Capri Holdings Conference Call Summary Company Overview - Capri Holdings is a luxury fashion accessory brand with a market cap of approximately $3 billion [1] Key Industry Insights - The luxury market has historically grown at about 5% annually, but faced a setback last year due to rising prices and changing consumer behavior [48] - There is a slow recovery in the luxury market, particularly in North America, driven by wealth accumulation and potential interest rate decreases [49] - The accessories market is showing signs of recovery, with trends influencing consumer purchasing behavior [50] Core Company Insights Sale of Versace - Capri Holdings completed the sale of Versace for approximately $1.4 billion, providing financial flexibility and reducing debt [4][14] - The sale allows the company to focus on its core brands, Michael Kors and Jimmy Choo [5] Brand Focus and Growth Strategy - Michael Kors is being repositioned to emphasize its "jet set" image through modern marketing strategies, including influencer engagement and social media [10][11] - The company aims to grow Jimmy Choo from a $600 million business to approximately $800 million in the coming years, with a focus on footwear and accessories [6][25] Store Renovations and Fleet Optimization - Capri Holdings plans to renovate over 50% of its store fleet worldwide, with a focus on creating a warmer, more residential store environment [14][17] - The company has closed around 125 stores in the past three years and aims to open new stores selectively as renovations progress [17] Key Performance Indicators (KPIs) - Traffic in stores, average unit retail (AUR), and full-price sell-through rates are primary KPIs being monitored [21][22] - The company has over 90 million people in its customer database, indicating strong engagement potential [22] Financial Outlook Sales and Profitability - Capri Holdings expects to see positive sales growth starting in the next fiscal year, with a significant inflection point anticipated by Q3 [24][25] - Long-term operating margin targets are set at low 20% for Michael Kors and low double-digit margins for Jimmy Choo [31][32] Capital Allocation - The company plans to invest in store renovations, digital initiatives, and technology, while also focusing on debt reduction and returning value to shareholders through a $1 billion share repurchase program [42][43] Consumer Demand and Market Trends - Consumer demand is expected to remain stable in North America, with a cautious outlook in Europe and improving conditions in China [34][36] - The company is observing a balance of tailwinds and headwinds affecting margins, with a focus on strategic pricing to mitigate tariff impacts [38][39] Conclusion - Capri Holdings is optimistic about returning to a $4 billion sales volume over the next three to five years, driven by strategic initiatives in both Michael Kors and Jimmy Choo [51][52] - The company is committed to enhancing its brand presence and profitability through targeted growth strategies and consumer engagement efforts [53]

Core Insights - Fossil Group, Inc. (FOSL) shares have increased by 27.9% since the first-quarter earnings report for fiscal 2025, outperforming the S&P 500's 1.4% gain during the same period, and have surged 81.3% over the past month compared to the S&P 500's 15.4% increase, indicating renewed investor optimism in the company's turnaround strategy and improving fundamentals [1] Financial Performance - The company reported a first-quarter net loss per share of $0.33, an improvement from a loss of $0.46 in the prior-year quarter, while the adjusted net loss per share narrowed to $0.10 from $0.30 a year earlier [2] - Net sales were $233.3 million, down 8.5% from $254.9 million in the prior-year period, with a constant currency decline of 6.2% [2] - Gross profit increased to $143 million from $133.5 million a year earlier, with gross margin expanding to 61.3%, up 890 basis points, due to a favorable product mix, exiting the smartwatch category, and lower freight costs [3] Operating Metrics - Operating loss narrowed significantly to $6.7 million from $29.2 million in the year-ago quarter, with adjusted operating income of $10.3 million compared to an adjusted operating loss of $18.9 million in the first quarter of 2024 [4] Business Segment Highlights - Sales in the Americas and Asia declined by 9% and 10% respectively on a constant currency basis, while Europe saw a modest 1% increase; traditional watches grew by 2%, partially offsetting declines in leather goods (37%) and jewelry (13%) [5] - Wholesale sales rose by 6% on a constant currency basis, while direct-to-consumer (DTC) sales dropped by 24%, influenced by a 22% decrease in comparable retail sales [6] Management Commentary - CEO Franco Fogliato noted strong progress in operational and financial metrics, attributing improvements to restructuring initiatives and reduced promotional activity [7] - CFO Randy Greben highlighted an 8% year-over-year decline in operating expenses, reflecting cost discipline and reduced digital marketing spend [7] Strategic Initiatives - Successful product innovation was noted, particularly in the core Fossil line and collaborative launches, which generated social media traction and consumer engagement [8] - Margin expansion was driven by exiting the smartwatch segment, focusing on full-price sales, improving cost structures, and optimizing product assortments [9] Cost Management - SG&A expenses decreased to $133.8 million from $152.2 million, aided by lower compensation costs and fewer stores, while inventory declined by 19% year-over-year to $182.1 million [10] Guidance - Fossil reiterated its full-year 2025 guidance, projecting a worldwide net sales decline in the mid-to-high teens and an adjusted operating margin in the negative low single digits, factoring in a $45 million revenue hit from planned retail store closures [11] Other Developments - The company signed an agreement to sell its distribution center in Eckstedt, Germany, in a sale-leaseback transaction expected to close in the second quarter, projected to add $20 million in balance sheet cash [12]