CPRI - Earnings call transcript Q3 2020

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Operator

Good day. And welcome to the Capri Holdings Limited Third Quarter 2020 Earning Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jennifer Davis, VP of Investor Relations at Capri. Please go ahead.

Jennifer Davis

everyone. morning, Good for fiscal you on Holdings Capri And conference joining call. quarter XXXX third thank us With morning Officer, Idol Chief me Officer, Financial Executive this and are Chairman Chief Operating Tom Chief Edward. and John

today's release and risks let from me press those to in in which that made forward-looking Before we and could company's described SEC call to cause today's remind constitute risks begin, may subject differ Those uncertainties that the certain are we you which the and statements expect. on uncertainties available are are company's results statements, actual site. Web filings, on

information should remain on the operative Investors the the statements will later a this any time, and call obligation that discussed assume at no company call. made not undertakes during update to

financial restructuring discussed a ERP costs impairment one-time costs and be presented certain These measures Choo addition, Jimmy and implementation acquisitions, the cost. will information and exclude on non-GAAP today Versace non-cash associated certain basis. non-GAAP transformation In charges, with

otherwise numbers and Unless basis the store corresponding To measures information comparable the will please call reconciliation, on on all and a today today's sales presented view on on capriholding.com. earnings earlier be constant be release at currency non-GAAP presented GAAP a Web basis. all view posted our related will noted, financial site

Chief Now, like Officer. Executive and Mr. to Chairman would I Idol, to turn over the John call

John Idol

and Jennifer, morning. you, good Thank

we Holdings, founder-led continued the the fashion We Capri progress initiatives as houses. execute by for to be of luxury encouraged strategic at each our ongoing

luxury. consistent own they have and on distinct philosophies fashion its with each leadership, is heritage, brand While all

Sandra by Donatella led of is Versace, company Choi and Our visions Michael Kors. design

tremendous our expanding of investments Versace at in and progress and accessories Jimmy resources group, we've both the made Choo. With

category. for position inflicted the Michael third positively to At brand rebalancing repositioning the the Kors, it the of quarter, houses for in fact, time focus our on since In remains the first both at handbags growth.

years of Capri houses growth. revenue we multiple to our and three Holdings confident deliver that Taken luxury earnings remain position together,

at our our addition quarter and Earnings Jimmy share We Choo, third Michael from revenue increase increased were at were share revenue of results. Revenue exceeded pleased $X.XX expectations. This looking billion Kors. offset that anticipated per declines per by the growth year-over-year. Now, of reflects $X.XX. Versace and earnings partially X%

Before very quarter, to reviewing our the brand some for global emergency on quarter. would and our third serious its like the dynamic. highlights thoughts outlook share fourth and I situation for health is on This impact the of coronavirus

and this to and and only prayers The globally. positive people ensure the We of health our precautions continue to employees resolution the for hope is priority, to a virus those China Our safety necessary go take their can affected wellbeing. this thoughts out of we by and to crisis. all speedy and

trading other taken extraordinary Currently, XXX Greater certain results and of our the and have China of the the appropriate stores virus, parts XXX contain Given closed. Mainland materially China Asia impacted. approximately in are our region to efforts in been

reducing been by full per revenue for $XXX those our $X.XX and and on open, are China, remaining into quarter for year. severely fourth $X.XX current the have reduced. in by both earnings sales Additionally, stores traffic and visibility to the share we situation Based approximately million

from impact change on potential countries. tourist virus the including of China could traffic outbound of worsens, other if and China, materially severity is travel into This estimate business the broader if our restricted outside further

sales not due comparable providing will ranges store visibility. quarter than guidance the brand be In fourth the normal forecast addition, lower we to for

now our XXXX $X.XX and $X.XX fiscal the share to summarize outlook our anticipate were to per billion XXXX. approximately for initial on revenue the largely approximately fiscal China, I expectations situation for would We of like year. per earnings in with earnings our Now Prior share to track of $X.XX. guidance

investment an to is Choo. stated, in year strategic previously and fiscal initiatives fund XXXX Jimmy Versace As

are will year and this now accelerated and that that synergies operating is revenue we the realizing are making company provide We confident margin the investments expansion.

our Now million single turning delivered with of sales to ongoing to expectations, Hong which third double was Asia, quarter store digit and increased Revenue Americas with comparable Kong. were growth third pleased expected Versace. mid reflecting related to ahead store $XXX in of primarily results. EMEA, quarter experience brands, by performance our comparable to due digits. but continue Versace the in starting better declines We than challenges sales,

This archives, by a original interpreted Versace's through extensive new several infused new of codes, is ready as continued code, and Taking hardware such recently from handwritten iconic collections wear V, embellishments. prints prince. to our was that driven It with house wear across our Both and incorporated introduced women's embroidery, were new signature quarter. ready women's and were styles. men's drivers crystal momentum motique Barocco the signature. growth of to and key Versace's we for was our all men's brand Medusa Gianni

styles. remains Barocco we jewelry, V collection well growth Barocco logo. component third the expanded and our categories, new bag in top Sales have a strategy. performing group collection accessories, V by our across the to of the the as including with footwear Virtus of significantly driven belts, Virtus Turning fashion hand the and and key new as new The quarter, performance increased backpacks, accessories, handbag

with new more encouraged from client coming acquisition driving of than We are customers. purchases XX% that particularly increased Virtus is

on terms of holiday during across quarter, increase $XX marketing holiday social Versace's the employed degree In traffic This and in novel. followers to brand of brand Instagram which XXX and helps a Collins marketing customer media XX% The campaign million. a the rich drive email Jackie program dedicated a reminiscent awareness section narrative contribute grew versace.com. our to reflected to engagement,

celebrities were in a Lopez, Kardashian, and dressed Jennifer Boseman, high Michael the throughout Jolie, again, Chadwick profile number including Gomez, Once Selena of quarter, Versace Kim Angelina Jordan.

like Miley Priyanka about Gigi bag. celebrities was Chopra out and Virtus carrying numerous Hadid, spotted Additionally, Cyrus, the

Lopez forefront dressing Reflecting over in the Versace Versace night remain ability million and by atelier to the showcased confident Versace's continued we Donatella revenue. power executing are grow XXX in event its of Bowl our Versace viewers roll created this and progress with Super our Jennifer first heritage. sensation at the during a growth $X Versace her excited in rock initiatives performance of Overall, against Sunday brand, worldwide billion about to

and with see Choo. sales Jimmy X% both basis our which to on increased We digits store in sales double-digits. grow was store expectations. constant and China in Asia while which the Kong, flat, increased digits. positive Revenue continued Moving which by quarter, Comparable impacted comparable line were to to EMEA, Mainland currency trends in last reported Hong high-single pleased Similar low-single line were grew also performance with Americas, in expectations. to our were

by insights, designs the collection. others the second series, Rosie but and stand seeker, in Choo is to active of Jimmy builds existing by we from interview of sharing sales classification, our wearing continued footwear, also by experiences. November, My JC growth of and comparable positive empower installment deliver the In store of In this strength strong exciting the to group their continued new in Hawaii dare featured driven learnings strong, who on Choos In which continued fashion time and cruise growth In comparable first diamond for global and VARENNE the signature positive the not were store continued series, we women's out, our our category. Huntington-Whiteley accessories, Madeline. expansion ring. our prominent the highlight sales driven Sales only to repositioned led of collections since performance introduction women XXXX which new

Jimmy first In continued of in Duchess shoes Chan campaign, with as to with wore conjunction saw the sell Rosie Instagram Constance throughs Gemma Hailey such Choo the launched Porter. tags Beyonce, the shopping posts. above her Dua the we for the time average carpet dominate Billy Leona, Wu, red Lipa, Cambridge, and and Bieber, on celebrities,

an of Instagram nearly XX% During XX to million, the quarter, over year. increase grew Jimmy Choo's followers last

in to news recognition induction the moment Choi take Jimmy are to congratulate like part more company's her into of I'd prominent the building of achievements luxury Jimmy for with in we Sandra fashion from Choo footwear predominantly the most house accessories transforming hall into brands Finally, becoming outstanding revenue. the world. of footwear the of progress a a pleased illustrious one Choo significant brand a with into luxury luxury her balanced a fame Overall,

XX% Our grow confident Choo's of billion. from term to Jimmy in XX% long our goal ability approximately We overtime. Choo's X revenue to is to remain revenues grow to Jimmy accessories

to Kors. Michael Turning

was revenues declined quarter Third line with below sales constant revenue declining expectations. single currency in on our our Retail X% revenue was Total in low basis. digits. both comparable reported and store the with expectations

flat stores month were Our digit in of results impacted in Americas, during the reflect low third anticipated December. traffic growth decline where by single a Asia, in lower Europe and digit than low the store quarter comparable sales single

impacted sales basis expected Additionally, decline we by store approximately saw total comparable in negatively XXX points. a than which greater watches,

flat. to been year have would sales throughs better as ahead revenue product store comparable declines, the watch saw partners. of prior our with impact of channel, store the are expectations and Excluding wholesale building department inventory our we In sell levels was

Long Moving animation. channel new signature approximately to increased anticipate reach quarter, third as and consistent higher drive quarter, term, as product continues Penetration drive the accessories throughs. of similar to the assortment the and approximately penetration, the will penetration signature responded in to we in revenues XX% was our to globe, to will second customers performance, which around more our sales both signature nearly core XX% in wholesale well. retail sell and positively XX%

fashion the third active. performance of in driven booties’ quarter fastest iconic lock trends were categories charm growing booties footwear, in Moving our branding Heritage Active to customer by and remain and with remains one favorites. strong footwear.

strong expand to to was men's, store collection. fashion leaders in by be continued to to wear, small ready innovation also In quarter and enthusiastic backpacks the to women's remain outerwear. and design and continue opportunity particularly comparable response positive continued see this customer accessories in in In our goods. third leather Growth positive led about sales trends We the we with classification.

Our account performance XX% collections for sales. of driving now and signature are

quarter. our Additionally, in competition continued introduction watches decelerated smartwatch to was market. tech a This and sneaker further Despite watch reflects than collection. of category, In in in of customers companies third the trends innovation, responded greater anticipated. our the driven decline the decreases the greater fashion from positively continued new impact

focused pressure watches. continued will of line retail as remain North continued our store sales, fine distribution mitigate We comparable have the jewelry remain in likely on challenged This category decline well accelerating on help American and a the from licensing to future income. impact as

quarter, sales double-digits. the jewelry increased During comparable third store

we Bella engagement, brand to our continue Hadid be pleased to campaigns. Turning with

of Bella, in Our our girls Ski traveling & and signature speed, energy holiday with Jet the brand Sea MKGO with capsule in style and marketing reflected accessories. optimism our our Set

of Olivia Once wide Yunyan Wilde, the during Daisy Michael including and Ronan, a Reese among Serratia array Witherspoon Ridley, quarter, others. celebrities Gow dressed and Lupita Lee again, Nyong'o, Chris

the demonstrating database enrolled, of continued strength our an reaching over well XX has to X.X continues especially experience, our We're which about compared our global last customer expectations. of expand VIP approximately customers, brand. database, increase Kors to customers excited above year, million desirability XX% Michael and the of Moving the to now million growth

During driving And innovation, Kors the Holdings. our with traction. customers execution for XX% business customer Versace Kors. Michael our for and brand. Choo, Kors’ an to remain at followers returning strategic pillars to product stabilize the and results versus Capri the to connection focused are Jimmy to and our quarter, our continue progress trends on initiatives with Michael path experience. Overall, XX the reflect at nearly delivering grew brand deepening on acquisitions, our We continued growth In last we growth conclusion, three longer engagement year. of continued recent right Instagram improvement and committed Kors Michael in increase Michael million, to desire term we against gain ultimately remain The of and excitement the

is fashion position be houses The look in long in that situation our continue us achieve China region three concerning, of to a we pillar our the term power Asia future meaningful and to the long will term While revenue for very growth. opportunity believe earnings the growth. luxury

turn me let to the over call Tom. Now

Tom Edwards

by of and of a Versace X% resulting diluted with million, lower was year-over-year to Michael income Starting by anticipated $XX, Jimmy partially Revenue John. of Choo, $XXX Kors. our Net driven from quarter revenue third growth growth offset per year, last share increased billion which at X ahead earnings our above was the you, compared our was expectations. $X.X Thank in addition results. of expectations. Revenue

from $X.XX per of earnings Versace. quarter Third included dilution share

expectations, store performance was comparable Looking revenue in mid than $XXX of anticipated brand, digits. increased sales our by sales. Total the at single and sales Versace revenue million better was ahead reflecting comparable

XXX with retail to see a from Versace Hong luxury double of global while and of We quarter. quarter in Asia XX sales digit fleet stores, the comparable continued as declined trends EMEA, increases the Kong increase ended Americas a worsened. in net prior

continued increase on sales Turning quarter compared both to a reported to $XXX constant increase line year and and of year. flat with quarter ended with million, EMEA with China. X% basis Jimmy Choo a a as XXX retail the were and in anticipated during of currency Americas, a net prior expectations. fleet growth store global was the in Mainland XX the Choo, from prior stores, Comparable Jimmy revenue

Kors, X% year and our by on declined results. was Michael revenue was wholesale basis. to constant currency above expectations to total performance Turning reported last $X.X of both anticipated driven compared a and Revenue better than billion

As This expected partially our inventory bring wholesale store with John worked help by better we than comparable in sell lower throughs. to said, drive to partners sales. earlier was offset

was basis revenues America e-commerce and digits, benefited global of anticipated year. the quarter from North comparable ended XXX greater watches Kors lower reflecting to the quarter December. XX compared retail decrease channel, points. The sales in anticipated by retail with in decline In XXX than single the fleet low in decline than in a basis prior headwind XXX traffic net watches a of a points. comparable Michael in the sales Global approximately stores,

of company $XXX Versace. partially Now compared the reflects compared to increased performance. inclusion predominantly increase margin primarily in related Kors to America, turning margin expense a Gross down North prior company This million by points benefit due approximately year. margin, prior activity the Michael basis of gross million addition was from Versace. operating year. The brand XX.X%, offset total expenses to of promotional increased lower XXX reflected to $XXX Total to

lower percentage addition XXX Kors. to at expense increased operating by expenses reflecting a of As XX.X%, Michael revenue, of basis points partially the Versace, offset

operating year, compared to points perspective, channel company XX.X% X.X% margin seasonality of Kors’ Total X.X% initiatives. retail by Versace's negative addition compared basis a the growth lower last in Michael Kors. expenses. again, of Michael Jimmy operating once margin operating investments XXX X.X% Choo's of business lower margin operating to while margin, From reflected and Versace margins at operating by year, XX% support driven and the increased gross margin wholesale the reflecting operating margin to normal last expanded prior XX.X% the year. of declined margins offset quarter, of partially lower versus primarily declined.

prior resolution X.X% was quarter to tax compared in year, the positions. primarily uncertain the for reflecting rate XX.X% the tax Our of

ended Now with equivalents the turning in and and to $XXX cash our $X.X balance million sheet. debt. We of quarter billion cash

cash $XXX paid the quarter, During debt we of million, repaid approximately $XXX the business. down million and already strong year-to-date of the reflecting flows have

X.X Additionally, and million of remaining XXX for we repurchased authorization. share have shares our repurchase on availability of stock million XXX million

compared the at We million $XXX $XXX ended with inventory to quarter last year million

trends. Kors category in increased the of to reflecting Michael support million. addition increase sales expansion. Choo compared X% year inventory decreased prior the with XX% Versace now the of inventory growing inventory to our accessories with more $XXX line is new Jimmy and store and

guidance. to turning Now,

the primarily As our revised China, full John have year as situation stated, a we expectations. result in of

By million now Holdings, of approximately revenue $X.X revenue of Versace in foreign $X.XX for Kong translation. revenue all reflect expect we Michael billion. approximately and changes Kors million, of Choo developments brands, and the revenue unfavorable brands Revenue we approximately Jimmy exchange China, billion. the $XXX in Capri situation expect approximately Hong of $XXX For

America. North Kors sales Michael lower was impacted in addition, In by

an anticipate now XX.X%. We approximately operating margin of

and expense X.X%, effective average and We tax to outstanding rate of $XXX $XX expect interest shares $XX weighted approximately of million million. million of

$X.XX. an situation to the now to $X.XX, estimate $X.XX As coronavirus to China diluted in of for result, earnings $X.XX of a expect share approximately the per we including related

in operating experiencing perspective XXX of locations of traffic that Mainland approximately the are but XXX China are our have stores closed, and the situation, open remain some hours currently reduced impact For on declines. significant

in revenues in more impacted. region. of than have fourth a Prior situation Capri up in Asia XX% represented being consideration that are half As significantly makes business of to result, the and quarter, would total China of our China, approximately revenue our

the outside change if further business if our could severity situation broader Our traffic worsen, of for China potential of on of impact restricted. including in the and China tours the travel current materially is impact estimate virus the

less We Michael product in XX% than of currently our Kors source China.

of be impacted disruption Our supply by negatively chain. forecast could our also

As this resolution and a speedy earlier, John situation. for positive of noted hope we challenging

anyone prayers of to Our and by this go thoughts and out China affected people virus. the

revenue For total the fourth $X.X quarter, of million. we expect now of billion. approximately Versace company Jimmy and approximately $XXX This Choo assumes revenue of million $XXX revenue approximately

approximately third $XXX includes Kors expect revenue of the the wholesale in which the Michael earlier realized impact shipments million, quarter. We of

is operating margin to be approximately expected Our fourth quarter X%.

the expansion month benefit is brand’s December, in month expect margin, an single the operating in an the Versace, from of quarter, profitable reflecting year. which we most For additional the

to Kors we now to and prior investments below is normalize two For to margin Choo, margin prior begin impact. to made expected over brand strategic we as due operating the the improve expenses Jimmy expect past coronavirus year leverage from year be Michael operating years.

effective approximately net and X%. earnings share in forecast of interest resulting per to outstanding million, tax to of $X.XX rate $XXX expense $X.XX. shares be We expect to be approximately average our the diluted in We zero approximately range weighted

about like XXXX. briefly Now I'd to talk fiscal

that tremendous synergies progress our We our deliver have transformation business. across made initiatives on

are as in We systems details anticipate common and cost more operational now to our services, approximately call. million centers we forward fruition earnings initiatives. corporate to see shared fiscal fiscal and synergies some leverage accelerate come excellence $XXX about look We XXXX XXXX starting sharing build savings to to and of year-end great savings out business on in

drive competencies your on we initiatives ahead, our of and realizing executing and to of against our for brands term revenue remain earnings benefits efforts focused growth. position each portfolio, strategic long our Looking up multi-brand the

questions. up for line open Now the we'll

Operator

Randy open. is question line Please Konik will go Jefferies. your [Operator Instructions] ahead, we take our of And from first

Randy Konik

for where I you've Michael couple down perspective we I of guess watch some some a second, guess it just retail job wholesale today have some -- the the have margins frame and Could in a how little can stabilizing now. Kors, of percent Just sales? category you done on nice is us a bit. of margins clarifications. you come us question Tom, so give big is improving the reference give of as of

what on should gave are interesting through. margin kind then of you you know and perspective on good there how we some of levers guess us stabilize, start give and I us we should wholesale coming some the see week, to last So timing. the see the And synergies perspective when kind really

I think you said $XXX fiscal XXXX. million in

us China give of those how perspective some the offset on than think synergies, in and of issues you Just some Asia region. they do more going

Just in some guys. those Asia? continuing offsetting, offsetting be we should how synergies thinking issues about partially or Thanks

Tom Edwards

And business of in taking a watch a still and part North it category, our America of the portion significant our business. represents retail good is

specific number penetration, and the in that basis So see the significant but we it's us number a in has from point enough well. but hit the quarter height as it a has XXX its where teens can you don't share or impact for and declined high-teens past still as in it's the

we're fiscal capabilities. our about guidance synergies and We're something provide and services that's XXXX. full clearly, a teams talk more. that create when global on initiatives with to more is very global excited the you regard to going company and on how coming and really to year our we'll we together information With executing are we're lot But provide to pleased a against think I impact, the our transformation

John Idol

I Randy, take piece. would margin to John. this the is like

quarter we and going our beginning result in see operating of or the also margin our in categories. for certain be China. that's for prepared to doing fleet that. other said you're with in And Choo retail of kind which we're us recall, But a program and better the operating all expanding, that Tom were and that that you in as As Versace some sell optimization brands. to Michael see margins happened expansion with of going throughs to at impacted even to Jimmy forecasting his continue situation we're what Kors is QX by the is seeing earlier actually remarks, where are moment things getting was third really our

in prepared encouraged And result We as then secondly, and pressure said in with saw partners I worked. a in. the to given an really originally a we America about of shrinking. deleverage, than to size under of wholesale earlier remarks. that we had margins the anticipated were get What and is them that been inflection as in really business quarter, departments We during that's the have closely my with inventory actually to our our started inventories worked we bit North move

LY signature upto which to quite getting our but we're that with channel, initiatives not see And what close. We’re happen. levels our we in seeing we're partners very work very, is wanted

about felt happened really good in QX So retailer categories. I our our in think we what QX,

So that was a good sign. really

operating all margin into across year. brands year we margin up doing of situation which of going QX exclusion you've to us view, next the direction. heard in have right show operating that things heading feel look like to we take next to the with say And next that rebalancing in in and remarks in getting, So in the we're the China, right I in prepared especially expansion Michael believe for our see going our obviously brand Kors you're we're terms the the year. of

you're product then operating to initiatives But up group, cost synergies our to hear on to across the all you’re going we're margin. of in goods that that's feeling very up and some show as going making the we're development showing in the Tom about and how getting indicated, margins. see of going good on And that that gross the

thank So very much your you for questions.

Operator

Thank you.

ahead, go open. line from our take BMO Siegel now is of Please question will We your next Simeon Capital.

Simeon Siegel

Versace of how then be fleet across you business opportunity additional revenue versus the about and in specifically you're thinking light the your about Choo. store contextualize may see closures, can thinking in And e-com? how their for Macy's you the Americas, Thanks. John, there

John Idol

very what here hours. with we them with good one we partnership being very let good Simeon. making doors From the back business our saw look We're Macy's, in the then second, with we understand, up learned some And I Macy's all our top and represents pleased a that about closures want we're the me them so we Kors I We last season the thank brand. with to Michael XX progress had So Macy's holiday really business. at of as done and hundred said is biggest of department the eCommerce our to results. the work of that obviously store today few for their most partners, when majority and majority our the

It to Again, will through anything next then be we're terrific impact, I of don't in to store see a the Macy's be they're course because small from what think our through fiscal partner on year. our and of we very doing all have QX all the to we great looking to doors then material significant. they've going the proud don't and these understand, fleet our we job. it's are that continue And stores business. but going to trend and that across a be announced, a we're think department our partners think

accessories. proud secondly I'm and though of all and bought without really having accessories double-digit, in showing doing in has comped the business Versace fact penetration excellent very Choo, since and inflected growth pretty that the we're the and way we excited that by that results. the the way, of the even we're of seen Versace positive of percentage Jimmy Versace So and day we double-digit we've Americas been through here, the terms strong,

more still opportunity to grow. much As has it so percentage, a

if chain those I bought results excellent feeling same chance there we Europe. So you we told store the the almost you'll we think outperforming seeing about fleet, the we'll thing number see we're us. program, a so the are think And we're globally said with and for you And we get every started Versace, company, stores great stores renovate the renovation really in of the that. in as I

North That's super Jimmy Choo, more in Jimmy Choo is terms than the driven actually America. company. largest holiday the and our pleased And holiday America. had a a inflection see Versace then historically largest which accessories collection. business America mature Jimmy been a in by in very, here new one we Choo's in good But businesses North season very the good in and just very its had season of of had category, North JC Varenne to

So we've are we're stores very XX the the got customers. and our Versace, way I we to it, the working accessories that the customers as majority feel into in if the plus see very, actually closer of percent are nicely probably new stores, getting think on that two and go same accessories groups positioned you in you'll the the

acquisition that pleased developing very very, and we're with So us. the how customer is category for

So thank you for Simeon. your questions this morning,

Operator

you. Thank

We take Piper of will Erinn Sandler. Murphy our question from now next

Erinn Murphy

you, on John, guidance. I the just first had a clarification for just

North potential America of then the just are you just FX? of Thank by guidance the that any? million $XX was You the then chain of today Coronavirus, million, or continue fourth guys sales overall disruptions, are And that driver the assuming the quarter, primary current end Corona that supply expound that? on how you you. Can I that kept the and $XXX know on was small, if assessing business kind million I quarter And $XXX the of it's other that. conditions but through you know for the quarter? Was

John Idol

The $XXX second. what back we come million things. approximately to couple $XXX Number is approximately I'll $XXX million a it's and in that in Asia, one, see of of a

that's from and of very quarter in into earlier performance shift, of turned shipments the expectations Secondly, a that our there out a good us because as turned to our majority be wholesale that that coming a is the we better because wholesale and beat we revenue during partners. bit for mentioned thing

not get and a we will obviously So QX. shift that's really back that in

the kind million. that gives of you feeling $XXX of So a

in gets happening we've And the Coronavirus, prudent the have where change very the guidance Macau for that's and along will taken close fact, we've We anything And etc. today we've approached March. had that weeks assumed that indicates don't the better stores already that, trends that we it. current through nothing that in of overnight we'll view we believe that are see the that think to few The with one that this change. end is way a I casinos, way a now

to our that given best have visibility but understanding, continue things So, the today. this evolve, we is

And as we countries was we outside doing said has impact as tour China to Hong know, the tour smart you that and we curtailment to and had great not places Singapore, press Malaysia the we leaving, in groups, Macau. in see of and Kong decided to Japan and travel, additional protect our China, if prepared and is which being try in a conducted remarks groups in think thing, have job particular think that our their release, obviously, whether that very a in and of the government Korea, people other Chinese it's like own

So worse. we've it it this number up materially of how the could gets is if idea we number, get see think that frame net But everyone wanted an to what worse, it some and situation. the give into factored we of to we today

Tom Edwards

supply had the You mentioned chain.

of noted we than XX% Michael products Kors produced less in have as So, in of prepared I remarks, China. the

the of right sure and flows is our we're working actively in inventory activity, manage places For really positioned and also make future the production. remainder inventory to manage

effort of in teams focused lot a that is on. area the that of pieces the are around there So all

John Idol

further one me And Erinn, add let thing.

next to places there see we'll I that then shipping. not are that think closed are next remain of certain in resuming many, until of Obviously, know week in China factory us the resuming will many start openings, cities all two. more and or week

week. lot will a happen movement country there's next that in of So the

whatever don't here So will today, that reason there that know, currently just think could material again We open or for the further impact a again could movement, don't sitting in forecast. disruption today, we our impact multiple is, is what freight but have factories if it don't up mean.

Erinn Murphy

in follow-up logo kind a in part know just been your talk How then increase Kors, And script. hear to it for versus that business on I of move didn't strategic that's a you. perform penetration. did Michael quarter? about the the non-logo you the And Thank on the I

John Idol

remarks. actually Erinn, prepared it our So did comment we in about

of XX% revenues our the was we during as wholesale. So to our and the quarter business, Signature XX% about of refer retail about it,

happen. build we to the which store a thing, need working a our that a promotionally because is very really that longer good us we inflection out wanted be thing So in, we the more partners it's But was significant consistent the to which closely is category. are that for don't has to as saw what us department is duration. again, wholesale and versus second in quarter, second with And it active have category life it great that's and

the throughs fashion today promotional the performance the sell also we activities the is we're activity. the through when to seasonal without take with of or it's the having being do category So driven higher normally moving through level that and in company quarters the

to that we the So a inventory its we goal from the XX% to again, current we're have level and pleased season that. super flowing certainly do in have get also to XX% level and spring

also our that's that margin You'll way the we and going product customer see activity sell-throughs, gross track in later of quarter, a quarter in that on and probably the expansion, happen less achieve the operating next first responding. promotional well to on and think of which down have that But the the a is margin the better because year. fall we're impact will to on little further

Operator

Instructions] will of [Operator Please our from take go you. Thank ahead. question Matthew We Boss JPMorgan. next now

Grace Smalley

on Boss. This is Grace Smalley Matt for

brand, in in North traffic attribute at do the expected December? to what lower Looking you the America than Michael Kors

John Idol

slow We season. until right you, then and week holiday quick traffic can't was were tell morning. you and the actually whatnot. surge it saw Thank well and Grace Grace, saw one end of of we obviously the the December doing week first very or then towards good extremely I up we less whether

time position, decision end to we from in and a of so season. our really think down saw a spring setting which about up I with in what period statement, is for then and inventory that really our in us quarter position inventories be X% cleaner, Tom's to good the made additional was you so we be inventory the clean markdowns during to remark, And prepared took

see in Grace. we world. was of did of isolated you, tell for situation regions you North that so American certainly in what other Michael the us Thank And but Kors. that can't not we It a was, more

Operator

Thank you.

go Fargo. next from our ahead. of question Wells take Boruchow now Ike will We Please

Ike Boruchow

for question first John, you.

incrementally by talked the like incrementally, You watch disappointed that. you're about it sounds business being

on six because not and own really, going kind Just to just we months. me, MK clean the curious outside to given from for you or Thanks. and focusing that inventory issues can got What's on the that's last gross because really watches, question stay maybe visibility MK of but before pressure incremental margins in assume the China Asia just then Americas regions the forward? just ended relative I its the that should to positive? of And Europe, know that those looks of inventory in comps MK back get

John Idol

So this that positive, and see positively were Europe the of comping us. healthy in in we world most we've regions for flat that quarter, in again one Europe, before being we we as but were been the comping

or Watches view I very So -- there a third are big quarter. continuing to our as that being a surge is think happen. quarter we during very retailer fourth

of so the disproportionate, the represents during quarter. And it that amount it's velocity

the were much close would we very that So we drop We disappointed in watches. think not to in quarter. did

linked anticipated, tell And even in and more many against than necessarily and have we very the particular we ecosystem to watches an consumer. they tech an again, in we I have wearable companies are in for had them think those you saw customer I products our remarks, prepared voted that's compete difficult that the our than clearly and tech business are decline with it's you but would the for greater it us to other in where

uphill So trying battle. hard it's but an we're definitely

the de in de business very declines a watches a are. percentage through minimis, but will North the It's Europe Europe the a continue of it's business think comps to I not it's to of Asia of degree and very, in what American minimis, and all the small lesser less a America North a next watch to way that percentage impact So year. comparatively

working That hard. being said, very we very, are

picture with business, us men's and terms guidance, to we of growth with next going begin of men's happening in to a we're our really you what's some much And talk heard give think when little you very on QX good plans to year. give becoming it's happy start significant with get we're You to about men's because men's that particular. more to revenues category for I represents what more a accessories, in

footwear seeing exactly we're watch closer. much, know, be, we in has want we're You but ready-to-wear, been We're women's getting already accessories offsetting women's that the the And much not we've business business. stabilize. to start some where of had to the declines again,

that, And getting of again, year. too for Michael not far stable definitely business in front think I for Kors next look we but so ourselves, for

all that us anticipating that, in changes already gross quite very the comps And I nice I necessarily don't strategies for, flowed positive obviously should up in even have which operating that up, that's with and for because something the down the margin. Michael of And able place, and we sets in watches positioning for of we declining, those if think said, would to look are minimum us flat QX frankly, we ended for all our inventory, area. a in terms right at very place. in get think we inflection to were hopefully, that Kors as clean product margins, very, be us you

margin for Tom and of talked company. highest the will bigger for be, will Michael that are in about is remarks margin from margin The Michael is revenues business we said operating where That our in operating declining coming the QX Kors in for Kors that the for that fact Asia. most issue decline us be his prepared the

So going Ike. to direct to Thank have just that's margin. you, a our operating impact overall

Operator

question of from UBS. Thank you. Sole We'll now our take Jay next

Jay Sole

question in context Could performance Asia. about bit maybe is you John, around my provide the Versace. little first a more

would of Coronavirus. cost to if of virus about then is business. happening the you cost the able impact Asia, in an manage the had if from next China, secondly year's that I managing there changed? drifting And impact were away, forward? next T-shirt goes there of then see back you be much down sort going amount you how what's nice the bounce that to bounce if the cost an think going much back business in normal high a is given an inflation re-lever to sales talk you just continuing or could Are theoretically few the with cost to a year, the or back had a the in if would be natural on How ability and in issue year. if months ago, there that the Is

John Idol

little managing the I'll then to, of take bit costs take over going to and turn and Versace Tom. it I'm a obviously, the I'll

my doing than the working Donatella earlier, responding there, when built that we and to we and any what at Akeroyd is on. are our have and said absolutely initiatives happier So Versace. way is out vision we're I design we implementing exactly management prowess take the be happening I off as envisioned together. to her what to Jonathan the hat really and and with team he the customer strategic collective had couldn't company that marketing working acquired what's her

think a a labeled product China, was, have I about where the misunderstanding did track. a feel way situation was So unfortunately, we we right really on and created in That celebrity recently, wear China. absolutely Chinese that difficult has subsiding performance. Versace had been a and really result a there We Mainland is in wonderful the product, performance in Lau again Carina that of our our

that One -- And I sure understand we think very, working will in time over sovereignty. we make people are Policy China and hard the the China that to so their respect that believe of very

So to I don't issue think an for be us. that's going

is than of a China business any our Versace of the Obviously, brands. three bigger proportion

a believe with next dealt to and go painful as the the away, three rebound to take get months, we period. it be months, because virus be through six go will will really going it's that's or say to next be there'll contained. we I'm the and So two to then It going going

thoughts reduced QX of terms see shopping not today seeing malls. we'll what our are we're in closures So traffic of store and in probably the level

going is group what sales. to doesn't QX itself this minute to for be for So the being feeling acquisition our to all billion it impact that's of of penetration about an and but our add its it do pause this potential largest able of the on by about But give Versace us is of going brand. because the $X for with overall brands, overall one

this as of Coronavirus said term. managing of brands China And through. actually margins will cost, going think our I at of to us will how our for I which about earlier, pillar and operating over will in the key think turn to going that's terms that year get be Tom. situation, very we And it all current we're expand a growth. ex super I to positive will return, impact we next long that are

Tom Edwards

from the adjust variable you could the we're lot a costs, of not For are are rapid we the here, as short that term in managing imagine short developments costs but very the that in costs, actively could term.

the However, that possibility, events, reducing like there and items store short those that is other many said, costs. fact marketing and and for less there is actively a traffic term where managing and we're closed certainly

which the the at seeing the is the business. million level, $XXX the up our across However, for mentioned, regions, as right highest we're John the margin of what in through now, impact flow thus, more all is gross company,

back we for virus that works that the to be again is get the don't business, support come any market well inflationary meantime. in specific managing after in would there the that timeframe, during the I back and impact cost as expect through. would we'll and the margin this the we just be considering really we as extent ultimately recovers, know To when this

Operator

Thank you.

We go Co. take Oliver Chen will Please of from now & our ahead. last question Cowen

Unidentified Analyst

for Hi, [Joanna] managing how you How of the performed price Thank on Could just And trends versus the Thank are by you overall? today. AURs category the the hands-free Kors Oliver perform this question. is handbags, full did the taking in for light thoughts trend? you how outlet? And just elaborate traffic for quick on channel? our much. on very you Michael

John Idol

brands gone was price although to three by is exciting speak we're just every seen and, I'll online excellent growing for seen pavilion Eleven single We beginning has last business best the in channel a China. and the the including in In at of way, very one terms we've you've the decline over traffic, holidays, our what great broadly us. of full Eleven T mitigate. obviously in for results channels, had Clearly, is on that's the years in luxury a market almost which to partnership and the we're performing Mall,

part today. So the that's of shopping think migration again where of are I natural consumers

in The commented traffic customers slight who full-price that. certain shop would again, an Again on who outlet And part channel. have seen outlet or typically declines because of only I on our malls the something think and have one we're eCommerce. store seeing is not of might sale that buy

just in of migration part the exactly Europe more America, So in North where Asia, not you the I think that's and bit natural and that's a see case. that

very years So I as ago. we've times, e-commerce think five well than positioned we're many mentioned journey started more we and digital our

We're and also where money on warehouses. groups going it. at Choo in We're significant a moving is we're, level as the bringing centers. group bring Tom -- distribution good mentioned, we're to Versace to investments together certain pretty platforms, spent of Jimmy in make further synergies We the the upto going we're of amount

that happen well. You'll in rapidly in see year North in and Europe very Asia as America, next

capabilities a financial channel. from store example, only Versace not standpoint, begin as synergies, also a but more to have approach improve our their an able the to from using a online really to we're capabilities, will So be omni to and

what's to And in feeling of right good to ability said move we very direction. the you, feel of as about about performance terms inflection I We're So our think happening. very moving good that we're I've in accessories, the forward.

actually We more last we on get that better well to where us much very going that at turning its time performers this We're have have did much operating into is to again not Signature the and a year level, XX% going to strong are give is sell-throughs. groups of which number way. margins, consistent

just not about I and Michael feel Kors, good we So I add, want think that in to

happening think about feel great accessories. I in with Versace what's we

us the brand shows and our and the accessories, getting Denis new into quicker what Choi and take is Choo Jimmy has on business in logo. really V achieve Sandra also grip particular actually done really logo the that And with think only and than able footwear holiday well. boots Barocco had Pierre Signature it's what performed Donatella anticipated. to and have JC not starting think that been in to of the I power our really then I this we but season our at logo And

are across you I just next saying on morning. us note, in So for put to an by this think teams conclude very us that like joining And product position all thank strong the I'd of our and excellent developing for world year.

for to tell We think said initiatives investment really was for long call. and we operating earnings today. feeling growth, about term the company and you opportunity very and about of our this year you're you see our revenue I excited to have share year are more per that fruits forward and the Thank income as good the us upcoming going earnings next in and for come joining we're Capri's

Operator

your Ladies and gentlemen, this concludes today’s conference Thank call. you for participation.

You may now disconnect.

Capri Holdings Limited (CPRI) 5 Feb 202020 Q3 Earnings call transcript