CPRI - Earnings call transcript Q1 2021

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Capri Holdings Limited First Quarter Fiscal 2021 Earnings Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. now Vice turn President, would to conference I Davis, Jennifer Investor Instructions] like the to over [Operator Relations. Please go ahead.

Jennifer Davis

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

which to me on statements, we begin, uncertainties let differ at remind and subject no obligation today’s which in press and today’s may during we statements on certain the available to undertakes made made on described Investors a the you call are could Before company any that update and statements the filings, expect. that forward-looking call company’s remain constitute are will later results and cause risks uncertainties call. the company’s that this the time operative are discussed in release Those information actual risks should SEC those to website. not from assume

certain earnings capriholdings.com. information financial posted Unless view at a information These implementation presented the basis. non-GAAP Capri ERP non-GAAP certain reconciliation, on asset restructuring addition, measures be costs, corresponding other charges. long-lived will and related today otherwise basis. today our transformation earlier GAAP noted, exclude will charges, a release associated non-GAAP on financial costs call costs, on be view please To all website impairments, today’s presented with on measures and discussed COVID-XX-related In

the slides I our that that highlights Before quarter. we for would we have website, note to on begin, provide like posted

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

John Idol

be again, joining morning, the light New and some building. in everyone. from may background I’m sorry, Today, good our Jennifer, but due you, construction noise we there are to once York offices. you Thank

serious prayers out and quarter impact been world. thoughts COVID-XX to continues The dynamic some everyone those frontlines very helping pandemic. are profoundly this first thoughts all around who would as who like the reviewing pandemic. go Before and situation combat to results, virus, evolving have the the remains it the our I entire tirelessly and to on by share affected My

continue our health and the we time. and the dedication to top of every thank and around their a around day support employees, the stores and I customers world hard communities remains As the reopen want unprecedented communities globe, for our each they our safety priority. teams other this work to continue to demonstrate during to

pandemic, our by our was to with e-commerce while as quarter e-commerce particularly exceeded pleased robust were impacted turning revenue above first the our XX% significantly And performing earnings and partners, performance our increased compared results, reopened, expectations. expectations. our our expectations. as Now, COVID-XX revenue initial growth stores and to sites, year. our the wholesale are original Similarly, our exceeded approximately stores reopened revenue We prior

declined wholesale approximately retail during closures. XX% limited wholesale quarter sales month. Revenue with XX%. approximately XX%, our store quarter the decreased our while to improving due However, in each revenue placed first the channel partners Total trends progressively Overall, declined orders

were selectively corporate our sell-throughs Looking as initiatives price basis higher performance to in full pleased at gross we points. part, prices This profit, expanded with and improvement, reflects margin AURs. generating increase XXX our raise

mix higher Additionally, versus retail a benefited of from gross margins sales wholesale sales.

base we expenses, XXXX. our reduce expense fiscal decisive operating have in Moving actions to to taken

quarter. in on the the share generated first of loss lower However, loss $X.XX deleverage a $XXX due to net a million, we of per revenue,

from strength China, progress open domestic driven in have sales of are longest turning trends a the XX%. by in region, where made Now, first We’ve revenue and declined been quarter region, the to our mainland in benefiting by most sales review Asia the consumption. this stores

approximately was Macau flat year. First where quarter Choo significantly in the remainder remained revenue the Kong Kors year in of And revenue Revenue region below EMEA, Greater below to is and in year. Hong Mainland impacted Asia of later, Michael and prior China, last XX%. outside at last as was Versace virus declined slower China, In shipments the Wholesale areas declined Jimmy these XX%. a the first progressing recovery at quarter pace,

shipments Our by quarter. and region May were in stores the reopening first XX%. the In the declined region quarter. were average Americas, the end stores quarter began fleet revenue approximately of of in of XX%. open in closed XX% on XX% the We the Wholesale declined the

reopening Our and stores approximately in began open. of of quarter. of XX% approximately in the XX% first the We were approximately declined the stores with May Wholesale average end fleet on XX%. our shipments closed region quarter

regions our important has destinations. our flagship major outbreak business. impacted in Tourist virtually related Additionally, activity locations many a well the standstill come Tourism travel of and international tourist a to been have travel our comprise of all as COVID-XX. of as meaningful sales channel, as travel retail since part impacts

prints, Lopez. of collection, Virtus first saw to new jewelry. Overall, are our statement pleased to footwear, Virtus turning backpacks, Within with Jennifer expanded a Virtus styles sandals the are Versace, celebrated sales as top jungle performance Within The the strong outperformance V including pace and featured Barocco innovative by worn spring/summer our active. and with new customer by quarter the the in Starting which encouraging. Tie-dye we additional Now, anniversary including a jungle collection complemented remains we fashion of collection of collection XXth designs. the saw have dress footwear ready-to-wear, Versace. response recovery logo we performing categories brand. V across group The well as accessories, by of belts, fashion we accessories Barocco the with and

to social across V-shaped the promoting have featured fun scenes to X with drive engagement launched, challenge our Challenge have the and Barocco brand channels and In submissions the further awareness VeryVersace logo. we digital a brand of new landscapes, V platforms terms we across share websites. pictures followers our objects, everyday of VeryVersace spaces of the mid-July, May, their The potential in awareness, Barocco community In or encouraged iconic their inspire from logo. V lives, of our The our creativity. to customer launched Part social to invited challenge

The of squad Cheer print our second courage strength, uniform virtue. featured imagery collection The symbolizing Paris pre-fall in dressed of a the XXXX. values from Barocco Virtus accessories pieces of of Royal new installment showcased Virtus’ Squad the the line and

grew initiatives Versace’s social DV-TV, few media increase a in we a a contribute that she in in following friends. as significant in XX% which handpicks $XX engagement million. the during resulted for to and launched Additionally, total her June, follows Donatella series of These increase famous helped outfits to a quarter,

Jimmy Moving Choo. to

performance relaxed accessories of best-selling JC sandals, are in our our by resulted expanded penetration in Varenne we the strong performance are our as active. quarter. nearly the of doubling customer fashion towards assortment more for response Signature to collection. We footwear, assortment expanded flat and shifting saw styles, preferences pleased In active, fashion with our remaining In

In the stylish standout, Bohemian customer. well and not and terms Choos strong XXXX and experiences. this launched by was highlights but fashion pre-fall ad who June, featured learnings their glamour awareness prominent featuring Moss Kate Interview brand season’s of dare In of in others customer Moss. Kate our series, the Jimmy campaign as engagement, icon, In My women, Kate epitomizes, Choo modern also insights, we empower collection only which installment to new latest inspired sharing as

top These increase held social helped followers, a to Choi of in shopping virtual Sandra grew events with Jimmy some clients. activities media contribute our which over $XX Choo’s Additionally, million. X% global to

Turning Kors. to Michael

We classification. are accessories pleased with the performance of our

and last XX% penetration increased to over quarter margins. year, gross as well XX% compared This generated approximately AURs as signature higher

such as totes with we designs. increases. true chic several watches In bold, and addition, months. we such styles, In jewelry, saw over we Within and sales better to saw bags in active. that large sandals Watch also performance inflection being backpacks, strong contributing our are past versatile are which style performance in driven sophisticated seeing and and footwear, as distinctive to are by an fashion are traditional the DNA, AUR

Finally, modern continues men’s on timeless expectations. a we edge. our with outperform grow as essentials focus the continues business Within men’s accessories to to

to the as of He photos to around continued world. favorite traveler modern his theme reinforce social to he engagement, journey and connect Turning travel media, them destinations. trips Michael fans with shared virtual the some brand from of memories on a taking on his the

city a virtual on increase coronavirus sent Bella to inspired to the Michael And followers her spots. Hadid engagement. videos in trip a of Michael the first pandemic, significant Orleans. New drove last Instagram the her of favorite to visit Michael’s Before tour Bella’s took our Bella where and his city, month,

media helped continue initiatives energy X% optimism. and global marketing our increase brand’s the to This nearly contribute presence, to of XX speed, to which grew Our followers. pillars in brand a social million underpin

brand. to encouraged compared the progress each luxury XX houses. of last demonstrating Holdings, of strategic we to and Despite founder-led continues execute also of customers, for database of increase Michael our global the global by the expand nearly Capri continued the the the desirability we’re fashion as of pandemic, initiatives XX% against an Kors impact million reaching year, ongoing Our strength

at over stores. revenue, expanding increase footwear on remain increasing ability meaningful luxury expanding XX% XXX changed. operating $X $X growth. enhancing potential achieve at of luxury vision, to development, revenue building accelerating increasing e-commerce billion footwear to margin there penetration our over accessories the revenue, retail by powerful confidence approximately group XXX opportunity to position revenue to global omni-channel marketing, that approximately margin and our Similarly our with believe global our time. mid-teens grow Choo, e-commerce footprint retail growth initiatives omni-channel to We to momentum and and on driven By a and of and operating focus houses to our the long-term capabilities iconic collection confident ahead, our XX% has luxury significant collection, time Jimmy our we and penetration by luxury mid-teens remain revenue Versace, billion and footprint stores. achieve long-term is Starting not Looking the global earnings our fashion our leveraging to in Donatella’s we accessories increasing and our of a and to

also business. customer our our to in To double brand Kors, our e-commerce and building engagement increase Expand to signature on men’s awareness. to growth, growth, to improving revenue, expand revenue Turning Michael’s our classifications, revenue Asia strong is Michael growing profitability. increase across goal continue plan our global all we return offerings but

certain of margin to operating Turning benefits initiatives beginning the designed the realize to we years. over our improve profitability, next to several are

drive expect and gross price full higher sell-throughs, through costs. lower margin manufacturing We price strategic increases to expansion

we to cost will also streamline reduce base with anticipated We as align our continue structure better to organization our expense revenue. our

to In initiatives remain and our we founder-led confident iconic to opportunities conclusion, profitability luxury houses. Capri overall during long fashion optimization closing X execute for to Additionally, unprecedented strategic plan and program the has in times, these long-term by unique successfully value periods. growth each improve continue fleet we have underperforming portfolio our luxury global of a expect stores. a our history navigating of brands that challenging Holdings of enduring on

continue will fiscal current guide business to through environment, the retail XXXX. carefully while to in positioning growth our the resume We company

Now, over I’d call turn like to to the Tom.

Thomas Edwards

results. good quarter of Across limited being deleverage brands a the loss all XX% on The fleet $X.XX. quarter, resulting per million, closed net month was to and million, for first everyone. first progressively morning, and quarter, our lower declined a wholesale revenue by each we primarily in share of revenue, trends Revenue of with John, to of revenue you, throughout XX% retail $XXX improved $XXX loss orders. generated due year. Thank Starting last decreased driven compared approximately the

revenue at from Versace ended brand, compared net million, increase of Versace of June luxury prior year. a prior stores, year. XXX to X a was fleet a by decrease global Looking with XX% retail $XX revenue performance

$XX of quarter a For Jimmy of XX Choo, during to ended global prior Choo XXX the prior was retail a compared a net year. year. decrease from quarter fleet million, stores, XX% Jimmy revenue the increase with

million Kors, prior to Michael $XXX of Michael XX% year. quarter compared to of Turning stores XX a XXX last retail year. the of Kors declined from total global ended fleet with a revenue decrease net

million, and driven as percent Kors Gross margin an expense last due was company costs. of variable $XXX expanded basis a XX.X%. compares year, margin reduction Now higher deleverage to benefits reflecting XXX% reflects from from our performance. decreased Total XX.X% This channel XX.X% deleverage AURs as as to well on looking cost predominantly Operating XX.X% mix. due lower favorable increase company expense lower to the revenue. revenue. year, in Total company total of revenue points operating compared significant store by operating negative last initiatives, lower primarily to margin Michael to XXX at

$X.X Turning million, to we the Total million $X.X billion. sheet, of debt end the of of quarter with $X.X debt resulting our net billion. balance ended was of and in the liquidity $XXX quarter cash at

down inventory, X% quarter with the million, we $XXX to compared Looking year. ended last at

XXXX the sequentially with our year throughout inventory approximately decline. and fiscal to expect full-year line decline We in end revenue

this guidance, not to macroeconomic to are of earnings providing fundamentals annual Now, turning time surrounding lack we the and tourism. visibility guidance due the pandemic, at

our However, the and color I thoughts some as would throughout the expectations expected of certain recovery provide progression like items. for non-operating the some the around second to quarter, share as fiscal well year, around

as luxury our the as impacts all of encouraged recovery well and EMEA, we major planning the of far, that the more important rebuild anticipate as progression geographies, the recovery in locations domestic While a benefiting channel, so are we the are Americas business, and gradually. retail tourist are well sales In destinations. from rapid we tourist In will longer. take assuming we by as revenue many to Asia, recovery as which Across slower in flagship China, our demand. expect travel experiencing activity, recovery balance

confidence begins sales as increased looking second second at anticipate wholesale. continue quarter, economy in shipments. reopened. compared with Now, the to XX% we’d recover. continued year, improve performance of better stores wholesale quarter sales see the to continuing to anticipate point will improve, and we majority performance Building trends vast the improve resulting revenue the to In sale regions fourth of gradually approximately retail We third which the quarters, at total our the the quarter, channel, July. all than the through In first prior company’s will momentum to consumer have significantly seen and decline is in also positive on

shopping to levels. Summing performance XXXX, below a for expect XX% our quarter expect the approximately We consumer be improvement decline gradual in quarter, remain the better a the anticipate periods outlook third for and for fourth up in than prior-year both revenue year. we but trends of fiscal

This expect incorporate We recovery slower in sales retail not shipments. company with or a to re-closures lockdowns. store wholesale significant government any trends owned be additional better, does outlook

gross of reflects This expansion Turning of sell-throughs, across gross year greater basis improvements approximately to with profit increases performance selective margin quarters. and profit, XXX primarily we the price full-price for manufacturing efficiencies. the anticipate benefit all points cost

around expectations anticipate full $XX our items, non-operating we to for turning Now, certain million. approximately expense interest the of year,

of XXXX, in forecast earnings per given Our in effective tax rate shares million. average is approximately fiscal anticipate XX%. of $XXX we expected weighted to the half We be approximately first an resulting revenue outstanding reduction loss deleverage. the And share and

also internal our brands. business is first the are trends the While thus we have revenue positive made decline per initiatives focused each with gradually improve. our of during while as significant the pleased cost In progress reductions, which it remain will far, XXXX, we of not will managing for year. be times, half recovery in enough ahead of strategic these considerable the our uncertain on our company projections. to long-term executing conclusion, We to against the through share, expect second earnings In return of fiscal we the generating offset half the revenue of

Holdings emerge Capri is revenue in and we strong to the from drive As growth well-positioned XXXX. fiscal earnings pandemic,

will up I Now, the questions. open for line

Operator

you. Thank

[Operator the will Saad from Instructions] of Please ahead. question Evercore go Omar begin We now ISI. question-and-answer Our session. first comes

Omar Saad

underlying for taking Good Thanks Kors in Thanks positive gross brand you some on dynamics a further about update. John, that. maybe AUR do little the and the ongoing talk question. Thanks. see the in trends. and kind taking like that, you basis? in reduce partners, the to an a my dive kind could the really opportunity here think this your could And I’d driving environment pricing bit with you do Michael And trend? in your of for on of morning. margin promotional pandemic and AUR channels to support demand a this of about positive own go-forward that an to levels opportunity think wholesale

John Idol

morning, you family Good all your hope I unprecedented Omar. this and that time. And during are safe

in said fiscal today. we out that, you with in our by XXXX still me started majority start as out the that remarks, place Let initiatives telling really prepared are first we in of our our

revenue say pandemic. strategies, growth when the with one and luxury when groups, where enormous most the So the lot we starting of opportunity, have little we a And which the we I we said growth opportunity, at $X And in current given changed across Versace, billion look see each we pre-COVID, clearly that that believe underdeveloped houses billion of our a of look haven’t that’s, we world. a our that, underdeveloped first over were we we’ve $X think And ultimately, trend, when a you feel numerous the company. times, for means significantly. we

We very been we’ve lines, refocusing into see we million year-and-a-half also of owning can certain first closing And remain our company. company we’ve to with live we margins, that out start and ability some $XXX closed X also really been taken where of larger confident over of think We’ve of kind our cleaning the penetration We’ve position that. dropped in and up. year, I accessories, that we really company. through unproductive the revenues. expand We So finally around initiatives – stores. the doing gotten in we’re the now, size where it

brand that. our So tremendous into doing we opportunity those we our loyalty. us we create Medusa, launched new heading to Barocco logo, which think were and gives things with along COVID V engagement All and

that. As see social – quarter. remarks And what database media the prepared say our grew didn’t very, we XX% again, grow rapidly. base in consumers, prepared of very heritage brand’s that symbol And is our our think the engaged lastly, during remarks, by to can were then pre-COVID, we the again, and brand, have very with or still that you a products represented we continues

really being good and take but for feel mid-teens with fast of about think we’re market very, for can is COVID, very share, we And growing we’re quickly, that the absolutely the to growth positioned on the the as still again, industry pyramid operating a obviously we still engaging long-term. the growing with we have So getting quite although – short-term trajectory this company we’re very the top the customer, that. area contracted for that’s margin

think Again, Secondly, about opportunity the later. during the see grew taking talk rebalance predominantly fall we with house, accessories increases to company as a I season. again, there, underpriced and in think improve product. its Jimmy database Choo, footwear margin phenomenal. XX% being remarks this as more you’re by that prepared just footwear we quarter, XX%. then, that to from are going And have operating price again, an actually is to that to that want which our really And company our and we said we in that line, We Jimmy historically Choo, has we happen

think a little that’s being going bit luxury and margins, operating ultimately, gross history we’ve had our we’ve always underdog a of our also in reflected brand. are be position new the And to a of a that. and We on taken margins. We

in. really Luxury is. we and Jimmy what feel we Choo. traditionally the We’ve about talked to we that in we’re had casual good about the as very not. about prepared did always And new very quickly did, heading in before pivoted business talked big sneaker remarks, So that, we direction a

company. one our is And and made wearing slides if in You you today, new really for on incredible Kate got that the our can Hawaii trainer our Moss see that. trainer release, just attachment press we’ve to of looked in the fire you strides at

by, we’re factory X on and ago, really start there, our manufacturing place that’s and efficiencies up new about not going gross I a products. then showing was really some ago, that I months down of you it to operating mistake we’re personally putting led our that Michael that path of in a so we margin. some purchased lots again, making So that pushing said signature made first really And strength recall, with as our time started we’ve Kors,

part. had on a we pulled In them. strategic decision incorrect That fact, was very my back on

the particularly, significantly. on we that in corrected business done during calls the our signature. was We’ve have area our accessories that by more. driven of the have quarter up done told We And we that. subsequently – previous signature you business would could We the XX% get

from been she great that out We’re a product been running selling in product and to brand. have the That responding with own marketing the obviously, Customers the certain lot with stories in with says inventory. that’s teams actually cases out that up resonating are customer. about And our that, our inventory wants and pacing of we’re with Michael It’s really absolutely or from Hadid. Bella he, company we coming fantastic what led around and that. levels men’s if that, And far category.

that’s And take area we selling. of better that one less because So in seeing signature we’re in area. full-price the AUR, that markdowns areas,

Michael Secondly, probably absolutely X prices raising strategically that now. been we in are Kors. doing We’ve quarters for

happening. again You’ll see it

a be up moving little in of think about for, a We’re position XX the been we’ve that the were We’ve the again, or going bit Once doing bit marketplace in we that Michael of little to I XX prices taken years. always Kors. underdog.

We’re taking position. a different

American fashion We And of not, on or been most accordingly. going important products the no one right when always in we’ve have whether We’ve getting so – the up depends product also world. if resistance we’ve far. we’re efficiencies. the price And taking also And our you are prices manufacturing that seen been not. again brand the luxury to most, some

been Our terrific. have partners

put want this our to of We really who, of really that. all. on going cancel I of our They’ve reaping also working haven’t We the about we’ve changed are marketplaces. cancelled manufacturers fall cancellations quality been in the partner we different been the on our actually orders, in that with thank limited at more didn’t very things benefits us great on pandemic, the And call during holiday. most amounts.

through some flowing our actually in repurposing of we’re then, product. fall spring. spring product the that And upcoming We’re holiday, product the

to through that we excellent is position, that about, be the will the to as markdowns out close have talked few as Tom from there’ll we which lot of much merchandise also quarters. us. for inventories And next move come So our going fact don’t less as mean, in gross a margin are expansion,

trends of being Michael selling, restrictive us we full-price those in all, think, amount introduce fashion has more with, all I helped So bit as well. better into were of leaning new that little – the course Kors, a that in and, by we really

really strategies going So any we changed haven’t into the our of pandemic.

the a we exclusion performance that. see, think really the up than that. had I can significantly slightly you With month strong XX% of July, the as which of by e-commerce, quarter during for actually And way the we’re higher our over

decelerating, And X the points the is So have historically. think new trend we I trend is is not interesting than customers accelerating. during X, this, one the of generated the we more in months other that last

So we And of time. luxury period saw new less during our with basically was to houses customers more coming marketing. of this – to that the all

they searching Michael and percentage out. us highest They that. our the Kors brands. So saw our wanted And were of products

think are these really good So all I indicators.

lot management to difficult us. And change taking best in the They’re decided before that, at in you we and we strategies Versace very sounding next an of management one team, of the And teams are industry, I the where of want take while this of that’s a if these And have team excellent eye bleak time. these at think through periods in say because nimbly Michael last the been for seasoned, we’ve Kors, here company. go. I this positive, win to me one strategy question very the able at put working. not the both off So these houses Jimmy strategic their issues we to hear place, Choo, time is during got as those thing again, companies a been some in it’s industry. a that our to of of not probably they’re the And most just strategies during going work and

we through XX-year out get will long are stay got as end going the We in These history. our has grow. we going got These going There’s XX-year the are brands not will that winners fade a get – to – opinion. we’ll a away. are And a And to Versace got Michael of even history. be on Jimmy not we’ll as through this. got other are that will brands get We’ve They’re XX-year Kors strategies, to come and a one Choo’s question. history. we focused my this. stronger. has

you, So thank Omar.

Operator

comes go question next ahead. of Sandler. from Our Murphy Erinn Piper Please

Erinn Murphy

It slides, recovery like Great, morning. is the a guess, your seeing recovery my Americas regions. the of if John, question of other I’m steeper Americas. in I looking versus thanks. looks lot it at looks that the you’re some here the Good is around a

So rising, have if in you any in counts could about as certain you’re Thank seen July? you. regional month states, more then, we’ve what just case seeing. major seen And speak bit a differences the of you

John Idol

you you. Erinn. morning, your And and I are, hope Good Thank wherever safe you family. are

And I you the for look you hope view what’s all that because So, feel on think day. when Erinn, sent I that many are we’re living this of this chart at happening. we helps, give on out, to analysts which call, we is who some and day enlightening

the You’re happening a bit getting than what’s live. information later little

appreciate. we So

for much our as information, need You possible. investors as

to with be you as trying So and we’re what we see. transparent share

start quite the doing Asia. has just with well seen the Choo are recovery Again, moved very China to would really where globe the Michael Kors would want is And rapidly decision, I recovery, address route I a fastest I around that said Hindsight and given Versace that, XXXX, so. we’ve the and in the Jimmy inventory the little was probably when Americas. best was very, quickly back and pretty not to China. China, to that January, because bounced to So EMEA pandemic there. go less that and in we that broke in that’s

basically as inventory we’re arriving that region So inventory on is lean speak. in and that we

It’s trend newness. fresh what’s we’re So really new a about both we EMEA merchandise. interesting. me. fresh, sale new excite in seeing, to what’s responding than United little less China, lot more needed ever going and And the and quite that an and a Customers to what’s on States. It’s interesting more about and that’s whole more

we’re again, around X really standpoint each fun that time that trying out And marketing we’re talk in what So lifestyles whether be storytelling. our that’s story an product to of image companies brands. or it’s various a and about, of to a from really project around and the

seeing China. we’re Obviously, are for the luxury difficult businesses those significant companies. Kong most it’s very in and positives So and us in Macau. Hong And

very as And resurgence is heard, you many there. kind in there it’s what’s have and So a happening a Japan, read painful, happening. of of

And so, have to again. are stores our China. reclosed there Certain in close offices starting

there. So we’re some seeing difficulty

as some has Australia, around on. So I lockdown you And going a bouncing have in that region. in Melbourne think see we’re starting to probably read

encouraging, say, very of traveling to I’d tourist we’re a while move the my with region that, that these to going the huge to to I we’re very So recovering. this I’d places year. And EMEA on peak basically, the remarks the of us Florence volume. are coming important we’re And be balance impact big region, for say, And and as cities come is that’s and Paris London slowly season important and Asian many to do obviously, because happen the tourists tourist And that’s where not at and said the prepared in has tourists. where we this the where here Barcelona in would reason next. recovery. really standstill. China again, where a and seeing the traveling, very And, seeing slowest is of is travel. I’ll all Milan

to with day choose sales they’re back people first customers making and point a They’re very week. the happening, get can an we’ll working and the live us. the and we to I really creating to, There’s same really enormous every their happening but and customers. safe in hand, up send – the brought but with experiences associates, what’s cautious be in with with once virtually, what’s being of our putting And other clothes who let of then, we nervous company So homes continue done them brands about out happy the who, wardrobes have their are pick and opening shout also, where and or some they’re bespoke clienteling them And in two, a very, being while day give cases people’s and for want clients whole these about time. at they’re and our work Europe. heroes to lot the to on stores, again

rebound see start bit response you that. in In there’s And very, America, quicker. department been good the So that store more a happening happening, North probably is out, of little to partners. pointed I’ll our Europe. actually as very we some with

the are department quite beating depth Our a is products, we’re being at well. digital interesting. partners our and quite few some which we’ve of reach where are, driven had actually of last least our doing weeks store with at operations. by their And that’s year, partners And

been seeing with we’ve had that’s that the – on – always Also, end. extraordinary we’re mentioned seen add that might call very results real with last and in I and penetration partners online it incredible So department where a some Europe, similar store high in sales I we’ve our always that. results we’ve

the had tremendous recovery limited a closures in California, had impact the for numbers really predominantly on haven’t that we’ve So which been America, in us. North have

closures sporadic first. our that We COVID happened we’re stores. employee of safety again, due have our inside putting And are cases seeing to

close. We will

stores. the will clean We

contracted sure have We are employees that will quarantined. whatever COVID make

in difficult. levels And skewing is The who so stores. happening, I’d but clearly biggest is conversion traffic. higher. and America, so significantly it’s in transaction are less in in. coming people levels are not down much generally for say North those But The there’s are The range, traffic higher foot the the us business that into XX% in Asia even traffic is Foot issue for tremendously. Europe that and the

would We’re – actually building, our all The X by seeing in extraordinary. And e-commerce I’m even earlier, as build week. lastly But And this traffic I us I proud said is quite investments teams. that results for week regions. so are made of say so really what slow. the company. it’s in We’ve

huge for got changed more a more As X doing that I a XX mentioned on being engaging Michael got talked a focused has this sudden, we’ve a we for X been lot it, us. today, of journey about Kors digitally-led not with our it’s in way, million and lot everything omni-channel so on really database like or spotlight years, emphasis We’ve it. previously, customer We’ve all a people. started that of this on

is can that. we So quite build upon really our and large, ecosystem

of marketing the more some We have do we size that to targeted Versace extraordinary. as for Choo the lofty roll quite Jimmy And offs of we a and that increase really the lot and can and that, goals ecosystem. results do are

is omni. take Thank Erinn. as our our that largest right America given the North our clearly own allocation us time positioned this as percentage partners. it. of for well towards But the department for way And asset going to So has e-commerce out to you, store work our both in us, and of feel we’re we way channels, like

Operator

comes Our ahead. next from of question go Please JPMorgan. Boss Matthew

Matthew Boss

Great, thanks.

quarter. So maybe you opportunity emerge to front the of distribution XX% stronger wholesale John, the about in the quarter the wholesale How best shipments first think think pandemic footprint with do to on half of progression year? a wholesale versus about the how in from And the maybe back larger second the the global relative to the decline overall? picture,

John Idol

turn and to for second to I’m the the question. over first Tom going I’ll it part, take part then

As calls, many around are retail and in deeply I’ve travel we partners, and our partnerships to store you partners department our with on specialty proud world. the believe we very and said

you but about closures our necessarily bankruptcies are one-third look you see total last will not year our That see you know, sorry, that of – this by which about and come unique door when some year happening, corporation. wholesale So XX% are penetration, happening. year, the business, at you as that down for number design, ran next

going that’s that. limit to And so

heard believe retail you not you And listening have to. recover. telling We that to X also take that anything I’m business the again, actually probably at or travel least will years been

or relevant number customer So less extremely those we Neiman’s, that will think a that although absolutely profitable, we we company to our partnerships think and the that at value it’s Saks, and and loyal stores with Lafayette, great customers. relationships amazing they whatever sales or Harvey are, Harrods them in these their the associates with Bloomingdale’s, or Macy’s, the beautiful places have are Minkoff, Galeries Nichols number whether become – Dillards shops

for I today. good. off out be a down at quite for stores position And that recovery we actually be before, worried we the do I was only think to with over said better precipitous, seeing to actually that to the think merchandise, the you’ve ultimately way the everyone took of time. just handful laid we’ve people it quite think And And turn last least see the this we at think And with is engaged So it. to way think going happen remain smaller and I business to doing although us remember, only the our I’ll very say, one host brand, it’s we partners. we the know pay we the what outbreak the seems that was and seen Tom, as want with were thing, actually they’re for out what working not that X to we’re it to got ship is of decline, we reasons. channel And given a would I’ll channel going that which be to while – as ones a business we we today. nicely cash continue then And we went We of smart. about for be that next you of turn department because for we the obviously, quarters. our that that. want the to did we to quite of department pandemic, store out told here’s don’t the bad recovering But we to do them, recover

start to let recover talk next about the So quarters, but see that Tom few that. we’ll I’ll over

Thomas Edwards

been Sure. Thanks, POS positive saying, QX it encouraging. Matt. expect the so lag And e-commerce year. very was our the And had John wholesale on good retail have will from said is we on side build been it the what for own they and that business. has out of will coming seen our recover trends that on just partners, replenishments through what to we recover, and That new orders

few And not a However, closures mentioned, a small looking the it our and really behind and little in smaller to at part major we recovery retail shipments bankruptcies, longer will be year. term, impacted but paced own throughout a have are John door with and our slightly business. those had large it as maybe

John Idol

you, Thank Matt.

Operator

Goldman Our Please next ahead. Sachs. go Alex question comes Walvis from of

Alexandra Walvis

comments Good the on longer and for morning. you’re for And taking in you belief thinking how term. here. thanks My same opportunity that about still mentioned the so the store the your and question the much plan of John, the thinking forward is pandemic of going the that rollout acceleration change question or How consumer kind brands? Jimmy direct growth the the to e-commerce, the across anything your X about fleet for that the you business Choo. see reflection has structure for the and on associated on is

John Idol

I morning, safe. good family off, are hope your First and you

the couldn’t Secondly, I first think the could we part repeat question, hear if of just that? you

Alexandra Walvis

has about the believe opportunity ask to and Jimmy acceleration retail thoughts how e-commerce the store wanted I for physical business. still I on in how apologies. thinking Versace the in similar. pandemic the during you’re My about is growth Choo this changed in of the presence

and they how you’re e-commerce why So interact guess, differently the stores how of wondering that future? in kind you’re is I’m that I of the with thinking about maybe types

John Idol

okay. Sure,

So, happen it’s Michael is as in at to to news going pandemic our it’s to business. platforms, built time The accelerated have minimum, increased e-commerce has great e-commerce able built $X our warehouses. cetera, of billion still ago, we Kors, And the of before, overnight. think business. said revenues, that happen we the – I we’ve strategy penetration overnight. business that absolutely our to built didn’t handle not to total would type – the that our that be But We some et

some help a possibly where as in what’s transformation other e-commerce. very looking be Choo, growth in starting the feel be fast take initiatives able other for place. can. at position able Jimmy our of example, that they’re And the And warehouse and we to we’re that happened to are to rapid this in moving of our we take we is grow to to Europe. is into divisions, we integration comfortable So Holland ability advantage have as

we’ve Secondly, X on initiative. very years, been the really for past strong a

then, when that, it’s can database going as because we’re to we’re You going that possibly to when talk to tremendous recover we is at fact That’s What talk growing, rate experience the us following our to like each us. we one that When don’t going on not as – course, growing, new dealing current that we want and in see pushing regularly, of traffic what we down they with they they’re because do we to don’t or brands. us. is to because thing and growing, our we the have able the customers, media particular, of of know value know hard us. names, engaging part can you at. social customers customers. every And got hear a about that that’s lapped you’re ecosystem, is that’s be customers, of can it and The do their we’re with and recover one grow with, our to it’s

we’re about So that. excited

is more a light of our not you when between over XXX competitors think don’t think of even that we stores Choo, of have brands. a Many and Jimmy are at in pandemic, both look the stored. those having for know and our opinion the either and I that underdeveloped, Versace brands one significantly stretch today. in XXX lot XXX we globally We of luxury And that’s we going where and the that as that have creating beyond digital experiences connection targets our additional our far. we of don’t can category. hit think need to of many again with are we we what our think ways without and with client as customer growth go stores We telling customer,

very that. So and careful monitor be we’ll

On Kors where quite we’ve program to our of a optimizing say, side, I I’m And the have been fleet. started have Michael proud really that. already we

XXX years current competitors, when Michael over I next addition going our versus XXX in we’re close to clearly approximately X stores that our us from the we’ve at Kors stores. look think said you

grow profitable, we’re us going productive. stores at Michael that’s and Choo a really and to Kors. in can start to of those that And making stores put and predominantly stores more Versace we’re having that good that terms on So in focus going are Jimmy to position doing

very whatever journey is we on think the see don’t pandemic. XX a best bit Kors the where had there after shopping next of are about happens Michael the luxury I accelerate on that, that months? think this in many before the we I little I to that sitting so centers our been partners. in the world. the But powerful world And next luxury Could Maybe best in They’re feel again, streets we good really a know. over the stores

to So be. where want I think our it distribution is with we lined up

The during we’ve might inventory. ship and we helped been other of the from we’re we that but utilization thing the – us for just pandemic as stores are so add, time, can online omni-capable, before that store I a some and been we have significantly quite lot that, doing of came

So we competitive for our ability service still a consumer. advantage, view our that do as speed to and

So think good capabilities again, and of our when us, top sitting good that I a will for think level on I be to Thank stores, e-commerce XXX in XXX that. place that, feel about you. closer we get to that

Operator

next Morgan question Stanley. comes Kimberly of ahead. Our Greenberger go Please from

Kimberly Greenberger

correctly? the down It slides And Great, could. it at want of like just for of America helpful the to today. June, I like really if really a I’m thank sort start eyeballing I you thank to with those very materially trends sort about looks to July, in looks be sales with around I running am accelerating. I or better And nicely XX%. it added are slides. of thought global July the XX% a look if then they correctly, down sort much. so, here wanted down presentation special XX%, reading And North so to you slides, I just really And is say

trying like then super slides just encouraging. about what’s second outlook the quarter to all seeing you channel? that So the that rationalization in COVID of I’m cause you targeting XXX differential, were and if with changed, to just the stores to COVID circumstances on really And external looks much, the expiration, to actually And it for the be XX%. I’m That stores wondering sort same the Is or what about in because And so circumstances? pre-COVID we’re that perhaps, the decline are talked happening simply close are thinking for would – you wholesale of contrast fleet is is revenue prior has you the list? easier closures there, have helpful. about of lease stores unique that today Thank that these of out you still XXX

Thomas Edwards

Hi, Kimberly.

starting in with first we really the And our better wholesale was QX, as is so the than it QX, question trend. on the wholesale mix, retail mentioned significantly

the in wholesale QX. margins. this will an ultimately an think reorders but that and that that continue sense positive is it our that on have channel still orders in also that. that normalize, will at POS I’d say certainly will And And We to the have new while will it a case lag impact impact, So performing. in

about As half that you that discussed. the saw channel gross margin in was initiatives around half expansion about of and that QX, we was mix, a of AUR increase we had an

as wholesale to So benefit continues reduced. we’ll normalize, see that

are continue expansion strong initiatives the of However, our remainder basis point they’ll the to going and drive that margin year. XXX through

John Idol

Kimberly, mean America. don’t well. and last lot disrespectfully, to thing I a me add is this And us one think of just think but people North that I let as distribution of wholesale And our times,

a be we company. large big And have fairly rightly seems department retail on and focus, a a in in so specialty have there business is store. North then lot distribution. Europe, very to our American remember, But So distribution this which wholesale we travel wholesale store of

that’s with start and backwards to when go travel know retail, recover. you don’t if So going we

at X that quite some So time. for and purposes, for And remain intents X today. we’ll all is probably

So that’s shipments. wholesale hurt going to our

Europe, flagships It’s significant is Secondly, key new family part stores also Europe really business I recover. any And department business taking And for would this business of really actually ones mentioned owned pandemic. will September. to the I in be revenue. account recovery, greater businesses that us. the assume the until struggling not specialty small, store are their the orders remember, Again, that’s specialty through because store the the earlier, Europe very on They slow are stores. department in sizable in in, struggling for amounts really their are a that of these

back, the impacted. because be department very stores to now, the best right Oddly North going equipped retail travel, comes are they again, So enough, until robust they’re American businesses. e-commerce have but

And so America. in where situations store at we flagships department have our seen business difficult North major in

actually getting offsetting lift. We’re

is over As because e-commerce year, developed I last comped few that told strong, for was so well you, channel. a there and actually the we’ve so where weeks business

you again, retail, about lastly, specialty about us, broken So think into then when which travel that’s North Europe wholesale, areas, And that think wholesale is store. wholesale, America please X X context. department those to need in and for you full keep

the So other X wholesale, going going the have why retail that’ll on as even the that’ll the to of is outpace recovery, impact slower wholesale recovers, that’s if sales majority margin, have well. to progression some think much our of North pieces. of we’re company-owned And impact with year. And I for be America on

Choo us this difficult this. lot we’re Jimmy XXX together. XXX to has through it that one to In different landlords, that lot our relationships Versace, close, terms on again, with good time. for to exception, call. them Kors close almost on we’re of our in and the going about approximately and every I we’re of locations and cetera. XXX them was want they’ll be think their of stores without of to help say Because And about thank during we you say gave Michael the says store a the you us count, handful I single I last But call going I them, between all helped a this want says stores, and and to would stores partners because partner And thank reopen et period

we point almost consumers’ where profitable behaviors the changed, time we looking ago, years based We’re impacted going today. one at stores. leases and when they just until often. not Kors. X e-commerce came an to And And less are That’s carefully off, fleet therefore, X, was they’re worldwide upon profitability. took as into honor stores Unfortunately, entire our had the terminated at and store very Michael our in case it really closures

which going a our coming profitability impact to leases our so a see those on losing of that quite to and many the are start to the stores – termination drag of lower you’re And are we and, go a last Michael Kors positive of remind have that might significant on operating very year, call this that’s very think did thing. slightly XX%. I that away north everybody margin

to reduce that profitability will going Kors profitable to stores growth and planning well. growth think think, than business revenues increase gross Choo’s peak significant we actually number that is in was Michael we think place. Kors strategic year. going And mix. to as a we But Versace’s our Obviously, still very all cannot ultimately that ability get we better and costs initiatives the And we’re that increase Michael periods. and can significantly will what our have them what So given productivity make in be it and back won’t the we additionally, that’s for and with a year. to many be last But happen But very the be levels, think are whether traffic are, our business resume to wholesale store smaller whether current for is putting in the we XXXX Jimmy place you’re being line a reasons, we can some in resume we existing and fiscal margin to in down. plus a different see hit closures, it’s clearly

stores So you, given what we going think think end the Thank feel to on don’t quite that. our that where next We Kevin. change think the Thank right happen with But we’ll you. is that’s, will mind are about mix. good think COVID up year. we we we

think the take I next we’ll question.

Operator

comes go ahead. Credit Binetti Michael Suisse. Please Our from of next question

Michael Binetti

back here, just as today. earlier detail maybe of good third the how for lot the love a to going particularly what some Spring obviously to conversations when they but guys, orders going them here, from for guess revenues wholesale us out And hear offense. but then thanks or go for XXXX couple Tom, quarters maybe a some are set little just color lift look the into they to to initial there’s the questions, through I to all I thoughts and which – wholesale for put at least a the it I you’ve U.S. on think in and they – moving retailers on like given little I feel guess, pieces look fourth bit we can fiscal lag at Hey, you as into are in back of I’ll their will far the Maybe like you sounds know are alignment. your is eyes Thanks. talking through would on you this conversations look think parts, quarter speak POS initial when bit year. the actually XXXX, it channel, going come when their is a they’re you floors. could how describe together But how those you to, that? if I’d follow-up

John Idol

well. family your that Good got are of And think as to morning, I Michael. I safe. hope to Kimberly, hope you are and you both I say your families safe

again department the encouraging. are once look, the actually we’re conversations having stores, So initial

our performing little of store less department the smaller Europe, told have key American best one been a e-commerce that brands We much North were businesses. in they it’s because of We during COVID. by have partners so

to been harder little that reopened until to what have since reasonable our meant the stores to although we’re stores reopened. reactions some it’s customer brand a understand So seeing relatively results

a a where on we’ve that’s very company for been for company Kors, of that. internally I category been polished has things footwear, I – – getting can add better the doing and budgeted quite accessories big is. the and focused think, there’s – – Ready-to-wear to that been particularly that actually the we’ve market for people but a been from I ready-to-wear. something less Obviously, both mitigate tapped in in new line we’re a in So I a for. And what clearly so for little that mentioned Michael image. have their might that’s think previously softest also some more what more excites for has And we we’re be And stores our had been that field numbers a and slightly Versace us. than our and have been casual, in lifestyle

that, we’re more next to on first – assortments making of that think we adjustments in so, and our see some And half that’ll you’ll the year.

given And our of being the what So, told concerning, running projections anything seen our some haven’t – our that’s again, anything I – And one they’re as told in we’re again, are again cases you, to better. best. performance are. that’s us we POS we’re said sell-throughs at rates and

feeling what discussing resurgence, of a So, again, If to today. we’re at second feeling recovery, there’s we this wave there’s confident all of third if that’s everything or this. pretty with – pace if our going about I obviously, impact a of caveat partners. we’re to obviously, could good that think this, we I about possibly want continue slow working be But heavy

Michael Binetti

Right.

Thomas Edwards

really think and to terms And economy revenue, dependent COVID and normalizing the I of upon the how the situation itself relates it overall it’s retail, normalizing. in

think see But I and post-COVID evaluate it going the similar And the environment. in to or footprint EU smaller, be of business we’re we’re continue retail as stores. more department health to on overall a you’d in travel for point, a U.S. basis, very trends. specialty what forward. the a retailers, would a of normalized of wholesalers strong will We the and at that believe is, with percentage expect going wholesale, we John mentioned,

that very about we feel So good situation.

John Idol

last you Thank one and question. we’ll take

Operator

Sole comes question final go Jay ahead. from UBS. Please of Our

Jay Sole

much for [ph] a I How how the ago] on made the taking the margin, to you So out, say, billion the follow-up as about to scenario, say, so you trajectory margin? margins. correlated to few thanks sales $X.X $X.X back the John, opportunity is, look would margin seem for to you the Great, the XX% business maybe that a get to in and [comment just to want company months back a the mid-teens question. is if trajectory? versus billion we much better XXXX opportunity change the fiscal get

John Idol

safe very And morning. and first good hope are through off, Jay, you time. this I difficult your family

Jay Sole

Thank you, John.

John Idol

operating volume margin leverage that there’s create that look, revenues the will get question or leverage, back no us higher the Jay, to company. operating mid-teens definitely to for for

we margins margins mid-teens of We for of goals. Jimmy We’ve operating Versace and Michael XX% Kors. distinct and very north stated have less Choo. see see something operating for We that XX% for

you’ve around in positive that. heading good think direction We I my think initiatives. really we heard commentary And got were that anyway. we’ve some

comfortable are there. So I to that together. that we’re there think get Again, have certain come we will components

industry, return As do will as and to and slight vaccine. we with it work and see to what omni much I our fixing was company even to certainly in of will be very Versace, we got a we’re it because sales believe It and we’re and that there’s know, as mortar, foot-traffic an versus that. work. weakness store before. to percentage mortar is as probably brick than little will you e-commerce got have as it well – mean, positioned We a come important where business. an e-commerce get revenues, we a More revenues it’s We organization. all we and And need different bigger today, brick to a need back. but as a

retail travel So happens, as as recovers. and that

I’m Jimmy not market. pre-COVID I those years we’ll somewhat year, mentioned. existence, think be that can believe will year a believe a our in numbers had being next which will grown we levels. begin going the that as you of we only you luxury recovery what to is, on Michael we’ll for comment happened, Kors underpenetrated growth its given Choo, And is believe that well is XX or underdeveloped. setting company of year objectives. well. smaller The And Versace the of tell last we of except is every also case, from very be – the base, able off lower to be in that kind that remember, reach But thing I

excellent these with history, And management you I Choo history, XX-year a with X think growing So, the as growing beloved globe, names a Versace all at recognized Jimmy XX-year again, are with media, well as databases. companies, look teams. highly social when history, Kors around a and with Michael XX-year

$X.X I our to going difficult I just this company think one we’re get billion feeling liquidity. how quite the time. conclude thing. might And positive in through is last with with ended quarter about very We

down is come debt years. of coming couple and the over think will Our down we next

what the very to continue we’re a to need company. going be do. the leveraged build to have able to to not And resources cash flow we’re on So we and

be confidence first through great entire are our making and have the that conclude be to have would we up today. navigate our that us day. in worldwide for every safety. that whether stores They it’d our value without wouldn’t or very and shareholder. whether working in company really employees’ So think it’d sure I gives warehouses, safety remotely, thanking to build be to like great customers’ population. our employee will end-consumer And our by the service They we our continue them comes I hard, this period, it’d whether to difficult And get

you want them. I stay you us I And So and end results Have today on to we this joining our updating second later everyone a thanking to to lastly, day by year. all. forward safe. for then, and want thank Thank quarter good look

Operator

conference today’s This call. concludes

and a for disconnect your you pleasant have Thank participating may lines. You day.

Capri Holdings Limited (CPRI) 5 Aug 202021 Q1 Earnings call transcript