Capri Holdings Conference Call Summary Company Overview - **Company**: Capri Holdings (NYSE: CPRI) - **Brands**: Michael Kors, Jimmy Choo - **Recent Developments**: Sold Versace, resulting in reduced debt to $80 million, allowing for strategic investments and share repurchase programs [6][7] Strategic Initiatives - **Target Audience**: Focus on attracting younger consumers, specifically Gen Z and millennials [3][4] - **Brand Modernization**: - Michael Kors: Emphasis on modernizing the Jet Set heritage while maintaining brand identity [3][4] - Jimmy Choo: Shift in marketing to appeal to a broader lifestyle, including casual wear [9][10] - **Pricing Strategy**: Resetting pricing architecture to align with consumer expectations, resulting in reduced discounting and improved full-price sell-throughs [5][19] Financial Performance - **Jimmy Choo**: - Achieved three consecutive quarters of comparable store sales increases [9] - Projected to reach $800 million in revenue with operating margins of 10%-15% [13][40] - **Michael Kors**: - Focus on full-price sales and reduced promotional activities, leading to positive sales trends [21][22] - Anticipated operating margins above 20% [42][48] - **Overall Growth**: Expected low single-digit growth for Capri Holdings with significant operating margin expansion [30][31] Marketing and Sales Channels - **Influencer Marketing**: Increased use of influencers and social media channels to enhance brand visibility and engagement [5][26] - **Store Renovations**: Plans to renovate 350 stores with a budget of $300 million, aiming to improve customer experience and sales [20][35] - **Wholesale Business**: Positive developments in wholesale partnerships, particularly in North America and Europe, with a focus on accessible luxury [28][29] Market Conditions - **Luxury Market Trends**: The luxury accessories market is expected to decline slightly, but Capri Holdings aims to gain market share through accessible luxury offerings [54][55] - **Consumer Health**: North American consumers remain strong, with a resurgence in shopping mall traffic, particularly among younger demographics [58][59] - **Geopolitical Impact**: Limited impact from recent events in the Middle East, with a focus on maintaining operations in the region [57][58] Challenges and Risks - **Tariffs**: Anticipated tariff impacts of approximately $125 million, with expectations of stabilization in the future [66][67] - **Footwear Segment**: Identified as an area needing improvement, with plans to enhance product offerings [34] Leadership Changes - **New CFO/COO**: Tyler Redden, with extensive operational experience, is set to join the company, expected to contribute positively to operational efficiency [71] This summary encapsulates the key points discussed during the Capri Holdings conference call, highlighting the company's strategic direction, financial performance, market conditions, and leadership changes.

Financial Data and Key Metrics Changes - Total company revenue decreased 6% year-over-year to $797 million, with earnings per share at $0.50, reflecting a sequential improvement in trends across all regions [6][29][40] - Net income was $60 million, driven by better-than-expected results at both Michael Kors and Jimmy Choo [29] - Gross margin was approximately flat at 63%, with higher tariffs negatively impacting it by 30 basis points [32][33] Business Line Data and Key Metrics Changes - Michael Kors revenue decreased 6% year-over-year, with retail sales showing encouraging signs of momentum, including improved traffic trends and stronger full-price sell-throughs [6][8][30] - Jimmy Choo revenue decreased 6.4% year-over-year, with retail sales declining mid-single digits and wholesale sales declining double digits [17][31] - Accessories at Michael Kors saw strong full-price sell-throughs, while footwear revenue was down double digits [14][21] Market Data and Key Metrics Changes - Revenue in The Americas decreased 9%, while EMEA revenue increased 6%, and Asia revenue declined 15% [30] - Michael Kors experienced a decline of 8% in The Americas, while EMEA saw a 9% increase [30] - Jimmy Choo's revenue in The Americas decreased 12%, with EMEA revenue increasing by 1% [31] Company Strategy and Development Direction - The company is focused on stabilizing its business in fiscal 2026 and establishing a foundation for growth in fiscal 2027, with strategic initiatives aimed at reenergizing its luxury brands [5][6][17] - A significant store renovation program is planned, targeting approximately 50% of the store fleet over the next three years to enhance consumer experience [16][79] - The company aims to achieve $4 billion in revenues for Michael Kors and $800 million for Jimmy Choo over time [17][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about early signs of strategic initiatives working, with expectations for trends to improve in the second half of fiscal 2026 [26][41] - The global macroeconomic environment remains dynamic, with increased tariff rates impacting cost of goods sold [39][40] - The company anticipates a gradual sequential improvement in trends supported by new product deliveries and marketing initiatives [40][41] Other Important Information - The Versace transaction is expected to close in 2025, with proceeds aimed at reducing debt significantly [27][77] - The company is implementing a targeted price increase strategy to mitigate tariff impacts and improve gross margins [39][61] Q&A Session Summary Question: Can you elaborate on recent sell-through trends on product launches across direct-to-consumer and wholesale? - Management noted that consumer engagement with the new storytelling and marketing strategies has improved, leading to better sell-throughs and a positive response to new product designs [45][46][49] Question: How do you expect pricing strategy trends to translate to margins? - Management indicated that while tariffs are expected to impact margins negatively in the short term, strategic initiatives aimed at reducing promotional activity and increasing full-price sell-throughs will support margin improvement in the future [55][61][62] Question: Are you baking in growth in any quarter this year at Michael Kors? - Management confirmed that there is no year-over-year growth planned yet, but they anticipate growth in the full-price channel in the latter part of the fiscal year [68][70] Question: What do you expect the balance sheet to look like post-Versace sale? - Management expects minimal debt remaining on the balance sheet after the Versace transaction closes, allowing for a strong financial position moving forward [77][79] Question: What handbag families might be most important moving forward? - Management highlighted three handbag families—Layla, Nolita, and Bryant—as key products with strong sell-throughs, and emphasized the importance of storytelling around existing products [86][88]