Capri (US:CPRI)2025-05-28 13:32Financial Data and Key Metrics Changes - Total company revenue for the fourth quarter decreased by 15% year-over-year to $1 billion, slightly better than expectations [29] - The company reported a net loss of $581 million, resulting in a diluted loss per share of $4.9, primarily due to a non-cash tax valuation allowance [29][38] - Gross margin declined to 61%, down 170 basis points from the prior year, primarily due to inventory actions taken during the quarter [33] Business Line Data and Key Metrics Changes - Michael Kors revenue decreased by 16% compared to the prior year, with global retail sales down mid-teens and wholesale sales declining double digits [10][31] - Jimmy Choo revenue decreased by 3%, with global retail sales declining high single digits while wholesale increased high teens [19][32] - Michael Kors gross margin was 58.6%, down from 60.8% last year, while Jimmy Choo's gross margin was 66.2%, down from 70.1% [34] Market Data and Key Metrics Changes - Revenue in the Americas decreased by 13%, EMEA declined by 14%, and Asia saw a decrease of 23% [30][32] - For Jimmy Choo, revenue in the Americas decreased by 7%, while EMEA revenue increased by 9% and Asia revenue declined by 16% [32] Company Strategy and Development Direction - The company announced the pending sale of Versace to focus on growth opportunities within Michael Kors and Jimmy Choo, aiming to reduce debt and reinstate a share repurchase program [5][6] - Strategic initiatives include enhancing brand desirability, improving product offerings, and stabilizing the wholesale business [7][8][19] - The company plans to renovate approximately 50% of the Michael Kors store fleet over the next three years to drive sales recovery [16][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future despite a challenging macro environment, citing early signs of improvement in sales momentum and consumer engagement [6][17] - The company anticipates total revenue for fiscal 2026 to be between $3.3 billion and $3.4 billion, with gradual progression expected as strategic initiatives gain traction [45] Other Important Information - The company plans to use proceeds from the sale of Versace to reduce debt, which is expected to significantly lower interest expenses [41] - The company is proactively managing tariff risks and expects to mitigate their impact over time through sourcing optimization and potential price increases [44][70] Q&A Session Summary Question: Can you speak to the comfort in the troughing revenue expectations and margin degradation? - Management highlighted a significant improvement in Michael Kors retail performance, with a near flat comp in the current quarter compared to a 15% decline previously, driven by strong full-price sell-throughs and effective storytelling [58][60] Question: What is the wholesale outlook for Michael Kors this year? - Management indicated that discussions with wholesale partners have been positive, with increased commitments due to the successful new storytelling and product initiatives [74][76] Question: What strategies are in place to drive traffic and conversion? - Management emphasized the importance of marketing initiatives, data analytics, and influencer programs to engage consumers and drive traffic, noting that conversion rates have remained strong [82][84] Question: Can you elaborate on the strategies to improve the sales trajectory of Michael Kors? - Management acknowledged past missteps but emphasized a return to the brand's heritage and pricing strategy that aligns with consumer expectations, aiming for sustainable growth [90][92] Question: What is the timeline for achieving steady state pricing? - Management expects to reach the desired pricing levels by the fall season, having already made significant adjustments to align with historical price points [105]