ended June 29, 2024 and July 1, 2023 (in millions):

Previous wording

The following table presents our global network of retail stores and wholesale doors by brand:

Current wording

The following table presents our global network of retail stores by brand:

Previous wording

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Critical accounting policies are those that are the most important to the portrayal of our results of operations and financial condition and that require our most difficult, subjective and complex judgments to make estimates about the effect of matters that are inherently uncertain. In applying such policies, we must use certain assumptions that are based on our informed judgments, assessments of probability and best estimates. Estimates, by their nature, are subjective and are based on analysis of available information, including current and historical factors and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis. While our significant accounting policies are detailed in Note 3 to the accompanying consolidated financial statements, our critical accounting policies are disclosed, in full, in the MD&A section of our Annual Report on Form 10-K for the fiscal year ended April 1, 2023. There have been no significant changes in our critical accounting policies and estimates since April 1, 2023.

Current wording

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Critical accounting policies are those that are the most important to the portrayal of our results of operations and financial condition and that require our most difficult, subjective and complex judgments to make estimates about the effect of matters that are inherently uncertain. In applying such policies, we must use certain assumptions that are based on our informed judgments, assessments of probability and best estimates. Estimates, by their nature, are subjective and are based on analysis of available information, including current and historical factors and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis. While our significant accounting policies are detailed in Note 3 to the accompanying consolidated financial statements, our critical accounting policies are disclosed, in full, in the MD&A section of our Annual Report on Form 10-K for the fiscal year ended March 30, 2024. There have been no significant changes to our critical accounting policies and estimates since March 30, 2024.

Previous wording

Total revenue decreased $85 million, or 5.6%, to $1.427 billion for the three months ended December 30, 2023, compared to $1.512 billion for the three months ended December 31, 2022, which included net favorable foreign currency effects of approximately $15 million primarily 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 for the three months ended December 30, 2023. On a constant currency basis, our total revenue decreased $100 million, or 6.6%. primarily attributable to lower revenues in the Americas for each of our brands.

Current wording

Total revenue decreased $162 million, or 13.2%, to $1.067 billion for the three months ended June 29, 2024, compared to $1.229 billion for the three months ended July 1, 2023, which included net unfavorable foreign currency effects of approximately $13 million primarily as a result of the strengthening of the United States dollar against the Japanese Yen, Euro and Chinese Renminbi for the three months ended June 29, 2024. On a constant currency basis, our total revenue decreased $149 million, or 12.1% primarily attributable to continuing macroeconomic headwinds resulting in softening demand globally for fashion luxury goods impacting each of our brands.

Previous wording

•Versace revenues decreased $22 million, or 8.8%, to $227 million for the three months ended December 30, 2023, compared to $249 million for the three months ended December 31, 2022, which included favorable foreign currency effects of $5 million. On a constant currency basis, revenue decreased $27 million, or 10.8%, primarily attributable to lower revenues in EMEA and the Americas partially offset by increased revenues in Asia.

Current wording

•Versace revenues decreased $40 million, or 15.4%, to $219 million for the three months ended June 29, 2024, compared to $259 million for the three months ended July 1, 2023, which included unfavorable foreign currency effects of $3 million. On a constant currency basis, revenue decreased $37 million, or 14.3%, primarily attributable to lower revenues in EMEA and the Americas, particularly in our wholesale business.

Previous wording

•Jimmy Choo revenues decreased $2 million, or 1.2%, to $166 million for the three months ended December 30, 2023, compared to $168 million for the three months ended December 31, 2022, which included favorable foreign currency effects of $3 million. On a constant currency basis, revenue decreased $5 million, or 3.0%, primarily attributable to lower revenues in the Americas partially offset by increased revenues in Asia.

Current wording

•Jimmy Choo revenues decreased $10 million, or 5.5%, to $173 million for the three months ended June 29, 2024, compared to $183 million for the three months ended July 1, 2023, which included unfavorable foreign currency effects of $3 million. On a constant currency basis, revenue decreased $7 million, or 3.8%, primarily attributable to lower revenues in Asia due to softening demand for fashion luxury goods.

Previous wording

•Michael Kors revenue decreased $61 million, or 5.6%, to $1.034 billion for the three months ended December 30, 2023, compared to $1.095 billion for the three months ended December 31, 2022, which included favorable foreign currency effects of $7 million. On a constant currency basis, revenue decreased $68 million, or 6.2%, primarily due to lower revenues in the Americas.

Current wording

•Michael Kors revenue decreased $112 million, or 14.2%, to $675 million for the three months ended June 29, 2024, compared to $787 million for the three months ended July 1, 2023, which included unfavorable foreign currency effects of $7 million. On a constant currency basis, revenue decreased $105 million, or 13.3%, primarily due to softening demand globally for fashion luxury goods.

Previous wording

Gross profit decreased $77 million, or 7.7%, to $928 million for the three months ended December 30, 2023, compared to $1.005 billion for the three months ended December 31, 2022, which included net favorable foreign currency effects of $15 million. Gross profit as a percentage of total revenue was 65.0% and 66.5% for the three months ended December 30, 2023 and December 31, 2022, respectively. The gross profit margin decrease was primarily related to lower full price sell-through for the three months ended December 30, 2023, as compared to the three months ended December 31, 2022.

Current wording

Gross profit decreased $123 million, or 15.1%, to $689 million for the three months ended June 29, 2024, compared to $812 million for the three months ended July 1, 2023, which included net unfavorable foreign currency effects of $6 million. Gross profit as a percentage of total revenue was 64.6% and 66.1% for the three months ended June 29, 2024 and July 1, 2023, respectively. The gross profit margin decrease was primarily related to lower full price sell-throughs partially offset by favorable channel mix for the three months ended June 29, 2024, as compared to the three months ended July 1, 2023.

Previous wording

Total operating expenses increased $37 million, or 4.8%, to $806 million for the three months ended December 30, 2023, compared to $769 million for the three months ended December 31, 2022. Our operating expenses included a net unfavorable foreign currency impact of approximately $14 million. Total operating expenses increased to 56.5% as a percentage of total revenue for the three months ended December 30, 2023, compared to 50.9% for the three months ended December 31, 2022. The components that comprise total operating expenses are explained below.

Current wording

Total operating expenses decreased $35 million, or 4.8%, to $697 million for the three months ended June 29, 2024, compared to $732 million for the three months ended July 1, 2023. Our operating expenses included a net favorable foreign currency impact of approximately $8 million. Total operating expenses increased to 65.3% as a percentage of total revenue for the three months ended June 29, 2024, compared to 59.6% for the three months ended July 1, 2023. The components that comprise total operating expenses are explained below.

Previous wording

Selling, general and administrative expenses increased $29 million, or 4.0%, to $749 million for the three months ended December 30, 2023, compared to $720 million for the three months ended December 31, 2022. As a percentage of total revenue, selling, general and administrative expenses increased to 52.5% for the three months ended December 30, 2023, compared to 47.6% for the three months ended December 31, 2022, primarily due to increased retail store costs, marketing investments and unallocated corporate expenses along with deleveraging of expenses on lower revenue for the three months ended December 30, 2023.

Current wording

As a percentage of total revenue, selling, general and administrative expenses increased to 60.8% for the three months ended June 29, 2024, compared to 56.1% for the three months ended July 1, 2023, primarily due to deleveraging of expenses on lower revenues for the three months ended June 29, 2024.

Previous wording

Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $12 million, or 21.4%, to $68 million for the three months ended December 30, 2023 as compared to $56 million for the three months ended December 31, 2022, primarily due to an increase in professional fees and information technology costs related to the ongoing Capri transformation projects.

Current wording

Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, decreased $7 million, or 9.9%, to $64 million for the three months ended June 29, 2024 as compared to $71 million for the three months ended July 1, 2023, primarily due to a decrease in professional fees and information technology costs related to certain Capri transformation projects which are now complete.

Previous wording

Depreciation and amortization increased $3 million, or 7.0%, to $46 million for the three months ended December 30, 2023, compared to $43 million for the three months ended December 31, 2022. Depreciation and amortization increased to 3.2% as a percentage of total revenue for the three months ended December 30, 2023, compared to 2.8% for the three months ended December 31, 2022. The increase in depreciation and amortization expense was primarily attributable to higher depreciation due to information technology assets associated with Capri transformation projects which are now in service.

Current wording

Depreciation and amortization increased $2 million, or 4.4%, to $47 million for the three months ended June 29, 2024, compared to $45 million for the three months ended July 1, 2023. The increase in depreciation and amortization expense was primarily attributable to higher depreciation due to information technology assets associated with Capri transformation projects which are now in service.

Previous wording

During the nine months ended December 30, 2023, we recorded costs of $3 million, primarily related to expenses related to equity awards associated with the acquisition of Versace and severance for certain employees, partially offset by a $10 million gain on the sale of a long-lived corporate asset. During the nine months ended December 31, 2022, we recorded expenses of $11 million, primarily related to equity awards associated with the acquisition of Versace. See Note 9 to the accompanying consolidated financial statements for additional information.

Current wording

During the three months ended June 29, 2024, we recorded costs of $1 million primarily related to lease termination and store closure costs. The $2 million of income recorded for the three months ended July 1, 2023 was primarily related to a gain on the sale of a long-lived corporate asset, partially offset by acquisition related Versace equity awards, which are no longer recurring in the current year, and severance expenses. See Note 9 to the accompanying consolidated financial statements for additional information.

Previous wording

As a result of the foregoing, income from operations decreased $114 million, to $122 million for three months ended December 30, 2023, compared to $236 million for the three months ended December 31, 2022. Income from operations as a percentage of total revenue decreased to 8.5% for the three months ended December 30, 2023, compared to 15.6% for the three months ended December 31, 2022. See Segment Information above for a reconciliation of our segment operating income to total operating income.

Current wording

As a result of the foregoing, loss from operations was $8 million for three months ended June 29, 2024, compared to income from operations of $80 million for the three months ended July 1, 2023. Loss from operations as a percentage of total revenue was 0.7% for the three months ended June 29, 2024, compared to income from operations of 6.5% for the three months ended July 1, 2023. See Segment Information above for a reconciliation of our segment operating income to total operating (loss) income.

Previous wording

•Versace recorded a loss from operations of $14 million for the three months ended December 30, 2023, compared to income of $24 million for the three months ended December 31, 2022. Operating margin decreased from 9.6% for the three months ended December 31, 2022, to an operating loss of 6.2% for the three months ended December 30, 2023, primarily due to increased retail store costs, unfavorable channel mix, deleveraging of operating expenses on lower revenues and lower full price sell-through compared to the prior year.

Current wording

•Versace recorded a loss from operations of $17 million for the three months ended June 29, 2024, compared to income of $3 million for the three months ended July 1, 2023. Operating margin decreased from 1.2% for the three months ended July 1, 2023, to an operating loss of 7.8% for the three months ended June 29, 2024, primarily due to deleveraging of operating expenses on lower revenues and lower full price sell-throughs partially offset by decreased marketing expenses compared to the prior year as noted above.

Previous wording

•Jimmy Choo recorded income from operations of $4 million for the three months ended December 30, 2023, compared to $18 million for the three months ended December 31, 2022. Operating margin decreased from 10.7% for the three months ended December 31, 2022 to 2.4% for the three months ended December 30, 2023, primarily due to lower full price sell-through, unfavorable channel mix and increased retail store costs compared to the prior year.

Current wording

•Jimmy Choo recorded income from operations of $4 million for the three months ended June 29, 2024, compared to $16 million for the three months ended July 1, 2023. Operating margin decreased from 8.7% for the three months ended July 1, 2023 to 2.3% for the three months ended June 29, 2024, primarily due to increased retail store costs, deleveraging of operating expenses on lower revenues and lower full price sell-throughs compared to the prior year.

Previous wording

•Michael Kors recorded income from operations of $219 million for the three months ended December 30, 2023, compared to $251 million for the three months ended December 31, 2022. Operating margin decreased from 22.9% for the three months ended December 31, 2022, to 21.2% for the three months ended December 30, 2023, primarily due to deleveraging of operating expenses on lower revenues and lower full price sell-through compared to the prior year.

Current wording

•Michael Kors recorded income from operations of $75 million for the three months ended June 29, 2024, compared to $130 million for the three months ended July 1, 2023. Operating margin decreased from 16.5% for the three months ended July 1, 2023, to 11.1% for the three months ended June 29, 2024, primarily due to deleveraging of operating expenses on lower revenues and lower full price sell-throughs partially offset by favorable channel mix compared to the prior year.

Previous wording

We recognized $1 million and $12 million of interest expense, net, for the three months ended December 30, 2023 and December 31, 2022, respectively. The $11 million decrease in interest expense, net, is primarily due to $22 million higher interest income from our net investment hedges, partially offset by higher effective interest rates and higher average borrowings on our outstanding debt (see Note 10 and Note 13 to the accompanying consolidated financial statements for additional information).

Current wording

For the three months ended June 29, 2024, we recognized $4 million of interest income compared to $8 million of interest expense for the three months ended July 1, 2023. The $12 million improvement in interest (income) expense, net, is primarily due to higher interest income from our net investment hedges (see Note 10 and Note 13 to the accompanying consolidated financial statements for additional information).

Previous wording

For the three months ended December 30, 2023 and December 31, 2022, we recognized a net foreign currency gain of $2 million and $3 million, respectively, primarily attributable to the remeasurement of intercompany loans with certain of our subsidiaries.

Current wording

For the three months ended June 29, 2024 and July 1, 2023, we recognized a net foreign currency loss of $5 million and $21 million, respectively, primarily attributable to the remeasurement of intercompany loans with certain of our subsidiaries.

Previous wording

Net Income Attributable to Capri

Current wording

Net (Loss) Income Attributable to Capri

Previous wording

As a result of the foregoing, our net income decreased $120 million to $105 million for the three months ended December 30, 2023, compared to $225 million for the three months ended December 31, 2022.

Current wording

As a result of the foregoing, our net loss attributable to Capri was $14 million for the three months ended June 29, 2024, compared to net income of $48 million for the three months ended July 1, 2023.

Previous wording

Our primary sources of liquidity are the cash flows generated from operations, along with borrowings available under our credit facilities (see below discussion regarding “Revolving Credit Facilities”) and available cash and cash equivalents. Our primary use of this liquidity is to fund the ongoing cash requirements, including our working capital needs and capital investments in our business, debt repayments, acquisitions, returns of capital, including share repurchases and other corporate activities. We believe that the cash generated from 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 spent $139 million on capital expenditures during the nine months ended December 30, 2023.

Current wording

Our primary sources of liquidity are the cash flows generated from our operations, along with borrowings available under our credit facilities (see below discussion regarding “Revolving Credit Facilities”) and available cash and cash equivalents. Our primary use of this liquidity is to fund the ongoing cash requirements, including our working capital needs and capital investments in our business, debt repayments, acquisitions, returns of capital, including share repurchases and other corporate activities. 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. We spent $43 million on capital expenditures during the three months ended June 29, 2024.

Previous wording

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 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. From Fiscal 2024 through Fiscal 2026, we expect expenditures of up to $220 million related to these efforts.

Current wording

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. During Fiscal 2024, the remaining transformation projects were paused due to the pending Merger and we will reassess this program, along with related timing, during Fiscal 2025.

Previous wording

Net cash provided by operating activities was $265 million during the nine months ended December 30, 2023, as compared to net cash provided by operating activities of $616 million for the nine months ended December 31, 2022. The decrease in net cash provided by operating activities were primarily attributable to a decrease in our net income after non-cash adjustments, along with the stabilization of inventory levels and reduction of accounts payables in the current year.

Current wording

Net cash provided by operating activities was $83 million during the three months ended June 29, 2024, as compared to net cash provided by operating activities of $40 million for the three months ended July 1, 2023. The increase in net cash provided by operating activities were primarily attributable to improved inventory levels and a more favorable accounts payable position in the current year, partially offset by a decrease in our net income after non-cash adjustments.

Previous wording

Net cash used in investing activities was $139 million during the nine months ended December 30, 2023, as compared to net cash provided by investing activities of $241 million during the nine months ended December 31, 2022. The increase in net cash used in investing activities were primarily attributable to the settlement of net investment hedges of $409 million during the nine months ended December 31, 2022, partially offset by lower capital expenditures of $29 million compared to prior year.

Current wording

Net cash used in investing activities was $52 million during the three months ended June 29, 2024, as compared to net cash used in investing activities of $50 million during the three months ended July 1, 2023. The increase in net cash used in investing activities were primarily attributable to $9 million of acquisition related payments, partially offset by the lower capital expenditures of $7 million compared to prior year.

Previous wording

Net cash used in financing activities was $116 million during the nine months ended December 30, 2023, as compared to net cash used in financing activities of $651 million during the nine months ended December 31, 2022. The decrease in net cash used in financing activities of $535 million was primarily attributable to a decrease in cash payments to repurchase our ordinary shares of $857 million compared to prior year, offset by lower net debt borrowings of $322 million.

Current wording

Net cash used in financing activities was $9 million during the three months ended June 29, 2024, as compared to net cash used in financing activities of $3 million during the three months ended July 1, 2023. The increase in cash used by financing activities of $6 million was primarily attributable to a decrease in cash payments to repurchase our ordinary shares of $103 million, offset by lower net debt borrowings of $108 million compared to prior year.

Previous wording

(2)As of December 30, 2023 and April 1, 2023, all amounts are recorded as long-term debt in our consolidated balance sheets, besides the Senior Notes, due in November 2024, of which are recorded within short-term debt in our consolidated balance sheets as of December 30, 2023.

Current wording

(2)As of June 29, 2024 and March 30, 2024, all amounts are recorded as long-term debt on our consolidated balance sheets, besides the Senior Notes, due in November 2024, which are recorded within short-term debt on our consolidated balance sheets as of June 29, 2024.

Previous wording

(3)On December 5, 2022, Gianni Versace S.r.l., our wholly owned subsidiary, entered into a credit facility, which provides a senior unsecured term loan in an aggregate principal amount of €450 million. As of December 30, 2023 and April 1, 2023, all amounts are recorded as long-term debt in our consolidated balance sheets.

Current wording

(3)On December 5, 2022, Gianni Versace S.r.l., our wholly owned subsidiary, entered into a credit facility, which provides a senior unsecured term loan in an aggregate principal amount of €450 million. As of June 29, 2024 and March 30, 2024, all amounts are recorded as long-term debt on our consolidated balance sheets.

Previous wording

(4)The balance as of December 30, 2023 consists 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, 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 $4 million related to our supplier finance 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, and $2 million of other loans recorded as long-term debt in our consolidated balance sheets.

Current wording

(4)The balance as of June 29, 2024 consists of $10 million related to our supplier financing program recorded within short-term debt on our consolidated balance sheets, $11 million related to the sale of certain Versace tax receivables, with $1 million and $10 million, respectively, recorded within short-term debt and long-term debt on our consolidated balance sheets and $7 million of other loans recorded as long-term debt on our consolidated balance sheets. The balance as of March 30, 2024 consists of $4 million related to our supplier finance program recorded within short-term debt on 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, and $2 million of other loans recorded as long-term debt on our consolidated balance sheets.

Previous wording

The following table presents our treasury share repurchases during the nine months ended December 30, 2023 and December 31, 2022 (dollars in millions):

Current wording

The following table presents our treasury share repurchases during the three months ended June 29, 2024 and July 1, 2023 (dollars in millions):