CPRI - Earnings call transcript Q2 2021

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Jennifer Davis

Good morning, everyone, and thank you for joining us on Capri Holdings Limited second quarter fiscal 2021 conference call. With me this morning are Chairman and Chief Executive Officer, John Idol; and Chief Financial Officer and Chief Operating Officer, Tom Edwards.

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

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

note that our we we accompanying Before like begin, to would five website. to I posted have

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

John Idol

everyone pandemic and Capri to My tirelessly are of safety Thank other morning, demonstrate out who virus to world you, Jennifer, communities combat pandemic. on good this to prayers helping to dedication affected work health are and I impact everyone. our during and to our and world. the The employees, we entire for teams frontlines been At time. COVID-XX the want of those support and unprecedented each around the have continues who day the to the communities. all this hard go thank profoundly prioritizing by thoughts and their Holdings the every consumers and they

proven global historically are resilient sales that design, innovation health again indicate sales as trends passion outlook and forward in increasingly downturns look exceptional rebounding. well consumers Current once with an as quickly those has creates we is value As we enduring rapidly industry it excitement fashion optimistic crisis. who for following The recovering quality. about are luxury the the as Luxury with industry. economic and emotional inspiring connection luxury

on products higher at Additionally, has reduced we travel restrictions. luxury are to been due on believe as experiences consumers there rates spending spending

positioned and resume many are of earnings expand we Choo market unknowns Michael Holdings with Versace, trajectory revenue luxury that Capri the will steady there growth Jimmy and in is Kors. to us a its uniquely While believe and front

turn share to Revenue expectations. results. and to our second like earnings I per our exceeded significantly Now would quarter

anticipated Versace, channel at at revenue, sequentially luxury at $X.XX improved our three substantial Michael While retail Kors. sales brands compared improvement margin geography. sequentially recovery year. by across channel single our three reduction In second driven quarter initiatives. digits clienteling led store the better local wholesale performance recovering retail houses. Americas other lower than particularly than the XX% channel a improve quarter. by we at first share the are initiatives. our slower tracked expense accelerated decreased continued also was performance approximately in prior also growth Jimmy of in Revenue with by continued increasing this EMEA pleased is also all retail all double We improved anticipated with e-commerce to Sales compared is channel This of and and of and Choo gross sale grew importance and with our surpassed XX%. expectations performance. to sequentially impact were approximately Door at revenue declined also the Asia. in being than XX% our sales per robust Earnings which in in the we that positive tourism the in trailed mainland lower regions digits a By but given faster low but of its driven fastest own seeing our geography point to sales expansion recovery across China our

Versace. with performance Now turning to starting by brand, second quarter

in while the single brand innovation. results ahead channel increased digits increased the Asia triple e-commerce and remained high pleased China by are the of Global sequentially prior the improved product trends in expectations. balance fashion of below robust and our though are which retail Revenue digits sales menswear in globally the to favorable and brand We channel footwear. EMEA digits America athletic year. sales and the We single our of with double strength in demonstrating mainland increased the strength response across in increased particularly our Sales trends digits. retail in the and in and mid significantly saw our

belts by shoulders response continued winter ready-to-wear Berroco cinched also Within all see Donatella's waists. to and fall responded and including We to V which accessories, women's collection across channeled strong classifications power performed consumers featuring consumer logo the broad to well strength jewelry. footwear, that and

businesses the the key Turquoise addition of with is family we the brand Another fragrance dedicated the a is designer Dylan to world. campaign our fragrance starring in In indicator of September, Hailey latest Dylan's successful of largest of Versace strength launched Bieber. which one fragrances very collection, the

a also launched our successful Hadid. of Blue Dylan featuring refresh We Bella

sales during have fragrance shown strong sequential quarter. Our the a improvement

On we over Tracey In growth reinforces and a debuting the coming Capri in over was show to Versace XX% initiatives On of our a AJ created show own strength held collection total Tracey terms in flask where The Holdings a Milan. revenue who September The These his from in wearing helped models was a grew campaign also our to will Step results number Donatella featuring joined capsule of song dreamy Week. potential. database consumer gave optimistic, and increase social represent positive. Versaceopolis Versace's long-term largest continues Milan Versace underwater The in an access views during spring is Versace brand we a in by engagement AJ believe opportunity speak in Fashion musician we collection. channels new confidence brand world to XX, summer designs world ruled collection a the fantasy by the Medusa. XXXX year-over-year fashion British viewers stream awareness by our increase consumers. in July Versace's our revealed which performance dollars by generated million and through drive one to for backstage exclusive. live to video and on house's the luxury X growth the billion million global media brand the years. the engaged Overall

Choo. Moving to Jimmy

triple We below digits are the China grew pleased Retail the sales the the in the and in year. Trends improvement single in E-commerce prior double EMEA improved digits. increased Asia sales but sequentially quarter. rest revenue strong remained mainland with low and Americas sequential in grew of digits. second

are encouraged We our bags. totes with the strength particular of in accessories and resort with performance expanded mini

Our outperform continue best In signature Varenne in the [trainers] penetration. an accessories. remains collection footwear, JC selling to and increase

with a Jimmy version expand a $X,XXX casual significant collaboration as Crystal to by sneakers Timberland Choi plus Off-Duty almost footwear all have of sell through. sold demonstrates our embellished with Glamour We The the immediately. opportunity signature the demonstrated success footwear arena. outdoor the Timberland's The brand of this utility Jimmy in Choo out vision Swarovski fused collaboration casual beyond Sandra assortment in Jimmy XXX% Choo's and over resulted of that recent which the power Choo's

cruise sales have casual results elegance crystal including the boots detailing a booties pearl touch or in particularly we adorned styles. of seen styles Additionally strong with to in that add

the have expand we We beauty as distribution. well includes collection Seduction line first Sales luxury launched expectation are that The our at Jimmy also lipstick, Harrods. as planning and collection exclusively Choo's exceeded to recently launched fragrances. nail polishes

collection. launched in of Daisy the was is In latest Edgar-Jones of terms engagement show In Daisy our prominent winter but of star who installment in fall their stand who featuring Normal the the featured the consumer by British femininity and the September of to only glamour Hulu personifies My also and series Edgar In Jones actress brand experiences. others we highlights women insights, XXXX autumn strong empower campaign the Hip which not Choos awareness, sharing dare interview learnings off-duty Daisy People. out the

Timberland Cole product helped consumers storytelling life Our both Sprouse and campaign brought existing actor the energy introduce to consumers. with with collaboration Choo. excitement authentic photographer and marketing drove resonated and The to and Riverdale by that shot with new new Jimmy

already XX% engaging which consumer Our contribute we campaigns grew million luxurious revenue believe the emphasis to enable footwear a to million coming along and strategy additional a on product foundation approximately to increase build the our $XXX in year-over-year solid helped accessories with as Choo's Jimmy of global years. Overall marketing by grow database off-duty consumers. luxury in X.X our will us cornerstone to

In are sequentially the strong improved our the increased E-commerce sales digits remained higher other to mainland but all improved China margins. regions, gross retail year. prior pleased trends digits. Michael sales revenue recovery. double quarter second and generated Kors, we we in Turning with In increased sequentially single the and of pace high below

Marrakech and Bohemian with encouraged the are the reflecting and inspired bliss. We performance glamour initial XXs roll our fall collection rock of by in

resulting as penetration The as margins. nearly as well are In last in and perform penetration new to across accessories continues to XX% to categories to all techniques consumers developing compared offering the and almost XX% signature year respond higher increasing expanding AURs Signature by executions. newness. gross increased well We

and in performance strong contributing AUR our backpacks to which are totes saw in driven styles. signature active continue large we logo by We and fashion strength see Within also to lux footwear handbags, increases.

spring The a garden the a perform which Kors Michael's men's in multi-layered was Michael York viewers York debuted the digital fashion fashion addition in performance consumer featuring to in continues innovation by awareness respect film season a mood michaelkors.com love project Additionally, of New by collection enduring driven Diaz. experience community filmed documentary was through New accessible well XXXX City. The winner in business and outerwear. featured Idol show for and engagement style from show. accessories collection and inspiration runway runway and summer to to brand at immersed Samantha highlighted drew restoration the that With the inspiration show American the

social and followers engaged ambassador. classic role million in and actresses glamour ambassador has Americas a our with our of jet of of campaign vision celebrated nearly our fall first Over throughout media Kors fall in Bella roll rock the that Additionally, campaign. Bella China actress roll followed on Asia. embodies is as the In vignettes and Weibo. with million followers In in as consumers Yuanyuan newest social sense a She EMEA Michael announced brand and Chinese approximately XX September media brand we who her in Gao is in fans rock our series award-winning beloved Gao in most campaign. Hadid set XX featured fall one

million contribute Our XX% increase optimism. sales This in above in Kors. marketing Michael gross global energy pleased trends which XX Overall historical pillars with remain initiatives to ability improvement we generating reached over continued sequential to underpin year-over-year operating brand to of margin levels. our helped the our a revenue We while speed, database consumers. our at expansion confident grow and in are margins and

luxury on Looking lead designing and ahead by exciting all innovative the following executing strategic the founder most from Capri grow to fashion houses. five earnings Holdings revenue our we and product pillars; plan first, three

our and engaging compelling marketing through campaigns. inspiring, consumers delighting Second,

Capri all at emphasizing developing fashion Third, revenue three as omni-channel demonstrates through centric strength well our growth a significantly of and and expectations than approach inclusion second database. with fifth, with responsibility as a our our philanthropy. improvement luxury leveraging exceptional In across sequential expanding accelerating by Fourth, houses. more and and in diversity e-commerce social comprehensive conclusion, Holdings citizen exceeded our anticipated The the quarter our and leading performance capabilities, all brands teams being consumer resiliency globe. luxury global strategy across an better houses corporate revenue the of environmental results industry

We to each confident our remain opportunities unique on houses. in the global initiatives our luxury strategic long-term of will growth and continue execute for

over to turn me call the let Now Tom.

Thomas Edwards

than of per of These good results you was considerably while wholesale continued also meaningfully was gross cost decreased than Starting everyone. revenue and million billion $X.XX. expectations. $XXX ahead benefits with anticipated initiatives. margin were share of of and second XX% expectations year. revenue, e-commerce ahead $X.X resulting above earnings better Thank quarter diluted results anticipated the to compared Retail Net our was and reflecting This income significantly performed better our slightly of reduction John expectations. last our morning expansion in

Looking performance compared million, brand was a by Versace XX% revenue to $XXX at prior year. decrease revenue

a closures. still reminder As store results reported Versace's June a impacted was are a that lag the included on one-month because by month second quarter

expectations. positive well July period global September increased single of channel our digits mid our ahead the turning in For sales retail through

Versace As of in in the digits. digits. increased of China a mainland net high with Deals stores from global mentioned e-commerce digits ended XXX triple fleet John North America region double single a prior increase sales September sales strongest with X retail year. while up the luxury was increased strong

increase than slightly digits e-commerce above low year. prior a quarter was double revenue a net increased stores prior XXX high the in retail decrease the was For Wholesale including Jimmy revenue triple X% was XX in increased the Americas sales better Retail expectations. mainland from during $XXX declined to Jimmy a Choo the in double with fleet and ended sales. compared our year. a in and Retail in quarter million, single the digits China digit performance expected increase also of digits. of global Choo low

total Turning a decrease year. regions improved double quarter to and Wholesale compared teens. we at improved year. sales prior global a we're but E-commerce sequentially a million lower net sequentially are revenue the point-of-sale quarter declined our than Michael in with strong decreased of also slower revenue to and mainland digits. XX saw fleet $XXX XX% point increased retail results. a but improved pace of last Michael improving sale the than shipments low XXX in Retail stores first from Kors, as performance other but of China stores. high at sequentially wholesale grew still covering digits rate to All ended declined expected double own Kors retail of the In relative double digits. sales at

margin we increase higher improvement AURs. gross Now looking basis were sell-throughs margin. prices and initiatives pleased in raise full-price the corporate at selectively total reflects company performance, our to XXX improvement with generating primarily point This

last benefited to from million a percent actions to a expenses reduce decreased retail XX.X% as of revenue. versus due XX% wholesale year. operating Additionally, gross our primarily $XXX approximately XX.X% compared revenue of mix decisive expense base. taken Operating company was Total margins the expense we have or higher to

ahead and expanded our result points margin a basis was total As well to operating company expectations. XXX XX.X% of

Choo's of basis reflecting XXX points XX.X% margin XXX Michael operating margin made expanded expenses. XX% of XXX compared the Jimmy margin by partially operating expansion year basis normalized. brand expanded lower as to margin by prior strategic gross over offset and gross points deleverage. margin Versace's of operating operating higher have at margin investments Kors expanded two primarily points breakeven past basis years reflecting expense Looking

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

pleased impact with our pandemic. the our half are liquidity we despite the of throughout year of We first position of the maintain strength the business as the

repurposed year. quarter $XXX million quarters we Looking receipts prior beginning is the XX% to for upcoming ended cancellation at inventory with the and of inventory Inventory the over the we expected the inventory at repurposing the down holiday including implemented seasons. sequentially reduction compared reflects summer given the This aggressive of two XXXX to of pandemic decline next spring product.

revenue We end continue year. to expect inventory approximately in the line by with of the

to the macroeconomic the to Now we flows unable are turning Due of guidance. annual pandemic, surrounding to lack earnings of the tourism progression provide and guidance. visibility fundamentals

how the of would year some However, around thoughts progressing. see I to share we like back half the

the the encouraged a by fiscal While so recovery taking we the to our are approach due measured balance year to far uncertainty. of ongoing

year. improvement In revenue modest versus the third the total second and year improvement XX% we declining digits results double approximately a compared by sales an better continue trends driven This remain retail results year. In our own quarter in below the prior improvement we relative anticipate more fourth our to expect we prior prior to a with Given the the decline prior sequential we better our expected in anticipate anticipate to quarter, in to pronounced sales quarter company of represents sales improvement but now revenue in channel. for outlook a than expectation.

recently outlook restrictions announced in Our short-term impact store includes second half of Europe. and currently the the closures

outlook from not closures government may future include our any store However, does that restrictions. additional result

to gross Turning profit.

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

additional a increased variable trajectory of employees Michael executive fiscal faster fiscal prior increased expenses; Choi will $XXX Idol, recovery We of John prior to to anticipated fiscal a expenses year program the of weaker $XX Moving in base our we team now exception and implemented reinstating based and and business. portion along to XXXX. given sales, due sales performance our forgo are salaries initiatives for salaries than one-time impact have spending million trends Kors, of operating confidence in second support the dollar, the a half the decline to XXXX. levels to growth increases Compensation and Versace XX% with our additional to for less in marketing million management reinvesting base our approximately their bonus earlier operating is anticipate than year better and This with of of than outlook returning associated included the approximately addition Sandra will in continue expenses XXXX. compensation expected the with for related reductions Donatella who

Our directors annual of also at retainer reinstated XX%. board was

certain turning to Now non-operating items. our expectations around

For we interest the anticipate of full year million. $XX expense approximately

and In Our shares extremely approximately forecast well luxury thus above progress pleased XX% is weighted expected for years effective far conclusion, our industry rate believe of approximately be poised of are ahead of internal The has is and outstanding to which average average is growth. recovery tax the million. we it $XXX resilient projections. with of proven the we we

we revenue are as the drive well As well-positioned emerge as earnings to from pandemic years Capri that increased is multiple of growth Holdings value. shareholder strong and confident we

for open the Now line questions. up I will

Operator

you. Thank

Cowen. begin question We Instructions] session. will from Chen comes ahead. [Operator Our the Please now of question-and-answer first go Oliver

Oliver Chen

how Michael wholesale Thanks will and the are environment. and that's of forward retail tough what results color you and love performance evolving. good you. John your brand, morning very look versus around and thoughts to much, would lead the regarding margins, terms execution nice retail on Thank continue snapshots in wholesale inventory a Kors in on thoughts as merchandise the

John Idol

and you good Oliver. morning Thank

channel and is for and Jimmy we're wholesale two our with better than in partners. quarters at performance what really we've Choo our true Michael past the Versace Kors is own retail As said seeing this

travel That go open stores some As for will anticipate that Choo couple We smaller XX% partners North these obviously America and North sizable that that's over retail I've well as down believe there actually growing own channel business also we XX% some to of do we business with believe then And Europe will reducing Versace in a in said in rapidly the group's of business that as retail the on our revenue. are department American degree in many brand. become on our significant approximately And channeled omni next very a are people some being in and to the revenues before e-commerce this prolonged recovery Also to and of was we to not year. in and travel retail accurate. because group channel. very store us they're certain will and in department and the but It last stores which overall much channel. Europe. everyone before in their wholesale is licensed a our Jimmy you approximately of in over calls there the are as channel both particularly I of distribution partners the overall terms the limited times time. of continuing XXX% stores are the that's be years call wholesale many business only We and a wholesale in think quite said

that's can given knowing here two our trail to understand North in and reasons coming completely happening retail restrictions our concern retail with been department that really the grave is in number positions our aggressive not government channel any channel we've for store certain have week So will into both we actual more more place. U.S. in there conservative on partners why partners one, store I what's inventory been our and whereas in behind the own America continue department and believe own

stores. As you know, Europe closure retail department partners as XX-day as approximately our of in see we of well store our many own

strong a that the digits. channels performance but partners in our with you our you our own chart in from we performance inflection seen out that will I quite really single high substantial also quite sent trend can in was October So in will and October both were impact that, retail tell revenue only that earnings we've a down the release see

to to business ready So a total a men's softness women's I've and the to channel. and that's very high retail by wear the we've the our in continuing really the to the group. we mentioned We brand same both wear calls strong seen of way see growth across channel of and as ready which very footwear the greatest also ready all the wholesale with trends as predominantly performance watch in other see men's in Versace some is level in to and and that's women's strong and shown at kind has recovery exception the accessories, perform in relative and wear the well as that

planned So the are a than little I of the point in probably our a area came lighter pandemic basis. going in think And the first the we indications on reduced to miss we positions going on more boots going this to we business when in inventories back have group we of maybe in into QX where pulled at booties. particular footwear to have inventory across bit bit because conclusion and bear we're little global our would a time

part definitely that Europe out I own Thank retail business our because to but impact we in that Oliver. that that the turns and impact of closures any you, now not will see the the of which calendar wholesale see of do kind continued until have the significant believe of would again trail again to channel the believe continue recovery you we'll how XXXX. retail our So will and will a of travel see

Operator

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

Kimberly Greenberger

percentage in piece through return higher sounded out normal? you of be seeing you the I efficiencies, mix It's October retail likely no of seeing see. total that improvement and sequential certainly we more we but business. between that is it seeing expect but and retail. And you your XXX to wondering you're wholesale just manufacturing in of I look expect if piece when that in on great shift to the you year fill like the a sequential John Tom can there mixed Tom correctly prices wholesale sounded margin as wholesale benefit then had this would permanent the quick XX some is in full the of balanced you're saying I'm is business temporary in I'm about it other wondering maybe were there expansion of the a guidance to the a clarification piece is a momentum revenue point better what fiscal can own for could, but also between if channel. your basis talking and nice gross current understanding that you Really to represent words if obviously XXX terms much. so you Thank ultimately then a do I Great. normal would how business improvement that In to extent you that that like I more here price be would in based out to there as world of heard wholesale a maintain retail? were think

don't what gross the this margin the have is I sustainable so you for if way about think might So help improvement year. us in a much. rate be Thanks to know

John Idol

and slightly actually your call family saw greater correctly you inflection inflection. Kimberly even wholesale and safe. we channel heard you and finds and in hope this Yes, Good healthy the the that morning same

and given know you month. both cautious channel that can really don't here in don't distancing all have I America people is in of just restrictions and in our that's requirements. to we know in the about inside what retail we December our own Asia bring I know obviously on of again So we're Europe if as North the going stores have amount social a

outside So especially holiday around lines that Friday when will the through our world. absolutely typically we move what Black have would as many of from an we the stores overall will period be our impact on revenues have

very but department also really very about but saw and I one up cautious So our particular quite wholesale XX%, it now retail where strong we of out just again America how our our we'll across the only were again in in that luxury you have increases we in to own how, well. that business at and channel had store encouraged seeing seeing the is our the was we and for channel North would department e-commerce in jump works luxury ramping accessible highlight all group and we're in what powerful were we up partners the see we're it's what channel sequential store category month in the as in we're both is saw and group and more

were Kors retail cycles in a So more in I if say and us Michael competitors that that I historical well I seen in I started with what in China well also think hopefully and saw really acceleration these know is Versace Americas the be North go Choo in impacted look we're right there that at at the bodes performing Jimmy season. strong which pandemics we of we're China the puts our were EMEA call or at seeing economic and of own holiday rapid a luxury our medical you strong to channel category with think terms when for bodes particular look our luxury really back America, change performance. would kind how will going I in and and crisis, we the in successfully what with where through the up luxury business quite as has we really look very rebonded globally. but as where performance other of I we've

that I for the things next and want maybe leave declining numbers. partners following are about. for think company highly as don't be about to will very to for revenue long-term is think think we channel. us wholesale in it's don't the that those think probably of closures. an for that but a XX% to it you actually you we year I channel good the of again the the think store from because these again terms are impression directional of And some and In not hard that naturally group, could because channel about It's good maybe retail profitable just year These XX% shrinking wholesale a

turn number will know it question industry major again travel business and tourist of XXX side and and think about last see I you the Tom I'll that have to in a future. but will area retail let hold a of to recover had too absolutely As that travel that growth we've the basis even it that does thing We the to what going recover. like I going we I'm look approach think the will actually when one bankruptcies have and in very-very the business to a that we're talk think cautious points margin we in around think mark on cities we what look like retail really we over Tom,

Thomas Edwards

Sure. it Thank at and look expansion. we're pleased QX with how QX really we in gross things you and Kimberly margin continued gone have when with

As an both year John QX. QX mentioned that XXX in include does and and we're for expectation keeping the improvement the

better supporters gross in and growth across brands. our longer price increase in manufacturing Versace well expansion year are term beyond selective expect and this Choo certainly then accessories are there increases seeing continue the would penetration that of I what that Asia full-price us margin drivers some call that are margin. of we and benefiting fundamental in We're and correct and You're of it efficiencies at taking We're this year includes the to sell-throughs. through Jimmy

and and of we're this Now drivers retail the mix lower benefit gross wholesale from the saw that QX this about of the opportunities longer QX term have but versus half in would were but FY we margin and we revenues business. course fundamental second growth greater did in the favorable gross the margin a in our we normalize get of expect driver into mix year about XX really-really less expand beyond XX%/XX% and to enthused tailwind as and be for to we

Operator

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

Matthew Boss

improvement. the on congrats and Great

by and you then for multi-year accessories opportunity through the Do maybe the can if of help as across terms how this AURs were and for inflection whole larger portfolio specifically the rank a maybe cycle magnitude? John of picture? walk more thinking we Capri just you you the So the AUR would in category driver brand quantify see as a and higher

John Idol

our Matt. the start of the that so become more are said Tom see to probably will before number impact Good first shift where be mix with will you. and margin going than wholesale. Thank gross and Capri retail I'll things our company one drivers as of across a important morning, we larger

impact. know that you I Kimberly our as moment will as wholesale you become will be of have So to part a smaller That mix. mentioned an see as ago

to not the shipping a of see we're and We're less seen to lot any to that during of interesting then the houses I going the deliveries dramatically each the our that's need price product all three you're a each really better don't impact engagement. reducing quarters of things pandemic whole a sell-throughs, from has think the cases and markdown. inside certain count less dropping leading of full-price consumer increases. happened and for across we've delivery we're only not, of one in the And has we're Secondly skew maybe which is company, the

database the and to next this increases. And that year-on-year the That's we and that's business price I in she terms is us we into remaining a biggest next to less Choo customer turning we've and keep initial started We've extraordinary impact it a marks luxury Matthew also Jimmy gives our past significant that Europe completely want also I boding reaction wants we versus for quite more an really two and piece sales fact wants before fact has it's of accessories brand consumer gaining and on basis. Kors in replenishment delivered we've house the of competitors That's basis. prepared -- in a have well again fashion increase competitors. six pandemic in quite and journey we will of ability brand months. product and have pandemic more very that and I a our over Michael consistently million excellent see quickly negative with and we XX% of been Again doing taken a increases will consumer no we price in with luxury quarter-over-quarter engagement of that the now our especially a price by a to three our we've or grew quarters. and added probably to people. the that finding really the well items we're on light the and us. the again last discounting been any and high for highlight of also want lot the our that. that very she lot happens, because footwear that frankly, not business is creating is only the that again on have a Signature said we're results quietly traction price shoe price and competitors can you to consumer need for our that similar digital - that This to the and So standpoint business in say have that strategy million clearly and our all think from the over her engaged XX% so an Michael is underpriced that three And be what then XX in we're basic representing And I the underpriced as the of one seen database probably again take them the increases we've we've six the the that's this increases consumer course our consumers seen over to continue us will taken four years a is think position resistance. Kors taking with the

of going I to today. it that and see as to limited think the Thank handful So high Versace it some you currently a the be but on then tear that be really would not items. took in kind ones They need items of there's would out stay We happen business. velocity that for way any be you.

Operator

Our Please go ahead. next question comes from Bob Greenblatt of Securities. Guggenheim

Bob Greenblatt

Hi and morning. good

Just couple questions. a

of changes think if in? a sold you've has of I has been wondered brands that sold in the in improvement by sort through, of had the just inventory I just the terms product the it lot on channel some give is of on us you progress and around where that really commentary the inventory sort could what status you've your you the channel stands think maybe the categories? in made by and the Thanks.

John Idol

I'll Thank if do of take Choo as the Good I the then drain. to there at that's you. said buildup Bob we things times out I'll to Versace, end of all product a margin need we're light part assortments earlier bright time can takes it the Tom. we're think or broad we're that's, and industry be of morning unnecessary in markdowns too creates shipping of creates Again what over this turn an same and whether less Jimmy it one Bob. and Michael I inventory the many business to of season which that amount it's Kors, of move a and seeing, clearly through,

quicker how as obviously helps focus do really us about reads a product we're data continue on through. and once because inventory really to our we that talk So I'll again sell getting much

the us. that they, from we they we in consumers to We are have think a with if think us we products up Berroco a I seeing sell. a or belt them more interest are to I'll great serve sell We're doing they our able that that agilely afterwards sell. talk also bags same we're shoe repeat and seeing many handbag be might that mentioned target that been might V bought extremely able of terrific customer. customer the seeing and those Versace seeing about engagement We're the has We're well and shoes for

all giving say the inventories lot would flow I'll channels that's but us let of lower courage is of talk really and Tom the that to I to a that. on So operate size right across

Thomas Edwards

at as mentioned John talked look call we the inventory overall you to the with aggressive took then align about early we When inventory action and in Sure. demand.

some XX% XXXX being So but time held we're for down for XX% quarter. inventory compared the in the had to same at repurposed in quarter seasons the and revenue summer later that's we down spring

we not inventory well holiday as well-positioned for year. products and at inventory a would closely the be working inventory have but said in if is level in I we're trends So may but season overall on this the even There based are areas the excluded outperforming sales believe our sales that believe select aligned trends be you'd QX inventory our well-positioned reduction SKU that be lower we'll future overall John as broadly for we speaking may into approach. much the more some

John Idol

Thank you.

Operator

of from Please Markets. comes Siegel question Simeon BMO next go Our ahead. Capital

Simeon Siegel

quantify licensing you you was strength Thanks. you great nice then handbag was on Thanks. see. could Good AUR morning larger could and anything what was lift Really anything great results. a elaborate Did and The everyone. AUR on to quarter that the John business? or the this

John Idol

increase call facing. going Sure. give these remaining everyone we're healthy and to who's Simeon the all during AUR we're not the of Good half unique increase morning actual this and we've times greatest probably half Simeon, Simeon, driven I again are on seen you hope that by safe trend else and overall so it's of AUR that's places in because half the totes. and say and but leverage lot is a different in I'd accessories

sales We are up. satchel starting to see pick certain

again handbags and Jimmy big thing wildly and see heard at our as as nice that's it's again have we're we've backpacks and Hamilton seen talked and Versace We that's we've similar been new well. to about me as about successful group you Choo seeing talk at really selling a

industry. trend that that sell-throughs probably strongest holiday delivered a still definitely had Again of very-very we've some in it's So across we and time. the strong are small the for are new we've strong that some have some bags incredibly the season sellers

AUR lift going see additional you're And also some so I and in footwear. to our think

Versace, our with Swarovski of all particular I seen a we've Jimmy so Choo, talked in that. about shoes sold kind to $X,XXX the boot across the Jimmy and Choo all and Choo think through Choo Michael sellers. price literally Jimmy number the Kors been I very Timberland, crystals on piece range the seen $X,XXX at strong of to almost We've Jimmy $X,XXX have that of out in sell

to the definitely customer product prowess are our things we're limited and quantities customer data to product really to stores whole digital sense what get a have because to ability and reacting with sell-throughs. points. we're do we encouraged at but to to the and really more the price Again of the in it's use put don't some on emboldened again So these is swath who that of into and a is, higher sell and reflect able our our fashion high

we're there has AUR other to business going I America price benefits point to are China North Simeon. think So want of where also points use continue and particular and Asia for been us I and higher the in in you considerably that versus our is mainland EMEA. one more the Thank of Asia out also again strong to very

Operator

of Our Please next ahead. Altschwager Baird. comes from go Mark question

Mark Altschwager

I my question brand? and Good sense structural I on congrats was far. where year sequential hoping by give continued and brand. at Where versus fleet give are where nice morning. retail. separately this then store of you were normalize the so the a for store productivity Thanks the current you will to the making you of you're us digital you. penetration changes that changes rate think in you each some of taking and could hoping Thank in see the channel a of of wholesale to progress run could you the last sense terms was improvement us in given

John Idol

tell digital actual Good by following. the performance out what you is but I know, morning break you Mark. can Mark or the brand as company we the for don't

saw XX% for the grow business You group. digital our

it going Versace. we're store our will Jimmy at and in handful of Jimmy America I of following Kors. North terms past, double-digit grow that at and three about the And say close digit a at What a stores in triple You we've growth stores. talked Choo as Michael saw strong Versace of There additionally would amount and at at be very-very in Kors in Michael Choo is is brands all significant development. really open the at to full capacity will are

over in is will Our overall point and of Europe get and the North something of for feeling we few America the at again much the are know to years can could as would get ourselves point in don't couple to it's that leaning in trajectory. a take definitely us a few it's see you a next XX% in time Asia that that there years in over probably see We type smaller between do piece next think XX% XX% getting digits in single of the the and today XX% We but see next revenues a to digital to trends to again direction. we that will kind that America. over range we North see years. XX% the years low brands that be that the of that represent business that, going level of few but

Jimmy tremendous brand Michael you Michael brands Japan of extremely and know our year or are million the we're digital number about XX] recently. with add the for again I and business. and start may the [XX; excellent an million job We and X Michael, that increases mean from powerful promotion customers very Donatella an XXX,XXX were might this the I and customers Versace we from Kors, around online pandemic really the extraordinary. terms approximately that data majority our first engage will had when Versace I luxury was just and during of fact to engagement the brand our personal one customer us the this was brought Sandra different about Michael's group the and X that I also same our When Michael more inside will just across names, just across marketing He regular at see point the as if came with which with all that's in during look well. continue the pleased for been and than current for know with and last we excited us for our a with database all group I ago new basis appearances in of on which team store. about healthy. extraordinary the really and Choo we and added making about which we've vocal are that just only development gone as consumer very and is the elections actually new the around Jimmy and engagement gives us. three both voting we growth at of them a Kors business on say with staying very of a came the the done extraordinary again the messages Kors as to on ability Choo these customers houses voices And are

there we total tactical are strength are have brands, Michael call restructure their news to communicate that us of fashion that the that's and guidance our leading who that were the vision we're to icons fleet and going yet. we for in Thank around company more Kors post is Choo actually and we becoming seeing operating design that the improvement well really good we north to than about channel our than So profit talked these at and be direction long-term gave the the going future to we we going build have in bodes store our Versace business us profitability We're profitable and for vision you that obviously our previous XX% before actually store historical know operating and into quite Michael our for benefit business initiatives for databases and for our going while you e-commerce will Jimmy level we've Mark. bodes more to as the margin Four-Wall in that where pandemic. a the Michael years for think is this Kors well. it's the Kors profitable our very ability because be a as e-commerce Really profitability situation which market and is really not how then prominent our and you

Operator

Our Please ahead. next question from of Deutsche go comes Bank. Trussell Paul

Paul Trussell

support should to we successful Tom the and Good more a just about that's on kind quarter. and little Versace in you quickly OpEx wanted and view savings both Thank as in improving congrats maybe outlook the on guidance also think how today John bottom margins cost flowing marketing full of if think bit stand point for of year kind ask the Choo? at about for of morning for and puts margins the the basis on question your the into can to and you takes line and business about versus you. detail gross medium-term about and a a terms XXX maybe then the bit I little chime growth reinvestment we more the just and where

Thomas Edwards

QX Paul with cost basis little a channel drive through, to see move points mix but of in question increases gross manufacturing drivers expansion better a and overall the fundamental and across to second the margin the again I'll the across thanks and start the opportunities for margin continue XXX and price continue less expect but sell and and tailwind to full efficiencies still the from company gross selective expansion a brands. the wholesale QX price in really the year half margin piece for and we're then gross about expect margin to excited we to gross

at expect and then our better that next When excited recovering into doing we are as the piece continue guidance is the that look would So at the spending back a we on updated to rate. year. we're we about quicker cost we business and savings

like on around as in for it the that of first a We reductions anticipated we're the did while and in weakened the and a as basis. reductions support few really by We're the have building some other has was store rent to now $XX lot on marketing the support and from significant more it growth as and closures brand spending trajectory impacted compensation savings and at closed confidence second weren't costs up us a business factors we're dollar spending but course The benefit on applicable notice about half that's increasing. to the sales course wasn't million. furloughs higher from but we time of are the back half and activities variable

that's little back second of half. bit So a the half

that future you we to million there saving the ultimate flow considerations we through you the is indicated but few savings at that initially still of flow seeing XXX we're on had If through. and just longer expected for the for half were the underlying that we look a about of term

dollar The than than continue and first is or year. the we second the course into to variable revenue weaker better level expect XXX be revenue and we that initially recovery at expenses is higher higher expected would anticipated of what is as next

going headwind be and some So costs controlled in there area. expect a there robustly savings a expected Thank year rigorously but bit overall the will of we into or you. that still

John Idol

Paul. Good morning

market are be most talked we've There first the initiatives because XX and continuing will stores. Donatella down closed think about the this as of know come paul lines. acquisitions of we're renovate with the before seeing, terrific important So that that. leader on and us previous started Jonathan our not the to we bear and CEO multiple have these luxury XX that of lot calls this is in we're off before type one the really fruit put has have secondly houses to who the We've that to we global in we We've this luxury place a a starting again with I've the a about Versace we fleet many this company We've brand recognition commented next pandemic as hopefully months. shut house we of lot started and made. behind Aykroyd, for from to

we around with to is some in really own our reports I earlier what put of luxury really house strongly brand we single said stores in this increasing this dollar is that through the invest that as appears continue know mid other as the is and see a category opportunity perform I in world of the believe you've for out. extraordinary this in in and during pandemic come luxury brand in luxury to firmly environment So the quite and this retail seen repositioning competition the and digits right you other and our with mode competitive that performing

to previous in to calls. levels seen in continue Versace kind So of going you've that term we the at the the is that earnings believe medium grow

-- So again on you're we've these we're said we're see really for well what I once and to get made acquisition we'll there. mid-teens getting turn on to we we've we on and our believe have to times luxury way house again this our well operating way us through and difficult know think margins is we going going this

a going be was to third build with to we start to and believe very knows talked incredible think to the new company, as also will terms that also brought new very acquisition. lastly fourth in business, of for some more third an we talked think off Again We've fact we're with been have the design very proud got pipeline we trainer employee we the beforehand. I the the are the way these other She or Timberland and that the of company that We've penetrating we're successful with our collaborations we do we In She's sneaker employee this I be we're stress reposition the on and on she Jimmy with you accessory talent dress it got category some a in. can even moving business in which that pandemic is that out Jimmy then equally where be we're things start. really our footwear of is to of take there as a proven inside company and who's pleased we're a the to it clear because development see. which obviously interesting few going about this how and Choo, got We've she company. But further have wants can the in vision company that. the We've Choo the Hannah in footwear more has pandemic dress to and very before was CEO brand put and than rapidly out. Colman. some suffering just

So and this billion we both these billion names half a for again us of this houses the opportunity, I a a a that. is think dollar luxury do again half a and to billion is Versace have think

clear as the want less I to we we say the just that were with us want that that place do place there. frankly strategies on a of think are the that is we the profitable new trajectory already path our the and as to in in Michael leadership we also also that thing we put digital lead said data think the a particular I talent really in last overall for helping again business. got I the way AURs little Kors quite and businesses place want to have reshape strategies to strategies had highest and and during we've We the and to lead We analytics on quarter. do a put will customers in have it to We the And to kind business. be more

largest also had our only growth not the highest they they but the AURs. So part were of

very is because difficult of Thank midst Paul. you lot I the a of the you across see in think voice and we we now many so what enthusiasm positives the hear and happening. group things again a see in good So environment, Tom's right obviously my voice

Operator

comes go question of ahead. Advisory Please Telsey Group. Telsey from Dana next Our

Dana Telsey

terms of closures? the forward? as What you Good drive see. term physical SG&A morning the are long thinking and about like about the the efficiencies cost on physical Thank targets. updated thinking of footprint, the regionally you. should helping to progress. very look rent That's you've congratulations John what reductions you given footprint are going in everyone think you out and How nice

John Idol

to seeing to honor absolute Thank real to partners table we biggest you moments and of morning. leases darkest that Dana, but collaboratively estate all to thank our I going easy I thanks and if our this those and of pandemic not partners it's good big long-term of We're of during around want We're for do say together first really I going those a reductions. on necessarily term would do have Good to Dana. really as the the any stated. that. and not them came we're XX leases and globe. be pay to them to all got worked were our the at give partners moment plus them the partners leases rent we've to percent

where I most rents leverage. place like come Maybe that's down. in of time our don't will leases going say wouldn't know I some see are duration. to we're So it's over for

and think judge XX%, say a stores no we XX%, North reducing to those really and XX% what Kors I doing clearly and our are below fallen and it's too would it's I initiative store XX% have profitability but we're America a longer So Michael count it's are profitable. in Europe that actually early overall or is probably

profitable news the another ways it's we I'll got, maybe high with aware this that shed company. cities major company and to avenue be. or I'd down those clear the we're Madrid important is but stores that's certain Korea them you're in the thing. that tourist need say short experience. Angeles, an doors today close how again vision there can think that not So omni all a with us cities we three New this back a well Versace really center more think some the Milan, whether maybe We whether in an not us consumer San or gives relatively across with back to you coming again concern and Tokyo more but Los there we the but that York, up Xth again place Traffic these those major going good now actually her we're very with not vision so is in of say interact level it's or London, still wouldn't coming many Chicago, is reach is she's really cities XXX% Paris, had to the and last parts store more but going and out not even really customer in term and return the the leave communicate he's in dramatically store to in is tourism it's the level. again Asia we've I to is in shopping doors clear to are come group or these the structuring Rockefeller of will take we something it's the again data of We get got time is behaving may Francisco, impacted our advantage. We've have

our is digital The first interaction. led being we by believe business

that's place that marketing So interest the in sees the one our whether initial are with and comes product; whether initiatives, way product. our that's and customer's interaction that's the the he views we developing the number she or

Secondly, concerns over and develop is people light recovering. given and to have going and a that's having is more limited face-to-face and of the in store time be the pandemic it experience obviously the interaction about

The last clear say good a traction see traffic is to some I not clienteling. at also that want really it's to thing about. recovering is we're where I starting be real is So to us feel that but level acceptable that's still for

can for either initiatives the previously. actually very that whether So to important call had the about be it client a I Zoom client's can that product few be successful bringing the through We gatherings led really We've social engaging talked one-on-one customers. someone's most house. them. have actually at to small one Choo really brought might by was called and to with We a where you are we Jimmy Choo have the a there inventory we program house.

think but us. for I clienteling So it's a about that working really talk is lot don't well people something

interaction non-major slightly with client engaging that's stores a in maybe of revenues with some at we've even flat or city are some our though the to those effort associates cases keeping in best like certain lot XX,XXX the around really a of up traffic got and stores the week incredible globe. down, really of our stores sales are local XX,XXX and close to and the is and plus and sales especially around the So of and them customers. personal having lights day I'd every they're up who They globe interactions our all the by an on thanking with engage having making plus, really associates get the

our share us to we're earnings driving will help I for think we luxury strategies I'd course this thank who houses; We Choo. three all much by per remain we really thank call growth employees growth Michael with really of of them business our you an and us extraordinary highly lead of we that recent today. saying and the think today's encouraged have that I want future. joining very So like all got Kors and during conclude done Versace, further initiatives want and of in the the and job to of difficult outstanding to time. by developments very Thank balance leadership seeing for Jimmy have revenue we've our and

Operator

call. conference This concludes today's

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

Capri Holdings Limited (CPRI) 5 Nov 202021 Q2 Earnings call transcript