UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March ~~28, 2020~~27, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35368

(Exact Name of Registrant as Specified in Its Charter)

CAPRI HOLDINGS LTD


British Virgin Islands			N/A
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

33 Kingsway

London, United Kingdom

WC2B 6UF

(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: 44 207 632 8600

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Ordinary Shares, no par value	CPRI	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.	☒ Yes	☐ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.	☐ Yes	☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.	☒ Yes	☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).	☒ Yes	☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

☐☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

☐ Yes

☒ No

The aggregate market value of the registrant’s voting and non-voting ordinary shares held by non-affiliates of the registrant was ~~$4,791,368,573~~$2,831,225,962 as of September ~~28,~~ ~~2019,~~25, 2020, the last business day of the registrant’s most recently completed second fiscal quarter based on the closing price of the ordinary shares on the New York Stock Exchange.

As of ~~July 1, 2020,~~May 19, 2021, Capri Holdings Limited had ~~150,184,409~~151,327,019 ordinary shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this report, to the extent not set forth herein, is incorporated by reference from the Registrant’s definitive Proxy Statement, which will be filed in ~~July 2020,~~June 2021, for the ~~2020~~2021 Annual Meeting of the Shareholders.

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TABLE OF CONTENTS


		Page
	PART I

Item 1	Business	46
Item 1A	Risk Factors	1417
Item 1B	Unresolved Staff Comments	3033
Item 2	Properties	3033
Item 3	Legal Proceedings	3133
Item 4	Mine Safety Disclosures	3133

	PART II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3234
Item 6	Selected Financial Data	3436
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3638
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	5658
Item 8	Financial Statements and Supplementary Data	5760
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	5760
Item 9A	Controls and Procedures	5860
Item 9B	Other Information	5961

	PART III

Item 10	Directors, Executive Officers and Corporate Governance	6062
Item 11	Executive Compensation	6062
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	6062
Item 13	Certain Relationships and Related Transactions and Director Independence	6062
Item 14	Principal Accounting Fees and Services	6062

	PART IV

Item 15	Exhibits and Financial Statement Schedules	6163

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, including documents incorporated herein by reference, contains statements which are, or may be deemed to be, “forward-looking statements.” Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Capri Holdings Limited (the “Company”) about future events. All statements other than statements of historical facts included in this Annual Report on Form 10-K, including documents incorporated herein by reference, may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words “plans”, “believes”, “expects”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “might” or similar words or phrases, are forward-looking statements. These forward-looking statements are not guarantees of future financial performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions, which could cause actual results to differ materially from those projected or implied in any forward-looking statements. These risks, uncertainties and other factors include the ~~effect~~impact of the COVID-19 pandemic and its potential material and significant impact on the Company’s future financial and operational results if retail stores remain closed and the pandemic is prolonged, including that our estimates could materially differ if the severity of the COVID-19 situation worsens, the length and severity of such outbreak across the globe and the pace of recovery following the COVID-19 pandemic, levels of cash flow and future availability of credit, compliance with restrictive covenants under the Company’s credit agreement, the Company’s ability to integrate successfully and to achieve anticipated benefits of any ~~acquisition;~~acquisition and to successfully execute our growth strategies; the risk of disruptions to the Company’s businesses; risks associated with operating in international markets and our global sourcing activities; the risk of cybersecurity threats and privacy of data security breaches; the negative effects of events on the market price of the Company’s ordinary shares and its operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the Company’s businesses; fluctuations in demand for the Company’s products; levels of indebtedness (including the indebtedness incurred in connection with acquisitions); the timing and scope of future share buybacks, which may be made in open market or privately negotiated transactions, and are subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors, and which share repurchases may be suspended or discontinued at any time, the level of other investing activities and uses of cash; changes in consumer traffic and retail trends; loss of market share and industry competition; fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen epidemics and pandemics, disasters or catastrophes; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions, as well as those risks set forth in the Company’s filings with the U.S. Securities and Exchange Commission (the “SEC”), including in this Annual Report on Form 10-K, particularly under “Item 1A. Risk Factors” and in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company disclaims any obligation to update or revise any forward-looking statements contained herein other than in accordance with legal and regulatory obligations.

~~Electronic Access~~

SUMMARY OF RISKS AFFECTING OUR BUSINESS

Our business is subject to ~~Company Reports~~

~~Our investor website can be accessed at~~ ~~www.capriholdings.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with or furnished to the SEC pursuant to Section 13(a) or Section 15(d)~~numerous risks. The following summary highlights some of the ~~Securities Exchange Act~~risks you should consider with respect to our business and prospects. This summary is not complete and the risks summarized below are not the only risks we face. You should review and consider carefully the risks and uncertainties described in more detail in this “Risk Factors” section of 1934, as amended, are available free of charge on our website under the caption “Financials” and then “SEC Filings” promptly after we electronically file such materials with, or furnish such materials to, the SEC. No information contained on our website is intended to be included as part of, or incorporated by reference into, this Annual Report on Form ~~10-K. Information~~10-K which includes a more complete discussion of the risks summarized below as well as a discussion of other risks related to our business and an investment in our ordinary shares. Risks are listed in the categories where they primarily apply, but other categories may also apply.

Risks Related to Our Business

•the COVID-19 pandemic may continue to have a material adverse effect on our business and results of operations;

•our retail stores are heavily dependent on the ability and desire of consumers to travel and shop and a decline in consumer traffic could have a negative effect on our comparable store sales and store profitability resulting in impairment charges, which could have a material adverse effect on our business, results of operations and financial condition;

•the long-term growth of our business depends on the successful execution of our strategic initiatives;

•if we are unable to effectively execute our e-commerce business and provide a reliable digital experience for our customers, our reputation and operating results may be harmed;

•a substantial portion of our revenue is derived from a small number of large wholesale customers, and the loss of or decline in business from any of these wholesale customers could substantially reduce our total revenue;

•acquisitions may not achieve intended benefits and may not be successfully integrated;

•the markets in which we operate are highly competitive, both within North America and internationally, and increased competition based on a number of factors could cause our profitability and/or gross margins to decline;

•we may not be able to respond to changing fashion and retail trends in a timely manner, which could have a material adverse effect on our brands, business, results of operations and financial condition;

•we face risks associated with operating globally and our strategy to continue to expand internationally;

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•our business is subject to risks associated with importing products, and the imposition of additional duties, tariffs or trade restrictions could have a material adverse effect on our business, results of operations and financial condition;

•if we cannot successfully negotiate rent deferrals or abatements, lease modifications or lease terminations, our substantial operating lease obligations could have a material adverse effect on our business and our landlords may attempt to hold us in breach of our lease obligations and take other actions, including terminating our leases and/or accelerating our future rent;

•we are dependent on a limited number of distribution facilities. If one or more of our distribution facilities experiences operational difficulties or becomes inoperable, it could have a material adverse effect on our business, results of operations and financial condition;

•the departure of members of our executive management and other key employees or our failure to attract and retain qualified personnel could have a material adverse effect on our business;

•fluctuations in our tax obligations and changes in tax laws, treaties and regulations may have a material adverse impact on our future effective tax rates and results of operations;

•our business is exposed to foreign currency exchange rate fluctuations;

•our current and future licensing and joint venture arrangements may not be successful and may make us susceptible to the actions of third parties over whom we have limited control;

•increases in the cost of raw materials could increase our production costs and cause our operating results and financial condition to suffer;

•we primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods and our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments;

•if we fail to comply with labor laws or collective bargaining agreements, or if our independent manufacturing contractors fail to use acceptable, ethical business practices, our business and reputation could suffer;

•we may be unable to protect our trademarks, copyrights and other intellectual property rights, and others may allege that we infringe upon their intellectual property rights;

•we self-insure certain risks and may be impacted by unfavorable claims experience;

•we are subject to various proceedings, lawsuits, disputes, and claims in the ordinary course of business which could have an adverse impact on our business, financial condition, and results of operations;

•our business is susceptible to the risks associated with climate change and other environmental impacts which could negatively affect our business and operations;

•increased scrutiny from investors and others regarding our corporate social responsibility initiatives, including environmental, social and other matters of significance relating to ~~corporate governance at~~sustainability, could result in additional costs or risks and adversely impact our ~~Company, including~~reputation;

•the accessories, footwear and apparel industries are heavily influenced by general macroeconomic cycles that affect consumer spending and a prolonged period of depressed consumer spending could have a material adverse effect on our ~~Corporate Governance Guidelines,~~ business, results of operations and financial condition; and

•our ~~Code~~industry is subject to significant pricing pressure caused by many factors which may cause our profitability and gross margins in the future to be materially lower than our expectations.

Risks Related to Privacy and Data Security

•privacy breaches and other cyber security risks related to our business could negatively affect our reputation, credibility and business; and

•a material delay or disruption in our information technology systems or e-commerce websites or our failure or inability to upgrade our information technology systems precisely and efficiently could have a material adverse effect on our business, results of ~~Business Conduct~~operations and ~~Ethics for all directors, officers,~~financial condition.

Risks Related to Our Debt

•we have incurred a substantial amount of indebtedness, which could adversely affect our financial condition and ~~employees,~~restrict our ability to incur additional indebtedness or engage in additional transactions; and ~~information concerning~~

•we may be unable to meet financial covenants in our ~~directors, Committees~~indebtedness agreements which could result in an event of ~~the Board, including Committee charters,~~default and ~~transactions~~restrictive covenants in ~~Company securities by directors and executive officers, is available at~~such agreements may restrict our ~~website under the captions “Corporate Governance” and “Financials” and then “SEC Filings.” Paper copies of these filings and corporate governance documents are available~~ability to shareholders free of charge by written request to Investor Relations, Capri Holdings Limited, 33 Kingsway, London, United Kingdom, WC2B 6UF. Documents filed with the SEC are also available on the SEC’s website at ~~www.sec.gov~~.pursue our business strategies.

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Risks Related to Our Ordinary Shares

•our share price may periodically fluctuate based on the accuracy of our earnings guidance or other forward-looking statements regarding our financial performance;

•failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting, which could harm our business and cause a decline in the price of our ordinary shares;

•provisions in our organizational documents may delay or prevent our acquisition by a third party;

•rights of shareholders under British Virgin Islands law differ from those under United States law, and, accordingly, our shareholders may have fewer protections;

•the laws of the British Virgin Islands provide limited protection for minority shareholders, so minority shareholders will have limited or no recourse if they are dissatisfied with the conduct of our affairs;

•it may be difficult to enforce judgments against us or our executive officers and directors in jurisdictions outside the United States; and

•British Virgin Islands companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of one avenue to protect their interests.

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PART I

Unless the context requires otherwise, references in this Annual Report on Form 10-K to “Capri”, “we”, “us”, “our”, “the Company”, “our Company” and “our business” refer to Capri Holdings Limited and its consolidated subsidiaries. References to our stores, retail stores and retail segment include all of our full-price retail stores (including concessions), our e-commerce websites and outlet ~~stores,~~stores. The Company utilizes a 52 to 53 week fiscal year and the term "Fiscal Year" or “Fiscal~~” with respect to any year,~~ refers to ~~the~~that 52-week ~~period~~or 53-week period. The fiscal years ending on ~~the Saturday closest to~~ March ~~31 of such year, except for~~27, 2021, March 28, 2020 and March 30, 2019 (“Fiscal 2021”, “Fiscal ~~2016,” which refers to the~~2020” and “Fiscal 2019”, respectively) contain 52 weeks. The Company’s Fiscal 2022 is a 53-week period ending April 2, ~~2016.~~2022. Some differences in the numbers in the tables and text throughout this annual report may exist due to rounding. ~~All comparable store sales are presented on a 52-week basis.~~

Item 1. Business

Our Company

Capri Holdings Limited (“Capri”) is a global fashion luxury group, consisting of iconic brands that are industry leaders in design, style and ~~craftsmanship.~~craftsmanship, led by a world-class management team and renowned designers. Our brands cover the full spectrum of fashion luxury categories, including women’s and men’s accessories, footwear and ready-to-wear, as well as wearable technology, watches, jewelry, eyewear and a full line of fragrance products. Our goal is to continue to extend the global reach of our brands while ensuring that they maintain their independence and exclusive DNA.

Our Brands

Versace

~~The~~Our Versace brand has long been recognized as one of the world’s leading international fashion design houses and is synonymous with Italian glamour and style. Founded ~~over 40 years ago~~in 1978 in Milan, ~~Italy,~~ Versace is known for its iconic and unmistakable style and unparalleled craftsmanship. Over the past several decades, the House of Versace has grown globally from its roots in haute couture, expanding into the design, manufacturing, distribution and retailing of ready-to-wear, accessories, footwear, eyewear, watches, jewelry, fragrance and home furnishings businesses. Versace’s design team is led by Donatella Versace, who has been the brand’s artistic director for over 20 years. Versace distributes its products through a worldwide distribution network, which includes boutiques located in ~~some of~~ the world’s most glamorous ~~cities. In addition, certain categories, such~~cities, its e-commerce site, as ~~jeans, fragrances, watches~~well as through the most prestigious department and ~~eyewear are produced under licensing agreements.~~specialty stores worldwide.

Jimmy Choo

~~The~~Our Jimmy Choo brand ~~founded over 20 years ago, enjoys a leading position in the luxury footwear market and an expanding presence in the luxury accessories space. Since its inception in 1996, Jimmy Choo has offered~~offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand, whose core product offering ofis women’s luxury shoes, is complemented by accessories, including handbags, small leather goods, scarves and belts, as well as a growing men’s luxury ~~shoe~~shoes and an accessory business. In addition, certain categories, such as fragrances and eyewear, are produced under licensing agreements. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic. The brand offers classic and timeless luxury products, as well as innovative products that are intended to set and lead fashion trends. Jimmy Choo is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.

Michael Kors

~~The~~Our Michael Kors brand was launched ~~almost~~ 40 years ago by Michael Kors, whose vision has taken itthe Company from its beginnings as an American luxury sportswear house to a global accessories, footwear and apparel company with a global distribution network that has presence in over 100 countries through ~~company-operated~~Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners. Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with growing brand awareness in other international markets. Michael Kors features distinctive designs, materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude. Michael Kors offers three primary collections: the Michael Kors Collection luxury line, the MICHAEL Michael Kors accessible luxury line and the Michael Kors Mens line. The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried inby many of our ~~Michael Kors~~ retail stores, our ~~Michael Kors~~ e-commerce sites, as well as in the finest luxury department stores in the world. ~~Our accessible luxury line~~ MICHAEL Michael Kors has a strong focus on accessories, in addition to offering footwear and apparel, and ~~is carried~~addresses the significant demand opportunity in ~~all of~~accessible luxury goods. We have also been developing our ~~Michael Kors lifestyle stores, as well as leading department stores throughout the world. We also continue to develop our Michael Kors Mens~~men’s business in recognition of the significant opportunity afforded by our Michael Kors brand’s established fashion authority. In addition, certain categories, such as watches, jewelry, fragrances and eyewear are produced under product and geographic licensing arrangements.

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the significant opportunity afforded by the Michael Kors brand’s established fashion authority and the expanding men’s market. Taken together, our Michael Kors collections target a broad customer base while retaining our premium luxury image.

Our Segments

We operate in three reportable segments ~~which are~~ as follows:

•Versace — accounted for approximately ~~15%~~18% of our total revenue in Fiscal ~~2020~~2021 and includes worldwide sales of Versace products through ~~206~~210 retail stores (including concessions) and e-commerce sites, through ~~824~~868 wholesale doors (including multi-brand stores), as well as through product and geographic licensing arrangements.

•Jimmy Choo — accounted for approximately 10% of our total revenue in Fiscal ~~2020~~2021 and includes worldwide sales of Jimmy Choo products through ~~226~~227 retail stores (including concessions) and e-commerce sites, through ~~554~~450 wholesale doors (including multi-brand stores), as well as through product and geographic licensing arrangements.

•Michael Kors — accounted for approximately ~~75%~~72% of our total revenue in Fiscal ~~2020~~2021 and includes worldwide sales of Michael Kors products through ~~839~~820 retail stores (including concessions) and e-commerce sites, through ~~2,982~~2,852 wholesale doors, as well as through product and geographic licensing arrangements.

In addition to these reportable segments, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including Enterprise Resource Planning (“ERP”) system implementation costs. In addition, certain other costs are not allocated to segments, including restructuring and other charges (including transition costs related to our recent acquisitions), impairment costs and COVID-19 related charges. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance. For additional financial information regarding our segments and corporate unallocated expenses, see Segment Information note in the accompanying consolidated financial statements.

Industry

We operate in the global personal luxury goods industry. ~~The~~Through 2019, the personal luxury goods market grew at a 5% rate over the past 20 years, with more recent growth driven by stronger Chinese demand from both international and local consumers and demographic and socioeconomic shifts resulting in younger consumers purchasing more luxury goods. ~~The~~Then, in 2020, due to the impact of the COVID-19 crisis, the personal luxury goods market grew approximately 7% in 2019 despite growing geopolitical tensions, such as trade tensions between the United States and China, Brexit and protests in Hong Kong. Growth in 2020 is expected to be impacted by the COVID-19 outbreak and subsequent global recovery.declined 23%. According to ~~forecasts by Bain-Altagamma,~~Bain studies*, the personal luxury goods market is ~~expected~~predicted to ~~contract between 20% and 35% in 2020. Bain-Altagamma forecasted~~increase at a 10% compound annual growth rate ~~from~~between 2020 and 2025, and will return to ~~2025. Accessories remains~~2019 levels by the ~~largest and fastest growing personal luxury goods category,~~end of 2021 or in 2022. Future growth will be driven by ~~leather goods~~e-commerce, Chinese consumers and footwear. Over the past several years, direct-to-consumer has been the fastest-growing channel, largely driven by the rapid and accelerating growth of the e-commerce channel, which is expected to representyounger generations. By 2025, Bain studies estimate over 30% of personal luxury goods sales ~~by 2025. Consumer shopping preferences have continued to shift from physical stores to on-line shopping.~~will occur online, Chinese consumers will represent nearly half of total global personal luxury goods sales, and Gen Z and Gen Y combined will make up at least two-thirds of the market. As the ~~overall retail environment becomes increasingly omni-channel, with point of sales evolving into point of touch, we believe that~~personal luxury goods market continues to evolve, Capri is committed to creating engaging luxury experiences globally. In our view, increased customer engagement and tailoring merchandise to customer shopping and communication preferences are ~~the~~ key ~~ingredients~~ to growing market share. We believe that our innovative and luxurious product offerings and customer engagement initiatives across all three brands position us to capitalize on the continued growth of the global personal luxury ~~accessories~~goods industry.

*Comprised of: Bain – Altagamma Luxury Goods Worldwide Market Study, Spring 2021, May 17th 2021 update and ~~footwear product categories, as they are among our primary product categories~~Bain – Altagamma Luxury Goods Worldwide Market Study, Spring 2021 (Together, the “Bain studies”). These studies were prepared by the Bain & Company and Altagamma and can be obtained free of ~~focus, as well as to grow our sales in our other product categories, such as ready-to-wear where~~charge or at a nominal cost by contacting Bain & Company’s media contacts at aliza.medina@bain.com or dan.pinkney@bain.com. While we ~~now~~believe that each of these studies and publications is reliable, we have ~~a broader presence across both women’s~~not independently verified market and ~~men’s offerings.~~industry data from third-party sources.

Geographic Information

We generate revenue globally through our three ~~reporting~~reportable segments, as described above. We sell our Versace, Jimmy Choo and Michael Kors products through retail and wholesale channels of distribution in three principal geographic markets: the Americas (U.S., Canada and Latin America), EMEA (Europe, Middle East and Africa) and ~~Asia.~~Asia (including Australia). We also have wholesale arrangements pursuant to which we sell products to our geographic licensees. In addition, we have licensing agreements through which we license to third parties the use of our Versace, Jimmy Choo and Michael Kors brand names and trademarks, certain production rights and sales and/or distribution rights with respect to our brands.

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The following table details our revenue by segment and geographic location (in millions):


		Fiscal Years Ended											Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
															March 27, 2021	March 28, 2020	March 30, 2019
Versace revenue - the Americas	Versace revenue - the Americas	$	186	$	22	$	—	Versace revenue - the Americas	$	201	$	186	$	22
Versace revenue - EMEA	Versace revenue - EMEA	420		66		—		Versace revenue - EMEA	276		420		66
Versace revenue - Asia	Versace revenue - Asia	237		49		—		Versace revenue - Asia	241		237		49
Total Versace	Total Versace	843		137		—		Total Versace	718		843		137
Jimmy Choo revenue - the Americas	Jimmy Choo revenue - the Americas	107		96		37		Jimmy Choo revenue - the Americas	102		107		96
Jimmy Choo revenue - EMEA	Jimmy Choo revenue - EMEA	282		321		123		Jimmy Choo revenue - EMEA	146		282		321
Jimmy Choo revenue - Asia	Jimmy Choo revenue - Asia	166		173		63		Jimmy Choo revenue - Asia	170		166		173
Total Jimmy Choo	Total Jimmy Choo	555		590		223		Total Jimmy Choo	418		555		590
Michael Kors revenue - the Americas	Michael Kors revenue - the Americas	2,822		3,064		2,996		Michael Kors revenue - the Americas	1,869		2,822		3,064
Michael Kors revenue - EMEA	Michael Kors revenue - EMEA	821		892		970		Michael Kors revenue - EMEA	607		821		892
Michael Kors revenue - Asia	Michael Kors revenue - Asia	510		555		530		Michael Kors revenue - Asia	448		510		555
Total Michael Kors	Total Michael Kors	4,153		4,511		4,496		Total Michael Kors	2,924		4,153		4,511

Total revenue - the Americas	Total revenue - the Americas	3,115		3,182		3,033		Total revenue - the Americas	2,172		3,115		3,182
Total revenue - EMEA	Total revenue - EMEA	1,523		1,279		1,093		Total revenue - EMEA	1,029		1,523		1,279
Total revenue - Asia	Total revenue - Asia	913		777		593		Total revenue - Asia	859		913		777
Total revenue	Total revenue	$	5,551	$	5,238	$	4,719	Total revenue	$	4,060	$	5,551	$	5,238

Competitive Strengths

We believe that the following strengths differentiate us from our competitors:

Global Fashion Luxury Group Led by a World-Class Management Team and Renowned Designers. We are a global fashion luxury group, consisting of three iconic brands defined by fashion luxury products with a reputation for world-class design and innovation. The design leadership of our founder-designers Donatella Versace, Sandra Choi and Michael Kors is a unique advantage that we possess. Our founder-led design teams are supported by our senior management team with extensive experience across a broad range of disciplines in the retail industry, including design, sales, marketing, public relations, merchandising, real estate, supply chain and finance. With an average of 2526 years of experience in the retail industry, including at a number of public companies, and an average of 1416 years experience with our brands, our senior management team has strong creative and operational experience and a successful track record.

For over 20 years, Donatella Versace has been the artistic director, molding Versace’s iconic style. A true visionary with an intuition for how to blend fashion, design and culture, Donatella continues to honor the rich and storied Versace heritage founded in 1978, while constantly evolving and adapting the luxury house to ensure the brand’s continued relevance. Donatella’s most recent collections for Versace are a testament to her unique design vision and are equal parts bold and refined, evoking both a rock and roll spirit as well as runway glamour. Versace designs have been worn by the world’s most famous celebrities and most sought-after super models.

Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the Jimmy Choo brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic. The Jimmy Choo brand offers classic and timeless luxury products, as well as innovative products that are intended to set and lead fashion trends. Jimmy Choo’s products have a strong red carpet presence and are often worn by global celebrities.

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The Michael Kors brand was launched ~~almost~~ 40 years ago by Michael Kors, a world-renowned designer, who is responsible for conceptualizing and directing the design of our Michael Kors brand products. We believe that the Michael Kors brand name has become synonymous with luxurious fashion that is timeless and elegant, expressed through the brand’s sophisticated accessories and ready-to-wear collections. Each of our Michael Kors brand collections exemplifies the jet-set lifestyle and features high quality designs, materials and craftsmanship. Michael Kors has received a number of awards, which recognize the contribution he and his team have made to the fashion industry and our Company. Some of the most widely recognized global trendsetters and celebrities wear our Michael Kors brand collections.

Expertise in the Accessories and Footwear Product Categories. We have strong group expertise in accessories and footwear. The strength of our Michael Kors luxury collection and our accessible luxury MICHAEL Michael Kors line have allowed us to expand our brand awareness and position Michael Kors as one of the leading global luxury brands in the accessories product categories. Capitalizing on the success of our accessories product category, we continue to further develop the accessories businesses for Jimmy Choo and Versace, bringing our accessories expertise, including our product category knowledge, our merchandising best practices and our substantial group buying power to these brands. Our goal is to increase Versace’s women’s and men’s accessories and footwear penetration from less than 35% of revenues in Fiscal ~~2020~~2021 to 60% of Versace’s revenues over time, and to increase Jimmy Choo's women's accessories penetration from ~~less than~~approximately 20% of revenues in Fiscal ~~2020~~2021 to 50% of Jimmy Choo’s revenues over time.

Exceptional Retail Store Footprint. Versace operates in three primary retail formats: boutiques, outlet and e-commerce. We operated ~~206~~210 Versace retail stores as of March ~~28, 2020,~~27, 2021, in some of the most fashionable cities and the most sought-after shopping destinations around the world. Versace’s products are distributed worldwide through a global network of highly specialized stores, which average approximately 1,700 square feet. In addition, we operate Versace e-commerce sites in the U.S., ~~certain parts of~~ Europe and ~~China.~~China (covering 85 countries worldwide).

We operated ~~226~~227 Jimmy Choo retail stores as of March ~~28, 2020, with approximately 85%~~27, 2021, in some of ~~stores represented by~~ the ~~brand’s new global~~most premier locations worldwide. During Fiscal 2021, we designed a refresh to our existing retail store format ~~which has been progressively rolled~~and will begin to roll out ~~around the world during the past several years.~~this new concept in Fiscal 2022 to both new stores and existing stores. Jimmy Choo retail stores, comprised of full-price stores and outlets, average approximately ~~1,300~~1,400 square feet. In addition, we operate Jimmy Choo e-commerce sites in the U.S., certain parts of Europe, ~~and~~ Japan and ~~launched~~have a localized site in ~~China during Fiscal 2020. Omni-channel developments continued during Fiscal 2020 with the successful roll out of in-store ordering at concessions across Europe and Japan.~~China.

We operated ~~839~~820 Michael Kors stores as of March ~~28, 2020~~27, 2021 with four primary retail store formats: collection stores, lifestyle stores, outlet stores and e-commerce sites. Michael Kors collection stores are located in some of the world’s most prestigious shopping areas and average approximately 2,900 square feet in size. The Michael Kors lifestyle stores are located in some of the world’s most frequented metropolitan shopping locations and leading regional shopping centers, and average approximately ~~2,800~~2,700 square feet in size. We also extend our reach to additional consumer groups through our outlet stores, which average approximately ~~4,300~~4,400 square feet in size. In addition, we also operate Michael Kors e-commerce sites in the U.S., Canada, certain parts of Europe, China, Japan and South Korea.

World-class Omni and CRM capabilities. We have omni-channel capabilities from best-in-class digital platforms to state-of-the-art distribution facilities globally, which we leverage across businesses. As part of our plan to continue to implement omni-channel capabilities throughout our businesses, we have begun leveraging our world class distribution centers, including in Venlo, Netherlands and Teterboro, New Jersey, to serve ~~all three~~multiple brands.

Strong Relationships with Premier Department Stores. We partner with leading wholesale customers, such as Macy's, Saks Fifth Avenue, Bloomingdale’s and Holt Renfrew in North America, as well as Harrods, Harvey Nichols, Printemps, Selfridges and Galeries Lafayette in Europe. These relationships enable us to access large numbers of our key consumers in a targeted manner. Our “shop-in-shops” have specially trained staff, as well as customized fixtures, wall casings, decorative items, ~~and~~ flooring and provide department store consumers with a more personalized shopping experience than traditional retail department store configurations. We have engaged with our wholesale customers on various initiatives and have continued to enter into innovative supply chain partnerships designed to increase the speed at which our luxury fashion products reach the ultimate consumer. We plan to increase Versace’s and Jimmy Choo’s presence in certain luxury department stores, and for Michael Kors, we have continued to strategically reduce shipments with the intent to drive more full-price sell ~~throughs~~through in the wholesale channel.

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~~Business Strategy~~Jimmy Choo

Our ~~goal~~Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, scarves and belts, as well as a growing men’s luxury shoes and accessory business. In addition, certain categories, such as fragrances and eyewear, are produced under licensing agreements. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic. The brand offers classic and timeless luxury products, as well as innovative products that are intended to ~~continue~~set and lead fashion trends. Jimmy Choo is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.

Michael Kors

Our Michael Kors brand was launched 40 years ago by Michael Kors, whose vision has taken the Company from its beginnings as an American luxury sportswear house to ~~create long-term shareholder value~~a global accessories, footwear and apparel company with a global distribution network that has presence in over 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners. Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with growing brand awareness in other international markets. Michael Kors features distinctive designs, materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude. Michael Kors offers three primary collections: the Michael Kors Collection luxury line, the MICHAEL Michael Kors accessible luxury line and the Michael Kors Mens line. The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried by ~~increasing~~many of our ~~revenue~~retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world. MICHAEL Michael Kors has a strong focus on accessories, in addition to offering footwear and ~~profits~~apparel, and ~~strengthening~~addresses the significant demand opportunity in accessible luxury goods. We have also been developing our ~~global brands. We also believe that sound environmental~~men’s business in recognition of

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the significant opportunity afforded by the Michael Kors brand’s established fashion authority and ~~social policies are both ethically correct and fiscally responsible. To that end, we are committed to improving~~ the ~~way we work in order to better the world in which we live. We plan to achieve our business strategy by focusing on the following strategic initiatives:~~

~~Leverage group expertise and capabilities.~~ ~~We will continue to leverage our group expertise in accessories and footwear to fuel growth across our portfolio of brands, implementing the best practices from~~expanding men’s market. Taken together, our Michael Kors ~~core accessories business~~collections target a broad customer base while retaining our premium luxury image.

Our Segments

We operate in three reportable segments as follows:

•Versace — accounted for approximately 18% of our total revenue in Fiscal 2021 and includes worldwide sales of Versace products through 210 retail stores (including concessions) and e-commerce sites, through 868 wholesale doors (including multi-brand stores), as well as through product and geographic licensing arrangements.

•Jimmy Choo — accounted for approximately 10% of our total revenue in Fiscal 2021 and includes worldwide sales of Jimmy Choo products through 227 retail stores (including concessions) and e-commerce sites, through 450 wholesale doors (including multi-brand stores), as well as through product and geographic licensing arrangements.

•Michael Kors — accounted for approximately 72% of our total revenue in Fiscal 2021 and includes worldwide sales of Michael Kors products through 820 retail stores (including concessions) and e-commerce sites, through 2,852 wholesale doors, as well as through product and geographic licensing arrangements.

Industry

We operate in the global personal luxury goods industry. Through 2019, the personal luxury goods market grew at a 5% rate over the past 20 years, with more recent growth driven by stronger Chinese demand from both international and local consumers and demographic and socioeconomic shifts resulting in younger consumers purchasing more luxury goods. Then, in 2020, due to the impact of the COVID-19 crisis, the personal luxury goods market declined 23%. According to Bain studies*, the personal luxury goods market is predicted to increase at a 10% compound annual growth rate between 2020 and 2025, and will return to 2019 levels by the end of 2021 or in 2022. Future growth will be driven by e-commerce, Chinese consumers and younger generations. By 2025, Bain studies estimate over 30% of personal luxury goods sales will occur online, Chinese consumers will represent nearly half of total global personal luxury goods sales, and Gen Z and Gen Y combined will make up at least two-thirds of the market. As the personal luxury goods market continues to evolve, Capri is committed to creating engaging luxury experiences globally. In our view, increased customer engagement and tailoring merchandise to customer shopping and communication preferences are key to growing market share. We believe that our innovative and luxurious product offerings and customer engagement initiatives across all three brands position us to capitalize on the continued growth of the global personal luxury goods industry.

*Comprised of: Bain – Altagamma Luxury Goods Worldwide Market Study, Spring 2021, May 17th 2021 update and Bain – Altagamma Luxury Goods Worldwide Market Study, Spring 2021 (Together, the “Bain studies”). These studies were prepared by the Bain & Company and Altagamma and can be obtained free of charge or at a nominal cost by contacting Bain & Company’s media contacts at aliza.medina@bain.com or dan.pinkney@bain.com. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources.

Geographic Information

We generate revenue globally through our three reportable segments, as described above. We sell our Versace, ~~and~~ Jimmy Choo ~~brands.~~and Michael Kors products through retail and wholesale channels of distribution in three principal geographic markets: the Americas (U.S., Canada and Latin America), EMEA (Europe, Middle East and Africa) and Asia (including Australia). We ~~will~~ also ~~continue~~have wholesale arrangements pursuant to ~~prioritize~~which we sell products to our geographic licensees. In addition, we have licensing agreements through which we license to third parties the ~~development~~use of our ~~e-commerce platforms~~Versace, Jimmy Choo and ~~omni-channel capabilities~~Michael Kors brand names and trademarks, certain production rights and sales and/or distribution rights with respect to our brands.

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The following table details our revenue by segment and geographic location (in millions):


	Fiscal Years Ended
	March 27, 2021		March 28, 2020		March 30, 2019

Versace revenue - the Americas	$	201	$	186	$	22
Versace revenue - EMEA	276		420		66
Versace revenue - Asia	241		237		49
Total Versace	718		843		137
Jimmy Choo revenue - the Americas	102		107		96
Jimmy Choo revenue - EMEA	146		282		321
Jimmy Choo revenue - Asia	170		166		173
Total Jimmy Choo	418		555		590
Michael Kors revenue - the Americas	1,869		2,822		3,064
Michael Kors revenue - EMEA	607		821		892
Michael Kors revenue - Asia	448		510		555
Total Michael Kors	2,924		4,153		4,511

Total revenue - the Americas	2,172		3,115		3,182
Total revenue - EMEA	1,029		1,523		1,279
Total revenue - Asia	859		913		777
Total revenue	$	4,060	$	5,551	$	5,238

Competitive Strengths

We believe that the following strengths differentiate us from our competitors:

Global Fashion Luxury Group Led by a World-Class Management Team and Renowned Designers. We are a global fashion luxury group, consisting of three iconic brands defined by fashion luxury products with a reputation for world-class design and innovation. The design leadership of our ~~brands, leveraging~~founder-designers Donatella Versace, Sandra Choi and Michael Kors is a unique advantage that we possess. Our founder-led design teams are supported by our senior management team with extensive experience across a broad ~~expertise~~range of disciplines in the retail industry, including design, sales, marketing, public relations, merchandising, real estate, supply chain and ~~capabilities~~finance. With an average of 26 years of experience in ~~this area. With~~ the ~~addition of Versace, we see~~retail industry, including at a number of ~~opportunities to create long-term~~public companies, and an average of 16 years experience with our brands, our senior management team has strong creative and operational ~~synergies as we combine our global competencies~~experience and ~~footprint. These synergies will be primarily focused on opportunities in our supply chain, information systems, back office support and manufacturing.~~a successful track record.

~~Continue to increase our presence in Asia.~~ ~~We plan to continue to diversify our group’s global footprint~~For over 20 years, Donatella Versace has been the artistic director, molding Versace’s iconic style. A true visionary with an ~~emphasis on~~intuition for how to blend fashion, design and culture, Donatella continues to honor the ~~Asia market, where we believe each of our three brands continue~~rich and storied Versace heritage founded in 1978, while constantly evolving and adapting the luxury house to ensure the brand’s continued relevance. Donatella’s most recent collections for Versace are a testament to her unique design vision and are equal parts bold and refined, evoking both a rock and roll spirit as well as runway glamour. Versace designs have been worn by the ~~potential to significantly grow market share in~~world’s most famous celebrities and most sought-after super models.

Jimmy Choo’s design team is led by Sandra Choi, who has been the ~~region.~~

~~Integrate Versace and continue to build on the brand~~’~~s luxury image.~~ We plan to grow the Versace business to $2 billion in revenues over time. There are five strategic initiatives that we will focus on to achieve this goal. First, we plan to build on Versace’s luxury runway momentum. Second, we will enhance Versace’s powerful and iconic communications messaging. Third, we plan to increase Versace’s global footprint from 206 stores to 300 retail stores. Fourth, we will accelerate Versace’s e-commerce development to create a full omni-channel experience. Finally, we plan to leverage our group’s expertise to expand Versace’s women’s and men’s accessories and footwear businesses from less than 35% of revenues to a target of 60% of the brand's revenues over time, while maintaining Versace’s authoritative presence in women’s and men’s ready-to-wear.

~~Continue to execute on our strategies to grow~~Creative Director for the Jimmy Choo ~~brand.~~ ~~We plan to continue to implement our growth strategies for~~brand since its inception in 1996. Jimmy Choo ~~with a goal of reaching $1 billion in revenues over time. Since the acquisition, we have grown Jimmy Choo’s retail store base from 150 stores to over 200 stores~~products are unique, instinctively seductive and ~~are targeting to expand the~~chic. The Jimmy Choo ~~retail footprint to 300 stores globally, with an emphasis on growth in Asia. Maintaining our leadership in footwear for Jimmy Choo remains a top priority,~~brand offers classic and we plan to accelerate footwear growth by continuing to expand the strategic fashion active category. In addition, we plan to continue increasing our presence in the accessories product category by expanding the breadth of new collection offerings, focusing on visual merchandising and increased marketing, with a goal of growing the accessories business to 50% of Jimmy Choo's revenues. Our marketing campaign, featuring Jimmy Choo’s first global brand ambassador, model Kaia Gerber, aims to attract a younger customer, while simultaneously highlighting our new active footwear and accessoriestimeless luxury products, ~~in addition to continuing to showcase our core luxury women’s fashion footwear.~~

~~Continue to leverage the strength of our Michael Kors brand, which remains the foundation for our fashion luxury group.~~ Our goal is to position Michael Kors to become a stronger and more profitable brand. Our focus on product innovation has greatly improved newness across all product categories for our Michael Kors brand. In accessories, we continue to introduce new product groups, as well as ~~unique design, style,~~innovative products that are intended to set and ~~craftsmanship. In footwear, we plan to grow our~~lead fashion active product offerings and continue fashion innovation. In women’s apparel, our KORS style head-to-toe dressing remains our key focus, along with our strategic dress and outerwear categories. We will continue to increase product offerings within menswear, including our new men's footwear collection. We also plan to continue to focus on brand engagement, capitalizing on Michael Kors’ leadingtrends. Jimmy Choo’s products have a strong red carpet presence and ~~social media presence. Our strategy to enhance customer experience~~are often worn by ~~expanding our omni-channel capabilities also remains a key priority.~~

~~Execute on our corporate social responsibility strategy.~~ Our corporate social responsibility strategy is divided into three areas: (i) Our World: focused on actions across our operations and supply chain, meant to significantly reduce our environmental impact; (ii) Our Community: fostering a supportive, healthy, diverse and inclusive workplace for all of our employees; and (iii) Our Philanthropy: connecting the talents, energy and success of each of our brands to those in need around the world. We have set targets to be 100% carbon neutral in our direct operations and to source 100% of energy for our owned and operated facilities from renewable sources by 2025. Building on our net zero carbon emissions commitment, and in an effort to deliver on the goals of the Paris Agreement, we will also commit to set emissions reduction targets across our operations and supply chain with the Science Based Targets initiative by 2021. We have additionally committed to, and have already been working towards, a number of important initiatives, including:global celebrities.

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•~~All plastic in packaging to be recyclable, compostable, recycled or reusable~~The Michael Kors brand was launched 40 years ago by ~~2025~~

•~~100% of point-of-sale packaging materials to be recyclable or sustainably sourced by 2025~~

•~~Partnering with key suppliers to reduce water use~~

•~~Traceability~~Michael Kors, a world-renowned designer, who is responsible for conceptualizing and directing the design of our ~~supply chain~~

•~~Sourcing at least 95%~~Michael Kors brand products. We believe that the Michael Kors brand name has become synonymous with luxurious fashion that is timeless and elegant, expressed through the brand’s sophisticated accessories and ready-to-wear collections. Each of our ~~leather from certified tanneries by 2025~~Michael Kors brand collections exemplifies the jet-set lifestyle and features high quality designs, materials and craftsmanship. Michael Kors has received a number of awards, which recognize the contribution he and his team have made to the fashion industry and our Company. Some of the most widely recognized global trendsetters and celebrities wear our Michael Kors brand collections.

•Expertise in the Accessories and Footwear Product Categories. ~~Furthering diversity~~We have strong group expertise in accessories and ~~inclusion within the organization, including through~~footwear. The strength of our ~~new Global D&I Council~~

•~~Supply chain empowerment programs focused on human rights~~Michael Kors luxury collection and ~~fair wages~~our accessible luxury MICHAEL Michael Kors line have allowed us to ~~be implemented in line with the United Nations Framework for Corporate Action on Workplace Women’s Health~~expand our brand awareness and ~~Empowerment by 2025~~

~~Collections and Products~~

~~Our total revenue by major product category is~~position Michael Kors as ~~follows (in millions):~~

Fiscal Years Ended
March 28,
2020 % of
Total March 30,
2019 % of
Total March 31,
2018 % of
Total
Accessories $ 2,933 52.8% $ 3,139 59.9% $ 3,057 64.8%
Footwear 1,100 19.8% 1,023 19.5% 657 13.9%
Apparel 1,069 19.3% 698 13.3% 605 12.8%
Licensed product 222 4.0% 218 4.2% 250 5.3%
Licensing revenue 201 3.6% 156 3.0% 150 3.2%
Other 26 0.5% 4 0.1% — —%
Total revenue $ 5,551 $ 5,238 $ 4,719

~~Versace~~

~~Versace is~~ one of the leading ~~international fashion design houses~~global luxury brands in the accessories product categories. Capitalizing on the success of our accessories product category, we continue to further develop the accessories businesses for Jimmy Choo and ~~a symbol of Italian luxury worldwide, which has developed its~~Versace, bringing our accessories expertise, ~~in haute couture~~including our product category knowledge, our merchandising best practices and our substantial group buying power to ~~include ready-to-wear,~~these brands. Our goal is to increase Versace’s women’s and men’s accessories ~~footwear and home furnishings. Generally, Versace’s haute couture retails up to $100,000, ready-to-wear retails from $250 to $4,000, accessories retail from $100 to $3,500,~~ and footwear ~~retails~~penetration from ~~$225~~less than 35% of revenues in Fiscal 2021 to ~~$2,500.~~60% of Versace’s revenues over time, and to increase Jimmy Choo's women's accessories penetration from approximately 20% of revenues in Fiscal 2021 to 50% of Jimmy Choo’s revenues over time.

~~Certain product categories,~~

Exceptional Retail Store Footprint. Versace operates in three primary retail formats: boutiques, outlet and e-commerce. We operated 210 Versace retail stores as of March 27, 2021, in some of the most fashionable cities and the most sought-after shopping destinations around the world. Versace’s products are distributed worldwide through a global network of highly specialized stores, which average approximately 1,700 square feet. In addition, we operate Versace e-commerce sites in the U.S., Europe and China (covering 85 countries worldwide).

We operated 227 Jimmy Choo retail stores as of March 27, 2021, in some of the most premier locations worldwide. During Fiscal 2021, we designed a refresh to our existing retail store format and will begin to roll out this new concept in Fiscal 2022 to both new stores and existing stores. Jimmy Choo retail stores, comprised of full-price stores and outlets, average approximately 1,400 square feet. In addition, we operate Jimmy Choo e-commerce sites in the U.S., certain parts of Europe, Japan and have a localized site in China.

We operated 820 Michael Kors stores as of March 27, 2021 with four primary retail store formats: collection stores, lifestyle stores, outlet stores and e-commerce sites. Michael Kors collection stores are located in some of the world’s most prestigious shopping areas and average approximately 2,900 square feet in size. The Michael Kors lifestyle stores are located in some of the world’s most frequented metropolitan shopping locations and leading regional shopping centers, and average approximately 2,700 square feet in size. We also extend our reach to additional consumer groups through our outlet stores, which average approximately 4,400 square feet in size. In addition, we also operate Michael Kors e-commerce sites in the U.S., Canada, certain parts of Europe, China, Japan and South Korea.

Strong Relationships with Premier Department Stores. We partner with leading wholesale customers, such as ~~Versace Jeans Couture, eyewear, fragrances, jewelry~~Macy's, Saks Fifth Avenue, Bloomingdale’s and ~~watches are produced under product licensing agreements. Swinger SA is~~Holt Renfrew in North America, as well as Harrods, Harvey Nichols, Printemps, Selfridges and Galeries Lafayette in Europe. These relationships enable us to access large numbers of our key consumers in a targeted manner. Our “shop-in-shops” have specially trained staff, as well as customized fixtures, wall casings, decorative items, flooring and provide department store consumers with a more personalized shopping experience than traditional retail department store configurations. We have engaged with our wholesale customers on various initiatives and have continued to enter into innovative supply chain partnerships designed to increase the ~~exclusive licensee~~speed at which our luxury fashion products reach the ultimate consumer. We plan to increase Versace’s and Jimmy Choo’s presence in certain luxury department stores, and for ~~Versace Jeans Couture, Luxottica is~~Michael Kors, we have continued to strategically reduce shipments with the ~~exclusive licensee for Versace eyewear, Euroitalia is~~intent to drive more full-price sell through in the exclusive licensee for Versace fragrances, Samra International is the exclusive licensee for Versace jewelry, and Vertime is the exclusive licensee for Versace watches. Generally, Versace Jeans Couture retail from $75 to $2,000, Versace eyewear retails from $200 to $500, Versace fragrances retail from $75 to $400, Versace jewelry retails from $500 to $7,500, and Versace watches retail from $500 to $3,500.wholesale channel.

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Jimmy Choo

Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, scarves and belts, as well as a growing men’s luxury shoes and accessory business. In addition, certain categories, such as fragrances and eyewear, are produced under licensing agreements. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic. The brand offers classic and timeless luxury products, as well as innovative products that are intended to set and lead fashion trends. Jimmy Choo is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.

Michael Kors

Our Michael Kors brand was launched 40 years ago by Michael Kors, whose vision has taken the Company from its beginnings as an American luxury sportswear house to a global accessories, footwear and apparel company with a global distribution network that has presence in over 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners. Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with growing brand awareness in other international markets. Michael Kors features distinctive designs, materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude. Michael Kors offers three primary collections: the Michael Kors Collection luxury line, the MICHAEL Michael Kors accessible luxury line and the Michael Kors Mens line. The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried by many of our retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world. MICHAEL Michael Kors has a strong focus on accessories, in addition to offering footwear and apparel, and addresses the significant demand opportunity in accessible luxury goods. We have also been developing our men’s business in recognition of

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Our Segments

We operate in three reportable segments as follows:

Industry

Geographic Information

We generate revenue globally through our three reportable segments, as described above. We sell our Versace, Jimmy Choo and Michael Kors products through retail and wholesale channels of distribution in three principal geographic markets: the Americas (U.S., Canada and Latin America), EMEA (Europe, Middle East and Africa) and Asia (including Australia). We also have wholesale arrangements pursuant to which we sell products to our geographic licensees. In addition, we have licensing agreements through which we license to third parties the use of our Versace, Jimmy Choo and Michael Kors brand names and trademarks, certain production rights and sales and/or distribution rights with respect to our brands.

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The following table details our revenue by segment and geographic location (in millions):


	Fiscal Years Ended
	March 27, 2021		March 28, 2020		March 30, 2019

Versace revenue - the Americas	$	201	$	186	$	22
Versace revenue - EMEA	276		420		66
Versace revenue - Asia	241		237		49
Total Versace	718		843		137
Jimmy Choo revenue - the Americas	102		107		96
Jimmy Choo revenue - EMEA	146		282		321
Jimmy Choo revenue - Asia	170		166		173
Total Jimmy Choo	418		555		590
Michael Kors revenue - the Americas	1,869		2,822		3,064
Michael Kors revenue - EMEA	607		821		892
Michael Kors revenue - Asia	448		510		555
Total Michael Kors	2,924		4,153		4,511

Total revenue - the Americas	2,172		3,115		3,182
Total revenue - EMEA	1,029		1,523		1,279
Total revenue - Asia	859		913		777
Total revenue	$	4,060	$	5,551	$	5,238

Competitive Strengths

We believe that the following strengths differentiate us from our competitors:

Global Fashion Luxury Group Led by a World-Class Management Team and Renowned Designers. We are a global fashion luxury group, consisting of three iconic brands defined by fashion luxury products with a reputation for world-class design and innovation. The design leadership of our founder-designers Donatella Versace, Sandra Choi and Michael Kors is a unique advantage that we possess. Our founder-led design teams are supported by our senior management team with extensive experience across a broad range of disciplines in the retail industry, including design, sales, marketing, public relations, merchandising, real estate, supply chain and finance. With an average of 26 years of experience in the retail industry, including at a number of public companies, and an average of 16 years experience with our brands, our senior management team has strong creative and operational experience and a successful track record.

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The Michael Kors brand was launched 40 years ago by Michael Kors, a world-renowned designer, who is responsible for conceptualizing and directing the design of our Michael Kors brand products. We believe that the Michael Kors brand name has become synonymous with luxurious fashion that is timeless and elegant, expressed through the brand’s sophisticated accessories and ready-to-wear collections. Each of our Michael Kors brand collections exemplifies the jet-set lifestyle and features high quality designs, materials and craftsmanship. Michael Kors has received a number of awards, which recognize the contribution he and his team have made to the fashion industry and our Company. Some of the most widely recognized global trendsetters and celebrities wear our Michael Kors brand collections.

Expertise in the Accessories and Footwear Product Categories. We have strong group expertise in accessories and footwear. The strength of our Michael Kors luxury collection and our accessible luxury MICHAEL Michael Kors line have allowed us to expand our brand awareness and position Michael Kors as one of the leading global luxury brands in the accessories product categories. Capitalizing on the success of our accessories product category, we continue to further develop the accessories businesses for Jimmy Choo and Versace, bringing our accessories expertise, including our product category knowledge, our merchandising best practices and our substantial group buying power to these brands. Our goal is to increase Versace’s women’s and men’s accessories and footwear penetration from less than 35% of revenues in Fiscal 2021 to 60% of Versace’s revenues over time, and to increase Jimmy Choo's women's accessories penetration from approximately 20% of revenues in Fiscal 2021 to 50% of Jimmy Choo’s revenues over time.

Strong Relationships with Premier Department Stores. We partner with leading wholesale customers, such as Macy's, Saks Fifth Avenue, Bloomingdale’s and Holt Renfrew in North America, as well as Harrods, Harvey Nichols, Printemps, Selfridges and Galeries Lafayette in Europe. These relationships enable us to access large numbers of our key consumers in a targeted manner. Our “shop-in-shops” have specially trained staff, as well as customized fixtures, wall casings, decorative items, flooring and provide department store consumers with a more personalized shopping experience than traditional retail department store configurations. We have engaged with our wholesale customers on various initiatives and have continued to enter into innovative supply chain partnerships designed to increase the speed at which our luxury fashion products reach the ultimate consumer. We plan to increase Versace’s and Jimmy Choo’s presence in certain luxury department stores, and for Michael Kors, we have continued to strategically reduce shipments with the intent to drive more full-price sell through in the wholesale channel.

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Business Strategy

Our goal is to continue to create long-term shareholder value by increasing our revenue and profits and strengthening our global brands. We also believe that sound environmental and social policies are both ethically correct and fiscally responsible. To that end, we are committed to improving the way we work in order to better the world in which we live. We plan to achieve our business strategy by focusing on the following strategic initiatives:

Leverage group expertise and capabilities. We will continue to leverage our group expertise in accessories and footwear to fuel growth across our portfolio of brands, implementing the best practices from our Michael Kors core accessories business to our Versace and Jimmy Choo brands. We will also continue to prioritize the development of our e-commerce platforms and omni-channel capabilities for our brands, leveraging our broad expertise and capabilities in this area. With the addition of Versace, we see a number of opportunities to create long-term operational synergies as we combine our global competencies and footprint. These synergies will be primarily focused on opportunities in our supply chain, information systems, back office support and manufacturing.

Continue to increase our presence in Asia. We plan to continue to diversify our group’s global footprint with an emphasis on the Asia market, where we believe each of our three brands continue to have the potential to significantly grow market share in the region.

Integrate Versace and continue to build on the brand’s luxury image. We plan to grow the Versace business to $2 billion in revenues over time. There are five strategic initiatives that we will focus on to achieve this goal. First, we plan to build on Versace’s luxury runway momentum and capitalize on our iconic brand codes. Second, we will enhance Versace’s powerful and storied marketing. Third, we plan to increase Versace’s global footprint from 210 stores to 300 retail stores. Fourth, we will accelerate Versace’s e-commerce development to create a full omni-channel experience. Finally, we plan to leverage our group’s expertise to expand Versace’s women’s and men’s accessories and footwear businesses from less than 35% of revenues to a target of 60% of the brand's revenues over time, while maintaining Versace’s authoritative presence in women’s and men’s ready-to-wear.

Continue to execute on our strategies to grow the Jimmy Choo brand. We plan to continue to implement our growth strategies for Jimmy Choo, with a goal of reaching $1 billion in revenues over time. To achieve this goal, we plan to expand Jimmy Choo’s distribution by accelerating e-commerce and omni-channel developments and increasing our global retail footprint to 300 retail stores in the most fashionable shopping destinations around the world. We also have a significant opportunity to increase women’s accessories to approximately 50% of Jimmy Choo’s revenue by expanding the breadth of new collections. At the same time, we plan to continue to grow footwear sales, in part by expanding our fashion active and casual offerings.

Continue to leverage the strength of our Michael Kors brand, which remains the foundation for our fashion luxury group. Our goal is to position Michael Kors to become a stronger and more profitable brand. Our focus on product innovation has greatly improved newness across all product categories for our Michael Kors brand. In accessories, we continue to introduce new product groups, as well as unique design, style and craftsmanship. In footwear, we plan to grow our fashion active product offerings and continue fashion innovation. In women’s apparel, our KORS style head-to-toe dressing remains our key focus, along with our strategic dress and outerwear categories. We will continue to increase product offerings within menswear, including our new men's footwear collection. We also plan to continue to focus on brand engagement, capitalizing on Michael Kors’ leading red carpet and social media presence. Our strategy to enhance customer experience by expanding our omni-channel capabilities also remains a key priority.

Execute on our corporate social responsibility strategy. Our corporate social responsibility strategy is divided into three areas: (i) Our World: focused on actions across our operations and supply chain, meant to significantly reduce our environmental impact; (ii) Our Community: fostering a supportive, healthy, diverse and inclusive workplace for all of our employees; and (iii) Our Philanthropy: connecting the talents, energy and success of each of our brands to those in need around the world. We have set targets to be 100% carbon neutral in our direct operations and to source 100% of energy for our owned and operated facilities from renewable sources by 2025. Building on our net zero carbon emissions commitment, and in an effort to deliver on the goals of the Paris Agreement, we will also set emissions reduction targets across our operations and supply chain with the Science Based Targets initiative by the end of calendar 2022. We have additionally committed to, and have already been working towards, a number of important initiatives, including:

•All plastic in packaging to be recyclable, compostable, recycled or reusable by 2025

•100% of point-of-sale packaging materials to be recyclable or sustainably sourced by 2025

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•Partnering with key suppliers to reduce water use

•Traceability of our supply chain

•Sourcing at least 95% of our leather from certified tanneries by 2025

•Furthering diversity and inclusion within the organization, including through our Global D&I Council

•Supply chain empowerment programs focused on human rights and fair wages to be implemented in line with the United Nations Framework for Corporate Action on Workplace Women’s Health and Empowerment by 2025

Collections and Products

Our total revenue by major product category is as follows (in millions):


	Fiscal Years Ended
	March 27, 2021		% of Total	March 28, 2020		% of Total	March 30, 2019		% of Total
Accessories	$	2,158	53.2%	$	2,933	52.8%	$	3,139	59.9%
Footwear	796		19.6%	1,100		19.8%	1,023		19.5%
Apparel	720		17.7%	1,069		19.3%	698		13.3%
Licensed product	185		4.6%	222		4.0%	218		4.2%
Licensing revenue	155		3.8%	201		3.6%	156		3.0%
Other	46		1.1%	26		0.5%	4		0.1%
Total revenue	$	4,060		$	5,551		$	5,238

Versace

Versace is one of the leading international fashion design houses and a symbol of Italian luxury worldwide, which has developed its expertise in haute couture to include ready-to-wear, accessories, footwear and home furnishings. Generally, Versace’s haute couture retails up to $100,000, ready-to-wear retails from $270 to $9,500, accessories retail from $85 to $3,500 and footwear retails from $300 to $2,500.

Certain product categories, such as Versace Jeans Couture, eyewear, fragrances, jewelry, watches, and home furnishings, are produced under product licensing agreements. Swinger SA is the exclusive licensee for Versace Jeans Couture, Luxottica is the exclusive licensee for Versace eyewear, Euroitalia is the exclusive licensee for Versace fragrances, Samra International is the exclusive licensee for Versace jewelry, Vertime is the exclusive licensee for Versace watches and Poltrona Frau is the exclusive licensee for Versace home furnishings. Generally, Versace Jeans Couture retail from $50 to $2,000, Versace eyewear retails from $200 to $500, Versace fragrances retail from $70 to $400, Versace jewelry retails from $500 to $7,500, Versace watches retail from $500 to $3,500 and Versace home furnishings, which includes a variety of products, generally retails from $700 to $52,000.

Jimmy Choo

Jimmy Choo is a leading global luxury accessories brand and offers a distinctive, glamorous and fashion-forward product range, whose core product offerings are women’s luxury shoes, complemented by accessories, including handbags, small leather goods, scarves and belts, as well as a ~~growing~~ men’s luxury shoes and accessories business. Generally, Jimmy Choo women’s and men's luxury shoes retail from $400 to $5,500 ~~accessories retail from $450 to $5,500~~ and ~~men’s shoes~~accessories retail from $200 to ~~$2,500.~~$4,500.

Certain product categories, such as Jimmy Choo fragrances and eyewear, are produced under product licensing agreements. Interparfums SA is the exclusive licensee for Jimmy Choo fragrances and Safilo SpA is the exclusive licensee for Jimmy Choo eyewear. Generally, Jimmy Choo eyewear retails from $200 to ~~$500~~$550 and Jimmy Choo fragrances retail from ~~$50~~$80 to ~~$200.~~$220.

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Michael Kors

Michael Kors has three primary collections that offer accessories, footwear and apparel: Michael Kors Collection, MICHAEL Michael Kors and Michael Kors Mens. The three primary collections and licensed products are offered through our own Michael Kors retail stores and e-commerce businesses, in department stores around the world and by our exclusive licensees to wholesale customers in addition to select retailers. The Michael Kors Collection is a sophisticated designer collection for women based on a philosophy of essential luxury and pragmatic glamour and includes accessories, primarily handbags and small leather goods, ready-to-wear and footwear. Generally, the Michael Kors Collection women’s handbags and small leather goods retail from $300 to $6,000, footwear retails from $300 to $1,500 and ready-to-wear retails from $400 to $7,500. MICHAEL Michael Kors is the accessible luxury collection and offers women’s accessories, primarily handbags and small leather goods, as well as footwear and apparel and is carried in all of the Michael Kors lifestyle stores and leading department stores around the world. MICHAEL Michael Kors offers handbags designed to meet the fashion and functional requirements of our broad and diverse consumer base. Generally, MICHAEL Michael Kors handbags retail from $200 to $750, small leather goods retail from $50 to $250, footwear retails from $50 to $300 and apparel retails from $75 to ~~$600.~~$700. Michael Kors Mens is an innovative collection of men’s ready-to-wear, accessories, and footwear with a modern American style. Michael Kors Mens apparel generally retails from $50 to $1,000, men’s accessories generally retail from $50 to $800 and men’s footwear generally retails from ~~$200~~$150 to $400.

Certain product categories, including watches, jewelry, eyewear and fragrance, are produced under product licensing agreements. Fossil is our exclusive licensee for Michael Kors watches and jewelry, including our Michael Kors ACCESS smartwatches ~~introduced in Fiscal 2017~~ and our fine jewelry ~~line introduced in Fiscal 2019.~~line. Luxottica is our exclusive licensee for Michael Kors distinctive eyewear inspired by our collections. Estée Lauder is Michael Kors exclusive women’s and men’s fragrance licensee. Generally, Michael Kors fashion watches retail from $150 to $600, Michael Kors ACCESS smartwatches retail from $300 to $500, Michael Kors jewelry retails from $50 to $500, Michael Kors eyewear retails from $100 to ~~$250~~$400 and Michael Kors fragrance and related products generally retail from $50 to $150.

Advertising and Marketing

Our marketing and advertising programs are designed to build brand awareness for each of our luxury houses as well as highlight our product offerings. We use a 360-degree marketing strategy for each of our brands to deliver a consistent message across each brand's advertising communications, social media, celebrity dressing, special events and direct marketing activities at a national, regional and local level. Our campaigns are increasingly being executed through digital and social media platforms to drive further engagement with younger consumers.

Our brands introduce their new collections annually with fashion shows and other fashion events. These fashion events, in addition to celebrity red carpet dressing moments, generate extensive domestic and international media and social media coverage. The Versace and Michael Kors semi-annual runway shows and Jimmy Choo celebrity placements generate extensive media coverage. Jimmy Choo is also the leading brand in editorial coverage for women’s luxury shoes globally.

We believe our renowned brand founders, as well as our high-profile brand ambassadors and well-known social media influencers across our marketing programs helps expand brand awareness and drive cultural relevance.

During Fiscal 2020, Versace's Spring 2020 show celebrated the 20th anniversary of the legendary moment in fashion history when the iconic jungle print dress worn by Jennifer Lopez helped inspire Google Images' search function. To close the show, Jennifer Lopez wore a re-imagined version of the tropical print dress she wore to the 2000 Grammys. The reviews, press coverage and social media generated from the show continue to expand the global reach of Versace. Kaia Gerber continues to be the face of Jimmy Choo. With her timeless beauty and fashion pedigree, Kaia’s authenticity transcends generations and is the perfect representation of the dynamic energy of the Jimmy Choo brand. Bella Hadid remains the face of MICHAEL Michael Kors. Bella accentuates the lifestyle, attitude and mood that is quintessentially jet-set. The imagery reflects the speed, energy and optimism that are the hallmarks of our Company.

In Fiscal ~~2020,~~2021, we recognized approximately ~~$201~~$137 million in advertising and marketing expenses globally. We engage in a wide range of integrated marketing programs across various marketing channels, including but not limited to email marketing, print advertising, outdoor advertising, digital marketing, social media, public relations outreach, visual merchandising and partnership marketing, in an effort to engage our existing and potential customer base and ultimately stimulate sales in a consumer-preferred shopping venue.

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Our growing e-commerce businesses provide us with an opportunity to increase the size of our customer database and to communicate with our consumers to increase online and physical store sales, as well as to continue to build global brand awareness for our brands. We are continuously improving the functionalities and features on our e-commerce sites to create innovative ways to keep our brands at the forefront of consumers’ minds by offering a broad selection of products, including accessories, apparel, and footwear. Since e-commerce growth is critical to our overall growth strategy, we plan to accelerate Versace’s and Jimmy Choo’s e-commerce and omni-channel development, while continuing to work with select e-commerce partners.

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Manufacturing and Sourcing

We generally contract for the purchase of finished goods principally with independent third-party manufacturing contractors, whereby the manufacturing contractor is generally responsible for the entire manufacturing process, including the purchase of piece goods and trim for our Jimmy Choo and Michael Kors brands. For the Versace brand, some of the piece goods and trim are separately purchased by Versace and provided to the manufacturers, and some are sourced directly by the manufacturers, as further described below.

Versace has a centrally managed production model for the majority of its products, and buys raw materials and components for these products. All raw materials arrive in a central warehouse in Novara, Italy and are distributed to independent third-party manufacturing contractors after the quality control process is complete. The vast majority of Versace’s production is located in Italy. The remaining production occurs ~~in Tunisia,~~ elsewhere in ~~Europe~~EMEA and a small portion is produced in Asia.

Jimmy Choo products are ~~also~~ manufactured by independent third-party manufacturing ~~contractors.~~contractors and our recently acquired Italian atelier and shoe manufacturer Alberto Gozzi S.r.L ("Gozzi"). Most of Jimmy Choo’s products are produced by specialists in Italy, supported by other factories across Europe, with a small portion produced in Asia. Jimmy Choo has a product development facility in Florence. ~~During Fiscal 2020, we acquired Italian atelier and shoe manufacturer Alberto Gozzi S.r.L. In the immediate future, the factory will primarily develop and produce shoes for Jimmy Choo.~~ Jimmy Choo typically purchases finished goods and does not purchase raw materials, except for product development purposes.

Michael Kors contracts for the purchase of finished goods principally with independent third-party manufacturing contractors that are generally responsible for the entire manufacturing process, including the purchase of piece goods and trim. Product manufacturing for the Michael Kors brand is allocated among third-party agents based on their capabilities, the availability of production capacity, pricing and delivery. Michael Kors also has relationships with various agents who source finished goods with numerous manufacturing contractors on its behalf. This multi-supplier strategy provides specialist skills, scalability, flexibility and speed to market, as well as diversifies risk. In Fiscal ~~2020~~2021 and Fiscal ~~2019,~~2020, one third-party agent sourced approximately 26% ~~and 24%~~ of Michael Kors finished goods purchases, ~~respectively,~~ based on unit volume. Michael Kors’ largest manufacturing contractor, who produces its products in Asia and who Michael Kors has worked with for ~~over 10~~approximately 20 years, accounted for the production of approximately ~~20%~~18% of its finished products, based on dollar volume in Fiscal ~~2020.~~2021. Nearly all of our Michael Kors products were produced in Asia in Fiscal ~~2020.~~2021.

The manufacturing contractors and agents for our brands operate under the close supervision of our global manufacturing divisions and buying agents located in North America, Europe and Asia. All products are produced according to our specifications. Production staff monitors manufacturing at supplier facilities in order to correct problems prior to shipment of the final product. Quality assurance is focused on as early as possible in the production process, allowing merchandise to be received at the distribution facilities and shipped to customers with minimal interruption. See “Import Restrictions and Other Governmental Regulations” and Item 1A. —“Risk Factors” — “We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods, which poses legal, regulatory, political and economic risks to our business operations.”

Our future manufacturing and sourcing strategy includes ~~creating a manufacturing center of excellence in Italy, as well as~~ purchasing luxury manufacturing facilities in Italy to support all of our brands, ~~to secure~~pursuing manufacturing synergies across brands and securing capacity and ~~improve~~improving our expertise in development and delivery. While the fashion design process will remain independently managed by each of our brands, we believe that creating a manufacturing center of excellence, which would combine all functions that support our design teams, from leather and hardware purchases to investment in machinery and systems, will create synergies and efficiencies for our global fashion luxury group.

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Distribution

Versace owns a central warehouse in Novara, Italy, managed by a third party, which acts as a global hub for Versace’s primary operations. Versace also has a leased warehouse near Novara operated by the same third party, which serves as a distribution point for ~~other Versace lines.~~e-commerce operations and reverse logistics. From these warehouses, products are shipped to regional warehouses that are operated by third ~~parties~~parties. The main regional warehouses are located in New Jersey, Hong Kong, Beijing and Tokyo, and ~~supports~~support the Versace retail and e-commerce businesses. The e-commerce distribution for the other regions is conducted through third party providers in Columbus, Ohio and Beijing, China. Versace’s wholesale business is mainly serviced from three central warehouses located in Italy, the United States and Japan.

Jimmy Choo's primary distribution facility is our Company-owned and operated distribution facility in ~~Switzerland.~~the Netherlands. From there, products are shipped to regional warehouses in the United Kingdom, the United States, Canada, China, Hong Kong, South Korea, Japan and United Arab Emirates, largely supporting the Jimmy Choo retail and e-commerce businesses.

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Shipments to wholesale customers globally are made from ~~Switzerland~~the Netherlands and the United States, with some further local fulfillment. All of the distribution facilities utilized by Jimmy Choo are operated by third parties and are shared with other ~~businesses.~~unaffiliated businesses with the exception of our distribution facility in the Netherlands. This flexible method reinforces the speed and efficiency of the supply chain and allows the business to deliver Jimmy Choo product and collections to market rapidly and in line with the industry’s fashion calendar.

Michael Kors primary distribution facility in the United States is ~~the~~a leased facility in Whittier, California, which is directly operated and services our Michael Kors retail stores, e-commerce site and wholesale operations in the United States. We also engage in omni-channel order fulfillment by filling online orders through our Michael Kors retail stores and through our click-and-collect service offerings. Our primary Michael Kors distribution facility in Europe is our Company-owned and operated distribution facility in the Netherlands, which supports our European operations for our Michael Kors brand, including our European e-commerce sites. We also have a regional Michael Kors distribution ~~centers~~center in ~~New Jersey and~~ Canada, which ~~are~~is leased, as well as regional Michael Kors distribution centers in New Jersey, China, Hong Kong, Japan, South Korea and Taiwan, which are operated by third-parties.

Intellectual Property

We own VERSACE, JIMMY CHOO and MICHAEL KORS trademarks, as well as other material trademarks, copyrights, design and patent rights related to the production, marketing and distribution of our products, both in the United States and in other countries in which our products are principally sold. We also have applications pending for a variety of related trademarks, copyrights, designs and patents in various countries throughout the world. As ~~our~~the worldwide usage of our material trademarks, copyrights, designs and patents continue to expand, we continue to strategically apply to register them in key countries where they are used. We expect that our material intellectual property will remain in full force and effect for as long as we continue to use and renew them.

We aggressively police our intellectual property and pursue infringers both domestically and internationally. In addition, we pursue counterfeiters in the United States, Europe, the Middle East, Asia and elsewhere in the world in both online and offline channels, working with our network of customs authorities, law enforcement, legal representatives and brand specialists around the world as well as involvement with industry associations and anti-counterfeiting organizations.

Information Systems

Each of our three brands currently operates using their legacy systems for finance and accounting, supply chain, inventory control, point-of-sale transactions, store replenishment and other functions. Our long-term strategy includes consolidating certain systems across our brands over time to create operational efficiencies, as well as to achieve a common platform across the Company. During Fiscal 2020, we embarked on a multi-year ERP implementation, to conform the majority of our processes onto one global system that would support finance and accounting, procurement, inventory control and store replenishment. The implementation of the ERP required a significant investment in human and financial resources. As a result of COVID-19 and our need to significantly reduce our capital expenditures in order to protect our liquidity and cash flows, we temporarily suspended our ERP project. The project has resumed as of the fourth quarter of Fiscal 2021. See Item 1A. “Risk Factors” -— “A material delay or disruption in our information technology systems or e-commerce websites or our failure or inability to upgrade our information technology systems precisely and efficiently could have a material adverse effect on our business, results of operations and financial condition.”

Human Capital Management

12At Capri Holdings, we strive to create workplaces where our employees and the workers across our supply chain thrive. Through our benefits packages, learning and development programs, focus on diversity and inclusion, wellness programs and supply chain empowerment initiatives, we continue to make significant investments in our Capri community.

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~~Employees~~

At the end of Fiscal 2021, 2020 ~~2019~~ and ~~2018,~~2019, we had approximately ~~17,006, 17,797~~13,800, 17,000 and ~~14,846~~17,800 total employees, respectively. As of March ~~28, 2020,~~27, 2021, we had approximately ~~10,834~~9,300 full-time employees and approximately ~~6,172~~4,500 part-time employees. Approximately ~~13,137~~10,400 of our employees were engaged in retail selling and administrative positions and our remaining employees were engaged in other aspects of our business as of March ~~28, 2020.~~27, 2021. As of March ~~28, 2020,~~27, 2021, we have ~~1,424~~approximately 2,400 employees covered by collective bargaining agreements in certain European countries. We consider our relations with both our union and non-union employees to be good.

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Benefits and Compensation. We maintain comprehensive benefits and compensation packages to attract, retain and recognize our employees. Our health and welfare benefit program is designed to provide a wide range of benefits to meet the health care, financial and work/life needs of eligible employees. Benefits include, among others, medical, dental and vision plans, life insurance, short and long-term disability coverage, retirement plans (with matching contributions where applicable), paid parental leave, gender reassignment coverage and fertility support benefits in the United States, and a corporate wellness program. We also offer employees paid time off, including to volunteer with select charitable organization, to get the COVID-19 vaccine and to quarantine in accordance with government or health organization recommended quarantine guidelines (in addition to any COVID-19 mandated paid sick leave at the federal, state, or local level). Employees are also entitled to discounts on our merchandise.

Learning and Development. We honor our employees through our dedication to development. A majority of our executives have participated in an executive leadership development program offered in partnership with the Center for Creative Leadership, and more than 800 of our people managers have participated in leadership development programs. These programs are aimed at equipping our leaders with strategies to effectively navigate and drive change, and to build and strengthen cross-functional relationships. All full-time employees also participate in a formal performance review process annually, and receive annual trainings on important topics including compliance, ethics and integrity, respect in the workplace and information security as a part of our efforts to maintain a safe, positive and inclusive work environment. In Fiscal 2021, we also implemented diversity and inclusion trainings focused on unconscious bias, microaggressions and workplace diversity, sensitivity and inclusion.

Diversity and Inclusion. Diversity and inclusion are embedded in our DNA. We foster an inclusive environment where employees and customers of diverse backgrounds are respected, valued and celebrated. We are proud of our commitment to diversity, equality and inclusion, and will continue to advance these principles through meaningful short and long term actions across the globe. We recently appointed a Head of Diversity and Inclusion and established a Global Diversity and Inclusion Council, comprised of leaders across our brands focused on bringing Capri’s diversity and inclusion strategy to life. Our commitment to diversity and inclusion is supported by three pillars:

Capri Culture - Our commitment to diversity extends beyond representation. We are building an inclusive space where all employees have the opportunity to realize their full potential and excel, while contributing to our success in a meaningful way.

Capri Talent - Differences in ideas and experiences allow our Company to thrive. We are attracting, advancing and advocating for a workforce that reflects the diversity of the world around us.

Capri Community - Through diversity and inclusion comes understanding and strength. Our responsibility to promote equality is not just to those who work with us, but to our industry, the customers we serve and the communities around us.

In Fiscal 2021, we formed The Capri Holdings Foundation for the Advancement of Diversity in Fashion. The Company has pledged $20 million to further the foundation’s mission of supporting diversity, inclusion and equality throughout the fashion industry.

Health and Safety. Everyone working on behalf of our Company is entitled to work in a safe environment. Capri’s global safe workplace program, which includes employee traveler and emergency response alerts, raises awareness and provides safety resources tailored for workers in different work environments – from our distribution centers to our retail stores. In addition, as we continue to navigate the COVID-19 pandemic, we continue to prioritize the safety of our employees and our customers and to do our part to help stop the spread within our communities. We enhanced health and safety protocols at our retail stores, distribution centers and corporate offices, adhered to social distancing measures and provided contact-free shopping opportunities when safe to do so.

Supply Chain Empowerment. Our community extends beyond our direct employees and our corporate social responsibility program drives us toward greater engagement with our suppliers. We are dedicated to conducting our operations throughout the world on principles of ethical business practice and recognition of the dignity of workers. Through our Code of Conduct for Business Partners and Factory Social Compliance Program, we partner with our suppliers on important human rights, health and safety, environmental and compliance issues.

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Competition

We face intense competition in the product lines and markets in which we operate from both existing and new competitors. Our products compete with other branded products within their product category. In varying degrees, depending on the product category involved, we compete on the basis of style, price, customer service, quality, brand prestige and recognition, among ~~other bases.~~others. In our wholesale business, we compete with numerous manufacturers, importers and distributors of products like ours for the limited space available for product display. Moreover, the general availability of manufacturing contractors allows new entrants easy access to the markets in which we compete, which may increase the number of our competitors and adversely affect our competitive position and our business. We believe, however, that we have significant competitive advantages because of the recognition of our brands and the acceptance of our brands by consumers. See Item 1A. “Risk Factors” — “The markets in which we operate are highly competitive, both within North America and internationally, and increased competition based on a number of factors could cause our profitability and/or gross margins to decline.”

Seasonality

We experience certain effects of seasonality with respect to our business. We generally experience greater sales during our third fiscal quarter, primarily driven by holiday season sales, and the lowest sales during our first fiscal quarter.

Import Restrictions and Other Governmental Regulations

Virtually all of our imported products are subject to duties which may impact the costs of such products. In addition, countries to which we ship our products may impose safeguard quotas to limit the quantity of products that may be imported. We rely on free trade agreements and other supply chain initiatives in order to maximize efficiencies and cost savings relating to product importation. ~~On May 10, 2019,~~For example, we have historically received benefits from duty-free imports on certain products from certain countries pursuant to the ~~United States (“~~U.S.” Generalized System of Preferences ("GSP") ~~increased~~program. The GSP program expired on December 31, 2020. If the ~~sanction tariffs rate~~GSP program is not renewed or otherwise made retroactive, we would experience significant additional duties and our gross margin could be negatively impacted. Additionally, we are subject to government regulations relating to importation activities, including related to U.S. Customs and Border Protection ("CBP"0) withhold release orders. The imposition of taxes, duties and quotas, the withdrawal from ~~10%~~or material modification to ~~25%~~trade agreements and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on ~~$200 billion~~our business, results of ~~imports of select product categories (Tranche 3), which includes handbags~~operations and ~~travel goods from China, and effective September 1, 2019, a 10% tariff on an additional $300 billion of goods from China, including ready-to-wear, footwear and men’s products, went into effect.~~financial condition. If additional tariffs or trade restrictions are implemented by the U.S. or other countries, the cost of our products could increase which could adversely affect our results of operations and financial condition. Additionally, we are subject to government regulations relating to ~~both importation activities and~~ product labeling, testing and safety. We maintain a global customs and product compliance organization to help manage our import and related regulatory activity.

Corporate Social Responsibility

~~In April 2020,~~As a global fashion luxury group, we ~~released~~recognize the impact that our ~~first group-wide~~operations can have on the environment and the social well-being of others. We have developed a corporate social responsibility ~~strategy. The report builds upon the initiatives that each of~~strategy in order to drive positive change within our ~~brands has already been working on,~~organization and our world. Our Corporate Social Responsibility strategy outlines our global strategy to achieve significant, measurable goals across a range of important environmental and social sustainability issues, including material sourcing, greenhouse gas emissions, water use, waste reduction, diversity and inclusion and philanthropic giving. See “Business Strategy” -— “Execute on our corporate social responsibility strategy.”

Our ~~company’s~~Company’s corporate social responsibility strategy is divided into three areas:

•Our World – focused on actions across our operations and supply chain, meant to significantly reduce our environmental impact.

•Our Community – fostering a supportive, healthy, diverse and inclusive workplace for all of our employees.

•Our Philanthropy – connecting the talents, energy and success of each of our brands to those in need around the world.

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In arriving at the goals and objectives described in our report, we looked to the United Nations Sustainable Development Goals for insight, and also to align ourselves effectively with the work being done by governments, individuals and companies around the world. We are committed to the goals outlined in our global corporate social responsibility strategy and are taking a number of actions in furtherance of these objectives including endorsing pledges and joining industry groups that align with our strategy.

A copy of our Corporate Social Responsibility report is available on our website at www.capriholdings.com/csr.

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Available Information

Our investor website can be accessed at www.capriholdings.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with or furnished to the SEC pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on our website under the caption “Financials” and then “SEC Filings” promptly after we electronically file such materials with, or furnish such materials to, the SEC. No information contained on our website is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K. Information relating to corporate governance at our Company, including our Corporate Governance Guidelines, our Code of Business Conduct and Ethics for all directors, officers, and employees, and information concerning our directors, Committees of the Board, including Committee charters, and transactions in Company securities by directors and executive officers, is available at our website under the captions “Governance” and “Financials” and then “SEC Filings.” Paper copies of these filings and corporate governance documents are available to shareholders free of charge by written request to Investor Relations, Capri Holdings Limited, 33 Kingsway, London, United Kingdom, WC2B 6UF. Documents filed with the SEC are also available on the SEC’s website at www.sec.gov.

Item 1A. Risk Factors

You should carefully read this entire report, including, without limitation, the following risk factors and the section of this annual report entitled “Note Regarding Forward-Looking Statements.” Any of the following factors could materially adversely affect our business, results of operations and financial condition. Additional risks and uncertainties not currently known to us or that we currently view as immaterial may also materially adversely affect our business, results of operations and financial condition. Risks are listed in the categories where they primarily apply, but other categories may also apply.

Risk Relating to Our Business

The COVID-19 pandemic ~~could~~may continue to have a material adverse effect on our business and results of operations.

The COVID-19 pandemic has caused ~~and is likely to continue causing~~ significant disruption to the global economy, to consumer spending and behavior, tourism and to financial ~~markets,~~markets. While the overall COVID-19 situation appears to be improving, we have not recovered to pre-COVID performance levels and ~~could have a material adverse effect on~~ our business and ~~financial results.~~operating results may be negatively impacted if the virus worsens or mutates, if vaccination efforts are unsuccessful and/or if regions or countries take further actions to contain the virus (including additional extended lock-downs and travel restrictions), among others. The full extent of the impact of COVID-19 on our business and operating results ~~cannot be predicted with certainty, and~~ will depend largely on future events outside of our control, including the duration and severity of the pandemic and ~~other future events outside~~the success of ~~our control.~~ vaccination efforts, new information concerning the virus or variants of the virus, and actions different states, regions or countries may take to contain the virus (including extended lock-downs and travel restrictions), among others.

As a result of the COVID-19 pandemic, and in response to government orders and proactive decisions we have made to protect the health and safety of our employees, consumers and communities, at various points during the course of the pandemic we temporarily closed almost all of our retail stores globally and we furloughed all of our retail store employees in North America and many of our retail personnel elsewhere for an extended time. We may face longer term store closure requirements and other operational restrictions with respect to some or all of our retail stores in the future, and government restrictions and health and safety measures (including social distancing protocols) may prevent us from opening or limit our ability to fully operate in the ordinary course, which could materially impact our financial results. We have also closed many of our corporate offices globally and have implemented a work-from-home policy for many of our corporate employees, which may also negatively affect productivity in, or otherwise result in disruptions to, parts of our business.

As a result of store closures and reduced consumer traffic caused by COVID-19, many of our wholesale customers have experienced, and may continue to experience, liquidity constraints or other financial difficulties, causing a reduction in the amount of merchandise purchased from us and our product licensing partners, an increase in order cancellations and/or the need to extend payment terms. Any or all of these measures could substantially reduce our revenue and have a material adverse effect on our profitability. In addition, these actions could lead to larger outstanding accounts receivable balances, delays in collection of accounts receivable, increased expenses associated with collection efforts, increases in ~~bad debt expense,~~credit losses and reduced cash flows.

Furthermore, our supply chain may also be significantly negatively affected if the factories that produce our product, the distribution centers that manage and ship our inventory, or the operations of our third-party logistics and other service providers

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are disrupted, closed or experience worker shortages, which may result in disruptions and delays in product ~~shipments.~~shipments and potentially higher costs.

In light of our retail store closures in response to government orders, mandates, guidelines and recommendations limiting business operations due to the COVID-19 pandemic, as well as decisions by many of the retail centers in which we operate to close shopping centers, we ~~are taking~~took certain actions and may continue to take certain actions with respect to our lease obligations, including discontinuing rent payments, negotiating with landlords for rent abatement or other rent relief and terminating certain leases, which may subject us to legal, reputational and financial risks. We may also take further actions with respect to our lease obligations in the future, which may not be successful.

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In addition, we expect that traffic to our retail stores (and ~~the retail stores of~~ department stores and other third-party retailers that sell our products) as they reopen will be adversely affected by the COVID-19 ~~pandemic as consumers may be concerned about becoming ill if they travel to physical retail locations.~~pandemic. We further expect that consumer spending will be negatively affected by macroeconomic conditions resulting from the COVID-19 pandemic, including a continued high unemployment rate and an economic recession, which may impact our physical retail stores, our e-commerce business and third-party wholesale accounts. Any significant disruption in consumer traffic, consumer behavior and/or consumer spending at our retail stores, on our e-commerce sites and/or at third-party wholesale accounts following the pandemic would result in a decrease in sales and profits and otherwise materially impact our business and financial performance.

COVID-19 may also have a material adverse effect on our liquidity and cash flows. If our business does not generate sufficient cash flows from operating activities, and sufficient funds are not otherwise available to us from borrowings under our credit facility or other sources, we may not be able to cover our expenses, fund our other liquidity and working capital needs, or execute on our strategic initiatives which could significantly harm our business. Our insurance costs may also increase substantially in the future as a result of the COVID-19 pandemic.

~~The long-term growth of our business depends on the successful execution of our strategic initiatives.~~

~~As part of our long-term strategy, we intend to grow our market share and revenue through the following initiatives:~~

•~~trendsetting and innovative product offerings;~~

•~~increased brand engagement;~~

•~~optimizing customer experience;~~

•~~investing in technology; and~~

•~~expanding our global presence.~~

We also intend to support the growth of Versace and Jimmy Choo sales through retail store openings and further developing each brand’s e-commerce and omni-channel presence, as well as expanding into the luxury accessories market. We cannot guarantee that we will be able to successfully execute on these strategic initiatives.

If we are unable to execute on our strategic initiatives, including for reasons due to the challenges we face as a result of the COVID-19 pandemic, our business, results of operations and financial condition could be materially adversely affected.

We have incurred a substantial amount of indebtedness, which could adversely affect our financial condition and restrict our ability to incur additional indebtedness or engage in additional transactions.

As of March 28, 2020, our consolidated indebtedness was approximately $2.2 billion, net of debt issuance costs and discount amortization. Our total borrowings as of March 28, 2020 included $681 million outstanding under our 2018 Revolving Credit Facility, senior notes of $450 million and term loans of $1.0 billion. Our ability to make payments on and to refinance our debt obligations and to fund planned capital expenditures depends on our ability to generate cash from our operations. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Until recently, we have been able to use our cash from operations to fund our debt service obligations and to utilize our Revolving Credit Facility to supplement our near-term liquidity needs. Our cash from operations have declined significantly largely due to retail store closures and reduced store traffic caused by the COVID-19 pandemic.

Pursuant to the Second Amendment, an additional $230 million 364 day revolving credit facility was added under the 2018 Credit Facility and our lenders agreed to modify until March 31, 2021 the material adverse change representation required to be made in connection with revolving borrowings and the issuance or amendment of letters of credit to disregard certain COVID-19 pandemic-related impacts. Notwithstanding this additional facility and the modifications to our 2018 Credit Facility, our substantial level of indebtedness could have negative consequences to our business and we cannot guarantee that our business will generate sufficient cash flow from our operations or that future borrowings will be available to us in an amount sufficient to enable us to make payments of our debt, fund other liquidity needs, make necessary capital expenditures or pursue certain business opportunities.

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In addition, our ability to access the credit and capital markets in the future as a source of funding, and the borrowing costs associated with such financing, is dependent upon market conditions and our credit rating and outlook. In March 2020, Moody’s Investor Service downgraded their credit rating of us from Baa2 to Ba1, and in April 2020 Fitch Ratings downgraded their credit rating of us from BBB- to BB+. These downgrades, and any future reduction in our credit ratings, could result in reduced access to the credit and capital markets, more restrictive covenants in future financial documents and higher interest costs, and potentially increased lease or hedging costs. Our financial results, our substantial indebtedness and our credit ratings could adversely affect the availability and terms of our financing and negatively impact our ability to enter into new financing arrangements in the future.

We have suspended rent payments for our retail stores that have been closed because of the COVID-19 pandemic and as a result our landlords may attempt to hold us in breach of our lease obligations and take other actions, including terminating our leases and/or accelerating our future rent if we cannot reach acceptable settlements or otherwise prevail in litigation.

We do not own any of our retail store facilities, but instead lease all of our stores under operating leases. Our leases generally have terms of up to 10 years, generally require a fixed annual base rent and most require the payment of additional percentage rent if store sales exceed a negotiated amount. Certain of our European stores also require initial investments in the form of key money to secure prime locations, which may be paid to landlords or existing lessees. Generally, our leases are “net” leases, which require us to pay all of the costs of insurance, taxes, maintenance and utilities. We generally cannot cancel these leases or withhold payments at our option, and payments under these operating leases account for a significant portion of our operating costs. For example, as of March 28, 2020, we were party to operating leases associated with our retail stores that we operate directly throughout the globe, as well as other global corporate facilities, requiring future minimum lease payments aggregating to $1.8 billion through Fiscal 2025 and approximately $566 million thereafter through Fiscal 2044.

In light of our retail store closures in response to government orders, mandates, guidelines and recommendations limiting business operations due to the COVID-19 pandemic, as well as decisions by many of the retail centers in which we operate to close shopping centers, we temporarily closed all of our retail stores in North America and Europe. On April 1, 2020, we suspended rent payments under the leases for these stores. As a result of such suspension, landlords could allege that we are in default under the lease and attempt to terminate our lease and/or accelerate our future rents. Although we believe that strong legal grounds exist to support our claim that we are not obligated to pay rent during periods of closure as a result of the COVID-19 pandemic, there can be no assurance whether or not, and to what degree, such arguments will be successful, and any dispute under these leases may result in litigation with the landlord, which could be costly and have an uncertain outcome.

In addition, as our retail stores reopen, we expect to require additional negotiations with our landlords to further defer or abate rent, to modify the terms of our leases (including rent and expiration date) and in certain instances to terminate a lease or permanently close a store. There can be no assurance that we will be able to successfully negotiate rent deferrals or abatements, lease modifications or lease terminations on favorable terms or at all. Our substantial operating lease obligations could have a material adverse effect on our business, results of operations and financial condition.

We may be unable to meet financial covenants in our indebtedness agreements which could result in an event of default and restrictive covenants in such agreements may restrict our ability to pursue our business strategies.

On March 20, 2020, we entered into the first amendment, and on June 25, 2020, we entered into the second amendment (the “Second Amendment”), to the third amended and restated senior unsecured credit facility, dated as of November 15, 2018 (as amended, the “2018 Credit Facility”), with, among others, JPMorgan Chase Bank, N.A., as administrative agent. The Company and a U.S., Canadian, Dutch and Swiss subsidiary of the Company are the borrowers under the 2018 Credit Facility. The borrowers and certain material subsidiaries of the Company provide guarantees of the 2018 Credit Facility. Pursuant to the Second Amendment, the obligations under the 2018 Credit Facility will be secured by substantially all of the assets of the Company and the US borrowers and guarantors and substantially all of the registered intellectual property of the Company, the borrower and the guarantors, subject to certain exceptions.

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Pursuant to the Second Amendment, the financial covenant in our 2018 Credit Facility requiring us to maintain a ratio of the sum of total indebtedness plus the capitalized amount of all operating lease obligations for the last four fiscal quarters to Consolidated EBITDAR of no greater than 3.75 to 1.0 has been waived through the fiscal quarter ending June 26, 2021. When this financial covenant is reinstated, the applicable ratio will be calculated net of our unrestricted cash and cash equivalents to the extent in excess of $100 million and shall exclude up to $150 million of supply chain financings, and the maximum permitted net leverage ratio will be 4.00 to 1.0. In addition, the Second Amendment requires us, during the period from June 25, 2020 until we deliver our financial statements with respect to the fiscal quarter ending June 26, 2021, to maintain at all times unrestricted cash and cash equivalents plus the aggregate undrawn amounts under the revolving facilities under the 2018 Credit Facility of not less than $300 million, increasing to $400 million on October 1, 2020 and $500 million on December 1, 2020. Our ability to satisfy the maximum net leverage ratio test when it is reinstated and the liquidity test may be affected by events beyond our control, including effects of COVID-19 on our business, and we may be unable to comply with these covenants.

In addition, the 2018 Credit Facility and the Indenture governing our senior notes contain certain restrictive covenants that impose operating and financial restrictions on us, and the Second Amendment imposes incremental restrictions on certain of these covenants during the covenant relief period provided under the 2018 Credit Facility, including restrictions on our ability to:

•~~incur additional indebtedness and guarantee indebtedness;~~

•~~pay dividends or make other distributions or repurchase or redeem capital stock;~~

•~~make loans and investments, including acquisitions;~~

•~~sell assets;~~

•~~incur liens;~~

•~~enter into transactions with affiliates; and~~

•~~consolidate, merge or sell all or substantially all of our assets~~

~~which collectively may limit our ability to engage in acts that may be in our long-term best interest.~~

A breach of the covenants or restrictions under the documents that govern our indebtedness could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under the credit agreement governing our 2018 Credit Facility would permit the lenders under our 2018 Credit Facility to terminate all commitments to extend further credit under that facility and foreclose on the collateral that secures the 2018 Credit Facility. In the event our lenders or noteholders accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. As a result of these restrictions, we may be:

•~~limited in how we conduct our business;~~

•~~unable to raise additional debt or equity financing to operate during general economic or business downturns, including as a result of COVID-19; or~~

•~~unable to compete effectively or to take advantage of new business opportunities.~~

Our retail stores are heavily dependent on the ability and desire of consumers to travel and shop and a decline in consumer traffic could have a negative effect on our comparable store sales and store profitability resulting in impairment charges, which could have a material adverse effect on our business, results of operations and financial condition.

Reduced travel resulting from economic conditions, fuel shortages, increased fuel prices, travel restrictions, travel concerns and other circumstances, including adverse weather conditions, disease pandemics (including COVID-19), epidemics and other health-related concerns, war, terrorist attacks or the perceived threat of war or terrorist attacks could have a material adverse effect on us, particularly if such events impact our customers’ desire to travel to our retail stores. For example, social distancing measures and other restrictions imposed by governments as a result of the COVID-19 pandemic, which have had and ~~are expected to~~may continue to affect our customers’ ability and desire to travel to our stores, which in turn has had and ~~will~~may continue to have a material adverse impact on our store revenue.

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In addition, other factors that could impact the success of our retail stores include: (i) the location of the mall or the location of a particular store within the mall; (ii) the other tenants occupying space at the mall; (iii) vacancies within the mall (including retailers that may not reopen post-COVID-19); (iv) stores and malls having to re-close due to personnel or customer illness or further government restrictions; (v) increased competition in areas where the malls are located; (vi) the amount of advertising and promotional dollars spent on attracting consumers to the malls; and (vii) a shift toward online shopping which may be exacerbated in light of COVID-19 even when stores reopen. A decline in consumer traffic could have a negative effect on our comparable store sales and/or average sales per square foot and store profitability. If our retail stores underperform due to declining consumer traffic or otherwise and our expected future cash flows of the related underlying retail store asset do not exceed such asset’s carrying value, we may incur store impairment charges. A decline in future comparable store sales and/or store profitability or failure to meet market expectations or the occurrence of impairment charges relating to our retail store fleet could have a material adverse effect on our business, results of operations and financial condition.

The long-term growth of our business depends on the successful execution of our strategic initiatives.

As part of our long-term strategy, we intend to grow our market share and revenue through the following initiatives:

•trendsetting and innovative product offerings;

•increased brand engagement;

•optimizing customer experience;

•investing in technology; and

•expanding our global presence.

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If we are unable to effectively execute our e-commerce business and provide a reliable digital experience for our customers, our reputation and operating results may be harmed.

While e-commerce still comprises a small portion of our net revenues, it has been our fastest growing business over the last several years, particularly in light of COVID-19 and retail store closures. The success of our e-commerce business depends, in part, on third parties and factors over which we have limited control, including changing consumer preferences and buying trends relating to e-commerce usage, both domestically and abroad, and promotional or other advertising initiatives employed by our wholesale customers or other third parties on their e-commerce sites. Any failure on our part, or on the part of our third-party digital partners, to provide attractive, reliable, secure and user-friendly e-commerce platforms could negatively impact our consumers’ shopping experience, resulting in reduced website traffic, diminished loyalty to our brands and lost sales. In addition, if due to COVID-19 or otherwise there is a shift in consumer behavior such that customers utilize e-commerce over traditional brick-and-mortar stores, sales from our retail stores and wholesale channels of distribution may decline.

The success of our business also depends on our ability to continue to develop and maintain a reliable digital experience for our customers. We strive to give our customers a seamless omni-channel experience both in stores and through digital technologies, such as computers, mobile phones, tablets, and other devices. We also use social media to interact with our customers and enhance their shopping experience. Our inability to develop and continuously improve our digital brand engagement could negatively affect our ability to compete with other brands, which could adversely impact our business, results of operations and financial condition.

In addition, we must keep up to date with competitive technology trends, including the use of new or improved technology, creative user interfaces and other e-commerce marketing tools such as paid search and mobile applications, among others, which may increase our costs and which may not succeed in increasing sales or attracting consumers. For example, it is possible that consumers may not sign up for our loyalty program at anticipated rates if they do not find the features and benefits compelling, and that we may not realize the benefits that we anticipate from these programs. Our failure to successfully respond to these risks and uncertainties might adversely affect the sales in our e-commerce business, as well as damage our reputation and brands.

Additionally, the success of our e-commerce business and the satisfaction of our consumers depend on their timely receipt of our products. The efficient flow of our products requires that our company-operated and third-party operated distribution facilities have adequate capacity to support the current level of e-commerce operations and any anticipated increased levels that may follow from the growth of our e-commerce business. If we encounter difficulties with our distribution facilities or in our relationships with the third parties who operate the facilities, or if any such facilities were to shut down or be limited in capacity for any reason, including as a result of fire, other natural disaster, labor disruption, or pandemic (including as a consequence of public health directives, quarantine policies or social distancing measures resulting from the COVID-19 pandemic), we could face shortages of inventory, and we could experience disruption or delay, or incur significantly higher costs and longer lead times for distributing our products to our consumers which could result in customer dissatisfaction. Any of these issues could have an adverse effect on our business and harm our reputation.

A substantial portion of our revenue is derived from a small number of large wholesale customers, and the loss of or decline in business from any of these wholesale customers could substantially reduce our total revenue.

A small number of our wholesale customers account for a significant portion of our sales. Revenue from our five largest wholesale customers represented 12% of our total revenue for Fiscal 2021 and 17% of our total revenue for Fiscal ~~2020 and 19% of our total revenue for Fiscal 2019.~~2020. We do not have written agreements with any of our wholesale customers and purchases generally occur on an order-by-order basis. As a result of store closures and reduced consumer traffic caused by COVID-19, many of our wholesale customers have experienced, and may continue to experience, liquidity constraints or other financial difficulties, causing a reduction in the amount of merchandise purchased from us and our product licensing partners, an increase in order cancellations and/or the need to extend payment terms. Any or all of these measures could substantially reduce our revenue and have a material adverse effect on our profitability. In addition, these actions could lead to larger outstanding accounts receivable balances, delays in collection of accounts receivable, increased expenses associated with collection efforts, increase in excess inventory, increases in ~~bad debt expense,~~credit losses and reduced cash flows.

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The retail industry has experienced a great deal of consolidation and other ownership changes over the past several years and wea number of wholesale accounts were forced to file bankruptcy or undergo restructurings due to the impact of COVID-19 on their business. We expect ~~such changes will continue and~~ that the risk of consolidation, bankruptcy, restructurings or reorganizations by department stores and other retailers will ~~increase as a result of COVID-19. The changes~~continue to exist for the foreseeable future. This could ~~also~~ result in store closings by our wholesale customers, which would decrease the number of stores carrying our products, while the remaining stores may purchase a smaller amount of our products and/or may reduce the retail floor space designated for our brands. In addition, such consolidation, bankruptcy or other changes with respect to our wholesale customers could decrease our opportunities in the market, increase our reliance on a smaller number of large wholesale customers and decrease our negotiating strength with our wholesale customers, which could have a material adverse effect on our business, results of operations and financial condition.

Additionally, certain of our wholesale customers, particularly those located in the U.S., have become highly promotional and have aggressively marked down their ~~merchandise and we~~merchandise.We expect that such markdowns may continue to be exacerbated because of the impact of COVID-19. Such promotional activity could negatively impact our business.

The accessories, footwear and apparel industries are heavily influenced by general macroeconomic cycles that affect consumer spending and a prolonged period of depressed consumer spending could have a material adverse effect on our business, results of operations and financial condition.

The accessories, footwear and apparel industries have historically been subject to cyclical variations, recessions in the general economy and uncertainties regarding future economic prospects that can affect consumer spending habits. Purchases of discretionary luxury items, such as our products, tend to decline during recessionary periods when disposable income is lower. The success of our operations depends on a number of factors impacting discretionary consumer spending, including the extent and duration of the ongoing impact of the COVID-19 pandemic, general economic conditions, consumer confidence, wages and unemployment, housing prices, consumer debt, interest rates, fuel and energy costs, taxation and political conditions. A worsening of the economy may negatively affect consumer and wholesale purchases of our products and could have a material adverse effect on our business, results of operations and financial condition.

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~~Our industry is subject to significant pricing pressure caused by many factors which may cause our profitability and gross margins in the future to be materially lower than our expectations.~~

Our industry is subject to significant pricing pressure caused by many factors, including the impact of COVID-19 on the economy and consumer discretionary spending, intense competition and a highly promotional environment, fragmentation in the retail industry, pressure from retailers to reduce the costs of products, changes in consumer behavior, fashion trends, pricing, inflation, the timing of the release of new merchandise and promotional events, changes in our merchandise mix, the success of marketing programs and weather and other environmental conditions. These factors may cause our profitability and gross margins in the future to be materially lower than in recent periods and our expectations, which could have a material adverse effect on our business, results of operations and financial condition. As a result of COVID-19, we may be faced with significant excess inventories, and in the future, if we misjudge the market for our products, we may have excess inventories for some products and missed opportunities for other products. We may be forced to rely on markdowns or promotional sales to dispose of excess and slow-moving inventory, which also may negatively impact our gross margin and profitability.

Acquisitions may not achieve intended benefits and may not be successfully integrated.

We face additional risks associated with our strategy to grow our business through acquisitions of other brands and geographic licensees, such as our acquisitions of Versace in December 2018 and Jimmy Choo in November 2017.

Our acquisitions of Versace and Jimmy Choo or any other entity that we may acquire may not perform as well as initially expected, which could have a material adverse effect on our results of operations and financial condition. In addition, we are required to test goodwill, brand and any other intangible assets acquired as a result of acquisitions for impairment. For Fiscal 2021 and Fiscal 2020, the carrying value of goodwill and brand intangible value for Jimmy Choo exceeded its respective related fair value, requiring us to record an impairment ~~charge~~charges for the difference of $163 million and $351 ~~million.~~million, respectively.

In addition, we may not be able to successfully integrate ~~any licensee or any other business that we may acquire~~acquired businesses into our own business, or achieve any expected cost savings or synergies from such integration or we may determine to limit the integration of our brands. In addition to the overarching and continued challenges resulting from the COVID-19 pandemic, the potential difficulties that we may face that could cause the results of ~~the acquisition of such previously licensed business, Versace, Jimmy Choo, or any other business that we may acquire~~our acquisitions to not be in line with our expectations include, among others:

•failure to implement our business plan for the combined business or to achieve anticipated revenue or profitability targets;

•delays or difficulties in completing the integration of acquired companies or assets;

•higher than expected costs, lower than expected cost savings and/or a need to allocate resources to manage unexpected operating difficulties;

•unanticipated issues in integrating logistics, information and other systems;

•unanticipated changes in applicable laws and regulations;

•retaining key customers, suppliers and employees;

•operating risks inherent in the acquired business and our business;

•diversion of the attention and resources of management and resource constraints;

•retaining and obtaining required regulatory approvals, licenses and permits;

•unanticipated changes in the combined business due to potential divestitures or other requirements imposed by antitrust regulators;

•assumption of liabilities not identified in due diligence or other unanticipated issues, expenses and liabilities; and

•the impact on our internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002.

Additionally, Jimmy Choo outsources its information technology, accounting and other back office activities to a third-party service ~~provider pursuant to an agreement effective October 2, 2017.~~provider. There are risks of relying on a third-party provider to perform these services, which may include experiencing operational challenges and incurring increased expenses, which may result in a material adverse effect on our business, results of operations and financial condition.

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The markets in which we operate are highly competitive, both within North America and internationally, and increased competition based on a number of factors could cause our profitability and/or gross margins to decline.

Our brands face intense competition from other accessories, footwear and apparel producers and retailers, including, primarily European and American international luxury brands. In addition, we face competition through third party distribution channels that sell our merchandise, such as e-commerce, department stores and specialty stores. Competition is based on a number of factors, including, without limitation, the following:

•anticipating and responding to changing consumer demands in a timely manner;

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•establishing and maintaining favorable ~~brand-name~~brand name recognition;

•determining and maintaining product quality;

•maintaining key employees;

•maintaining and growing market share;

•developing quality and differentiated products that appeal to consumers;

•establishing and maintaining acceptable relationships with retail customers;

•pricing products appropriately;

•providing appropriate service and support to retailers;

•optimizing retail and supply chain capabilities;

•determining size and location of retail and department store selling space; and

•protecting intellectual property.

In addition, some of our competitors may be significantly larger and more diversified than us and may have significantly greater financial, technological, manufacturing, sales, marketing and distribution resources than we do. Their ~~greater~~ capabilities in these areas may enable them to better withstand periodic downturns in the accessories, footwear and apparel industries (including those related to COVID-19), compete more effectively on the basis of price and production and more quickly develop new products. The general availability of manufacturing contractors and agents also allows new entrants easy access to the markets in which we compete, which may increase the number of our competitors and adversely affect our competitive position and our business. Any increased competition, or our failure to adequately address any of these competitive factors, could result in reduced revenues, which could adversely affect our business, results of operations and financial condition.

Competition, along with other factors such as consolidation, changes in consumer spending patterns and a highly promotional retail selling environment (including the impacts of COVID-19), could also result in significant pricing pressure. These factors may cause us to reduce our sales prices to our wholesale customers and retail consumers, which could cause our gross margins to decline if we are unable to appropriately manage inventory levels and/or otherwise offset price reductions with comparable reductions in our operating costs. If our sales prices decline and we fail to sufficiently reduce our product costs or operating expenses, our profitability may decline, which could have a material adverse effect on our business, results of operations and financial condition.

We may not be able to respond to changing fashion and retail trends in a timely manner, which could have a material adverse effect on our brands, business, results of operations and financial condition.

The accessories, footwear and apparel industries have historically been subject to rapidly changing fashion trends and consumer preferences. We believe that our success is largely dependent on the images of our brands and ability to anticipate and respond promptly to changing consumer demands and fashion trends in the design, styling, production, merchandising and pricing of products. If we do not correctly gauge consumer needs and fashion trends and respond appropriately, consumers may not purchase our products and our brand names and the images of our brands may be impaired. Even if we react appropriately to changes in fashion trends and consumer preferences, consumers may consider our brands to be outdated or associate our brands with styles that are no longer popular or trend-setting. Any of these outcomes could have a material adverse effect on our brands, business, results of operations and financial condition.

We face risks associated with operating globally and our strategy to continue to expand internationally.

We operate on a global basis, with approximately ~~48%~~50% of our total revenue from operations outside of the U.S. during Fiscal ~~2020.~~2021. As a result, we are subject to the risks of doing business internationally, including:

•political or civil unrest, including protests and other civil disruption;

•unforeseen public health crises, such as pandemic and epidemic diseases, including the ~~recent global outbreak of COVID-19;~~COVID-19 pandemic and any variants thereof;

•economic instability and unsettled regional and global conflicts, which may negatively affect consumer spending by foreign tourists and local consumers in the various regions where we operate;

•laws, regulations and policies of foreign governments;

•potential negative consequences from changes in taxation policies;

•natural disasters or other extreme weather events, including those attributed to climate change; and

•acts of terrorism, military actions or other conditions over which we have no control.

2021

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In addition, ~~on June 23, 2016, voters in~~ the United Kingdom (“U.K.”) ~~approved an advisory referendum to withdraw from~~formally left the European Union ~~("EU"~~(“EU”)~~, commonly referred to as “Brexit”. On March 29, 2017, the U.K. triggered Article 50 of the Lisbon Treaty formally starting negotiations with the EU. The U.K. formally left the EU~~ on January 31, ~~2020. There is an agreement~~2020 (“Brexit”). The consequences of Brexit could result in principle to transitional provisions under which EU law would remain in force in the U.K. until the end of December 2020, but this remains subject to the successful conclusion of a final withdrawal agreement between the parties. Although the terms of the U.K.’s future relationship with the EU are still unknown, it is possible that there will be increased regulatory and legal complexities ~~including potentially divergent national laws~~ and ~~regulations between the U.K. and EU. Brexit may also~~ cause disruption and create uncertainty surrounding our business, including affecting our relationship with our existing and future customers, suppliers and employees and resulting in increased ~~cost by way of~~costs from new or elevated customs duties or financial implications from operational ~~challenges.~~challenges, trade or tax policies. Brexit has also contributed to volatility and uncertainty in global stock markets and currency exchange rates, and could adversely impact investor confidence and consumer spending, including on discretionary items and retail products such as ours.

Finally, if our international expansion plans are unsuccessful, it could have a material adverse effect on our business, results of operations and financial condition. We sell our products at varying retail price points based on geographic location that yield different gross profit margins and we achieve different operating profit margins, depending on geographic region, due to a variety of factors including product mix, store size, occupancy costs, labor costs and retail pricing. Changes in any one or more of these factors could result in lower revenues, increased costs, and negatively impact our business, results of operations and financial condition. There are also some countries where we do not yet have significant operating experience, and in most of these countries we face established competitors with significantly more operating experience in those locations. Furthermore, consumer demand and behavior, as well as tastes and purchasing trends may differ in these countries and, as a result, sales of our product may not be successful, or the gross margins on those sales may not be in line with those we currently anticipate.

There can be no assurance that any or all of these events will not have a material adverse effect on our business, results of operations and financial condition.

Our business is subject to risks associated with importing products, and the imposition of additional duties, ~~and any changes to international~~tariffs or trade ~~agreements~~restrictions could have a material adverse effect on our business, results of operations and financial condition.

There are risks inherent to importing our products. Virtually all of our imported products are subject to duties which may impact the cost of such products. In addition, countries to which we ship our products may impose safeguard quotas to limit the quantity of products that may be imported. We rely on free trade agreements and other supply chain initiatives in order to maximize efficiencies relating to product importation. For example, we have historically received benefits from duty-free imports on certain products from certain countries pursuant to the U.S. Generalized System of Preferences ("GSP") program. The GSP program expired on December 31, 2020. If the GSP program is not renewed or otherwise made retroactive, we could experience significant additional duties and our gross margin could be negatively impacted. Additionally, we are subject to government regulations relating to importation ~~activities.~~activities, including related to U.S. Customs and Border Protection ("CBP") withhold release orders. The imposition of taxes, duties and quotas, ~~and/or~~ the withdrawal from or material modification to trade agreements, and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on our business, results of operations and financial condition. On May 10, 2019, the U.S. increased the sanction tariffs rate from 10% to 25% on $200 billion of imports of select product categories (Tranche 3), which includes handbags and travel goods from China, and effective September 1, 2019, a 10% tariff on an additional $300 billion of goods from China, including ready-to-wear, footwear and men’s products, went into effect. If additional tariffs or trade restrictions are implemented by the U.S. or other countries, the cost of our products could increase which could adversely affect our business.

If we cannot successfully negotiate rent deferrals or abatements, lease modifications or lease terminations, our substantial operating lease obligations could have a material adverse effect on our business and our landlords may attempt to hold us in breach of our lease obligations and take other actions, including terminating our leases and/or accelerating our future rent.

We do not own any of our retail store facilities, but instead lease all of our stores under operating leases. Our leases generally have terms of up to 10 years, generally require a fixed annual base rent and some require the payment of additional percentage rent if store sales exceed a negotiated amount. Certain of our European stores also require initial investments in the form of key money to secure prime locations, which may be paid to landlords or existing lessees. Generally, our leases are “net” leases, which require us to pay all of the costs of insurance, taxes, maintenance and utilities. We generally cannot cancel these leases or withhold payments at our option, and payments under these operating leases account for a significant portion of our operating costs. For example, as of March 27, 2021, we were party to operating leases associated with our retail stores that we operate directly throughout the globe, as well as other global corporate facilities, requiring future minimum lease payments aggregating to $1.8 billion through Fiscal 2026 and approximately $493 million thereafter through Fiscal 2044.

In light of our retail store closures in response to government orders, mandates, guidelines and recommendations limiting business operations due to the COVID-19 pandemic, as well as decisions by many of the retail centers in which we operate to close shopping centers, we temporarily closed all of our retail stores in North America and Europe. On April 1, 2020, we suspended rent payments under the leases for these stores. In many instances, we were able to negotiate with counterparties under our leases to defer or abate the applicable rent during the store closure period, to modify the terms (including rent) of our leases going forward when stores reopen, or in certain instances to terminate the leases and permanently close retail stores. However, in instances where we were unable to negotiate with landlords, the landlords could allege that we are in default under

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the lease and attempt to terminate our lease and/or accelerate our future rents. Although we believe that strong legal grounds exist to support our claim that we are not obligated to pay rent during periods of closure as a result of the COVID-19 pandemic, there can be no assurance whether or not, and to what degree, such arguments will be successful, and any dispute under these leases may result in litigation with the landlord, which could be costly and have an uncertain outcome.

In addition, as certain of our retail stores in Europe, Canada and parts of Asia remain closed and as other locations reopen, we expect to require additional negotiations with our landlords to further defer or abate rent, to modify the terms of our leases (including rent and expiration date) and in certain instances to terminate a lease or permanently close a store. There can be no assurance that we will be able to successfully negotiate rent deferrals or abatements, lease modifications or lease terminations on favorable terms or at all. Our substantial operating lease obligations could have a material adverse effect on our business, results of operations and financial condition.

We are dependent on a limited number of distribution facilities. If one or more of our distribution facilities experience operational difficulties or becomes inoperable, it could have a material adverse effect on our business, results of operations and financial condition.

We operate a limited number of distribution facilities. Our ability to meet the needs of our own retail stores and e-commerce sites, as well as our wholesale customers, depends on the proper and uninterrupted operation of these distribution facilities. If any of these distribution facilities were to shut down or otherwise become inoperable or inaccessible for any reason (including as a result of a government mandate or order due to COVID-19), we could suffer a substantial loss of inventory and/or disruptions of deliveries to our retail and wholesale customers. In addition, we could incur significantly higher costs and longer lead times associated with the distribution of our products during the time it takes to reopen or replace the damaged facility. Any of the foregoing factors could result in decreased sales and have a material adverse effect on our business, results of operations and financial condition.

In addition, we have been moving into new and larger facilities as needed to further support our efforts to operate with increased efficiency and flexibility. There are risks inherent in operating in new distribution environments and implementing new warehouse management systems, including technological and operational difficulties that may arise with such transitions. We may experience shipping delays should there be any disruptions in our new warehouse management systems or warehouses themselves.

The departure of members of our executive management and other key employees or our failure to attract and retain qualified personnel could have a material adverse effect on our business.

We depend on the services and management experience of executive officers, who have substantial experience and expertise in our business. We also depend on other key employees involved in our design and marketing operations, including our creative officers for each of our brands, Ms. Donatella Versace, Ms. Sandra Choi and Mr. Michael Kors. Competition for qualified personnel in the fashion industry is intense, and competitors may use aggressive tactics to recruit our executive officers and key employees. Our ability to attract and retain employees is influenced by our ability to offer competitive compensation and benefits, employee morale, our reputation, recruitment by other employers, perceived internal opportunities, non-competition and non-solicitation agreements and macro unemployment rates. Although we have entered into employment agreements with our executive officers and other key employees, we may not be able to retain the services of such individuals in the future. The loss of services of one or more of these individuals or any negative public perception with respect to, or relating to, the loss of one or more of these individuals, could have a material adverse effect on our business, results of operations and financial condition. In addition, our operational efficiency initiatives as well as acquisitions and related integration activity may intensify this risk.

We must also attract, develop, motivate and retain a sufficient number of qualified retail and distribution center personnel. Historically, competition for talent has been intense and the turnover rate in the retail industry is generally high. There can be no assurance that we will be able to attract or retain a sufficient number of qualified employees in future periods to execute on our business objectives. Additionally, our ability to meet our labor needs while also controlling costs is subject to external factors such as unemployment levels, prevailing wage rates, minimum wage legislation and overtime regulations. If we are unable to attract, develop, motivate and retain talented employees with the necessary skills and experience, or if changes to our organizational structure, operating results, or business model, including as a result of COVID-19, adversely affect morale, hiring and/or retention, we may not achieve our objectives and our results of operations could be adversely impacted.

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Fluctuations in our tax obligations and changes in tax laws, treaties and regulations may have a material adverse impact on our future effective tax rates and results of operations.

Our subsidiaries are subject to taxation in the U.S. and various foreign jurisdictions, with the applicable tax rates varying by jurisdiction. As a result, our overall effective tax rate is affected by the proportion of earnings from the various tax jurisdictions. We record tax expense based on our estimates of taxable income and required reserves for uncertain tax positions in multiple tax jurisdictions. At any time, there are multiple tax years that are subject to examinations by various taxing authorities. The ultimate resolution of these audits and negotiations with taxing authorities may result in a settlement amount that differs from our original estimate. Any proposed or future changes in tax laws, treaties and regulations or interpretations where we operate could have a material adverse effect on our effective tax rates, results of operations and financial condition.

We and our subsidiaries are also engaged in a number of intercompany transactions. Although we believe that these transactions reflect arm’s-length terms and that proper transfer pricing documentation is in place, the transfer prices and conditions may be scrutinized by local tax authorities, which could result in additional tax liabilities. On October 5, 2015, the Organization for Economic Co-operation and Development, an international association of thirty four countries, including the U.S. and U.K., released the final reports from its Base Erosion and Profit Shifting (BEPS) Action Plans. The BEPS recommendations covered a number of issues, including country-by-country reporting, permanent establishment rules, transfer pricing rules and tax treaties. Future tax reform resulting from this development may result in changes to long-standing tax principles, which could adversely affect our effective tax rate and/or result in higher cash tax liabilities.

Our business is exposed to foreign currency exchange rate fluctuations.

Our results of operations for our international subsidiaries are exposed to foreign exchange rate fluctuations as the financial results of the applicable subsidiaries are translated from the local currency into U.S. Dollars during financial statement consolidation. If the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions could impact our consolidated results of operations. In addition, we have intercompany notes amongst certain of our non-U.S. subsidiaries, which may be denominated in a currency other than the local currency of a particular reporting entity. As a result of using a currency other than the functional currency of the related subsidiary, results of these operations may be adversely affected during times of significant fluctuation between the functional currency of that subsidiary and the denomination currency of the note. We continuously monitor our foreign currency exposure and hedge a portion of our foreign subsidiaries’ foreign currency-denominated inventory purchases to minimize the impact of changes in foreign currency exchange rates. However, we cannot fully anticipate all of our foreign currency exposures and cannot ensure that these hedges will fully offset the impact of foreign currency exchange rate fluctuations. We also use fixed-to-fixed cross currency swap agreements to hedge our net investments in foreign operations against future volatility in the exchange rates between the U.S. Dollars and these foreign currencies. As a result, we are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations.

As a result of operating retail stores and concessions in various countries outside of the U.S., we are also exposed to market risk from fluctuations in foreign currency exchange rates, particularly the Euro, the British Pound, the Chinese Renminbi, the Japanese Yen, the Korean Won and the Canadian Dollar, among others. A substantial weakening of foreign currencies against the U.S. Dollar could require us to raise our retail prices or reduce our profit margins in various locations outside of the U.S. In addition, our sales and profitability could be negatively impacted if consumers in those markets were unwilling to purchase our products at increased prices.

Our current and future licensing and joint venture arrangements may not be successful and may make us susceptible to the actions of third parties over whom we have limited control.

We have entered into a select number of product licensing agreements with companies that produce and sell, under our trademarks, products requiring specialized expertise. We have also entered into a number of select licensing agreements pursuant to which we have granted third parties certain rights to distribute and sell our products in certain geographical areas and have a number of joint ventures. In the future, we may enter into additional licensing and/or joint venture arrangements. Although we take steps to carefully select our partners, such arrangements may not be successful. Our partners may fail to fulfill their obligations under these agreements or have interests that differ from or conflict with our own, such as the timing of new store openings, the pricing of our products and the offering of competitive products. In addition, the risks applicable to the business of our partners may be different than the risks applicable to our business, including risks associated with each such partner’s ability to:

•obtain capital;

•exercise operational and financial control over its business;

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•manage its labor relations;

•maintain relationships with suppliers;

•manage its credit and bankruptcy risks which may be exacerbated by the impact of COVID-19; and

•maintain customer relationships.

Any of the foregoing risks, or the inability of any of our partners to successfully market our products or otherwise conduct its business, may result in loss of revenue and competitive harm to our operations in regions or product categories where we have entered into such licensing arrangements.

We rely on our partners to preserve the value of our brands. Although we attempt to protect our brands through, among other things, approval rights over store location and design, product design, production quality, packaging, merchandising, distribution, advertising and promotion of our stores and products, we may not be able to control the use by our partners of our brand. The misuse of our brand by a licensing or joint venture partner could have a material adverse effect on our business, results of operations and financial condition.

Increases in the cost of raw materials could increase our production costs and cause our operating results and financial condition to suffer.

Our business is subject to volatility of costs related to certain raw materials used in the manufacturing of our products. The costs of raw materials used in our products are affected by, among other things, weather, consumer demand, speculation on the commodities market, the relative valuations and fluctuations of the currencies of producer versus consumer countries and other factors that are generally unpredictable and beyond our control. We are not always successful in our efforts to protect our business from the volatility of the market price of raw materials and our business can be materially affected by dramatic movements in prices of raw materials. The ultimate effect of this change on our earnings cannot be quantified, as the effect of movements in raw materials prices on industry selling prices are uncertain, but any significant increase in these prices could have a material adverse effect on our business, results of operations and financial condition. In addition, our costs may be impacted by sanction tariffs and customs trade orders which could also impact sourcing and availability of raw materials used by our suppliers in the manufacturing of certain of our products. Manufacturing labor costs are also subject to volatility based on local and global economic conditions. Increases in commodity prices, tariffs, sanctions, customs trade orders and/or manufacturing labor costs could increase our production costs and negatively impact our revenues, results of operations and financial condition.

We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods and our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments.

Our products are primarily produced by, and purchased or procured from, independent manufacturing contractors located mainly in Asia and Europe. A manufacturing contractor’s failure to ship products to us in a timely manner or to meet the required quality standards could cause us to miss the delivery date requirements of our customers for those items. The failure to make timely deliveries may cause customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on us.

We do not have written agreements with any of our third-party manufacturing contractors. As a result, any single manufacturing contractor could unilaterally terminate its relationship with us at any time. For example, in Fiscal 2021, Michael Kors’ largest manufacturing contractor, who produces its products in Asia and who Michael Kors has worked with for over ten years, accounted for the production of 18% of our finished products, based on dollar volume. Our inability to promptly replace manufacturing contractors that terminate their relationships with us or cease to provide high quality products in a timely and cost-efficient manner could have a material adverse effect on our business, results of operations and financial condition, and impact the cost and availability of our goods.

Michael Kors uses third-party agents to source finished goods with numerous manufacturing contractors on its behalf. Any single agent could unilaterally terminate its relationship with Michael Kors at any time. In Fiscal 2021, Michael Kors’ largest third-party agent, whose primary place of business is Hong Kong and who Michael Kors has worked with for over 10 years, sourced approximately 26% of its purchases of finished goods, based on unit volume. Our inability to promptly replace agents that terminate their relationships with us or cease to provide high quality service in a timely and cost-efficient manner could have a material adverse effect on our business, results of operations and financial condition.

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In addition, as a company engaged in sourcing on a global scale, we are subject to the risks inherent in such activities, including, but not limited to:

•disease pandemics, epidemics and health-related concerns, including related to COVID-19 or variants thereof;

•political or labor instability, labor shortages (stemming from labor disputes or otherwise), or increases in costs of labor or production in countries where manufacturing contractors and suppliers are located;

•labor disputes or strikes at the location of the source of our goods and/or at ports of entry;

•disruptions or delays in shipments, including port delays and congestion, and/or capacity constraints on transportation of goods due to COVID-19;

•political or military conflict;

•heightened terrorism security concerns;

•a significant decrease in availability or an increase in the cost of raw materials;

•the migration and development of manufacturing contractors;

•product quality issues;

•imposition of regulations, quotas and safeguards relating to imports and our ability to adjust in a timely manner to changes in trade regulations;

•increases in the costs of fuel (including volatility in the price of oil), travel and transportation (including vessel and freight);

•imposition of duties, taxes and other charges on imports;

•significant fluctuation of the value of the U.S. Dollar against foreign currencies;

•restrictions on transfers of funds out of countries where our foreign licensees are located;

•compliance by our independent manufacturers and suppliers with our Supplier Code of Conduct and other applicable compliance policies; and

•compliance with U.S. laws regarding the identification and reporting on the use of “conflict minerals” sourced from the Democratic Republic of the Congo in the Company’s products and the U.S. Foreign Corrupt Practices Act, U.K. Bribery Act and other global anti-corruption laws, as applicable.

If we fail to comply with labor laws or collective bargaining agreements, or if our independent manufacturing contractors fail to use acceptable, ethical business practices, our business and reputation could suffer.

We are subject to labor laws governing relationships with employees, including minimum wage requirements, overtime, working conditions and citizenship requirements. We are also subject to collective bargaining agreements with respect to employees in certain European countries. Compliance with these laws and regulations, as well as collective bargaining agreements, may lead to increased costs and operational complexity and may increase our exposure to governmental investigations or litigation.

We require our independent manufacturing contractors to operate in compliance with applicable laws, rules and regulations regarding working conditions, employment practices and environmental compliance, as well as our Supplier Code of Conduct and other compliance policies under our Factory Social Compliance Program. Our staff and third parties we retain for such purposes periodically visit and monitor the operations of our independent manufacturing contractors to determine compliance. However, we generally do not control these manufacturing contractors or suppliers or their labor, environmental or other business practices. The violation of labor, environmental or other laws by an independent manufacturer or supplier, or divergence of an independent manufacturer’s or supplier’s labor practices from those generally accepted as ethical or appropriate in the U.S. or that violate our Supplier Code of Conduct, could interrupt or otherwise disrupt the shipment of our products, harm our trademarks or damage our reputation. The occurrence of any of these events could materially adversely affect our business, financial condition and results of operations.

We may be unable to protect our trademarks, copyrights and other intellectual property rights, and others may allege that we infringe upon their intellectual property rights.

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to infringe on our brands. We work with customs authorities, law enforcement, legal representatives and brand specialists globally in an effort to prevent the sale of counterfeit products, but we cannot guarantee the extent to which our efforts to prevent counterfeiting of our brands and other intellectual property infringement will be successful. Such counterfeiting and other intellectual property infringement could dilute our brands and otherwise harm our reputation and business.

Our trademark and other intellectual property applications may fail to result in registered trademarks or other intellectual property or to provide the scope of coverage sought, and others may seek to invalidate our trademarks, copyrights or other intellectual property or block sales of our products as an alleged violation of their trademarks and/or intellectual property rights. In addition, others may assert rights in, or ownership of, trademarks, copyrights and/or other intellectual property rights of ours or in trademarks, copyrights or other intellectual property that are similar to ours or that we license, and we may not be able to successfully resolve these types of conflicts to our satisfaction. In some cases, other intellectual property owners may have prior rights to our trademarks or similar trademarks or intellectual property. Furthermore, the laws of certain foreign countries may not protect trademarks, copyrights and/or other intellectual property rights to the same extent as the laws of the United States or the European Union.

From time to time, in the ordinary course of our business, we become involved in opposition and cancellation proceedings with respect to trademarks or other intellectual property similar to some of our brands. Any litigation or dispute involving the scope or enforceability of our intellectual property rights or any allegation that we infringe upon the intellectual property rights of others could be costly and time-consuming and, if determined adversely to us, could result in harm to our competitive position.

We self-insure certain risks and may be impacted by unfavorable claims experience.

We use a combination of insurance and self-insurance programs, including a wholly-owned captive insurance entity, to provide for the potential liabilities for certain risks including, employee health-care benefits, workers’ compensation, general liability, marine transport and inventory, property damage and business interruption. Claims are difficult to predict and may be volatile. Any adverse claims experience could have a material adverse effect on our results of operations, financial condition and cash flows.

We are subject to various proceedings, lawsuits, disputes, and claims in the ordinary course of business which could have an adverse impact on our business, financial condition, and results of operations.

We are a global company and are subject to various proceedings, lawsuits, disputes and claims throughout the world in the ordinary course of business. These claims could include commercial, intellectual property, employment, customer and data privacy claims, as well as class action lawsuits. Typically, these claims raise complex factual and legal issues and are subject to uncertainties. Plaintiffs may seek unspecified damages and/or injunctive or other equitable relief. Our potential liability may be covered in part by our insurance policies, but we may not always have adequate insurance to defend all claims. An unfavorable outcome in any proceeding, lawsuit, dispute or claim may have an adverse impact on our business, financial condition and results of operations.

Our business is susceptible to the risks associated with climate change and other environmental impacts which could negatively affect our business and operations.

Our retail stores, distribution centers and manufacturing facilities, including those operated by third-parties, are subject to risks relating to climate change and other environmental impacts from our operations. For example, the physical effects of climate change, such as severe weather events, natural disasters and/or significant changes in climate patterns as well as our carbon emissions and our business’ overall impact on the environment could subject us to reputational, market and/or regulatory risks. Climate change and other environmental concerns may cause social and economic disruptions in the places where we operate, including disruptions to our supply chain and to local infrastructure and transportation systems which could limit material availability and quality, impact our ability to ship and deliver product and prevent access to our physical locations. These events could also adversely affect the economy and negatively impact consumer confidence and discretionary spending. Concern over climate change may result in new or additional legal, legislative and regulatory requirements to reduce or mitigate the effects of climate change on the environment. There is also increased focus, including by investors, customers, and other stakeholders, on climate change and other sustainability matters. In April 2020, we announced a global strategy to achieve significant, measurable goals across a range of important environmental and social sustainability issues, including, material sourcing, reducing greenhouse gas emissions and converting to renewal energy, responsible water use and waste reduction. We may not be successful in attaining our goals, and even if we meet our commitments, there remains a significant risk that climate change and other environmental events could negatively impact our operations.

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Increased scrutiny from investors and others regarding our corporate social responsibility initiatives, including environmental, social and other matters of significance relating to sustainability, could result in additional costs or risks and adversely impact our reputation.

Investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders and customers have increasingly focused on the environmental, social and governance ("ESG") or “sustainability” practices of companies. These parties have placed increased importance on the implications of the social cost of their investments. If our ESG practices do not meet investor or other industry stakeholder expectations and standards, which continue to evolve, our brand, reputation and customer and employee retention may be negatively impacted. Any sustainability report that we publish or other sustainability disclosure we make may include our policies and practices on a variety of social and ethical matters, including corporate governance, environmental compliance, employee health and safety practices, human capital management, product quality, supply chain management, and workforce inclusion and diversity. It is possible that stakeholders may not be satisfied with our ESG practices or the speed of adoption. We could also incur additional costs and require additional resources to monitor, report and comply with various ESG practices. Also, our failure, or perceived failure, to meet the standards included in any sustainability disclosure could negatively impact our reputation, employee retention and the willingness of our customers and suppliers to do business with us.

The accessories, footwear and apparel industries have historically been subject to cyclical variations, recessions in the general economy and uncertainties regarding future economic prospects that can affect consumer spending habits. Purchases of discretionary luxury items, such as our products, tend to decline during recessionary periods when disposable income is lower. The success of our operations depends on a number of factors impacting discretionary consumer spending, including the duration and severity of the pandemic and the success of vaccination efforts, new information concerning the virus or variants of the variance, and actions different states, regions or countries may take to contain the virus (including extended lock-downs and travel restrictions), among others, general economic conditions, consumer confidence, wages and unemployment, housing prices, consumer debt, interest rates, fuel and energy costs, taxation and political conditions. A worsening of the economy may negatively affect consumer and wholesale purchases of our products and could have a material adverse effect on our business, results of operations and financial condition.

Our industry is subject to significant pricing pressure caused by many factors which may cause our profitability and gross margins in the future to be materially lower than our expectations.

Our industry is subject to significant pricing pressure caused by many factors, including the impact of COVID-19 on the economy and consumer discretionary spending, intense competition and a highly promotional environment, fragmentation in the retail industry, pressure from retailers to reduce the costs of products, changes in consumer behavior, fashion trends, pricing, inflation, the timing of the release of new merchandise and promotional events, changes in our merchandise mix, the success of marketing programs and weather and other environmental conditions. These factors may cause our profitability and gross margins in the future to be materially lower than in recent periods and our expectations, which could have a material adverse effect on our business, results of operations and financial condition. We may be faced with significant excess inventories (due to the impact of COVID-19 or otherwise), and in the future, if we misjudge the market for our products, we may have excess inventories for some products and missed opportunities for other products. We may be forced to rely on markdowns or promotional sales to dispose of excess and slow-moving inventory, which also may negatively impact our gross margin and profitability.

Risks Related to Privacy and Data Security

Privacy breaches and other cyber security risks related to our business could negatively affect our reputation, credibility and business.

We are dependent on information technology (“IT”) systems and networks for a significant portion of our direct-to-consumer sales, including our e-commerce sites and retail business credit card transaction authorization and processing. We are responsible for storing data relating to our customers and employees and also rely on third party vendors for the storage, processing and transmission of personal and Company information. Consumers, lawmakers and consumer advocates alike are increasingly concerned over the security of personal information transmitted over the Internet, consumer identity theft and privacy and the retail industry, in particular, has been the target of many recent cyber-attacks. In addition to taking the necessary precautions ourselves, we generally require that third-party service providers implement reasonable security measures

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to protect our employees’ and customers’ identity and privacy. We do not, however, control these third-party service providers and cannot guarantee the elimination of electronic or physical computer break-ins or security breaches in the future. Cyber security breaches, including physical or electronic break-ins, security breaches due to employee error or misconduct, attacks by “hackers,” phishing scams, malicious software programs such as viruses and malware, and other breaches outside of our control, could result in unauthorized access or damage to our IT systems and the IT systems of our third party service providers. Despite our efforts and the efforts of our third-party service providers to secure our and their IT systems, attacks on these systems do occur from time to time. As the techniques used to obtain unauthorized access to IT systems become more varied and sophisticated (including in connection with the COVID-19 pandemic, as cybercriminals are finding new ways to launch their attacks) and if the occurrence of such security breaches becomes more frequent, we and our third-party service providers may be unable to adequately anticipate these techniques and implement appropriate preventative measures. While we maintain cyber risk insurance to provide some coverage for certain risks associated with cyber security incidents, there is no assurance that such insurance would cover all or a significant portion of the costs or consequences associated with a cyber security incident. A significant breach of customer, employee or Company data could damage our reputation, our relationship with customers and our brands, and could result in lost sales, sizable fines, significant breach-notification and other costs and lawsuits, as well as adversely affect our results of operations. We may also incur additional costs in the future related to the implementation of additional security measures to protect against new or enhanced data security and privacy threats, or to comply with current and new state, federal and international laws governing the unauthorized disclosure of confidential information which are continuously being enacted and proposed, such as the General Data Protection Regulation in the EU and the California Consumer Privacy Act in California in the United States, as well as increased cyber security protection costs such as organizational changes, deploying additional personnel and protection technologies, training employees, engaging third party experts and consultants and lost revenues resulting from unauthorized use of proprietary information.

A material delay or disruption in our information technology systems or e-commerce websites or our failure or inability to upgrade our information technology systems precisely and efficiently could have a material adverse effect on our business, results of operations and financial condition.

We rely extensively on our IT systems to track inventory, manage our supply chain, record and process transactions, manage customer communications, summarize results and manage our business. The failure of our IT systems to operate properly or effectively, problems with transitioning to upgraded or replacement systems, or difficulty in or failure to implement new systems, could adversely affect our business. We also operate a number of e-commerce websites throughout the world. Our IT systems and e-commerce websites may be subject to damage and/or interruption from power outages, computer, network and telecommunications failures, malicious software, such as viruses and malware, attacks by “hackers”, security breaches, usage errors or misconduct by our employees and bad acts by our customers and website visitors which could materially adversely affect our business.

In early Fiscal 2020, we embarked on a multi-year ERP implementation, but as a result of COVID-19 and our need to significantly reduce our capital expenditures in order to protect our liquidity and cash flows, we temporarily suspended our ERP project. Parts of the project have resumed as of the fourth quarter of Fiscal 2021. Our inability to fully resume ~~with~~ our ERP implementation and to upgrade our IT systems could result in system failures, disruptions, damage or malfunctions, cause critical information upon which we rely to be delayed, defective, corrupted, inadequate, inaccessible or lost and otherwise cause delays or disruptions to our operations. If any of these events happen, we may have to make significant investments to fix or replace impacted systems. Our failure or inability to upgrade IT systems effectively also could cause us to be unable to compete effectively, could harm our reputation and credibility, and could have a material adverse effect on our business, results of operations and financial condition.

Risks Related to Our Debt

As of March 27, 2021, our consolidated indebtedness was approximately $1.3 billion, net of debt issuance costs. Our total borrowings as of March 27, 2021 primarily relate to senior notes of $450 million and term loans of $870 million. Our ability to make payments on and to refinance our debt obligations and to fund planned capital expenditures depends on our ability to generate cash from our operations. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Until recently, we have been able to use our cash from operations to fund our debt service obligations and to utilize our 2018 Revolving Credit Facility to supplement our near-term liquidity needs. Our cash from operations have declined significantly, largely due to retail store closures and reduced store traffic caused by the COVID-19 pandemic. Our substantial level of indebtedness could have negative consequences to our business and we cannot guarantee that our business will generate sufficient cash flow from our operations or that future

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borrowings will be available to us in an amount sufficient to enable us to make payments of our debt, fund other liquidity needs, make necessary capital expenditures or pursue certain business opportunities. Our financial results, our substantial indebtedness and our credit ratings could adversely affect the availability and terms of our financing and negatively impact our ability to enter into new financing arrangements in the future.

The obligations under the second amendment, dated June 25, 2020 (the “Second Amendment”), to the third amended and restated credit facility, dated as of November 15, 2018 (the “2018 Credit Facility”) are secured by liens on substantially all of the assets of the Company and its U.S. subsidiaries that are borrowers and guarantors, subject to certain exceptions, and substantially all of the registered intellectual property of the Company and its subsidiaries. This requirement for collateral will be removed if the Company achieves an investment grade ratings requirement for two consecutive full fiscal quarters but there can be no assurance that the ratings requirement will be satisfied.In addition, our ability to access the credit and capital markets in the future as a source of funding, and the borrowing costs associated with such financing, is dependent upon market conditions and our credit rating and outlook. In March 2020, Moody’s Investor Service downgraded their credit rating of us from Baa2 to Ba1, and in April 2020 Fitch Ratings downgraded their credit rating of us from BBB- to BB+. These downgrades, and any future reduction in our credit ratings, could result in reduced access to the credit and capital markets, more restrictive covenants in future financial documents and higher interest costs, and potentially increased lease or hedging costs.

We may ~~not~~ be ~~able~~unable to ~~respond to changing fashion and retail trends~~meet financial covenants in ~~a timely manner,~~our indebtedness agreements which could ~~have~~result in an event of default and restrictive covenants in such agreements may restrict our ability to pursue our business strategies.

Pursuant to the Second Amendment, the financial covenant in the Company’s 2018 Credit Facility requiring it to maintain a ~~material adverse effect on~~ratio of the sum of total indebtedness plus the capitalized amount of all operating lease obligations for the last four fiscal quarters to Consolidated EBITDAR of no greater than 3.75 to 1.0 has been waived through the fiscal quarter ending June 26, 2021. The Company terminated the waiver period effective May 26, 2021. Effective as of that date, the applicable ratio will be calculated net of the Company’s unrestricted cash and cash equivalents in excess of $100 million and shall exclude up to $150 million of supply chain financings, and the maximum permitted net leverage ratio will be 4.00 to 1.0. The Second Amendment also requires the Company, during the period from June 25, 2020 until it delivers its financial statements with respect to the fiscal quarter ending June 26, 2021, to maintain at all times unrestricted cash and cash equivalents plus the aggregate undrawn amounts under the revolving facilities under the 2018 Credit Facility of not less than $500 million.

In addition, the 2018 Credit Facility and the Indenture governing our ~~brands, business, results of operations~~senior notes contain certain restrictive covenants that impose operating and financial ~~condition.~~

~~The accessories, footwear and apparel industries have historically been subject to rapidly changing fashion trends and consumer preferences. We believe that our success is largely dependent~~restrictions on the images of our brands and ability to anticipate and respond promptly to changing consumer demands and fashion trends in the design, styling, production, merchandising and pricing of products. If we do not correctly gauge consumer needs and fashion trends and respond appropriately, consumers may not purchase our products and our brand namesus, and the images of our brands may be impaired. Even if we react appropriately to changes in fashion trends and consumer preferences, consumers may consider our brands to be outdated or associate our brands with styles that are no longer popular or trend-setting. AnySecond Amendment imposes incremental restrictions on certain of these ~~outcomes could have a material adverse effect on our brands, our business, results of operations and financial condition.~~

~~The success of our business also depends~~covenants during the covenant relief period provided under the 2018 Credit Facility, including restrictions on our ability ~~to continue to develop~~to:

•incur additional indebtedness and ~~maintain a reliable digital experience for~~guarantee indebtedness;

•pay dividends or make other distributions or repurchase or redeem capital stock;

•make loans and investments, including acquisitions;

•sell assets;

•incur liens;

•enter into transactions with affiliates; and

•consolidate, merge or sell all or substantially all of our customers. We strive to give our customers a seamless omni-channel experience both in stores and through digital technologies, such as computers, mobile phones, tablets, and other devices. We also use social media to interact with our customers and enhance their shopping experience. Our inability to develop and continuously improve our digital brand engagement could negatively affectassets

which collectively may limit our ability to ~~compete with~~engage in acts that may be in our long-term best interest.

A breach of the covenants or restrictions under the documents that govern our indebtedness could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other ~~brands,~~debt to which ~~could adversely impact~~a cross-acceleration or cross-default provision applies. In addition, an event of default under the credit agreement governing our ~~business, results of operations~~2018 Credit Facility would permit the lenders under our 2018 Credit Facility to terminate all commitments to extend further credit under that facility and ~~financial condition.~~

~~We are dependent~~foreclose on ~~a limited number of distribution facilities. If one~~the collateral that secures the 2018 Credit Facility. In the event our lenders or ~~more~~noteholders accelerate the repayment of our ~~distribution facilities experiences operational difficulties or becomes inoperable, it could~~borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness. As a ~~material adverse effect on our business, results of operations and financial condition.~~

•limited in how we conduct our business;

•unable to ~~shut down~~raise additional debt or ~~otherwise become inoperable~~equity financing to operate during general economic or ~~inaccessible for any reason (including~~business downturns, including as a result of ~~a government mandate~~COVID-19; or ~~order due~~

•unable to ~~COVID-19), we could suffer a substantial loss~~compete effectively or to take advantage of inventory and/or disruptions of deliveries to our retail and wholesale customers. In addition, we could incur significantly higher costs and longer lead times associated with the distribution of our products during the time it takes to reopen or replace the damaged facility. Any of the foregoing factors could result in decreased sales and have a material adverse effect on ournew business ~~results of operations and financial condition.~~

~~The departure of members of our executive management and other key employees or our failure to attract and retain qualified personnel could have a material adverse effect on our business.~~

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We must also attract, develop, motivate and retain a sufficient number of qualified retail and distribution center personnel. Historically, competition for talent has been intense and the turnover rate in the retail industry is generally high. There can be no assurance that we will be ableRisks Related to attract or retain a sufficient number of qualified employees in future periods to execute on our business objectives. Additionally, our ability to meet our labor needs while also controlling costs is subject to external factors such as unemployment levels, prevailing wage rates, minimum wage legislation, and overtime regulations. If we are unable to attract, develop, motivate and retain talented employees with the necessary skills and experience, or if changes to our organizational structure, operating results, or business model, including as a result of COVID-19, adversely affect morale, hiring and/or retention, we may not achieve our objectives and our results of operations could be adversely impacted.Our Ordinary Shares

Our share price may periodically fluctuate based on the accuracy of our earnings guidance or other forward-looking statements regarding our financial performance.

Our business and long-range planning process is designed to maximize our long-term growth and profitability and not to achieve an earnings target in any particular fiscal quarter. We believe that this longer-term focus is in the best interests of our Company and our shareholders. At the same time, however, we recognize that it is helpful to provide investors with guidance as to our forecast of total revenue, earnings per share, comparable store sales and other financial metrics or projections. ~~Historically,~~While we ~~have provided~~generally expect to provide updates to our financial guidance when we report our results each fiscal quarter, ~~but~~ we do not have any responsibility to update any of our forward-looking statements at such times or otherwise. The dynamic nature of COVID-19 on our business makes it difficult for us to accurately project the potential impact on our business and therefore we may not provide quarterly or year-end guidance for the foreseeable future. In addition, any longer-term guidance that we provide is based on goals that we believe, at the time guidance is given, are reasonably attainable for growth and performance over a number of years. However, such long-range targets are more difficult to predict than our current quarter and fiscal year expectations. If, or when, we announce actual results that differ from those that have been predicted by us, outside investment analysts, or others, our share price could be adversely affected. Investors who rely on these predictions when making investment decisions with respect to our securities do so at their own risk. We take no responsibility for any losses suffered as a result of such changes in our share price.

We periodically return value to shareholders through our share repurchase program. Investors may have an expectation that we will repurchase all shares available under our share repurchase program. As a result of COVID-19, we suspended our share repurchase program. The market price of our securities could be adversely affected if our share repurchase activity differs from investors’ expectations or if our share repurchase program were to terminate.

~~Fluctuations in our tax obligations and changes in tax laws, treaties and regulations may have a material adverse impact on our future effective tax rates and results of operations.~~

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act included significant changes to the U.S. corporate income tax system including, among other things, lowering the U.S. statutory federal tax rate to 21% and implementing a territorial tax system. The Tax Act also added many new provisions, including changes to bonus depreciation, limits on the deductions for executive compensation and interest expense, a tax on global intangible low-taxed income, the base erosion anti-abuse tax and a deduction for foreign derived intangible income.

On March 26, 2015, the U.K. enacted new Diverted Profits Tax legislation (the “DPT”), which was effective on April 1, 2015. Under the DPT, profits of certain multinational enterprises (such as the Company) deemed to have been artificially diverted from the U.K. will be taxed at a rate of 25%. While the Company believes that all of its affiliated entities and the transactions among them have the required economic substance, there is no assurance that this legislation will not have a material effect on its results of operations and financial condition.

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~~Our business is exposed to foreign currency exchange rate fluctuations.~~

Our results of operations for our international subsidiaries are exposed to foreign exchange rate fluctuations as the financial results of the applicable subsidiaries are translated from the local currency into U.S. dollars during financial statement consolidation. If the U.S. dollar strengthens against foreign currencies, the translation of these foreign currency denominated transactions could impact our consolidated results of operations. In addition, we have intercompany notes amongst certain of our non-U.S. subsidiaries, which may be denominated in a currency other than the local currency of a particular reporting entity. As a result of using a currency other than the functional currency of the related subsidiary, results of these operations may be adversely affected during times of significant fluctuation between the functional currency of that subsidiary and the denomination currency of the note. We continuously monitor our foreign currency exposure and hedge a portion of our foreign subsidiaries’ foreign currency-denominated inventory purchases to minimize the impact of changes in foreign currency exchange rates. However, we cannot fully anticipate all of our foreign currency exposures and cannot ensure that these hedges will fully offset the impact of foreign currency exchange rate fluctuations.

~~Our current and future licensing and joint venture arrangements may not be successful and may make us susceptible to the actions of third parties over whom we have limited control.~~

We have entered into a select number of product licensing agreements with companies that produce and sell, under our trademarks, products requiring specialized expertise. We have also entered into a number of select licensing agreements pursuant to which we have granted third parties certain rights to distribute and sell our products in certain geographical areas and have a number of joint ventures. In the future, we may enter into additional licensing and/or joint venture arrangements. Although we take steps to carefully select our partners, such arrangements may not be successful. Our partners may fail to fulfill their obligations under their agreements or have interests that differ from or conflict with our own, such as the timing of new store openings, the pricing of our products and the offering of competitive products. In addition, the risks applicable to the business of our partners may be different than the risks applicable to our business, including risks associated with each such partner’s ability to:

•~~obtain capital;~~

•~~exercise operational and financial control over its business;~~

•~~manage its labor relations;~~

•~~maintain relationships with suppliers;~~

•~~manage its credit and bankruptcy risks which may be exacerbated by the impact of COVID-19; and~~

•~~maintain customer relationships.~~

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~~Increases in the cost of raw materials could increase our production costs and cause our operating results and financial condition to suffer.~~

Our business is subject to volatility in costs related to certain raw materials used in the manufacturing of our products. The costs of raw materials used in our products are affected by, among other things, weather, consumer demand, speculation on the commodities market, the relative valuations and fluctuations of the currencies of producer versus consumer countries and other factors that are generally unpredictable and beyond our control. We are not always successful in our efforts to protect our business from the volatility of the market price of raw materials and our business can be materially affected by dramatic movements in prices of raw materials. The ultimate effect of this change on our earnings cannot be quantified, as the effect of movements in raw materials prices on industry selling prices are uncertain, but any significant increase in these prices could have a material adverse effect on our business, results of operations and financial condition. In addition, our costs may be impacted by sanction tariffs imposed on our products due to changes in trade terms and increased manufacturing labor costs which are also subject to degrees of volatility based on local and global economic conditions. Increases in commodity prices, tariffs and manufacturing labor costs could increase our production costs and negatively impact our revenues, results of operations and financial condition.

We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods, which poses legal, regulatory, political and economic risks to our business operations.

•disease pandemics, epidemics and health-related concerns, including related to COVID-19, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;

•~~significant delays or disruptions in delivery of our products due to labor disputes or strikes at the location of the source of our goods and/or at ports of entry;~~

•~~political or military conflict, which could cause a delay in the transportation of our products and raw materials and increase transportation costs;~~

•heightened terrorism security concerns, which could subject imported or exported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods of time or could result in increased scrutiny by customs officials for counterfeit goods, leading to lost sales, increased costs for our anti-counterfeiting measures and damage to the reputation of our brands;

•~~a significant decrease in availability or an increase in the cost of raw materials;~~

•~~the migration and development of manufacturing contractors, which could affect where our products are or are planned to be produced;~~

•imposition of regulations, quotas and safeguards relating to imports and our ability to adjust in a timely manner to changes in trade regulations, which, among other things, could limit our ability to produce products in cost-effective countries that have the labor and expertise needed;

•~~increases in the costs of fuel, travel and transportation;~~

•~~imposition of duties, taxes and other charges on imports, including if the United States follows through on its proposed additional China tariffs;~~

•~~significant fluctuation of the value of the U.S. Dollar against foreign currencies; and~~

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•~~restrictions on transfers of funds out of countries where our foreign licensees are located.~~

We do not have written agreements with any of our third-party manufacturing contractors. As a result, any single manufacturing contractor could unilaterally terminate its relationship with us at any time. For example, in Fiscal 2020, Michael Kors’ largest manufacturing contractor, who produces its products in Asia and who Michael Kors has worked with for over ten years, accounted for the production of 20% of its finished products, based on dollar volume. Our inability to promptly replace manufacturing contractors that terminate their relationships with us or cease to provide high quality products in a timely and cost-efficient manner could have a material adverse effect on our business, results of operations and financial condition, and impact the cost and availability of our goods.

In addition, Michael Kors uses third-party agents to source its finished goods with numerous manufacturing contractors on its behalf. Any single agent could unilaterally terminate its relationship with Michael Kors at any time. In Fiscal 2020, Michael Kors’ largest third-party agent, whose primary place of business is Hong Kong and who Michael Kors has worked with for over 10 years, sourced approximately 26% of its purchases of finished goods, based on unit volume. Our inability to promptly replace agents that terminate their relationships with us or cease to provide high quality service in a timely and cost-efficient manner could have a material adverse effect on our business, results of operations and financial condition.

If we fail to comply with labor laws or collective bargaining agreements, or if our manufacturing contractors fail to use acceptable, ethical business practices, our business and reputation could suffer.

We are subject to labor laws governing relationships with employees, including minimum wage requirements, overtime, working conditions and citizenship requirements. Versace and Jimmy Choo are also subject to collective bargaining agreements with respect to employees in certain European countries. Compliance with these laws and regulations, as well as collective bargaining agreements may lead to increased costs and operational complexity and may increase our exposure to governmental investigations or litigation.

We require our manufacturing contractors to operate in compliance with applicable laws, rules and regulations regarding working conditions, employment practices and environmental compliance. Additionally, we impose upon our business partners operating guidelines that require additional obligations in those three areas in order to promote ethical business practices, and our staff and third parties we retain for such purposes periodically visit and monitor the operations of our manufacturing contractors to determine compliance. However, we generally do not control our manufacturing contractors or their labor and other business practices. If one of our manufacturing contractors violates applicable labor or other laws, rules or regulations or implements labor or other business practices that are generally regarded as unethical, the shipment of finished products to us could be interrupted, orders could be cancelled, relationships could be terminated and our reputation could be damaged. Any of these events could have a material adverse effect on our business, results of operations and financial condition.

~~We may be unable to protect our trademarks, copyrights and other intellectual property rights, and others may allege that we infringe upon their intellectual property rights.~~

Our VERSACE, JIMMY CHOO and MICHAEL KORS trademarks, as well as other material trademarks, copyrights and design and patent rights related to the production, marketing and distribution of our products, are important to our success and our competitive position. We are susceptible to others imitating our products and infringing our intellectual property rights in the Americas, EMEA, Asia and elsewhere in the world in both online and offline channels. Our brands enjoy significant worldwide consumer recognition and the generally higher pricing of our products creates additional incentive for counterfeiters to infringe on our brands. We work with customs authorities, law enforcement, legal representatives and brand specialists globally in an effort to prevent the sale of counterfeit products, but we cannot guarantee the extent to which our efforts to prevent counterfeiting of our brands and other intellectual property infringement will be successful. Such counterfeiting and other intellectual property infringement could dilute our brands and otherwise harm our reputation and business.

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Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting, which could harm our business and cause a decline in the price of our ordinary shares.

As a public company, we are required to document and test our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. If our management is unable to certify the effectiveness of our internal controls or if our independent registered public accounting firm cannot render an opinion on the effectiveness of our internal control over financial reporting, or if material weaknesses in our internal controls are identified, we could be subject to regulatory scrutiny and a loss of public confidence, which could have an adverse effect on our business and cause a decline in the price of our ordinary shares.

We are a global company and are subject to various proceedings, lawsuits, disputes and claims throughout the world in the ordinary course of business. These claims could include commercial, intellectual property, employment, customer, and data privacy claims, as well as class action lawsuits. As a result of the COVID-19 pandemic, we may face an increase in claims against us including by landlords or other commercial counterparties, employees and customers. Typically, these claims raise complex factual and legal issues and are subject to uncertainties. Plaintiffs may seek unspecified damages and/or injunctive or other equitable relief. Our potential liability may be covered in part by our insurance policies, but we may not always have adequate insurance to defend all claims. An unfavorable outcome in any proceeding, lawsuit, dispute or claim may have an adverse impact on our business, financial condition and results of operations.

~~Our business is susceptible to the risks associated with climate change and other environmental impacts which could negatively affect our business and operations.~~

Our retail stores, distribution centers and manufacturing facilities, including those operated by third-parties, are subject to risks relating to climate change and other environmental impacts from our operations. For example, the physical effects of climate change, such as severe weather events and/or significant changes in climate patterns as well as our carbon emissions and our business’ overall impact on the environment could subject us to reputational, market and/or regulatory risks. Climate change and other environmental concerns may cause social and economic disruptions in the places where we operate, including disruptions to our supply chain and to local infrastructure and transportation systems which could limit material availability and quality, impact our ability to ship and deliver product and prevent access to our physical locations. These events could also adversely affect the economy and negatively impact consumer confidence and discretionary spending. In April 2020, we announced a global strategy to achieve significant, measurable goals across a range of important environmental and social sustainability issues, including, material sourcing, reducing greenhouse gas emissions and converting to renewal energy, responsible water use, and waste reduction. We may not be successful in attaining our goals, and even if we meet our commitments, there remains a significant risk that climate change and other environmental events could negatively impact our operations.

Provisions in our organizational documents may delay or prevent our acquisition by a third party.

Our Memorandum and Articles of Association (together, as amended from time to time, our “Memorandum and Articles”) contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without the approval of our board of directors. These provisions ~~also~~ may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our shareholders receiving a premium over the market price for their ordinary shares. These provisions include, among others:

•our board of directors’ ability to amend the Memorandum and Articles to create and issue, from time to time, one or more classes of preference shares and, with respect to each such class, to fix the terms thereof by resolution;

•provisions relating to the multiple classes and three-year terms of directors, the manner of election of directors, removal of directors and the appointment of directors upon an increase in the number of directors or vacancy on our board of directors;

•restrictions on the ability of shareholders to call meetings and bring proposals before meetings;

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•elimination of the ability of shareholders to act by written consent; and

•the requirement of the affirmative vote of 75% of the shares entitled to vote to amend certain provisions of our Memorandum and Articles.

These provisions of our Memorandum and Articles could discourage potential takeover attempts and reduce the price that investors might be willing to pay for our ordinary shares in the future, which could reduce the market price of our ordinary shares.

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Rights of shareholders under British Virgin Islands law differ from those under United States law, and, accordingly, our shareholders may have fewer protections.

Our corporate affairs are governed by our Memorandum and Articles, the BVI Business Companies Act, 2004 (as amended, the “BVI Act”) and the common law of the British Virgin Islands. The rights of shareholders to take legal action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are to a large extent governed by the common law of the British Virgin Islands and by the BVI Act. The common law of the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the British Virgin Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are not as clearly established as they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws as compared to the United States, and some states (such as Delaware) have more fully developed and judicially interpreted bodies of corporate law. As a result of the foregoing, holders of our ordinary shares may have more difficulty in protecting their interests through actions against our management, directors or major shareholders than they would as shareholders of a U.S. company.

The laws of the British Virgin Islands provide limited protection for minority shareholders, so minority shareholders will have limited or no recourse if they are dissatisfied with the conduct of our affairs.

Under the laws of the British Virgin Islands, there is limited statutory law for the protection of minority shareholders other than the provisions of the BVI Act dealing with shareholder remedies. The principal protection under statutory law is that shareholders may bring an action to enforce the constituent documents of a British Virgin Islands company and are entitled to have the affairs of the ~~company~~Company conducted in accordance with the BVI Act and the memorandum and articles of association of the ~~company.~~Company. As such, if those who control the ~~company~~Company have persistently disregarded the requirements of the BVI Act or the provisions of the ~~company’s~~Company’s memorandum and articles of association, then the courts will likely grant relief. Generally, the areas in which the courts will intervene are the following: (i) an act complained of which is outside the scope of the authorized business or is illegal or not capable of ratification by the majority; (ii) acts that constitute fraud on the minority where the wrongdoers control the ~~company;~~Company; (iii) acts that infringe on the personal rights of the shareholders, such as the right to vote; and (iv) acts where the ~~company~~Company has not complied with provisions requiring approval of a special or extraordinary majority of shareholders, which are more limited than the rights afforded to minority shareholders under the laws of many states in the United States.

It may be difficult to enforce judgments against us or our executive officers and directors in jurisdictions outside the United States.

Under our Memorandum and Articles, we may indemnify and hold our directors harmless against all claims and suits brought against them, subject to limited exceptions. Furthermore, to the extent allowed by law, the rights and obligations among or between us, any of our current or former directors, officers and employees and any current or former shareholder will be governed exclusively by the laws of the British Virgin Islands and subject to the jurisdiction of the British Virgin Islands courts, unless those rights or obligations do not relate to or arise out of their capacities as such. Although there is doubt as to whether United States' courts would enforce these provisions in an action brought in the United States under United States securities laws, these provisions could make judgments obtained outside of the British Virgin Islands more difficult to enforce against our assets in the British Virgin Islands or jurisdictions that would apply British Virgin Islands law.

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British Virgin Islands companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of one avenue to protect their interests.

British Virgin Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect of any such action, may result in the rights of shareholders of a British Virgin Islands' company being more limited than those of shareholders of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred. The British Virgin Islands courts are also unlikely to recognize or enforce judgments of courts in the United States based on certain liability provisions of United States securities law or to impose liabilities, in original actions brought in the British Virgin Islands, based on certain liability provisions of the United States securities laws that are penal in nature. There is no statutory recognition in the British Virgin Islands of judgments obtained in the United States, although the courts of the British Virgin Islands will generally recognize and enforce the non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. This means that even if shareholders were to sue us successfully, they may not be able to recover anything to make up for the losses suffered.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

The following table sets forth the location, use and size of our significant distribution and corporate facilities as of March ~~28, 2020,~~27, 2021, all of which are leased with the exception of our distribution center in the Netherlands, our central warehouse in Italy and luxury shoe factory in Italy, which are owned. The leases expire at various times through Fiscal 2044, subject to renewal options.

Location

Use

Approximate Square
Footage

Whittier, CA

Michael Kors U.S. Distribution Center

~~1,284,430~~1,179,000

Venlo, Netherlands

Michael Kors and Jimmy Choo European Distribution Center

~~1,096,330~~1,096,000

New York, NY

Michael Kors, Versace and Jimmy Choo U.S. Corporate Offices

~~262,780~~284,000

Montreal, Quebec

Michael Kors Canadian Corporate Office and Distribution ~~Centers~~Center

~~150,440~~150,000

Novara, Italy

Versace European Distribution Center

~~108,810~~109,000

Milan, Italy

Versace Corporate Offices

90,000

Milan, Italy

~~54,070~~Versace Showroom

54,000

Novara, Italy

Versace Manufacturing and Distribution Center

46,000

East Rutherford, NJ

Michael Kors U.S. Corporate Offices

~~53,480~~

~~Novara, Italy~~

~~Versace Manufacturing and Distribution Center~~

~~45,700~~43,000

Pistoia, Italy

Capri Luxury Shoe Factory

~~41,050~~41,000

Milan, Italy

Michael Kors Regional Corporate Office and Showroom

~~24,660~~25,000

London, England

Jimmy Choo Corporate Offices

~~23,950~~

~~New York, NY~~

~~Versace U.S. Corporate Offices~~

~~21,340~~24,000

Manno, Switzerland

Michael Kors European Corporate Offices

~~18,400~~18,000

London, England

Capri Corporate Headquarters and Michael Kors Regional Corporate Office

~~17,830~~18,000

As of March ~~28, 2020,~~27, 2021, we also occupied ~~1,271~~1,257 leased retail stores worldwide (including concessions). We consider our properties to be in good condition and believe that our facilities are adequate for our operations and provide sufficient capacity to meet our anticipated requirements.

Other than the land and building for our Michael Kors and Jimmy Choo European distribution center in the Netherlands, our Versace central warehouse in Italy and our Capri luxury shoe factory in Italy, property and equipment related to our stores (e.g. leasehold improvements, fixtures, etc.) and computer equipment, we did not own any material property as of March ~~28, 2020.~~27, 2021.

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Item 3. Legal Proceedings

We are involved in various routine legal proceedings incident to the ordinary course of our business. We believe that the outcome of all pending legal proceedings in the aggregate will not have a material adverse effect on our business, results of operations and financial condition.

Item 4. Mine Safety Disclosures

None.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our ordinary shares trade on the NYSE under the symbol “CPRI”. At March ~~28, 2020,~~27, 2021, there were ~~149,425,612~~151,280,011 ordinary shares outstanding, and the closing price of our ordinary shares was ~~$11.67.~~$50.18. Also as of that date, we had approximately ~~100~~119 ordinary shareholders of record.

Share Performance Graph

The line graph below compares the cumulative total shareholder return on our ordinary shares with the Standard & Poor’s ("S&P") 500 Stock Index, ~~(GSPC),~~the S&P 500 Apparel, Accessories & Luxury Goods Index, the S&P Retailing Index, ~~(RLX),~~ and a prior peer group ~~index~~ of companies ~~that we believe are closest to ours~~(the "Prior Peer Group") for the five-year period from ~~March 27, 2015~~April 1, 2016 through March ~~27, 2020,~~26, 2021, the last business day of ~~the~~ our fiscal year. The ~~peer group index~~Prior Peer Group consists of the following companies: Tapestry, Inc., Guess?, Inc., PVH Corp., L Brands, Inc., Ralph Lauren Corporation, Tiffany & Co. and VF Corporation. During Fiscal 2021, management re-assessed the companies that comprise the S&P Retailing Index and determined that the S&P 500 Apparel, Accessories & Luxury Goods Index is a more appropriate comparison given the composition of companies it contains. In this transition year, the share performance graph below includes the comparative performance of the newly selected index and the previously reported indices. Going forward, we will show a comparison of return on our ordinary shares with the S&P 500 Stock Index and the S&P 500 Apparel, Accessories & Luxury Goods Index only.

The graph below assumes ~~that~~ an investment of $100 made at the closing of trading on ~~March 27, 2015,~~April 1, 2016, in ~~(i)~~ our ordinary shares ~~(ii)~~and each of the ~~shares comprising the GSPC, (iii) the shares comprising the RLX and (iv) the shares comprising our peer group index.~~indices presented. All values assume reinvestment of the full amount of all dividends, if any, into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable time period.

Issuer Purchases of Equity Securities

Our share repurchases were made under our $500 million share repurchase program, which was approved by our Board of Directors on August 1, 2019. During the first quarter of Fiscal 2021, the Company suspended its $500 million share-repurchase program in response to the continued impact of the COVID-19 pandemic. We also have in place a “withhold to cover” repurchase program, which allows us to withhold ordinary shares from certain executive officers and directors to satisfy minimum tax withholding obligations relating to the vesting of their restricted share awards.

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The following table provides information regarding our ordinary share repurchases during the three months ended March ~~28, 2020:~~27, 2021:

~~Total Number of Shares Purchased~~

~~Average Price Paid per Share~~

~~Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs~~

Maximum Number (or
Approximated Dollar Value)
of Shares (or Units) That
May Yet Be Purchased
Under the Plans or Programs (in millions)

~~December 29 – January 25~~

—

~~400~~

~~January 26 – February 22~~

—

~~400~~

~~February 23 – March 28~~

—

~~400~~

—


	Total Number of Shares	Average Price Paid per Share		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximated Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (in millions)
December 27, 2020 – January 23, 2021	—	$	—	—	$	400
January 24, 2021 – February 20, 2021	—	$	—	—	$	400
February 21, 2021 – March 27, 2021	381	$	48.26	—	$	400
	381			—

~~The share repurchase program was suspended on April 6, 2020 in response to the continued global health and economic impact of the COVID-19 pandemic.~~

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Item 6. Selected Financial Data

The following table sets forth selected historical consolidated financial and other data for Capri Holdings Limited and its consolidated subsidiaries for the periods presented. The ~~statements~~statement of operations data for Fiscal 2021, Fiscal 2020 and Fiscal 2019 ~~and Fiscal 2018~~ and the balance sheet data as of the end of Fiscal ~~2020~~2021 and Fiscal ~~2019~~2020 have been derived from our audited consolidated financial statements included elsewhere in this report. The ~~statements~~statement of operations data for Fiscal ~~2017~~2018 and Fiscal ~~2016~~2017 and the balance sheet data as of the end of Fiscal 2019, Fiscal 2018 and Fiscal 2017 ~~and Fiscal 2016~~ have been derived from our prior audited consolidated financial statements, which are not included in this report.

The selected historical consolidated financial data below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes included ~~elsewhere~~ in this annual report.


		Fiscal Years Ended																			Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018		April 1, 2017		April 2, 2016⁽¹⁾			March 27, 2021		March 28, 2020		March 30, 2019		March 31, 2018		April 1, 2017
		(data presented in millions, except for shares and per share data)																			(data presented in millions, except for shares and per share data)
Statement of Operations Data:	Statement of Operations Data:											Statement of Operations Data:
Total revenue	Total revenue	$	5,551	$	5,238	$	4,719	$	4,494	$	4,712	Total revenue	$	4,060	$	5,551	$	5,238	$	4,719	$	4,494
Cost of goods sold	Cost of goods sold	2,280		2,058		1,860		1,833		1,915		Cost of goods sold	1,463		2,280		2,058		1,860		1,833
Gross profit	Gross profit	3,271		3,180		2,859		2,661		2,797		Gross profit	2,597		3,271		3,180		2,859		2,661
Selling, general and administrative expenses	Selling, general and administrative expenses	2,464		2,075		1,767		1,541		1,428		Selling, general and administrative expenses	2,018		2,464		2,075		1,767		1,541
Depreciation and amortization	Depreciation and amortization	249		225		208		220		183		Depreciation and amortization	212		249		225		208		220
Impairment of assets	Impairment of assets	708		21		33		199		11		Impairment of assets	316		708		21		33		199
Restructuring and other charges ⁽²⁾	Restructuring and other charges ⁽²⁾	42		124		102		11		—		Restructuring and other charges ⁽²⁾	32		42		124		102		11
Total operating expenses	Total operating expenses	3,463		2,445		2,110		1,971		1,622		Total operating expenses	2,578		3,463		2,445		2,110		1,971
(Loss) Income from operations		(192)		735		749		690		1,175
Income (loss) from operations												Income (loss) from operations	19		(192)		735		749		690
Other income	Other income	(6)		(4)		(2)		(6)		(4)		Other income	(7)		(6)		(4)		(2)		(6)
Interest expense, net	Interest expense, net	18		38		22		4		2		Interest expense, net	43		18		38		22		4
Foreign currency loss (gain)		11		80		(13)		3		5
(Loss) income before provision for income taxes		(215)		621		742		689		1,172
Foreign currency (gain) loss												Foreign currency (gain) loss	(20)		11		80		(13)		3
Income (loss) before provision for income taxes												Income (loss) before provision for income taxes	3		(215)		621		742		689
Provision for income taxes	Provision for income taxes	10		79		150		137		334		Provision for income taxes	66		10		79		150		137
Net (loss) income	Net (loss) income	(225)		542		592		552		838		Net (loss) income	(63)		(225)		542		592		552
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest	Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest	(2)		(1)		—		(1)		(1)		Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest	(1)		(2)		(1)		—		(1)
Net (loss) income attributable to Capri	Net (loss) income attributable to Capri	$	(223)	$	543	$	592	$	553	$	839	Net (loss) income attributable to Capri	$	(62)	$	(223)	$	543	$	592	$	553

Weighted average ordinary shares outstanding:	Weighted average ordinary shares outstanding:											Weighted average ordinary shares outstanding:
Basic	Basic	150,714,598		149,765,468		152,283,586		165,986,733		186,293,295		Basic	150,453,568		150,714,598		149,765,468		152,283,586		165,986,733
Diluted	Diluted	150,714,598		151,614,350		155,102,885		168,123,813		189,054,289		Diluted	150,453,568		150,714,598		151,614,350		155,102,885		168,123,813
Net (loss) income per ordinary share⁽³⁾:
Net (loss) income per ordinary share (1):												Net (loss) income per ordinary share (1):
Basic	Basic	$	(1.48)	$	3.62	$	3.89	$	3.33	$	4.50	Basic	$	(0.41)	$	(1.48)	$	3.62	$	3.89	$	3.33
Diluted	Diluted	$	(1.48)	$	3.58	$	3.82	$	3.29	$	4.44	Diluted	$	(0.41)	$	(1.48)	$	3.58	$	3.82	$	3.29

⁽¹⁾~~Fiscal year ended April 2, 2016 contained 53 weeks, whereas all other fiscal years presented are based on 52-week periods.~~

⁽²⁾~~Restructuring and other charges includes store closure costs recorded in connection with the Michael Kors Retail Fleet Optimization Plan (as defined in Note 11~~) and other restructuring initiatives, and costs recorded in connection with the acquisitions of Versace, Jimmy Choo and Michael Kors (HK) Limited and Subsidiaries (see Note 11 to the accompanying audited consolidated financial statements).

⁽³⁾Basic net (loss) income per ordinary share is computed by dividing net (loss) income available to ordinary shareholders of Capri by basic weighted average ordinary shares outstanding. Diluted net (loss) income per ordinary share is computed by dividing net (loss) income attributable to ordinary shareholders of Capri by diluted weighted average ordinary shares outstanding.

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		Fiscal Years Ended																			Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018		April 1, 2017		April 2, 2016⁽¹⁾			March 27, 2021		March 28, 2020		March 30, 2019		March 31, 2018		April 1, 2017
		(data presented in millions, except for share and store data)																			(data presented in millions, except for share and store data)
Operating Data:	Operating Data:											Operating Data:
Retail stores, including concessions, end of period	Retail stores, including concessions, end of period	1,271		1,249		1,011		827		668		Retail stores, including concessions, end of period	1,257		1,271		1,249		1,011		827

Balance Sheet Data:	Balance Sheet Data:											Balance Sheet Data:
Working capital	Working capital	$	493	$	187	$	302	$	599	$	1,234	Working capital	$	(75)	$	493	$	187	$	302	$	599
Total assets	Total assets	$	7,946	$	6,650	$	4,059	$	2,410	$	2,567	Total assets	$	7,481	$	7,946	$	6,650	$	4,059	$	2,410
Short-term debt	Short-term debt	$	167	$	630	$	200	$	133	$	—	Short-term debt	$	123	$	167	$	630	$	200	$	133
Long-term debt	Long-term debt	$	2,012	$	1,936	$	675	$	—	$	2	Long-term debt	$	1,219	$	2,012	$	1,936	$	675	$	—
Shareholders’ equity of Capri	Shareholders’ equity of Capri	$	2,167	$	2,429	$	2,018	$	1,593	$	1,996	Shareholders’ equity of Capri	$	2,158	$	2,167	$	2,429	$	2,018	$	1,593
Number of ordinary shares issued	Number of ordinary shares issued	217,320,010		216,050,939		210,991,091		209,332,493		208,084,175		Number of ordinary shares issued	219,222,937		217,320,010		216,050,939		210,991,091		209,332,493

⁽¹⁾~~Fiscal year ended April 2, 2016 contained 53 weeks, whereas all other fiscal years presented are based on 52-week periods.~~

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis (“MD&A”) of our Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and notes thereto included as part of this Annual Report on Form 10-K. Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of ~~Capri Holdings Limited (the “Company”)~~the Company about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. All statements other than statements of historical facts included herein, may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words “plans”, “believes”, “expects”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “might” or similar words or phrases, are forward-looking statements. These forward-looking statements are not guarantees of future financial performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions, which could cause actual results to differ materially from those projected or implied in any forward-looking statements. These risks, uncertainties and other factors include the ~~effect~~impact of the COVID-19 pandemic and its potential material and significant impact on the Company’s future financial and operational results if retail stores remain closed and the pandemic is prolonged, including that our estimates could materially differ if the severity of the COVID-19 situation worsens, the length and severity of such outbreak across the globe and the pace of recovery following the COVID-19 pandemic, levels of cash flow and future availability of credit, compliance with restrictive covenants under the Company’s credit agreement, the Company’s ability to integrate successfully and to achieve anticipated benefits of any ~~acquisition;~~acquisition and to successfully execute our growth strategies; the risk of disruptions to the Company’s businesses; risks associated with operating in international markets and our global sourcing activities; the risk of cybersecurity threats and privacy or data security breaches; the negative effects of events on the market price of the Company’s ordinary shares and its operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the Company’s businesses; fluctuations in demand for the Company’s products; levels of indebtedness (including the indebtedness incurred in connection with acquisitions); the timing and scope of future share buybacks, which may be made in open market or privately negotiated transactions, and are subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors, and which share repurchases may be suspended or discontinued at any time, the level of other investing activities and uses of cash; changes in consumer traffic and retail trends; loss of market share and industry competition; fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen epidemics and pandemics, disasters or catastrophes; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions, as well as those risks set forth in the Company’s filings with the U.S. Securities and Exchange Commission, including in this Annual Report on Form 10-K, particularly under “Item 1A. Risk Factors”

Overview

Our Business

Capri Holdings Limited is a global fashion luxury group, consisting of iconic brands that are industry leaders in design, style and craftsmanship, led by a world-class management team and renowned designers. Our brands cover the full spectrum of fashion luxury categories, including women’s and men’s accessories, footwear and ready-to-wear, as well as wearable technology, watches, jewelry, eyewear and a full line of fragrance products. Our goal is to continue to extend the global reach of our brands while ensuring that they maintain their independence and exclusive DNA.

Our Versace brand has long been recognized as one of the world’s leading international fashion design houses and is synonymous with Italian glamour and style. Founded in 1978 in Milan, Versace is known for its iconic and unmistakable style and unparalleled craftsmanship, over the past several decades the House of Versace has grown globally from its roots in haute couture, expanding into the design, manufacturing, distribution and retailing of ready-to-wear, accessories, footwear, eyewear, watches, jewelry, fragrance and home furnishings businesses. Versace’s design team is led by Donatella Versace, who has been the brand’s artistic director for over 20 years. Versace distributes its products through a worldwide distribution network, which includes boutiques in some of the world’s most glamorous cities, its e-commerce site, as well as through the most prestigious department and specialty stores worldwide.

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Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, scarves and belts, as well as a growing men’s luxury shoes and accessory business. In addition, certain categories, such as fragrances ~~sunglasses~~ and eyewear, are produced under licensing agreements. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic. The brand offers classic and timeless luxury products, as well as innovative products that are intended to set and lead fashion trends. Jimmy Choo is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.

Our Michael Kors brand was launched ~~almost~~ 40 years ago by Michael Kors, whose vision has taken the Company from its beginnings as an American luxury sportswear house to a global accessories, footwear and apparel company with a global distribution network that has presence in over 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners. Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with growing brand awareness in other international markets. Michael Kors features distinctive designs, materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude. Michael Kors offers three primary collections: the Michael Kors Collection luxury line, the MICHAEL Michael Kors accessible luxury line and the Michael Kors Mens line. The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried by many of our retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world. MICHAEL Michael Kors has a strong focus on accessories, in addition to offering footwear and apparel, and addresses the significant demand opportunity in accessible luxury ~~goods.We~~goods. We have also been developing our men’s business in recognition of the significant opportunity afforded by the Michael Kors brand’s established fashion authority and the expanding men’s market. Taken together, our Michael Kors collections target a broad customer base while retaining our premium luxury image.

Certain Factors Affecting Financial Condition and Results of Operations

COVID-19 Pandemic. A novel strain of coronavirus commonly referred to as COVID-19 has spread rapidly across the globe, ~~in recent months,~~ including throughout all major geographies in which we operate (the Americas, EMEA and Asia), resulting in adverse economic conditions and business disruptions, as well as significant volatility in global financial markets. Governments worldwide have imposed varying degrees of preventative and protective actions, such as temporary travel bans, forced business closures, and stay-at-home orders, all in an effort to reduce the spread of the virus. Such factors, among others, have resulted in a significant decline in retail traffic, tourism and consumer spending on discretionary items. Additionally, during this period of uncertainty, companies across a wide array of industries have implemented various initiatives to reduce operating expenses and preserve cash balances, including work furloughs and reduced pay, which could lower consumers’ disposable income levels or willingness to purchase discretionary items. Further, even after such government restrictions and company initiatives are lifted, consumer behavior, spending levels and/or shopping preferences, such as their willingness to congregate in shopping centers or other populated locations, could be adversely affected.

In connection with the COVID-19 pandemic, we have experienced varying degrees of business disruptions and periods of closures of our stores, distribution centers and corporate facilities, as have our wholesale customers, licensing partners, suppliers and vendors. Retail traffic also continues to be challenging in those regions in which our stores are open. Additionally, our stores in the Americas and in Europe closed mid-March 2020, and although ~~a significant number~~the majority of our stores have since reopened, ~~a large number of~~certain stores remain ~~closed.~~closed due to local government mandates. Our wholesale business has also been adversely affected, particularly in the Americas and Europe, as a result of department store closures and lower traffic and consumer demand.

In response to the COVID-19 pandemic, during Fiscal 2021 we ~~have taken~~took a number of preemptive actions to preserve cash and strengthen our liquidity, including:

•for Fiscal 2021, our board of directors annual total cash compensation ~~will be reduced by 50%;~~was reduced;

•temporarily foregoing and reducing executive compensation for Fiscal 2021. In addition, the company reduced overall salaries at various levels throughout the ~~organization by approximately 20%;~~organization;

•reducing our corporate workforce in order to generate additional payroll savings;

•temporarily furloughing or reducing work hours for a significant portion of our retail employees who nevertheless remain eligible for employee benefits during such period;

•applying for national payroll subsidy programs in various countries throughout Europe to further reduce payroll expense;

•significantly reducing inventory purchases by reducing or canceling commitments, redeploying inventory and consolidating upcoming seasons;

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•extending payment terms of our payables with our partners in order to maintain our financial flexibility for the long term;

•reducing capital expenditures in Fiscal 2021;

•minimizing operating expenses, including decreasing marketing spend, delaying or canceling select new store openings, reducing external third-party services and halting non-critical systems implementations in order to reduce costs;

•temporarily ~~suspended~~suspending our ERP ~~project~~project;

•suspending the remaining $400 million under our current share repurchase program; and

•adding ~~new approximately~~a $230 million 364-day Revolver due June 2021 to bolster cash availability.

The COVID-19 pandemic remains highly volatile and continues to evolve on a daily basis. Accordingly, we cannot predict for how long and to what extent this crisis will impact our business operations or the global economy as a whole. We will continue to assess our operations location-by-location, taking into account the guidance of local governments and global health organizations to determine when our operations can ~~begin returning~~return to normal course of business. See Item 1A — ~~"The~~"Risk Factors" — “The COVID-19 pandemic ~~could~~may continue to have a material adverse effect on our business and results of ~~operations" for~~operations.” For additional discussion regarding risks to our business associated with the COVID-19 pandemic.

Establishing brand identity and enhancing global presence. We intend to continue to increase our international presence and global brand recognition by growing our existing international operations through ~~acquisitions,~~ the formation of various joint ventures with international partners and continuing with our international licensing arrangements. We feel this is an efficient method for continued penetration into the global luxury goods market, especially for markets where we have yet to establish a substantial presence. In addition, our growth strategy includes assuming direct control of certain licensed international operations to better manage our growth opportunities in the related regions.

Channel ~~Shift~~shift and ~~Demand~~demand for ~~Our Accessories~~our accessories and ~~Related Merchandise~~related merchandise. Our performance is affected by trends in the luxury goods industry, as well as shifts in demographics and changes in lifestyle preferences. Although ~~the~~ overall consumer spending for personal luxury products has increased in recent years, consumer shopping preferences have continued to shift from physical stores to on-line shopping. We currently expect that this trend will continue in the foreseeable future. We continue to adjust our operating strategy to the changing business environment. We have finalized the planned store closures under the Michael Kors Retail Fleet Optimization Plan as of the end of Fiscal 2020. As of March 28, 2020, we closed at total of 143 stores at a total cost of $99 million and recorded restructuring charges of $5 million and $41 million in Fiscal 2020 and Fiscal 2019, respectively. Collectively, we continue to anticipate ongoing savings as a result of the store closures and lower depreciation associated with the impairment charges being recorded. In addition, ~~during the second quarter of Fiscal 2021,~~last year we announced ~~that we plan~~our Capri Retail Store Optimization Program to close approximately 170 of our ~~full-price~~ retail stores over the next two years, in order to improve the profitability of our retail store fleet. Over this time period, we expect to incur approximately $75 million of one-time costs associated with these store closures. As of March 27, 2021, we have closed a total of 101 stores relating to the plan. We recorded net restructuring charges of $5 million during Fiscal 2021 relating to the plan. See Item 9B - Other Information for additional information. Collectively, we continue to anticipate ongoing savings as a result of the store closures and lower depreciation associated with the impairment charges being recorded.

Foreign currency fluctuation. Our consolidated operations are impacted by the relationships between our reporting currency, the U.S. dollar, and those of our non-U.S. subsidiaries whose functional/local currency is other than the U.S. dollar, particularly the Euro, the British Pound, the Chinese Renminbi, the Japanese Yen, the Korean Won and the Canadian Dollar, among others. We continue to expect volatility in the global foreign currency exchange rates, which may have a negative impact on the reported results of certain of our non-U.S. subsidiaries in the future, when translated to U.S. Dollars.

Disruptions in shipping and distribution. Our operations are subject to the impact of shipping disruptions as a result of changes or damage to our distribution infrastructure, as well as due to external factors, including the ~~impact~~impacts of COVID-19. Any future disruptions in our shipping and distribution network could have a negative impact on our results of operations. See Item 1A — "Risk Factors" — "We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods and our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments." for additional discussion.

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Costs of Manufacturing and Tariffs. Our industry is subject to volatility in costs related to certain raw materials used in the manufacturing of our products. This volatility applies primarily to costs driven by commodity prices, which can increase or decrease dramatically over a short period of time. In addition, our costs may be impacted by sanction tariffs imposed on our products due to changes in trade terms. ~~On May 10, 2019,~~For example, we have historically received benefits from duty-free imports on certain products from certain countries pursuant to the U.S. ~~increased~~Generalized System of Preferences ("GSP") program. The GSP program expired on December 31, 2020. If the ~~sanction tariffs rate~~GSP program is not renewed or otherwise made retroactive, we could experience significant additional duties and our gross margin could be negatively impacted. Additionally, we are subject to government import regulations, including U.S. Customs and Border Protection ("CBP") withhold release orders. The imposition of taxes, duties and quotas, the withdrawal from ~~10%~~or material modification to ~~25%~~trade agreements, and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on ~~$200 billion~~our business, results of ~~imports of select product categories (Tranche 3), which includes handbags~~operations and ~~travel goods from China, and effective September 1, 2019, a 10% tariff on an additional $300 billion of goods from China, including ready-to-wear, footwear and men’s products, went into effect.~~financial condition. If additional tariffs or trade restrictions are implemented by the U.S. or other countries, the cost of our products could increase which could adversely affect our business. In addition, commodity prices and tariffs may have an impact on our revenues, results of operations and cash flows. We use commercially reasonable efforts to mitigate these effects by sourcing our products as efficiently as possible and diversifying the countries where we produce. In addition, manufacturing labor costs are also subject to degrees of volatility based on local and global economic conditions. We use commercially reasonable efforts to source from localities that suit our manufacturing standards and result in more favorable labor driven costs to our products.

Segment Information

We operate in three reportable segments, which are as follows:

Versace

We generate revenue through the sale of Versace luxury ready-to-wear, accessories ~~footwear~~ and ~~home furnishings~~footwear through directly operated Versace boutiques throughout North America (United States and Canada), EMEA (Europe, Middle East and Africa) and certain parts of Asia, as well as through Versace outlet stores and e-commerce sites. In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of products, including jeans, fragrances, watches, jewelry, eyewear and ~~eyewear.~~home furnishings.

Jimmy Choo

We generate revenue through the sale of Jimmy Choo luxury goods ~~to end clients~~ through directly operated Jimmy Choo retail and outlet stores throughout the Americas (United States, Canada and Latin America), EMEA and certain parts of Asia, through our e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo tradename in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide. In addition, revenue is generated through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of products, including fragrances ~~sunglasses~~ and eyewear.

Michael Kors

We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our products, as well as licensed products bearing our name, directly to ~~the end consumer~~consumers throughout the Americas, Europe and certain parts of Asia. Our Michael Kors e-commerce business includes e-commerce sites in the U.S., Canada and certain parts of Europe and Asia. We also sell Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of EMEA, Asia and Brazil. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear, as well as through geographic licensing arrangements, which allow third parties to use the Michael Kors tradename in connection with the retail and/or wholesale sales of our Michael Kors branded products in specific geographic regions.

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Unallocated Expenses

In addition to the reportable segments discussed above, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including ERP system implementation costs. In addition, certain other costs are not allocated to segments, including restructuring and other charges (including transaction and transition costs related to our ~~recent~~ acquisitions), impairment costs and COVID-19 related charges. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance. The following table presents our total revenue and income (loss) ~~income~~ from operations by segment for Fiscal 2021, Fiscal 2020 and Fiscal 2019 ~~and Fiscal 2018~~ (in millions):


			Fiscal Years Ended																						Fiscal Years Ended
			March 28, 2020				March 30, 2019				March 31, 2018						March 27, 2021				March 28, 2020				March 30, 2019
Total revenue:	Total revenue:															Total revenue:
		Versace	$	843			$	137			$	—			Versace		$	718			$	843			$	137
		Jimmy Choo	555				590				223				Jimmy Choo		418				555				590
		Michael Kors	4,153				4,511				4,496				Michael Kors		2,924				4,153				4,511
Total revenue	Total revenue				$	5,551			$	5,238			$	4,719		Total revenue			$	4,060			$	5,551			$	5,238

(Loss) Income from operations:
Income (loss) from operations:													Income (loss) from operations:
		Versace	$	(8)			$	(11)			$	—			Versace		$	21			$	(8)			$	(11)
		Jimmy Choo	(13)				20				(4)				Jimmy Choo		(55)				(13)				20
		Michael Kors	850				964				975				Michael Kors		595				850				964
Total segment income from operations	Total segment income from operations				829				973				971			Total segment income from operations			561				829				973
Less:	Less:	Corporate expenses	(152)				(93)				(87)		Less:		Corporate expenses		(152)				(152)				(93)
		Restructuring and other charges	(42)				(124)				(102)				Impairment of assets		(316)				(708)				(21)
		Impairment of assets	(708)				(21)				(33)				COVID-19 related charges (1)		(42)				(119)				—
		COVID-19 related charges ⁽¹⁾	(119)				—				—				Restructuring and other charges		(32)				(42)				(124)
Total (loss) income from operations					$	(192)			$	735			$	749
Total income (loss) from operations													Total income (loss) from operations				$	19			$	(192)			$	735

~~___________________~~

(1)COVID-19 related charges during Fiscal 2021 primarily ~~includes~~include net incremental inventory reserves and ~~bad debt provision~~severance expense of $10 million and $24 million, respectively, recorded within costs of goods sold and selling, general and administrative expenses in the consolidated statements of income and comprehensive (loss) income. COVID-19 related charges during Fiscal 2020, primarily include additional inventory reserves and credit losses of $92 million and $25 million, respectively, recorded within costs of goods sold and selling, general and administrative expenses in the consolidated statements of ~~operation.~~operations and comprehensive (loss) income.

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The following table presents our global network of retail stores and wholesale doors:


		As of						As of
		March 28, 2020	March 30, 2019	March 31, 2018		March 27, 2021	March 28, 2020	March 30, 2019
Number of full price retail stores (including concessions):	Number of full price retail stores (including concessions):				Number of full price retail stores (including concessions):
Versace	Versace	157	146	—	Versace	153	157	146
Jimmy Choo	Jimmy Choo	179	169	158	Jimmy Choo	176	179	169
Michael Kors	Michael Kors	568	587	596	Michael Kors	529	568	587
		904	902	754		858	904	902

Number of outlet stores:	Number of outlet stores:				Number of outlet stores:
Versace	Versace	49	42	—	Versace	57	49	42
Jimmy Choo	Jimmy Choo	47	39	24	Jimmy Choo	51	47	39
Michael Kors	Michael Kors	271	266	233	Michael Kors	291	271	266
		367	347	257		399	367	347

Total number of retail stores	Total number of retail stores	1,271	1,249	1,011	Total number of retail stores	1,257	1,271	1,249

Total number of wholesale doors:	Total number of wholesale doors:				Total number of wholesale doors:
Versace	Versace	824	1,028	—	Versace	868	824	1,028
Jimmy Choo	Jimmy Choo	554	596	629	Jimmy Choo	450	554	596
Michael Kors	Michael Kors	2,982	3,202	3,544	Michael Kors	2,852	2,982	3,202
		4,360	4,826	4,173		4,170	4,360	4,826

The following table presents our retail stores by geographic location:


		As of					As of						As of		As of
		March 28, 2020					March 30, 2019						March 27, 2021		March 28, 2020
		Versace	Jimmy Choo	Michael Kors	Versace	Jimmy Choo	Michael Kors		Versace	Jimmy Choo	Michael Kors	Versace	Jimmy Choo	Michael Kors
Store count by region:	Store count by region:							Store count by region:
The Americas	The Americas	30	45	380	28	43	390	The Americas	34	44	353	30	45	380
EMEA	EMEA	60	76	180	53	71	186	EMEA	57	74	176	60	76	180
Asia	Asia	116	105	279	107	94	277	Asia	119	109	291	116	105	279
		206	226	839	188	208	853		210	227	820	206	226	839

Key Performance Indicators and Statistics

We use a number of key indicators of operating results to evaluate our performance, including the following (dollars in millions):


		Fiscal Years Ended																Fiscal Years Ended
		March 28, 2020			March 30, 2019			March 31, 2018				March 27, 2021			March 28, 2020			March 30, 2019
Total revenue	Total revenue	$	5,551		$	5,238		$	4,719		Total revenue	$	4,060		$	5,551		$	5,238

Gross profit as a percent of total revenue	Gross profit as a percent of total revenue	58.9		%	60.7		%	60.6		%	Gross profit as a percent of total revenue	64.0		%	58.9		%	60.7		%
(Loss) income from operations		$	(192)		$	735		$	749
(Loss) income from operations as a percent of total revenue		(3.5)		%	14.0		%	15.9		%
Income (loss) from operations											Income (loss) from operations	$	19		$	(192)		$	735
Income (loss) from operations as a percent of total revenue											Income (loss) from operations as a percent of total revenue	0.5		%	(3.5)		%	14.0		%

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Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Critical accounting policies are those that are the most important to the portrayal of our results of operations and financial condition and that require our most difficult, subjective and complex judgments to make estimates about the effect of matters that are inherently uncertain. In applying such policies, we must use certain assumptions that are based on our informed judgments, assessments of probability and best estimates. Estimates, by their nature, are subjective and are based on analysis of available information, including current and historical factors and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis. While our significant accounting policies are detailed in Note 2 to the accompanying financial statements, our critical accounting policies are discussed below and include revenue recognition, inventories, long-lived assets, goodwill and other indefinite-lived intangible assets, share-based compensation, derivatives and income taxes.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for goods or services. We recognize retail store revenue when control of the product is transferred at the point of sale at our owned stores, including concessions. Revenue from sales through our e-commerce sites is recognized at the time of delivery to the customer, reduced by an estimate of returns. Wholesale revenue is recognized net of estimates for sales returns, discounts, markdowns and allowances, after merchandise is shipped and control of the underlying product is transferred to our wholesale customers. To arrive at net sales for retail, gross sales are reduced by actual customer returns, as well as by a provision for estimated future customer returns, which is based on management’s review of historical and current customer returns. The amounts reserved for retail sales returns were $20 million, $12 million ~~$15 million~~ and ~~$12~~$15 million at March 27, 2021, March 28, 2020 and March 30, 2019, ~~and March 31, 2018,~~ respectively. Net sales for wholesale equals gross sales, reduced by provisions for estimated future returns based on current expectations, as well as trade discounts, markdowns, allowances, operational chargebacks, and certain cooperative selling expenses. Total sales reserves for wholesale were $78 million, $154 million ~~$112 million~~ and ~~$109~~$112 million at March 27, 2021, March 28, 2020 and March 30, 2019, ~~and March 31, 2018,~~ respectively. These estimates are based on such factors as historical trends, actual and forecasted performance and market conditions, which are reviewed by management on a quarterly basis. Our historical estimates of these costs were not materially different from actual results.

Royalty revenue generated from product licenses, which includes contributions for advertising, is based on reported sales of licensed products bearing our tradenames at rates specified in the license agreements. These agreements are also subject to contractual minimum levels. Royalty revenue generated by geographic licensing agreements is recognized as it is earned under the licensing agreements based on reported sales of licensees applicable to specified periods, as outlined in the agreements. These agreements allow for the use of our tradenames to sell our branded products in specific geographic regions.

During Fiscal 2018, we launched our Michael Kors customer loyalty program, which allows customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at our retail stores and e-commerce sites. We allocate a portion of the initial sales transaction based on the estimated relative fair value of the benefits based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed. The contract liability, net of an estimated “breakage,” is recorded as a reduction to revenue in the consolidated statements of income and comprehensive income. The contract liability was $2 million and $3 million as of March 28, 2020 and March 30, 2019, respectively. Our breakage and other assumptions used to determine the estimated fair value of benefits are estimates, which could vary significantly from actual benefits that will be redeemed in the future.

Inventories

Our inventory costs include amounts paid to independent manufacturers, plus duties and freight to bring the goods to the Company’s warehouses, as well as shipments to stores. We continuously evaluate the composition of our inventory and make adjustments when the cost of inventory is not expected to be fully recoverable. The net realizable value of our inventory is estimated based on historical experience, current and forecasted demand and market conditions. In addition, reserves for inventory losses are estimated based on historical experience and inventory counts. Our inventory reserves are estimates, which could vary significantly from actual results if future economic conditions, customer demand or competition differ from expectations. Our historical estimates of these adjustments have not differed materially from actual results.

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The combined total of raw materials and work in process inventory recorded on the our consolidated balance sheets as of March 27, 2021 and March 28, 2020 ~~and March 30, 2019~~ were ~~$27~~$28 million and ~~$25~~$27 million, respectively. The net realizable value of our inventory as of March ~~28, 2020~~27, 2021 includes the adverse impacts related to the COVID-19 pandemic. This includes the impact from temporary retail store closures, wholesale customer store closures, reductions in retail store traffic, international tourism and consumer consumption.

Long-lived Assets

We evaluate all long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of any

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such asset may not be recoverable. For the purposes of impairment testing, we group ~~our~~ long-lived assets ~~according to their~~at the lowest level of use, such as aggregating and capitalizing all construction costs related to a retail store into right-of-use assets, leasehold improvements and those related to our wholesale business into shop-in-shops.identifiable cash flow. Our leasehold improvements are typically amortized over the life of the store lease, including ~~highly probable~~reasonably assured renewals and our shop-in-shops are amortized over a useful life of three or four years. Our impairment testing is based on our best estimate of the future operating cash flows. If the sum of our estimated undiscounted future cash flows associated with the asset is less than the asset’s carrying value, we would recognize an impairment charge, which is measured as the amount by which the carrying value exceeds the fair value of the asset. The fair values determined by management require significant judgment and include certain assumptions regarding future sales and expense growth rates, discount rates and estimates of ~~current~~ real estate market fair values. As such, these estimates may differ from actual results and are affected by future market and economic conditions.

During Fiscal 2021, Fiscal 2020 and Fiscal 2019, ~~and Fiscal 2018,~~ we recorded impairment charges of $158 million, $357 million and $21 million, ~~and $33 million,~~ respectively, ~~related to our retail long-lived assets. The impairment charges recorded during Fiscal 2020~~which were primarily related to operating lease right-of-use assets and ~~the impairment charges recorded during Fiscal 2019 and Fiscal 2018 primarily related to property and equipment and lease rights for underperforming Michael Kors~~fixed assets of our retail ~~stores.~~store locations. Please refer to Note 8 ~~Note 9~~ and Note 14 toof the accompanying consolidated audited financial statements for additional information.

Goodwill and Other Indefinite-lived Intangible Assets

We record intangible assets based on their fair value on the date of acquisition. Goodwill is recorded ~~for~~as the difference between the fair value of the purchase consideration ~~over~~and the fair value of the net identifiable tangible and intangible assets acquired. The brand intangible assets recorded in connection with the acquisitions of Versace and Jimmy Choo were determined to be an indefinite-lived intangible assets, which are not subject to amortization. We perform an impairment assessment of goodwill, as well as the Versace brand and Jimmy Choo brand intangible assets on an annual basis, or whenever impairment indicators exist. In the absence of any impairment indicators, goodwill, the Versace brand and the Jimmy Choo brand are assessed for impairment during the fourth quarter of each fiscal year. Judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business.

We may assess our goodwill and our brand indefinite-lived intangible assets for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of these assets is greater than their carrying value. When performing a qualitative test, we assess various factors including industry and market conditions, macroeconomic conditions and performance of our businesses. If the results of the qualitative assessment indicate that it is more likely than not that our goodwill and other indefinite-lived intangible assets are impaired, a quantitative impairment analysis ~~would be~~is performed to determine if impairment is required. We may also elect to perform a quantitative analysis of goodwill and our indefinite-lived intangible assets initially rather than using a qualitative approach.

The impairment testing for goodwill is performed at the reporting unit level. ~~The~~We use industry accepted valuation ~~methods used~~models and set criteria that are reviewed and approved by various levels of management and, in certain instances, we engage independent third-party valuation specialists for advice. To determine the ~~quantitative~~ fair value ~~assessment include~~of a ~~discounted cash flow analysis, which requires management to make certain assumptions~~reporting unit, we use a combination of the income and ~~estimates regarding industry trends~~market approaches, when applicable. We believe the blended use of both models, when applicable, compensates for the inherent risk associated with either model if used on a stand-alone basis, and ~~future profitability~~this combination is indicative of ~~our reporting units.~~the factors a market participant would consider when performing a similar valuation. If the fair value of a reporting unit exceeds the related carrying value, the reporting unit’s goodwill is considered not to be impaired and no further testing is performed. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded for the difference. ~~This valuation is~~These valuations are affected by certain estimates, including ~~our~~ future revenue growth rates, future operating expense growth rates, gross margins and discount rates. Future events could cause us to conclude that impairment indicators exist, and ~~therefore, that~~ goodwill may be impaired.

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When performing a quantitative impairment assessment of our brand ~~indefinite-lived~~ intangible assets, the fair value of the Versace and the Jimmy Choo brands is estimated using a discounted cash flow analysis based on the "relief from royalty" method, assuming that a third party would be willing to pay a royalty in lieu of ownership for this intangible asset. This approach is dependent on many factors, including estimates of future revenue growth rates, royalty rates and discount rates. Actual future results may differ from these estimates. ~~Impairment~~An impairment loss is recognized when the estimated fair value of the ~~indefinite-lived~~ brand intangible assets is less than its carrying amount.

During the fourth quarter of Fiscal ~~2020,~~2021, we performed our annual goodwill and indefinite-lived intangible assets impairment analysis for ~~our three brands.~~each brand. Based on ~~the results of our~~ qualitative impairment assessment of the Michael Kors reporting units, we concluded that it is more likely than not that the fair value of the Michael ~~Kors’~~Kors reporting units exceeded ~~their~~its carrying value and, therefore, ~~were~~was not impaired. We elected to perform ~~our annual goodwill~~quantitative impairment analyses for both the Versace and ~~brand indefinite-lived~~Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair values of each brand's reporting units. We also elected to perform an impairment analysis for both the Versace and Jimmy Choo brand intangible assets using ~~a quantitative~~an income approach ~~using a discounted cash flow analysis~~ to estimate the fair ~~values of each brands' reporting units.~~values. Based on the results of these assessments, we determined there was no impairment

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loss for the Jimmy Choo retail reporting unit as its fair value is approximately 3% higher than the carrying value, which has a goodwill balance of $221 million. We also concluded that the fair values of the Versace reporting units and the brand intangible assets exceeded the related carrying amounts and no impairment was required. The fair value of the Versace retail reporting unit, Versace wholesale reporting unit and Versace licensing reporting unit are at least 20% higher than their respective carrying values. The fair value of the Versace retail brand and Versace wholesale brand are more than 10% higher than their respective carrying values.

However, we concluded that the fair values of the Jimmy Choo ~~Retail~~wholesale and Jimmy Choo ~~Licensing~~licensing reporting units, along with the Jimmy Choo brand ~~indefinite-lived~~ intangible ~~asset~~assets, did not exceed ~~the~~their related carrying amounts. ~~Jimmy Choo expects to experience a reduction in profitability trends,~~These impairment charges were primarily related to higher discount rates in the ~~ongoing impact of the COVID-19 pandemic, resulting in declines in sales~~current year driven by a change in market factors as well as a shift in expected revenue and earnings mix to the ~~full and partial closures of a significant portion of our stores globally.~~retail segment.

Accordingly, we recorded a goodwill impairment ~~charges~~charge of $94 million related to the Jimmy Choo wholesale and Jimmy Choo licensing reporting units and $69 million impairment charge related to the Jimmy Choo brand intangible assets during Fiscal 2021. We recorded a goodwill impairment charge of $171 million related to the Jimmy Choo ~~Retail~~retail and Jimmy Choo ~~Licensing~~licensing reporting units and $180 million impairment charge related to the Jimmy Choo brand intangible ~~asset~~assets during Fiscal 2020. The impairment charges were recorded within impairment of assets on our consolidated statement of operations and comprehensive (loss) income for the fiscal ~~year~~years ended March 27, 2021 and March 28, 2020. ~~If the discount rate increased by 0.5%, it may cause an additional~~We did not incur any impairment ~~of $36 million and $13 million for the Jimmy Choo Retail and Licensing reporting units and $21 million for Jimmy Choo Brand intangible assets.~~charges in Fiscal 2019. See Note 9 to the accompanying audited financial statements for information relating to ~~its~~the annual impairment analysis performed during the fourth ~~quarter~~quarters of Fiscal ~~2020.~~

~~We also elected to perform our annual goodwill~~2021, Fiscal 2020 and brand impairment analysis for Versace using a quantitative approach, using a discounted cash flow analysis to estimate the fair values of each reporting unit. We concluded that the fair values of the Versace reporting units and the brand intangible asset exceeded the related carrying amounts and there were no impairment recorded. The fair value of the Versace Retail reporting unit, which has a goodwill balance of $213 million, is 4% higher than the carrying value. The fair value of the Versace wholesale brand intangible asset, which has a balance of $312 million, is 3% higher than the carrying value.Fiscal 2019.

It is possible that our conclusions regarding impairment or recoverability of goodwill or other indefinite intangible assets could change in future periods if, for example, (i) our businesses do not perform as projected, (ii) overall economic conditions in future years vary from current assumptions, (iii) business conditions or strategies change from our current assumptions, (iv) ~~the change of~~ discount rates change, (v) market multiples change or ~~(v)~~(vi) the identification of our reporting units change, among other factors. Such changes could result in a future impairment charge of goodwill or other indefinite intangible assets.

Share-based Compensation

We grant share-based awards to certain of our employees and directors. The grant date fair value of share options is calculated using the Black-Scholes option pricing model, which requires us to use subjective assumptions. The closing market price at the grant date is used to determine the grant date fair value of restricted ~~share~~stock units (“RSUs”) and performance-based RSUs. These values are recognized as expense over the requisite service period, net of estimated forfeitures, based on expected attainment of pre-established performance goals for performance grants, or the passage of time for those grants which have only time-based vesting requirements. Compensation expense for performance-based RSUs is recognized over the employees' requisite service period when attainment of the performance goals is deemed probable, which involves judgment as to achievement of certain performance metrics.

We use our own historical experience in determining the expected holding period and volatility of our time-based share option awards. Determining the grant date fair value of share-based awards requires considerable judgment, including estimating expected volatility, expected term, risk-free rate and forfeitures. If factors change and we employ different assumptions, the fair value of future awards and resulting share-based compensation expense may differ significantly from what we have estimated in the past.

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Derivative Financial Instruments

Forward Foreign Currency Exchange Contracts

We use forward currency exchange contracts to manage our exposure to fluctuations in foreign currency for certain of our transactions. We are exposed to risks on certain purchase commitments to foreign suppliers based on the value of our purchasing subsidiaries’ local currency relative to the currency requirement of the supplier on the date of the commitment. As such, we enter into forward currency contracts that generally mature in 12 months or less, which is consistent with the related purchase commitments. We designate certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges. All of our derivative instruments are recorded in our consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation. The effective portion of changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income (loss) until the hedged item effects earnings. When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income (loss) are recognized within cost of goods sold. We use regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change

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in the fair value of the derivative instrument to the change in the related hedged item. Effectiveness is assessed on a quarterly basis and any portion of the designated hedge contracts deemed ineffective is recorded to foreign currency ~~gain (loss).~~(gain) loss. If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded in foreign currency ~~gain (loss)~~(gain) loss in our consolidated statements of ~~operations.~~operations and comprehensive (loss) income.

Net Investment Hedges

We also use fixed-to-fixed cross currency swap agreements to hedge our net investments in foreign operations against future volatility in the exchange rates between its U.S. Dollars and these foreign currencies. We have elected the spot method of designating these contracts under ASU 2017-12, as defined in Note 2 to the accompanying consolidated financial statements, and have designated these contracts as net investment hedges. The net gain or loss on net investment hedges is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income (loss) on our consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense in our ~~statement~~consolidated statements of operations and comprehensive (loss) income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated.

We are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, we only enter into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure.

During the fourth quarter of Fiscal 2020, we terminated all of our net investment hedges related to our Euro-denominated subsidiaries. The early termination of these hedges resulted in the receipt of $296 million in cash during the fourth quarter of Fiscal 2020. During Fiscal 2021, the Company resumed its normal hedging program and entered into multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $3 billion to hedge its net investment in Euro-denominated subsidiaries.

Interest Rate Swap Agreements

We also use interest rate swap agreements to hedge the variability of our cash flows resulting from floating interest rates on our borrowings. When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded within equity as a component of accumulated other comprehensive income (loss) and are reclassified into interest expense in the same period during which the hedged transactions affect earnings.

Income Taxes

Deferred income tax assets and liabilities reflect temporary differences between the tax basis and financial reporting basis of our assets and liabilities and are determined using the tax rates and laws in effect for the periods in which the differences are expected to reverse. We periodically assess the realizability of deferred tax assets and the adequacy of deferred tax liabilities, based on the results of local, state, federal or foreign statutory tax audits or our own estimates and judgments.

Realization of deferred tax assets associated with net operating loss and tax credit carryforwards is dependent upon generating sufficient taxable income prior to their expiration in the applicable tax jurisdiction. We periodically review the recoverability of our deferred tax assets and provide valuation allowances as deemed necessary to reduce deferred tax assets to amounts that more-likely-than-not will be realized. This determination involves considerable judgment and our management considers many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within various taxing jurisdictions, expectations of future taxable income, the carryforward periods remaining and other factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Deferred tax assets could be reduced in the future if our estimates of taxable income during the carryforward period are significantly reduced or alternative tax strategies are no longer viable.

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We recognize the impact of an uncertain income tax position taken on our income tax returns at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. The effect of an uncertain income tax position will not be taken into account if the position has less than a 50% likelihood of being sustained. Our tax positions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments for those positions. We record interest expense and penalties payable to relevant tax authorities as income tax expense.

In response to the COVID-19 pandemic, local governments enacted, or are in the process of enacting, measures to provide aid and economic stimulus to companies. On March 27, 2020, the United States government enacted the Coronavirus

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Aid, Relief, and Economic Security Act (the “CARES Act”), which includes various tax provisions aimed at providing economic relief. We realized a slight favorable cash flow impact in Fiscal ~~2020~~2021 as a result of the deferral of income tax payments under the CARES Act and other local government relief initiatives. We also considered the significant adverse impact of COVID-19 on our business in assessing the realizability of our deferred tax assets. Based on this assessment, we determined that valuation allowances of approximately $65 million were needed against a portion of our non-US deferred tax ~~assets.~~assets in Fiscal 2020 and increased to $95 million in Fiscal 2021. We will continue to monitor the impacts of COVID-19 on our ability to realize our deferred tax assets and on the tax provision. Another provision. of the CARES Act applicable to us is the modification to allow for a five-year carryback of net operating losses. We recognized a $13 million benefit from the net operating loss (“NOL”) carryback claim in Fiscal 2021. This reflects our provisional estimate and is subject to adjustment as estimation approaches are refined.

New Accounting Pronouncements

Please refer to Note 2 to the accompanying consolidated financial statements for detailed information relating to recently adopted and recently issued accounting pronouncements and the associated impacts.

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Results of Operations

A discussion regarding our results of operations for Fiscal ~~2020~~2021 compared to Fiscal ~~2019~~2020 is presented below. A discussion regarding our results of operations for Fiscal ~~2019~~2020 compared to Fiscal ~~2018~~2019 can be found under Item 7 in our Annual Report on Form 10-K for the year ended March ~~30, 2019,~~28, 2020, filed with the SEC on ~~May 29, 2019,~~July 8, 2020, which is available on the SEC’s website at www.sec.gov and our investor website at www.capriholdings.com.

Comparison of Fiscal ~~2020~~2021 with Fiscal ~~2019~~2020

The following table details the results of our operations for Fiscal ~~2020~~2021 and Fiscal ~~2019~~2020 and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):


		Fiscal Years Ended						$ Change		% Change		% of Total Revenue for Fiscal 2020				% of Total Revenue for Fiscal 2019	Fiscal Years Ended				$ Change		% Change		% of Total Revenue for Fiscal 2021			% of Total Revenue for Fiscal 2020
		March 28, 2020		March 30, 2019															March 27, 2021								% of Total Revenue for Fiscal 2020
Statements of Operations Data:	Statements of Operations Data:													Statements of Operations Data:
Total revenue	Total revenue	$	5,551	$	5,238	$	313	6.0	%					Total revenue	$	4,060	$	5,551	$	(1,491)	(26.9)	%
Cost of goods sold	Cost of goods sold	2,280		2,058		222		10.8	%	41.1	%	39.3	%	Cost of goods sold	1,463		2,280		(817)		(35.8)	%	36.0	%	41.1	%
Gross profit	Gross profit	3,271		3,180		91		2.9	%	58.9	%	60.7	%	Gross profit	2,597		3,271		(674)		(20.6)	%	64.0	%	58.9	%
Selling, general and administrative expenses	Selling, general and administrative expenses	2,464		2,075		389		18.7	%	44.4	%	39.6	%	Selling, general and administrative expenses	2,018		2,464		(446)		(18.1)	%	49.7	%	44.4	%
Depreciation and amortization	Depreciation and amortization	249		225		24		10.7	%	4.5	%	4.3	%	Depreciation and amortization	212		249		(37)		(14.9)	%	5.2	%	4.5	%
Impairment of assets	Impairment of assets	708		21		687		NM		12.8	%	0.4	%	Impairment of assets	316		708		(392)		(55.4)	%	7.8	%	12.8	%
Restructuring and other charges ⁽¹⁾	Restructuring and other charges ⁽¹⁾	42		124		(82)		(66.1)	%	0.8	%	2.4	%	Restructuring and other charges ⁽¹⁾	32		42		(10)		(23.8)	%	0.8	%	0.8	%
Total operating expenses	Total operating expenses	3,463		2,445		1,018		41.6	%	62.4	%	46.7	%	Total operating expenses	2,578		3,463		(885)		(25.6)	%	63.5	%	62.4	%
(Loss) income from operations		(192)		735		(927)		(126.1)	%	(3.5)	%	14.0	%
Income (loss) from operations														Income (loss) from operations	19		(192)		211		NM		0.5	%	(3.5)	%
Other income, net	Other income, net	(6)		(4)		(2)		(50.0)	%	(0.1)	%	(0.1)	%	Other income, net	(7)		(6)		(1)		(16.7)	%	(0.2)	%	(0.1)	%
Interest expense, net	Interest expense, net	18		38		(20)		(52.6)	%	0.3	%	0.7	%	Interest expense, net	43		18		25		NM		1.1	%	0.3	%
Foreign currency loss		11		80		(69)		(86.3)	%	0.2	%	1.5	%
(Loss) income before provision for income taxes		(215)		621		(836)		(134.6)	%	(3.9)	%	11.9	%
Foreign currency (gain) loss														Foreign currency (gain) loss	(20)		11		(31)		NM		(0.5)	%	0.2	%
Income (loss) before provision for income taxes														Income (loss) before provision for income taxes	3		(215)		218		NM		0.1	%	(3.9)	%
Provision for income taxes	Provision for income taxes	10		79		(69)		(87.3)	%	0.2	%	1.5	%	Provision for income taxes	66		10		56		NM		1.6	%	0.2	%
Net (loss) income		(225)		542		(767)		(141.5)	%
Net loss														Net loss	(63)		(225)		162		(72.0)	%
Less: Net loss attributable to noncontrolling interests	Less: Net loss attributable to noncontrolling interests	(2)		(1)		(1)		NM						Less: Net loss attributable to noncontrolling interests	(1)		(2)		1		NM
Net (loss) income attributable to Capri		$	(223)	$	543	$	(766)	(141.1)	%
Net loss attributable to Capri														Net loss attributable to Capri	$	(62)	$	(223)	$	161	(72.2)	%

~~___________________~~

NM Not ~~meaningful.~~meaningful

⁽¹⁾Restructuring and other charges includes store closure costs recorded in connection with the Michael Kors Retail Fleet Optimization Plan and other restructuring initiatives, and costs recorded in connection with our acquisitions of Gianni Versace S.r.l and Jimmy Choo Group Limited.

~~Total Revenue~~Segment Information

~~Total~~We operate in three reportable segments, which are as follows:

Versace

We generate revenue ~~increased $313 million,~~ through the sale of Versace luxury ready-to-wear, accessories and footwear through directly operated Versace boutiques throughout North America (United States and Canada), EMEA (Europe, Middle East and Africa) and certain parts of Asia, as well as through Versace outlet stores and e-commerce sites. In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of products, including jeans, fragrances, watches, jewelry, eyewear and home furnishings.

Jimmy Choo

We generate revenue through the sale of Jimmy Choo luxury goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas (United States, Canada and Latin America), EMEA and certain parts of Asia, through our e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo tradename in connection with retail and/or ~~6.0%~~wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide. In addition, revenue is generated through product licensing agreements, which allow third parties to ~~$5.551 billion for Fiscal 2020, compared~~use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of products, including fragrances and eyewear.

Michael Kors

We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our products, as well as licensed products bearing our name, directly to ~~$5.238 billion for Fiscal 2019,~~consumers throughout the Americas, Europe and certain parts of Asia. Our Michael Kors e-commerce business includes e-commerce sites in the U.S., Canada and certain parts of Europe and Asia. We also sell Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of EMEA, Asia and Brazil. In addition, revenue is generated through product and geographic licensing arrangements, which ~~included net unfavorable foreign currency effects~~allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of ~~$45 million~~products, including watches, jewelry, fragrances and eyewear, as well as through geographic licensing arrangements, which allow third parties to use the Michael Kors tradename in connection with the retail and/or wholesale sales of our Michael Kors branded products in specific geographic regions.

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Unallocated Expenses

In addition to the reportable segments discussed above, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including ERP system implementation costs. In addition, certain other costs are not allocated to segments, including restructuring and other charges (including transaction and transition costs related to our acquisitions), impairment costs and COVID-19 related charges. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the ~~weakening of the Euro, the Chinese Renminbi, the British Pound~~business and ~~the Canadian Dollar against the U.S. Dollar in Fiscal 2020, as compared to Fiscal 2019. On a constant currency basis,~~assesses performance. The following table presents our total revenue ~~increased $358 million, or 6.8%. Total revenue~~and income (loss) from operations by segment for Fiscal 2021, Fiscal 2020 ~~included approximately $723~~and Fiscal 2019 (in millions):


		Fiscal Years Ended
		March 27, 2021		March 28, 2020		March 30, 2019
Total revenue:
	Versace	$	718	$	843	$	137
	Jimmy Choo	418		555		590
	Michael Kors	2,924		4,153		4,511
Total revenue		$	4,060	$	5,551	$	5,238

Income (loss) from operations:
	Versace	$	21	$	(8)	$	(11)
	Jimmy Choo	(55)		(13)		20
	Michael Kors	595		850		964
Total segment income from operations		561		829		973
Less:	Corporate expenses	(152)		(152)		(93)
	Impairment of assets	(316)		(708)		(21)
	COVID-19 related charges (1)	(42)		(119)		—
	Restructuring and other charges	(32)		(42)		(124)
Total income (loss) from operations		$	19	$	(192)	$	735

(1)COVID-19 related charges during Fiscal 2021 primarily include net incremental inventory reserves and severance expense of $10 million and $24 million, respectively, recorded within costs of ~~incremental~~goods sold and selling, general and administrative expenses in the consolidated statements of income and comprehensive (loss) income. COVID-19 related charges during Fiscal 2020, primarily include additional inventory reserves and credit losses of $92 million and $25 million, respectively, recorded within costs of goods sold and selling, general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income.

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The following table presents our global network of retail stores and wholesale doors:


	As of
	March 27, 2021	March 28, 2020	March 30, 2019
Number of full price retail stores (including concessions):
Versace	153	157	146
Jimmy Choo	176	179	169
Michael Kors	529	568	587
	858	904	902

Number of outlet stores:
Versace	57	49	42
Jimmy Choo	51	47	39
Michael Kors	291	271	266
	399	367	347

Total number of retail stores	1,257	1,271	1,249

Total number of wholesale doors:
Versace	868	824	1,028
Jimmy Choo	450	554	596
Michael Kors	2,852	2,982	3,202
	4,170	4,360	4,826

The following table presents our retail stores by geographic location:


	As of			As of
	March 27, 2021			March 28, 2020
	Versace	Jimmy Choo	Michael Kors	Versace	Jimmy Choo	Michael Kors
Store count by region:
The Americas	34	44	353	30	45	380
EMEA	57	74	176	60	76	180
Asia	119	109	291	116	105	279
	210	227	820	206	226	839

Key Performance Indicators and Statistics

We use a number of key indicators of operating results to evaluate our performance, including the following (dollars in millions):


	Fiscal Years Ended
	March 27, 2021			March 28, 2020			March 30, 2019
Total revenue	$	4,060		$	5,551		$	5,238

Gross profit as a percent of total revenue	64.0		%	58.9		%	60.7		%
Income (loss) from operations	$	19		$	(192)		$	735
Income (loss) from operations as a percent of total revenue	0.5		%	(3.5)		%	14.0		%

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Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue ~~attributable~~and expenses during the reporting period. Critical accounting policies are those that are the most important to ~~Versace, which was acquired and consolidated into~~the portrayal of our results of operations ~~effective December 31, 2018. The remaining decrease is attributable~~and financial condition and that require our most difficult, subjective and complex judgments to ~~lower Jimmy Choo~~make estimates about the effect of matters that are inherently uncertain. In applying such policies, we must use certain assumptions that are based on our informed judgments, assessments of probability and ~~Michael Kors revenues, as compared~~best estimates. Estimates, by their nature, are subjective and are based on analysis of available information, including current and historical factors and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis. While our significant accounting policies are detailed in Note 2 to the ~~prior year,~~accompanying financial statements, our critical accounting policies are discussed below and include revenue recognition, inventories, long-lived assets, goodwill and other indefinite-lived intangible assets, share-based compensation, derivatives and income taxes.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for goods or services. We recognize retail store revenue when control of the product is transferred at the point of sale at our owned stores, including concessions. Revenue from sales through our e-commerce sites is recognized at the time of delivery to the customer, reduced by an estimate of returns. Wholesale revenue is recognized net of estimates for sales returns, discounts, markdowns and allowances, after merchandise is shipped and control of the underlying product is transferred to our wholesale customers. To arrive at net sales for retail, gross sales are reduced by actual customer returns, as well as by a provision for estimated future customer returns, which is based on management’s review of historical and current customer returns. The amounts reserved for retail sales returns were $20 million, $12 million and $15 million at March 27, 2021, March 28, 2020 and March 30, 2019, respectively. Net sales for wholesale equals gross sales, reduced by provisions for estimated future returns based on current expectations, as well as trade discounts, markdowns, allowances, operational chargebacks, and certain cooperative selling expenses. Total sales reserves for wholesale were $78 million, $154 million and $112 million at March 27, 2021, March 28, 2020 and March 30, 2019, respectively. These estimates are based on such factors as historical trends, actual and forecasted performance and market conditions, which are reviewed by management on a quarterly basis. Our historical estimates of these costs were not materially different from actual results.

Inventories

The combined total of raw materials and work in process inventory recorded on the our consolidated balance sheets as of March 27, 2021 and March 28, 2020 were $28 million and $27 million, respectively. The net realizable value of our inventory as of March 27, 2021 includes the adverse impacts related to the COVID-19 pandemic. This includes the impact from temporary retail store closures, wholesale customer store closures, reductions in retail store traffic, international tourism and consumer consumption.

Long-lived Assets

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such asset may not be recoverable. For the purposes of impairment testing, we group long-lived assets at the lowest level of identifiable cash flow. Our leasehold improvements are typically amortized over the life of the store lease, including reasonably assured renewals and our shop-in-shops are amortized over a useful life of three or four years. Our impairment testing is based on our best estimate of the future operating cash flows. If the sum of our estimated undiscounted future cash flows associated with the asset is less than the asset’s carrying value, we would recognize an impairment charge, which is measured as the amount by which the carrying value exceeds the fair value of the asset. The fair values determined by management require significant judgment and include certain assumptions regarding future sales and expense growth rates, discount rates and estimates of real estate market fair values. As such, these estimates may differ from actual results and are affected by future market and economic conditions.

During Fiscal 2021, Fiscal 2020 and Fiscal 2019, we recorded impairment charges of $158 million, $357 million and $21 million, respectively, which were primarily related to operating lease right-of-use assets and fixed assets of our retail store locations. Please refer to Note 8 and Note 14 of the accompanying consolidated audited financial statements for additional information.

Goodwill and Other Indefinite-lived Intangible Assets

We record intangible assets based on their fair value on the date of acquisition. Goodwill is recorded as the difference between the fair value of the purchase consideration and the fair value of the net identifiable tangible and intangible assets acquired. The brand intangible assets recorded in connection with the acquisitions of Versace and Jimmy Choo were determined to be indefinite-lived intangible assets, which are not subject to amortization. We perform an impairment assessment of goodwill, as well as the Versace brand and Jimmy Choo brand intangible assets on an annual basis, or whenever impairment indicators exist. In the absence of any impairment indicators, goodwill, the Versace brand and the Jimmy Choo brand are assessed for impairment during the fourth quarter of each fiscal year. Judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business.

We may assess our goodwill and our brand indefinite-lived intangible assets for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of these assets is greater than their carrying value. When performing a qualitative test, we assess various factors including industry and market conditions, macroeconomic conditions and performance of our businesses. If the results of the qualitative assessment indicate that it is more likely than not that our goodwill and other indefinite-lived intangible assets are impaired, a quantitative impairment analysis is performed to determine if impairment is required. We may also elect to perform a quantitative analysis of goodwill and our indefinite-lived intangible assets initially rather than using a qualitative approach.

The impairment testing for goodwill is performed at the reporting unit level. We use industry accepted valuation models and set criteria that are reviewed and approved by various levels of management and, in certain instances, we engage independent third-party valuation specialists for advice. To determine the fair value of a reporting unit, we use a combination of the income and market approaches, when applicable. We believe the blended use of both models, when applicable, compensates for the inherent risk associated with either model if used on a stand-alone basis, and this combination is indicative of the factors a market participant would consider when performing a similar valuation. If the fair value of a reporting unit exceeds the related carrying value, the reporting unit’s goodwill is considered not to be impaired and no further testing is performed. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded for the difference. These valuations are affected by certain estimates, including future revenue growth rates, future operating expense growth rates, gross margins and discount rates. Future events could cause us to conclude that impairment indicators exist, and goodwill may be impaired.

When performing a quantitative impairment assessment of our brand intangible assets, the fair value of the Versace and the Jimmy Choo brands is estimated using a discounted cash flow analysis based on the "relief from royalty" method, assuming that a third party would be willing to pay a royalty in lieu of ownership for this intangible asset. This approach is dependent on many factors, including estimates of future revenue growth rates, royalty rates and discount rates. Actual future results may differ from these estimates. An impairment loss is recognized when the estimated fair value of the brand intangible assets is less than its carrying amount.

During the fourth quarter of Fiscal 2021, we performed our annual goodwill and indefinite-lived intangible assets impairment analysis for each brand. Based on qualitative impairment assessment of the Michael Kors reporting units, we concluded that it is more likely than not that the fair value of the Michael Kors reporting units exceeded its carrying value and, therefore, was not impaired. We elected to perform quantitative impairment analyses for both the Versace and Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair values of each brand's reporting units. We also elected to perform an impairment analysis for both the Versace and Jimmy Choo brand intangible assets using an income approach to estimate the fair values. Based on the results of these assessments, we determined there was no impairment

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However, we concluded that the fair values of the Jimmy Choo wholesale and Jimmy Choo licensing reporting units, along with the Jimmy Choo brand intangible assets, did not exceed their related carrying amounts. These impairment charges were primarily related to higher discount rates in the current year driven by a change in market factors as well as a shift in expected revenue and earnings mix to the retail segment.

Accordingly, we recorded a goodwill impairment charge of $94 million related to the Jimmy Choo wholesale and Jimmy Choo licensing reporting units and $69 million impairment charge related to the Jimmy Choo brand intangible assets during Fiscal 2021. We recorded a goodwill impairment charge of $171 million related to the Jimmy Choo retail and Jimmy Choo licensing reporting units and $180 million impairment charge related to the Jimmy Choo brand intangible assets during Fiscal 2020. The impairment charges were recorded within impairment of assets on our consolidated statement of operations and comprehensive (loss) income for the fiscal years ended March 27, 2021 and March 28, 2020. We did not incur any impairment charges in Fiscal 2019. See Note 9 to the accompanying audited financial statements for information relating to the annual impairment analysis performed during the fourth quarters of Fiscal 2021, Fiscal 2020 and Fiscal 2019.

It is possible that our conclusions regarding impairment or recoverability of goodwill or other indefinite intangible assets could change in future periods if, for example, (i) our businesses do not perform as projected, (ii) overall economic conditions in future years vary from current assumptions, (iii) business conditions or strategies change from our current assumptions, (iv) discount rates change, (v) market multiples change or (vi) the identification of our reporting units change, among other factors. Such changes could result in a future impairment charge of goodwill or other indefinite intangible assets.

Share-based Compensation

We grant share-based awards to certain of our employees and directors. The grant date fair value of share options is calculated using the Black-Scholes option pricing model, which requires us to use subjective assumptions. The closing market price at the grant date is used to determine the grant date fair value of restricted stock units (“RSUs”) and performance-based RSUs. These values are recognized as expense over the requisite service period, net of estimated forfeitures, based on expected attainment of pre-established performance goals for performance grants, or the passage of time for those grants which have only time-based vesting requirements. Compensation expense for performance-based RSUs is recognized over the employees' requisite service period when attainment of the performance goals is deemed probable, which involves judgment as to achievement of certain performance metrics.

Derivative Financial Instruments

Forward Foreign Currency Exchange Contracts

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in the fair value of the derivative instrument to the change in the related hedged item. Effectiveness is assessed on a quarterly basis and any portion of the designated hedge contracts deemed ineffective is recorded to foreign currency (gain) loss. If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded in foreign currency (gain) loss in our consolidated statements of operations and comprehensive (loss) income.

Net Investment Hedges

We also use fixed-to-fixed cross currency swap agreements to hedge our net investments in foreign operations against future volatility in the exchange rates between its U.S. Dollars and these foreign currencies. We have elected the spot method of designating these contracts under ASU 2017-12, as defined in Note 2 to the accompanying consolidated financial statements, and have designated these contracts as net investment hedges. The net gain or loss on net investment hedges is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income (loss) on our consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense in our consolidated statements of operations and comprehensive (loss) income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated.

Interest Rate Swap Agreements

Income Taxes

We recognize the impact of ~~COVID-19.~~an uncertain income tax position taken on our income tax returns at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. The effect of an uncertain income tax position will not be taken into account if the position has less than a 50% likelihood of being sustained. Our tax positions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments for those positions. We record interest expense and penalties payable to relevant tax authorities as income tax expense.

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~~Gross Profit~~

~~Gross profit increased $91 million, or 2.9%~~Aid, Relief, and Economic Security Act (the “CARES Act”), ~~to $3.271 billion during~~which includes various tax provisions aimed at providing economic relief. We realized a slight favorable cash flow impact in Fiscal ~~2020, compared to $3.180 billion for Fiscal 2019, which included net unfavorable foreign currency effects of $28 million. Gross profit~~2021 as a ~~percentage~~result of total revenue decreased 180 basis points to 58.9% during Fiscal 2020, compared to 60.7% during Fiscal 2019. The decrease in gross profit margin was primarily attributable to incremental inventory reservesthe deferral of ~~$92 million recorded in connection with COVID-19~~income tax payments under the CARES Act and ~~lower gross profit for Michael Kors primarily driven by increased markdowns during Fiscal 2020, as compared to Fiscal 2019, partially offset by~~other local government relief initiatives. We also considered the ~~inclusion of Versace, which benefited our gross margin 140 basis points.~~

~~Total Operating Expenses~~

Total operating expenses increased $1.018 billion, or 41.6%, to $3.463 billion during Fiscal 2020, compared to $2.445 billion for Fiscal 2019, which included incremental operating expenses of $472 million associated with the recently acquired Versace business. Our operating expenses included a net favorable foreign currencysignificant adverse impact of COVID-19 on our business in assessing the realizability of our deferred tax assets. Based on this assessment, we determined that valuation allowances of approximately ~~$56 million. Total operating expenses as~~$65 million were needed against a ~~percentage~~portion of ~~total revenue increased to 62.4%~~our non-US deferred tax assets in Fiscal 2020 ~~compared to 46.7% in Fiscal 2019. The components that comprise total operating expenses are detailed below.~~

~~Selling, General~~ and ~~Administrative Expenses~~

Selling, general and administrative expenses increased $389 million, or 18.7%, to $2.464 billion during Fiscal 2020, compared to $2.075 billion for Fiscal 2019. The increase in selling, general and administrative expenses was primarily due to incremental costs of $421 million associated with the recently acquired Versace business, which has been consolidated in our operations beginning on December 31, 2018, increased retail store and e-commerce related costs and bad debt expense related to COVID-19, partially offset by decreased rent and occupancy expense.

~~Selling, general and administrative expenses as a percentage of total revenue~~ increased to 44.4% during Fiscal 2020, compared to 39.6% for Fiscal 2019, primarily due to the inclusion of expenses associated with the Versace business, increased retail store and e-commerce related costs and bad debt expense related to COVID-19 of $25 million.

Corporate unallocated expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment and exclude COVID-19 related charges, increased $59 million, or 63.4%, to $152$95 million in Fiscal ~~2020 as compared~~2021. We will continue to ~~$93~~monitor the impacts of COVID-19 on our ability to realize our deferred tax assets and on the tax provision. Another provision of the CARES Act applicable to us is the modification to allow for a five-year carryback of net operating losses. We recognized a $13 million benefit from the net operating loss (“NOL”) carryback claim in Fiscal ~~2019, primarily attributable~~2021. This reflects our provisional estimate and is subject to ~~the inclusion of ERP system implementation costs in the current year.~~adjustment as estimation approaches are refined.

~~Depreciation and Amortization~~New Accounting Pronouncements

~~Depreciation and amortization increased $24 million, or 10.7%,~~Please refer to $249 million during Fiscal 2020, compared to $225 million for Fiscal 2019. The increase in depreciation and amortization expense was primarily attributable to incremental depreciation and amortization expenses of $51 million attributable to the Versace business (including amortization of purchase accounting adjustments), partially offset by lower depreciation due to previously recorded property and equipment impairment charges. Depreciation and amortization increased to 4.5% as a percentage of total revenue during Fiscal 2020, compared to 4.3% for Fiscal 2019.

~~Impairment of Assets~~

During Fiscal 2020, we recognized asset impairment charges of $708 million. The increase was primarily related to the impairment of operating lease right-of-use assets, as well as the impairment of Jimmy Choo goodwill and its brand intangible assets as part of our annual impairment assessments (see Note 142 to the accompanying consolidated financial statements for ~~additional information). During Fiscal 2019, we recognized asset impairment charges of approximately $21 million, of which $17 million related~~detailed information relating to ~~underperforming Michael Kors full-price retail store locations, some of which were closed as part of our Michael Kors Retail Fleet Optimization Plan.~~

~~Restructuring~~recently adopted and ~~Other Charges~~

~~During Fiscal 2020, we recognized restructuring~~recently issued accounting pronouncements and other charges of $42 million, which included restructuring charges of $8 million, primarily related to our Michael Kors Retail Fleet Optimization Plan, and other costs of $34 million. The other costs recorded during Fiscal 2020 included $24 million related to the acquisition of Versace, $9 million in connection with the Jimmy Choo acquisition, and $1 million in connection with the acquisition of Gozzi. (see Note 11 to the accompanying consolidated financial statements for additional information).associated impacts.

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~~During Fiscal 2019, we recognized restructuring and other charges~~Results of $124 million, which included restructuring charges of $45 million, primarily associated with our Michael Kors Retail Fleet Optimization Plan and other costs of $79 million, $52 million of which related to the Versace acquisition and $27 million related to the Jimmy Choo acquisition.

~~(Loss) Income from~~ Operations

~~As a result~~A discussion regarding our results of ~~the foregoing, income from~~ operations ~~decreased $927 million, or 126.1%, to a loss from operations of $192 million during Fiscal 2020, compared to income from operations of $735 million~~ for Fiscal ~~2019. Income from operations as a percentage of total revenue decreased to (3.5)% in Fiscal 2020, compared to 14.0% in Fiscal 2019. See~~ ~~Segment Information~~ ~~above for a reconciliation of our segment operating income to total operating income.~~

~~Interest expense, net~~

Interest expense, net decreased $20 million, or 52.6%, to $18 million for Fiscal 2020, as compared to $38 million for Fiscal 2019, primarily due to a reduction of interest expense related to cross-currency swaps associated with our net investment hedge during Fiscal 2020, as2021 compared to Fiscal 2019, largely offset by increased interest expense attributable to higher average borrowings outstanding in the current year (see Note 12 and Note 15 to the accompanying consolidated financial statements2020 is presented below. A discussion regarding our results of operations for ~~additional information).~~

~~Foreign Currency Loss~~

We recognized a net foreign currency loss of $11 million during Fiscal 2020, primarily attributable to the revaluation and settlement of certain of our accounts payable in currencies other than the functional currency, as well as the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries (see Note 15 to the accompanying consolidated financial statements for additional information).

We recognized a net foreign currency loss of $80 million during Fiscal 2019, primarily attributable to a $77 million loss related to forward foreign currency exchange derivative contracts to hedge the transaction price of the Versace acquisition (please refer to Note 15 to the accompanying consolidated financial statements for additional information).

~~Provision for Income Taxes~~

We recognized $10 million of income tax expense during Fiscal 2020, compared with $79 million for Fiscal 2019. Our effective tax rate for Fiscal 2020 was (4.7)%, compared to 12.7% for Fiscal 2019. The decrease in our income tax provision was primarily due to the impact of a consolidated pre-tax loss as well as the impact of a release of income tax reserves during Fiscal 2020. The decrease was partially offset by the effects of valuation allowances established on a portion of our non-US deferred tax assets, a lower favorable effect of our global financing activities during Fiscal 2020 compared to Fiscal 2019 ~~as well as non-tax deductible goodwill impairment impacts. The global financing activities are related to~~can be found under Item 7 in our ~~previously disclosed 2014 move of our principal executive office from Hong Kong to~~Annual Report on Form 10-K for the ~~United Kingdom (“U.K.”) and decision to become a U.K. tax resident. In connection~~year ended March 28, 2020, filed with this decision, we funded our international growth strategy through intercompany debt financing arrangements between certain of our U.S., U.K. and Switzerland subsidiaries in December 2015. Accordingly, due to the ~~difference in the statutory income tax rates between these jurisdictions, we realized a higher effective tax rate~~SEC on July 8, 2020, which is available on the ~~consolidated pre-tax loss.~~SEC’s website at www.sec.gov and our investor website at www.capriholdings.com.

~~Our effective tax rate may fluctuate from time to time due to the effects~~Comparison of ~~changes in U.S. state and local taxes and tax rates in foreign jurisdictions. In addition, factors such as the geographic mix of earnings, enacted tax legislation and~~Fiscal 2021 with Fiscal 2020

The following table details the results of ~~various global tax strategies, may also impact~~ our ~~effective tax rate in future periods.~~

~~Net (Loss) Income Attributable to Capri~~

~~As a result of the foregoing, our net income attributable to Capri decreased $766 million, or 141.1%, to a net loss of $223 million during~~operations for Fiscal 2021 and Fiscal 2020 ~~compared~~and expresses the relationship of certain line items to ~~net income of $543 million for Fiscal 2019.~~total revenue as a percentage (dollars in millions):


	Fiscal Years Ended				$ Change		% Change		% of Total Revenue for Fiscal 2021		% of Total Revenue for Fiscal 2020
	March 27, 2021		March 28, 2020
Statements of Operations Data:
Total revenue	$	4,060	$	5,551	$	(1,491)	(26.9)	%
Cost of goods sold	1,463		2,280		(817)		(35.8)	%	36.0	%	41.1	%
Gross profit	2,597		3,271		(674)		(20.6)	%	64.0	%	58.9	%
Selling, general and administrative expenses	2,018		2,464		(446)		(18.1)	%	49.7	%	44.4	%
Depreciation and amortization	212		249		(37)		(14.9)	%	5.2	%	4.5	%
Impairment of assets	316		708		(392)		(55.4)	%	7.8	%	12.8	%
Restructuring and other charges	32		42		(10)		(23.8)	%	0.8	%	0.8	%
Total operating expenses	2,578		3,463		(885)		(25.6)	%	63.5	%	62.4	%
Income (loss) from operations	19		(192)		211		NM		0.5	%	(3.5)	%
Other income, net	(7)		(6)		(1)		(16.7)	%	(0.2)	%	(0.1)	%
Interest expense, net	43		18		25		NM		1.1	%	0.3	%
Foreign currency (gain) loss	(20)		11		(31)		NM		(0.5)	%	0.2	%
Income (loss) before provision for income taxes	3		(215)		218		NM		0.1	%	(3.9)	%
Provision for income taxes	66		10		56		NM		1.6	%	0.2	%
Net loss	(63)		(225)		162		(72.0)	%
Less: Net loss attributable to noncontrolling interests	(1)		(2)		1		NM
Net loss attributable to Capri	$	(62)	$	(223)	$	161	(72.2)	%

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NM Not meaningful

Segment Information

We operate in three reportable segments, which are as follows:

Versace

We generate revenue through the sale of Versace luxury ready-to-wear, accessories and footwear through directly operated Versace boutiques throughout North America (United States and Canada), EMEA (Europe, Middle East and Africa) and certain parts of Asia, as well as through Versace outlet stores and e-commerce sites. In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of products, including jeans, fragrances, watches, jewelry, eyewear and home furnishings.

Jimmy Choo

We generate revenue through the sale of Jimmy Choo luxury goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas (United States, Canada and Latin America), EMEA and certain parts of Asia, through our e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo tradename in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide. In addition, revenue is generated through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of products, including fragrances and eyewear.

Michael Kors

We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our products, as well as licensed products bearing our name, directly to consumers throughout the Americas, Europe and certain parts of Asia. Our Michael Kors e-commerce business includes e-commerce sites in the U.S., Canada and certain parts of Europe and Asia. We also sell Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of EMEA, Asia and Brazil. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear, as well as through geographic licensing arrangements, which allow third parties to use the Michael Kors tradename in connection with the retail and/or wholesale sales of our Michael Kors branded products in specific geographic regions.

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Unallocated Expenses

In addition to the reportable segments discussed above, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including ERP system implementation costs. In addition, certain other costs are not allocated to segments, including restructuring and other charges (including transaction and transition costs related to our acquisitions), impairment costs and COVID-19 related charges. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance. The following table presents our total revenue and income (loss) from operations by segment for Fiscal 2021, Fiscal 2020 and Fiscal 2019 (in millions):


		Fiscal Years Ended
		March 27, 2021		March 28, 2020		March 30, 2019
Total revenue:
	Versace	$	718	$	843	$	137
	Jimmy Choo	418		555		590
	Michael Kors	2,924		4,153		4,511
Total revenue		$	4,060	$	5,551	$	5,238

Income (loss) from operations:
	Versace	$	21	$	(8)	$	(11)
	Jimmy Choo	(55)		(13)		20
	Michael Kors	595		850		964
Total segment income from operations		561		829		973
Less:	Corporate expenses	(152)		(152)		(93)
	Impairment of assets	(316)		(708)		(21)
	COVID-19 related charges (1)	(42)		(119)		—
	Restructuring and other charges	(32)		(42)		(124)
Total income (loss) from operations		$	19	$	(192)	$	735

(1)COVID-19 related charges during Fiscal 2021 primarily include net incremental inventory reserves and severance expense of $10 million and $24 million, respectively, recorded within costs of goods sold and selling, general and administrative expenses in the consolidated statements of income and comprehensive (loss) income. COVID-19 related charges during Fiscal 2020, primarily include additional inventory reserves and credit losses of $92 million and $25 million, respectively, recorded within costs of goods sold and selling, general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income.

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The following table presents our global network of retail stores and wholesale doors:


	As of
	March 27, 2021	March 28, 2020	March 30, 2019
Number of full price retail stores (including concessions):
Versace	153	157	146
Jimmy Choo	176	179	169
Michael Kors	529	568	587
	858	904	902

Number of outlet stores:
Versace	57	49	42
Jimmy Choo	51	47	39
Michael Kors	291	271	266
	399	367	347

Total number of retail stores	1,257	1,271	1,249

Total number of wholesale doors:
Versace	868	824	1,028
Jimmy Choo	450	554	596
Michael Kors	2,852	2,982	3,202
	4,170	4,360	4,826

The following table presents our retail stores by geographic location:


	As of			As of
	March 27, 2021			March 28, 2020
	Versace	Jimmy Choo	Michael Kors	Versace	Jimmy Choo	Michael Kors
Store count by region:
The Americas	34	44	353	30	45	380
EMEA	57	74	176	60	76	180
Asia	119	109	291	116	105	279
	210	227	820	206	226	839

Key Performance Indicators and Statistics

We use a number of key indicators of operating results to evaluate our performance, including the following (dollars in millions):


	Fiscal Years Ended
	March 27, 2021			March 28, 2020			March 30, 2019
Total revenue	$	4,060		$	5,551		$	5,238

Gross profit as a percent of total revenue	64.0		%	58.9		%	60.7		%
Income (loss) from operations	$	19		$	(192)		$	735
Income (loss) from operations as a percent of total revenue	0.5		%	(3.5)		%	14.0		%

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Critical Accounting Policies

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for goods or services. We recognize retail store revenue when control of the product is transferred at the point of sale at our owned stores, including concessions. Revenue from sales through our e-commerce sites is recognized at the time of delivery to the customer, reduced by an estimate of returns. Wholesale revenue is recognized net of estimates for sales returns, discounts, markdowns and allowances, after merchandise is shipped and control of the underlying product is transferred to our wholesale customers. To arrive at net sales for retail, gross sales are reduced by actual customer returns, as well as by a provision for estimated future customer returns, which is based on management’s review of historical and current customer returns. The amounts reserved for retail sales returns were $20 million, $12 million and $15 million at March 27, 2021, March 28, 2020 and March 30, 2019, respectively. Net sales for wholesale equals gross sales, reduced by provisions for estimated future returns based on current expectations, as well as trade discounts, markdowns, allowances, operational chargebacks, and certain cooperative selling expenses. Total sales reserves for wholesale were $78 million, $154 million and $112 million at March 27, 2021, March 28, 2020 and March 30, 2019, respectively. These estimates are based on such factors as historical trends, actual and forecasted performance and market conditions, which are reviewed by management on a quarterly basis. Our historical estimates of these costs were not materially different from actual results.

Inventories

Long-lived Assets

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Goodwill and Other Indefinite-lived Intangible Assets

We may assess our goodwill and our brand indefinite-lived intangible assets for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of these assets is greater than their carrying value. When performing a qualitative test, we assess various factors including industry and market conditions, macroeconomic conditions and performance of our businesses. If the results of the qualitative assessment indicate that it is more likely than not that our goodwill and other indefinite-lived intangible assets are impaired, a quantitative impairment analysis is performed to determine if impairment is required. We may also elect to perform a quantitative analysis of goodwill and our indefinite-lived intangible assets initially rather than using a qualitative approach.

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It is possible that our conclusions regarding impairment or recoverability of goodwill or other indefinite intangible assets could change in future periods if, for example, (i) our businesses do not perform as projected, (ii) overall economic conditions in future years vary from current assumptions, (iii) business conditions or strategies change from our current assumptions, (iv) discount rates change, (v) market multiples change or (vi) the identification of our reporting units change, among other factors. Such changes could result in a future impairment charge of goodwill or other indefinite intangible assets.

Share-based Compensation

We grant share-based awards to certain of our employees and directors. The grant date fair value of share options is calculated using the Black-Scholes option pricing model, which requires us to use subjective assumptions. The closing market price at the grant date is used to determine the grant date fair value of restricted stock units (“RSUs”) and performance-based RSUs. These values are recognized as expense over the requisite service period, net of estimated forfeitures, based on expected attainment of pre-established performance goals for performance grants, or the passage of time for those grants which have only time-based vesting requirements. Compensation expense for performance-based RSUs is recognized over the employees' requisite service period when attainment of the performance goals is deemed probable, which involves judgment as to achievement of certain performance metrics.

Derivative Financial Instruments

Forward Foreign Currency Exchange Contracts

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in the fair value of the derivative instrument to the change in the related hedged item. Effectiveness is assessed on a quarterly basis and any portion of the designated hedge contracts deemed ineffective is recorded to foreign currency (gain) loss. If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded in foreign currency (gain) loss in our consolidated statements of operations and comprehensive (loss) income.

Net Investment Hedges

We also use fixed-to-fixed cross currency swap agreements to hedge our net investments in foreign operations against future volatility in the exchange rates between its U.S. Dollars and these foreign currencies. We have elected the spot method of designating these contracts under ASU 2017-12, as defined in Note 2 to the accompanying consolidated financial statements, and have designated these contracts as net investment hedges. The net gain or loss on net investment hedges is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income (loss) on our consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense in our consolidated statements of operations and comprehensive (loss) income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated.

Interest Rate Swap Agreements

Income Taxes

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Aid, Relief, and Economic Security Act (the “CARES Act”), which includes various tax provisions aimed at providing economic relief. We realized a slight favorable cash flow impact in Fiscal 2021 as a result of the deferral of income tax payments under the CARES Act and other local government relief initiatives. We also considered the significant adverse impact of COVID-19 on our business in assessing the realizability of our deferred tax assets. Based on this assessment, we determined that valuation allowances of approximately $65 million were needed against a portion of our non-US deferred tax assets in Fiscal 2020 and increased to $95 million in Fiscal 2021. We will continue to monitor the impacts of COVID-19 on our ability to realize our deferred tax assets and on the tax provision. Another provision of the CARES Act applicable to us is the modification to allow for a five-year carryback of net operating losses. We recognized a $13 million benefit from the net operating loss (“NOL”) carryback claim in Fiscal 2021. This reflects our provisional estimate and is subject to adjustment as estimation approaches are refined.

New Accounting Pronouncements

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Results of Operations

A discussion regarding our results of operations for Fiscal 2021 compared to Fiscal 2020 is presented below. A discussion regarding our results of operations for Fiscal 2020 compared to Fiscal 2019 can be found under Item 7 in our Annual Report on Form 10-K for the year ended March 28, 2020, filed with the SEC on July 8, 2020, which is available on the SEC’s website at www.sec.gov and our investor website at www.capriholdings.com.

Comparison of Fiscal 2021 with Fiscal 2020

The following table details the results of our operations for Fiscal 2021 and Fiscal 2020 and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):


	Fiscal Years Ended				$ Change		% Change		% of Total Revenue for Fiscal 2021		% of Total Revenue for Fiscal 2020
	March 27, 2021		March 28, 2020
Statements of Operations Data:
Total revenue	$	4,060	$	5,551	$	(1,491)	(26.9)	%
Cost of goods sold	1,463		2,280		(817)		(35.8)	%	36.0	%	41.1	%
Gross profit	2,597		3,271		(674)		(20.6)	%	64.0	%	58.9	%
Selling, general and administrative expenses	2,018		2,464		(446)		(18.1)	%	49.7	%	44.4	%
Depreciation and amortization	212		249		(37)		(14.9)	%	5.2	%	4.5	%
Impairment of assets	316		708		(392)		(55.4)	%	7.8	%	12.8	%
Restructuring and other charges	32		42		(10)		(23.8)	%	0.8	%	0.8	%
Total operating expenses	2,578		3,463		(885)		(25.6)	%	63.5	%	62.4	%
Income (loss) from operations	19		(192)		211		NM		0.5	%	(3.5)	%
Other income, net	(7)		(6)		(1)		(16.7)	%	(0.2)	%	(0.1)	%
Interest expense, net	43		18		25		NM		1.1	%	0.3	%
Foreign currency (gain) loss	(20)		11		(31)		NM		(0.5)	%	0.2	%
Income (loss) before provision for income taxes	3		(215)		218		NM		0.1	%	(3.9)	%
Provision for income taxes	66		10		56		NM		1.6	%	0.2	%
Net loss	(63)		(225)		162		(72.0)	%
Less: Net loss attributable to noncontrolling interests	(1)		(2)		1		NM
Net loss attributable to Capri	$	(62)	$	(223)	$	161	(72.2)	%

NM Not meaningful

Total Revenue

Total revenue decreased $1.491 billion, or 26.9%, to $4.060 billion for Fiscal 2021, compared to $5.551 billion for Fiscal 2020, which included net favorable foreign currency effects of $107 million primarily related to the strengthening of the Euro, the Chinese Renminbi and the British Pound against the U.S. Dollar in Fiscal 2021, as compared to Fiscal 2020. On a constant currency basis, our total revenue decreased $1.598 billion, or 28.8%. The decrease is attributable to lower revenues across all three brands, as compared to the prior year, reflecting the adverse impact of COVID-19.

Gross Profit

Gross profit decreased $674 million, or 20.6%, to $2.597 billion during Fiscal 2021, compared to $3.271 billion for Fiscal 2020, which included net favorable foreign currency effects of $64 million. Gross profit as a percentage of total revenue increased 510 basis points to 64.0% during Fiscal 2021, compared to 58.9% during Fiscal 2020. The increase in gross profit margin was primarily attributable to a higher gross profit margin for Michael Kors driven by a higher average unit price and favorable channel mix during Fiscal 2021, as compared to Fiscal 2020.

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Total Operating Expenses

Total operating expenses decreased $885 million, or 25.6%, to $2.578 billion during Fiscal 2021, compared to $3.463 billion for Fiscal 2020. Our operating expenses included a net unfavorable foreign currency impact of approximately $108 million. Total operating expenses as a percentage of total revenue increased to 63.5% in Fiscal 2021, compared to 62.4% in Fiscal 2020. The components that comprise total operating expenses are detailed below.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $446 million, or 18.1%, to $2.018 billion during Fiscal 2021, compared to $2.464 billion for Fiscal 2020, primarily due to lower variable costs, as well as decreases from our cost reduction initiatives as a result of COVID-19.

Selling, general and administrative expenses as a percentage of total revenue increased to 49.7% during Fiscal 2021, compared to 44.4% for Fiscal 2020, primarily due to deleverage on lower revenue and increased e-commerce related costs as a percentage of total revenue.

Depreciation and Amortization

Depreciation and amortization decreased $37 million, or 14.9%, to $212 million during Fiscal 2021, compared to $249 million for Fiscal 2020. The decrease in depreciation and amortization expense was primarily attributable to lower depreciation due to previously recorded property and equipment impairment charges. Depreciation and amortization increased to 5.2% as a percentage of total revenue during Fiscal 2021, compared to 4.5% for Fiscal 2020 primarily due to lower revenues during Fiscal 2021 due to COVID-19.

Impairment of Assets

During Fiscal 2021, we recognized asset impairment charges of $316 million. The decrease was primarily related to lower impairment of operating lease right-of-use assets, as well as lower impairment of Jimmy Choo goodwill and its brand intangible assets. During Fiscal 2020, we recognized asset impairment charges of approximately $708 million, which were primarily related to the impairment of operating right-of-use assets, as well as the impairment of Jimmy Choo goodwill and its brand intangible assets as part of our annual assessments (see Note 14 to the accompanying consolidated financial statements for additional information).

Restructuring and Other Charges

During Fiscal 2021, we recognized restructuring and other charges of $32 million, which included other costs of $27 million, primarily related to equity awards associated with the acquisition of Versace and closures of corporate locations during Fiscal 2021 and $5 million related to our Capri Retail Store Optimization Program.

During Fiscal 2020, we recognized restructuring and other charges of $42 million, which included restructuring charges of $8 million, primarily related to our Michael Kors Retail Fleet Optimization Plan and other costs of $34 million. The other costs recorded during Fiscal 2020 primarily related to equity awards associated with the acquisition of Versace and Jimmy Choo (see Note 11 to the accompanying consolidated financial statements for additional information).

Income (Loss) from Operations

As a result of the foregoing, income (loss) from operations increased $211 million to income from operations of $19 million during Fiscal 2021, compared to a loss from operations of $192 million for Fiscal 2020. Income (loss) from operations as a percentage of total revenue increased to 0.5% in Fiscal 2021, compared to (3.5)% in Fiscal 2020. See Note 20 to the accompanying consolidated financial statements for a reconciliation of our segment operating income to total operating income.

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Interest expense, net

Interest expense, net increased $25 million, to $43 million for Fiscal 2021 as compared to $18 million for Fiscal 2020, primarily due to a decrease of interest income attributable to lower average interest rates and lower average notional amount outstanding on our net investment hedges in the current year. The decrease in interest income was largely offset by a decrease in interest expense attributable to lower average borrowings outstanding in the current year and the addition of an interest rate swap in the current year which converts the one-month Adjusted LIBOR interest rate on these borrowings to a fixed interest rate of 0.237% through December 2022 (see Note 12 and Note 15 to the accompanying consolidated financial statements for additional information).

Foreign Currency (Gain) Loss

We recognized a net foreign currency gain of $20 million during Fiscal 2021, primarily attributable to the remeasurement of U.S. dollar-denominated intercompany payables with certain of our subsidiaries.

We recognized a net foreign currency loss of $11 million during Fiscal 2020, primarily attributable to the revaluation and settlement of certain of our accounts payable in currencies other than their functional currency, as well as the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries.

Provision for Income Taxes

We recognized $66 million of income tax expense on pre-tax income of $3 million during Fiscal 2021, compared with $10 million of income tax expense on a pre-tax loss of $215 million for Fiscal 2020. Our effective tax rate for Fiscal 2021 was significantly higher than our effective tax rate in Fiscal 2020, and not a meaningful or comparable metric, primarily due to the relationship between our income tax expense and minimal pre-tax income in the current year. The Fiscal 2021 income tax expense was higher than Fiscal 2020 primarily due to tax effects of changes in our geographic mix of earnings, a lower favorable effect of our global financing activities during Fiscal 2021 compared to Fiscal 2020, increases in uncertain tax positions during Fiscal 2021 as well as the impact of the United Kingdom’s increase in the enacted corporate income tax rate during Fiscal 2021. The increase was partially offset by reduced effects of valuation allowances established on a portion of our non-US deferred tax assets, a release of a valuation allowance on a portion of our deferred tax assets, and a lower unfavorable impact of non-tax deductible goodwill impairment during Fiscal 2021, compared to Fiscal 2020. The variance between Fiscal 2021 and Fiscal 2020 effective income tax rates is substantially affected by the material change in our pre-tax (loss) income. As a result, the effect that discrete tax amounts have on the effective income tax rate during the year is not comparable. See Note 18 to the accompanying consolidated financial statements for additional information.

The global financing activities are related to our previously disclosed 2014 move of our principal executive office from Hong Kong to the U.K. and decision to become a U.K. tax resident. In connection with this decision, we funded our international growth strategy through intercompany debt financing arrangements between certain of our U.S., U.K. and Switzerland subsidiaries in December 2015. Accordingly, due to the difference in the statutory income tax rates between these jurisdictions, we realized a lower effective tax rate on consolidated pre-tax income.

Our effective tax rate may fluctuate from time to time due to the effects of changes in U.S. state and local taxes and tax rates in foreign jurisdictions. In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.

Net Loss Attributable to Capri

As a result of the foregoing, our net loss attributable to Capri decreased $161 million, or 72.2%, to a net loss of $62 million during Fiscal 2021, compared to net loss of $223 million for Fiscal 2020.

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Segment Information

Versace


		Fiscal Years Ended												Fiscal Years Ended							% Change
		March 28, 2020			March 30, 2019			$ Change			March 27, 2021			March 28, 2020			$ Change		As Reported		Constant Currency
Revenues	Revenues	$	843		$	137		$	706	Revenues	$	718		$	843		$	(125)	(14.8)	%	(19.8)	%
Loss from operations		(8)			(11)			3
Income (loss) from operations										Income (loss) from operations	21			(8)			29		NM
Operating margin	Operating margin	(0.9)		%	(8.0)		%			Operating margin	2.9		%	(0.9)		%

NM Not meaningful

Revenues

Versace revenues ~~increased $706~~decreased $125 million to $718 million for Fiscal 2021, compared to $843 million for Fiscal 2020, which included favorable foreign currency effects of $42 million. On a constant currency basis, revenue decreased $167 million, or 19.8%, primarily reflecting the adverse impacts related to COVID-19.

Income (loss) from Operations

During Fiscal 2021, Versace recorded income from operations of $21 million compared to ~~$137~~a loss from operations of $8 million for Fiscal ~~2019.~~2020. Operating margin increased from (0.9)% for Fiscal 2020 ~~included incremental revenue of $723 million~~to 2.9% for Fiscal 2021, primarily due to ~~the inclusion~~a favorable channel mix, partially offset by a decline in revenue as a result of ~~the Versace business acquired on December 31, 2018~~COVID-19.

Jimmy Choo


	Fiscal Years Ended								% Change
	March 27, 2021			March 28, 2020			$ Change		As Reported		Constant Currency
Revenues	$	418		$	555		$	(137)	(24.7)	%	(26.8)	%
Loss from operations	(55)			(13)			(42)		NM
Operating margin	(13.2)		%	(2.3)		%

NM Not meaningful

Revenues

Jimmy Choo revenues decreased $137 million, or 24.7% to $418 million for ~~the entire~~Fiscal 2021, compared to $555 million for Fiscal 2020, ~~year. The remaining decrease in sales reflects the~~which included favorable foreign currency effects of $12 million. On a constant currency basis, revenue decreased $149 million, or 26.8%, primarily reflecting adverse impacts related to COVID-19.

Loss from Operations

During Fiscal ~~2020, we~~2021, Jimmy Choo recorded a loss from operations of $8$55 million compared to a loss of $11 million for the period from the date of acquisition through March 30, 2019 (after amortization of non-cash purchase accounting adjustments). Operating margin in Fiscal 2020 was (0.9)% compared to (8.0)% for the period from the date of acquisition through March 30, 2019.

~~Jimmy Choo~~

Fiscal Years Ended % Change
March 28,
2020 March 30,
2019 $ Change As Reported Constant
Currency
Revenues $ 555 $ 590 $ (35) (5.9) % (5.1) %
(Loss) income from operations (13) 20 (33) (165.0) %
Operating margin (2.3) % 3.4 %

~~Revenues~~

~~Jimmy Choo revenues decreased $35 million, or 5.9% to $555~~$13 million for Fiscal 2020, compared to $590 million for Fiscal 2019, which included unfavorable foreign currency effects of $5 million. On a constant currency basis, revenue decreased $30 million, or 5.1%, primarily reflecting adverse impacts related to COVID-19.

~~(Loss) Income from Operations~~

~~During Fiscal 2020, Jimmy Choo recorded a loss from operation of $13 million compared to income from operations of $20 million for Fiscal 2019.~~2020. Operating margin declined ~~570 basis points~~ from ~~3.4% for Fiscal 2019, to~~ (2.3)% for Fiscal 2020 to (13.2)% for Fiscal 2021, primarily ~~due to an increase in operating expenses, including retail store expenses, as well as investments in new stores, while also~~ reflecting ~~the~~ adverse impacts related to COVID-19.

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Michael Kors


		Fiscal Years Ended										% Change									Fiscal Years Ended						% Change
		March 28, 2020			March 30, 2019			$ Change		As Reported		Constant Currency			March 27, 2021			March 28, 2020			$ Change		As Reported		Constant Currency
Revenues	Revenues	$	4,153		$	4,511		$	(358)	(7.9)	%	(7.0)	%	Revenues	$	2,924		$	4,153		$	(1,229)	(29.6)	%	(30.9)	%
Income from operations	Income from operations	850			964			(114)		(11.8)	%			Income from operations	595			850			(255)		(30.0)	%
Operating margin	Operating margin	20.5		%	21.4		%							Operating margin	20.3		%	20.5		%

Revenues

Michael Kors revenues decreased ~~$358 million,~~$1.229 billion, or ~~7.9%~~29.6%, to $2.924 billion for Fiscal 2021, compared to $4.153 billion for Fiscal 2020, ~~compared to $4.511 billion for Fiscal 2019,~~ which included ~~unfavorable~~favorable foreign currency effects of ~~$40~~$53 million. On a constant currency basis, revenue decreased ~~$318 million,~~$1.282 billion, or ~~7.0%. The decrease in revenues was~~30.9%, primarily ~~due to lower sales of women's accessories and watches, and a decrease in comparable stores sales of $146 million partially~~reflecting adverse impacts related to ~~the adverse effects of~~ COVID-19. ~~This decrease was partially offset by higher sales of women's footwear and men's accessories, as well as a 9% increase in e-commerce sales.~~

Income from Operations

~~Income~~During Fiscal 2021, Michael Kors recorded income from operations ~~for our Michael Kors segment decreased $114~~of $595 million ~~or 11.8%,~~compared to $850 million for Fiscal ~~2020, compared to $964 million~~2020. Operating margin declined from 20.5% for Fiscal ~~2019. Income from operations as a percentage of Michael Kors revenue decreased 90 basis points~~2020 to ~~20.5% in~~20.3% for Fiscal ~~2020, compared to 21.4% in Fiscal 2019, largely~~2021, primarily due to a ~~decrease~~decline in revenue related to COVID-19, partially offset by higher gross profit ~~margin,~~margins related to a higher average unit price and favorable channel mix, as ~~previously discussed.~~well as our cost reduction initiatives as a result of COVID-19.

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Liquidity and Capital Resources

~~Liquidity~~

Our primary sources of liquidity are the cash flows generated from our operations, along with borrowings available under our credit facilities (see below discussion regarding “Revolving Credit Facilities”) and available cash and cash equivalents. Our primary use of this liquidity is to fund the ongoing cash requirements, including our working capital needs and capital investments in our business, debt repayments, acquisitions, returns of capital, including share repurchases and other corporate activities. We believe that the cash generated from our operations, together with borrowings available under our revolving credit facilities and available cash and cash equivalents, will be sufficient to meet our working capital needs for the next 12 months and beyond, including investments made and expenses incurred in connection with our store growth plans, shop-in-shop growth, investments in corporate and distribution facilities, continued systems development, e-commerce and marketing initiatives. We spent ~~$223~~$111 million on capital expenditures during Fiscal ~~2020,~~2021, and expect to spend approximately ~~$130~~$200 million during Fiscal ~~2021. In response to the~~2022. This anticipated increase reflects continued ~~global health and economic impact of the COVID-19 pandemic, this represents a significant reduction to capital expenditures in Fiscal 2021. The majority of the Fiscal 2020~~ expenditures related to our retail operations (including e-commerce), ERP system implementation and our corporate offices. The majority of the Fiscal 2021 expenditures related to our retail operations (including e-commerce) and our corporate offices.

The following table sets forth key indicators of our liquidity and capital resources (in millions):


		As of							As of
		March 28, 2020		March 30, 2019			March 27, 2021		March 28, 2020
Balance Sheet Data:	Balance Sheet Data:					Balance Sheet Data:
Cash and cash equivalents	Cash and cash equivalents	$	592	$	172	Cash and cash equivalents	$	232	$	592
Working capital	Working capital	$	493	$	187	Working capital	$	(75)	$	493
Total assets	Total assets	$	7,946	$	6,650	Total assets	$	7,481	$	7,946
Short-term debt	Short-term debt	$	167	$	630	Short-term debt	$	123	$	167
Long-term debt	Long-term debt	$	2,012	$	1,936	Long-term debt	$	1,219	$	2,012


		Fiscal Years Ended											Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
Cash Flows Provided By (Used In):
Cash flows provided by (used in):								Cash flows provided by (used in):
Operating activities	Operating activities	$	859	$	694	$	1,062	Operating activities	$	624	$	859	$	694
Investing activities	Investing activities	62		(2,125)		(1,533)		Investing activities	(124)		62		(2,125)
Financing activities	Financing activities	(497)		1,451		389		Financing activities	(870)		(497)		1,451
Effect of exchange rate changes	Effect of exchange rate changes	(4)		(11)		15		Effect of exchange rate changes	12		(4)		(11)
Net increase (decrease) in cash and cash equivalents		$	420	$	9	$	(67)
Net (decrease) increase in cash, cash equivalents and restricted cash								Net (decrease) increase in cash, cash equivalents and restricted cash	$	(358)	$	420	$	9

Cash Provided by Operating Activities

Cash provided by operating activities decreased $235 million to $624 million during Fiscal 2021, as compared to $859 million for Fiscal 2020, which was due to a decrease in our net income after non-cash adjustments, primarily driven by a decrease in impairments and a decrease in net loss, partially offset by increases related to changes in our working capital, primarily attributable to fluctuations in the timing of payments and receipts due to the impact of COVID-19.

Cash provided by operating activities increased $165 million to $859 million during Fiscal 2020, as compared to $694 million for Fiscal 2019, which was primarily due to increases related to changes in our working capital, primarily attributable to decreased inventory purchases, as well as the timing of payments and receipts. The net increase in cash flows also included decreases to our net income after non-cash adjustments.

Cash ~~provided~~(Used in) Provided by ~~operating~~Investing Activities

Net cash used in investing activities ~~decreased $368 million to $694~~was $124 million during Fiscal ~~2019,~~2021, as compared to ~~$1.062 billion for~~net cash provided by investing activities of $62 million during Fiscal ~~2018, which~~2020. The $186 million increase in cash used in investing activities was ~~primarily due to decreases related to changes in our working capital~~ primarily attributable to ~~increased inventory purchases as well as the timing~~a $298 million settlement of ~~payments and receipts. The~~ net ~~decrease in cash flows also included decreases to our net income after non-cash adjustments,~~investment hedges during Fiscal 2020, partially offset by ~~an increase~~a $112 million decrease in ~~tax-related long-term liabilities.~~capital expenditures compared to prior year.

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~~Cash Provided by (Used in) Investing Activities~~

Net cash provided by investing activities was $62 million during Fiscal 2020, as compared to net cash used in investing activities of $2.125 billion during Fiscal 2019. The $2.187 billion increase in cash from investing activities was primarily attributable to $1.862 billion of cash paid, net of cash acquired, in connection with our Fiscal 2019 acquisition of the Versace business. The increase in cash from investing activities was also due to a $77 million realized loss related to an undesignated derivative contract during Fiscal 2019 associated with the Versace acquisition and the settlement of net investment hedges of $298 million during Fiscal 2020, partly offset by higher capital expenditures of $42 million, due to higher spending related to the ERP system implementation and expenditures related to corporate infrastructure.

Net cash used in investing activities increased $592 million to $2.125 billion during Fiscal 2019, compared to $1.533 billion during Fiscal 2018. The decrease in cash was primarily attributable to a $460 million increase of cash paid, net of cash acquired, in connection with our Fiscal 2019 acquisition of the Versace business, as compared to our acquisition of the Jimmy Choo business during Fiscal 2018. The decrease in cash was also due to a $77 million realized loss related to an undesignated derivative contract during Fiscal 2019 associated with the Versace acquisition, as well as higher capital expenditures of $61 million, due to higher spending related to build-outs for new and renovated retail stores and expenditures related to corporate infrastructure.

Cash (Used in) Provided by Financing Activities

Net cash used in financing activities was $870 million during Fiscal 2021, as compared to $497 million during Fiscal 2020. The increase in cash used by financing activities of $373 million was primarily due to an increase in net debt repayments of $474 million, partially offset by a decrease of $101 million in cash payments to repurchase our ordinary shares during Fiscal 2021.

Net cash used in financing activities was $497 million during Fiscal 2020, as compared to net cash provided by financing activities of $1.451 billion during Fiscal ~~2019.~~2020. The increase in cash used by financing activities of $1.948 billion was due to decreased debt borrowings of $2.038 billion, net of debt repayments, primarily attributable to higher term loan borrowings to finance the acquisition of Versace during Fiscal 2019, partially offset by a decrease of $105 million in cash payments to repurchase our ordinary shares during Fiscal 2020.

Net cash provided by financing activities increased $1.062 billion to $1.451 billion during Fiscal 2019, compared to $389 million during Fiscal 2018. The increase in cash from financing activities was due to increased debt borrowings of $908 million, net of debt repayments, primarily attributable to higher term loan borrowings to finance the acquisition of Versace, as well as a decrease of $154 million in cash payments to repurchase our ordinary shares.

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Debt Facilities

The following table presents a summary of the Company’s borrowing capacity and amounts outstanding as of March ~~28, 2020~~27, 2021 and March ~~30, 2019~~28, 2020 (dollars in millions):


		Fiscal Years Ended									Fiscal Years Ended
		March 28, 2020			March 30, 2019				March 27, 2021		March 28, 2020
Senior Unsecured Revolving Credit Facility:
Senior Secured Revolving Credit Facility:								Senior Secured Revolving Credit Facility:
Revolving Credit Facility (excluding up to a $500 million accordion feature) ⁽¹⁾	Revolving Credit Facility (excluding up to a $500 million accordion feature) ⁽¹⁾							Revolving Credit Facility (excluding up to a $500 million accordion feature) (1)
Total Availability	Total Availability	$	1,000		$	1,000		Total Availability	$	1,000	$	1,000
Borrowings outstanding		681		(3)	539		⁽²⁾
Borrowings outstanding (2)								Borrowings outstanding (2)	—		681
Letter of credit outstanding	Letter of credit outstanding	18			17			Letter of credit outstanding	27		18
Remaining availability	Remaining availability	$	301		$	444		Remaining availability	$	973	$	301

Term Loan Facility ($1.6 billion)	Term Loan Facility ($1.6 billion)							Term Loan Facility ($1.6 billion)
Borrowings Outstanding, net of debt issuance costs ⁽³⁾⁽²⁾	Borrowings Outstanding, net of debt issuance costs ⁽³⁾⁽²⁾	$	1,010		$	1,570		Borrowings Outstanding, net of debt issuance costs ⁽³⁾⁽²⁾	$	865	$	1,010
Remaining availability	Remaining availability	$	—		$	—		Remaining availability	$	—	$	—

4.000% Senior Notes
Borrowings Outstanding, net of debt issuance costs and discount amortization ⁽³⁾		$	446		$	445
364 Credit Facility ($230 million)								364 Credit Facility ($230 million)
Total availability								Total availability	$	230	$	—
Remaining availability								Remaining availability	$	230	$	—

Senior Notes due 2024								Senior Notes due 2024
Borrowings Outstanding, net of debt issuance costs and discount amortization (2)								Borrowings Outstanding, net of debt issuance costs and discount amortization (2)	$	447	$	446

Other Borrowings ⁽³⁾	Other Borrowings ⁽³⁾	$	3		$	1		Other Borrowings (3)	$	21	$	3

Hong Kong Uncommitted Credit Facility:	Hong Kong Uncommitted Credit Facility:							Hong Kong Uncommitted Credit Facility:
Total availability (100 million Hong Kong Dollars)	Total availability (100 million Hong Kong Dollars)	$	14		$	13		Total availability (100 million Hong Kong Dollars)	$	13	$	14
Borrowings outstanding	Borrowings outstanding	—			—			Borrowings outstanding	—		—
Bank guarantees outstanding (4 million and 12 million Hong Kong Dollars)		1			2
Remaining availability		$	13		$	11
Bank guarantees outstanding (3 million and 4 million Hong Kong Dollars)								Bank guarantees outstanding (3 million and 4 million Hong Kong Dollars)	—		1
Remaining availability (97 million and 96 million Hong Kong Dollars)								Remaining availability (97 million and 96 million Hong Kong Dollars)	$	13	$	13

China Uncommitted Credit Facility:	China Uncommitted Credit Facility:							China Uncommitted Credit Facility:
Borrowings outstanding	Borrowings outstanding	$	—		$	—		Borrowings outstanding	$	—	$	—
Total and remaining availability (100 million Chinese Yuan)		$	14		$	14
Remaining availability (100 million Chinese Yuan)								Remaining availability (100 million Chinese Yuan)	$	15	$	14

Japan Credit Facility:	Japan Credit Facility:							Japan Credit Facility:
Borrowings outstanding		$	—		$	—
Total and remaining availability (1.0 billion Japanese Yen)		$	9		$	9
Total availability (1.0 billion Japanese Yen)								Total availability (1.0 billion Japanese Yen)	$	9	$	9
Borrowings outstanding (1.0 billion and 0.0 billion Japanese Yen) (4)								Borrowings outstanding (1.0 billion and 0.0 billion Japanese Yen) (4)	9		—
Remaining availability (0.0 billion and 1.0 billion Japanese Yen)								Remaining availability (0.0 billion and 1.0 billion Japanese Yen)	$	—	$	9

Versace Uncommitted Credit Facility:	Versace Uncommitted Credit Facility:							Versace Uncommitted Credit Facility:
Total availability (20 million Euro)		$	22		$	22
Borrowings outstanding (10 million Euro) ⁽²⁾		11			11
Total availability (57 million and 52 million Euro)								Total availability (57 million and 52 million Euro)	67		$	58
Borrowings outstanding (0 million and 35 million Euro) (4)								Borrowings outstanding (0 million and 35 million Euro) (4)	—		39

Remaining availability		$	11		$	11
Remaining availability (57 million and 17 million Euro)								Remaining availability (57 million and 17 million Euro)	$	67	$	19

Versace Uncommitted Credit Facilities:
Total availability (32 million Euro)		$	36		$	—
Borrowings outstanding (25 million Euro) ⁽²⁾		28			—
Remaining availability		$	8		$	—

Total borrowings outstanding⁽¹⁾	Total borrowings outstanding⁽¹⁾	$	2,179		$	2,566		Total borrowings outstanding (1)	$	1,342	$	2,179
Total remaining availability	Total remaining availability	$	356		$	489		Total remaining availability	$	1,298	$	356

~~_____________________________~~

(1)~~As of the last day of Fiscal 2020, the~~The financial covenant in our 2018 Credit Facility ~~contained customary events of default and required~~requiring us to maintain a ~~leverage ratio at the end of each fiscal quarter of no greater than 3.75 to 1, calculated based on the~~ ratio of ~~consolidated~~the sum of total indebtedness plus the capitalized amount of all operating lease ~~liabilities presented on our consolidated balance sheets to Consolidated EBITDAR~~obligations for the last four ~~consecutive~~ fiscal ~~quarters.~~quarters to Consolidated EBITDAR ~~is defined~~of no greater than 3.75 to 1 has been waived through the fiscal quarter ending June 26, 2021. We terminated the waiver period effective May 26, 2021. Effective as ~~consolidated net income plus income tax expense, net interest expense, depreciation and amortization expense, consolidated rent expense~~of that date, the applicable ratio will be calculated

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and other non-cash charges, subject to certain deductions. The 2018 Credit Facility also includes other customary covenants that limit additional indebtedness, guarantees, liens, acquisitions and other investmentsnet of our unrestricted cash and cash ~~dividends.~~equivalents to the extent in excess of $100 million and shall exclude up to $150 million of supply chain financings, and the maximum permitted net leverage ratio will be 4.00 to 1.0. As of March ~~28, 2020~~27, 2021 and March ~~30, 2019,~~28, 2020, we were in compliance with all covenants related to our agreements then in effect governing our debt.

⁽²⁾~~Recorded as short-term debt in our consolidated balance sheets as of March 28, 2020 and March 30, 2019.~~

⁽³⁾Recorded as long-term debt in our consolidated balance sheets as of March ~~28, 2020~~27, 2021 and March ~~30, 2019,~~28, 2020, except for the current portion of ~~$128~~$97 million and ~~$80~~$128 million, respectively, outstanding under the 2018 Term Loan Facility, which was recorded within short-term debt at March 27, 2021 and March 28, 2020.

(3)The balance as of March 27, 2021 consists of $17 million related to our supplier finance program recorded within short-term debt in our consolidated balance sheets and $4 million of other loans recorded as long-term debt in our consolidated balance sheets. The balance as of March 28, 2020 consists of $3 million of other loans recorded as long-term debt in our consolidated balance sheets.

(4)Recorded as short-term debt in our consolidated balance sheets as of March 27, 2021 and March ~~30, 2019.~~28, 2020.

We believe that our 2018 Credit Facility is adequately diversified with no undue concentration in any one financial institution. As of March ~~28, 2020,~~27, 2021, there were 2629 financial institutions participating in the facility, with none maintaining a maximum commitment percentage in excess of 10%. We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the 2018 Credit Facility.

See Note 12 and Note 22 in the accompanying consolidated financial statements for detailed information relating to our credit facilities and debt obligations.

Share Repurchase Program

The following table presents our treasury share repurchases during the fiscal years ended March ~~28, 2020~~27, 2021 and March ~~30, 2019~~28, 2020 (dollars in millions):


		Fiscal Years Ended								Fiscal Years Ended
		March 28, 2020		March 30, 2019				March 27, 2021		March 28, 2020
Cost of shares repurchased under share repurchase program	Cost of shares repurchased under share repurchase program	$	100	$	200	⁽¹⁾	Cost of shares repurchased under share repurchase program	$	—	$	100
Fair value of shares withheld to cover tax obligations for vested restricted share awards	Fair value of shares withheld to cover tax obligations for vested restricted share awards	2		7			Fair value of shares withheld to cover tax obligations for vested restricted share awards	1		2
Total cost of treasury shares repurchased	Total cost of treasury shares repurchased	$	102	$	207		Total cost of treasury shares repurchased	$	1	$	102

Shares repurchased under share repurchase program	Shares repurchased under share repurchase program	2,711,807		3,718,237			Shares repurchased under share repurchase program	—		2,711,807
Shares withheld to cover tax withholding obligations	Shares withheld to cover tax withholding obligations	63,958		107,712			Shares withheld to cover tax withholding obligations	48,528		63,958
		2,775,765		3,825,949				48,528		2,775,765

~~_____________________________~~

⁽¹⁾~~The~~During the first quarter of Fiscal 2021, the Company suspended its $500 million share-repurchase program ~~expired on May 25, 2019.~~in response to the continued impact of the COVID-19 pandemic. See Note 12 in the accompanying financial statements for additional information.

~~On August 1, 2019, our Board of Directors authorized a new $500 million share repurchase program, which was set to expire August 1, 2021.~~ As of March ~~28, 2020,~~27, 2021, the remaining availability under our share repurchase program was $400 million. ~~Share~~Under this program, share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading restrictions under ~~the~~ our insider trading policy and other relevant factors. This program may be suspended or discontinued at any time.

~~The share repurchase program was suspended on April 6, 2020 in response~~See Note 16 and Note 22 to the ~~continued global health and economic impact~~accompanying consolidated financial statements for additional information.

Table of ~~the COVID-19 pandemic.~~Contents

Contractual Obligations and Commercial Commitments

As of March ~~28, 2020,~~27, 2021, our contractual obligations and commercial commitments ~~and contractual obligations~~ were as follows (in millions):

Fiscal Years Ending Fiscal 2021
Fiscal
2022-2023
Fiscal
2024-2025
Fiscal 2026 and thereafter Total
Operating leases $ 489 $ 801 $ 551 $ 566 $ 2,407
Inventory Purchase Obligations 570 — — — 570
Other commitments 58 20 3 — 81
Short-term debt 167 — — — 167
Long-term debt — 192 1,820 — 2,012
Total $ 1,284 $ 1,013 $ 2,374 $ 566 $ 5,237

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Fiscal Years	Fiscal 2022		Fiscal 2023-2024		Fiscal 2025-2026		Fiscal 2027 and thereafter		Total
Operating leases	$	502	$	807	$	512	$	493	$	2,314
Interest, net	9		23		3		—		35
Inventory purchase obligations	688		—		—		—		688
Other commitments	59		11		—		—		70
Short-term debt	123		—		—		—		123
Long-term debt	—		194		1,033		—		1,227
Total	$	1,381	$	1,035	$	1,548	$	493	$	4,457

Operating lease obligations represent ~~our~~ equipment leases and the minimum lease rental payments due under non-cancelable operating leases for our real estate locations globally. In addition to the above amounts, we are typically required to pay real estate taxes, contingent rent based on sales volume and other occupancy costs relating to ~~our~~ leased properties for our retail stores.

Interest, net represents the estimated net interest expense associated with our term loan based on the current interest rate and interest from our interest rate swap. It also includes the estimated net interest income from our net investment hedges.

Inventory purchase obligations represent ~~our~~ contractual ~~agreements relating to~~obligations for future purchases of inventory.

Other commitments include ~~our~~ non-cancelable contractual obligations related to marketing and advertising agreements, information technology agreements and supply agreements.

Excluded from the above commitments is ~~$99~~$107 million of long-term liabilities related to net uncertain tax positions, due to the uncertainty of the ~~time~~timing and nature of resolution.

The above table also excludes current liabilities (other than short-term ~~debt)~~debt and short-term operating lease liabilities) recorded as of March ~~28, 2020,~~27, 2021, as these items will be paid within one year, and non-current liabilities that have no cash outflows associated with them (e.g., deferred taxes).

Off-Balance Sheet Arrangements

We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. In addition to the commitments in the above table, our off-balance sheet commitments relating to our outstanding letters of credit were ~~$24~~$33 million at March ~~28, 2020,~~27, 2021, including $6 million in letters of credit issued outside of the 2018 Credit Facility. In addition, as of March ~~28, 2020,~~27, 2021, bank guarantees of approximately ~~$18~~$35 million were supported by our ~~Versace Credit Facility.~~various credit facilities. We do not have any other off-balance sheet arrangements or relationships with entities that are not consolidated into our financial statements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

~~Effects of Inflation~~

We do not believe that our sales or operating results have been materially impacted by inflation during the periods presented in our financial statements. However, we may experience an increase in cost pressure from our suppliers in the future, which could have an adverse impact on our gross profit results in the periods effected.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to certain market risks during the normal course of our business, such as risk arising from fluctuations in foreign currency exchange rates, as well as fluctuations in interest rates. In attempts to manage these risks, we employ certain strategies to mitigate the effect of these fluctuations. We enter into foreign currency forward contracts to manage our foreign currency exposure to the fluctuations of certain foreign currencies. The use of these instruments primarily helps to manage our exposure to our foreign purchase commitments and better control our product costs. We do not use derivatives for trading or speculative purposes.

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Foreign Currency Exchange Risk

Forward Foreign Currency Exchange Contracts

We are exposed to risks on certain purchase commitments to foreign suppliers based on the value of our purchasing subsidiaries’ local currency relative to the currency requirement of the supplier on the date of the commitment. As such, we enter into forward currency exchange contracts that generally mature in 12 months or less and are consistent with the related purchase commitments, to manage our exposure to the changes in the value of the Euro and the Canadian Dollar. These contracts are recorded at fair value in our consolidated balance sheets as either an asset or liability, and are derivative contracts to hedge cash flow risks. Certain of these contracts are designated as hedges for hedge accounting purposes, while certain of these contracts, are not designated as hedges for accounting purposes. Accordingly, the changes in the fair value of the majority of these contracts at the balance sheet date are recorded in our equity as a component of accumulated other comprehensive income (loss), and upon maturity (settlement) are recorded in, or reclassified into, our cost of sales or operating expenses, in our consolidated ~~statement~~statements of operations and comprehensive (loss) income, as applicable to the transactions for which the forward currency exchange contracts were established.

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We perform a sensitivity analysis on our forward currency contracts, both designated and not designated as hedges for accounting purposes, to determine the effects of fluctuations in foreign currency exchange rates. For this sensitivity analysis, we assume a hypothetical change in U.S. Dollar against foreign exchange rates. Based on all foreign currency exchange contracts outstanding as of March ~~28, 2020,~~27, 2021, a 10% appreciation or devaluation of the U.S. Dollar compared to the level of foreign currency exchange rates for currencies under contract as of March ~~28, 2020,~~27, 2021, would result in a net increase and decrease, respectively, of approximately ~~$15~~$37 million in the fair value of these contracts.

Net Investment Hedge

We are exposed to adverse foreign currency exchange rate movements related to interest from our net investment ~~hedge.~~hedges. As of March ~~28, 2020, the~~27, 2021, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $3 billion to hedge our net investment ~~hedge has an aggregate notional amount of $44~~in Euro-denominated subsidiaries and $194 million to hedge our net investments in Japanese Yen-denominated subsidiaries against future volatility in the exchange rates between the U.S. Dollar and this currency. Under the ~~terms~~term of ~~this contract, which matures November 2024,~~these contracts, we will exchange the semi-annual fixed rate payments ~~made under our Senior Notes~~on U.S. denominated debt for fixed rate payments of ~~0.89%~~0% to 4.508% in Euros and 0% to 3.588% in Japanese Yen. Based on the net investment ~~hedge~~hedges outstanding as of March ~~28, 2020,~~27, 2021, a 10% appreciation or devaluation of the U.S. Dollar compared to the level of foreign currency exchange rates for currencies under contract as of March ~~28, 2020,~~27, 2021, would result in a potential net increase or decrease upon settlement of approximately $5$329 million in the fair value of this contract, which ~~matures in 4 years.~~include mandatory early termination dates between November 2022 and February 2026, while the remaining contracts have maturity dates between July 2022 and August 2027.

Interest Rate Risk

We are exposed to interest rate risk in relation to borrowings outstanding under our 2018 Term Loan Facility, our ~~2018~~ Credit Facility, our Hong Kong Credit Facility, our Japan Credit Facility and our Versace Credit Facilities. Our 2018 Term Loan Facility carries interest at a rate that is based on LIBOR. Our 2018 Credit Facility carries interest rates that are tied to LIBOR and the prime rate, among other institutional lending rates (depending on the particular origination of borrowing), as further described in Note 12 to the accompanying consolidated financial statements. Our Hong Kong Credit Facility carries interest at a rate that is tied to the Hong Kong Interbank Offered Rate. Our China Credit Facility carries interest at a rate that is tied to the People’s Bank of China’s Benchmark lending rate. Our Japan Credit Facility carries interest at a rate posted by the Mitsubishi UFJ Financial Group. Our Versace Credit Facility carries interest at a rate set by the bank on the date of borrowing that is tied to the European Central Bank. Therefore, our consolidated statements of operations and comprehensive (loss) income and cash flows are exposed to changes in those interest rates. At March 27, 2021, we had no borrowings outstanding under our Revolving Credit Facility, $865 million, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and no borrowings outstanding under our Versace Credit Facilities. At March 28, 2020, we had $681 million in long-term borrowings outstanding under our ~~2018~~Revolving Credit Facility, $1.010 billion, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and $39 million outstanding under our Versace Credit Facilities. At March 30, 2019, we had $539 million in short-term borrowings outstanding under our 2018 Credit Facility, $1.570 billion, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and $11 million outstanding under our Versace Credit Facility. These balances are not indicative of future balances that may be outstanding under our revolving credit facilities that may be subject to fluctuations in interest rates. Any increases in the applicable interest rate(s) would cause an increase to the interest expense relative to any outstanding balance at that date.

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Credit Risk

We have outstanding $450 million aggregate principal amount of Senior Notes due in 2024. The Senior Notes bear interest at a fixed rate equal to ~~4.000%~~4.500% per year, payable semi-annually. Our Senior Notes interest rate payable may be subject to adjustments from time to time if either Moody’s or S&P (or a substitute rating agency), downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Senior Notes. In March 2020, Moody's Investor Service downgraded their credit rating of us from Baa2 to Ba1, and in April 2020 Fitch ratings downgraded their credit rating of us from BBB- to BB+. As a result, the Senior Notes currently bear interest at a fixed rate equal to 4.500% per year, payable semi-annually.

Item 8. Financial Statements and Supplementary Data

The response to this item is provided in this Annual Report on Form 10-K under Item 15. “Exhibits and Financial Statement Schedule” and is incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

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Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, our principal executive officer and principal financial officer, respectively, of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a - 15(e) and 15(d) - 15(e) under the Securities and Exchange Act of 1934, as amended, (the “Exchange Act”)) as of March ~~28, 2020.~~27, 2021. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures are effective as of March ~~28, 2020.~~27, 2021.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined under the Exchange Act Rule 13a-15 (f)) to provide reasonable assurance regarding the reliability of financial reporting and that the consolidated financial statements have been prepared in accordance with U.S. GAAP. Such internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance (A) that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors; and (B) regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Our management assessed the effectiveness of our internal control over financial reporting as of March ~~28, 2020.~~27, 2021. In making this assessment, it used the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the 2013 Framework. Based on this assessment, management has determined that, as of March ~~28, 2020,~~27, 2021, our internal control over financial reporting is effective based on those criteria.

The Company’s internal control over financial reporting as of March ~~28, 2020,~~27, 2021, as well as the consolidated financial statements, have been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears herein. ~~The audit report appears on page 61 of this report.~~

Changes in Internal Control over Financial Reporting

Except as discussed below, there have been no changes in our internal control over financial reporting during the three months ended March ~~28, 2020,~~27, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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COVID-19

~~In addition~~We expect to ~~the changes discussed below, we have experienced~~continue to experience varying degrees of business disruptions related to the COVID-19 pandemic, including periods of closures of our retail stores, distribution centers and corporate ~~facilities beginning during the fourth quarter of Fiscal 2020.~~facilities. In addition, ~~we have temporarily furloughed a significant portion~~many of ~~our store employees and are requiring~~ our corporate employees in affected regions continue to work remotely. Despite such actions, we have not experienced any material changes to our internal controls over financial reporting. We will continue to evaluate and monitor the impact of the COVID-19 pandemic on our internal controls. See Item 1A — "Risk ~~Factors~~Factors" — ~~The~~"The COVID-19 pandemic ~~could~~may continue to have a material adverse effect on our business and results of ~~operations"~~operations." for additional discussion regarding risks to our business associated with the COVID-19 pandemic.

~~Leases~~

In the first quarter of Fiscal 2020, we implemented additional internal controls in connection with our adoption of ASU 2016-02, Leases (Topic 842), none of which materially affected our internal control over financial reporting.

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Item 9B. Other Information

~~The Company~~As previously disclosed that in connection with the Michael Kors Retail Fleet Optimization Plan, it expected to incur approximately $100 - $125 million of one-time costs, including lease termination and other store closure costs. The Company closed a total of 143 Michael Kors stores at a cost of $99 million since plan inception, with total costs in line with its original expectations. As of the end of Fiscal 2020, the previously disclosed Michael Kors Retail Fleet Optimization is completed.

~~On July 7, 2020,~~announced, the Board of Directors of the Company approved a retail optimization program (the “Capri Retail Store Optimization Program”) to improve the profitability of its retail store fleet. As part of the Capri Retail Store Optimization Program, the Company intends to close approximately 170 of its retail stores over ~~the next~~ two fiscal years, ~~(Fiscal~~which began during Fiscal 2021 and will continue into Fiscal ~~2022).~~2022. In addition, in connection with the Capri Retail Store Optimization Program, the Company expects to incur approximately $75 million of one-time costs, including lease termination and other store closure costs, the majority of which are expected to result in future cash expenditures. During Fiscal 2021, the Company closed 101 of its retail stores as part of the Capri Retail Store Optimization Program. Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program during Fiscal 2021 were $5 million, which was comprised of lease-related and other store closing costs.

The exact amounts and timing of the Capri Retail Optimization Program charges and future cash expenditures associated therewith are undeterminable at this time. The Company will either disclose in a Current Report on Form 8-K, or disclose in another periodic filing with the U.S. Securities and Exchange Commission, the amount of any material charges relating to the Capri Retail Optimization Program by major type of cost once such amounts or range of amounts are determinable.

This disclosure is intended to satisfy the requirements of Item 2.05 of Form 8-K.

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Part III

Item 10. Directors, Executive Officers and Corporate Governance

Information with respect to this Item is included in the Company’s Proxy Statement to be filed in ~~July 2020,~~June 2021, which is incorporated herein by reference.

Item 11. Executive Compensation

Information with respect to this Item is included in the Company’s Proxy Statement to be filed in ~~July 2020,~~June 2021, which is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information as of March ~~28, 2020~~27, 2021 regarding compensation plans under which the Company’s equity securities are authorized for issuance:


Equity Compensation Plan Information	Equity Compensation Plan Information												Equity Compensation Plan Information
		(a)	(b)			(c)		(a)	(b)			(c)
Plan category	Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))	Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders ⁽¹⁾	Equity compensation plans approved by security holders ⁽¹⁾	6,697,026	$	46.99	⁽²⁾	2,686,919	Equity compensation plans approved by security holders (1)	6,585,275	$	37.58	(2)	4,998,829
Equity compensation plans not approved by security holders ⁽³⁾	Equity compensation plans not approved by security holders ⁽³⁾	457,925	$	4.57	⁽²⁾	—	Equity compensation plans not approved by security holders (3)	42,761	$	12.12	(2)	—
Total	Total	7,154,951	$	44.28	⁽²⁾	2,686,919	Total	6,628,036	$	37.41	(2)	4,998,829

⁽¹⁾Reflects share options and restricted ~~share~~stock units issued under the Company’s Amended and Restated Omnibus Incentive Plan.

⁽²⁾Represents the weighted average exercise price of outstanding share awards only.

⁽³⁾Reflects share options issued under the Company’s Amended and Restated Stock Option Plan (the “Option Plan”), which was in effect prior to our initial public offering. As of March ~~28, 2020,~~27, 2021, there were no shares available for future issuance under the Option Plan.

Item 13. Certain Relationships, Related Transactions and Director Independence

Information with respect to this Item is included in the Company’s Proxy Statement to be filed in ~~July 2020,~~June 2021, which is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

Information with respect to this Item is included in the Company’s Proxy Statement to be filed in ~~July 2020,~~June 2021, which is incorporated herein by reference.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)The following documents are filed as part of this annual report on Form 10-K:

1.The following consolidated financial statements listed below are filed as a separate section of this Annual Report on Form 10-K:

Report of Independent Registered Public Accounting Firm - Ernst & Young LLP.

Consolidated Balance Sheets as of March ~~28, 2020~~27, 2021 and March ~~30, 2019.~~28, 2020.

Consolidated Statements of Operations and Comprehensive (Loss) Income for the fiscal years ended March 27, 2021, March 28, 2020 and March 30, ~~2019 and March 31, 2018.~~2019.

Consolidated Statements of Shareholders’ Equity for the fiscal years ended March 27, 2021, March 28, 2020 and March 30, ~~2019 and March 31, 2018.~~2019.

Consolidated Statements of Cash Flows for the fiscal years ended March 27, 2021, March 28, 2020 and March 30, ~~2019 and March 31, 2018.~~2019.

Notes to Consolidated Financial Statements for the fiscal years ended March 27, 2021, March 28, 2020 and March 30, ~~2019 and March 31, 2018.~~2019.

2.Exhibits:

EXHIBIT INDEX


Exhibit No.			Document Description
2.1			Share Purchase Agreement dated as of May 31, 2016, by and among Michael Kors (Europe) B.V., Michael Kors (HK) Limited, Michael Kors Far East Trading Limited and Sportswear Holdings Limited (included as Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 001-35368), filed on June 1, 2016 and incorporated herein by reference).
~~2.2~~			Cooperation Agreement, dated as of July 25, 2017, by and among Michael Kors Holdings Limited, JAG Acquisitions (UK) Limited and Jimmy Choo Group Limited (formerly known as Jimmy Choo PLC) (included as Exhibit 2.2 to the Company's Current Report on Form 8-K (File No. 001-35368), filed on July 25, 2017 and incorporated herein by reference).
~~2.3~~			Rule 2.7 Announcement, dated as of July 25, 2017 (included as Exhibit 2.1 to the Company's Current Report on Form 8-K (File No. 001-35368), filed on July 25, 2017 and incorporated herein by reference).
~~2.4~~			Stock Purchase Agreement, dated as of September 24, 2018, by and among Allegra Donata Versace Beck, Donatella Versace, Santo Versace, Borgo Luxembourg S.À R.L., Blackstone GPV Capital Partners (Mauritius) VI-D FDI Ltd., Blackstone GPV Tactical Partners (Mauritius)-N Ltd. and Capri Holdings Limited (f/k/a Michael Kors Holdings Limited) (included as Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 001-35368), filed on September 25, 2018 and incorporated herein by reference).
3.1			Amended and Restated Memorandum and Articles of Association of Capri Holdings Limited (included as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 31, 2018 and incorporated herein by reference).
4.1			Specimen of Ordinary Share Certificate of Capri Holdings ~~Limited.~~Limited (included as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 2019 (File No. 001-35368), filed on May 29, 2019 and incorporated herein by reference).
4.2			Shareholders Agreement, dated as of July 11, 2011, among Michael Kors Holdings Limited and certain shareholders of Michael Kors Holdings Limited (included as Exhibit 10.2 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011 and incorporated herein by reference).
4.3			Indenture, dated as of October 20, 2017, by and among Michael Kors (USA), Inc., Michael Kors Holdings Limited, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (included as Exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 001-35368), filed on October 20, 2017 and incorporated herein by reference).
10.1			Second Amendment, dated as of June 25, 2020, to the Third Amended and Restated Credit Agreement dated as of November 15, 2018 among Capri Holdings Limited, Michael Kors (USA), Inc., the foreign subsidiary borrowers party thereto, the guarantors party thereto, the financial institutions party thereto as lenders and issuing banks and JPMorgan Chase Bank, N.A., as administrative agent (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-35368), filed on July 1, 2020 and incorporated herein by reference).
10.2			Form of Indemnification Agreement between Michael Kors Holdings Limited and its directors and executive officers (included as Exhibit 10.5 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011 and incorporated herein by reference).

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Exhibit No.			Document Description
10.3			Amended and Restated Michael Kors (USA), Inc. Stock Option Plan (included as Exhibit 10.4 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011 and incorporated herein by reference).
10.4			~~Amended~~Amendment No. 1 to the Amended and Restated Michael Kors (USA), Inc. Share Option Plan (included as Exhibit 4.9 to the Company’s Annual Report on Form 20-F for the fiscal year ended March 31, 2012, filed on June 12, 2012 and incorporated herein by reference).
10.5			Capri Holdings Limited Second Amended and Restated Omnibus Incentive Plan (included as ~~Appendix~~Annex A to the Company’s Definitive Proxy Statement on Schedule 14A (File No. 001-35368), filed on ~~June 16, 2015~~July 22, 2020 and incorporated herein by reference).
10.6			Third Amended and Restated Employment Agreement, dated as of March 28, 2018, by and among Michael Kors (USA), Inc., Michael Kors Holdings Limited and John D. Idol (included as Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018, filed on May 30, 2018 and incorporated herein by reference).
10.7			Executive Bonus Program (included as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2013 filed on August 8, 2013 and incorporated herein by reference).
10.8			Employment Agreement, dated as of May 12, 2014, by and between Michael Kors (USA), Inc., and Cathy Marie Robinson (included as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2014 filed on May 28, 2014 and incorporated herein by reference).
~~10.9~~			Employment Agreement, dated as of July 14, 2014, by and between Pascale Meyran and Michael Kors (USA), Inc. (included as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference).
~~10.10~~			Form of Employee Non-Qualified Option Award Agreement (included as Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference).
~~10.11~~10.9			Form of Employee Restricted ~~Share~~Stock Unit Award Agreement (included as Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference).
~~10.12~~10.10			Form of Performance-Based Restricted ~~Share~~Stock Unit Award Agreement (included as Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference).
~~10.13~~10.11			Form of Independent Director Restricted ~~Share~~Stock Unit Award Agreement (included as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference).
~~10.14~~10.12			Aircraft Time Sharing Agreement, dated November 24, 2014, by and between Michael Kors (USA), Inc. and John Idol (included as Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference).
~~10.15~~10.13			Employment Agreement, dated as of April 17, 2017, by and among Michael Kors (USA), Inc., Michael Kors Holdings Limited and Thomas J. Edwards, Jr. (including as Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2017, filed on May 31, 2017 and incorporated herein by reference).
~~10.16~~			Agreement and General Release between Pascale Meyran and Michael Kors (USA), Inc., dated July 9, 2019 (included as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q (File No. 001-35368), filed on November 7, 2019 and incorporated herein by reference).
~~10.17~~10.14			Capri Holdings Limited Deferred Compensation Plan (included as Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001.35368), filed on November 14, 2019 and incorporated herein by reference).
~~10.18~~10.15			Employment Agreement between Michael Kors (USA), Inc. and Krista McDonough made as of October 1, ~~2016.~~2016 (included as Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2020 (File No 001-35368), filed on July 8, 2020 and incorporated herein by reference).
10.16			Employment Agreement, dated as of March 30, 2020, by and among Capri Holdings Limited, Michael Kors (USA), Inc. and Daniel Purefoy.
21.1			List of subsidiaries of Capri Holdings Limited.
23.2			Consent of Ernst & Young LLP.
31.1			Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002.
31.2			Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002.
32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1			Interactive Data Files.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~July 8, 2020~~May 26, 2021


			CAPRI HOLDINGS LIMITED
			By:			/s/ John D. Idol
			Name:			John D. Idol
			Title:			Chairman & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



By:	/s/ John D. Idol	Chairman, Chief Executive Officer and Director (Principal Executive Officer)	~~July 8, 2020~~May 26, 2021
	John D. Idol
By:	/s/ Thomas J. Edwards, Jr.	Chief Financial Officer and Chief Operating Officer (Principal Financial and Accounting Officer)	~~July 8, 2020~~May 26, 2021
	Thomas J. Edwards Jr.
By:	/s/ M. William Benedetto	Director	~~July 8, 2020~~May 26, 2021
	M. William Benedetto
By:	/s/ Robin Freestone	Director	~~July 8, 2020~~May 26, 2021
	Robin Freestone
By:	/s/ Judy Gibbons	Director	~~July 8, 2020~~May 26, 2021
	Judy Gibbons
By:	/s/ Ann Korologos	Director	~~July 8, 2020~~May 26, 2021
	Ann Korologos
By:	/s/ Stephen F. Reitman	Director	~~July 8, 2020~~May 26, 2021
	Stephen F. Reitman
By:	/s/ Jane Thompson	Director	~~July 8, 2020~~May 26, 2021
	Jane Thompson
By:	/s/ Jean Tomlin	Director	~~July 8, 2020~~May 26, 2021
	Jean Tomlin

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Capri Holdings Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Capri Holdings Limited and subsidiaries (“the Company”) as of March ~~28, 2020~~27, 2021 and March ~~30, 2019,~~28, 2020, and the related consolidated statements of operations and comprehensive (loss) income, shareholders’ equity and cash flows for each of the three years in the period ended March ~~28, 2020,~~27, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March ~~28, 2020~~27, 2021 and March ~~30, 2019,~~28, 2020, and the results of its operations and its cash flow for each of the three years in the period ended March ~~28, 2020,~~27, 2021, in conformity with the U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March ~~28, 2020,~~27, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated ~~July 8, 2020~~May 26, 2021 expressed an unqualified opinion thereon.

Adoption of ASU No. 2016-02

As discussed in Note 2 and Note 4 to the consolidated financial statements, the Company changed its method of accounting for leases in the fiscal year ended March 28, 2020 due to the adoption of ASU No. 2016-02, Leases and associated amendments (Topic 842). ~~See below for discussion of our related critical audit matter.~~

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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						Valuation of Goodwill and Indefinite-lived Intangible Assets
Description of the Matter						At March ~~28, 2020,~~27, 2021, the Company’s goodwill and indefinite-lived intangible assets, consisting of brand names, totaled $1.5 billion and $1.3 billion, respectively. As discussed in Note 2 to the consolidated financial statements, goodwill and indefinite-lived intangible assets are assessed for impairment on an annual basis, or whenever impairment indicators exist. During Fiscal ~~2020,~~2021, the Company recognized a goodwill impairment charge of ~~$171~~$94 million associated with two of its Jimmy Choo reporting units. The Company also recognized an impairment charge of ~~$180~~$69 million associated with the Jimmy Choo indefinite-lived brand name intangible asset. Auditing the Company’s annual impairment assessments was complex and highly judgmental due to the significant estimation required in determining the fair value of the reporting units for goodwill and the fair value of indefinite-lived brand name intangible assets. In particular, the fair value estimates were sensitive to significant assumptions, such as changes in the discount rate, revenue growth rate, margin and royalty rates, which are affected by expectations about future market or economic conditions (including the effects of the global pandemic).


How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill and indefinite-lived intangible assets impairment review process, including controls over management’s review of the significant assumptions described above. To test the estimated fair value of the Company’s reporting units and indefinite-lived intangible assets, we performed audit procedures that included, among others, assessing the valuation methodologies and testing the significant assumptions discussed above and the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions used by management to current industry and economic trends and evaluated whether changes to the Company’s business environment would affect the significant assumptions. For example, we compared the royalty rates used in estimating the fair value of certain indefinite-lived brand name intangible assets to current industry licensing agreements. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of the significant assumptions to evaluate the changes in the fair value of the reporting units and indefinite-lived brand name intangible assets that would result from changes in the assumptions. We also involved our internal valuation specialists to assist in our evaluation of the significant assumptions and methodologies used by the Company in developing the fair value estimates. In addition, we tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company.


						~~Adoption of Accounting Standards Update No. 2016-02, Leases~~
~~Description of the Matter~~						As discussed above and in Notes 2 and 4 to the consolidated financial statements, the Company adopted Accounting Standards Update No. 2016-02, Leases (“ASC 842”) on March 31, 2019. As a result of the adoption, the Company recorded a lease liability and related right of use asset of $2.2 billion and $1.6 billion, respectively on its balance sheet at March 28, 2020. Auditing management’s initial recognition of the lease liabilities and right-of-use asset upon adoption of ASU No. 2016-02 was especially challenging due to the volume and diversity of leases in the Company’s global lease portfolio. Further, the Company’s estimated incremental borrowing rate had a significant effect on the measurement of the lease liability and right-of use asset recognized upon adoption. Auditing management’s calculated incremental borrowing rate was complex due to the judgement involved in developing the expected interest rates for secured borrowings based on the term and the economic environment of the leases.

~~Table of Contents~~


~~How We Addressed the Matter in Our Audit~~						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the adoption of ASU No. 2016-02 included testing of controls over management’s review of the completeness of the lease population and the calculation of the incremental borrowing rate. We tested the completeness and accuracy of the data used in the Company’s initial recognition of the lease liabilities and right-of-use asset. Our audit procedures included, among others, comparing the information in a sample of lease agreements to the Company’s analyses and selecting leases from independent sources and assessing their inclusion in the Company’s analysis. We involved our valuation specialists to assist in evaluating the key assumptions and methodologies management used to develop the incremental borrowing rate. We independently calculated a range of incremental borrowing rates and compared it to the rates used by the Company.


						Impairment of Retail Store Long-Lived assets
Description of the Matter						As discussed in Note 2 to the consolidated financial statements, the Company evaluates its long-lived assets, which primarily include property, plant, and equipment and operating lease right-of-use assets at retail stores, for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. During the year ended March ~~28, 2020,~~27, 2021, the Company recognized an impairment charge of ~~$357~~$158 million related to the long-lived assets at certain of its retail stores. In addition, upon adoption of ASC 842, Leases, the Company recorded a $152 million impairment, net of tax, of operating lease assets at certain of its retail stores as a reduction to retained earnings on March 31, 2019.assets. Auditing the Company’s impairment assessment of retail store long-lived assets was complex and highly judgmental due to the significant estimation required in determining the future cash flows used to assess recoverability of each retail store long-lived asset group (undiscounted) and determining the fair value (discounted). The significant assumptions used include estimated future cash flows directly related to the future operation of the stores (including sales and expense growth rates) and the discount rate used to determine fair value. Significant assumptions used in determining the fair value of certain operating lease right-of-use assets include the current market rent and discount rate for the remaining lease term of the related stores. These assumptions are subjective in nature and are affected by expectations about future market or economic conditions (including the effects of the global pandemic).

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How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the retail store long-lived assets impairment process, including, determining the undiscounted future cash flows of the stores and the fair value of the long-lived assets (including those related to operating leases) for the stores that were deemed to be impaired. We also tested controls over management’s review of the significant assumptions described above. Our testing of the Company’s impairment measurement included, among other procedures, evaluating the significant assumptions and operating data used to calculate the estimated future cash flows and to determine the fair value of the store long lived asset groups. For a sample of retail stores, we tested the completeness and accuracy of the data used by the Company in its analyses and we compared the significant assumptions used to determine the forecasted cash flows to historical results of the retail stores, current industry and economic trends and inquired of the Company’s executives to understand the business initiatives supporting the assumptions in the future cash flows. We involved our internal valuation specialists to assist in evaluating the fair value of certain operating lease right-of-use assets, which included assessing the estimated market rental rates of these leases by comparing them to rental rates for comparable leases and evaluating the applied discount rate.

/s/ ERNST & YOUNG LLP

We have served as the Company’s auditor since ~~2014~~2014.

New York, New York

~~July 8, 2020~~May 26, 2021

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Capri Holdings Limited

Opinion on Internal Control over Financial Reporting

We have audited Capri Holdings Limited and subsidiaries’ internal control over financial reporting as of March ~~28, 2020,~~27, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Capri Holdings Limited and subsidiaries (“the Company”) maintained, in all material respects, effective internal control over financial reporting as of March ~~28, 2020,~~27, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March ~~28, 2020~~27, 2021 and March ~~30, 2019,~~28, 2020, the related consolidated statements of operations and comprehensive (loss) income, shareholders’ equity and cash flows for each of the three years in the period ended March ~~28, 2020,~~27, 2021, and the related notes and our report dated ~~July 8, 2020~~May 26, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the ~~company;~~Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the ~~company~~Company are being made only in accordance with authorizations of management and directors of the ~~company;~~Company and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the ~~company’s~~Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ ERNST & YOUNG LLP

New York, New York

~~July 8, 2020~~May 26, 2021

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CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)


		March 28, 2020		March 30, 2019			March 27, 2021		March 28, 2020
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	592	$	172	Cash and cash equivalents	$	232	$	592
Receivables, net	Receivables, net	308		383		Receivables, net	373		308
Inventories, net	Inventories, net	827		953		Inventories, net	736		827
Prepaid expenses and other current assets	Prepaid expenses and other current assets	167		221		Prepaid expenses and other current assets	205		167
Total current assets	Total current assets	1,894		1,729		Total current assets	1,546		1,894
Property and equipment, net	Property and equipment, net	561		615		Property and equipment, net	485		561
Operating lease right-of-use assets	Operating lease right-of-use assets	1,625		—		Operating lease right-of-use assets	1,504		1,625
Intangible assets, net	Intangible assets, net	1,986		2,293		Intangible assets, net	1,992		1,986
Goodwill	Goodwill	1,488		1,659		Goodwill	1,498		1,488
Deferred tax assets	Deferred tax assets	225		112		Deferred tax assets	278		225
Other assets	Other assets	167		242		Other assets	178		167
Total assets	Total assets	$	7,946	$	6,650	Total assets	$	7,481	$	7,946
Liabilities, Redeemable Noncontrolling Interest and Shareholders’ Equity
Liabilities and Shareholders’ Equity						Liabilities and Shareholders’ Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	428	$	371	Accounts payable	$	512	$	428
Accrued payroll and payroll related expenses	Accrued payroll and payroll related expenses	93		133		Accrued payroll and payroll related expenses	116		93
Accrued income taxes	Accrued income taxes	42		34		Accrued income taxes	126		42
Short-term operating lease liabilities	Short-term operating lease liabilities	430		—		Short-term operating lease liabilities	447		430
Short-term debt	Short-term debt	167		630		Short-term debt	123		167
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	241		374		Accrued expenses and other current liabilities	297		241
Total current liabilities	Total current liabilities	1,401		1,542		Total current liabilities	1,621		1,401
Long-term operating lease liabilities	Long-term operating lease liabilities	1,758		—		Long-term operating lease liabilities	1,657		1,758
Deferred rent		—		132

Deferred tax liabilities	Deferred tax liabilities	465		438		Deferred tax liabilities	397		465
Long-term debt	Long-term debt	2,012		1,936		Long-term debt	1,219		2,012
Other long-term liabilities	Other long-term liabilities	142		166		Other long-term liabilities	430		142
Total liabilities	Total liabilities	5,778		4,214		Total liabilities	5,324		5,778
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies	0		0
Redeemable noncontrolling interest		—		4

Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Ordinary shares, 0 par value; 650,000,000 shares authorized; 217,320,010 shares issued and 149,425,612 outstanding at March 28, 2020; 216,050,939 shares issued and 150,932,306 outstanding at March 30, 2019		—		—
Treasury shares, at cost (67,894,398 shares at March 28, 2020 and 65,118,633 shares at March 30, 2019)		(3,325)		(3,223)
Ordinary shares, 0 par value; 650,000,000 shares authorized; 219,222,937 shares issued and 151,280,011 outstanding at March 27, 2021; 217,320,010 shares issued and 149,425,612 outstanding at March 28, 2020						Ordinary shares, 0 par value; 650,000,000 shares authorized; 219,222,937 shares issued and 151,280,011 outstanding at March 27, 2021; 217,320,010 shares issued and 149,425,612 outstanding at March 28, 2020	0		0
Treasury shares, at cost (67,942,926 shares at March 27, 2021 and 67,894,398 shares at March 28, 2020)						Treasury shares, at cost (67,942,926 shares at March 27, 2021 and 67,894,398 shares at March 28, 2020)	(3,326)		(3,325)
Additional paid-in capital	Additional paid-in capital	1,085		1,011		Additional paid-in capital	1,158		1,085
Accumulated other comprehensive income (loss)		75		(66)
Accumulated other comprehensive income						Accumulated other comprehensive income	56		75
Retained earnings	Retained earnings	4,332		4,707		Retained earnings	4,270		4,332
Total shareholders’ equity of Capri	Total shareholders’ equity of Capri	2,167		2,429		Total shareholders’ equity of Capri	2,158		2,167
Noncontrolling interest	Noncontrolling interest	1		3		Noncontrolling interest	(1)		1
Total shareholders’ equity	Total shareholders’ equity	2,168		2,432		Total shareholders’ equity	2,157		2,168
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	7,946	$	6,650	Total liabilities and shareholders’ equity	$	7,481	$	7,946

See accompanying notes to consolidated financial statements.

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CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(In millions, except share and per share data)


		Fiscal Years Ended											Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
Total revenue	Total revenue	$	5,551	$	5,238	$	4,719	Total revenue	$	4,060	$	5,551	$	5,238
Cost of goods sold	Cost of goods sold	2,280		2,058		1,860		Cost of goods sold	1,463		2,280		2,058
Gross profit	Gross profit	3,271		3,180		2,859		Gross profit	2,597		3,271		3,180
Selling, general and administrative expenses	Selling, general and administrative expenses	2,464		2,075		1,767		Selling, general and administrative expenses	2,018		2,464		2,075
Depreciation and amortization	Depreciation and amortization	249		225		208		Depreciation and amortization	212		249		225
Impairment of assets	Impairment of assets	708		21		33		Impairment of assets	316		708		21
Restructuring and other charges ⁽¹⁾	Restructuring and other charges ⁽¹⁾	42		124		102		Restructuring and other charges ⁽¹⁾	32		42		124
Total operating expenses	Total operating expenses	3,463		2,445		2,110		Total operating expenses	2,578		3,463		2,445
(Loss) Income from operations		(192)		735		749
Income (loss) from operations								Income (loss) from operations	19		(192)		735
Other income, net	Other income, net	(6)		(4)		(2)		Other income, net	(7)		(6)		(4)
Interest expense, net	Interest expense, net	18		38		22		Interest expense, net	43		18		38
Foreign currency loss (gain)		11		80		(13)
(Loss) income before provision for income taxes		(215)		621		742
Foreign currency (gain) loss								Foreign currency (gain) loss	(20)		11		80
Income (loss) before provision for income taxes								Income (loss) before provision for income taxes	3		(215)		621
Provision for income taxes	Provision for income taxes	10		79		150		Provision for income taxes	66		10		79
Net (loss) income	Net (loss) income	(225)		542		592		Net (loss) income	(63)		(225)		542
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest	Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest	(2)		(1)		—		Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest	(1)		(2)		(1)
Net (loss) income attributable to Capri	Net (loss) income attributable to Capri	$	(223)	$	543	$	592	Net (loss) income attributable to Capri	$	(62)	$	(223)	$	543

Weighted average ordinary shares outstanding:	Weighted average ordinary shares outstanding:							Weighted average ordinary shares outstanding:
Basic	Basic	150,714,598		149,765,468		152,283,586		Basic	150,453,568		150,714,598		149,765,468
Diluted	Diluted	150,714,598		151,614,350		155,102,885		Diluted	150,453,568		150,714,598		151,614,350
Net (loss) income per ordinary share attributable to Capri:	Net (loss) income per ordinary share attributable to Capri:							Net (loss) income per ordinary share attributable to Capri:
Basic	Basic	$	(1.48)	$	3.62	$	3.89	Basic	$	(0.41)	$	(1.48)	$	3.62
Diluted	Diluted	$	(1.48)	$	3.58	$	3.82	Diluted	$	(0.41)	$	(1.48)	$	3.58

Statements of Comprehensive (Loss) Income:	Statements of Comprehensive (Loss) Income:							Statements of Comprehensive (Loss) Income:
Net (loss) income	Net (loss) income	$	(225)	$	542	$	592	Net (loss) income	$	(63)	$	(225)	$	542
Foreign currency translation adjustments	Foreign currency translation adjustments	145		(134)		148		Foreign currency translation adjustments	(15)		145		(134)
Net (loss) gain on derivatives	Net (loss) gain on derivatives	(4)		17		(16)		Net (loss) gain on derivatives	(4)		(4)		17
Comprehensive (loss) income	Comprehensive (loss) income	(84)		425		724		Comprehensive (loss) income	(82)		(84)		425
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest	Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest	(2)		(1)		—		Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest	(1)		(2)		(1)

Comprehensive (loss) income attributable to Capri	Comprehensive (loss) income attributable to Capri	$	(82)	$	426	$	724	Comprehensive (loss) income attributable to Capri	$	(81)	$	(82)	$	426

⁽¹⁾Restructuring and other charges includes store closure costs recorded in connection with the Michael Kors Retail Fleet Optimization Plan (as defined in Note 11) and other restructuring initiatives, and costs recorded in connection with the acquisitions of Gianni Versace S.r.l and Jimmy Choo Group Limited (see Note 5 and Note 11).

See accompanying notes to consolidated financial statements.

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CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in millions, except share data which is in thousands)


		Ordinary Shares					Additional Paid-in Capital		Treasury Shares							Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total Equity of Capri				Non-controlling Interests		Total Equity	Ordinary Shares			Additional Paid-in Capital		Treasury Shares						Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Total Equity of Capri		Non-controlling Interests		Total Equity
		Shares	Amounts					Shares			Amounts																		Shares			Additional Paid-in Capital			Shares											Total Equity
Balance at April 1, 2017		209,332	$	—	$	768	(53,499)		$	(2,655)		$	(81)	$	3,560	$	1,592	$	3	$	1,595
Net income		—	—		—		—		—			—		592		592		—		592
Other comprehensive income		—	—		—		—		—			132		—		132		—		132
Total comprehensive income		—	—		—		—		—			—		—		724		—		724
Non-controlling interest of Jimmy Choo joint ventures		—	—		—		—		—			—		—		—		3		3
Partial repurchase of non-controlling interest		—	—		—		—		—			—		—		—		(1)		(1)
Vesting of restricted awards, net of forfeitures		542	—		—		—		—			—		—		—		—		—
Exercise of employee share options		1,117	—		14		—		—			—		—		14		—		14
Equity compensation expense		—	—		50		—		—			—		—		50		—		50
Purchase of treasury shares		—	—		—		(7,794)		(361)			—		—		(361)		—		(361)
Redemption of capital/dividends		—	—		—		—		—			—		—		—		(1)		(1)
Other		—	—		(1)		—		—			—		—		(1)		—		(1)
Balance at March 31, 2018, as previously reported		210,991	$	—	$	831	(61,293)		$	(3,016)		$	51	$	4,152	$	2,018	$	4	$	2,022
Adoption of accounting standard (ASC 606)		—	—		—		—		—			—		12		12		—		12
Balance as of April 1, 2018	Balance as of April 1, 2018	210,991	—		831		(61,293)		(3,016)			51		4,164		2,030		4		2,034		Balance as of April 1, 2018	210,991		0		831		(61,293)	(3,016)				51			4,164			2,030			4		2,034
Net income (loss)	Net income (loss)	—	—		—		—		—			—		543		543		(1)		542		Net income (loss)	—		—		—		—	—		—			543			543			(1)		542
Other comprehensive loss	Other comprehensive loss	—	—		—		—		—			(117)		—		(117)		—		(117)		Other comprehensive loss	—		—		—		—	—		(117)			—			(117)			0		(117)
Total comprehensive income (loss)	Total comprehensive income (loss)	—	—		—		—		—			—		—		426		(1)		425		Total comprehensive income (loss)	—		—		—		—	—		—			—			426			(1)		425
Issuance of ordinary shares	Issuance of ordinary shares	2,395	—		91		—		—			—		—		91		—		91		Issuance of ordinary shares	2,395		—		91		—	—		—			—			91			—		91
Vesting of restricted awards, net of forfeitures	Vesting of restricted awards, net of forfeitures	818	—		—		—		—			—		—		—		—		—		Vesting of restricted awards, net of forfeitures	818		—		—		—	—		—			—			—			—		—
Exercise of employee share options	Exercise of employee share options	1,847	—		29		—		—			—		—		29		—		29		Exercise of employee share options	1,847		—		29		—	—		—			—			29			—		29
Equity compensation expense		—	—		60		—		—			—		—		60		—		60
Purchase of treasury shares		—	—		—		(3,826)		(207)			—		—		(207)		—		(207)
Share based compensation expense																						Share based compensation expense	—		—		60		—	—		—			—			60			—		60
Repurchase of common stock																						Repurchase of common stock	—		—		—		(3,826)	(207)		—			—			(207)			—		(207)

Balance at March 30, 2019, as previously reported	Balance at March 30, 2019, as previously reported	216,051	$	—	$	1,011	(65,119)		$	(3,223)		$	(66)	$	4,707	$	2,429	$	3	$	2,432	Balance at March 30, 2019, as previously reported	216,051		$	0	$	1,011	(65,119)	$	(3,223)	$	(66)		$	4,707		$	2,429		$	3	$	2,432
Adoption of accounting standard (See Note 2)	Adoption of accounting standard (See Note 2)	—	—		—		—		—			—		(152)		(152)		—		(152)		Adoption of accounting standard (See Note 2)	—		—		—		—	—		—			(152)			(152)			—		(152)
Balance as of March 31, 2019	Balance as of March 31, 2019	216,051	—		1,011		(65,119)		(3,223)			(66)		4,555		2,277		3		2,280		Balance as of March 31, 2019	216,051		0		1,011		(65,119)	(3,223)		(66)			4,555			2,277			3		2,280
Net (loss)		—	—		—		—		—			—		(223)		(223)		(2)		(225)
Net loss																						Net loss	—		—		—		—	—		—			(223)			(223)			(2)		(225)
Other comprehensive income	Other comprehensive income	—	—		—		—		—			141		—		141		—		141		Other comprehensive income	—		—		—		—	—		141			—			141			0		141
Total comprehensive (loss)		—	—		—		—		—			—		—		(82)		(2)		(84)
Total comprehensive loss																						Total comprehensive loss	—		—		—		—	—		—			—			(82)			(2)		(84)
Vesting of restricted awards, net of forfeitures	Vesting of restricted awards, net of forfeitures	1,262	—		—		—		—			—		—		—		—		—		Vesting of restricted awards, net of forfeitures	1,262		—		—		—	—		—			—			—			—		—
Exercise of employee share options	Exercise of employee share options	7	—		—		—		—			—		—		—		—		—		Exercise of employee share options	7		—		—		—	—		—			—			—			—		0
Equity compensation expense		—	—		70		—		—			—		—		70		—		70
Purchase of treasury shares		—	—		—		(2,775)		(102)			—		—		(102)		—		(102)
Share based compensation expense																						Share based compensation expense	—		—		70		—	—		—			—			70			—		70
Repurchase of common stock																						Repurchase of common stock	—		—		—		(2,775)	(102)		—			—			(102)			—		(102)
Adjustment of redeemable non-controlling interests to redemption value																						Adjustment of redeemable non-controlling interests to redemption value	—		—		4		—	—		—			—			4			—		4

Adjustment of redeemable non-controlling interests to redemption value		—	—		4		—		—			—		—		4		—		4

Balance at March 28, 2020	Balance at March 28, 2020	217,320	$	—	$	1,085	(67,894)		$	(3,325)		$	75	$	4,332	$	2,167	$	1	$	2,168	Balance at March 28, 2020	217,320		$	0	$	1,085	(67,894)	$	(3,325)	$	75		$	4,332		$	2,167		$	1	$	2,168
Net loss																						Net loss	—		—		—		—	—		—			(62)			(62)			(1)		(63)
Other comprehensive loss																						Other comprehensive loss	—		—		—		—	—		(19)			—			(19)			0		(19)
Total comprehensive loss																						Total comprehensive loss	—		—		—		—	—		—			—			(81)			(1)		(82)
Vesting of restricted awards, net of forfeitures																						Vesting of restricted awards, net of forfeitures	1,456		—		—		—	—		—			—			—			—		—
Exercise of employee share options																						Exercise of employee share options	447		—		3		—	—		—			—			3			—		3
Share based compensation expense																						Share based compensation expense	—		—		70		—	—		—			—			70			—		70
Repurchase of common stock																						Repurchase of common stock	—		—		—		(49)	(1)		—			—			(1)			—		(1)
Other																						Other	—		—		—		—	—		—			—			—			(1)		(1)

Balance at March 27, 2021																						Balance at March 27, 2021	219,223		0		$	1,158	(67,943)	$	(3,326)	$	56		$	4,270		$	2,158		$	(1)	$	2,157

See accompanying notes to consolidated financial statements.

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CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


		Fiscal Years Ended											Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
Cash flows from operating activities	Cash flows from operating activities							Cash flows from operating activities
Net (loss) income	Net (loss) income	$	(225)	$	542	$	592	Net (loss) income	$	(63)	$	(225)	$	542
Adjustments to reconcile net (loss) income to net cash provided by operating activities:	Adjustments to reconcile net (loss) income to net cash provided by operating activities:							Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	249		225		208		Depreciation and amortization	212		249		225
Equity compensation expense		70		60		50
Share-based compensation expense								Share-based compensation expense	71		70		60
Impairment of assets	Impairment of assets	708		21		33		Impairment of assets	316		708		21
Bad debt expense		29		4		8
Credit loss								Credit loss	(3)		29		4
Losses on store lease exits	Losses on store lease exits	—		18		29		Losses on store lease exits	0		0		18
Deferred income taxes	Deferred income taxes	(73)		(71)		9		Deferred income taxes	(70)		(73)		(71)
Changes to lease related balances, net	Changes to lease related balances, net	(55)		—		—		Changes to lease related balances, net	(112)		(55)		—
Amortization of deferred financing costs	Amortization of deferred financing costs	8		4		4		Amortization of deferred financing costs	6		8		4
Tax deficit (benefit) on exercise of share options	Tax deficit (benefit) on exercise of share options	2		(24)		(7)		Tax deficit (benefit) on exercise of share options	4		2		(24)

Foreign currency losses (gains)		11		80		(13)
Foreign currency (gains) losses								Foreign currency (gains) losses	(15)		11		80
Other non-cash charges	Other non-cash charges	3		—		—		Other non-cash charges	0		3		0
Change in assets and liabilities:	Change in assets and liabilities:							Change in assets and liabilities:
Receivables, net	Receivables, net	42		(23)		11		Receivables, net	(52)		42		(23)
Inventories, net	Inventories, net	115		(125)		46		Inventories, net	145		115		(125)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	20		(31)		49		Prepaid expenses and other current assets	(31)		20		(31)
Accounts payable	Accounts payable	63		(48)		(21)		Accounts payable	50		63		(48)
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	(95)		20		56		Accrued expenses and other current liabilities	153		(95)		20
Other long-term assets and liabilities	Other long-term assets and liabilities	(13)		42		8		Other long-term assets and liabilities	13		(13)		42
Net cash provided by operating activities	Net cash provided by operating activities	859		694		1,062		Net cash provided by operating activities	624		859		694
Cash flows from investing activities	Cash flows from investing activities							Cash flows from investing activities
Capital expenditures	Capital expenditures	(223)		(181)		(120)		Capital expenditures	(111)		(223)		(181)
Purchase of intangible assets	Purchase of intangible assets	—		(3)		(3)		Purchase of intangible assets	0		0		(3)

Cash paid for business acquisitions, net of cash acquired		(13)		(1,875)		(1,415)
Realized (loss) gain on hedge related to acquisitions		—		(77)		5
Settlement of a net investment hedge		298		11		—
Net cash provided by (used in) investing activities		62		(2,125)		(1,533)
Cash paid for asset/business acquisitions, net of cash acquired								Cash paid for asset/business acquisitions, net of cash acquired	(13)		(13)		(1,875)
Realized loss on hedge related to acquisitions								Realized loss on hedge related to acquisitions	0		0		(77)
Settlement of net investment hedges								Settlement of net investment hedges	0		298		11
Net cash (used in) provided by investing activities								Net cash (used in) provided by investing activities	(124)		62		(2,125)
Cash flows from financing activities	Cash flows from financing activities							Cash flows from financing activities
Debt borrowings	Debt borrowings	2,282		4,204		2,520		Debt borrowings	2,443		2,282		4,204
Debt repayments	Debt repayments	(2,676)		(2,560)		(1,784)		Debt repayments	(3,311)		(2,676)		(2,560)
Debt issuance costs	Debt issuance costs	(1)		(15)		—		Debt issuance costs	(4)		(1)		(15)
Purchase of treasury shares		(102)		(207)		(361)
Repurchase of common stock								Repurchase of common stock	(1)		(102)		(207)
Exercise of employee share options	Exercise of employee share options	—		29		14		Exercise of employee share options	3		0		29

Net cash (used in) provided by financing activities	Net cash (used in) provided by financing activities	(497)		1,451		389		Net cash (used in) provided by financing activities	(870)		(497)		1,451
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(4)		(11)		15		Effect of exchange rate changes on cash and cash equivalents	12		(4)		(11)
Net increase (decrease) in cash and cash equivalents		420		9		(67)
Net (decrease) increase in cash, cash equivalents and restricted cash								Net (decrease) increase in cash, cash equivalents and restricted cash	(358)		420		9
Beginning of period	Beginning of period	172		163		230		Beginning of period	592		172		163
End of period	End of period	$	592	$	172	$	163	End of period	$	234	$	592	$	172
Supplemental disclosures of cash flow information	Supplemental disclosures of cash flow information							Supplemental disclosures of cash flow information
Cash paid for interest	Cash paid for interest	$	80	$	45	$	11	Cash paid for interest	$	52	$	80	$	45
Cash paid for income taxes	Cash paid for income taxes	$	98	$	172	$	104	Cash paid for income taxes	$	45	$	98	$	172
Supplemental disclosure of non-cash investing and financing activities	Supplemental disclosure of non-cash investing and financing activities							Supplemental disclosure of non-cash investing and financing activities
Accrued capital expenditures	Accrued capital expenditures	$	30	$	25	$	26	Accrued capital expenditures	$	17	$	30	$	25

See accompanying notes to consolidated financial statements.

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CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business and Basis of Presentation

The Company was incorporated in the British Virgin Islands (“BVI”) on December 13, 2002 as Michael Kors Holdings Limited and changed its name to Capri Holdings Limited (“Capri,” and together with its subsidiaries, the “Company”) on December 31, 2018. The Company is a holding company that owns brands that are leading designers, marketers, distributors and retailers of branded women’s and men’s accessories, apparel and footwear bearing the Versace, Jimmy Choo and Michael Kors tradenames and related trademarks and logos. The Company operates in 3 reportable segments: Versace, Jimmy Choo and Michael Kors. See Note 20 for additional information.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. ~~The Company’s audited consolidated financial statements include the following operations for the periods from the respective acquisition/consolidation date through March 28, 2020:~~

•~~Gianni Versace S.r.l. (“Versace”), acquired on December 31, 2018;~~

•~~Jimmy Choo Group Limited (“Jimmy Choo”), acquired on November 1, 2017;~~

~~See Note 5 for additional information related to the above acquisitions.~~

The Company utilizes a 52 to 53 week fiscal year, ~~ending on~~and the ~~Saturday closest~~term "Fiscal Year" or "Fiscal" refers to ~~March 31. As such, the~~that 52-week or 53-week period. The fiscal years ending on March 27, 2021, March 28, 2020 and March 30, 2019 ~~and March 31, 2018~~ (“Fiscal ~~2020”~~2021”, “Fiscal ~~2019”~~2020” and “Fiscal ~~2018”~~2019”, respectively) contain 52 weeks.

~~Timing of Filing of Annual Report on Form 10-K~~

As a result of the impacts of the COVID-19 pandemic on the business and employees of the Company, the Company has relied on the Securities and Exchange Commission’s Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020, to delay the filing of its Annual Report on Form 10-K for Fiscal 2020 by up to 45 days from May 27, 2020, which is the original filing due date.

The Company’s operations and business have experienced significant disruption due to the unprecedented conditions surrounding the COVID-19 global pandemic. The Company has been following the recommendations of local government and health authorities to minimize exposure risk for its employees. AsFiscal 2022 is a result, most of the Company’s corporate offices globally have been temporarily closed due to the pandemic and corporate employees involved in the Company’s annual financial statement closing process and finalizing the audit of the Company’s financial statements for Fiscal 2020 are working remotely. In addition, the Company required additional time to prepare analyses related to the impact of COVID-19 on its business and complete related required disclosures. This has resulted in delays in finalizing the Annual Report on Form 10-K for Fiscal 2020 and accompanying audited financial statements.53-week period ending April 2, 2022.

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2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. The most significant assumptions and estimates involved in preparing the financial statements include allowances for customer deductions, sales returns, sales discounts and ~~doubtful accounts,~~credit losses, estimates of inventory net realizable value, the valuation of share-based compensation, the valuation of deferred taxes and the valuation of goodwill, intangible assets, operating lease right-of-use assets and property and equipment, along with the estimated useful lives assigned to these assets. Actual results could differ from those estimates.

~~Reclassifications~~

~~Certain reclassifications have been made to the prior periods’ financial information in order to conform to the current period’s presentation.~~

Seasonality

The Company experiences certain effects of seasonality with respect to its business. The Company generally experiences greater sales during its third fiscal quarter, primarily driven by holiday season sales, and the lowest sales during its first fiscal quarter.

Revenue Recognition

The Company accounts for contracts with its customers when there is approval and commitment from both parties, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when control of the promised goods or services is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. The Company recognizes retail store revenues when control of the product is transferred at the point of sale at Company owned stores, including concessions, net of estimated returns. Revenue from sales through the Company’s e-commerce sites is recognized at the time of delivery to the customer, reduced by an estimate of returns. Wholesale revenue is recognized net of estimates for sales returns, discounts, markdowns and allowances, after merchandise is shipped and control of the underlying product is transferred to the Company’s wholesale customers. To arrive at net sales for retail revenue, gross sales are reduced by actual customer returns as well as by a provision for estimated future customer returns, which is based on management’s review of historical and future customer return expectations. Sales taxes collected from retail customers are presented on a net basis and, as such, are excluded from revenue. To arrive at net sales for wholesale revenue, gross sales are reduced by provisions for estimated future returns, based on current expectations, as well as trade discounts, markdowns, allowances, operational chargebacks, and certain cooperative selling expenses. These estimates are based on such factors as

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historical trends, actual and forecasted performance and current market conditions, which are reviewed by management on a quarterly basis.

The following table details the activity and balances of the Company’s sales reserves for the fiscal years ended March 27, 2021, March 28, 2020, and March 30, 2019 ~~and March 31, 2018~~ (in millions):


		Balance Beginning of Year		Amounts Charged to Revenue		Write-offs Against Reserves		Balance at Year End			Balance Beginning of Year		Amounts Charged to Revenue		Write-offs Against Reserves		Balance at Year End
Retail	Retail									Retail
Return Reserves:	Return Reserves:									Return Reserves:
Fiscal Year Ended March 27, 2021										Fiscal Year Ended March 27, 2021	$	12	$	176	$	(168)	$	20
Fiscal Year Ended March 28, 2020	Fiscal Year Ended March 28, 2020	$	15	$	231	$	(234)	$	12	Fiscal Year Ended March 28, 2020	15		231		(234)		12
Fiscal Year Ended March 30, 2019	Fiscal Year Ended March 30, 2019	12		226		(223)		15		Fiscal Year Ended March 30, 2019	12		226		(223)		15
Fiscal Year Ended March 31, 2018		7		161		(156)		12

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		Balance Beginning of Year		Amounts Charged to Revenue		Write-offs Against Reserves		Balance at Year End			Balance Beginning of Year		Amounts Charged to Revenue		Write-offs Against Reserves		Balance at Year End
Wholesale	Wholesale									Wholesale
Total Sales Reserves:	Total Sales Reserves:									Total Sales Reserves:
Fiscal Year Ended March 27, 2021										Fiscal Year Ended March 27, 2021	$	154	$	137	$	(213)	$	78
Fiscal Year Ended March 28, 2020	Fiscal Year Ended March 28, 2020	$	112	$	266	$	(224)	$	154	Fiscal Year Ended March 28, 2020	112		266		(224)		154
Fiscal Year Ended March 30, 2019	Fiscal Year Ended March 30, 2019	109		262		(259)		112		Fiscal Year Ended March 30, 2019	109		262		(259)		112
Fiscal Year Ended March 31, 2018		97		258		(246)		109

Royalty revenue generated from product licenses, which includes contributions for advertising, is based on reported sales of licensed products bearing the Company’s trademarks at rates specified in the license agreements. These agreements are also subject to contractual minimum levels. Royalty revenue generated by geographic licensing agreements is recognized as it is earned under the licensing agreements based on reported sales of licensees applicable to specified periods, as outlined in the agreements. These agreements allow for the use of the Company’s tradenames to sell its branded products in specific geographic regions.

The adverse impact from the COVID-19 pandemic which includes, but is not limited to, temporary retail store closures, wholesale customer store closures, a reduction in retail store traffic, a decline in international tourism and a decrease in consumer consumption is reflected in the Company's Fiscal 2021 and Fiscal 2020 total revenue.

Loyalty Program

The Company ~~has~~offers a loyalty program, which allows its Michael Kors ~~customer loyalty program in the United States, which allows~~U.S. customers to earn points on qualifying purchases toward monetary and non-monetary rewards, ~~that~~which may be redeemed for purchases at ~~the Company’s~~Michael Kors retail stores and e-commerce ~~site.~~sites. The Company ~~allocates~~defers a portion of the initial sales transaction based on the estimated relative fair value of the benefits ~~using statistical formulas~~ based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed. The contract liability, net of an estimated “breakage,” is recorded ~~as a reduction to revenue in the consolidated statements of income and comprehensive income and~~ within accrued expenses and other current liabilities in the Company’s consolidated balance ~~sheets.~~sheets and is expected to be recognized within the next 12 months. See Note 3 for additional information.

Advertising and Marketing Costs

Advertising and marketing costs are generally expensed ~~over~~when the ~~period of benefit~~advertisement is first exhibited and are recorded in selling, general and administrative ~~expenses.~~expenses in the Company’s consolidated statements of operations and comprehensive (loss) income. Advertising and marketing expense was $137 million, $201 million ~~$158 million~~ and ~~$167~~$158 million in Fiscal 2021, Fiscal 2020 and Fiscal 2019, ~~and Fiscal 2018,~~ respectively.

Cooperative advertising expense, which represents the Company’s participation in advertising expenses of its wholesale customers, is reflected as a reduction of net sales. Expenses related to cooperative advertising for Fiscal 2021, Fiscal 2020 and Fiscal 2019, ~~and Fiscal 2018,~~ were $3 million, $7 million and $8 million, ~~and $6 million,~~ respectively.

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Shipping and Handling

Freight-in expenses are recorded as part of cost of goods sold, along with product costs and other costs to acquire inventory. The costs of preparing products for sale, including warehousing expenses, are included in selling, general and administrative ~~expenses.~~expenses in the Company’s consolidated statements of operations and comprehensive (loss) income. Selling, general and administrative expenses also include the costs of shipping products to the Company’s e-commerce customers. Shipping and handling costs included within selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive (loss) income were $160 million, $157 million ~~$132 million~~ and ~~$129~~$132 million for Fiscal 2021, Fiscal 2020 and Fiscal 2019, ~~and Fiscal 2018,~~ respectively. Shipping and handling costs charged to customers are included in total revenue.

COVID-19 Related Government Assistance and Subsidies

As there is no definitive guidance under U.S. GAAP, the Company has applied the guidance under International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance ("IAS 20"). The Company has elected to follow the income approach under IAS 20 and recognize these funds as a reduction to the related expense in the Company’s consolidated statements of operations and comprehensive (loss) income. During Fiscal 2021, the Company recognized $37 million related to government assistance and subsidies.

Cash, ~~and~~ Cash Equivalents and Restricted Cash

All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. Included in the Company’s cash and cash equivalents as of March ~~28, 2020~~27, 2021 and March ~~30, 2019~~28, 2020 are credit card receivables of $4$25 million and ~~$24~~$4 million, respectively, which generally settle within two to three business days. The ~~decrease~~increase in credit card receivables year over year is mainly due to the impact on sales from COVID-19.

A reconciliation of cash, cash equivalents and restricted cash as of March 27, 2021 and March 28, 2020 from the ~~COVID-19 pandemic.~~consolidated balance sheets to the consolidated statements of cash flows is as follows:

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	Fiscal Years Ended
	March 27, 2021		March 28, 2020
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	232	$	592
Restricted cash included within prepaid expenses and other current assets	2		0
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	234	$	592

Inventories

Inventories ~~mainly~~primarily consist of finished goods with the exception of raw materials and work in process inventory. The combined total of raw materials and work in process inventory recorded on the Company's consolidated balance sheets as of March 27, 2021 and March 28, 2020 ~~and March 30, 2019~~ were ~~$27~~$28 million and ~~$25~~$27 million, respectively. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted-average cost method. Costs include amounts paid to independent manufacturers, plus duties and freight to bring the goods to the Company’s warehouses, as well as shipments to stores. The Company continuously evaluates the composition of its inventory and makes adjustments when the cost of inventory is not expected to be fully recoverable. The net realizable value of the Company’s inventory is estimated based on historical experience, current and forecasted demand, and market conditions. In addition, reserves for inventory losses are estimated based on historical experience and physical inventory counts. The Company’s inventory reserves are estimates, which could vary significantly from actual results if future economic conditions, customer demand or competition differ from expectations. Our historical estimates of these adjustments have not differed materially from actual results.

The net realizable value of the Company's inventory as of March 27, 2021 and March 28, 2020 includes the adverse impacts connected to the COVID-19 pandemic. This includes the impact from temporary retail store closures, wholesale customer store closures, reductions in retail store traffic, a decline in international tourism and a decrease in consumer consumption.

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Store Pre-opening Costs

Costs associated with the opening of new retail stores and start up activities, are expensed as incurred.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and amortization (carrying value). Depreciation is recorded on a straight-line basis over the expected remaining useful lives of the related assets. Equipment, furniture and fixtures, are depreciated over five to seven years, computer hardware and software are depreciated over three to five years. The Company’s share of the cost of constructing in-store shop displays within its wholesale customers’ floor-space (“shop-in-shops”), which is paid directly to third-party suppliers, is capitalized as property and equipment and is generally amortized over a useful life of three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated remaining useful lives of the related assets or the remaining lease term, including highly probable renewal periods. The Company includes all depreciation and amortization expense as a component of total operating expenses, as the underlying long-lived assets are not directly or indirectly related to bringing the Company’s products to their existing location and condition. Maintenance and repairs are charged to expense in the year incurred.

The Company capitalizes, in property and equipment, direct costs incurred during the application development stage and the implementation stage for developing, purchasing or otherwise acquiring software for its internal use. These costs are amortized over the estimated useful lives of the software, generally five years. All costs incurred during the preliminary project stage, including project scoping and identification and testing of alternatives, are expensed as incurred.

Definite-Lived Intangible Assets

The Company’s definite-lived intangible assets consist of trademarks and customer relationships which are stated at cost less accumulated amortization. The Company’s customer relationships are amortized over five to eighteen years. Reacquired rights recorded in connection with the acquisition of ~~MKHKL~~Michael Kors (HK) Limited and Subsidiaries (“MKHKL”) are amortized through March 31, 2041, the original expiration date of the Michael Kors license agreement in the Greater China region. The trademark for the Michael Kors brand is amortized over twenty years.

~~Impairment of~~ Long-lived Assets

The Company evaluates ~~its~~all long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. For the purposes of impairment testing, the Company groups long-lived assets at the lowest level of identifiable cash flow. The ~~Company’s~~leasehold improvements are typically amortized over the life of the store lease, including reasonably assured renewals and the shop-in-shops are amortized over a useful life of three or four years. The Company's impairment testing is based on its best estimate of ~~its~~the future operating cash flows. ~~To the extent~~If the sum of ~~the~~our estimated undiscounted future cash flows associated with the asset is less than the asset’s carrying value, the Company ~~typically recognizes~~would recognize an impairment ~~loss~~charge, which is measured byas the amount inby which the carrying value exceeds the fair value of the ~~asset, taking into consideration other market assumptions.~~asset. The fair values determined by management require significant judgment and include certain assumptions regarding future sales and expense growth rates, discount rates and estimates of ~~current~~ real estate market fair values. As such, these estimates may differ from actual results and are affected by future market and economic conditions.

During Fiscal 2021, Fiscal 2020 and Fiscal 2019, the Company recorded impairment charges of $158 million, $357 million and $21 million, respectively, which were primarily related to operating lease right-of-use assets and fixed assets of our retail store locations. Please refer to Note 8, Note 9 and Note 14 for additional information.

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Goodwill and Other Indefinite-lived Intangible Assets

The Company records ~~indefinite-lived~~ intangible assets based on their fair value on the date of acquisition. Goodwill is recorded ~~for~~as the difference between the fair value of the purchase consideration ~~over~~and the fair value of the net identifiable tangible and intangible assets acquired. The brand intangible assets recorded in connection with the acquisitions of Versace and Jimmy Choo were determined to be indefinite-lived intangible assets, which are not subject to amortization. The Company performs an impairment assessment of goodwill, as well as the Versace brand and Jimmy Choo brand intangible assets on an annual basis, or whenever impairment indicators exist. In the absence of any impairment indicators, goodwill, the Versace brand and the Jimmy Choo brand are assessed for impairment during the fourth quarter of each fiscal year. Judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business.

The Company may assess its goodwill and its brand ~~indefinite-lived~~ intangible assets for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of these assets is greater than their carrying value. When performing a qualitative test, the Company assesses various factors, including industry and market conditions, macroeconomic conditions and performance of ~~the Company’s~~its businesses. If the results of the qualitative assessment indicate that it is more likely than not that ~~the Company’s~~our goodwill and other indefinite-lived intangible assets are impaired, a quantitative impairment analysis ~~would be~~is performed to determine if impairment is required. The Company may also elect to perform a quantitative analysis of goodwill and its indefinite-lived intangible assets initially rather than using a qualitative approach.

The impairment testing for goodwill is performed at the reporting unit level. The Company uses industry accepted valuation ~~methods used~~models and set criteria that are reviewed and approved by various levels of management and, in certain instances, it engages independent third-party valuation specialists. To determine the ~~quantitative~~ fair value ~~assessment included~~of a ~~discounted cash flow analysis which requires~~reporting unit, the ~~Company’s management to make certain assumptions and estimates regarding industry trends and future profitability~~Company uses a combination of the ~~Company’s reporting units.~~income and market approaches, when applicable. The Company believes the blended use of both models, when applicable, compensates for the inherent risk associated with either model if used on a stand-alone basis, and this combination is indicative of the factors a market participant would consider when performing a similar valuation. If the fair value of a reporting unit exceeds the related carrying value, the reporting unit’s goodwill is considered not to be impaired and no further testing is performed. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded for the difference. ~~This valuation is~~These valuations are affected by certain estimates, including ~~the Company’s~~ future revenue growth rates, future operating expense growth rates, gross margins and discount rates. Future events could cause ~~the Company~~us to conclude that impairment indicators exist, and ~~therefore, that~~ goodwill may be impaired.

When performing a quantitative impairment assessment of ~~the Company’s~~our brand ~~indefinite-lived~~ intangible assets, the fair value of the Versace and the Jimmy Choo brands is estimated using a discounted cash flow analysis based on the "relief from royalty" method, assuming that a third party would be willing to pay a royalty in lieu of ownership for this intangible asset. This approach is dependent on many factors, including estimates of future revenue growth rates, royalty rates and discount rates. Actual future results may differ from these estimates. ~~Impairment~~An impairment loss is recognized when the estimated fair value of the ~~indefinite-lived~~ brand intangible assets is less than its carrying amount.

During the fourth quarter of Fiscal 2021, the Company performed its annual goodwill and indefinite-lived intangible assets impairment analysis for each brand. Based on qualitative impairment assessment of the Michael Kors reporting units, the Company concluded that it is more likely than not that the fair value of the Michael Kors reporting units exceeded its carrying value and, therefore, was not impaired. The Company elected to perform quantitative impairment analysis for both the Versace and Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair values of each brands' reporting units. The Company also elected to perform an impairment analysis for both the Versace and Jimmy Choo brand intangible assets using an income approach to estimate the fair values. Based on the results of these assessments, the Company determined there was 0 impairment loss for the Jimmy Choo retail reporting unit as its fair value is approximately 3% higher than the carrying value, which has a goodwill balance of $221 million. The Company also concluded that the fair values of the Versace reporting units and the brand intangible assets exceeded the related carrying amounts and no impairment was required. The fair value of the Versace retail reporting unit, Versace wholesale reporting unit and Versace licensing reporting unit are at least 20% higher than their respective carrying values. The fair value of the Versace retail brand and Versace wholesale brand are more than 10% higher than their respective carrying values.

However, the Company concluded that the fair values of the Jimmy Choo wholesale and Jimmy Choo licensing reporting units, along with the Jimmy Choo brand intangible assets, did not exceed their related carrying amounts. These impairment charges were primarily related to higher discount rates in the current year driven by a change in market factors as well as a shift in expected revenue and earnings mix to the retail segment.

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Accordingly, the Company recorded impairment charges of $94 million related to the Jimmy Choo wholesale and Jimmy Choo licensing reporting units and $69 million related to the Jimmy Choo brand intangible assets during Fiscal 2021. The Company recorded impairment charges of $171 million related to the ~~goodwill associated with the~~ Jimmy Choo ~~Retail~~retail and Jimmy Choo ~~Licensing~~licensing reporting units and $180 million related to the Jimmy Choo brand ~~indefinite-lived~~ intangible ~~asset~~assets during Fiscal 2020. The impairment charges were recorded within impairment of assets on ~~the Company's~~our consolidated statement of operations and comprehensive (loss) income for the fiscal ~~year~~years ended March 27, 2021 and March 28, 2020. The Company did not incur any impairment charges in Fiscal 2019. See Note 9 ~~and Note 14~~ for information relating to ~~the Company’s~~its annual impairment analysis performed during the fourth quarter of Fiscal ~~2020.~~2021, Fiscal 2020 and Fiscal 2019.

It is possible that the Company's conclusions regarding impairment or recoverability of goodwill or other indefinite intangible assets could change in future periods if, for example, (i) the Company's businesses do not perform as projected, (ii) overall economic conditions in future years vary from current assumptions, (iii) business conditions or strategies change from our current assumptions, (iv) discount rates change, (v) market multiples change or (vi) the identification of the Company's reporting units change, among other factors. Such changes could result in a future impairment charge of goodwill or other indefinite-lived intangible assets.

Insurance

The Company uses a combination of insurance and self-insurance programs, including a wholly-owned captive insurance entity, to provide for ~~losses related to a number of~~the potential liabilities for certain risks, including workers’ compensation and employee-related health care benefits. The Company also maintains stop-loss coverage with third-party insurers to limit its exposure arising from claims. Self-insurance claims filed and claims incurred but not reported are accrued based upon management’s estimates of the discounted cost for self-insured claims incurred using actuarial assumptions, historical loss experience, actual payroll and other data. Although the Company believes that it can reasonably estimate losses related to these claims, actual results could differ from these estimates.

The Company also maintains other types of customary business insurance policies, including general liability, marine transport and inventory and business interruption insurance. Insurance recoveries represent gain contingencies and are recorded upon actual settlement with the insurance carrier.

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Share-based Compensation

The Company grants share-based awards to certain employees and directors of the Company. The grant date fair value of share options is calculated using the Black-Scholes option pricing model. The Company uses its own historical experience in determining the expected holding period and volatility of its time-based share option awards. The risk-free interest rate is derived from the zero-coupon United States (“U.S.”) Treasury Strips yield curve based on the grant’s estimated holding period. Determining the grant date fair value of share-based awards requires considerable judgment, including estimating expected volatility, expected term and risk-free rate. If factors change and the Company employs different assumptions, the fair value of future awards and the resulting share-based compensation expense may differ significantly from what the Company has estimated in the past.

The closing market price of the Company’s shares on the date of grant is used to determine the grant date fair value of restricted shares, time-based restricted ~~shares~~stock units (“~~RSU”s)~~RSUs") and performance-based RSUs. These fair values are recognized as expense over the requisite service period, net of estimated forfeitures, based on expected attainment of pre-established performance goals for performance grants, or the passage of time for those grants which have only time-based vesting requirements.

Foreign Currency Translation and Transactions

The financial statements of the majority of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. The Company’s functional currency is the United States Dollar (“USD”) for Capri and its United States based subsidiaries. Assets and liabilities are translated using period-end exchange rates, while revenues and expenses are translated using average exchange rates over the reporting period. The resulting translation adjustments are recorded separately in shareholders’ equity as a component of accumulated other comprehensive (loss) income. Foreign currency income and losses resulting from the re-measuring of transactions denominated in a currency other than the functional currency of a particular entity are included in foreign currency (gain) loss ~~(gain)~~ on the Company’s consolidated statements of operations and comprehensive (loss) income.

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Derivative Financial Instruments

Forward Foreign Currency Exchange Contracts

The Company uses forward currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these forward currency contracts to hedge the Company’s cash flows, as they relate to foreign currency transactions. Certain of these contracts are designated as hedges for accounting purposes, while others remain undesignated. All of the Company’s derivative instruments are recorded in the Company’s consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation.

In connection with the September 24, 2018 definitive agreement to acquire all of the outstanding shares of Versace, the Company entered into forward foreign currency exchange contracts with notional amounts totaling €1.680 billion (approximately $2.001 billion) to mitigate its foreign currency exchange risk through the expected closing date of the acquisition, which were settled on December 21, 2018. ~~Likewise, in connection with the July 25, 2017 cash offer to acquire Jimmy Choo, the Company entered into a forward foreign currency exchange~~This derivative contract ~~with a notional amount of £1.115 billion (approximately $1.469 billion) to mitigate its foreign currency exchange risk through the expected closing date of the acquisition, which~~ was ~~settled on October 30, 2017. These derivative contracts were~~ not designated as an accounting ~~hedges.~~hedge. Therefore, changes in fair value ~~are~~were recorded to foreign currency loss (gain) in the Company’s consolidated statements of operations and comprehensive (loss) income. The Company’s accounting policy is to classify cash flows from derivative instruments in the same category as the cash flows from the items being hedged. Accordingly, the Company classified $77 million of realized losses ~~and $5 million of realized gains, respectively,~~ relating to ~~these~~this derivative ~~instruments~~instrument within cash flows from investing activities during Fiscal ~~2019 and Fiscal 2018.~~

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2019.

The Company designates certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges. Formal hedge documentation is prepared for all derivative instruments designated as hedges, including description of the hedged item and the hedging instrument and the risk being hedged. The changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income (loss) ~~income~~ until the hedged item affects earnings. When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income (loss) ~~income~~ are recognized within cost of goods sold. The Company uses regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item. If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency (gain) loss ~~(gain)~~ in the Company’s consolidated statements of operations and comprehensive (loss) income. The Company classifies cash flows relating to its forward foreign currency exchange contracts related to purchase of inventory consistently with the classification of the hedged item, within cash flows from operating activities.

The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign transaction they are intended to hedge.

Net Investment Hedges

The Company also uses fixed-to-fixed cross currency swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between its U.S. Dollars and these foreign currencies. The Company has elected the spot method of designating these contracts under ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” and has designated these contracts as net investment hedges. The net gain or (loss) on the net investment hedge is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income (loss) ~~income~~ on the Company’s consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense in the Company’s ~~statement~~consolidated statements of operations and comprehensive (loss) income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated.

During the fourth quarter of Fiscal 2020, the Company terminated all of its net investment hedges related to its Euro-denominated subsidiaries. The early termination of these hedges resulted in the Company receiving $296 million in cash during the fourth quarter of Fiscal 2020. During Fiscal 2021, the Company resumed its normal hedging program and entered into multiple fixed-to-fixed cross-currency swap agreements to hedge its net investment in Euro-denominated and Japanese Yen-denominated subsidiaries against future volatility in the exchange rate between the U.S. Dollar and these currencies.

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Interest Rate Swap Agreements

The Company also uses interest rate swap agreements to hedge the variability of its cash flows resulting from floating interest rates on the Company’s borrowings. When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive income (loss) and are reclassified into interest expense in the same period during which the hedged transactions affect earnings.

Income Taxes

Deferred income tax assets and liabilities have been provided for temporary differences between the tax bases and financial reporting bases of the Company’s assets and liabilities using the tax rates and laws in effect for the periods in which the differences are expected to reverse. The Company periodically assesses the realizability of deferred tax assets and the adequacy of deferred tax liabilities, based on the results of local, state, federal or foreign statutory tax audits or estimates and judgments used.

Realization of deferred tax assets associated with net operating loss and tax credit carryforwards is dependent upon generating sufficient taxable income prior to their expiration in the applicable tax jurisdiction. The Company periodically reviews the recoverability of its deferred tax assets and provides valuation allowances, as deemed necessary, to reduce deferred tax assets to amounts that more-likely-than-not will be realized. The Company’s management considers many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings ~~results~~ within various taxing jurisdictions, expectations of future taxable income, the carryforward periods remaining and other factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Deferred tax assets could be reduced in the future if the Company’s estimates of taxable income during the carryforward period are significantly reduced or alternative tax strategies are no longer viable.

The Company recognizes the impact of an uncertain income tax position taken on its income tax returns at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will be recognized if it has less than a 50% likelihood of being sustained. The tax positions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments for those positions. The Company records interest expense and penalties payable to relevant tax authorities as income tax expense.

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Leases

On March 31, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet for all leases, except certain short-term leases. The Company adopted the new standard recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating the comparative prior year periods.

The Company leases retail stores, office space and warehouse space under operating lease agreements that expire at various dates through September 2043. The Company’s leases generally have terms of up to 10 years, generally require a fixed annual rent and may require the payment of additional rent if store sales exceed a negotiated amount. Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through ~~May~~November 2024. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores under its ~~Michael Kors Retail Fleet Optimization Plan,~~restructuring initiatives, as defined in Note 11. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. The Company determines the sublease term based on the date it provides possession to the subtenant through the expiration date of the sublease.

The Company recognizes operating lease right-of-use assets and lease liabilities at lease commencement date, based on the present value of fixed lease payments over the expected lease term. The Company uses its incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable for the Company’s leases. The Company’s incremental borrowing rates are based on the term of the leases, the economic environment of the leases and reflect the expected interest rate it would incur to borrow on a secured basis. Certain leases include one or more renewal options, generally for the same period as the initial term of the lease. The exercise of lease renewal options is generally at the Company’s sole discretion and as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company generally does not include the renewal option period in the expected lease term and the associated lease payments are not included in the measurement of the operating lease right-of-use asset and lease liability. Certain leases also contain termination options with an associated penalty. Generally, the Company is reasonably certain not to exercise these options and as such, they are not

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included in the determination of the expected lease term. The Company recognizes operating lease expense on a straight-line basis over the lease term.

Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for its short-term leases on a straight-line basis over the lease term.

The Company’s leases generally provide for payments of non-lease components, such as common area maintenance, real estate taxes and other costs associated with the leased property. The Company accounts for lease and non-lease components of its real estate leases together as a single lease component and, as such, includes fixed payments of non-lease components in the measurement of the operating lease right-of-use assets and lease liabilities for its real estate leases. Variable lease payments, such as percentage rentals based on location sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property, are expensed as incurred as variable lease costs and are not recorded on the balance sheet. The Company’s lease agreements do not contain any material residual value guarantees or material restrictions or covenants.

Debt Issuance Costs and Unamortized Discounts

The Company defers debt issuance costs directly associated with acquiring third party financing. These debt issuance costs and any discounts on issued debt are amortized on a straight-line basis, which approximates the effective interest method, as interest expense over the term of the related indebtedness. Deferred financing fees associated with the Company’s ~~revolving credit facilities~~Revolving Credit Facilities are primarily recorded within ~~prepaid expenses and~~ other ~~current assets.~~assets in the Company’s consolidated balance sheets. Deferred financing fees and unamortized discounts associated with the Company’s other borrowings are primarily recorded as an offset to long-term debt in the Company’s consolidated balance sheets. See Note 12 for additional information.

Net (Loss) Income per Share

The Company’s basic net (loss) income per ordinary share is calculated by dividing net ~~loss~~(loss) income by the weighted average number of ordinary shares outstanding during the period. Diluted net ~~loss~~(loss) income per ordinary share reflects the potential dilution that would occur if share option grants or any other potentially dilutive instruments, including restricted shares and ~~restricted share units ("RSUs"),~~RSUs, were exercised or converted into ordinary shares. These potentially dilutive securities are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods. Performance-based RSUs are

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included in diluted shares if the related performance conditions are considered satisfied as of the end of the reporting period and to the extent they are dilutive under the treasury stock method.

The components of the calculation of basic net (loss) income per ordinary share and diluted net ~~loss~~(loss) income per ordinary share are as follows (in millions, except share and per share data):


		Fiscal Years Ended											Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
Numerator:	Numerator:							Numerator:
Net (loss) income attributable to Capri	Net (loss) income attributable to Capri	$	(223)	$	543	$	592	Net (loss) income attributable to Capri	$	(62)	$	(223)	$	543
Denominator:	Denominator:							Denominator:
Basic weighted average shares	Basic weighted average shares	150,714,598		149,765,468		152,283,586		Basic weighted average shares	150,453,568		150,714,598		149,765,468
Weighted average dilutive share equivalents:	Weighted average dilutive share equivalents:							Weighted average dilutive share equivalents:
Share options and restricted shares/units, and performance restricted share units		—		1,848,882		2,819,299
Share options and restricted stock units, and performance restricted stock units								Share options and restricted stock units, and performance restricted stock units	0		0		1,848,882
Diluted weighted average shares	Diluted weighted average shares	150,714,598		151,614,350		155,102,885		Diluted weighted average shares	150,453,568		150,714,598		151,614,350
Basic net (loss) income per share ⁽¹⁾	Basic net (loss) income per share ⁽¹⁾	$	(1.48)	$	3.62	$	3.89	Basic net (loss) income per share (1)	$	(0.41)	$	(1.48)	$	3.62
Diluted net (loss) income per share ⁽¹⁾	Diluted net (loss) income per share ⁽¹⁾	$	(1.48)	$	3.58	$	3.82	Diluted net (loss) income per share (1)	$	(0.41)	$	(1.48)	$	3.58

⁽¹⁾Basic and diluted net (loss) income per share are calculated using unrounded numbers.

Share equivalents ~~for~~of 3,658,959 shares, 3,752,560 shares ~~1,409,415 shares~~ and ~~1,662,889~~1,409,415 shares, for Fiscal 2021, Fiscal 2020 and Fiscal 2019, ~~and Fiscal 2018,~~ respectively, have been excluded from the above calculation due to their anti-dilutive effect.

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Diluted net loss per share attributable to Capri for Fiscal 2021 and Fiscal 2020 excluded all potentially dilutive securities because there was a net loss attributable to Capri for the period and, as such, the inclusion of these securities would have been anti-dilutive.

Noncontrolling Interest ~~and Redeemable Noncontrolling Interest~~

The Company has an ownership interest in the Michael Kors Latin American joint venture, MK (Panama) Holdings, S.A. and subsidiaries of 75%, an ownership interest in the Jimmy Choo EMEA ~~Joint Ventures, JC Industry S.r.L of 33% and~~joint venture JC Gulf Trading LLC of 49%, an ownership interest in the Jimmy Choo Macau joint venture J. Choo (Macau) Co. Limited of 70%, and a 50% ownership interest in J. Choo Russia J.V. Limited and ~~a 70% interest in Versace Australia PTY Limited (“Versace Australia”).~~its subsidiary.

Recently Adopted Accounting Pronouncements

~~Lease Accounting~~Measurement of Credit Losses on Financial Instruments

On March ~~31, 2019,~~29, 2020, the Company adopted ASU ~~2016-02, “Leases (Topic 842)~~No. 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”),” which amends the guidance on measuring credit losses for certain financial assets measured at amortized cost, including trade receivables. The Financial Accounting Standards Board has subsequently issued several updates to the standard, providing additional guidance on certain topics covered by the standard. This update requires ~~lessees~~entities to recognize an allowance for credit losses using a ~~lease liability~~forward-looking expected loss impairment model, taking into consideration historical experience, current conditions and supportable forecasts that impact collectability. The adoption of this update did not have a ~~right-of-use asset on the balance sheet for all leases, except certain short-term leases. In evaluating the~~material impact ~~of ASU 2016-02, the Company considered guidance provided by several additional ASUs issued by the FASB, including ASU 2018-01, “Land Easement Practical Expedient for Transition to Topic 842” in January 2018, ASU 2018-10, “CodificationImprovements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” both issued in July 2018, and ASU 2018-20, “Leases (Topic 842) - Narrow-Scope Improvements for Lessors~~” issued in December 2018. In connection with its implementation of ASU 2016-02, the Company adopted the package of three practical expedients, allowing it to carry forward its previous lease classification and embedded lease evaluations and not to reassess initial direct costs as of the date of adoption. The Company also adopted the practical expedient allowing it to combine lease and non-lease components for its real estate leases. Lastly, the Company adopted the practical expedient provided by ASU 2018-11, “~~Leases (Topic 842): Targeted Improvements,” allowing it to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating the comparative prior year periods~~.

The Company’s existing lease obligations, which relate to stores, corporate locations, warehouses, and equipment, are subject to the new standard and resulted in recording of lease liabilities and right-of-use assets for operating leases on the Company’s consolidated ~~balance sheet.~~financial statements.

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Implementation Costs Associated with Cloud Computing Arrangements

~~The below table details~~On March 29, 2020, the ~~balance sheet adjustments recorded on March 31, 2019~~Company adopted ASU No. 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in ~~connection with the Company’s adoption of~~ a Cloud Computing Arrangement That Is a Service Contract" ("ASU ~~2016-02 (in millions):~~

March 30, 2019
As Reported under ASC 840 ASC 842 Adjustments March 31, 2019
As Reported Under ASC 842
Assets
Prepaid expenses and other current assets $ 221 $ (23)
⁽¹⁾
$ 198
Operating lease right-of-use assets — 1,876
⁽²⁾
1,876
Intangible assets, net 2,293 (40)
⁽³⁾
2,253
Deferred tax assets 112 38
⁽⁴⁾
150
Liabilities
Current portion of operating lease liabilities — 386
⁽⁵⁾
386
Accrued expenses and other current liabilities 374 (72)
⁽⁶⁾
302
Long-term portion of operating lease liabilities — 1,828
⁽⁵⁾
1,828
Deferred Rent 132 (132)
⁽⁷⁾
—
Deferred tax liabilities 438 (7)
⁽⁴⁾
431
Shareholders’ Equity
Retained earnings 4,707 (152)
⁽⁴⁾
4,555

⁽¹⁾~~Represents the reclassification of rent paid in advance to current operating lease liabilities.~~

⁽²⁾Represents the recognition of operating lease right-of-use assets, reflecting the reclassifications of deferred rent, sublease liabilities, tenant allowances, and lease rights. This balance also reflects the initial impairments of the operating lease right-of-use assets recorded through retained earnings, as described below.

⁽³⁾~~Represents the reclassifications of lease rights for leases recorded in conjunction with the Company’s acquisitions to operating lease right-of-use assets.~~

⁽⁴⁾~~Represents the initial impairment recognized through retained earnings for certain underperforming retail store locations for~~2018-15"), which ~~property and equipment were previously impaired, net of associated deferred taxes.~~

⁽⁵⁾~~Represents the recognition of current and non-current lease liabilities for fixed payments associated with the Company’s operating leases.~~

⁽⁶⁾Represents the reclassification of $54 million in sublease liabilities, primarily related to Michael Kors retail stores closed under the Michael Kors Retail Fleet Optimization Plan as defined in Note 10, as well as the reclassification of $18 million of deferred rent and tenant allowances to operating lease right-of-use assets.

⁽⁷⁾~~Represents the reclassification of noncurrent deferred rent and tenant improvement allowances to operating lease right-of-use assets.~~

~~See Note 4 for additional disclosures~~provides guidance related to the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The adoption of this update did not have a material impact on the Company’s ~~lease accounting policy.~~consolidated financial statements.

Recently Issued Accounting Pronouncements

The Company has considered all new accounting pronouncements and, other than the recent pronouncements discussed below, have concluded that there are no new pronouncements that ~~are expected to~~may have a material impact on ~~our~~the Company’s results of operations, financial condition or cash flows based on current ~~information.~~information

~~Measurement~~Reference Rate Reform

In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, "Facilitation of ~~Credit Losses~~the Effects of Reference Rate Reform on Financial ~~Instruments~~

~~In June 2016, the FASB~~Reporting" and in January 2021, issued ASU ~~No. 2016-13, “Measurement~~2021-01, "Reference Rate Reform: Scope". Both of ~~Credit Losses on Financial Instruments” (“ASU 2016-13”), which amends~~these updates aim to ease the ~~guidance on measuring credit losses~~potential burden in accounting for reference rate reform. These updates provide optional expedients and exceptions, if certain ~~financial assets measured at amortized cost, including trade receivables. The FASB has subsequently issued several updates~~criteria are met, for applying accounting principles generally accepted in the United States to ~~the standard, providing additional guidance on certain topics covered~~contract modifications, hedging relationships and other transactions affected by the ~~standard. This update requires entities~~expected market transition from the London interbank offered rate (“LIBOR”) and other interbank offered rates to ~~recognize an allowance for credit losses using~~alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The amendments were effective upon issuance and allow companies to adopt the amendments on a ~~forward-looking expected loss impairment model, taking into consideration historical experience, current conditions, and supportable forecasts that~~prospective basis through December 31, 2022. The Company is currently evaluating the impact ~~collectibility. ASU No. 2016-13 is effective for the Company beginning in~~of these updates on its ~~Fiscal 2021. The adoption of this update is not expected to have a material impact on the Company's~~ consolidated financial statements.

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3. Revenue Recognition

The Company sells its products through ~~three~~3 primary channels of distribution: retail, wholesale and licensing. Within the retail and wholesale channels, substantially all of the Company’s revenues consist of sales of products that represent a single performance obligation, where control transfers at a point in time to the customer. For licensing arrangements, royalty and advertising revenue is recognized over time based on access provided to the Company’s brands.

The Company has chosen to apply the practical expedient allowing it not to disclose the amount of the transaction price allocated to the remaining performance obligations that have an expected duration of 12 months or less.

Retail

The Company generates sales through directly operated stores and e-commerce throughout the Americas (U.S., Canada and Latin America), EMEA (Europe, Middle East and Africa) and certain parts of ~~Asia.~~Asia (including Australia). Retail revenue is recognized when control of the product is transferred at the point of sale at Company owned stores, including concessions. For e-commerce transactions, control is transferred and revenue is recognized when products are delivered to the customer, net of estimated returns. To arrive at net sales for retail, gross sales are reduced by actual customer returns, as well as by a provision for estimated future customer returns.

Sales tax collected from retail customers are presented on a net basis and, as such, are excluded from revenue. Shipping and handling costs that are billed to customers are included in net sales, with the related costs recorded in cost of goods sold. Shipping and handling costs that are not billed to customers are accounted for as fulfillment costs.

Gift Cards. The Company sells gift cards that can be redeemed for merchandise, resulting in a contract liability upon issuance. Revenue is recognized when the gift card is redeemed or upon “breakage” for the estimated portion of gift cards that are not expected to be redeemed. “Breakage” revenue is calculated under the proportional redemption methodology, which considers the historical patterns of redemption in jurisdictions where the Company is not required to remit the value of the unredeemed gift cards as unclaimed property. The Company anticipates that substantially all of its outstanding gift cards will be redeemed within the next 12 months. The contract liability related to gift cards, net of estimated ~~“breakage”,~~“breakage,” was ~~$11~~$12 million and ~~$13~~$11 million as of March ~~28, 2020~~27, 2021 and March ~~30, 2019,~~28, 2020, respectively, and is included in accrued expenses and other current liabilities in the Company’s consolidated balance ~~sheet.~~sheets.

Loyalty Program. The Company offers a loyalty program, which allows its Michael Kors U.S. customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at Michael Kors retail stores and e-commerce sites. The Company defers a portion of the initial sales transaction based on the estimated relative fair value of the benefits based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed. The contract liability, net of an estimated “breakage,” of $2 million and $3 million as of March 28, 2020 and March 30, 2019, respectively, is recorded as a reduction to revenue in the consolidated statements of income and comprehensive income and within accrued expenses and other current liabilities in the Company’s consolidated balance sheet and is expected to be recognized within the next 12 months.

Wholesale

The Company’s products are sold primarily to major department stores, specialty stores and travel retail shops throughout the Americas, EMEA and Asia. The Company also has arrangements where its products are sold to geographic licensees in certain parts of EMEA, Asia and South America. Wholesale revenue is recognized net of estimates for sales returns, discounts, markdowns and allowances, when merchandise is shipped and control of the underlying product is transferred to the Company’s wholesale customers. To arrive at net sales for wholesale, gross sales are reduced by provisions for estimated future returns, as well as trade discounts, markdowns, allowances, operational chargebacks and certain cooperative selling expenses. These estimates are developed based on historical trends, actual and forecasted performance and market conditions, and are reviewed by management on a quarterly basis. Unfulfilled, non-cancelable purchase orders for products from wholesale customers (including the Company’s geographic licensees) are expected to be fulfilled within the next 12 months.

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Licensing

The Company provides its third-party licensees with the right to access its Versace, Jimmy Choo and Michael Kors trademarks under product and geographic licensing arrangements. Under product licensing arrangements, the Company allows third parties to manufacture and sell luxury goods, including watches and jewelry, fragrances, ~~sunglasses~~eyewear and ~~eyewear,~~home furnishings, using the Company’s trademarks. Under geographic licensing arrangements, third party licensees receive the right to distribute and sell products bearing the Company’s trademarks in retail and/or wholesale channels within certain geographical areas, including Brazil, the Middle East, Eastern Europe, South Africa and certain parts of ~~Asia and Australia.~~Asia.

The Company recognizes royalty revenue and advertising contributions based on the percentage of sales made by the licensees. Advertising contributions are received to support the Company’s branded advertising and marketing campaigns and are viewed as part of a single performance obligation with the right to access the Company’s trademarks. Royalty revenue generated from licenses, which includes contributions for advertising, may be subject to contractual minimum levels, as defined in the contract. Such minimums are generally fixed annually, based on the previous year’s sales. Licensing revenue is based on reported current period sales of licensed products at rates that are specified in the license agreements for contracts that are expected to exceed the related guaranteed minimums. If the Company expects the minimum guaranteed amounts to exceed amounts calculated based on actual sales, the guaranteed minimums are recognized ratably over the contractual year to which they relate. Generally the Company’s guaranteed minimum royalty amounts due from licensees relate to contractual periods that do not exceed 12 months, however, some of our guaranteed minimums for Versace are multi-year based. As of March ~~28, 2020,~~27, 2021, contractually guaranteed minimum fees from ~~our~~the Company's license agreements expected to be recognized as revenue during future periods were as follows (in millions):


	Contractually Guaranteed Minimum Fees

~~Fiscal 2021~~	$	27
Fiscal 2022	26 $	29
Fiscal 2023	2025
Fiscal 2024	1022
Fiscal 2025	618
Fiscal 2026	19
Fiscal 2027 and thereafter	2971
Total	$	~~118~~184

Sales Returns

For the sale of goods with a right of return, the Company recognizes revenue for the consideration to which it expects to be entitled and a refund liability for the amount it expects to refund to its customers within accrued expenses and other current liabilities. The refund liability is estimated based on management’s review of historical and current customer returns for its retail and wholesale customers, estimated future returns, adjusted for non-resalable products. The Company also considers its product strategies, as well as the financial condition of its customers, store closings by wholesale customers, changes in the retail environment and other macroeconomic factors. The Company recognizes an asset with a corresponding adjustment to cost of sales for the right to recover the products from its retail and wholesale customers. The refund liability recorded as of March 27, 2021 and March 28, 2020 ~~and March 30, 2019~~ was ~~$37~~$46 million and ~~$35~~$37 million, respectively, and the related asset for the right to recover returned product as of March ~~28, 2020~~27, 2021 and March ~~30, 2019~~28, 2020 was $14 million and ~~$12~~$14 million, respectively.

Contract Balances

The Company’s contract liabilities are recorded within accrued expenses and other current liabilities and other long-term liabilities in its consolidated balance sheets depending on the short- or long-term nature of the payments to be recognized. The Company’s contract liabilities primarily consist of gift card liabilities, loyalty program liabilities and advanced payments from product licensees. Total contract liabilities were ~~$22~~$18 million and ~~$31~~$22 million as of March 27, 2021 and March 28, 2020, ~~and March 30, 2019,~~ respectively. ~~Contract liabilities decreased $5 million as a result of the adoption of ASC 606 on April 1, 2018, due to recognition of gift card breakage revenue (see Note 2).~~ During Fiscal ~~2020~~2021 and Fiscal ~~2019,~~2020, the Company recognized ~~$20~~$9 million and ~~$16~~$20 million in revenue, respectively, relating to contract liabilities that existed at March 28, 2020 and March 30, 2019, respectively. There were 0 material contract assets recorded as of March ~~28, 2020~~27, 2021 and March ~~30, 2019.~~28, 2020.

There were no changes in historical variable consideration estimates that were materially different from actual results.

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Disaggregation of Revenue

The following table presents the Company’s segment revenues disaggregated by geographic location (in millions):


		Fiscal Years Ended											Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
															March 27, 2021	March 28, 2020	March 30, 2019
Versace revenue - the Americas	Versace revenue - the Americas	$	186	$	22	$	—	Versace revenue - the Americas	$	201	$	186	$	22
Versace revenue - EMEA	Versace revenue - EMEA	420		66		—		Versace revenue - EMEA	276		420		66
Versace revenue - Asia	Versace revenue - Asia	237		49		—		Versace revenue - Asia	241		237		49
Total Versace	Total Versace	843		137		—		Total Versace	718		843		137
Jimmy Choo revenue - the Americas	Jimmy Choo revenue - the Americas	107		96		37		Jimmy Choo revenue - the Americas	102		107		96
Jimmy Choo revenue - EMEA	Jimmy Choo revenue - EMEA	282		321		123		Jimmy Choo revenue - EMEA	146		282		321
Jimmy Choo revenue - Asia	Jimmy Choo revenue - Asia	166		173		63		Jimmy Choo revenue - Asia	170		166		173
Total Jimmy Choo	Total Jimmy Choo	555		590		223		Total Jimmy Choo	418		555		590
Michael Kors revenue - the Americas	Michael Kors revenue - the Americas	2,822		3,064		2,996		Michael Kors revenue - the Americas	1,869		2,822		3,064
Michael Kors revenue - EMEA	Michael Kors revenue - EMEA	821		892		970		Michael Kors revenue - EMEA	607		821		892
Michael Kors revenue - Asia	Michael Kors revenue - Asia	510		555		530		Michael Kors revenue - Asia	448		510		555
Total Michael Kors	Total Michael Kors	4,153		4,511		4,496		Total Michael Kors	2,924		4,153		4,511

Total revenue - the Americas	Total revenue - the Americas	3,115		3,182		3,033		Total revenue - the Americas	2,172		3,115		3,182
Total revenue - EMEA	Total revenue - EMEA	1,523		1,279		1,093		Total revenue - EMEA	1,029		1,523		1,279
Total revenue - Asia	Total revenue - Asia	913		777		593		Total revenue - Asia	859		913		777
Total revenue	Total revenue	$	5,551	$	5,238	$	4,719	Total revenue	$	4,060	$	5,551	$	5,238

4. Leases

The following table presents the Company’s supplemental balance ~~sheet~~sheets information related to leases (in millions):

~~Balance Sheet Location~~

~~March 28, 2020~~

~~Assets~~

~~Operating leases~~

~~Operating lease right-of-use assets~~

~~1,625~~

~~Liabilities~~

~~Current:~~

~~Operating leases~~

~~Short-term portion of operating lease liabilities~~

~~430~~

~~Non-current:~~

~~Operating leases~~

~~Long-term portion of operating lease liabilities~~

~~1,758~~


	Balance Sheet Location	March 27, 2021		March 28, 2020
Assets
Operating leases	Operating lease right-of-use assets	$	1,504	$	1,625

Liabilities
Current:
Operating leases	Short-term portion of operating lease liabilities	$	447	$	430
Non-current:
Operating leases	Long-term portion of operating lease liabilities	$	1,657	$	1,758

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The components of net lease costs for the fiscal year ended March 27, 2021 and March 28, 2020 were as follows (in millions):

Statement of Operations and
Comprehensive Income Location

~~March 28, 2020~~

~~Operating lease cost~~

~~Selling, general and administrative expenses~~

~~449~~

~~Short-term lease cost~~

~~Selling, general and administrative expenses~~

~~Variable lease cost~~⁽¹⁾

~~Selling, general and administrative expenses~~

~~155~~

~~Sublease income~~

~~Selling, general and administrative expenses~~

~~(6)~~

~~Total lease cost~~

~~616~~


	Consolidated Statement of Operations and Comprehensive (Loss) Income Location	March 27, 2021		March 28, 2020
Operating lease cost	Selling, general and administrative expenses	$	432	$	449
Variable lease cost (1)	Selling, general and administrative expenses	69		155
Short-term lease cost	Selling, general and administrative expenses	15		18
Sublease income	Selling, general and administrative expenses	(6)		(6)
Total lease cost		$	510	$	616

~~Table of Contents~~(1)

⁽¹⁾The Company elected to account for rent concessions negotiated in connection with COVID-19 as if it were contemplated as part of the existing contract and these concessions are recorded as variable lease expense. As of the fiscal year ended March 27, 2021, rent concessions due to COVID-19 were $52 million. There is an immaterial impact from these ~~concession~~concessions for the fiscal year ended March 28, 2020.

The following table presents the Company’s supplemental cash flow information related to leases (in millions):

~~March 28, 2020~~

~~Cash paid for amounts included in the measurement of lease liabilities:~~

~~Operating cash flows used in operating leases~~

~~495~~

~~Non-cash transactions:~~

~~Lease assets obtained in exchange for new lease liabilities~~

~~428~~


	March 27, 2021		March 28, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases	$	488	$	495
Non-cash transactions:
Lease assets obtained in exchange for new lease liabilities	348		428
Rent concessions due to COVID-19	52		0

The following tables summarizes the weighted average remaining lease term and weighted average discount rate related to the Company’s operating lease right-of-use assets and lease liabilities recorded on the balance ~~sheet~~sheets as of March 27, 2021 and March 28, 2020:

~~March 28, 2020~~

~~Operating leases:~~

~~Weighted average remaining lease term (years)~~

~~6.6~~

~~Weighted average discount rate~~

~~2.9~~


	March 27, 2021		March 28, 2020
Operating leases:
Weighted average remaining lease term (years)	6.2		6.6
Weighted average discount rate	3.1	%	2.9	%

At March ~~28, 2020,~~27, 2021, the future minimum lease payments under the terms of these noncancelable operating lease agreements are as follows (in millions):

March ~~28, 2020~~

~~Fiscal~~27, 2021

~~489~~

Fiscal 2022

~~432~~ $

502

Fiscal 2023

~~369~~437

Fiscal 2024

~~312~~370

Fiscal 2025

~~239~~291

Fiscal 2026

221

Thereafter

~~566~~493

Total lease payments

~~2,407~~2,314

Less: interest

~~(219)~~(210)

Total lease liabilities

~~2,188~~2,104

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At March ~~28, 2020,~~27, 2021, the future minimum sublease income under the terms of these noncancelable operating lease agreements are as follows (in millions):


	March ~~28, 2020~~
~~Fiscal~~27, 2021	$	6
Fiscal 2022	$	5
Fiscal 2023	5
Fiscal 2024	4
Fiscal 2025	4
Fiscal 2026	3
Thereafter	128
Total sublease income	$	3629

Additionally, the Company had approximately $23 million and $13 million of future payment obligations related to executed lease agreements for which the related lease has not yet commenced as of March 27, 2021 and March 28, ~~2020.~~2020, respectively.

See Note 2 for additional information on the Company's accounting policies related to leases.

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5. Acquisitions

Fiscal 2020

Acquisition of Alberto Gozzi S.r.L.

On December 16, 2019, the Company entered into a definitive agreement to acquire Italian atelier and shoe manufacturer Alberto Gozzi S.r.L. The transaction was completed in the Company's fourth quarter of Fiscal 2020 and the assets and liabilities acquired approximated fair value. The acquired identifiable assets and liabilities net to a nominal amount, with $11 million recognized in goodwill allocated to the Jimmy Choo reportable segment.

Fiscal 2019

Acquisition of Versace

On December 31, 2018, the Company completed the acquisition of Versace for a total enterprise value of approximately €1.753 billion (or approximately $2.005 billion), giving effect to an investment made by the Versace family at acquisition of 2.4 million shares. The acquisition was funded through a combination of borrowings under the Company’s 2018 Term Loan Facility, drawings under the Company’s Revolving Credit Facility and cash on ~~hand (see Note 12 for additional information).~~hand.

Versace’s results of operations have been included in our consolidated financial statements beginning on December 31, 2018. Versace contributed total revenue of $137 million and net loss of $12 million, after amortization of non-cash purchase accounting adjustments and transition and transaction costs, from the date of acquisition on December 31, 2018 through February 28, 2019 (reflecting a one-month reporting lag).

The Company recorded measurement period adjustments during Fiscal 2020. The measurement period adjustments are primarily related to conclusions reached on the ability to utilize certain deferred tax assets based on new facts and circumstances identified which existed at the acquisition date and if known, would have affected the measurement of the amounts recognized as of that date. The net measurement period adjustments increased goodwill by $26 million.

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The following table summarizes the unaudited pro-forma consolidated results of operations for the fiscal ~~years~~year ended March 30, 2019 ~~and March 31, 2018~~ as if the acquisition had occurred on April 2, 2017, the beginning of Fiscal 2018 (in millions):

Fiscal Years Ended
March 30, 2019 March 31, 2018
Pro-forma total revenue $ 5,983 $ 5,473
Pro-forma net income 579 526
Pro-forma net income per ordinary share attributable to Capri:
Basic $ 3.82 $ 3.40
Diluted $ 3.78 $ 3.34


	March 30, 2019
Pro-forma total revenue	$	5,983
Pro-forma net income	579
Pro-forma net income per ordinary share attributable to Capri:
Basic	$	3.82
Diluted	$	3.78

The unaudited pro-forma consolidated results above are based on the historical financial statements of the Company and Versace and are not necessarily indicative of the results of operations that would have been achieved if the acquisition was completed at the beginning of Fiscal 2018 and are not indicative of the future operating results of the combined company. The financial information for Versace prior to the acquisition has been included in the pro-forma results of operations on a calendar-year basis and includes certain adjustments to Versace’s historical consolidated financial statements to align with U.S. GAAP and the Company’s accounting policies. The pro-forma consolidated results of operations also include the effects of purchase accounting adjustments, including amortization charges related to the definite-lived intangible assets acquired, fair value adjustments relating to leases and property and equipment, and the related tax effects assuming that the business combination occurred on April 2, 2017. Purchase accounting amortization of the inventory step-up adjustment has been excluded from the above pro-forma amounts due to the short-term nature of this adjustment. The pro-forma consolidated financial statements also reflect the impact of debt repayment and borrowings made to finance the acquisition ~~(see Note 12)~~ and exclude historical interest expenses related to Versace’s €90 million pre-existing debt. Transaction costs of $41 million for Fiscal 2019, which have been recorded within restructuring and other charges in the Company’s consolidated statements of operations and comprehensive (loss) income, have been excluded from the above pro-forma consolidated results of operations due to their non-recurring nature. The shares used to calculate the pro-forma net income per ordinary share attributable to Capri reflect the weighted average impact of a 2.4 million ordinary share investment made by the Versace family at acquisition date.

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~~Fiscal 2018~~

~~Acquisition of Jimmy Choo Group Limited~~

On November 1, 2017, the Company completed the acquisition of Jimmy Choo, whereby the Company's wholly-owned subsidiary acquired all of Jimmy Choo’s issued and to be issued shares at a purchase price of 230 pence per share in cash, for a total transaction value of $1.447 billion, including the repayment of existing debt obligations, which was funded through a combination of borrowings under the Company’s new $1.0 billion term loan facility, the issuance of the Senior Notes and cash on hand (please refer to Note 12 for additional information).

Jimmy Choo’s results of operations have been included in our consolidated financial statements beginning on November 1, 2017. Jimmy Choo contributed revenue of $223 million and net loss of $15 million (after amortization of non-cash purchase accounting adjustments and transition and transaction costs) for the period from the date of acquisition through March 31, 2018.

The following table summarizes the unaudited pro-forma consolidated results of operations for the fiscal years ended March 31, 2018 and April 1, 2017 as if the acquisition had occurred on April 3, 2016, the beginning of Fiscal 2017 (in millions):

Fiscal Years Ended
March 31, 2018 April 1, 2017
Pro-forma total revenue $ 5,012 $ 4,985
Pro-forma net income 623 554
Pro-forma net income per ordinary share attributable to Capri:
Basic $ 4.09 $ 3.34
Diluted $ 4.02 $ 3.29

The unaudited pro-forma consolidated results above are based on the historical financial statements of the Company and Jimmy Choo and are not necessarily indicative of the results of operations that would have been achieved if the acquisition was completed at the beginning of Fiscal 2017 and are not indicative of the future operating results of the combined company. The financial information for Jimmy Choo prior to the acquisition has been included in the pro-forma results of operations on a calendar-year basis and includes certain adjustments to Jimmy Choo’s historical consolidated financial statements to align with U.S. GAAP and the Company’s accounting policies. The pro-forma consolidated results of operations also include the effects of purchase accounting adjustments, including amortization charges related to the definite-lived intangible assets acquired, fair value adjustments relating to leases and property and equipment, and the related tax effects assuming that the business combination occurred on April 3, 2016. Purchase accounting amortization of the inventory step-up adjustment has been excluded from the above pro-forma amounts due to the short-term nature of this adjustment. The pro-forma consolidated financial statement also reflect the impact of debt repayment and borrowings made to finance the acquisition (see Note 12) and exclude historical interest expense for Jimmy Choo. Transaction costs of $41 million for Fiscal 2018, which have been recorded within restructuring and other charges in the Company’s consolidated statements of operations and comprehensive income, have been excluded from the above pro-forma consolidated results of operations due to their non-recurring nature.

6. Receivables, net

Receivables, net consist of (in millions):


		March 28, 2020		March 30, 2019			March 27, 2021		March 28, 2020
Trade receivables ⁽¹⁾	Trade receivables ⁽¹⁾	$	432	$	459	Trade receivables (1)	$	412	$	432
Receivables due from licensees	Receivables due from licensees	14		23		Receivables due from licensees	20		14
		446		482			432		446
Less: allowances	Less: allowances	(138)		(99)		Less: allowances	(59)		(138)
		$	308	$	383		$	373	$	308

⁽¹⁾As of March 27, 2021 and March 28, 2020, ~~and March 30, 2019, $80~~$81 million and ~~$317~~$80 million, respectively, of trade receivables were insured.

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Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and ~~doubtful accounts.~~credit losses. Discounts are based on open invoices where trade discounts have been extended to customers. Markdowns are based on wholesale customers’ sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in revenues.

The Company’s allowance for ~~doubtful accounts~~credit losses is determined through analysis of periodic aging of receivables ~~that are not covered by insurance~~ and assessments of collectability based on an evaluation of historic and anticipated trends, the financial condition of the Company’s customers and the impact of general economic conditions. The past due status of a receivable is based on its contractual terms. Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered. Allowance for ~~doubtful accounts~~credit losses was $25 million and $39 million as of March 27, 2021 and March 28, 2020, respectively, including the impact related to COVID-19. ~~Allowance for doubtful accounts was $18 million as of March 30, 2019, which included an $11 million allowance within the opening balance sheet of the newly acquired Versace business.~~ The Company had ~~bad debt expense~~credit loss of $(3) million, $29 million ~~$4 million~~ and $8$4 million, respectively, for Fiscal ~~2020,~~2021, Fiscal ~~2019~~2020 and Fiscal ~~2018.~~2019.

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7. Concentration of Credit Risk, Major Customers and Suppliers

Financial instruments that subject the Company to concentration of credit risk are cash and cash equivalents and receivables. As part of its ongoing procedures, the Company monitors its concentration of deposits with various financial institutions in order to avoid any undue exposure. The Company mitigates its risk by depositing cash and cash equivalents in major financial institutions. The Company also mitigates its credit risk by obtaining insurance coverage for a portion of its receivables (see Note 6). No individual customer accounted for 10% or more of the Company’s total revenues during Fiscal ~~2020,~~2021, Fiscal ~~2019~~2020 or Fiscal ~~2018.~~2019.

The Company contracts for the purchase of finished goods principally with independent third-party contractors, whereby the contractor is generally responsible for all manufacturing processes. Although the Company does not have any long-term agreements with any of its manufacturing contractors, the Company believes it has mutually satisfactory relationships with them. The Company allocates product manufacturing among agents and contractors based on their capabilities, the availability of production capacity, quality, pricing and delivery. The inability of certain contractors to provide needed services on a timely basis could adversely affect the Company’s operations and financial condition. For Fiscal 2021, Fiscal 2020 and Fiscal 2019, ~~and Fiscal 2018,~~ one contractor accounted for approximately ~~20%~~18%, ~~21%~~20% and ~~26%~~21%, respectively, of the Company’s total finished goods purchases, based on dollar volume.

The Company also has relationships with various agents who source finished goods with numerous contractors on behalf of its Michael Kors brand. For Fiscal 2021, Fiscal 2020 and Fiscal 2019, ~~and Fiscal 2018,~~ one agent sourced approximately 26%, ~~24%~~26% and 24%, respectively, of Michael Kors finished goods, based on unit volume.

8. Property and Equipment, ~~Net~~net

Property and equipment, net, consists of (in millions):


		March 28, 2020		March 30, 2019			March 27, 2021		March 28, 2020
Leasehold improvements	Leasehold improvements	$	704	$	639	Leasehold improvements	$	737	$	704
In-store shops		236		270
Computer equipment and software						Computer equipment and software	359		329
Furniture and fixtures	Furniture and fixtures	329		292		Furniture and fixtures	350		329
Computer equipment and software		329		292
Equipment	Equipment	136		123		Equipment	139		136
In-store shops (1)						In-store shops (1)	53		236
Building	Building	49		47		Building	51		49
Land	Land	19		15		Land	20		19
		1,802		1,678			1,709		1,802
Less: accumulated depreciation and amortization(1)	Less: accumulated depreciation and amortization(1)	(1,310)		(1,115)		Less: accumulated depreciation and amortization(1)	(1,271)		(1,310)
		492		563			438		492
Construction-in-progress	Construction-in-progress	69		52		Construction-in-progress	47		69
		$	561	$	615		$	485	$	561

~~Table~~(1)The Company wrote off $179 million of ~~Contents~~fully depreciated assets which were no longer in service from in-store shops and related accumulated depreciation during the fiscal year ended March 27, 2021.

Depreciation and amortization of property and equipment for the fiscal years ended March 27, 2021, March 28, 2020, and March 30, 2019 ~~and March 31, 2018 was~~totaled $165 million, $200 million ~~$188 million~~ and ~~$182~~$188 million, respectively. During Fiscal 2021, Fiscal 2020 and Fiscal 2019, the Company recorded property and equipment impairment charges of $23 million, $77 million ~~$66~~and $19 million, ~~of which~~respectively, primarily related to the Company's retail store ~~locations and $11 million of which related to determining asset groups for the Company’s premier store locations at an individual store level.~~locations. See Note 14 for additional information. During Fiscal 2019 and Fiscal 2018, the Company recorded property and equipment impairment charges of $19 million and $28 million, respectively, primarily related to underperforming Michael Kors retail locations.

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9. Intangible Assets and Goodwill

The following table details the carrying values of the Company’s intangible assets other than goodwill (in millions):


		March 28, 2020										March 30, 2019											March 27, 2021				March 28, 2020
		Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net			Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Definite-lived intangible assets:	Definite-lived intangible assets:													Definite-lived intangible assets:
Reacquired rights	Reacquired rights	$	400	$	61	$	339	$	400	$	45	$	355	Reacquired rights	$	400	$	77	$	323	$	400	$	61	$	339
Trademarks	Trademarks	23		20		3		23		19		4		Trademarks	23		21		2		23		20		3
Lease rights ⁽¹⁾		—		—		—		96		56		40

Customer relationships	Customer relationships	404		51		353		415		23		392		Customer relationships	437		86		351		404		51		353
		827		132		695		934		143		791			860		184		676		827		132		695

Indefinite-lived intangible assets:	Indefinite-lived intangible assets:													Indefinite-lived intangible assets:
Jimmy Choo brand ⁽²⁾⁽¹⁾	Jimmy Choo brand ⁽²⁾⁽¹⁾	547		180		367		572		—		572		Jimmy Choo brand ⁽²⁾⁽¹⁾	587		249		338		547		180		367
Versace brand ⁽³⁾⁽²⁾	Versace brand ⁽³⁾⁽²⁾	924		—		924		930		—		930		Versace brand ⁽³⁾⁽²⁾	978		—		978		924		—		924
		1,471		180		1,291		1,502		—		1,502			1,565		249		1,316		1,471		180		1,291

Total intangible assets, excluding goodwill	Total intangible assets, excluding goodwill	$	2,298	$	312	$	1,986	$	2,436	$	143	$	2,293	Total intangible assets, excluding goodwill	$	2,425	$	433	$	1,992	$	2,298	$	312	$	1,986

⁽¹⁾The March 30, 2019 balance includes certain lease rights that were reclassified to the operating lease right-of-use asset as part of the adoption of ASU 2016-02 in Fiscal 2020. Includes $2 million and $5 million, respectively, of impairment charges recorded during Fiscal 2019 and Fiscal 2018, primarily in connection with underperforming full-price Michael Kors retail stores. See Note 14 for additional information.

⁽²⁾

(1)The year-over-year change in carrying value reflects an impairment charge of ~~$180~~$69 million and foreign currency translation of ~~$25 million.~~$40 million for the fiscal year ended March 27, 2021. The Company ~~did 0t incur any~~recorded an impairment ~~charges in prior periods.~~charge of $180 million for the fiscal year ended March 28, 2020.

⁽³⁾(2)The year-over-year change in ~~carrying~~ value relates to foreign currency translation.

Reacquired rights relate to the Company’s reacquisition of the rights to use the Michael Kors trademarks and to import, sell, advertise and promote certain of its products in the previously licensed territories in the Greater China region and are being amortized through March 31, 2041, the expiration date of the related license agreement. The trademarks relate to the Michael Kors brand name and are amortized over twenty years. Customer relationships are generally amortized over five to eighteen years. ~~Key money is amortized over the respective terms of the underlying lease, including highly probable renewal periods.~~ Amortization expense for the Company’s definite-lived intangibles was $47 million, $49 million ~~$37 million~~ and ~~$26~~$37 million, respectively, for each of the fiscal years ended March 27, 2021, March 28, 2020 and March 30, ~~2019 and March 31, 2018.~~2019.

Indefinite-lived intangible assets other than goodwill included the Versace and Jimmy Choo brands, which were recorded in connection with the acquisitions of Versace and Jimmy Choo, and have an indefinite life due to being essential to the Company’s ability to operate the Versace and Jimmy Choo businesses for the foreseeable future.

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Estimated amortization expense for each of the next five years is as follows (in millions):


Fiscal ~~2021~~2022	$	4647
~~Fiscal 2022~~	46
Fiscal 2023	4647
Fiscal 2024	4547
Fiscal 2025	4547
Fiscal 2026	47
Fiscal 2027 and thereafter	~~467~~441
	$	~~695~~676

The future amortization expense above reflects weighted-average estimated remaining useful lives of 2120 years for reacquired rights, 32 years for trademarks and 1312 years for customer relationships.

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The following table details the changes in goodwill for each of the Company’s reportable segments (in millions):


		Versace		Jimmy Choo		Michael Kors ⁽¹⁾		Total			Versace		Jimmy Choo		Michael Kors		Total
Balance at March 31, 2018		$	—	$	728	$	120	$	848
Acquisition of Versace ⁽¹⁾		878		—		—		878
Foreign currency translation		(17)		(50)		—		(67)
Balance at March 30, 2019	Balance at March 30, 2019	861		678		120		1,659		Balance at March 30, 2019	861		678		120		$	1,659
Acquisition	Acquisition	—		11		—		11		Acquisition	0		11		0		11
Measurement period adjustment ⁽¹⁾	Measurement period adjustment ⁽¹⁾	26		—		—		26		Measurement period adjustment (1)	26		0		0		26
Impairment charges ⁽²⁾	Impairment charges ⁽²⁾	—		(171)		—		(171)		Impairment charges (2)	0		(171)		0		(171)
Foreign currency translation	Foreign currency translation	(6)		(31)		—		(37)		Foreign currency translation	(6)		(31)		0		(37)
Balance at March 28, 2020	Balance at March 28, 2020	$	881	$	487	$	120	$	1,488	Balance at March 28, 2020	881		487		120		1,488

Impairment charges (2)										Impairment charges (2)	0		(94)		0		(94)
Foreign currency translation										Foreign currency translation	52		52		0		104
Balance at March 27, 2021										Balance at March 27, 2021	$	933	$	445	$	120	$	1,498

⁽¹⁾See Note 5 for additional information.

⁽²⁾The Company recorded impairment charges during Fiscal 2021 of $94 million related to the Jimmy Choo wholesale and licensing reporting units, and $171 million during Fiscal 2020 related to the Jimmy Choo retail and licensing reporting units. ~~The Company did 0t incur any goodwill impairment charges in prior periods.~~

The Company’s goodwill and the Versace and Jimmy Choo brands are not subject to amortization but are evaluated for impairment annually in the last quarter of each fiscal year, or whenever impairment indicators exist. During the fourth quarter of Fiscal ~~2020,~~2021, the Company performed its annual goodwill and indefinite-lived intangible assets impairment analysis for its 3 segments. The Company performed its goodwill impairment assessment for its Michael Kors segment using a qualitative assessment. As a result of realigning its segment reporting structure during the fourth quarter of Fiscal 2019, the Company presented the carrying amount of goodwill for the Michael Kors Retail, Michael Kors Wholesale and Michael Kors Licensing reporting units within the Michael Kors reportable segment. Based on the results of the Company’s qualitative impairment assessment, the Company concluded that it is more likely than not that the fair value of the Michael Kors’ reporting units exceeded their carrying value and, therefore, were not impaired.

The Company performed its annual goodwill and indefinite-lived intangible ~~asset~~assets impairment analysis for both the Versace and Jimmy Choo reporting units, using a ~~quantitative approach, using a discounted cash flow analysis~~combination of income and market approaches to estimate the fair ~~values~~value of ~~the~~ each brands' reporting units. The Company also elected to perform an impairment analysis for both the Versace and Jimmy Choo brand indefinite-lived intangible assets using an income approach to estimate the fair values. Based on the results of these assessments, the Company ~~concluded that the fair values of~~determined there was 0 impairment loss for the Jimmy Choo ~~retail and licensing~~Retail reporting units and the Jimmy Choo brand indefinite-lived intangible asset did not exceed the related carrying amounts. Jimmy Choo expects to experience a reduction in profitability trends, primarily related to the ongoing impact of the COVID-19 pandemic, resulting in declines in sales driven by the full and partial closures of a significant portion of our stores globally.

unit. The Company also concluded that the fair values of the Versace reporting units and the ~~Versace~~ brand ~~indefinite-lived~~ intangible ~~asset~~assets exceeded the related carrying amounts and ~~there was~~ no impairment ~~recorded.~~was required.

However, the Company concluded that the fair value of the Jimmy Choo Wholesale and Jimmy Choo Licensing reporting units, along with the Jimmy Choo brand indefinite-lived intangible assets, did not exceed their related carrying amounts. These impairment charges were primarily related to higher discount rates in the current year driven by a change in market factors as well as a shift in expected revenue and earnings mix to the retail segment.

Accordingly, the Company recorded impairment charges of $94 million related to the Jimmy Choo Retail and Jimmy Choo Licensing reporting units and $69 million related to the Jimmy Choo brand intangible assets during Fiscal 2021. The Company recorded impairment charges of $171 million related to the Jimmy Choo ~~retail~~Retail and ~~licensing~~Jimmy Choo Licensing reporting units and $180 million related to the Jimmy Choo brand intangible ~~asset~~assets during Fiscal 2020. The impairment charges were recorded within impairment of assets on ~~the Company's~~our consolidated statement of operations and comprehensive (loss) income for the fiscal ~~year~~years ended March 27, 2021 and March 28, 2020. The Company did not record any such impairment charges in Fiscal 2019. See Note 14 ~~to the accompanying audited financial statements~~ for ~~information relating to its annual impairment analysis performed during the fourth quarter of Fiscal 2020.~~additional information.

9092

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10. Current Assets and Current Liabilities

Prepaid expenses and other current assets consist of the following (in millions):


		March 28, 2020		March 30, 2019			March 27, 2021		March 28, 2020
Prepaid taxes	Prepaid taxes	$	116	$	125	Prepaid taxes	$	133	$	116
Prepaid contracts		17		15
Other accounts receivables	Other accounts receivables	10		10		Other accounts receivables	13		10
Interest receivable related to net investment hedges	Interest receivable related to net investment hedges	1		11		Interest receivable related to net investment hedges	12		1
Prepaid rent		—		24
Prepaid contracts						Prepaid contracts	11		17
Other	Other	23		36		Other	36		23
		$	167	$	221		$	205	$	167

Accrued expenses and other current liabilities consist of the following (in millions):


		March 28, 2020		March 30, 2019			March 27, 2021		March 28, 2020
Other taxes payable	Other taxes payable	$	38	$	47	Other taxes payable	$	46	$	38
Return liabilities	Return liabilities	37		35		Return liabilities	46		37
Accrued rent (1)						Accrued rent (1)	20		10
Charitable donations (2)						Charitable donations (2)	20		0
Accrued capital expenditures	Accrued capital expenditures	31		25		Accrued capital expenditures	17		31
Gift cards and retail store credits		11		13
Accrued rent ⁽¹⁾		10		34
Professional services	Professional services	10		12		Professional services	13		10
Accrued litigation	Accrued litigation	10		11		Accrued litigation	12		10
Restructuring liability ⁽²⁾		9		64
Gift and retail store credits						Gift and retail store credits	12		11
Accrued advertising and marketing	Accrued advertising and marketing	9		10		Accrued advertising and marketing	11		9
Accrued interest	Accrued interest	8		10		Accrued interest	10		8
Restructuring liability						Restructuring liability	9		9
Accrued purchases and samples	Accrued purchases and samples	3		29		Accrued purchases and samples	8		3
Other	Other	65		84		Other	73		65
		$	241	$	374		$	297	$	241

⁽¹⁾The accrued rent balance relates to variable lease payments.

⁽²⁾~~In connection with~~Relates to a $20 million unconditional pledge to The Capri Holdings Foundation for the ~~adoption~~Advancement of ASU 2016-02, certain lease related assets and liabilities were reflected within operating lease right-of-use assets and liabilities as of March 28, 2020. See Note 2 and Note 4 for additional information.Diversity in Fashion.

11. Restructuring and Other Charges

Capri Retail Store Optimization Program

As previously announced, the Company intends to close approximately 170 of its retail stores over two fiscal years, which began during Fiscal 2021 and will continue into Fiscal 2022, in connection with its Capri Retail Store Optimization Program in order to improve the profitability of its retail store fleet. In addition, the Company expects to incur approximately $75 million of one-time costs related to this program, including lease termination and other store closure costs, the majority of which are expected to result in future cash expenditures.

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During Fiscal 2021, the Company closed 101 of its retail stores which have been incorporated into the Capri Retail Store Optimization Program. Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program during Fiscal 2021 was $5 million. The below table presents a roll forward of the Company's restructuring liability related to its Capri Retail Store Optimization Program (in millions):


	Severance and benefit costs		Lease-related and other costs		Total
Balance at March 28, 2020	$	0	$	0	$	0
Additions charged to expense (1)	2		11		13
Payments	(2)		(11)		(13)
Other	0		3		3
Balance at March 27, 2021	$	0	$	3	$	3

(1)Excludes a net credit of $8 million related to lease termination gains of previously impaired operating lease right-of-use assets partially offset by additional impairments for the stores closing under the Company’s Capri Retail Store Optimization Program during Fiscal 2021.

Michael Kors Retail Fleet Optimization Plan

During Fiscal 2020, the Company completed its plan to close between 100 and 150 of its Michael Kors retail stores in order to improve the profitability of its retail store fleet (“Michael Kors Retail Fleet Optimization Plan”). The Company expected approximately $100 - $125 million of one-time costs associated with these store closures, with total costs in line with its original expectations. Collectively, the Company continues to anticipate ongoing savings as a result of the store closures and lower depreciation expense associated with the impairment charges being recorded.

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During Fiscal 2020, the Company closed 43 of its Michael Kors retail stores under the Michael Kors Retail Fleet Optimization Plan, for a total of 143 stores closed at a cost of $99 million since plan inception. Restructuring charges recorded in connection with the Michael Kors Retail Fleet Optimization Plan during Fiscal 2020 was $5 million. The below table presents a rollforward of the Company’s remaining restructuring liability related to this plan (in millions):

Severance and benefit costs Lease-related and other costs Total
Balance at March 30, 2019 $ 2 $ 53 $ 55
ASC 842 (Leases) Adjustment ⁽¹⁾
— (46) (46)
Balance at March 31, 2019 2 7 9
Additions charged to expense — 5 5
Payments (1) (8) (9)
Balance at March 28, 2020 $ 1 $ 4 $ 5

⁽¹⁾~~Consists of the reclassification of sublease liabilities to an offset of the related operating lease right-of-use asset due to the adoption of ASC 842. See Note 2 and Note 4 for further information.~~

~~During Fiscal 2019, the Company~~ recorded restructuring charges of ~~$41~~$5 million under the Michael Kors Retail Fleet Optimization Plan, which ~~were comprised~~was completed during the fourth quarter of ~~lease-related charges of $38 million and severance and benefit costs of $3 million. During~~ Fiscal 2018, the Company recorded restructuring charges of $53 million under the Michael Kors Retail Fleet Optimization Plan, which were comprised of lease-related charges of $52 million and severance and benefit costs of $1 million.2020.

Other Restructuring Charges

In addition to the restructuring charges related to the ~~Michael Kors~~Capri Retail ~~Fleet~~Store Optimization Plan, the Company incurred charges of $8 million primarily relating to closures of corporate locations during Fiscal 2021.

The Company incurred $3 million of restructuring charges related to the Michael Kors Retail Fleet Optimization Plan during Fiscal 2020, primarily consisting of lease-related ~~costs during Fiscal 2020. The Company also incurred charges of $4 million relating to Jimmy Choo lease-related charges during Fiscal 2019.~~costs.

Other Costs

During Fiscal 2021, the Company recorded costs of $19 million primarily related to equity awards associated with the acquisition of Versace.

During Fiscal 2020, the Company recorded costs of $34 million, which included $24 million in connection with the Versace acquisition, ~~and~~ $9 million in connection with the acquisition of Jimmy Choo and $1 million in connection with the acquisition of Gozzi.

During Fiscal 2019, the Company recorded costs of $79 million, which included $52 million in connection with the Versace acquisition and $27 million in connection with the Jimmy Choo acquisition. During Fiscal 2018, the Company recorded costs of $49 million in connection with the Jimmy Choo acquisition. See Note 5 for additional information relating to these acquisitions.

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12. Debt Obligations

The following table presents the Company’s debt obligations (in millions):


		March 28, 2020		March 30, 2019			March 27, 2021		March 28, 2020
Term Loan⁽¹⁾	Term Loan⁽¹⁾	$	1,015	$	1,580	Term Loan⁽¹⁾	$	870	$	1,015
4.000% Senior Notes due 2024		450		450
Revolving Credit Facilities		720		550
Senior Notes due 2024						Senior Notes due 2024	450		450
Revolving Credit Facility						Revolving Credit Facility	0		720
Other	Other	3		1		Other	30		3
Total debt	Total debt	2,188		2,581		Total debt	1,350		2,188
Less: Unamortized debt issuance costs	Less: Unamortized debt issuance costs	8		13		Less: Unamortized debt issuance costs	7		8
Less: Unamortized discount on long-term debt	Less: Unamortized discount on long-term debt	1		2		Less: Unamortized discount on long-term debt	1		1
Total carrying value of debt	Total carrying value of debt	2,179		2,566		Total carrying value of debt	1,342		2,179
Less: Short-term debt	Less: Short-term debt	167		630		Less: Short-term debt	123		167
Total long-term debt	Total long-term debt	$	2,012	$	1,936	Total long-term debt	$	1,219	$	2,012

⁽¹⁾~~During Fiscal 2019, the Company repaid the remaining $59 million of borrowings outstanding under the previous Term Loan Facility entered into in connection with the Jimmy Choo acquisition.~~

Senior ~~Unsecured~~Secured Revolving Credit Facility

On ~~March 20,~~June 25, 2020, the Company entered into the ~~first~~second amendment (the ~~“First~~“Second Amendment”) to its third amended and restated ~~senior unsecured~~ credit facility, dated as of November 15, 2018 (the “2018 Credit Facility”), with, among others, JPMorgan Chase Bank, N.A., as administrative ~~agent. The First~~agent (the “Administrative Agent”). Pursuant to the Second Amendment, ~~amends~~the obligations under the 2018 Credit Facility are secured by liens on substantially all of the assets of the Company and its U.S. subsidiaries that are borrowers and guarantors, subject to ~~among other things, provide~~certain exceptions, and substantially all of the registered intellectual property of the Company and its subsidiaries. This requirement for collateral will fall away if the ~~exchange of approximately $267 million (out of $315 million) in aggregate principal amount of outstanding term loans due~~Company achieves an investment grade ratings requirement for two consecutive full fiscal quarters. The Amendment adds a restriction on the ~~second anniversary, for~~disposition of assets and a requirement to prepay the term loans with ~~the existing remaining tranche that matures on the fifth anniversary, resulting~~certain net cash proceeds of non-ordinary course asset sales, subject to certain exceptions and a reinvestment option with respect to up to $100 million of net cash proceeds in the ~~extension~~aggregate.

Pursuant to the Second Amendment, the financial covenant in the Company’s 2018 Credit Facility requiring it to maintain a ratio of the ~~maturity~~sum of ~~such exchanged loans~~total indebtedness plus the capitalized amount of all operating lease obligations for the last four fiscal quarters to Consolidated EBITDAR of no greater than 3.75 to 1.0 has been waived through the fiscal quarter ending June 26, 2021. The Company terminated the waiver period effective May 26, 2021. Effective as of that date, the applicable ratio will be calculated net of the Company’s unrestricted cash and cash equivalents in excess of $100 million and shall exclude up to $150 million of supply chain financings, and the maximum permitted net leverage ratio will be 4.00 to 1.0. In addition, until March 31, 2021, the material adverse change representation required to be made in connection with revolving borrowings and the issuance or amendment of letters of credit will be modified to disregard certain COVID-19 pandemic-related impacts to the ~~third~~business, results of operations or financial condition of the Company and its subsidiaries, taken as a whole. The Second Amendment also requires the Company, during the period from June 25, 2020 until it delivers its financial statements with respect to the fiscal quarter ~~of Fiscal 2024. The remaining $48 million that were not exchanged remain due in~~ending June 26, 2021, to maintain at all times unrestricted cash and cash equivalents plus the ~~third quarter of Fiscal 2021. In addition,~~aggregate undrawn amounts under the ~~leverage ratio covenant metric in~~revolving facilities under the 2018 Credit Facility ~~was modified~~of not less than $300 million, increasing to ~~take into account~~$400 million on October 1, 2020 and $500 million on December 1, 2020.

The 2018 Credit Facility and the Indenture governing the Company's senior notes contain certain restrictive covenants that impose operating ~~lease liability as defined by ASC 842. The~~and financial restrictions on the Company, and ~~its U.S., Canadian, Dutch and Swiss subsidiaries are~~ the ~~borrowers~~Second Amendment imposes incremental restrictions on certain of these covenants during the covenant relief period provided under the 2018 Credit ~~Facility. The borrowers~~Facility, including restrictions on its ability to incur additional indebtedness and ~~certain material subsidiaries~~guarantee indebtedness, pay dividends or make other distributions or repurchase or redeem capital stock, make loans and investments, including acquisitions, sell assets, incur liens, enter into transactions with affiliates and consolidate, merge or sell all or substantially all of ~~the Company provide unsecured guarantees of the 2018 Credit Facility.~~ its assets.

The 2018 Credit Facility provides for a ~~$1.0~~$1 billion revolving credit facility (the ~~“Revolving~~"Revolving Credit ~~Facility”~~Facility"), which may be denominated in U.S. ~~Dollars~~dollars and other currencies, including Euros, Canadian Dollars, Pounds Sterling, Japanese Yen and Swiss Francs. The Revolving Credit Facility also provides sub-facilities for the issuance of letters of credit of up to $75 million and swing ~~line~~ loans of up to $75 million. The 2018 Credit Facility also provides for a $1.6 billion term loan facility (the ~~“2018~~"2018 Term Loan ~~Facility”~~Facility") ~~to finance a portion of the purchase price of the Company’s acquisition of Versace.~~. The 2018 Term Loan Facility is divided into 2 tranches, ~~that now mature on~~with the ~~fifth anniversary~~second tranche maturing in December 2023, which requires a quarterly payment of ~~the initial borrowing of the term loans, except for the remaining $48 million that were not exchanged, and are required to be repaid on the last business day~~$24 million. As of March ~~June, September and December of each year, commencing after~~27, 2021, the ~~last business day of the first full fiscal quarter after the initial borrowing, in installments equal to 2.50% of the aggregate original principal amount of the term loans. The~~ Company has ~~the right to prepay its borrowings under~~fully paid off Tranche 1 of the 2018 Term Loan Facility.

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In addition, the Second Amendment adds a new $230 million revolving line of credit that matures on June 24, 2021 (the “364 Day Facility”). The terms of the 364 Day Facility ~~at any time in whole or in part. The Revolving Credit Facility expires on November 15, 2023. The Company has~~are substantially similar to the ~~ability to expand its borrowing availability~~terms of the existing revolving facility under the 2018 Credit Facility inexcept that (i) no letters of credit or swingline loans are provided and (ii) for loans subject to Adjusted LIBOR, the ~~form of revolving commitments or term~~applicable margin is 225 basis points per annum, for loans ~~by up to an additional $500 million,~~ subject to the ~~agreement~~base rate the applicable margin is 125 basis points per annum and the commitment fee is 35 basis points per annum. In addition, while the 364 Day Facility is outstanding, (i) if the Company incurs any incremental indebtedness under the 2018 Credit Facility or certain permitted indebtedness in lieu of such incremental indebtedness, the 364 Day Facility will be reduced on a dollar for dollar basis and the Company will be required to make corresponding prepayments and (ii) the Company will be required to prepay amounts outstanding under the 364 Day Facility on a weekly basis to the extent that cash and cash equivalents of the ~~participating lenders~~Company and its subsidiaries exceed $200 million.

The Second Amendment also permits certain working capital facilities between the Company or any of its subsidiaries with a lender or an affiliate of a lender under the 2018 Credit Facility to be guaranteed under the 2018 Credit Facility guarantees and certain ~~other customary conditions.~~supply chain financings with, and up to $50 million outstanding principal amount of bilateral letters of credit and bilateral bank guarantees issued by a lender or an affiliate of a lender to be guaranteed and secured under the 2018 Credit Facility guarantees and collateral documents.

Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, at the following rates:

•for any loans (except loans denominated in Canadian Dollars), the greater of Adjusted LIBOR for the applicable interest period and zero, plus an applicable margin based on the Company’s public debt rating;

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•for loans denominated in U.S. Dollars, an alternate base rate, which is the greatest of: (a) the prime rate publicly announced from time to time by JPMorgan Chase, (b) the greater of the federal funds effective rate and the Federal Reserve Bank of New York overnight bank funding rate and zero, plus 50 basis points, and (c) the greater of the one-month London Interbank Offered Rate adjusted for statutory reserve requirements for Eurocurrency liabilities (“Adjusted LIBOR”) and zero, plus 100 basis points, in each case, plus an applicable margin based on the Company’s public debt ratings;

•for loans denominated in Canadian Dollars, the Canadian prime rate, which is the greater of the PRIMCAN Index rate and the rate applicable to one-month Canadian Dollar banker’s acceptances quoted on Reuters (“CDOR”), plus 100 basis points, plus an applicable margin based on the Company’s public debt ratings; or

•for loans denominated in Canadian Dollars, the average CDOR rate for the applicable interest period, plus 10 basis points per annum, plus an applicable margin based on the Company’s public debt ratings.

Borrowings under the 2018 Term Loan Facility bear interest, at the Company’s option, at (a) the alternate base rate plus an applicable margin based on the Company’s public debt ratings; or (b) the greater of Adjusted LIBOR for the applicable interest period and zero, plus an applicable margin based on the Company’s public debt ratings.

The Revolving Credit Facility also provides for an annual administration fee and a commitment fee equal to 0.10% to 0.25% per annum, based on the Company’s public debt ratings, applied to the average daily unused amount of the Revolving Credit Facility. The 2018 Term Loan Facility provides for a commitment fee equal to 0.10% to 0.25% per annum, based on the Company’s public debt ratings, applied to the undrawn amount of the 2018 Term Loan Facility, from January 6, 2019 until the term loans are fully drawn or the commitments under the 2018 Term Loan Facility terminate or expire. Loans under the 2018 Credit Facility may be repaid and commitments may be terminated or reduced by the borrowers without premium or penalty other than the customary breakage costs with respect to loans bearing interest based on Adjusted LIBOR or the CDOR rate.

As of the last day of Fiscal ~~2020,~~2021, the 2018 Credit Facility ~~required~~requirement of the Company to maintain a leverage ratio as of the end of each fiscal quarter of no greater than 3.75 to 1.1 has been waived through the fiscal quarter ending June 26, 2021. Such leverage ratio is calculated based on the ratio of consolidated total indebtedness plus the capitalized amount of all operating lease liabilities presented on our consolidated balance sheets to Consolidated EBITDAR (as defined below) for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined as consolidated net income plus income tax expense, net interest expense, depreciation and amortization expense, consolidated rent expense and other non-cash charges, subject to certain additions and deductions. The 2018 Credit Facility also includes covenants that limit additional indebtedness, guarantees, liens, acquisitions and other investments and cash dividends that are customary for financings of this type. See Note 2322 for additional information. As of March ~~28, 2020~~27, 2021 and the date these financial statements were issued, the Company was in compliance with

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all covenants related to this ~~agreement.~~agreement, which was calculated based on the unrestricted cash and cash equivalents plus the aggregate undrawn amounts of no less than $500 million under the 2018 Credit Facility.

The 2018 Credit Facility contains events of default customary for financings of this type, including, but not limited to, payment of defaults, material inaccuracy of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy or insolvency, certain events under The Employee Retirement Income Security Act, material judgments, actual or asserted failure of any guaranty supporting the 2018 Credit Facility to be in full force and effect, and changes of control. If such an event of default occurs, the lenders under the 2018 Credit Facility would be entitled to take various actions, including, but not limited to, terminating the commitments and accelerating amounts outstanding under the 2018 Credit Facility, subject to “certain funds” limitations in connection with the transaction governing the 2018 Term Loan Facility.

~~In connection with the acquisition~~As of ~~Versace, on December 21, 2018~~March 27, 2021, the Company ~~borrowed $1.6 billion in term loans~~had 0 borrowings outstanding under the ~~2018 Term Loan Facility and $350 million under its $1.0 billion~~ Revolving Credit Facility ~~provided for under~~as a result of repaying the ~~2018 Credit Facility, to pay a portion of the acquisition consideration and other related fees and expenses.~~remaining borrowings. As of March 28, 2020, ~~and March 30, 2019,~~ the Company had ~~borrowings of~~ $681 million ~~and $539 million~~borrowings outstanding under the ~~2018~~ Revolving Credit Facility, ~~respectively,~~ which were recorded within long-term ~~and short-term~~ debt in its consolidated balance sheets. In addition, stand-by letters of credit of $27 million and $18 million were outstanding as of March 27, 2021 and March 28, ~~2020.~~2020, respectively. At March ~~28, 2020,~~27, 2021, the amount available for future borrowings under the ~~2018~~ Revolving Credit Facility ~~was $301 million.~~ and the 364 Day facility were $973 million and $230 million, respectively.

As of March ~~28, 2020,~~27, 2021, the carrying ~~value~~values of borrowings outstanding under the 2018 Term Loan Facility were $865 million, net of debt issuance costs of $5 million, $97 million of which was recorded within short-term debt while $768 million was recorded within long-term debt in the Company's consolidated balance sheets. As of March 28, 2020, the carrying values of borrowings outstanding under the 2018 Term Loan Facility were $1.010 billion, net of debt issuance costs of $5 million, $128 million of which ~~$128 million~~ was recorded within short-term debt ~~and~~while $882 million was recorded within long-term debt in ~~its~~the Company's consolidated balance sheets.

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Senior Notes

On October 20, 2017, Michael Kors (USA), Inc. (the “Issuer”), the Company’s wholly owned subsidiary, completed its offering of $450 million aggregate principal amount of 4.000% senior notes due 2024 (the “Senior Notes”) at an issue price of 99.508% of aggregate principal amount, pursuant to an exemption from registration under the Securities Act of 1933, as amended. The Senior Notes were issued under an indenture dated October 20, 2017, among the Issuer, the Company, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (the “Indenture”). The Senior Notes were issued to finance a portion of the Company’s acquisition of Jimmy Choo and certain related refinancing transactions.

~~The~~As of March 27, 2021, the Senior Notes bear interest at a rate of ~~4.000%~~4.500% per year, subject to adjustments from time to time if either Moody’s or S&P (or a substitute rating agency therefore) downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Senior Notes. Interest on the Senior Notes is payable semi-annually on May 1 and November 1 of each year, beginning on May 1, 2018.

The Senior Notes are unsecured and are guaranteed by the Company and its existing and future subsidiaries that guarantee or are borrowers under the 2018 Credit Facility (subject to certain exceptions, including subsidiaries organized in China).

The Senior Notes may be redeemed at the Company’s option at any time in whole or in part at a price equal to 100% of the principal amount, plus accrued and unpaid interest, plus a “make-whole” amount calculated at the applicable Treasury Rate plus 30 basis points.

The Senior Notes rank equally in right of payment with all of the Issuer’s and guarantors’ existing and future senior unsecured indebtedness, senior in right of payment to any future subordinated indebtedness, effectively subordinated in right of payment to any of the Company’s subsidiaries’ obligations (including secured and unsecured obligations) and any of the Company’s secured obligations, to the extent of the assets securing such obligations.

The Indenture contains covenants, including those that limit the Company’s ability to create certain liens and enter into certain sale and leaseback transactions. In the event of a “Change of Control Triggering Event,” as defined in the Indenture, the Issuer will be required to make an offer to repurchase the Senior Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of the Senior Notes being repurchased plus any unpaid interest. These covenants are subject to important limitations and exceptions, as per the Indenture.

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As of March ~~28, 2020~~27, 2021 and March ~~30, 2019,~~28, 2020, the carrying value of the Senior Notes was ~~$446~~$447 million and ~~$445~~$446 million, respectively, net of issuance costs and unamortized ~~discount.~~discount, which were recorded within long-term debt in the Company's consolidated balance sheets.

Supplier Financing Program

During the third quarter of Fiscal 2021, the Company began offering a supplier financing program to certain suppliers as the Company continues to identify opportunities to improve liquidity. This program enables suppliers, at their sole discretion, to sell their receivables (i.e., the Company’s payment obligations to suppliers) to a financial institution on a non-recourse basis in order to be paid earlier than current payment terms provide. The Company’s obligations, including the amount due and scheduled payment dates, are not impacted by a suppliers’ decision to participate in this program. The Company does not reimburse suppliers for any costs they incur to participate in the program and their participation is voluntary. The amount outstanding under this program as of March 27, 2021 was $17 million and is presented as short-term debt in the Company’s consolidated balance sheets.

Japan Credit Facility

In ~~November 2017,~~Fiscal 2021, the Company’s subsidiary in Japan ~~entered into~~renewed a short term credit facility (“Japan Credit Facility”) with Mitsubishi UFJ Financial Group (“MUFJ”), which may be used to fund general working capital needs of Michael Kors Japan K.K., subject to the bank’s discretion. The Japan Credit Facility is in effect through November 30, ~~2020.~~2021. The Japan Credit Facility provides Michael Kors Japan K.K. with a revolving credit line of up to ¥1.0 billion (approximately $9 million). The Japan Credit Facility bears interest at a rate posted by the Bank plus 0.300% two business days prior to the date of borrowing or the date of interest renewal. As of March ~~28, 2020 and March 30, 2019,~~27, 2021 the Company had 0$9 million borrowings outstanding under the Japan Credit ~~Facility.~~Facility and 0 borrowings outstanding as of March 28, 2020, which were recorded within short-term debt in the Company's consolidated balance sheets.

Hong Kong Credit Facility

In May 2020, the Company’s Hong Kong subsidiary, MKHKL, renewed its uncommitted credit facility (“HK Credit Facility”) with HSBC, which may be used to fund general working capital needs of MKHKL through ~~April~~September 30, 2021 subject to the bank’s discretion. The HK Credit Facility provides MKHKL with a revolving line of credit of up to 100 million Hong Kong Dollars (approximately ~~$14~~$13 million), and may be used to support bank guarantees. Borrowings under the HK Credit Facility must be made in increments of at least 5 million Hong Kong Dollars and bear interest at the Hong Kong Interbank Offered Rate (“HIBOR”) plus 150 basis points. As of March ~~28, 2020~~27, 2021 and March ~~30, 2019,~~28, 2020, there were 0 borrowings outstanding under the HK Credit ~~Facility.~~Facility. As of March ~~28, 2020,~~27, 2021, bank guarantees supported by this facility were 43 million Hong Kong Dollars ~~(approximately~~(less than $1 million). At March ~~28, 2020,~~27, 2021, the amount available for future borrowings under the HK Credit Facility was 9697 million Hong Kong Dollars (approximately $13 million).

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China Credit Facility

In January 2019, the Company’s subsidiary in China, MKTSCL, entered into a short-term credit facility (“China Credit Facility”) with HSBC, which may be used to fund general working capital needs, not to exceed 12 months. The China Credit Facility is in effect through December 31, 2021. The China Credit Facility provides MKTSCL with a Revolving Loan Facility of up to RMB 70 million (approximately ~~$10~~$11 million);, an overdraft facility with a credit line of RMB 10 million (approximately $1 million), and a non-financial bank guarantee facility of RMB 20 million (approximately $3 million) or its equivalent in another currency, at lender’s discretion. Borrowings under the China Credit Facility bear interest at 105% of the applicable People’s Bank of China’s Benchmark lending rate at the time of borrowing. As of March 27, 2021 and March 28, 2020, the Company had 0 borrowings outstanding under the China Credit Facility.

Versace Credit Facilities

In June 2019, the Company’s subsidiary, Versace, entered into 2 uncommitted short-term credit facilities, one with Unicredit and the other with Intesa (“Versace Credit Facilities”), which may be used for general working capital needs of Versace. The Versace Credit Facilities provide Versace with a swing line of credit of up to €32 million (approximately ~~$36~~$38 million), with interest set by the bank on the date of borrowing. As of March 27, 2021, there were 0 borrowings outstanding under the Versace Credit Facility. As of March 28, 2020, there were borrowings outstanding of €25 million (approximately $28 million), which were recorded within short-term debt in the ~~Company’s~~Company's consolidated balance ~~sheet.~~sheets.

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In November 2018, Versace entered into an overdraft facility ("Versace Overdraft Facility"), which may be used for general working capital needs of Versace. The overdraft facility provides Versace with a line of credit of up to €5 million (approximately $6 million). As of March 27, 2021 and March 28, 2020, there were 0 borrowings outstanding under the Versace Overdraft Facility.

In January 2018, Versace entered into an uncommitted short-term credit facility ~~with BNL~~ (“Versace Credit Facility”), which may be used for general working capital needs of Versace. The Versace Credit Facility provides Versace with a swing line of credit of up to €20 million (approximately ~~$22~~$24 million), with interest set by the bank on the date of borrowing. As of March 27, 2021, there were 0 borrowings outstanding under the Versace Credit Facility. As of March 28, 2020, there were borrowings outstanding of €10 million (approximately $11 million), which were recorded within short-term debt in the ~~Company’s~~Company's consolidated balance ~~sheet.~~sheets.

13. Commitments and Contingencies

Commitments

The Company has issued stand-by letters of credit to guarantee certain of its retail and corporate operating lease commitments, aggregating ~~$24~~$33 million at March ~~28, 2020,~~27, 2021, including ~~$18~~$27 million in letters of credit issued under the ~~2018~~Revolving Credit Facility.

Other Commitments

As of March ~~28, 2020,~~27, 2021, the Company also has other contractual commitments aggregating ~~$2.830~~$2.108 billion, which consist of inventory purchase commitments of ~~$570~~$688 million, debt obligations of ~~$2.179~~$1.350 billion and other contractual obligations of ~~$81~~$70 million, which primarily relate ~~to obligations related~~ to the Company’s marketing and advertising ~~agreements,~~obligations, information technology agreements and supply agreements.

Long-term Employment Contract

The Company has an employment agreement with the Chief Creative Officer of the Michael Kors brand that provides for continuous employment through the date of the officer’s death or permanent disability at an annual salary of $1 million. In addition to salary, the agreement provides for an annual bonus and other employee related benefits. In response to the continued global health and economic impact of the COVID-19 pandemic, the Chief Creative Officer of the Michael Kors brand voluntarily elected to forgo his salary for Fiscal 2021.

Contingencies

In the ordinary course of business, the Company is party to various legal proceedings and claims. Although the outcome of such items cannot be determined with certainty, the ~~Company’s management~~Company does not believe that the outcome of all pending legal proceedings in the aggregate will have a material adverse effect on its cash flow, results of operations or financial position.

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14. Fair Value Measurements

Financial assets and liabilities are measured at fair value using the three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability ~~developed~~ based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions ~~developed~~ based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date.

Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data.

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Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

At March ~~28, 2020~~27, 2021 and March ~~30, 2019,~~28, 2020, the fair values of the Company’s forward foreign currency exchange contracts, interest rate swaps and net investment hedges were determined using broker quotations, which were calculations derived from observable market information: the applicable currency rates at the balance sheet date and those forward rates particular to the contract at inception. The Company makes no adjustments to these broker obtained quotes or prices, but assesses the credit risk of the counterparty and would adjust the provided valuations for counterparty credit risk when appropriate. The fair values of the forward contracts are included in prepaid expenses and other current assets, and in accrued expenses and other current liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities to the Company. The fair values of net investment hedges and interest rate swaps are included in other assets, ~~as detailed~~and in other long-term liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities of the Company. See Note ~~15.~~15 for detail.

All contracts are measured and recorded at fair value on a recurring basis and are categorized in Level 2 of the fair value hierarchy, as shown in the following table (in millions):

Fair value at March 28, 2020, using: Fair value at March 30, 2019, using:
Quoted prices
in active
markets for
identical
assets
(Level 1) Significant
other
observable
inputs
(Level 2) Significant
unobservable
inputs
(Level 3) Quoted prices
in active
markets for
identical
assets
(Level 1) Significant
other
observable
inputs
(Level 2) Significant
unobservable
inputs
(Level 3)
Derivative assets:
Forward foreign currency exchange contracts $ — $ 1 $ — $ — $ 5 $ —
Net investment hedges — 3 — — 37 —
Total derivative assets $ — $ 4 $ — $ — $ 42 $ —
Derivative liabilities:
Other undesignated derivative contracts $ — $ — $ — $ — $ 5 $ —

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	Fair value at March 27, 2021, using:						Fair value at March 28, 2020, using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative assets:
Forward foreign currency exchange contracts	$	0	$	2	$	0	$	0	$	1	$	0
Net investment hedges	0		3		0		0		3		0

Total derivative assets	$	0	$	5	$	0	$	0	$	4	$	0

Derivative liabilities:
Forward foreign currency exchange contracts	$	0	$	1	$	0	$	0	$	0	$	0
Net investment hedges	0		263		0		0		0		0
Designated interest rate swaps	0		1		0		0		0		0
Total derivative liabilities	$	0	$	265	$	0	$	0	$	0	$	0

The Company’s long-term debt obligations are recorded in its consolidated balance sheets at carrying values, which may differ from the related fair values. The fair value of the Company’s long-term debt is estimated using external pricing data, including any available quoted market prices and based on other debt instruments with similar characteristics. Borrowings under revolving credit agreements, if outstanding, are recorded at carrying value, which approximates fair value due to the frequent nature of such borrowings and repayments. See Note 12 for detailed information ~~relating~~related to carrying values of the Company’s outstanding debt. The following table summarizes the carrying values and estimated fair values of the Company’s short- and long-term debt, based on Level 2 measurements (in millions):


		March 28, 2020						March 30, 2019							March 27, 2021				March 28, 2020
		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value			Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
4.000% Senior Notes		$	446	$	443	$	445	$	438
Senior Notes due 2024										Senior Notes due 2024	$	447	$	470	$	446	$	443
Term Loan	Term Loan	$	1,010	$	957	$	1,570	$	1,574	Term Loan	$	865	$	866	$	1,010	$	957
Revolving Credit Facilities	Revolving Credit Facilities	$	720	$	720	$	550	$	550	Revolving Credit Facilities	$	0	$	0	$	720	$	720

The Company’s cash and cash equivalents, accounts receivable and accounts payable, are recorded at carrying value, which approximates fair value.

100

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Non-Financial Assets and Liabilities

The Company’s non-financial assets include goodwill, intangible assets, operating lease right-of-use assets and property and equipment. Such assets are reported at their carrying values and are not subject to recurring fair value measurements. The Company’s goodwill and its indefinite-lived intangible assets (Versace and Jimmy Choo brands) are assessed for impairment at least annually, while its other long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The fair values of these assets were determined based on Level 3 measurements using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.

The following table details the carrying values and fair values of the Company’s assets that have been impaired (in millions):


									Carrying Value Prior to Impairment		Fair Value		Impairment Charge (1)
Fiscal 2021:								Fiscal 2021:
Operating Lease Right-of-Use Assets								Operating Lease Right-of-Use Assets	$	326	$	191	$	135
Goodwill								Goodwill	319		225		94
Brands								Brands	407		338		69
Property and Equipment								Property and Equipment	30		7		23
Total								Total	$	1,082	$	761	$	321
		Carrying Value Prior to Impairment		Fair Value		Impairment Charge
Fiscal 2020:	Fiscal 2020:							Fiscal 2020:
Operating Lease Right-of-Use Assets	Operating Lease Right-of-Use Assets	$	717	$	437	$	280	Operating Lease Right-of-Use Assets	$	717	$	437	$	280
Trade Name		547		367		180
Brands								Brands	547		367		180
Goodwill	Goodwill	474		303		171		Goodwill	474		303		171
Property and Equipment	Property and Equipment	105		28		77		Property and Equipment	105		28		77
Total	Total	$	1,843	$	1,135	$	708	Total	$	1,843	$	1,135	$	708

Fiscal 2019:	Fiscal 2019:							Fiscal 2019:
Property and Equipment	Property and Equipment	$	26	$	7	$	19	Property and Equipment	26		7		19
Lease Rights	Lease Rights	3		1		2		Lease Rights	3		1		2

Total	Total	$	29	$	8	$	21	Total	$	29	$	8	$	21

Fiscal 2018:
Property and Equipment		$	31	$	3	$	28
Lease Rights		5		1		4
Customer relationships		1		—		1
Total		$	37	$	4	$	33

~~Please refer~~(1)Includes $5 million of impairment charges that were recorded within restructuring and other charges related to ~~Note 8 and Note 9 for additional information.~~

~~Table of Contents~~the Capri Retail Store Optimization Program during the Fiscal 2021.

In addition to the impairment charges above, the Company recorded an adjustment to reduce its March 31, 2019 opening balance of retained earnings by $152 million, net of tax, reflecting impairments of operating lease right-of-use assets for certain underperforming real estate locations for which the carrying value of the opening operating lease right-of-use asset exceeded its related fair value. Property and equipment related to these underperforming locations were fully impaired due to the adoption of ASU 2016-02. See Note 2 and Note 4 for additional information.

There were 0 impairment charges related to goodwill or indefinite-lived intangible assets in Fiscal ~~2019 and Fiscal 2018.~~2019.

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15. Derivative Financial Instruments

Forward Foreign Currency Exchange Contracts

The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain of its transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to certain forecasted inventory purchases by using forward foreign currency exchange contracts. The Company only enters into derivative instruments with highly credit-rated counterparties. The Company does not enter into derivative contracts for trading or speculative purposes.

On September 24, 2018, in connection with the acquisition of Versace, the Company entered into forward foreign currency exchange contracts with a total notional amount of €1.680 billion (approximately $2.001 billion) to mitigate its foreign currency exchange risk through the expected closing date of the acquisition. ~~These~~This derivative ~~contracts were~~contract was not designated as an accounting ~~hedges~~hedge and ~~were~~was settled on December 21, 2018 as a result of the debt issued in connection with the acquisition of Versace (see Note 12 for further information). Changes in fair value were recorded to foreign currency (gain) loss in the Company’s consolidated statement of operations and comprehensive (loss) income for Fiscal 2019.

On July 25, 2017, in connection with the acquisition of Jimmy Choo, which closed on November 1, 2017, the Company entered into a forward foreign currency exchange contract with a notional amount of £1.115 billion (approximately $1.469 billion) to mitigate its foreign currency exchange risk through the date of the acquisition. This derivative contract was not designated as an accounting hedge and was settled on October 30, 2017. Changes in fair value were recorded to foreign currency (gain) loss in the Company’s consolidated statement of operations and comprehensive income for the Fiscal 2018.

Net Investment Hedges

As of March ~~28, 2020,~~27, 2021, the Company had 1multiple fixed-to-fixed cross-currency swap ~~agreement~~agreements with aaggregate notional ~~amount~~amounts of ~~$44~~$3 billion to hedge its net investment in Euro-denominated subsidiaries and $194 million to hedge its net investment in Japanese Yen-denominated subsidiaries against future volatility in the exchange ~~rate~~rates between the U.S. Dollar and ~~the Japanese Yen.~~these currencies. Under the term of ~~this contract, which has a maturity date of November 2024,~~these contracts, the Company will exchange the semi-annual fixed rate payments on U.S. denominated debt for fixed rate payments of ~~0.89%~~0% to 4.508% in Euros and 0% to 3.588% in Japanese Yen. ~~This contract has~~Certain of these contracts include mandatory early termination dates between November 2022 and February 2026, while the remaining contracts have maturity dates between July 2022 and August 2027. These contracts have been designated as a net investment ~~hedge.~~hedges

During the fourth quarter of Fiscal 2020, the Company terminated all of its net investment hedges related to its Euro-denominated subsidiaries. The early termination of these hedges resulted in the Company receiving $296 million in cash during the fourth quarter of Fiscal 2020. This resulted in a pre-tax gain of $211 million being recognized in ~~OCI~~other comprehensive income (loss) ("OCI") during the fourth quarter of Fiscal 2020.

When a cross-currency swap is used as a hedging instrument in a net investment hedge assessed under the spot method, the cross-currency basis spread is excluded from the assessment of hedge effectiveness and is recognized as a reduction in interest expense in the Company’s consolidated statements of operations and comprehensive (loss) income. Accordingly, the Company recorded a reduction in interest expense of $16 million, $71 million and $17 million, respectively, during Fiscal 2021, Fiscal 2020 and Fiscal 2019.

Interest Rate Swap

As of March 27, 2021, the Company had an interest rate swap with an initial notional amount of $500 million that will decrease to $350 million in April 2022. The swap was designated as a cash flow hedge designed to mitigate the impact of adverse interest rate fluctuations for a portion of the Company’s variable-rate debt equal to the notional amount of the swap. The interest rate swap converts the one-month Adjusted LIBOR interest rate on these borrowings to a fixed interest rate of 0.237% through December 2022.

When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive income (loss) and are reclassified into interest expense in the same period during which the hedged transactions affect earnings. During Fiscal 2021, the Company recorded an immaterial amount of interest expense related to this agreement.

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The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the consolidated balance sheets as of March ~~28, 2020~~27, 2021 and March ~~30, 2019~~28, 2020 (in millions):


						Fair Values																								Fair Values
		Notional Amounts							Assets									Liabilities ⁽²⁾						Notional Amounts						Assets		Liabilities
		March 28, 2020		March 30, 2019		March 28, 2020			March 30, 2019			March 28, 2020		March 30, 2019			March 27, 2021		March 28, 2020		March 27, 2021			March 28, 2020			March 27, 2021			March 28, 2020
Designated forward foreign currency exchange contracts	Designated forward foreign currency exchange contracts	$	161	$	166	$	1	⁽¹⁾	$	5	⁽¹⁾	$	—	$	—	Designated forward foreign currency exchange contracts	$	155	$	161	$	2	(1)	$	1	(1)	$	1	(2)	$	0
Designated net investment hedge	Designated net investment hedge	44		2,234		3		⁽³⁾	37		⁽³⁾	—		—		Designated net investment hedge	3,194		44		3		(3)	3		(3)	263		(4)	0
Designated interest rate swap																Designated interest rate swap	500		0		0			0			1		(4)	0
Total designated hedges	Total designated hedges	205		2,400		4			42			—		—		Total designated hedges	3,849		205		5			4			265			0
Undesignated derivative contracts ⁽⁴⁾		—		199		—			—			—		5
Undesignated derivative contracts (5)																Undesignated derivative contracts (5)	13		0		0			0			0			0
Total	Total	$	205	$	2,599	$	4		$	42		$	—	$	5	Total	$	3,862	$	205	$	5		$	4		$	265		$	0

⁽¹⁾Recorded within prepaid expenses and other current assets in the Company’s ~~audited~~ consolidated balance sheets.

⁽²⁾Recorded within accrued expenses and other current liabilities in the Company’s ~~audited~~ consolidated balance sheets.

⁽³⁾Recorded within other assets in the Company’s ~~audited~~ consolidated balance sheets.

⁽⁴⁾Recorded within other long-term liabilities in the Company’s consolidated balance sheets.

(5)Primarily includes undesignated hedges of ~~foreign currency denominated intercompany balances and~~ inventory purchases.

The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheets on a gross basis, as shown in the above table. However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to set-off amounts for similar transactions denominated in the same currencies, the resulting impact as of March ~~28, 2020~~27, 2021 and March ~~30, 2019~~28, 2020 would be as follows (in millions):


		Forward Currency Exchange Contracts						Net Investment Hedges							Forward Currency Exchange Contracts				Net Investment Hedges				Interest Rate Swap
		March 28, 2020		March 30, 2019		March 28, 2020		March 30, 2019			March 27, 2021		March 28, 2020		March 27, 2021		March 28, 2020		March 27, 2021		March 28, 2020
Assets subject to master netting arrangements	Assets subject to master netting arrangements	$	1	$	5	$	3	$	37	Assets subject to master netting arrangements	$	2	$	1	$	3	$	3	$	0	$	0
Liabilities subject to master netting arrangements	Liabilities subject to master netting arrangements	$	—	$	5	$	—	$	—	Liabilities subject to master netting arrangements	$	1	$	0	$	263	$	0	$	1	$	0
Derivative assets, net	Derivative assets, net	$	1	$	5	$	3	$	37	Derivative assets, net	$	1	$	1	$	3	$	3	$	0	$	0
Derivative liabilities, net	Derivative liabilities, net	$	—	$	5	$	—	$	—	Derivative liabilities, net	$	0	$	0	$	263	$	0	$	1	$	0

The Company’s master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties.

Changes in the fair value of the Company’s forward foreign currency exchange contracts that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income (loss), and are reclassified from accumulated other comprehensive income (loss) into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of sales within the Company’s consolidated statements of operations and comprehensive ~~income~~ (loss). income. The net gain or loss on net investment hedges are reported within foreign currency translation gains and losses (“CTA”) as a component of accumulated other comprehensive income (loss) on the Company’s consolidated balance sheets. Upon discontinuation of the hedge, such amounts remain in CTA until the related net investment is sold or liquidated. Changes in the fair value of the Company’s interest rate swaps that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income (loss) and are reclassified from accumulated other comprehensive income (loss) into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of interest expense within the Company’s consolidated statements of operations and comprehensive (loss) income.

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The following table summarizes the pre-tax impact of the gains and losses on the Company's designated forward foreign currency exchange contracts, ~~and~~ net investment hedges and interest rate swaps (in millions):


		Fiscal Year Ended March 28, 2020		Fiscal Year Ended March 30, 2019		Fiscal Year Ended March 31, 2018			Fiscal Year Ended March 27, 2021		Fiscal Year Ended March 28, 2020		Fiscal Year Ended March 30, 2019
		Pre-Tax Gains Recognized in OCI		Pre-Tax Gains Recognized in OCI		Pre-Tax Loss Recognized in OCI			Pre-Tax Losses Recognized in OCI		Pre-Tax Gains Recognized in OCI		Pre-Tax Gains Recognized in OCI
Designated forward foreign currency exchange contracts	Designated forward foreign currency exchange contracts	$	6	$	16	$	(22)	Designated forward foreign currency exchange contracts	$	(2)	$	6	$	16
Designated net investment hedges	Designated net investment hedges	$	264	$	47	$	—	Designated net investment hedges	$	(263)	$	264	$	47
Designated interest rate swaps								Designated interest rate swaps	$	(1)	$	0	$	0

The following tables summarize the impact of the gains and losses within the consolidated statements of operations and comprehensive (loss) income related to the designated forward foreign currency exchange contracts ~~for Fiscal 2020 and Fiscal 2019~~ (in millions):

Fiscal Year Ended
Pre-Tax Losses (Gains) Reclassified from
Accumulated OCI Location of Losses (Gains) Recognized Total Cost of Sales
March 28, 2020 March 30, 2019 March 31, 2018 March 28, 2020 March 30, 2019 March 31, 2018
Designated forward currency exchange contracts $ (10) $ 4 $ 4 Cost of Sales $ 2,280 $ 2,058 $ 1,860


	Fiscal Year Ended
	Pre-Tax (Gains) Losses Reclassified from Accumulated OCI						Location of (Gains) Losses Recognized
	March 27, 2021		March 28, 2020		March 30, 2019
Designated forward currency exchange contracts	$	(2)	$	(10)	$	4	Cost of Sales

The Company expects that substantially all of the amounts recorded in accumulated other comprehensive income (loss) for its forward foreign currency exchange contracts will be reclassified into earnings during the next 12 months, based upon the timing of inventory purchases and turnover.

Undesignated Hedges

During Fiscal ~~2020, Fiscal 2019~~2021 and Fiscal ~~2018,~~2020, the Company recognized an immaterial amount of net gains and losses and during Fiscal 2019, the Company recognized a net ~~losses~~loss of $78 million within foreign currency (gain) loss in the Company’s consolidated statement of operations and ~~net gains~~comprehensive (loss) income as a result of ~~$3 million respectively, related to~~the changes in the fair value of undesignated forward foreign currency ~~exchange contracts within foreign currency loss (gain) in the Company’s consolidated statements of operations and comprehensive income.~~contracts. The Fiscal 2019 amount was primarily comprised of a $77 million loss related to the derivative contracts entered into on September 25, 2018 to mitigate foreign currency exchange risk associated with the Versace acquisition that were settled on December 21, 2018.

16. Shareholders’ Equity

Share Repurchase Program

During the first quarter of Fiscal ~~2020,~~2021, the Company ~~repurchased 2,711,807~~suspended its $500 million share-repurchase program in response to the continued impact of the COVID-19 pandemic. During Fiscal 2021, the Company did 0t purchase any shares through open market transactions ~~at a cost of $100 million~~ under ~~its new $500 million share-repurchase program, which was authorized by~~ the Company’s Board of Directors on August 1, 2019 and which expires on August 1, 2021. During Fiscal 2019, the Company repurchased 3,718,237 shares through open market transactions at a cost of $200 million under its previous $1.0 billion share-repurchase program, which expired on May 25, 2019.current plan. As of March ~~28, 2020,~~27, 2021, the remaining availability under the Company’s share repurchase program was $400 million. Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading transactions under the Company’s insider trading policy and other relevant factors. The program may be suspended or discontinued at any time.

The ~~share repurchase program was suspended on April 6, 2020 in response to the continued global health and economic impact of the COVID-19 pandemic.~~

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~~The~~ Company also has in place a “withhold to cover” repurchase program, which allows the Company to withhold ordinary shares from certain executive officers and directors to satisfy minimum tax withholding obligations relating to the vesting of their restricted share awards. During Fiscal ~~2020~~2021 and Fiscal ~~2019,~~2020, the Company withheld ~~63,958~~48,528 shares and ~~107,712~~63,958 shares, respectively, with a fair value of $2$1 million and $7$2 million, respectively, in satisfaction of minimum tax withholding obligations relating to the vesting of restricted share awards.

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Accumulated Other Comprehensive Income (Loss)

The following table details changes in the components of accumulated other comprehensive income (loss) ("AOCI"), net of taxes for Fiscal 2021, Fiscal 2020 and Fiscal 2019 ~~and Fiscal 2018~~ (in millions):


		Foreign Currency Translation (Losses) Gains ⁽¹⁾		Net Gains (Losses) on Derivatives ⁽²⁾		Other Comprehensive (Loss)/Gain Attributable to Capri			Foreign Currency Translation Income (Loss) (1)		Net (Loss) Income on Derivatives (2)		Other Comprehensive Income (Loss) Attributable to Capri
Balance at April 1, 2017		$	(87)	$	6	$	(81)
Other comprehensive income (loss) before reclassifications		148		(19)		129
Less: amounts reclassified from AOCI to earnings		—		(3)		(3)
Other comprehensive income (loss), net of tax		148		(16)		132
Balance at March 31, 2018		61		(10)		51
Balance at April 1, 2018								Balance at April 1, 2018	$	61	$	(10)	$	51
Other comprehensive (loss) income before reclassifications	Other comprehensive (loss) income before reclassifications	(134)		14		(120)		Other comprehensive (loss) income before reclassifications	(134)		14		(120)
Less: amounts reclassified from AOCI to earnings	Less: amounts reclassified from AOCI to earnings	—		(3)		(3)		Less: amounts reclassified from AOCI to earnings	0		(3)		(3)
Other comprehensive (loss) income, net of tax	Other comprehensive (loss) income, net of tax	(134)		17		(117)		Other comprehensive (loss) income, net of tax	(134)		17		(117)
Balance at March 30, 2019	Balance at March 30, 2019	(73)		7		(66)		Balance at March 30, 2019	(73)		7		(66)
Other comprehensive income before reclassifications	Other comprehensive income before reclassifications	145		5		150		Other comprehensive income before reclassifications	145		5		150
Less: amounts reclassified from AOCI to earnings	Less: amounts reclassified from AOCI to earnings	—		9		9		Less: amounts reclassified from AOCI to earnings	0		9		9
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	145		(4)		141		Other comprehensive income (loss), net of tax	145		(4)		141
Balance at March 28, 2020	Balance at March 28, 2020	$	72	$	3	$	75	Balance at March 28, 2020	72		3		75
Other comprehensive loss before reclassifications								Other comprehensive loss before reclassifications	(15)		(2)		(17)
Less: amounts reclassified from AOCI to earnings								Less: amounts reclassified from AOCI to earnings	0		2		2
Other comprehensive loss, net of tax								Other comprehensive loss, net of tax	(15)		(4)		(19)
Balance at March 27, 2021								Balance at March 27, 2021	$	57	$	(1)	$	56

⁽¹⁾Foreign currency translation ~~gains~~losses for Fiscal 2021 primarily include a $199 million loss, net of taxes of $63 million, primarily relating to the Company’s net investment hedges, a net $189 million translation gain and ~~losses include~~a net ~~gains~~loss of $6$8 million, ~~for both Fiscal 2020 and Fiscal 2019,~~ on intra-entity transactions that are of a long-term investment nature. Foreign currency translation ~~losses~~gains for Fiscal 2020 ~~include~~includes a $219 million gain, net of taxes of $45 million, relating to the Company's net investment hedges, a $60 million translation loss relating to the Jimmy Choo business, a $10 million translation loss relating to the Versace business and a ~~$219~~net gain of $6 million, ~~gain, net~~on intra-entity transactions that are of ~~taxes of $45 million relating to the Company’s net~~a long-term investment hedges. Foreign currency translation losses for Fiscal 2019 includes an $105 million translation loss relating to the Jimmy Choo business, a $33 million translation loss relating to the Versace business and a $39 million gain, net of taxes of $8 million relating to the Company's net investment hedges.nature.

⁽²⁾Reclassified amounts relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations and comprehensive (loss) income. Other comprehensive income (loss) before reclassifications related to derivative instruments for Fiscal ~~2020~~2021 was immaterial. Other comprehensive income (loss) before reclassifications related to derivative instruments for Fiscal ~~2019~~2020 and Fiscal ~~2018~~2019 is net of a tax benefits of $2$0 million and $3$2 million, respectively. All tax effects were not material for the periods presented.

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17. Share-Based Compensation

The Company ~~issues~~grants equity ~~grants~~awards to certain employees and directors of the Company at the discretion of the Company’s Compensation and Talent Committee. The Company has 2 equity plans which includes 1 stock option plan adopted in Fiscal 2008 (as amended and restated, the “2008 Plan”), and an Omnibus Incentive Plan adopted in the third fiscal quarter of Fiscal 2012 and amended and restated with shareholder approval in May 2015 and again in June 2020 (the “Incentive Plan”). The 2008 Plan only provided for grants of share options and was authorized to issue up to 23,980,823 ordinary shares. As of March ~~28, 2020,~~27, 2021, there were 0 shares available to grant equity awards under the 2008 Plan. The Incentive Plan allows for grants of share options, restricted shares and ~~RSUs,~~restricted stock units ("RSUs"), and other equity awards, and authorizes a total issuance of up to ~~15,246,000~~18,846,000 ordinary shares. At March ~~28, 2020,~~27, 2021, there were ~~2,686,919~~4,998,829 ordinary shares available for future grants of equity awards under the Incentive Plan. Option grants issued from the 2008 Plan generally expire ten years from the date of the grant, and those issued under the Incentive Plan generally expire seven years from the date of the grant.

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Share Options

Share options are generally exercisable at the fair market value on the date of grant and vest on a pro-rata basis over a four year service period. The following table summarizes the share options activity during Fiscal ~~2020,~~2021, and information about options outstanding at March ~~28, 2020:~~27, 2021:


		Number of Options	Weighted Average Exercise price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in millions)			Number of Options	Weighted Average Exercise price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in millions)
Outstanding at March 30, 2019		2,131,259	$	50.67
Outstanding at March 28, 2020								Outstanding at March 28, 2020	2,071,096	$	50.66
Granted	Granted	—	$	—				Granted	0	$	0
Exercised	Exercised	(6,682)	$	27.01				Exercised	(446,564)	$	6.06
Canceled/forfeited	Canceled/forfeited	(53,481)	$	53.79				Canceled/forfeited	(474,272)	$	61.73
Outstanding at March 28, 2020		2,071,096	$	50.66	1.86	$	3
Vested or expected to vest at March 28, 2020		2,071,096	$	50.66	1.86
Vested and exercisable at March 28, 2020		1,785,076	$	49.90	1.41	$	3
Outstanding at March 27, 2021								Outstanding at March 27, 2021	1,150,260	$	63.42	1.67	$	4
Vested or expected to vest at March 27, 2021								Vested or expected to vest at March 27, 2021	1,150,260	$	63.42	1.67
Vested and exercisable at March 27, 2021								Vested and exercisable at March 27, 2021	1,014,945	$	64.01	1.37	$	4

There were ~~286,020~~135,315 unvested options and ~~1,785,076~~1,014,945 vested options outstanding at March ~~28, 2020.~~27, 2021. The total intrinsic value of options exercised during Fiscal ~~2020~~2021 was ~~immaterial~~$10 million and ~~$94 million~~immaterial during Fiscal ~~2019.~~2020. The cash received from options exercised during Fiscal ~~2020~~2021 was ~~immaterial~~$3 million and ~~$29 million~~immaterial during Fiscal ~~2019.~~2020. As of March ~~28, 2020,~~27, 2021, the remaining unrecognized share-based compensation expense for ~~nonvested~~unvested share options was $2$1 million, which is expected to be recognized over the related weighted-average period of approximately ~~1.80~~1.05 years.

There were no options granted during Fiscal 2021 or Fiscal 2020. The weighted average grant date fair value for options granted during Fiscal 2019 ~~and Fiscal 2018~~ was ~~$24.49 and $11.62, respectively.~~$24.49. The following table represents assumptions used to estimate the fair value of ~~options:~~options for the fiscal year ended March 30, 2019:

Fiscal Years Ended
March 28,
2020 March 30,
2019 March 31,
2018
Expected dividend yield N/A 0.0 % 0.0 %
Volatility factor N/A 36.9 % 36.3 %
Weighted average risk-free interest rate N/A 2.8 % 1.8 %
Expected life of option N/A 4.85 years 4.69 years



	March 30, 2019
Expected dividend yield	0.0	%
Volatility factor	36.9	%
Weighted average risk-free interest rate	2.8	%
Expected life of option	4.85 years

Restricted Awards

The Company grants ~~restricted share units~~RSUs at the fair market value on the date of the grant. ~~Expense for restricted awards~~The expense related to RSUs is based on the closing market price of the Company’s shares on the date of grant and is recognized ratably over the vesting period, net of expected forfeitures.

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The Company grants 2 types of ~~restricted stock unit ("RSU") awards:~~RSUs: time-based RSUs and performance-based RSUs. Time-based RSUs generally vest in full ~~either generally around~~on the first anniversary of the date of grant for our independent directors, or in equal increments on each of the ~~four~~third or fourth anniversaries of the date of ~~grant.~~grant (unless the employee is retirement-eligible). Performance-based RSUs generally vest in full on the second or third anniversary of the date of grant, subject to the employee’s continued employment during the vesting period ~~(unless the employee is retirement-eligible)~~ and only if certain pre-established cumulative performance targets are met. Expense related to performance-based RSUs is recognized ratably over the performance period, net of forfeitures, based on the probability of attainment of the related performance targets. The potential number of shares that may be earned ranges from 0%, if the minimum level of performance is not attained, to 150%, if the level of performance is at or above the predetermined maximum achievement level.

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The following table summarizes the RSU activity during Fiscal ~~2020:~~2021:


		Service-based				Performance-based						Service-based			Performance-based
		Number of Restricted Share Units	Weighted Average Grant Date Fair Value		Number of Restricted Share Units	Weighted Average Grant Date Fair Value			Number of Restricted Stock Units	Weighted Average Grant Date Fair Value		Number of Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested at March 30, 2019		3,839,862	$	46.11	737,074	$	52.34
Unvested at March 28, 2020								Unvested at March 28, 2020	4,311,683	$	40.34	772,172	$	49.13
Granted	Granted	1,987,450	$	33.92	169,817	$	33.86	Granted	2,349,594	$	19.21	12,318	$	39.43
Decrease due to performance condition		—	$	—	(39,999)	$	49.88
Change due to performance conditions								Change due to performance conditions	0	$	0	43,661	$	57.70

Vested	Vested	(1,209,177)	$	46.62	(53,025)	$	49.88	Vested	(1,354,285)	$	41.46	(102,078)	$	34.68
Canceled/forfeited	Canceled/forfeited	(306,452)	$	45.70	(41,695)	$	41.97	Canceled/forfeited	(411,475)	$	40.18	(144,414)	$	61.07
Unvested at March 28, 2020		4,311,683	$	40.34	772,172	$	49.13
Unvested at March 27, 2021								Unvested at March 27, 2021	4,895,517	$	29.91	581,659	$	49.17

The total fair value of service-based RSUs vested during Fiscal 2021, Fiscal 2020 and Fiscal 2019 ~~and Fiscal 2018~~ was $56 million, ~~$47~~$56 million and ~~$18~~$47 million, respectively. The total fair value of performance-based RSUs vested during Fiscal 2021, Fiscal 2020 and Fiscal 2019 ~~and Fiscal 2018~~ was $6 million, $3 million ~~$7 million~~ and $4$7 million, respectively. As of March ~~28, 2020,~~27, 2021, the remaining unrecognized share-based compensation expense for ~~non-vested~~unvested service-based and performance-based RSU grants was ~~$111~~$86 million and $7$4 million, respectively, which is expected to be recognized over the related weighted-average periods of approximately ~~3.01~~2.32 years and ~~1.45~~1.15 years, respectively.

There were 0 ~~non-vested~~ restricted shares vested during Fiscal 2021 or Fiscal 2020. The total fair value of restricted shares vested was $4 million ~~and $4 million~~ during Fiscal ~~2019 and Fiscal 2018, respectively.~~2019.

Share-Based Compensation Expense

The following table summarizes compensation expense attributable to share-based compensation for Fiscal 2021, Fiscal 2020 and Fiscal 2019 ~~and Fiscal 2018~~ (in millions):


		Fiscal Years Ended											Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
Share-based compensation expense	Share-based compensation expense	$	70	$	60	$	50	Share-based compensation expense	$	70	$	70	$	60
Tax benefits related to share-based compensation expense	Tax benefits related to share-based compensation expense	$	7	$	11	$	10	Tax benefits related to share-based compensation expense	$	12	$	7	$	11

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on its historical forfeiture ~~rate to date.~~rates. The estimated value of future forfeitures for equity ~~grants~~awards as of March ~~28, 2020~~27, 2021 is ~~approximately $22~~$13 million.

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18. Taxes

The Company is a United Kingdom tax resident and is incorporated in the British Virgin Islands. Capri’s subsidiaries are subject to taxation in the U.S. and various other foreign jurisdictions, which are aggregated in the “Non-U.S.” information captioned below.

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~~(Loss) income~~Income (loss) before provision for income taxes consisted of the following (in millions):


		Fiscal Years Ended											Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
U.S.	U.S.	$	(28)	$	191	$	124	U.S.	$	(56)	$	(28)	$	191
Non-U.S.	Non-U.S.	(187)		430		618		Non-U.S.	59		(187)		430
Total (loss) income before provision for income taxes		$	(215)	$	621	$	742
Total income (loss) before provision for income taxes								Total income (loss) before provision for income taxes	$	3	$	(215)	$	621

The provision for income taxes was as follows (in millions):


		Fiscal Years Ended															Fiscal Years Ended
		March 28, 2020			March 30, 2019			March 31, 2018				March 27, 2021		March 28, 2020			March 30, 2019
Current	Current										Current
U.S. Federal	U.S. Federal	$	4	(3)	$	82	⁽²⁾	$	48		U.S. Federal	$	35	$	4	(2)	$	82	(1)
U.S. State	U.S. State	19			24			16			U.S. State	20		19			24
Non-U.S.	Non-U.S.	60			44			77			Non-U.S.	81		60			44
Total current	Total current	83			150			141			Total current	136		83			150
Deferred	Deferred										Deferred
U.S. Federal	U.S. Federal	(22)			(34)		⁽²⁾	24		⁽¹⁾	U.S. Federal	(37)		(22)			(34)		(1)
U.S. State	U.S. State	(3)			(4)			1			U.S. State	(4)		(3)			(4)
Non-U.S.	Non-U.S.	(48)			(33)			(16)			Non-U.S.	(29)		(48)			(33)
Total deferred	Total deferred	(73)			(71)			9			Total deferred	(70)		(73)			(71)
Total provision for income taxes	Total provision for income taxes	$	10		$	79		$	150		Total provision for income taxes	$	66	$	10		$	79

⁽¹⁾~~Includes an $18 million provision related to the U.S. Tax Act one time revaluation of deferred tax assets.~~

⁽²⁾Includes a $25 million current tax provision and ~~equal~~ deferred tax benefit related to the U.S. Tax Act impact to business interest disallowance provisions.

⁽³⁾(2)Includes a $35 million current tax benefit due to a release of income tax reserves in the U.S.

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The Company’s provision for income taxes for the years ended March 27, 2021, March 28, 2020 and March 30, 2019 ~~and March 31, 2018~~ was different from the amount computed by applying the statutory U.K. income tax ~~rate~~rates to the underlying income (loss) ~~income~~ from operations before income taxes as a result of the ~~following:~~following (amounts in millions):


												Fiscal Years Ended
		Fiscal Years Ended															March 27, 2021					March 28, 2020					March 30, 2019
		March 28, 2020			March 30, 2019			March 31, 2018				Amount		% (1)			Amount		% (1)			Amount		% (1)
Provision for income taxes at the U.K. statutory tax rate	Provision for income taxes at the U.K. statutory tax rate	19.0	%		19.0	%		19.0	%		Provision for income taxes at the U.K. statutory tax rate	$	1	19.0	%		$	(41)	19.0	%		$	118	19.0	%
State and local income taxes, net of federal benefit		(1.9)	%		0.9	%		0.5	%
Effects of global financing arrangements	Effects of global financing arrangements	21.7	%	(4)	(8.1)	%		(15.6)	%		Effects of global financing arrangements	(24)		(953.4)	%		(41)		21.7	%	(4)	(50)		(8.1)	%
U.S. tax reform		—	%		—	%		2.0	%	⁽¹⁾
Effect of changes in valuation allowances on deferred tax assets											Effect of changes in valuation allowances on deferred tax assets	24		955.7	%		67		(30.9)	%	(5)	11		2.8	%	(3)
Non-deductible goodwill impairment											Non-deductible goodwill impairment	18		700.2	%	(6)	32		(15.1)	%	(6)	0		0	%
Differences in tax effects on foreign income	Differences in tax effects on foreign income	1.2	%		(1.8)	%	⁽²⁾	6.7	%		Differences in tax effects on foreign income	13		522.4	%		(7)		1.2	%		(15)		(1.8)	%	(2)
Liability for uncertain tax positions	Liability for uncertain tax positions	5.7	%		1.3	%		6.6	%		Liability for uncertain tax positions	11		414.2	%		(12)		5.7	%		8		1.3	%
Effect of changes in valuation allowances on deferred tax assets		(30.9)	%	(5)	2.8	%	⁽³⁾	0.3	%
Excess tax benefits related to stock-based compensation		(4.2)	%		(2.6)	%		(0.8)	%
Transaction costs		—	%		1.5	%		0.9	%
Tax rate change impact on deferred items											Tax rate change impact on deferred items	9		351.3	%		0		0	%		0		0	%
Share based compensation											Share based compensation	6		247.7	%		9		(4.2)	%		(12)		(2.6)	%
State and local income taxes, net of federal benefit											State and local income taxes, net of federal benefit	5		201.5	%		4		(1.9)	%		6		0.9	%
Withholding tax	Withholding tax	(1.6)	%		0.6	%		1.2	%		Withholding tax	4		165.0	%		3		(1.6)	%		3		0.6	%
Nondeductible goodwill impairment		(15.1)	%	(6)	—	%		—	%
Transaction cost											Transaction cost	0		0	%		0		0	%		9		1.5	%
Other	Other	1.4	%		(0.9)	%		(0.6)	%		Other	(1)		(33.1)	%	(7)	(4)		1.4	%		1		(0.9)	%
Effective tax rate		(4.7)	%		12.7	%		20.2	%
												$	66	2,590.5	%		$	10	(4.7)	%		$	79	12.7	%

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⁽¹⁾~~Includes an $18 million expense related to the re-measurement of certain net deferred tax assets in connection with U.S.~~ Tax ~~Act.~~rates are calculated using unrounded numbers.

⁽²⁾Mainly attributable to the United States statutory federal income tax rate change from a blended rate for Fiscal 2018 of 31.54% to 21% in Fiscal 2019.

⁽³⁾Includes an $11 million provision related to a United Kingdom capital loss.

⁽⁴⁾Mainly attributable to pre-tax loss position in Fiscal ~~2020~~2020.

⁽⁵⁾Mainly attributable to valuation allowances established on a portion of ~~Non-US~~non-U.S. deferred tax ~~assets~~assets.

⁽⁶⁾Attributable to ~~the~~goodwill impairment charges related to Jimmy Choo ~~brand intangible that was impaired~~reporting units in Fiscal ~~2020~~2021 and Fiscal 2020.

(7)Primarily relates to individually immaterial U.S. and foreign permanent adjustments.

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Significant components of the Company’s deferred tax assets (liabilities) consist of the following (in millions):


		Fiscal Years Ended							Fiscal Years Ended
		March 28, 2020		March 30, 2019			March 27, 2021		March 28, 2020
Deferred tax assets	Deferred tax assets					Deferred tax assets
Operating lease liabilities	Operating lease liabilities	521		—		Operating lease liabilities	501		521
Net operating loss carryforwards	Net operating loss carryforwards	109		61		Net operating loss carryforwards	139		109
Depreciation						Depreciation	54		33
Sales allowances						Sales allowances	50		37
Accrued Interest	Accrued Interest	40		41		Accrued Interest	44		40
Sales allowances		37		26
Derivative Financial Instruments						Derivative Financial Instruments	32		0
Inventories	Inventories	34		22		Inventories	25		34
Depreciation		33		18
Stock compensation	Stock compensation	13		13		Stock compensation	12		13
Payroll related accruals	Payroll related accruals	3		2		Payroll related accruals	3		3
Deferred rent		—		34
Other	Other	—		31		Other	42		0
		790		248
Total deferred tax assets						Total deferred tax assets	902		790
Valuation allowance	Valuation allowance	(134)		(40)		Valuation allowance	(159)		(134)
Total deferred tax assets		656		208
Net deferred tax assets						Net deferred tax assets	743		656

Deferred tax liabilities	Deferred tax liabilities					Deferred tax liabilities
Goodwill and intangibles	Goodwill and intangibles	(481)		(534)		Goodwill and intangibles	(495)		(481)
Operating lease right-of-use-assets	Operating lease right-of-use-assets	(401)		—		Operating lease right-of-use-assets	(367)		(401)
Other	Other	(14)		—		Other	0		(14)

Total deferred tax liabilities	Total deferred tax liabilities	(896)		(534)		Total deferred tax liabilities	(862)		(896)
Net deferred tax liabilities	Net deferred tax liabilities	$	(240)	$	(326)	Net deferred tax liabilities	$	(119)	$	(240)

The Company maintains valuation allowances on deferred tax assets applicable to subsidiaries in jurisdictions for which separate income tax returns are filed and where realization of the related deferred tax assets from future profitable operations is not reasonably assured. ~~Deferred tax~~The valuation ~~allowances~~allowance increased ~~approximately~~$24 million, $94 million ~~$29 million~~ and $8$26 million in Fiscal 2021, Fiscal 2020 and Fiscal 2019, ~~and Fiscal 2018,~~ respectively. The Company established valuation allowances amounting to approximately $110 million in Fiscal 2020, as a result of the expected inability to realize deferred tax asset balances in certain countries comprising the Company’s North American, European, and Asian operations. Additionally, inIn certain jurisdictions, the Company ~~remeasured and~~ increased the valuation allowance by ~~approximately $3~~$56 million, ~~in Fiscal 2020. The Company also remeasured~~$113 million and ~~reduced the valuation allowance by approximately $19~~$29 million ~~in Fiscal 2020~~ and released valuation allowances of ~~approximately $3~~$32 million, $19 million and $1$3 million in Fiscal ~~2019~~2021, Fiscal 2020 and Fiscal ~~2018,~~2019, respectively.

At March ~~28, 2020,~~27, 2021, the Company had non-U.S. and U.S. net operating loss carryforwards of ~~approximately $570~~$667 million, a portion of which will begin to expire in ~~2020.~~Fiscal 2022.

As of March ~~28, 2020~~27, 2021 and March ~~30, 2019,~~28, 2020, the Company had liabilities related to its uncertain tax positions, including accrued interest, of ~~approximately $109~~$121 million and ~~$203~~$109 million, respectively, which are included in other long-term liabilities in the Company’s consolidated balance sheets. ~~The March 28, 2020 balance, compared to the March 30, 2019 balance, includes the release of income tax reserves in North America and Europe.~~

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The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was ~~approximately$82~~$92 million, ~~$112~~$82 million and ~~$101~~$112 million as of March 27, 2021, March 28, 2020 and March 30, 2019, ~~and March 31, 2018,~~ respectively. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding accrued interest, for Fiscal 2021, Fiscal 2020 and Fiscal 2019, ~~and Fiscal 2018,~~ are presented below (in millions):


		Fiscal Years Ended														Fiscal Years Ended
		March 28, 2020			March 30, 2019			March 31, 2018			March 27, 2021		March 28, 2020			March 30, 2019
Unrecognized tax benefits beginning balance	Unrecognized tax benefits beginning balance	$	192		$	101		$	27	Unrecognized tax benefits beginning balance	$	99	$	192		$	101
Additions related to prior period tax positions	Additions related to prior period tax positions	29			81		⁽¹⁾	30		Additions related to prior period tax positions	12		29			81		(1)
Additions related to current period tax positions	Additions related to current period tax positions	4			21			45		Additions related to current period tax positions	9		4			21
Decreases in prior period positions due to lapses in statute of limitations	Decreases in prior period positions due to lapses in statute of limitations	(3)			(1)			(1)		Decreases in prior period positions due to lapses in statute of limitations	(4)		(3)			(1)
Decreases related to prior period tax positions	Decreases related to prior period tax positions	(99)		(2)	(3)			—		Decreases related to prior period tax positions	(3)		(99)		(2)	(3)
Decreases related to audit settlements	Decreases related to audit settlements	(24)		(3)	(7)			—		Decreases related to audit settlements	(6)		(24)		(3)	(7)
Unrecognized tax benefits ending balance	Unrecognized tax benefits ending balance	$	99		$	192		$	101	Unrecognized tax benefits ending balance	$	107	$	99		$	192

⁽¹⁾Primarily relates to the Versace acquisition.

⁽²⁾Primarily relates to releases of North American and European tax ~~reserves~~reserves.

⁽³⁾Primarily relates to ~~US audit~~the effective settlement of a U.S. audit.

The Company classifies interest and penalties related to unrecognized tax benefits as components of the provision for income taxes. Interest expense recognized in the consolidated statements of operations and comprehensive (loss) income for Fiscal 2021, Fiscal 2020 and Fiscal 2019 ~~and Fiscal 2018~~ was ~~approximately $11~~$15 million, $11 million and $7$11 million, respectively.

The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change based on future events including, but not limited to, the ~~settlements~~settlement of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. The Company anticipates that the balance of gross unrecognized tax benefits, excluding interest and penalties, will be reduced by ~~approximately $8~~$31 million during the next 12 months, primarily due to the anticipated settlement of a tax ~~examination~~examinations as well as statute of limitation expirations. However, the outcomes and timing of such events are highly uncertain and changes in the occurrence, expected outcomes and timing of such events could cause the Company’s current estimate to change materially in the future.

The Company files income tax returns in the ~~U.S., for federal,~~United States and in various foreign, state and local ~~purposes,~~jurisdictions. Most examinations have been completed by tax authorities or the statute of limitations has expired for United States federal, foreign, state and ~~in certain foreign jurisdictions. With few exceptions,~~local income tax returns filed by the Company ~~is no longer subject to examinations by the relevant tax authorities~~ for years ~~prior to its fiscal year ended April 1, 2017.~~through Fiscal 2015 (March 28, 2015).

Prior to the enactment of the Tax Cuts and Jobs Act, the Company's undistributed foreign earnings were considered permanently reinvested and, as such, United States federal and state income taxes were not previously recorded on these earnings. As a result of the Tax Act, substantially all of the Company’s earnings in foreign subsidiaries generated prior to the enactment of the Tax Act were deemed to have been repatriated. It remains the Company's intent to either reinvest indefinitely substantially all of its foreign earnings outside of the United States or repatriate them tax neutrally. However, if future earnings are repatriated, the potential exists that the Company may be required to accrue and pay additional taxes, including any applicable foreign withholding tax and income taxes. It is not practicable to estimate the amount of tax that might be payable if these earnings were repatriated due to the complexities associated with the hypothetical calculation.

Cares Act

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, such as refundable payroll tax credits, deferral of the employer portion of certain payroll taxes, net operating loss carrybacks, modifications to net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act require the Company to make significant judgments and estimates in the interpretation of the law and in the calculation of the provision for income taxes. However, additional guidance may be issued by the Internal Revenue Service (“IRS”), the Department of the Treasury or other governing body that may significantly differ from our interpretation of the law, which may result in a material effect on our business, cash flow, results of operations, or financial conditions.

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19. Retirement Plans

The Company maintains defined contribution plans for employees, who generally become eligible to participate after three months of service. Features of these plans allow participants to contribute to a plan a percentage of their compensation, up to statutory limits depending upon the country in which a plan operates, and provide for mandatory and/or discretionary matching contributions by the Company, which vary by country. During Fiscal 2021, Fiscal 2020, and Fiscal 2019, ~~and Fiscal 2018,~~ the Company recognized expenses of approximately $20 million, $12 million ~~$14 million,~~ and ~~$12~~$14 million, respectively, related to these retirement plans.

20. Segment Information

The Company operates its business through 3 operating segments—Versace, Jimmy Choo and Michael Kors, which are based on its business activities and organization. The reportable segments are segments of the Company for which separate financial information is available and for which operating results are evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to allocate resources, as well as in assessing performance. The primary key performance indicators are revenue and operating income for each segment. The Company’s reportable segments represent components of the business that offer similar merchandise, customer experience and sales/marketing strategies.

The Company’s 3 reportable segments are as follows:

•Versace — segment includes revenue generated through the sale of Versace luxury ready-to-wear, accessories ~~footwear~~ and ~~home furnishings~~footwear through directly operated Versace boutiques throughout North America (United States and Canada), EMEA and certain parts of Asia, as well as through Versace outlet stores and e-commerce sites. In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements that allow third parties to use the Versace trademarks in connection with retail and/or wholesale sales of Versace branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of jeans, fragrances, watches, jewelry, eyewear and ~~eyewear.~~home furnishings.

•Jimmy Choo — segment includes revenue generated through the sale of Jimmy Choo luxury footwear, handbags and small leather goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas, EMEA and certain parts of Asia, through its e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo trademarks in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide. In addition, revenue is generated through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of fragrances ~~sunglasses~~ and eyewear.

•Michael Kors — segment includes revenue generated through the sale of Michael Kors products through ~~four~~4 primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce sites, through which the Company sells Michael Kors products, as well as licensed products bearing the Michael Kors name, directly to ~~the end consumer~~consumers throughout the Americas, Europe and certain parts of Asia. The Company also sells Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops, and to its geographic licensees. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear.

In addition to these reportable segments, the Company has certain corporate costs that are not directly attributable to its brands and, therefore, are not allocated to its segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including enterprise resource planning system implementation costs. In addition, certain other costs are not allocated to segments, including restructuring and other charges (including transition costs related to the Company’s recent acquisitions), impairment costs and COVID-19 related charges. The segment structure is consistent with how the Company’s CODM plans and allocates resources, manages the business and assesses performance. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance.

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The following table presents the key performance information of the Company’s reportable segments (in millions):


			Fiscal Years Ended																						Fiscal Years Ended
			March 28, 2020				March 30, 2019				March 31, 2018						March 27, 2021				March 28, 2020				March 30, 2019
Total revenue:	Total revenue:															Total revenue:
		Versace	$	843			$	137			$	—			Versace		$	718			$	843			$	137
		Jimmy Choo	555				590				223				Jimmy Choo		418				555				590
		Michael Kors	4,153				4,511				4,496				Michael Kors		2,924				4,153				4,511
Total revenue	Total revenue				$	5,551			$	5,238			$	4,719		Total revenue			$	4,060			$	5,551			$	5,238

(Loss) income from operations:
Income (loss) from operations:													Income (loss) from operations:
		Versace	$	(8)			$	(11)			$	—			Versace		$	21			$	(8)			$	(11)
		Jimmy Choo	(13)				20				(4)				Jimmy Choo		(55)				(13)				20
		Michael Kors	850				964				975				Michael Kors		595				850				964
Total segment income from operations	Total segment income from operations				829				973				971			Total segment income from operations			561				829				973
Less:	Less:	Corporate expenses	(152)				(93)				(87)		Less:		Corporate expenses		(152)				(152)				(93)
		Restructuring and other charges	(42)				(124)				(102)				Impairment of assets (1)		(316)				(708)				(21)
		Impairment of assets ⁽¹⁾	(708)				(21)				(33)				COVID-19 related charges (2)		(42)				(119)				0
		COVID-19 related charges ⁽²⁾	(119)				—				—				Restructuring and other charges		(32)				(42)				(124)
Total (loss) income from operations					$	(192)			$	735			$	749
Total income (loss) from operations													Total income (loss) from operations				$	19			$	(192)			$	735

⁽¹⁾Impairment of assets during Fiscal 2021 includes $191 million, $91 million and $34 million of impairment charges related to the Jimmy Choo, Michael Kors and Versace reportable segments, respectively. Impairment of assets during Fiscal 2020 includes $434 million, $187 million and $87 million of impairment charges related to the Jimmy Choo, Michael Kors and Versace reportable segments, respectively. The impairment charges during Fiscal 2019 ~~and Fiscal 2018~~ were primarily related to the Michael Kors reportable segment.

⁽²⁾COVID-19 related charges during Fiscal 2021 primarily include net incremental inventory reserves and severance expense of $10 million and $24 million, respectively, recorded within costs of goods sold and selling, general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income. COVID-19 related charges during Fiscal 2020, primarily include additional inventory reserves and ~~bad debt expense~~credit losses of $92 million and $25 million, respectively, recorded within costs of goods sold and selling, general and administrative expenses in the consolidated statements of ~~operations.~~operations and comprehensive (loss) income.

Depreciation and amortization expense for each segment are as follows (in millions):


		Fiscal Years Ended											Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
Depreciation and amortization⁽¹⁾:	Depreciation and amortization⁽¹⁾:							Depreciation and amortization (1):
Versace	Versace	$	61	$	9	$	—	Versace	$	54	$	61	$	9
Jimmy Choo	Jimmy Choo	33		34		13		Jimmy Choo	31		33		34
Michael Kors	Michael Kors	155		182		195		Michael Kors	127		155		182
Total depreciation and amortization	Total depreciation and amortization	$	249	$	225	$	208	Total depreciation and amortization	$	212	$	249	$	225

⁽¹⁾Excluded from the above table are impairment charges, which are detailed in the below table and in Note 8,, Note 9 and Note 14.14.

See Note 9 to the accompanying consolidated financial statements for the Company’s goodwill by reportable segment.

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Total revenue (based on country of origin) and long-lived assets by geographic location are as follows (in millions):


		Fiscal Years Ended											Fiscal Years Ended
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
Revenue:	Revenue:							Revenue:
The Americas (U.S., Canada and Latin America)⁽¹⁾	The Americas (U.S., Canada and Latin America)⁽¹⁾	$	3,115	$	3,182	$	3,033	The Americas (U.S., Canada and Latin America) (1)	$	2,172	$	3,115	$	3,182
EMEA	EMEA	1,523		1,279		1,093		EMEA	1,029		1,523		1,279
Asia	Asia	913		777		593		Asia	859		913		777
Total revenue	Total revenue	$	5,551	$	5,238	$	4,719	Total revenue	$	4,060	$	5,551	$	5,238


		As of											As of
		March 28, 2020		March 30, 2019		March 31, 2018			March 27, 2021		March 28, 2020		March 30, 2019
Long-lived assets: ⁽¹⁾⁽²⁾	Long-lived assets: ⁽¹⁾⁽²⁾							Long-lived assets: ⁽¹⁾⁽²⁾
The Americas (U.S., Canada and Latin America)⁽²⁾⁽¹⁾	The Americas (U.S., Canada and Latin America)⁽²⁾⁽¹⁾	$	1,132	$	319	$	328	The Americas (U.S., Canada and Latin America)⁽²⁾⁽¹⁾	$	1,001	$	1,132	$	319
EMEA	EMEA	2,432		2,123		1,050		EMEA	2,384		2,432		2,123
Asia	Asia	608		466		441		Asia	596		608		466
Total Long-lived assets:		$	4,172	$	2,908	$	1,819
Total long-lived assets:								Total long-lived assets:	$	3,981	$	4,172	$	2,908

⁽¹⁾Net revenues earned in the U.S. during Fiscal 2021, Fiscal 2020, and Fiscal 2019 were $2.016 billion, $2.898 billion and $2.972 billion, respectively. Long-lived assets located in the U.S. as of March 27, 2021 and March 28, 2020 were $942 million and $1.060 billion, respectively.

(2)Long-lived assets as of March 27, 2021 and March 28, 2020 ~~reflect~~include property and equipment, net, intangible assets, net and operating lease right-of-use assets resulting from the Company’s adoption of ASU 2016-02. See Note 24 for additional information.

⁽²⁾Net revenues earned in the U.S. during Fiscal 2020, Fiscal 2019, and Fiscal 2018 were $2.898 billion, $2.972 billion and $2.818 billion, respectively. Long-lived assets located in the U.S. as of March 28, 2020 and March 30, 2019 were $1.060 billion and $296 million, respectively.

As of March ~~28, 2020 and March 30, 2019,~~27, 2021, the Company's total long-lived assets were $7.946 billion and $6.650 billion, respectively. The increase in total assets was primarily due to the adoption of ASU 2016-02 in the first quarter of Fiscal 2020. As of March 28, 2020, the Company had operating lease right-of-use assets recorded on its consolidated balance ~~sheets of $1.625~~sheet were $3.981 billion, of which, ~~$968 million~~$1.729 billion related to Versace, $1.515 billion related to Michael Kors ~~$457 million related to Versace,~~ and ~~$200~~$737 million related to Jimmy Choo.

Total revenue by major product category are as follows (in millions):

Fiscal Years Ended
March 28,
2020 % of
Total March 30,
2019 % of
Total March 31,
2018 % of
Total
Accessories $ 2,933 52.8% $ 3,139 59.9 % $ 3,057 64.8 %
Footwear 1,100 19.8% 1,023 19.5 % 657 13.9 %
Apparel 1,069 19.3% 698 13.3 % 605 12.8 %
Licensed product 222 4.0% 218 4.2 % 250 5.3 %
Licensing revenue 201 3.6% 156 3.0 % 150 3.2 %
Other 26 0.5% 4 0.1 % — — %
Total Revenue $ 5,551 $ 5,238 $ 4,719

~~110~~

~~Table of Contents~~

~~21. Selected Quarterly Financial Information (Unaudited)~~

~~The following table summarizes the Fiscal 2020 and Fiscal 2019 quarterly results (dollars in millions):~~

Fiscal Quarter Ended ⁽¹⁾
June 29,
2019 September 28,
2019 December 28,
2019 March 28,
2020
Fiscal 2020
Total revenue $ 1,346 $ 1,442 $ 1,571 $ 1,192
Gross profit $ 834 $ 874 $ 932 $ 631
Income (loss) from operations $ 64
⁽²⁾
$ 75
⁽³⁾
$ 205
⁽⁴⁾
$ (536)
⁽⁵⁾
Net income (loss) $ 45 $ 73 $ 209 $ (552)
Net income (loss) attributable to Capri $ 45 $ 73 $ 210 $ (551)
Weighted average ordinary shares outstanding:
Basic 151,049,572 151,602,502 150,826,196 149,380,121
Diluted 152,334,153 152,576,283 152,154,372 149,380,121
Fiscal Quarter Ended ⁽¹⁾
June 30,
2018 September 29,
2018 December 29,
2018 March 30,
2019
Fiscal 2019
Total revenue $ 1,203 $ 1,253 $ 1,438 $ 1,344
Gross profit $ 751 $ 763 $ 873 $ 793
Income from operations $ 215
⁽⁶⁾
$ 190
⁽⁷⁾
$ 290
⁽⁸⁾
$ 40
⁽⁹⁾
Net income $ 186 $ 137 $ 200 $ 19
Net income attributable to Capri $ 186 $ 138 $ 200 $ 19
Weighted average ordinary shares outstanding:
Basic 149,502,101 149,575,112 149,183,049 150,801,608
Diluted 152,399,655 151,705,685 150,268,424 152,083,632

⁽¹⁾~~All fiscal quarters presented contain 13 weeks.~~

⁽²⁾~~Fiscal quarter ended June 29, 2019 includes impairment charges of $97 million, other costs related to acquisitions of $12 million and restructuring charges of $1 million.~~

⁽³⁾~~Fiscal quarter ended September 28, 2019 includes impairment charges of $104 million and other costs related to acquisitions of $6 million.~~

⁽⁴⁾~~Fiscal quarter ended December 28, 2019 includes impairment charges of $19 million, other costs related to acquisitions of $8 million and restructuring charges of $5 million.~~

⁽⁵⁾~~Fiscal quarter ended March 28, 2020 includes impairment charges of $488 million and other costs related to acquisitions of $8 million.~~

⁽⁶⁾~~Fiscal quarter ended June 30, 2018 includes impairment charges of $4 million, other costs related to acquisitions of $7 million and restructuring charges of $4 million.~~

⁽⁷⁾~~Fiscal quarter ended September 29, 2018 includes impairment charges of $7 million, other costs related to acquisitions of $16 million and restructuring charges of $2 million.~~

⁽⁸⁾~~Fiscal quarter ended December 29, 2018 includes impairment charges of $6 million, other costs related to acquisitions of $12 million and restructuring charges of $8 million.~~

⁽⁹⁾~~Fiscal quarter ended March 30, 2019 includes impairment charges of $4 million, other costs related to acquisitions of $44 million and restructuring charges of $31 million.~~

~~See Note 11 for additional information related to restructuring charges, as well as other costs related to acquisitions and Note 14 for additional information related to impairment charges.~~

~~111~~

~~Table of Contents~~


	Fiscal Years Ended
	March 27, 2021		% of Total	March 28, 2020		% of Total		March 30, 2019		% of Total
Accessories	$	2,158	53.2%	$	2,933	52.8	%	$	3,139	59.9	%
Footwear	796		19.6%	1,100		19.8	%	1,023		19.5	%
Apparel	720		17.7%	1,069		19.3	%	698		13.3	%
Licensed product	185		4.6%	222		4.0	%	218		4.2	%
Licensing revenue	155		3.8%	201		3.6	%	156		3.0	%
Other	46		1.1%	26		0.5	%	4		0.1	%
Total revenue	$	4,060		$	5,551			$	5,238

~~22.~~21. Non-cash Investing Activities

Significant non-cash investing activities for Fiscal 2019 ~~and Fiscal 2018~~ included non-cash allocations of the fair values of the net assets acquired in connection with the Company’s ~~acquisitions~~acquisition of ~~Versace and Jimmy Choo, respectively.~~Versace. In addition, non-cash investing activities for Fiscal 2019 included an investment of 2.4 million of the Company’s ordinary shares made by the Versace family at acquisition date, which was valued at $91 million. See Note 5 for additional information.

There were no other significant non-cash investing or financing activities during the fiscal periods presented.

114

~~23.~~

Table of Contents

22. Subsequent Events

~~Amendment to Credit~~

Termination of 364 Day Facility and Reinstatement of Leverage Ratio Covenant

As noted in Note 12, on June 25, 2020, the Company entered into ~~the second~~an amendment (the ~~“Second Amendment”~~"Amendment"), to ~~the 2018 Credit Facility,~~its third amended and restated senior secured credit facility with among others, JPMorgan Chase Bank, N.A., as administrative ~~agent. Pursuant~~agent, to, among other things, add a $230 million revolving line of credit ("364 Day Facility") that matures on June 24, 2021.

On May 20, 2021, the Company determined it no longer desires to maintain this additional line of credit and consequently delivered a notice to the ~~Second Amendment,~~administrative agent terminating the ~~obligations under~~364 Day Facility, and the 364 Day Facility terminated on May 25, 2021. The remainder of the 2018 Credit Facility ~~will be secured by liens on substantially all of~~remains in full force and effect.

As previously disclosed, the ~~assets of~~Amendment, among other things, also temporarily suspended the Company and its U.S. subsidiaries that borrowers and guarantors, subject to certain exceptions, and substantially all of the registered intellectual property of the Company and its subsidiaries. This requirement for collateral will fall away if the Company achieves an investment grade ratings requirement for two consecutive full fiscal quarters. The Amendment adds a restriction on the disposition of assets and a requirement to prepay the term loans with certain net cash proceeds of non-ordinary course asset sales, subject to certain exceptions and a reinvestment option with respect to up to $100 million of net cash proceeds in the aggregate.

Pursuant to the Second Amendment, the financial covenant in the Company's 2018 Credit Facility requiring it to maintain a ratio of the sum of total indebtedness plus the capitalized amount of all operating lease obligations for the last four fiscal quarters to Consolidated EBITDAR of no greater than 3.75 to 1.0 has been waived through the fiscal quarter ending June 26, 2021. When this financial covenant is reinstated, the applicable ratio will be calculated net of the Company's unrestricted cash and cash equivalents to the extent in excess of $100 million and shall exclude up to $150 million of supply chain financings, and thequarterly maximum ~~permitted net~~ leverage ratio ~~will be 4.00 to 1.0. In addition, until March 31, 2021, the material adverse change representation required to be made in connection with revolving borrowings~~covenant and the issuance or amendment of letters of credit will be modified to disregard certain COVID-19 pandemic-related impacts to the business, results of operations or financial condition of the Company and its subsidiaries, taken asimposed a ~~whole. The Second Amendment also requires the Company,~~minimum liquidity test during the period from June 25, 2020 until itthe earlier of (x) the date on which the Company delivers its financial statements ~~with respect to~~for the fiscal quarter ending June 26, 2021 ~~to maintain at all times unrestricted cash~~ and ~~cash equivalents plus~~(y) the ~~aggregate undrawn amounts under the revolving facilities under the 2018 Credit Facility of not less than $300 million, increasing to $400 million~~date on ~~October 1, 2020 and $500 million on December 1, 2020.~~

~~The 2018 Credit Facility and the Indenture governing the Company's senior notes contain certain restrictive covenants that impose operating and financial restrictions on~~which the Company ~~and the Second Amendment imposes incremental restrictions on certain of these covenants during the covenant relief period provided under the 2018 Credit Facility, including restrictions on~~certifies that its ability to incur additional indebtedness and guarantee indebtedness, pay dividends or make other distributions or repurchase or redeem capital stock, make loans and investments, including acquisitions, sell assets, incur liens, enter into transactions with affiliates and consolidate, merge or sell all or substantially all of its assets.

~~In addition, the Second Amendment adds a new $230 million revolving line of credit that matures on June 24, 2021 (the “364 Day Facility”). The terms~~net leverage ratio as of the ~~364 Day Facility are substantially similar to the terms~~last day of the ~~existing revolving facility~~most recently ended fiscal quarter was no greater than 4.00 to 1.00 (the “Applicable Period”). During the Applicable Period, applicable margins and commitment fees under the Credit Facility ~~except that (i) no letters~~are increased and certain covenant baskets for restricted payments, the incurrence of ~~credit or swingline loans~~indebtedness, acquisitions and other investments made by the Company are ~~provided and (ii) for loans subject to Adjusted LIBOR,~~more restrictive.

On May 26, 2021 (the “Election Date”), the ~~applicable margin is 225 basis points per annum, for loans subject~~Company delivered to the ~~base rate~~Administrative Agent the ~~applicable margin is 125 basis points per annum and~~certificate required to terminate the ~~commitment fee is 35 basis points per annum. In addition, while~~Applicable Period. Effective as of the 364 Day Facility is outstanding, (i) if the Company incurs any incremental indebtedness under the Credit Facility or certain permitted indebtedness in lieu of such incremental indebtedness, the 364 Day Facility will be reduced on a dollar for dollar basis andElection Date, the Company will be required to ~~make corresponding prepayments~~comply with the quarterly maximum net leverage ratio test of 4.00 to 1.00, and ~~(ii)~~the applicable margins, commitment fees and covenant baskets will revert to the levels in effect prior to the effective date of the Amendment.

Share Repurchase Authorization

The Company also announced that its previously suspended share-repurchase program will be reinstated. The availability under this program remains at $400 million. Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy, and other relevant factors. The program may be suspended or discontinued at any time.

Net Investment Hedges

During the first quarter of Fiscal 2022, the Company ~~will be required~~restructured approximately $2.9 billion of its net investment hedges by terminating these hedges and entered into multiple fixed-to-fixed cross currency swap agreements with an aggregate notional amount of approximately $2.9 billion to ~~prepay amounts outstanding under~~hedge the ~~364 Day Facility on a weekly basis to~~Company's net investment in Euro-denominated subsidiaries against future volatility in the ~~extent that cash~~exchange rates between the U.S. Dollar and ~~cash equivalents of~~ the ~~Company and its subsidiaries exceed $200 million.~~Euro. These contracts have been designated as net investment hedges.

~~112~~115

~~Table of Contents~~

The Second Amendment also permits certain working capital facilities between the Company or any of its subsidiaries with a lender or an affiliate of a lender under the Credit Facility to be guaranteed under the Credit Facility guarantees and certain supply chain financings with, and up to $50 million outstanding principal amount of bilateral letters of credit and bilateral bank guarantees issued by, a lender or an affiliate of a lender to be guaranteed and secured under the Credit Facility guarantees and collateral documents.

~~Capri Retail Store Optimization Program~~

~~In addition, the Company recently approved a plan to close approximately 170 of its retail stores over the next~~ ~~two~~ fiscal years in order to improve the profitability of its retail store fleet. Over this time period, the Company expects to incur approximately $75 million of costs associated with these store closures. See Item 9B - Other Information for additional information.

~~Revolving Credit Facilities~~

~~During Fiscal 2021, the Company made net payments of approximately $328 million to lower the outstanding balance of its Revolving Credit Facilities.~~

~~113~~


Fiscal Years Ending	Fiscal 2021		Fiscal 2022-2023		Fiscal 2024-2025		Fiscal 2026 and thereafter		Total
Operating leases	$	489	$	801	$	551	$	566	$	2,407
Inventory Purchase Obligations	570		—		—		—		570
Other commitments	58		20		3		—		81
Short-term debt	167		—		—		—		167
Long-term debt	—		192		1,820		—		2,012
Total	$	1,284	$	1,013	$	2,374	$	566	$	5,237


	March 30, 2019 As Reported under ASC 840		ASC 842 Adjustments			March 31, 2019 As Reported Under ASC 842
Assets
Prepaid expenses and other current assets	$	221	$	(23)	⁽¹⁾	$	198
Operating lease right-of-use assets	—		1,876		⁽²⁾	1,876
Intangible assets, net	2,293		(40)		⁽³⁾	2,253
Deferred tax assets	112		38		⁽⁴⁾	150
Liabilities
Current portion of operating lease liabilities	—		386		⁽⁵⁾	386
Accrued expenses and other current liabilities	374		(72)		⁽⁶⁾	302
Long-term portion of operating lease liabilities	—		1,828		⁽⁵⁾	1,828
Deferred Rent	132		(132)		⁽⁷⁾	—
Deferred tax liabilities	438		(7)		⁽⁴⁾	431
Shareholders’ Equity
Retained earnings	4,707		(152)		⁽⁴⁾	4,555


	Fiscal Years Ended
	March 30, 2019		March 31, 2018
Pro-forma total revenue	$	5,983	$	5,473
Pro-forma net income	579		526
Pro-forma net income per ordinary share attributable to Capri:
Basic	$	3.82	$	3.40
Diluted	$	3.78	$	3.34


	Fiscal Years Ended
	March 31, 2018		April 1, 2017
Pro-forma total revenue	$	5,012	$	4,985
Pro-forma net income	623		554
Pro-forma net income per ordinary share attributable to Capri:
Basic	$	4.09	$	3.34
Diluted	$	4.02	$	3.29


	Fair value at March 28, 2020, using:										Fair value at March 30, 2019, using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative assets:
Forward foreign currency exchange contracts	$	—	$	1	$	—	$	—	$	5	$	—
Net investment hedges	—		3		—		—		37		—

Total derivative assets	$	—	$	4	$	—	$	—	$	42	$	—

Derivative liabilities:

Other undesignated derivative contracts	$	—	$	—	$	—	$	—	$	5	$	—


	Fiscal Year Ended
	Pre-Tax Losses (Gains) Reclassified from Accumulated OCI							Location of Losses (Gains) Recognized							Total Cost of Sales
	March 28, 2020		March 30, 2019		March 31, 2018						March 28, 2020			March 30, 2019			March 31, 2018
Designated forward currency exchange contracts	$	(10)	$	4	$	4	Cost of Sales		$	2,280		$	2,058		$	1,860


	Fiscal Quarter Ended ⁽¹⁾
	June 29, 2019			September 28, 2019			December 28, 2019			March 28, 2020
Fiscal 2020
Total revenue	$	1,346		$	1,442		$	1,571		$	1,192
Gross profit	$	834		$	874		$	932		$	631
Income (loss) from operations	$	64	⁽²⁾	$	75	⁽³⁾	$	205	⁽⁴⁾	$	(536)	⁽⁵⁾
Net income (loss)	$	45		$	73		$	209		$	(552)
Net income (loss) attributable to Capri	$	45		$	73		$	210		$	(551)
Weighted average ordinary shares outstanding:
Basic	151,049,572			151,602,502			150,826,196			149,380,121
Diluted	152,334,153			152,576,283			152,154,372			149,380,121

	Fiscal Quarter Ended ⁽¹⁾
	June 30, 2018			September 29, 2018			December 29, 2018			March 30, 2019
Fiscal 2019
Total revenue	$	1,203		$	1,253		$	1,438		$	1,344
Gross profit	$	751		$	763		$	873		$	793
Income from operations	$	215	⁽⁶⁾	$	190	⁽⁷⁾	$	290	⁽⁸⁾	$	40	⁽⁹⁾
Net income	$	186		$	137		$	200		$	19
Net income attributable to Capri	$	186		$	138		$	200		$	19
Weighted average ordinary shares outstanding:
Basic	149,502,101			149,575,112			149,183,049			150,801,608
Diluted	152,399,655			151,705,685			150,268,424			152,083,632