Capri (US:CPRI)2026-02-03 21:08Revenue Performance - Total revenue for the three months ended December 27, 2025, was $1,025 million, a decrease of 4% compared to $1,068 million for the same period in 2024[167]. - Michael Kors revenue for the nine months ended December 27, 2025, was $2,218 million, down 4% from $2,322 million in the prior year[167]. - Jimmy Choo revenue for the three months ended December 27, 2025, increased by 5% to $167 million from $159 million in the same period last year[167]. - Total revenue decreased by $43 million, or 4.0%, to $1.025 billion for the three months ended December 27, 2025, compared to $1.068 billion for the same period in 2024[175]. - Total revenue decreased by $116 million, or 4.2%, to $2.678 billion for the nine months ended December 27, 2025, compared to $2.794 billion for the same period in 2024[195]. - Michael Kors revenue decreased by $104 million, or 4.5%, to $2.218 billion for the nine months ended December 27, 2025, with a constant currency decrease of 6.0%[199]. - Jimmy Choo revenue decreased by $12 million, or 2.5%, to $460 million for the nine months ended December 27, 2025, with a constant currency decrease of 5.5%[199]. Cost and Expenses - Total cost of goods sold for the three months ended December 27, 2025, was $402 million, compared to $394 million for the same period in 2024, reflecting a 2% increase[167]. - Gross profit decreased by $51 million, or 7.6%, to $623 million, with a gross profit margin of 60.8% for the three months ended December 27, 2025, down from 63.1% in 2024[177]. - Total operating expenses decreased by $71 million, or 11.0%, to $577 million, which is 56.3% of total revenue for the three months ended December 27, 2025, down from 60.7% in 2024[178]. - Selling, general and administrative expenses decreased by $2 million, or 0.4%, to $535 million, with an increase in percentage to 52.2% of total revenue for the three months ended December 27, 2025[180]. - Selling, general and administrative expenses decreased by $54 million, or 3.5%, to $1.471 billion for the nine months ended December 27, 2025, compared to $1.525 billion for the same period in 2024[201]. - Total operating expenses decreased by $128 million, or 7.4%, to $1.597 billion for the nine months ended December 27, 2025, representing 59.6% of total revenue[198]. Income and Profitability - Income from continuing operations for the three months ended December 27, 2025, was $46 million, compared to $26 million for the same period in 2024, representing a significant increase[167]. - Income from continuing operations increased by $20 million, or 76.9%, to $46 million, representing 4.5% of total revenue for the three months ended December 27, 2025[174]. - Net income from continuing operations was $57 million for the three months ended December 27, 2025, compared to $6 million for the same period in 2024[192]. - Income from continuing operations was $50 million for the nine months ended December 27, 2025, compared to $31 million for the same period in 2024, representing a 61.3% increase[206]. - Michael Kors recorded income from operations of $255 million for the nine months ended December 27, 2025, down from $309 million for the same period in 2024, with an operating margin decrease from 13.3% to 11.5%[210]. - Jimmy Choo operating margin improved from a loss of 3.8% to an income of 1.8% due to leveraging operating expenses on higher revenues[188]. Store and Asset Management - The number of full-price retail stores for Michael Kors decreased to 368 as of December 27, 2025, from 435 as of December 28, 2024[169]. - The total number of retail stores decreased from 971 as of December 28, 2024, to 908 as of December 27, 2025[169]. - Impairment of assets during the nine months ended December 27, 2025, primarily related to operating lease right-of-use assets at certain Michael Kors store locations[168]. - No asset impairment charges were recognized for the three months ended December 27, 2025, compared to $81 million in the same period of 2024[182]. - The company recognized asset impairment charges of $21 million for the nine months ended December 27, 2025, down from $101 million for the same period in 2024[203]. - Restructuring expenses of $12 million were recorded for the three months ended December 27, 2025, primarily related to lease termination costs[183]. Financial Position and Cash Flow - Net cash provided by operating activities was $258 million during the nine months ended December 27, 2025, compared to $441 million for the same period in 2024, reflecting a decrease due to timing of payments[216]. - Net cash used in investing activities was $45 million during the nine months ended December 27, 2025, compared to $25 million for the same period in 2024, primarily due to capital expenditures[217]. - Net cash used in financing activities increased to $1.344 billion during the nine months ended December 27, 2025, compared to $212 million for the same period in 2024, mainly due to higher net debt repayments[218]. - As of December 27, 2025, total borrowings outstanding amounted to $234 million, a significant decrease from $1,490 million on March 29, 2025[219]. - The company has a total availability of $1,500 million under its Revolving Credit Facility, with remaining availability of $1,278 million as of December 27, 2025[219]. - The company is in compliance with all covenants related to its debt agreements, which require a maximum net leverage ratio of 4.0 to 1.0[219]. Corporate Developments - The merger agreement with Tapestry was terminated, with Tapestry agreeing to reimburse the company approximately $45 million for certain expenses[157]. - The company expects to spend approximately $100 million in Fiscal 2026 on capital expenditures, including store renovations and IT enhancements[214]. - The share repurchase program approved on November 4, 2025, allows for the repurchase of up to $1.0 billion of outstanding ordinary shares, expected to begin in Fiscal 2027[223]. - The company has not repurchased any ordinary shares during the pendency of the Merger Agreement through the expiration date of the previous share repurchase program[222]. Risk Management - The company faced macroeconomic challenges, including inflation and geopolitical factors, impacting consumer spending and overall financial performance[158]. - The company is exposed to interest rate risk related to $221 million borrowings outstanding under its 2022 Credit Facility as of December 27, 2025[234]. - The company has multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $3.5 billion to hedge net investments in CHF denominated subsidiaries[231]. - A 10% appreciation or devaluation of the United States dollar would result in a net increase or decrease of approximately $390 million in the fair value of the cross-currency swap agreements for CHF[231]. - The company has 17 financial institutions participating in its credit facilities, with none maintaining a maximum commitment percentage in excess of 10%[220].