Capri Holdings Ltd. — Form 10-K Summary
Reporting period: Fiscal year ended March 30, 2024 (52 weeks), compared with the fiscal year ended April 1, 2023. This is an annual report, not a standalone 2023 Q4 filing; the supplied filing text does not provide a clear set of Q4-only financial results. Capri operates Versace, Jimmy Choo and Michael Kors.
Financial performance
| Metric | FY2024 | FY2023 |
|---|---|---|
| Revenue | $5.170 billion | $5.619 billion |
| Gross profit / margin | $3.339 billion / 64.6% | $3.724 billion / 66.3% |
| Operating income (loss) / margin | ($241 million) / (4.7%) | $679 million / 12.1% |
| Net income (loss) attributable to Capri | ($229 million) | $616 million |
| Operating cash flow | $309 million | $771 million |
| Capital expenditures | $189 million | $226 million |
| Cash and cash equivalents at year-end | $199 million | $249 million |
| Total debt at year-end | $1.723 billion | $1.827 billion |
| Working capital | ($87 million) | $420 million |
- Revenue fell 8.0% reported and 8.4% at constant currency. Lower Americas revenue affected all three brands. Michael Kors revenue declined 9.2% to $3.522 billion; Versace fell 6.9% to $1.030 billion; Jimmy Choo fell 2.4% to $618 million.
- Segment operating income declined across the portfolio: Michael Kors $634 million (18.0% margin), Versace $25 million (2.4%), and Jimmy Choo $3 million (0.5%).
- Gross margin contracted 170 basis points, primarily due to lower full-price sell-through, partly offset by lower supply-chain costs. SG&A rose 2.8% to $2.784 billion despite lower sales.
- The $229 million net loss included $575 million of asset impairment charges, including $489 million related to goodwill and brand intangibles, and $20 million of merger-related costs. The filing attributes impairments to weaker revenue expectations and softer global luxury demand.
- Operating cash flow declined by $462 million. Lower earnings after non-cash adjustments and unfavorable changes in accounts payable and accrued expenses contributed; lower inventory provided a partial offset.
Liquidity, debt and capital resources
- Debt totaled approximately $1.723 billion: $764 million drawn on the revolving facility, about $486 million on the Versace term loan, $450 million of senior notes, and other borrowings. The $450 million notes mature in November 2024 and are classified as short-term debt.
- Revolver availability was $734 million; total remaining availability under facilities was $803 million. Capri reported compliance with applicable debt covenants at year-end. The revolving and Versace facilities require a maximum net leverage ratio of 4.0 to 1.0.
- Management said cash, operating cash generation and available borrowing capacity should be sufficient for working-capital needs over the next 12 months and beyond. Fiscal 2025 capital expenditures are expected to be approximately $135 million.
- Operating lease payments total $2.160 billion, including $464 million due in Fiscal 2025. Inventory purchase obligations were $582 million.
Outlook, material developments and risks
- Merger uncertainty: Capri agreed in August 2023 to be acquired by Tapestry in an all-cash transaction. On April 22, 2024, the FTC sued to block the deal; Capri and Tapestry said they would vigorously defend it. U.S. regulatory approval remained outstanding when the 10-K was filed. The merger’s timing and completion are uncertain, and failure to close could affect operations, share price and asset values. Capri withdrew its previously issued earnings guidance in light of the pending merger.
- Cost-reduction plan: The Global Optimization Plan anticipates headcount reductions and closure of approximately 100 stores over 18 months. Management expects annualized savings of $80 million to $90 million and one-time restructuring charges of $30 million to $40 million; $26 million of net plan-related restructuring expense was recorded in FY2024.
- Technology and execution: A new e-commerce platform rollout created unanticipated challenges that negatively affected FY2024 results; implementation is expected to continue through Fiscal 2025. The multi-year ERP and transformation work also carries execution and cost risks.
- Principal business risks: weaker discretionary luxury demand, inflation and other macroeconomic pressures, fashion and competitive risks, wholesale-channel weakness, sourcing and shipping disruption, foreign-exchange volatility, cybersecurity, and potential further impairments. E-commerce represented approximately 18% of net revenue.
- The independent auditor issued an unqualified opinion on the financial statements and internal controls; management also assessed disclosure controls and internal control over financial reporting as effective at year-end.
Important facts for investors to verify
- FTC litigation status, remaining merger approvals, closing conditions and any subsequent changes to the merger agreement.
- Progress against revenue, full-price sell-through and segment-margin trends, especially for Versace and Jimmy Choo.
- Whether the planned store closures and workforce reductions deliver the stated savings and what additional restructuring costs arise.
- Liquidity and refinancing plans for the $450 million senior notes due November 2024, covenant headroom and the effect of negative working capital.
- Performance and fair-value assumptions underlying remaining goodwill and brand intangible assets after the substantial FY2024 impairments.
- Effects of e-commerce platform implementation, the ERP rollout and the continued pause or reassessment of transformation projects.