Financial Data and Key Metrics Changes - Total company revenue for Q3 fiscal 2026 was $1.025 billion, a decrease of 4% year-over-year and 5.9% in constant currency [22][24] - Earnings per share increased approximately 30% to $0.81 [7] - Gross margin was 60.8%, down 230 basis points, but underlying gross margin expanded by 70 basis points due to better full price sell-throughs [24][29] Business Line Data and Key Metrics Changes - Michael Kors revenue decreased 5.6% year-over-year, with retail sales down mid-single digits and wholesale sales also declining mid-single digits [23][24] - Jimmy Choo revenue increased 5% year-over-year, with retail sales improving sequentially and wholesale revenue growing double digits [15][23] Market Data and Key Metrics Changes - Revenue in the Americas decreased 7%, while EMEA increased 5% and Asia decreased 4% [22] - For Michael Kors, revenue in the Americas decreased 9%, EMEA increased 6%, and Asia decreased 1% [23] - For Jimmy Choo, revenue in the Americas increased 23%, EMEA increased 3%, and Asia decreased 10% [23] Company Strategy and Development Direction - The company completed the sale of Versace to strengthen its financial foundation and reduce debt, ending the quarter with $80 million of net debt [7][26] - Strategic initiatives focus on enhancing brand desirability through storytelling and modern product offerings, aiming for a return to growth in fiscal 2027 [5][6][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic initiatives and their potential to support growth, with expectations for sequential improvement in retail trends in Q4 and a return to growth in fiscal 2027 [21][28] - The company is optimistic about sustainable growth potential for both Michael Kors and Jimmy Choo, leveraging advanced data analytics and consumer insights [29][87] Other Important Information - The company plans to renovate approximately 50% of its store fleet over the next three years to enhance the luxury retail experience [14] - Inventory at quarter-end totaled $663 million, a 6.5% decline year-over-year, with expectations for year-end inventory levels to be flat to prior year [25][26] Q&A Session Summary Question: Drivers of sequential improvement in Michael Kors retail sales - Management noted strategic initiatives are starting to take hold, with improved full price sell-throughs and reduced promotional activity leading to healthier business dynamics [31][34] Question: Expected revenue growth next year - Management indicated a cautious optimism for revenue growth in FY 2027, with expectations for continued sequential improvement in retail [40][56] Question: Performance by price range and age demographics - Management highlighted strong trends in the $150-$250 price range, particularly appealing to Gen Z consumers, and noted a positive response to new product introductions [80][81] Question: Plans for free cash flow and balance sheet management - Management stated that with reduced net debt, the focus will be on strategic investments and potentially returning value to shareholders through stock buybacks or store updates [91]

Financial Data and Key Metrics Changes - Total company revenue for Q3 fiscal 2026 was $1.025 billion, a decrease of 4% year-over-year and 5.9% in constant currency [20][21] - Gross margin was 60.8%, down 230 basis points, while underlying gross margin expanded by 70 basis points due to better full price sell-throughs and reduced promotional activity [22][24] - Earnings per share increased approximately 30% to $0.81 [5] Business Line Data and Key Metrics Changes - Michael Kors revenue decreased 5.6% year-over-year, with retail sales down mid-single digits, while wholesale sales also declined mid-single digits [21][6] - Jimmy Choo revenue increased 5% year-over-year, with retail sales improving sequentially and wholesale revenue growing double digits [21][13] - Michael Kors experienced a double-digit increase in full price sales, while outlet revenue continued to be impacted by reduced promotional activity [6][11] Market Data and Key Metrics Changes - Revenue in the Americas decreased 7%, while EMEA increased 5% and Asia decreased 4% [20] - Michael Kors retail sales declined low double digits in the Americas, while Europe outperformed with mid-single-digit increases [8][21] - Jimmy Choo's retail revenue increased high single digits in the Americas and low single digits in Europe, with a sequential improvement in Asia [15][21] Company Strategy and Development Direction - The company completed the sale of Versace to strengthen its financial foundation and reduce debt, ending the quarter with $80 million of net debt [5][24] - Strategic initiatives focus on enhancing brand desirability through storytelling and modern product offerings, aiming for a return to growth in fiscal 2027 [4][19] - Plans to renovate approximately 50% of the store fleet over the next three years to enhance the luxury retail experience [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic initiatives leading to improved consumer engagement and brand equity [4][19] - Anticipated sequential improvement in retail trends for Q4 and a return to growth in fiscal 2027, supported by better full price sell-throughs and targeted price increases [19][26] - Management highlighted the importance of influencer marketing and social media in re-engaging consumers, particularly younger demographics [31][43] Other Important Information - The company expects fiscal 2026 revenue to be between $3.45 billion and $3.475 billion, with gross margin anticipated to be approximately 61% [24][25] - Operating expenses are expected to be slightly more than $2 billion, with operating income anticipated to be around $100 million [25] Q&A Session Summary Question: Drivers of sequential improvement in Michael Kors retail sales - Management noted strategic initiatives are starting to take hold, with improved full price sell-throughs and reduced promotional activity contributing to better sales [29][30] Question: Revenue growth expectations for next year - Management indicated a cautious optimism for revenue growth in FY 2027, driven by improved retail trends and strategic initiatives [35][36] Question: Operating margin expansion potential - Management expects operating margin expansion due to gross margin improvements and controlled SG&A expenses, despite challenges from reduced wholesale distribution [52][56] Question: Performance by price range and age demographics - Management highlighted strong trends in the $150-$250 price range, particularly among Gen Z consumers, and noted positive responses to new product offerings [78][80] Question: Plans for free cash flow utilization - Management plans to invest in store renovations and technology enhancements, with a share repurchase program authorized for FY 27 [91]