UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~December 31, 2022~~July 1, 2023


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

For the transition period from to

Commission file number: 001-35368


CAPRI HOLDINGS LTD

(Exact Name of Registrant as Specified in Its Charter)


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

90 Whitfield Street

2nd Floor

London, United Kingdom

W1T 4EZ

(Address of principal executive offices)

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

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


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒

Yes

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒

Yes

☐

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

☐

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

☐

Yes

☒

As of ~~January~~July 31, 2023, Capri Holdings Limited had ~~125,709,550~~116,067,005 ordinary shares outstanding.

TABLE OF CONTENTS


		Page No.
	PART I FINANCIAL INFORMATION
Item 1.	Financial Statements	3

	Consolidated Balance Sheets (unaudited) as of ~~December~~July 1, 2023 3 ~~1, 2022~~ and April ~~2, 2022~~1 , 20 23	3

	Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three months ended July 1, 2023 and ~~nine~~July 2, ~~months ended~~ 20 ~~December 3~~2 ~~1, 2022 and~~ ~~December 25, 2021~~2	4

	Consolidated Statements of Shareholders’ Equity (unaudited) for the three ~~and~~ ~~nine~~months ended ~~December~~July 1, 2023 3 ~~1, 2022~~ and ~~December~~July ~~25, 2021~~2 , 202 2	5

	Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~three months ended ~~December 3~~July 1, ~~2022~~2023 and ~~December~~ ~~25, 2021~~July 2, 2022	76

	Notes to Consolidated Financial Statements (unaudited)	87

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3128

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4943

Item 4.	Controls and Procedures	5145

	PART II OTHER INFORMATION

Item 1.	Legal Proceedings	5246

Item 1A.	Risk Factors	5246

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5247



Item 6.	Exhibits	5247

Signatures		5348

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share data)

(Unaudited)


		December 31, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	281	$	169	Cash and cash equivalents	$	238	$	249
Receivables, net	Receivables, net	372		434		Receivables, net	300		369
Inventories, net	Inventories, net	1,188		1,096		Inventories, net	1,166		1,057
Prepaid expenses and other current assets	Prepaid expenses and other current assets	243		192		Prepaid expenses and other current assets	216		195
Total current assets	Total current assets	2,084		1,891		Total current assets	1,920		1,870
Property and equipment, net	Property and equipment, net	546		476		Property and equipment, net	551		552
Operating lease right-of-use assets	Operating lease right-of-use assets	1,369		1,358		Operating lease right-of-use assets	1,359		1,330
Intangible assets, net	Intangible assets, net	1,743		1,847		Intangible assets, net	1,737		1,728
Goodwill	Goodwill	1,358		1,418		Goodwill	1,308		1,293
Deferred tax assets	Deferred tax assets	247		240		Deferred tax assets	312		296
Other assets	Other assets	207		250		Other assets	222		226
Total assets	Total assets	$	7,554	$	7,480	Total assets	$	7,409	$	7,295
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity					Liabilities and Shareholders’ Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	519	$	555	Accounts payable	$	476	$	475
Accrued payroll and payroll related expenses	Accrued payroll and payroll related expenses	131		165		Accrued payroll and payroll related expenses	121		154
Accrued income taxes	Accrued income taxes	65		52		Accrued income taxes	82		73
Short-term operating lease liabilities	Short-term operating lease liabilities	412		414		Short-term operating lease liabilities	416		429
Short-term debt	Short-term debt	19		29		Short-term debt	13		5
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	413		351		Accrued expenses and other current liabilities	340		314
Total current liabilities	Total current liabilities	1,559		1,566		Total current liabilities	1,448		1,450
Long-term operating lease liabilities	Long-term operating lease liabilities	1,392		1,467		Long-term operating lease liabilities	1,354		1,348
Deferred tax liabilities	Deferred tax liabilities	531		432		Deferred tax liabilities	505		508
Long-term debt	Long-term debt	1,521		1,131		Long-term debt	1,924		1,822
Other long-term liabilities	Other long-term liabilities	328		326		Other long-term liabilities	366		318
Total liabilities	Total liabilities	5,331		4,922		Total liabilities	5,597		5,446
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Ordinary shares, no par value; 650,000,000 shares authorized; 223,781,728 shares issued and 125,398,217 outstanding at December 31, 2022; 221,967,599 shares issued and 142,806,269 outstanding at April 2, 2022		—		—
Treasury shares, at cost (98,383,511 shares at December 31, 2022 and 79,161,330 shares at April 2, 2022)		(4,951)		(3,987)
Ordinary shares, no par value; 650,000,000 shares authorized; 225,684,542 shares issued and 116,064,396 outstanding at July 1, 2023; 224,166,250 shares issued and 117,347,045 outstanding at April 1, 2023						Ordinary shares, no par value; 650,000,000 shares authorized; 225,684,542 shares issued and 116,064,396 outstanding at July 1, 2023; 224,166,250 shares issued and 117,347,045 outstanding at April 1, 2023	—		—
Treasury shares, at cost (109,620,146 shares at July 1, 2023 and 106,819,205 shares at April 1, 2023)						Treasury shares, at cost (109,620,146 shares at July 1, 2023 and 106,819,205 shares at April 1, 2023)	(5,457)		(5,351)
Additional paid-in capital	Additional paid-in capital	1,327		1,260		Additional paid-in capital	1,375		1,344
Accumulated other comprehensive income	Accumulated other comprehensive income	105		194		Accumulated other comprehensive income	137		147
Retained earnings	Retained earnings	5,742		5,092		Retained earnings	5,756		5,708
Total shareholders’ equity of Capri	Total shareholders’ equity of Capri	2,223		2,559		Total shareholders’ equity of Capri	1,811		1,848
Noncontrolling interest	Noncontrolling interest	—		(1)		Noncontrolling interest	1		1
Total shareholders’ equity	Total shareholders’ equity	2,223		2,558		Total shareholders’ equity	1,812		1,849
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	7,554	$	7,480	Total liabilities and shareholders’ equity	$	7,409	$	7,295

See accompanying notes to consolidated financial statements.

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In millions, except share and per share data)

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 31, 2022		December 25, 2021		December 31, 2022		December 25, 2021			July 1, 2023		July 2, 2022
Total revenue	Total revenue	$	1,512	$	1,609	$	4,284	$	4,162	Total revenue	$	1,229	$	1,360
Cost of goods sold	Cost of goods sold	507		561		1,427		1,374		Cost of goods sold	417		459
Gross profit	Gross profit	1,005		1,048		2,857		2,788		Gross profit	812		901
Selling, general and administrative expenses	Selling, general and administrative expenses	720		656		1,984		1,800		Selling, general and administrative expenses	689		622
Depreciation and amortization	Depreciation and amortization	43		47		131		146		Depreciation and amortization	45		45
Impairment of assets		1		—		12		33
Restructuring and other charges		5		14		11		25

Restructuring and other (income) expense										Restructuring and other (income) expense	(2)		3
Total operating expenses	Total operating expenses	769		717		2,138		2,004		Total operating expenses	732		670
Income from operations	Income from operations	236		331		719		784		Income from operations	80		231
Other income, net		(1)		—		(2)		(2)
Other expense, net										Other expense, net	1		—
Interest expense (income), net	Interest expense (income), net	12		(7)		13		(11)		Interest expense (income), net	8		(4)
Foreign currency (gain) loss		(3)		(4)		(10)		1
Foreign currency loss										Foreign currency loss	21		4
Income before income taxes	Income before income taxes	228		342		718		796		Income before income taxes	50		231
Provision for income taxes	Provision for income taxes	3		19		66		54		Provision for income taxes	2		28
Net income	Net income	225		323		652		742		Net income	48		203
Less: Net income attributable to noncontrolling interest	Less: Net income attributable to noncontrolling interest	—		1		2		1		Less: Net income attributable to noncontrolling interest	—		2
Net income attributable to Capri	Net income attributable to Capri	$	225	$	322	$	650	$	741	Net income attributable to Capri	$	48	$	201

Weighted average ordinary shares outstanding:	Weighted average ordinary shares outstanding:									Weighted average ordinary shares outstanding:
Basic	Basic	128,849,793		149,717,485		135,600,276		150,975,773		Basic	117,431,941		141,913,586
Diluted	Diluted	130,364,919		152,375,294		137,050,159		153,834,120		Diluted	118,282,633		143,733,984
Net income per ordinary share attributable to Capri:	Net income per ordinary share attributable to Capri:									Net income per ordinary share attributable to Capri:
Basic	Basic	$	1.74	$	2.15	$	4.79	$	4.91	Basic	$	0.41	$	1.42
Diluted	Diluted	$	1.72	$	2.11	$	4.74	$	4.82	Diluted	$	0.41	$	1.40

Statements of Comprehensive Income:	Statements of Comprehensive Income:									Statements of Comprehensive Income:
Net income	Net income	$	225	$	323	$	652	$	742	Net income	$	48	$	203
Foreign currency translation adjustments	Foreign currency translation adjustments	145		34		(87)		147		Foreign currency translation adjustments	(7)		(107)
Net (loss) gain on derivatives	Net (loss) gain on derivatives	(5)		5		(2)		9		Net (loss) gain on derivatives	(3)		2
Comprehensive income	Comprehensive income	365		362		563		898		Comprehensive income	38		98
Less: Net income attributable to noncontrolling interest	Less: Net income attributable to noncontrolling interest	—		1		2		1		Less: Net income attributable to noncontrolling interest	—		2
Less: Foreign currency translation adjustments attributable to noncontrolling interest		—		—		—		(1)

Comprehensive income attributable to Capri	Comprehensive income attributable to Capri	$	365	$	361	$	561	$	898	Comprehensive income attributable to Capri	$	38	$	96

See accompanying notes to consolidated financial statements.

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

(Unaudited)

Ordinary Shares Additional
Paid-in
Capital Treasury Shares Accumulated Other Comprehensive (Loss) Income Retained
Earnings Total Equity of Capri Non-controlling Interest Total Equity
Shares Amounts Shares Amounts
Balance at October 1, 2022 223,707 $ — $ 1,311 (92,618) $ (4,650) $ (35) $ 5,517 $ 2,143 $ — $ 2,143
Net income — — — — — — 225 225 — 225
Other comprehensive income — — — — — 140 — 140 — 140
Total comprehensive income — — — — — — — 365 — 365
Vesting of restricted awards, net of forfeitures 75 — — — — — — — — —
Share-based compensation expense — — 16 — — — — 16 — 16
Repurchase of ordinary shares — — — (5,766) (301) — — (301) — (301)
Balance at December 31, 2022 223,782 $ — $ 1,327 (98,384) $ (4,951) $ 105 $ 5,742 $ 2,223 $ — $ 2,223


	Ordinary Shares			Additional Paid-in Capital		Treasury Shares			Accumulated Other Comprehensive Income		Retained Earnings		Total Equity of Capri		Non-controlling Interest		Total Equity
	Shares	Amounts				Shares	Amounts
Balance at April 1, 2023	224,166	$	—	$	1,344	(106,819)	$	(5,351)	$	147	$	5,708	$	1,848	$	1	$	1,849


Net income	—	—		—		—	—		—		48		48		—		48
Other comprehensive loss	—	—		—		—	—		(10)		—		(10)		—		(10)
Total comprehensive income	—	—		—		—	—		—		—		38		—		38
Vesting of restricted awards, net of forfeitures	1,504	—		—		—	—		—		—		—		—		—
Exercise of employee share options	14	—		1		—	—		—		—		1		—		1
Share-based compensation expense	—	—		30		—	—		—		—		30		—		30
Repurchase of ordinary shares	—	—		—		(2,801)	(106)		—		—		(106)		—		(106)


Balance at July 1, 2023	225,684	$	—	$	1,375	(109,620)	$	(5,457)	$	137	$	5,756	$	1,811	$	1	$	1,812


	Ordinary Shares			Additional Paid-in Capital		Treasury Shares			Accumulated Other Comprehensive Income		Retained Earnings		Total Equity of Capri		Non-controlling Interest		Total Equity
	Shares	Amounts				Shares	Amounts


Balance at April 2, 2022	221,967	$	—	$	1,260	(79,161)	$	(3,987)	$	194	$	5,092	$	2,559	$	(1)	$	2,558
Net income	—	—		—		—	—		—		201		201		2		203
Other comprehensive loss	—	—		—		—	—		(105)		—		(105)		—		(105)
Total comprehensive income	—	—		—		—	—		—		—		96		2		98
Vesting of restricted awards, net of forfeitures	1,420	—		—		—	—		—		—		—		—		—
Exercise of employee share options	117	—		6		—	—		—		—		6		—		6
Share-based compensation expense	—	—		28		—	—		—		—		28		—		28
Repurchase of ordinary shares	—	—		—		(6,386)	(312)		—		—		(312)		—		(312)


Balance at July 2, 2022	223,504	$	—	$	1,294	(85,547)	$	(4,299)	$	89	$	5,293	$	2,377	$	1	$	2,378

Ordinary Shares Additional
Paid-in
Capital Treasury Shares Accumulated Other Comprehensive Income (Loss) Retained
Earnings Total Equity of Capri Non-controlling Interest Total Equity
Shares Amounts Shares Amounts
Balance at April 2, 2022 221,967 $ — $ 1,260 (79,161) $ (3,987) $ 194 $ 5,092 $ 2,559 $ (1) $ 2,558
Net income — — — — — — 650 650 2 652
Other comprehensive loss — — — — — (89) — (89) — (89)
Total comprehensive income — — — — — — — 561 2 563
Vesting of restricted awards, net of forfeitures 1,694 — — — — — — — — —
Exercise of employee share options 121 — 6 — — — — 6 — 6
Share-based compensation expense — — 60 — — — — 60 — 60
Repurchase of ordinary shares — — — (19,223) (964) — — (964) — (964)
Other — — 1 — — — — 1 (1) —
Balance at December 31, 2022 223,782 $ — $ 1,327 (98,384) $ (4,951) $ 105 $ 5,742 $ 2,223 $ — $ 2,223

See accompanying notes to consolidated financial statements.

~~CAPRI HOLDINGS LIMITED AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY~~

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

~~(Unaudited)~~

Ordinary Shares Additional
Paid-in
Capital Treasury Shares Accumulated Other Comprehensive Income Retained
Earnings Total Equity of Capri Non-controlling Interest Total Equity
Shares Amounts Shares Amounts
Balance at September 25, 2021 221,296 $ — $ 1,225 (70,849) $ (3,486) $ 174 $ 4,689 $ 2,602 $ (2) $ 2,600
Net income — — — — — — 322 322 1 323
Other comprehensive income — — — — — 39 — 39 — 39
Total comprehensive income — — — — — — — 361 1 362
Vesting of restricted awards, net of forfeitures 27 — — — — — — — — —
Exercise of employee share options — — — — — — — — — —
Share-based compensation expense — — 13 — — — — 13 — 13
Repurchase of ordinary shares — — — (3,222) (200) — — (200) — (200)
Balance at December 25, 2021 221,323 $ — $ 1,238 (74,071) $ (3,686) $ 213 $ 5,011 $ 2,776 $ (1) $ 2,775

Ordinary Shares Additional
Paid-in
Capital Treasury Shares Accumulated Other Comprehensive Income Retained
Earnings Total Equity of Capri Non-controlling Interest Total Equity
Shares Amounts Shares Amounts
Balance at March 27, 2021 219,223 $ — $ 1,158 (67,943) $ (3,326) $ 56 $ 4,270 $ 2,158 $ (1) $ 2,157
Net income — — — — — — 741 741 1 742
Other comprehensive income (loss) — — — — — 157 — 157 (1) 156
Total comprehensive income — — — — — — — 898 — 898
Vesting of restricted awards, net of forfeitures 1,817 — — — — — — — — —
Exercise of employee share options 283 — 11 — — — — 11 — 11
Share-based compensation expense — — 69 — — — — 69 — 69
Repurchase of ordinary shares — — — (6,128) (360) — — (360) — (360)
Balance at December 25, 2021 221,323 $ — $ 1,238 (74,071) $ (3,686) $ 213 $ 5,011 $ 2,776 $ (1) $ 2,775

~~See accompanying notes to consolidated financial statements.~~

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


		Nine Months Ended					Three Months Ended
		December 31, 2022		December 25, 2021			July 1, 2023		July 2, 2022
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	652	$	742	Net income	$	48	$	203
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	131		146		Depreciation and amortization	45		45
Share-based compensation expense	Share-based compensation expense	60		69		Share-based compensation expense	30		28

Deferred income taxes	Deferred income taxes	(10)		78		Deferred income taxes	(2)		1
Impairment of assets		12		43

Changes to lease related balances, net	Changes to lease related balances, net	(87)		(95)		Changes to lease related balances, net	(29)		(33)

Foreign currency loss (gain)		10		(7)
Foreign currency loss						Foreign currency loss	20		1

Other non-cash adjustments	Other non-cash adjustments	4		4		Other non-cash adjustments	2		1
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Receivables, net	Receivables, net	48		(84)		Receivables, net	68		26
Inventories, net	Inventories, net	(124)		(257)		Inventories, net	(122)		(209)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(60)		(204)		Prepaid expenses and other current assets	(26)		(13)
Accounts payable	Accounts payable	(31)		94		Accounts payable	1		6
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	45		165		Accrued expenses and other current liabilities	10		87

Other long-term assets and liabilities	Other long-term assets and liabilities	(34)		19		Other long-term assets and liabilities	(5)		(6)
Net cash provided by operating activities	Net cash provided by operating activities	616		713		Net cash provided by operating activities	40		137
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Capital expenditures	Capital expenditures	(168)		(85)		Capital expenditures	(50)		(36)

Settlement of net investment hedges	Settlement of net investment hedges	409		59		Settlement of net investment hedges	—		66
Net cash provided by (used in) investing activities		241		(26)
Net cash (used in) provided by investing activities						Net cash (used in) provided by investing activities	(50)		30
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Debt borrowings	Debt borrowings	3,433		501		Debt borrowings	593		1,350
Debt repayments	Debt repayments	(3,121)		(846)		Debt repayments	(491)		(1,090)
Debt issuance costs	Debt issuance costs	(5)		—		Debt issuance costs	—		(4)
Repurchase of ordinary shares	Repurchase of ordinary shares	(964)		(360)		Repurchase of ordinary shares	(106)		(312)
Exercise of employee share options	Exercise of employee share options	6		11		Exercise of employee share options	1		6
Other financing activities		—		31

Net cash used in financing activities	Net cash used in financing activities	(651)		(663)		Net cash used in financing activities	(3)		(50)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(94)		6		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(3)		(65)
Net increase in cash, cash equivalents and restricted cash		112		30
Net (decrease) increase in cash, cash equivalents and restricted cash						Net (decrease) increase in cash, cash equivalents and restricted cash	(16)		52
Beginning of period	Beginning of period	172		234		Beginning of period	256		172
End of period	End of period	$	284	$	264	End of period	$	240	$	224
Supplemental disclosures of cash flow information	Supplemental disclosures of cash flow information					Supplemental disclosures of cash flow information
Cash paid for interest	Cash paid for interest	$	47	$	35	Cash paid for interest	$	22	$	18
Net cash paid for income taxes		$	113	$	49
Net cash paid (received) for income taxes						Net cash paid (received) for income taxes	$	15	$	(72)
Supplemental disclosure of non-cash investing and financing activities	Supplemental disclosure of non-cash investing and financing activities					Supplemental disclosure of non-cash investing and financing activities
Accrued capital expenditures	Accrued capital expenditures	$	51	$	24	Accrued capital expenditures	$	27	$	43

See accompanying notes to consolidated financial statements.

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Business and Basis of Presentation

Capri Holdings Limited (“Capri”, and together with its subsidiaries, the “Company”) was incorporated in the British Virgin Islands on December 13, 2002. The Company is a holding company that owns brands that are leading designers, marketers, distributors and retailers of branded women’s and men’s accessories, footwear and ready-to-wear bearing the Versace, Jimmy Choo and Michael Kors tradenames and related trademarks and logos. The Company operates in three reportable segments: Versace, Jimmy Choo and Michael Kors. See Note 16 for additional information.

The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The interim consolidated financial statements as of ~~December 31, 2022~~July 1, 2023 and for the three ~~and nine~~ months ended ~~December 31,~~July 1, 2023 and July 2, 2022 ~~and December 25, 2021~~ are unaudited. The Company consolidates the results of its Versace business on a one-month lag, as consistent with prior periods. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation in conformity with U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended April ~~2, 2022,~~1, 2023, as filed with the Securities and Exchange Commission on ~~June 1, 2022,~~May 31, 2023, in the Company’s Annual Report on Form 10-K. The results of operations for the interim periods should not be considered indicative of results to be expected for the full fiscal year.

The Company utilizes a 52- to 53-week fiscal year and the term “Fiscal Year” or “Fiscal” refers to that 52- or 53-week period. The results for the three ~~and nine~~ months ended ~~December 31,~~July 1, 2023 and July 2, 2022 ~~and December 25, 2021~~ are based on 13-week ~~and 39-week periods, respectively.~~periods. The Company’s Fiscal Year ~~2023~~2024 is a 52-week period ending ~~April 1, 2023.~~March 30, 2024.

2. Summary of Significant Accounting Policies

Use of Estimates

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

Seasonality

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

Cash, Cash Equivalents and Restricted Cash

All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. Included in the Company’s cash and cash equivalents as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022~~1, 2023 are credit card receivables of $31 million and ~~$18~~$22 million, respectively, which generally settle within two to three business days.

A reconciliation of cash, cash equivalents and restricted cash as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022~~1, 2023 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):

December 31,
2022 April 2,
2022
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents $ 281 $ 169
Restricted cash included within prepaid expenses and other current assets 3 3
Total cash, cash equivalents and restricted cash shown on the consolidated statements of cash flows $ 284 $ 172


	July 1, 2023		April 1, 2023
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	238	$	249
Restricted cash included within prepaid expenses and other current assets	2		7
Total cash, cash equivalents and restricted cash shown on the consolidated statements of cash flows	$	240	$	256

Inventories, net

Inventories primarily consist of finished goods with the exception of raw materials and work in process inventory. The combined total of raw materials and work in process inventory, net, recorded on the Company’s consolidated balance sheets was ~~$46 million and $31~~$47 million as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022, respectively.~~1, 2023.

Derivative Financial Instruments

Forward Foreign Currency Exchange Contracts

The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these contracts to hedge the Company’s cash flows as they relate to foreign currency transactions. Certain of these contracts are designated as hedges for accounting purposes, while others remain undesignated. All of the Company’s derivative instruments are recorded in the Company’s consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation.

The Company designates certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges. Formal hedge documentation is prepared for all derivative instruments designated as hedges, including a description of the hedged item and the hedging instrument and the risk being hedged. The changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income until the hedged item affects earnings. When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income are recognized within cost of goods sold. The Company uses regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item. If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency ~~(gain)~~ loss in the Company’s consolidated statements of operations and comprehensive income. The Company classifies cash flows relating to its forward foreign currency exchange contracts related to purchase of inventory consistently with the classification of the hedged item, within cash flows from operating activities.

The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign transaction they are intended to hedge.

Net Investment Hedges

The Company also uses ~~fixed-to-fixed cross currency~~cross-currency swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between ~~the U.S. Dollars and the associated foreign~~different currencies. The Company has elected the spot method of designating these contracts under Accounting Standards Update (“ASU”) 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”, and has designated these contracts as net investment hedges. The net gain or loss on the net investment hedge is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense (income), net, in the Company’s consolidated statements of operations and

~~statements of operations and~~ comprehensive income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated.

Fair Value Hedges

When a cross-currency swap is designated as a fair value hedge and qualifies as highly effective, the fair value hedge will be recorded at fair value each period on the Company’s consolidated balance sheets, with the difference resulting from the changes in the spot rate recognized in foreign currency loss on the Company’s consolidated statements of operations and comprehensive income, which will offset the related foreign currency impact of the underlying transaction being hedged.

Leases

The Company leases retail stores, office space and warehouse space under operating lease agreements that expire at various dates through September 2043. The Company’s leases generally have terms of up to 10 years, generally require a fixed annual rent and may require the payment of additional rent if store sales exceed a negotiated amount. Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through ~~May~~August 2027. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores from previous restructuring activities. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. The Company determines the sublease term based on the date it provides possession to the subtenant through the expiration date of the sublease.

The Company recognizes operating lease right-of-use assets and lease liabilities at lease commencement date, based on the present value of fixed lease payments over the expected lease term. The Company uses its incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable for the Company’s leases. The Company’s incremental borrowing rates are based on the term of the leases, the economic environment of the leases and reflect the expected interest rate it would incur to borrow on a secured basis. Certain leases include one or more renewal options. The exercise of lease renewal options is generally at the Company’s sole discretion and as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company generally does not include ~~the~~ renewal ~~option period~~options in the expected lease term and the associated lease payments are not included in the measurement of the operating lease right-of-use asset and lease liability. Certain leases also contain termination options with an associated penalty. Generally, the Company is reasonably certain not to exercise these options and as such, they are not included in the determination of the expected lease term. The Company recognizes operating lease expense on a straight-line basis over the lease term.

Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for its short-term leases on a straight-line basis over the lease term.

The Company’s leases generally provide for payments of non-lease components, such as common area maintenance, real estate taxes and other costs associated with the leased property. The Company accounts for lease and non-lease components of its real estate leases together as a single lease component and, as such, includes fixed payments of non-lease components in the measurement of the operating lease right-of-use assets and lease liabilities for its real estate leases. Variable lease payments, such as percentage rentals based on sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred as variable lease costs and are not recorded on the balance sheet. The Company’s lease agreements do not contain any material residual value guarantees, material restrictions or covenants.

The following table presents the Company’s supplemental cash flow information related to leases (in millions):


		Nine Months Ended					Three Months Ended
		December 31, 2022		December 25, 2021			July 1, 2023		July 2, 2022
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases	Operating cash flows used in operating leases	$	373	$	413	Operating cash flows used in operating leases	$	131	$	125

During each of the three ~~and nine~~ months ended ~~December 31,~~July 1, 2023 and July 2, 2022, the Company recorded sublease income of $2 million and $7 million, respectively, within selling, general and administrative expenses. During the three and nine months ended December 25, 2021, the Company recorded $2 million and $6 million, respectively, within restructuring and other charges for stores relating to our restructuring plan and selling, general and administrative expenses for all other locations. During the three and nine months ended December 31, 2022, the Company recorded $3 million and $8 million, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract. During the three and nine months ended December 25, 2021, the Company recorded $3 million and $13 million, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract. The aforementioned rent concessions were recorded as a reduction to variable lease expense within selling, general and administrative expenses.

109

Net Income per Share

The Company’s basic net income per ordinary share is calculated by dividing net income by the weighted average number of ordinary shares outstanding during the period. Diluted net income per ordinary share reflects the potential dilution that would occur if share ~~option grants~~options or any other potentially dilutive instruments, including restricted shares and restricted share units (“RSUs”), were exercised or converted into ordinary shares. These potentially dilutive securities are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods. Performance-based RSUs are included as diluted shares if the related performance conditions are considered satisfied as of the end of the reporting period and to the extent they are dilutive under the treasury stock method.

The components of the calculation of basic net income per ordinary share and diluted net income per ordinary share are as follows (in millions, except share and per share data):


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 31, 2022		December 25, 2021		December 31, 2022		December 25, 2021			July 1, 2023		July 2, 2022
Numerator:	Numerator:									Numerator:
Net income attributable to Capri	Net income attributable to Capri	$	225	$	322	$	650	$	741	Net income attributable to Capri	$	48	$	201
Denominator:	Denominator:									Denominator:
Basic weighted average shares	Basic weighted average shares	128,849,793		149,717,485		135,600,276		150,975,773		Basic weighted average shares	117,431,941		141,913,586
Weighted average dilutive share equivalents:	Weighted average dilutive share equivalents:									Weighted average dilutive share equivalents:
Share options and restricted shares/units, and performance restricted share units	Share options and restricted shares/units, and performance restricted share units	1,515,126		2,657,809		1,449,883		2,858,347		Share options and restricted shares/units, and performance restricted share units	850,692		1,820,398
Diluted weighted average shares	Diluted weighted average shares	130,364,919		152,375,294		137,050,159		153,834,120		Diluted weighted average shares	118,282,633		143,733,984

Basic net income per share (1)	Basic net income per share (1)	$	1.74	$	2.15	$	4.79	$	4.91	Basic net income per share (1)	$	0.41	$	1.42
Diluted net income per share (1)	Diluted net income per share (1)	$	1.72	$	2.11	$	4.74	$	4.82	Diluted net income per share (1)	$	0.41	$	1.40

(1)Basic and diluted net income per share are calculated using unrounded numbers.

During the three ~~and nine~~ months ended ~~December 31, 2022,~~July 1, 2023, share equivalents of ~~187,547~~287,571 shares ~~and 546,607 shares, respectively,~~ have been excluded from the above calculations due to their anti-dilutive effect. Share equivalents of ~~208,168 shares and 411,394~~657,340 shares have been excluded from the above calculations for the three ~~and nine~~ months ended ~~December 25, 2021, respectively,~~July 2, 2022 due to their anti-dilutive effect.

See Note 2 in the Company’s Annual Report on Form 10-K for the fiscal year ended April ~~2, 2022~~1, 2023 for a complete disclosure of the Company’s significant accounting policies.

Recently ~~Issued~~Adopted Accounting Pronouncements

Supplier Finance Programs

In September 2022, the FASB issued ASU 2022-04, “Disclosure of Supplier Finance Program Obligations” which makes a number of changes. The amendments require a buyer in a supplier finance program to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude. The amendments in this update ~~are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years,~~do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance programs. The Company adopted the update in the first quarter of Fiscal 2024 on a retrospective basis, except for the ~~amendment on roll forward~~requirement to disclose rollforward information, which iswill be effective for ~~fiscal years beginning after December 15, 2023. Early adoption is permitted. The~~the Company ~~is currently evaluating~~in the ~~impact~~first quarter of ~~adopting~~Fiscal 2025 on a prospective basis. See Note 9 for the Company’s disclosures relating to this ~~standard on the Company's disclosures.~~update.

Recently Issued Accounting Pronouncements

The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on the Company’s results of operations, financial condition or cash flows based on current information.

1110

3. Revenue Recognition

The Company accounts for contracts with its customers when there is approval and commitment from both parties, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectibility of consideration is probable. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services.

The Company sells its products through three primary channels of distribution: retail, wholesale and licensing. Within the retail and wholesale channels, substantially all of the Company’s revenues consist of sales of products that represent a single performance obligation, where control transfers at a point in time to the customer. For licensing arrangements, royalty and advertising revenue is recognized over time based on access provided to the Company’s trademarks.

Retail

The Company generates sales through directly operated stores and e-commerce sites throughout the Americas (United States, Canada and Latin America), certain parts of EMEA (Europe, Middle East and Africa) and certain parts of Asia (Asia and Oceania).

Gift Cards. The Company sells gift cards that can be redeemed for merchandise, resulting in a contract liability upon issuance. Revenue is recognized when the gift card is redeemed or upon “breakage” for the estimated portion of gift cards that are not expected to be redeemed. “Breakage” revenue is calculated under the proportional redemption methodology, which considers the historical patterns of redemption in jurisdictions where the Company is not required to remit the value of the unredeemed gift cards as unclaimed property. The contract liability related to gift cards, net of estimated “breakage”, of ~~$15 million and $13~~$14 million as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022, respectively,~~1, 2023, is included within accrued expenses and other current liabilities in the Company’s consolidated balance sheet.

Loyalty Program. The Company offers a loyalty program, which allows its Michael Kors United States customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at Michael Kors retail stores and e-commerce sites. The Company defers a portion of the initial sales transaction based on the estimated relative fair value of the benefits based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed.

Wholesale

The Company’s products are sold primarily to major department stores, specialty stores and travel retail shops throughout the Americas, EMEA and Asia. The Company also has arrangements where its products are sold to geographic licensees in certain parts of EMEA, Asia and South America.

Licensing

The Company provides its third-party licensees with the right to access its Versace, Jimmy Choo and Michael Kors trademarks under product and geographic licensing arrangements. Under geographic licensing arrangements, third party licensees receive the right to distribute and sell products bearing the Company’s trademarks in retail and/or wholesale channels within certain geographical areas, including Brazil, the Middle East, Eastern Europe, South Africa and certain parts of Asia.

The Company recognizes royalty revenue and advertising contributions based on the percentage of sales made by the licensees. Generally, the Company’s guaranteed minimum royalty amounts due from licensees relate to contractual periods that do not exceed 12 months, however, certain guaranteed minimums for Versace are multi-year based.

1211

As of ~~December 31, 2022,~~July 1, 2023, contractually guaranteed minimum fees from the Company’s license agreements expected to be recognized as revenue during future periods were as follows (in millions):


	Contractually Guaranteed Minimum Fees

Remainder of Fiscal ~~2023~~2024	$	8
~~Fiscal 2024~~	3125
Fiscal 2025	3133
Fiscal 2026	2830
Fiscal 2027	2426
Fiscal 2028	18
Fiscal 2029 and thereafter	4429
Total	$	~~166~~161

Sales Returns

The refund liability recorded as of ~~December 31, 2022~~July 1, 2023 was ~~$64~~$58 million, and the related asset for the right to recover returned product as of ~~December 31, 2022~~July 1, 2023 was ~~$15~~$18 million. The refund liability recorded as of April ~~2, 2022~~1, 2023 was ~~$52~~$54 million, and the related asset for the right to recover returned product as of April ~~2, 2022~~1, 2023 was ~~$15~~$17 million.

Contract Balances

Total contract liabilities were ~~$20~~$37 million and ~~$30~~$36 million as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022,~~1, 2023, respectively. For the three ~~and nine~~ months ended ~~December 31,~~July 1, 2023, the Company recognized $5 million in revenue which related to contract liabilities that existed at April 1, 2023. For the three months ended July 2, 2022, the Company recognized $3$5 million ~~and $11 million respectively,~~ in revenue which related to contract liabilities that existed at April 2, 2022. For the three and nine months ended December 25, 2021, the Company recognized $1 million and $9 million, respectively, in revenue which related to contract liabilities that existed at March 27, 2021. There were no material contract assets recorded as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022.~~1, 2023.

There were no changes in historical variable consideration estimates that were materially different from actual results.

1312

Disaggregation of Revenue

The following table presents the Company’s segment revenue disaggregated by geographic location (in millions):


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 31, 2022		December 25, 2021		December 31, 2022		December 25, 2021			July 1, 2023		July 2, 2022
Versace revenue - the Americas	Versace revenue - the Americas	$	85	$	89	$	320	$	283	Versace revenue - the Americas	$	82	$	115
Versace revenue - EMEA	Versace revenue - EMEA	113		99		350		304		Versace revenue - EMEA	116		107
Versace revenue - Asia	Versace revenue - Asia	51		63		162		186		Versace revenue - Asia	61		53
Total Versace	Total Versace	249		251		832		773		Total Versace	259		275

Jimmy Choo revenue - the Americas	Jimmy Choo revenue - the Americas	54		51		151		127		Jimmy Choo revenue - the Americas	49		54
Jimmy Choo revenue - EMEA	Jimmy Choo revenue - EMEA	70		69		193		175		Jimmy Choo revenue - EMEA	81		66
Jimmy Choo revenue - Asia	Jimmy Choo revenue - Asia	44		58		138		155		Jimmy Choo revenue - Asia	53		52
Total Jimmy Choo	Total Jimmy Choo	168		178		482		457		Total Jimmy Choo	183		172

Michael Kors revenue - the Americas	Michael Kors revenue - the Americas	777		814		2,045		1,960		Michael Kors revenue - the Americas	501		625
Michael Kors revenue - EMEA	Michael Kors revenue - EMEA	212		237		616		616		Michael Kors revenue - EMEA	175		191
Michael Kors revenue - Asia	Michael Kors revenue - Asia	106		129		309		356		Michael Kors revenue - Asia	111		97
Total Michael Kors	Total Michael Kors	1,095		1,180		2,970		2,932		Total Michael Kors	787		913

Total revenue - the Americas	Total revenue - the Americas	916		954		2,516		2,370		Total revenue - the Americas	632		794
Total revenue - EMEA	Total revenue - EMEA	395		405		1,159		1,095		Total revenue - EMEA	372		364
Total revenue - Asia	Total revenue - Asia	201		250		609		697		Total revenue - Asia	225		202
Total revenue	Total revenue	$	1,512	$	1,609	$	4,284	$	4,162	Total revenue	$	1,229	$	1,360

See Note 3 in the Company’s Annual Report on Form 10-K for the fiscal year ended April ~~2, 2022~~1, 2023 for a complete disclosure of the Company’s revenue recognition policy.

4. Receivables, net

Receivables, net, consist of (in millions):


		December 31, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Trade receivables (1)	Trade receivables (1)	$	405	$	461	Trade receivables (1)	$	336	$	412
Receivables due from licensees	Receivables due from licensees	23		17		Receivables due from licensees	15		14
		428		478			351		426
Less: allowances	Less: allowances	(56)		(44)		Less: allowances	(51)		(57)
Total receivables, net	Total receivables, net	$	372	$	434	Total receivables, net	$	300	$	369

(1)As of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022, $92~~1, 2023, $97 million and ~~$83~~$96 million, respectively, of trade receivables were insured.

Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and credit losses. Discounts are based on open invoices where trade discounts have been extended to customers. Markdowns are based on wholesale customers’ sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in revenues.

The Company’s allowance for credit losses is determined through analysis of periodic aging of receivables and assessments of collectibility based on an evaluation of historic and anticipated trends, the financial condition of the Company’s customers and the impact of general economic conditions. The past due status of a receivable is based on its contractual terms. Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered. Allowance for credit losses was ~~$6 million and $10~~$8 million as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022, respectively.~~1, 2023. The Company had ~~immaterial~~ credit losses of $1 million for the three months ended ~~December 31, 2022~~July 1, 2023 and ~~$2 million for the nine months ended December 31,~~July 2, 2022. ~~The Company had $3 million of credit losses for the three months ended December 25, 2021 and $2 million for the nine months ended December 25, 2021.~~

5. Property and Equipment, net

Property and equipment, net, consists of (in millions):


		December 31, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Leasehold improvements	Leasehold improvements	$	568	$	575	Leasehold improvements	$	540	$	577
Computer equipment and software	Computer equipment and software	224		212		Computer equipment and software	246		237
Furniture and fixtures	Furniture and fixtures	213		218		Furniture and fixtures	205		216
Equipment	Equipment	100		81		Equipment	126		106
Building	Building	47		48		Building	52		48
In-store shops	In-store shops	41		47		In-store shops	45		44
Land	Land	18		19		Land	18		18
Total property and equipment, gross	Total property and equipment, gross	1,211		1,200		Total property and equipment, gross	1,232		1,246
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(756)		(790)		Less: accumulated depreciation and amortization	(782)		(784)
Subtotal	Subtotal	455		410		Subtotal	450		462
Construction-in-progress	Construction-in-progress	91		66		Construction-in-progress	101		90
Total property and equipment, net	Total property and equipment, net	$	546	$	476	Total property and equipment, net	$	551	$	552

~~Depreciation and amortization of property and equipment for the three and nine months ended December 31, 2022 was $32 million and $97 million, respectively.~~ Depreciation and amortization of property and equipment was $34 million ~~and $109 million~~ for the three ~~and nine~~ months ended ~~December 25, 2021, respectively.~~July 1, 2023 and July 2, 2022. The Company ~~recorded no~~did not record any property and equipment impairment charges for the three months ended ~~December 31, 2022~~July 1, 2023 and ~~$2 million in property and equipment impairment charges for the nine months ended December 31,~~July 2, 2022. ~~The Company recorded no property and equipment impairment charges for the three months ended December 25, 2021 and $3 million for the nine months ended December 25, 2021.~~

6. Intangible Assets and Goodwill

The following table details the carrying values of the Company’s intangible assets and goodwill (in millions):


		December 31, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Definite-lived intangible assets:	Definite-lived intangible assets:					Definite-lived intangible assets:
Reacquired rights	Reacquired rights	$	400	$	400	Reacquired rights	$	400	$	400
Trademarks	Trademarks	23		23		Trademarks	23		23

Customer relationships (1)	Customer relationships (1)	391		414		Customer relationships (1)	405		397
Gross definite-lived intangible assets	Gross definite-lived intangible assets	814		837		Gross definite-lived intangible assets	828		820
Less: accumulated amortization	Less: accumulated amortization	(256)		(228)		Less: accumulated amortization	(282)		(268)
Net definite-lived intangible assets	Net definite-lived intangible assets	558		609		Net definite-lived intangible assets	546		552

Indefinite-lived intangible assets:	Indefinite-lived intangible assets:					Indefinite-lived intangible assets:
Jimmy Choo brand (2)	Jimmy Choo brand (2)	297		321		Jimmy Choo brand (2)	286		277
Versace brand (1)	Versace brand (1)	888		917		Versace brand (1)	905		899
Net indefinite-lived intangible assets	Net indefinite-lived intangible assets	1,185		1,238		Net indefinite-lived intangible assets	1,191		1,176

Total intangible assets, excluding goodwill	Total intangible assets, excluding goodwill	$	1,743	$	1,847	Total intangible assets, excluding goodwill	$	1,737	$	1,728

Goodwill (3)	Goodwill (3)	$	1,358	$	1,418	Goodwill (3)	$	1,308	$	1,293

(1)The change in the carrying value since April ~~2, 2022~~1, 2023 reflects the impact of foreign currency translation.

(2)Includes accumulated impairment of ~~$249~~$273 million as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022.~~1, 2023. The change in the carrying value since April ~~2, 2022~~1, 2023 reflects the impact of foreign currency translation.

(3)Includes accumulated impairment of ~~$265~~$347 million related to the Jimmy Choo reporting units as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022.~~1, 2023. The change in the carrying value since April ~~2, 2022~~1, 2023 reflects the impact of foreign currency translation.

Amortization expense for the Company’s definite-lived intangible assets was $11 million for the three ~~and nine~~ months ended ~~December 31, 2022 was $11 million~~July 1, 2023 and $34 million, respectively. Amortization expense for the Company’s definite-lived intangible assets for the three and nine months ended December 25, 2021 was $13 million and $37 million, respectively.July 2, 2022.

7. Current Assets and Current Liabilities

Prepaid expenses and other current assets consist of the following (in millions):


		December 31, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Prepaid taxes	Prepaid taxes	$	162	$	86	Prepaid taxes	$	116	$	105
Prepaid contracts	Prepaid contracts	24		15		Prepaid contracts	19		22
Prepaid insurance						Prepaid insurance	14		2
Interest receivable related to hedges						Interest receivable related to hedges	13		10
Other accounts receivables	Other accounts receivables	9		17		Other accounts receivables	10		10

Interest receivable related to net investment hedges		3		13
Other	Other	45		61		Other	44		46
Total prepaid expenses and other current assets	Total prepaid expenses and other current assets	$	243	$	192	Total prepaid expenses and other current assets	$	216	$	195

Accrued expenses and other current liabilities consist of the following (in millions):


		December 31, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Return liabilities						Return liabilities	$	58	$	54
Other taxes payable	Other taxes payable	$	81	$	61	Other taxes payable	39		32
Return liabilities		64		52
Accrued advertising and marketing						Accrued advertising and marketing	34		26
Accrued capital expenditures	Accrued capital expenditures	51		39		Accrued capital expenditures	27		33
Accrued advertising and marketing		32		21
Accrued rent (1)	Accrued rent (1)	21		20		Accrued rent (1)	20		18
Advance royalties						Advance royalties	18		18
Professional services	Professional services	19		15		Professional services	17		14
Accrued interest						Accrued interest	16		16
Gift cards and retail store credits	Gift cards and retail store credits	15		17		Gift cards and retail store credits	14		14
Accrued purchases and samples						Accrued purchases and samples	12		8
Accrued litigation	Accrued litigation	11		13		Accrued litigation	11		12
Accrued interest		8		10
Accrued purchases and samples		7		11

Charitable donations (2)		—		10
Other	Other	104		82		Other	74		69
Total accrued expenses and other current liabilities	Total accrued expenses and other current liabilities	$	413	$	351	Total accrued expenses and other current liabilities	$	340	$	314

(1)The accrued rent balance relates to variable lease payments.

~~(2)The charitable donations balance relates to a $10 million unconditional pledge to The Versace Foundation as of April 2, 2022 which was paid during the third quarter ended December 31, 2022.~~

8. Restructuring and Other ~~Charges~~

~~Restructuring Charges - Capri Retail Store Optimization Program~~

~~During Fiscal 2022, the Company completed its plan to close certain retail stores as part of its Capri Retail Store Optimization Program.~~(Income) Expense

During the three ~~and nine~~ months ended December 25, 2021, the Company closed 13 and 39 of its retail stores, respectively, which were incorporated into the Capri Retail Store Optimization Program. Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program during the three and nine months ended December 25, 2021 were $10 million and $6 million, respectively.

~~Other Charges~~

~~During the three and nine months ended December 31, 2022,~~July 1, 2023, the Company recorded ~~costs~~other income of $5$2 million ~~and $11~~primarily related to a $10 million ~~respectively, primarily~~gain on the sale of a long-lived corporate asset partially offset by expenses related to equity awards associated with the acquisition of ~~Versace.~~ Versace and severance expenses incurred during the first quarter.

During the three ~~and nine~~ months ended ~~December 25, 2021,~~July 2, 2022, the Company recorded ~~costs~~expenses of $4$3 million ~~and $19 million, respectively,~~ primarily related to equity awards associated with the acquisition of Versace.

1715

9. Debt Obligations

The following table presents the Company’s debt obligations (in millions):


		December 31, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Revolving Credit Facilities	Revolving Credit Facilities	$	580	$	175	Revolving Credit Facilities	$	973	$	874
Versace Term Loan	Versace Term Loan	482		—		Versace Term Loan	491		488
Senior Notes due 2024	Senior Notes due 2024	450		450		Senior Notes due 2024	450		450
2018 Term Loan		—		497

Other	Other	31		42		Other	25		17
Total debt	Total debt	1,543		1,164		Total debt	1,939		1,829
Less: Unamortized debt issuance costs	Less: Unamortized debt issuance costs	2		3		Less: Unamortized debt issuance costs	2		2
Less: Unamortized discount on senior notes		1		1

Total carrying value of debt	Total carrying value of debt	1,540		1,160		Total carrying value of debt	1,937		1,827
Less: Short-term debt	Less: Short-term debt	19		29		Less: Short-term debt	13		5
Total long-term debt	Total long-term debt	$	1,521	$	1,131	Total long-term debt	$	1,924	$	1,822

Senior Revolving Credit Facility

On July 1, 2022, the Company entered into a revolving credit facility (the “2022 Credit Facility”) with, among others, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent (the “Administrative Agent”), which refinanced its existing senior unsecured revolving credit facility. The Company, a U.S. subsidiary of the Company, a Canadian subsidiary of the Company, a Dutch subsidiary of the Company and a Swiss subsidiary of the Company are the borrowers under the 2022 Credit Facility, and the borrowers and certain subsidiaries of the Company provide unsecured guaranties of the 2022 Credit Facility. The 2022 Credit Facility replaced the third amended and restated senior unsecured credit facility, dated as of November 15, 2018 (the “2018 Credit Facility”).

The 2022 Credit Facility provides for a $1.5 billion revolving credit facility (the “2022 Revolving Credit Facility”), which may be denominated in U.S. ~~Dollars~~dollars and other currencies, including Euros, Canadian Dollars, Pounds Sterling, Japanese Yen and Swiss Francs. The 2022 Revolving Credit Facility also includes sub-facilities for the issuance of letters of credit of up to $125 million and swing line loans at the Administrative Agent’s discretion of up to $100 million. The Company has the ability to expand its borrowing availability under the 2022 Credit Facility in the form of increased revolving commitments or one or more tranches of term loans by up to an additional $500 million, subject to the agreement of the participating lenders and certain other customary conditions.

~~Borrowings~~ See Note 11 to the Company’s Fiscal 2023 Annual Report on Form 10-K for information regarding the Company’s interest rates associated with borrowings under the 2022 Credit ~~Facility bear interest, at the Company’s option, at the following rates:~~

•For loans denominated in U.S. Dollars, (A) an alternate base rate, which is the greatest of (a) the prime rate publicly announced from time to time by JPMorgan Chase, (b) the greater of the federal funds effective rate and the Federal Reserve Bank of New York overnight bank funding rate and zero, plus 50 basis points, and (c) the greater of term Secured Overnight Financing Rate (“SOFR”) for an interest period of one month plus 10 basis points and zero, plus 100 basis points, (B) the greater of term SOFR for the applicable interest period plus 10 basis points (“Adjusted Term SOFR”) and zero or (C) the greater of daily simple SOFR plus 10 basis points and zero;

•~~For loans denominated in Pounds Sterling, the greater of Secured Overnight Index Average (“SONIA”) and zero;~~

•~~For loans denominated in Swiss Francs, the greater of Swiss Average Rate Overnight (“SARON”) and zero;~~

•For loans denominated in Euro, the greater of Euro Interbank Offer Rate (“EURIBOR”) for the applicable interest period adjusted for statutory reserve requirements (“Adjusted EURIBOR Rate”) and zero;

•For loans denominated in Canadian Dollars, the greater of the rate applicable to Canadian Dollar Canadian banker’s acceptances quoted on Reuters for the applicable interest period adjusted for statutory reserve requirements (“Adjusted CDOR Rate”) and zero; and

•For loans denominated in Japanese Yen, the greater of Tokyo Interbank Offer Rate (“TIBOR”) for the applicable interest period adjusted for statutory reserve requirements (“Adjusted TIBOR Rate”) and zero; in each case, plus an applicable margin based on the Company’s public debt ratings and/or net leverage ratio.Facility.

The 2022 Credit Facility provides for an annual administration fee and a commitment fee equal to 7.5 basis points to 17.5 basis points per annum, which was 15.0 basis points as of ~~December 31, 2022.~~July 1, 2023. The fees are based on the Company’s public debt ratings and/or net leverage ratio, applied to the average daily unused amount of the 2022 Credit Facility.

Loans under the 2022 Credit Facility may be prepaid and commitments may be terminated or reduced by the borrowers without premium or penalty other than customary “breakage” costs with respect to loans bearing interest based upon Adjusted Term SOFR, the Adjusted EURIBOR Rate, the Adjusted CDOR Rate and the Adjusted TIBOR Rate.

The 2022 Credit Facility requires the Company to maintain a net leverage ratio as of the end of each fiscal quarter of no greater than 4.0 to 1.0. Such net leverage ratio is calculated as the ratio of the sum of total indebtedness as of the date of the measurement plus the capitalized amount of all operating lease obligations, minus unrestricted cash and cash equivalents not to exceed $200 million, to Consolidated EBITDAR for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined as consolidated net income plus provision for taxes based on income, profits or capital, net interest expense, depreciation and amortization expense, consolidated rent expense and other non-cash losses, ~~charge~~charges and expenses, subject to certain additions and deductions. The 2022 Credit Facility also includes covenants that limit additional indebtedness, liens, acquisitions and other investments, restricted payments and affiliate transactions.

The 2022 Credit Facility also contains events of default customary for financings of this type, including, but not limited to, payment defaults, material inaccuracy of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy or insolvency, certain events under the Employee Retirement Income Security Act, material judgments, actual or asserted failure of any guaranty supporting the 2022 Credit Facility to be in full force and effect, and changes of control. If such an event of default occurs and is continuing, the lenders under the 2022 Credit Facility would be

entitled to take various actions, including, but not limited to, terminating the commitments and accelerating amounts outstanding under the 2022 Credit Facility.

As of July 1, 2023 and April 1, 2023, the Company had $973 million and $874 million of borrowings outstanding under the 2022 Revolving Credit Facility, respectively. In addition, stand-by letters of credit of $3 million were outstanding as of both July 1, 2023 and April 1, 2023. At July 1, 2023 and April 1, 2023, the amount available for future borrowings under the 2022 Revolving Credit Facility was $524 million and $623 million, respectively. The Company had $6 million of deferred financing fees related to Revolving Credit Facilities for both July 1, 2023 and April 1, 2023, and are recorded within other assets in the Company’s consolidated balance sheets.

As of July 1, 2023, and the date these financial statements were issued, the Company was in compliance with all covenants related to the 2022 Credit Facility.

Versace Term Loan

On December 5, 2022, Gianni Versace S.r.l., a wholly owned subsidiary of Capri Holdings Limited, entered into a credit facility with Intesa Sanpaolo S.p.A., Banco Nazionale del Lavoro S.p.A., and UniCredit S.p.A., as arrangers and lenders, and Intesa Sanpaolo S.p.A., as agent, which provides a senior unsecured term loan (the “Versace Term Loan”) in an aggregate principal amount of €450 ~~million (approximately $482 million).~~million. The Versace Term Loan is not subject to ~~required~~ amortization and matures on December 5, 2025. The Company provides an unsecured guaranty of the Versace Term Loan.

The Versace Term Loan bears interest at a rate per annum equal to the greater of EURIBOR for the applicable interest period and zero, plus a margin of 1.35%.

The Versace Term Loan may be prepaid without premium or penalty other than customary “breakage” costs. The Versace Term Loan requires the Company to maintain a net leverage ratio as of the end of each fiscal quarter of no greater than 4.0 to 1.0. Such net leverage ratio is calculated as the ratio of the sum of total indebtedness as of the date of the measurement plus the capitalized amount of all operating lease obligations, minus unrestricted cash and cash equivalents not to exceed $200 million, to Consolidated EBITDAR for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined as consolidated net income plus provision for taxes based on income, profits or capital, net interest expense, depreciation and amortization expense, consolidated rent expense and other non-cash losses, ~~charge~~charges and expenses, subject to certain additions and deductions. The Versace Term Loan also includes covenants that limit additional financial indebtedness, liens, acquisitions, loans and guarantees, restricted payments and mergers of GIVI Holding S.r.l., Gianni Versace S.r.l. and their respective subsidiaries.

The Versace Term Loan contains events of default customary for financings of this type, including, but not limited to payment defaults, material inaccuracy of representations and warranties, covenant defaults, cross-defaults to material financial indebtedness, certain events of bankruptcy or insolvency, illegality or repudiation of any loan document under the Versace Term Loan or any failure thereof to be in full force and effect, and changes of control. If such an event of default occurs and is continuing, the lenders under the Versace Term Loan would be entitled to take various actions, including, but not limited to, accelerating amounts outstanding under the Versace Term Loan.

As of ~~December 31, 2022,~~July 1, 2023 and April 1, 2023, the carrying value of the Versace Term Loan was $490 million and $487 million, respectively, net of $1 million of deferred financing fees for both July 1, 2023 and April 1, 2023, which were recorded within long-term debt in the Company’s consolidated balance sheets.

As of July 1, 2023, and the date these financial statements were issued, the Company was in compliance with all covenants related to the ~~2022 Credit Facility and the~~ Versace Term Loan.

As of December 31, 2022, the Company had $580 million of borrowings outstanding under the 2022 Revolving Credit Facility. The Company had $175 million of borrowings outstanding under revolver in the 2018 Credit Facility as of April 2, 2022. In addition, stand-by letters of credit of $15 million and $21 million were outstanding as of both December 31, 2022 and April 2, 2022, respectively. At December 31, 2022, the amount available for future borrowings under the 2022 Revolving Credit Facility was $905 million. The amount available for future borrowings under the revolver in the 2018 Credit Facility was $804 million as of April 2, 2022.

~~As of December 31, 2022, the carrying value of the~~ Versace Term Loan was $481 million, which was recorded within long-term debt in the Company’s consolidated balance sheets. As of December 31, 2022, the Company no longer had an outstanding balance related to the 2018 Term Loan. As of April 2, 2022, the carrying value of the 2018 Term Loan was $495 million, which was recorded within long-term debt in the Company’s consolidated balance sheets.

~~The Company had $6 million and $3 million of deferred financing fees related to Revolving Credit~~ Facilities as of December 31, 2022 and April 2, 2022, respectively, and are recorded within other assets in the Company’s consolidated balance sheets. The Company had $1 million of deferred financing fees related to the Versace Term Loan and $2 million of deferred financing fees related to the 2018 Term Loan as of December 31, 2022 and April 2, 2022, respectively, which are both recorded within long-term debt in the Company’s consolidated balance sheets.

The Company offers a supplier financing program which enables suppliers, at their sole discretion, to sell their receivables (i.e., the Company’s payment obligations to suppliers) to a financial institution on a non-recourse basis in order to be paid earlier than current payment terms provide. The Company’s obligations, including the amount due and scheduled payment dates, are not impacted by a suppliers’ decision to participate in this program. The Company does not reimburse suppliers for any costs they incur to participate in the program and their participation is voluntary. The amount outstanding under this program as of December 31, 2022 and April 2, 2022 was $18 million and $21 million, respectively, and is presented as short-term debt in the Company’s consolidated balance sheets.

During Fiscal 2022, the Company's subsidiary, Versace, entered into an agreement with Banco BPM Banking Group (“the Bank”) to sell certain tax receivables to the Bank in exchange for cash. The arrangement was determined to be a financing arrangement as the de-recognition criteria for the receivables was not met at the time of the cash receipt from the Bank. As of ~~December 31, 2022,~~July 1, 2023 and April 1, 2023, the outstanding balance was $11 million, with $1 million and $10 million recorded within short-term debt and long-term debt in the Company’s consolidated balance sheets, respectively. As

Supplier Financing Program

The Company offers a supplier financing program which enables the Company’s inventory suppliers, at their sole discretion, to sell their receivables (i.e., the Company’s payment obligations to suppliers) to a financial institution on a non-recourse basis in order to be paid earlier than current payment terms provide. The Company’s obligations, including the amount due and scheduled payment dates, which generally do not exceed 90 days, are not impacted by a suppliers’ decision to participate in this program. The Company does not reimburse suppliers for any costs they incur to participate in the program and their participation is voluntary. The amount outstanding under this program as of July 1, 2023 and April ~~2, 2022, the outstanding balance~~1, 2023 was ~~$18 million, with $8~~$12 million and ~~$10~~$4 million, ~~recorded within~~respectively, and is presented as short-term ~~debt and long-term~~ debt in the Company’s consolidated balance ~~sheets, respectively.~~sheets.

See Note 11 to the Company’s Fiscal ~~2022~~2023 Annual Report on Form 10-K for additional information regarding the Company’s credit facilities and debt obligations.

10. Commitments and Contingencies

In the ordinary course of business, the Company is party to various legal proceedings and claims. Although the outcome of such claims cannot be determined with certainty, the Company believes that the outcome of all pending legal proceedings, in the aggregate, will not have a material adverse effect on its cash flow, results of operations or financial position.

Please refer to the Contractual Obligations and Commercial Commitments disclosure within the Liquidity and Capital Resources section of the Company’s Annual Report on Form 10-K for the fiscal year ended April ~~2, 2022~~1, 2023 for a detailed disclosure of other commitments and contractual obligations as of April ~~2, 2022.~~1, 2023.

11. Fair Value Measurements

Financial assets and liabilities are measured at fair value using the three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date.

Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

At ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022,~~1, 2023, the fair values of the Company’s derivative contracts were determined using broker quotations, which were calculations derived from observable market information: the applicable currency rates at the balance sheet date and those forward rates particular to the contract at inception. The Company makes no adjustments to these broker obtained quotes or prices, but assesses the credit risk of the counterparty and would adjust the provided valuations for counterparty credit risk when appropriate. The fair values of the forward contracts are included in prepaid expenses and other current assets, and in accrued expenses and other current liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities to the Company. The fair value of net investment hedges is included in other assets, and in other long-term liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities of the Company. See Note 12 for further detail.

All contracts are measured and recorded at fair value on a recurring basis and are categorized in Level 2 of the fair value hierarchy, as shown in the following table (in millions):


		Fair value at December 31, 2022 using:						Fair value at April 2, 2022 using:							Fair value at July 1, 2023 using:						Fair value at April 1, 2023 using:
		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Derivative assets:	Derivative assets:													Derivative assets:
Forward foreign currency exchange contracts		$	—	$	—	$	—	$	—	$	4	$	—

Net investment hedges	Net investment hedges	—		—		—		—		44		—		Net investment hedges	$	—	$	4	$	—	$	—	$	1	$	—
Undesignated derivative contracts		—		—		—		—		4		—
Fair value hedges														Fair value hedges	—		1		—		—		—		—

Total derivative assets	Total derivative assets	$	—	$	—	$	—	$	—	$	52	$	—	Total derivative assets	$	—	$	5	$	—	$	—	$	1	$	—

Derivative liabilities:	Derivative liabilities:													Derivative liabilities:

Net investment hedges	Net investment hedges	$	—	$	41	$	—	$	—	$	37	$	—	Net investment hedges	$	—	$	93	$	—	$	—	$	36	$	—

Fair value hedges														Fair value hedges	—		3		—		—		3		—

Total derivative liabilities	Total derivative liabilities	$	—	$	41	$	—	$	—	$	37	$	—	Total derivative liabilities	$	—	$	96	$	—	$	—	$	39	$	—

The Company’s long-term debt obligations are recorded in its consolidated balance sheets at carrying values, which may differ from the related fair values. The fair value of the Company’s long-term debt is estimated using external pricing data, including any available quoted market prices and based on other debt instruments with similar characteristics. Borrowings under revolving credit agreements, if outstanding, are recorded at carrying value, which approximates fair value due to the frequent nature of such borrowings and repayments. See Note 9 for detailed information related to carrying values of the Company’s outstanding debt. The following table summarizes the carrying values and estimated fair values of the Company’s ~~short- and~~ long-term debt, based on Level 2 measurements (in millions):


		December 31, 2022				April 2, 2022					July 1, 2023				April 1, 2023
		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value			Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Revolving Credit Facilities	Revolving Credit Facilities	$	580	$	580	$	175	$	175	Revolving Credit Facilities	$	973	$	973	$	874	$	874
Versace Term Loan	Versace Term Loan	$	481	$	481	$	—	$	—	Versace Term Loan	$	490	$	486	$	487	$	481
Senior Notes due 2024	Senior Notes due 2024	$	448	$	429	$	448	$	451	Senior Notes due 2024	$	449	$	432	$	449	$	435
2018 Term Loan		—		—		$	495	$	490

The Company’s cash and cash equivalents, accounts receivable and accounts payable are recorded at carrying value, which approximates fair value.

Non-Financial Assets and Liabilities

The Company’s non-financial assets include goodwill, intangible assets, operating lease right-of-use assets and property and equipment. Such assets are reported at their carrying values and are not subject to recurring fair value measurements. The Company’s goodwill and its indefinite-lived intangible assets (Versace and Jimmy Choo brands) are assessed for impairment at least annually, while its other long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The Company determines the fair values of these assets based on Level 3 measurements using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.

The Company recorded ~~$1 million and $12 million in~~no impairment charges during the three ~~and nine~~ months ended ~~December 31, 2022, respectively. The Company recorded $10 million~~July 1, 2023 and $43 million in impairment charges during the three and nine months ended December 25, 2021, respectively. The following table details the carrying values and fair values of the Company’s assets that have been impaired during the three and nine months ended December 31, 2022 and the three and nine months ended December 25, 2021 (in millions):

Three Months Ended
December 31, 2022
Nine Months Ended
December 31, 2022
Carrying Value Prior to Impairment Fair Value Impairment Charge Carrying Value Prior to Impairment Fair Value
Impairment Charge
Operating Lease Right-of-Use Assets $ 2 $ 1 $ 1

$ 27 $ 17 $ 10
Property and Equipment — — — 3 1 2
Total $ 2 $ 1 $ 1 $ 30 $ 18 $ 12
Three Months Ended
December 25, 2021
Nine Months Ended
December 25, 2021
Carrying Value Prior to Impairment Fair Value
Impairment Charge(1)
Carrying Value Prior to Impairment Fair Value
Impairment Charge(1)
Operating Lease Right-of-Use Assets $ 10 $ — $ 10

$ 93 $ 53 $ 40
Property and Equipment — — — 4 1 3
Total $ 10 $ — $ 10 $ 97 $ 54 $ 43

~~(1)~~ Includes $10 million of impairment charges that were recorded within restructuring and other charges related to the Capri Retail Store Optimization Program for both the three and nine months ended December 25, 2021.July 2, 2022.

12. Derivative Financial Instruments

Forward Foreign Currency Exchange Contracts

The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign ~~currency~~currencies for certain of its transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to certain forecasted inventory purchases by using forward foreign currency exchange contracts. The Company only enters into derivative instruments with highly credit-rated counterparties. The Company does not enter into derivative contracts for trading or speculative purposes.

Net Investment Hedges

During the first quarter of Fiscal 2023, the Company modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $1.094 billion to hedge its net investment, of which $900 million was in Euro denominated subsidiaries and $194 million was in Japanese Yen denominated subsidiaries. The modification of these swaps resulted in the Company receiving $66 million in cash during the first quarter of Fiscal 2023. These contracts have been designated as net investment hedges.

As of July 2, 2022, the Company had multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $4 billion to hedge its net investment in Euro denominated subsidiaries (the “Euro Net Investment Hedges”) and $194 million to hedge its net investment in Japanese Yen denominated subsidiaries (the “Japanese Yen Net Investment Hedges”). During the month of July 2022, the Euro Net Investment Hedges with aggregate notional amount of $4 billion outstanding as of July 2, 2022 were terminated resulting in the Company receiving $237 million in cash.

~~During the second quarter of Fiscal 2023, the Company also entered into, and subsequently terminated, additional Euro Net Investment Hedges with aggregate notional amount of~~ ~~$4 billion. The termination of these contracts resulted in the Company receiving additional $100 million in cash.~~

During the second quarter of Fiscal 2023, the Company modified certain Japanese Yen Net Investment Hedges with notional amounts of $100 million. The modification of these hedges resulted in the Company receiving $6 million in cash during the second quarter of Fiscal 2023. The Company entered into additional Japanese Net Investment Hedges with notional amount of $100 million. These contracts have been designated as net investment hedges.

~~During the second quarter of Fiscal 2023, the Company received $343 million from the termination of Euro Net Investment Hedges and the modification of Japanese Yen Net Investment Hedges.~~

~~During the third quarter of Fiscal 2023,~~2024, the Company entered into multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of €1$2.5 billion ~~(approximately $1.07 billion)~~to hedge its net investment in Swiss Franc (“CHF”) denominated subsidiaries. Under the terms of these contracts, the Company will exchange the semi-annual fixed rate payments on United States Dollar notional amounts for fixed rate payments of 0.0% in CHF. These contracts have maturity dates between September 2024 and June 2028 and are designated as net investment hedges.

During the first quarter of Fiscal 2024, the Company entered into multiple float-to-float cross-currency swap agreements with aggregate notional amounts of $1.0 billion to hedge its net investment in Euro denominated subsidiaries. The Company will exchange Euro floating rate payments based on EURIBOR for the United States dollar floating rate amounts based on SOFR CME Term over the life of the agreement. The fixed rate component of semi-annual Euro payments range from 1.149% to 1.215%. These contracts have maturity dates between May 2028 and August 2030 and are designated as net investment hedges.

During the first quarter of Fiscal 2024, the Company entered into multiple fixed-to-fixed cross-currency swap agreements with an aggregate notional amount of $350 million to hedge its net investment in Euro denominated subsidiaries. Under the terms of these contracts, the Company will exchange the semi-annual fixed rate payments on United States Dollar notional amounts for fixed rate payments of 0.0% in Euro. These contracts have maturity dates between January 2027 and April 2027 and have been designated as net investment hedges.

During the first quarter of Fiscal 2024, the Company entered into a fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of €150 million to hedge its net investment in British Pound (“GBP”) denominated subsidiaries (the “GBP/EUR Net Investment Hedges”). As of July 1, 2023, the Company had multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of €1.15 billion to hedge its net investment in GBP denominated ~~subsidiaries (the “GBP Net Investment Hedges”).~~subsidiaries. Under the terms of these contracts, the Company will exchange the semi-annual fixed rate payments on GBP ~~denominated debt~~notional amounts for fixed rate payments of 0%0.0% in Euro. These contracts have maturity dates between November 2024 and November 2027 and are designated as net investment hedges.

As of ~~December 31, 2022,~~July 1, 2023, the Company had Japanese Yen ~~Net Investment Hedges~~net investment hedges with aggregate notional amounts of $294 million. Under the terms of these contracts, the Company will exchange the semi-annual fixed rate payments on ~~U.S. denominated debt~~United States notional amounts for fixed rate payments of 0% to 2.665% in Japanese Yen. These contracts have maturity dates between May 2027 and February 2051 and are designated as net investment hedges.

Certain of these contracts are supported by a credit support annex (“CSA”) which provides for collateral exchange with the earliest effective date being September 2027. If the outstanding position of a contract exceeds a certain threshold governed by the aforementioned CSA’s, either party is required to post cash collateral.

When a cross-currency swap is used as a hedging instrument in a net investment hedge assessed under the spot method, the cross-currency basis spread is excluded from the assessment of hedge effectiveness and is recognized as a reduction in interest expense in the Company’s consolidated statements of operations and comprehensive income. Accordingly, the Company recorded interest income of $4$15 million and ~~$32~~$17 million during the three ~~and nine~~ months ended ~~December 31,~~July 1, 2023 and July 2, 2022, respectively. ~~Additionally,~~

Fair Value Hedges

The Company is exposed to transaction risk from foreign currency exchange rate fluctuations with respect to various cross-currency intercompany loans which will impact earnings on a consolidated basis. To manage the foreign currency exchange rate risk related to these balances, the Company entered into fair value cross-currency swap agreements to hedge its exposure in GBP denominated subsidiaries (the “GBP Fair Value Hedge”) on a Euro denominated intercompany loan. As of July 1, 2023, the total notional values of outstanding fair value cross-currency swaps related to these loans were €1 billion. Under the term of these contracts, the Company will exchange the semi-annual fixed rate payments on GBP notional amounts for fixed rate payments of 0% in Euro. These contracts have maturity dates between March 2025 and March 2026 and are designated as fair value hedges.

When a cross-currency swap is designated as a fair value hedge and qualifies as highly effective, the fair value hedge will be recorded at fair value each period on the Company’s consolidated balance sheets, with the difference resulting from the changes in the spot rate recognized in foreign currency loss on the Company’s consolidated statements of operations and comprehensive income, which will offset the earnings impact of the underlying transaction being hedged. Accordingly, the Company recorded ~~interest income~~a foreign currency gain of ~~$17 million and $44~~$28 million during the three ~~and nine~~ months ended ~~December 25, 2021, respectively.~~July 1, 2023.

The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the consolidated balance sheets as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022~~1, 2023 (in millions):
Fair Value
Notional Amounts Assets Liabilities
December 31,
2022 April 2,
2022 December 31,
2022 April 2,
2022 December 31,
2022 April 2,
2022
Designated forward foreign currency exchange contracts $ 18 $ 119 $ — $ 4 (1) $ — $ —
Designated net investment hedges 1,364 4,194 — 44 (2) 41 (3) 37 (3)
Total designated hedges 1,382 4,313 — 48 41 37
Undesignated derivative contracts (4)
— 38 — 4 — —
Total $ 1,382 $ 4,351 $ — $ 52 $ 41 $ 37


					Fair Value
	Notional Amounts				Assets						Liabilities
	July 1, 2023		April 1, 2023		July 1, 2023			April 1, 2023			July 1, 2023			April 1, 2023

Designated net investment hedges	$	5,399	$	1,378	$	4	(1)	$	1	(1)	$	93	(2)	$	36	(2)
Designated fair value hedges	1,091		1,084		1		(1)	—			3		(2)	3		(2)


Total	$	6,490	$	2,462	$	5		$	1		$	96		$	39

(1)Recorded within ~~prepaid expenses and~~ other ~~current~~ assets in the Company’s consolidated balance sheets.

(2)Recorded within other ~~assets in the Company’s consolidated balance sheets.~~

~~(3)Recorded within other~~ long-term liabilities in the Company’s consolidated balance sheets.

~~(4)Represents undesignated hedges of inventory purchases.~~

The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheets on a gross basis, as shown in the ~~previous~~above table. However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to set-off amounts for similar transactions denominated in the same currencies and with the same banks, the resulting impact as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022~~1, 2023 would be as follows (in millions):


		Forward Currency Exchange Contracts				Net Investment Hedges					Net Investment Hedges	Fair Value Hedges
		December 31, 2022		April 2, 2022		December 31, 2022		April 2, 2022				July 1, 2023		April 1, 2023		July 1, 2023		April 1, 2023
Assets subject to master netting arrangements	Assets subject to master netting arrangements	$	—	$	8	$	—	$	44	Assets subject to master netting arrangements		$	4	$	1	$	1	$	—
Liabilities subject to master netting arrangements	Liabilities subject to master netting arrangements	$	—	$	—	$	41	$	37	Liabilities subject to master netting arrangements		$	93	$	36	$	3	$	3
Derivative assets, net	Derivative assets, net	$	—	$	8	$	—	$	42	Derivative assets, net		$	—	$	1	$	1	$	—
Derivative liabilities, net	Derivative liabilities, net	$	—	$	—	$	41	$	35	Derivative liabilities, net		$	89	$	36	$	3	$	3

Currently, the Company’s master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties.

Changes in the fair value of the Company’s forward foreign currency exchange contracts that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income and are reclassified from accumulated other comprehensive income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of goods sold within the Company’s consolidated statements of operations and comprehensive income. The net gain or loss on net investment hedges are reported within CTA as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets. Upon discontinuation of the hedge, such amounts remain in CTA until the related net investment is sold or liquidated. The net gain or loss on cross-currency swap contracts

designated as fair value hedges and associated with cross-currency intercompany loans are recognized within foreign currency loss on the Company’s consolidated statements of operations and comprehensive income generally in the period in which the related balances being hedged are revalued.

The following table summarizes the pre-tax impact of the gains and losses on the Company’s designated forward foreign currency exchange contracts and net investment hedges (in millions):
Three Months Ended Nine Months Ended
December 31, 2022 December 25, 2021 December 31, 2022 December 25, 2021
Pre-Tax Losses
Recognized in OCI Pre-Tax Gains
Recognized in OCI Pre-Tax Gains
Recognized in OCI Pre-Tax Gains
Recognized in OCI
Designated forward foreign currency exchange contracts $ (3) $ 5 $ 8 $ 7
Designated net investment hedges $ (33) $ 155 $ 332 $ 327
Designated interest rate swaps $ — $ 1 $ — $ 1


	Three Months Ended
	July 1, 2023		July 2, 2022
	Pre-Tax Losses Recognized in OCI		Pre-Tax Gains Recognized in OCI
Designated forward foreign currency exchange contracts	$	—	$	6
Designated net investment hedges	$	(54)	$	213
Designated fair value hedge	$	(25)	$	—

The following tables summarize the pre-tax impact of the gains ~~and losses~~ within the consolidated statements of operations and comprehensive income related to the designated forward foreign currency exchange contracts for the three ~~and nine~~ months ended ~~December 31,~~July 1, 2023 and July 2, 2022 ~~and December 25, 2021~~ (in millions):

~~Three Months Ended~~

Pre-Tax (Gain) Loss Reclassified from
Accumulated OCI

~~Location of (Gain) Loss Recognized~~

December 31,
2022

~~December 25, 2021~~

~~Designated forward foreign currency exchange contracts~~

~~(3)~~

—

~~Cost of goods sold~~

Nine Months Ended
Pre-Tax (Gain) Loss Reclassified from
Accumulated OCI Location of (Gain) Loss Recognized
December 31,
2022 December 25, 2021
Designated forward foreign currency exchange contracts $ (10) $ 2 Cost of goods sold

Three Months Ended

Pre-Tax Gain Reclassified from
Accumulated OCI

Location of Gain Recognized

July 1, 2023

July 2, 2022

Designated forward foreign currency exchange contracts

Cost of goods sold

The Company expects that substantially all of the amounts ~~currently~~ recorded in accumulated other comprehensive income for its forward foreign currency exchange contracts will be reclassified into earnings during the next 12 months, based upon the timing of inventory purchases and turnover.

Undesignated Hedges

During the three months ended ~~December 31, 2022,~~July 1, 2023, there was no gain or loss recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income, while during the nine months ended December 31, 2022, a $2 million gain was recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income as ~~a result of the changes in the fair value of~~there were no undesignated ~~forward foreign currency exchange contracts.~~hedges outstanding. During the three ~~and nine~~ months ended ~~December 25, 2021,~~July 2, 2022, a $1$2 million gain was recognized within foreign currency ~~(gain)~~ loss in the Company’s consolidated statements of operations and comprehensive income as a result of the changes in the fair value of undesignated forward foreign currency exchange contracts.

13. Shareholders’ Equity

Share Repurchase Program

During the first quarter of Fiscal 2022, the Company reinstated its $500 million share repurchase program, which was previously suspended during the first quarter of Fiscal 2021 in response to the impact of the COVID-19 pandemic and the provisions of the Second Amendment of the 2018 Credit Facility. Subsequently, on November 3, 2021, the Company announced that its Board of Directors had terminated the Company’s existing $500 million share repurchase program (the “Prior Plan”), which had $250 million of availability remaining at the time, and authorized a new share repurchase program (the “Fiscal 2022 Plan”) pursuant to which the Company was permitted, from time to time, to repurchase up to $1.0 billion of its outstanding ordinary shares within a period of two years from the effective date of the program.

On June 1, 2022, the Company announced ~~that~~ its Board of Directors ~~had terminated the Fiscal 2022 Plan, with $500 million of availability remaining, and~~ authorized a ~~new~~ share repurchase program (the “Fiscal 2023 Plan”) pursuant to which the Company was permitted, from time to time, to repurchase up to $1.0 billion of its outstanding ordinary shares within a period of two years from the effective date of the program.

On November 9, 2022, the Company announced ~~that~~ its Board of Directors approved a new share repurchase program (the “Existing Share Repurchase Plan”) ofto purchase up to $1$1.0 billion of its outstanding ordinary shares, providing additional capacity to return cash to shareholders over the longer term. This new two-year program replaced the Fiscal 2023 ~~Plan which had $250 million of availability remaining.~~Plan. Share repurchases may be made in open market or privately negotiated transactions and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors. The program may be suspended or discontinued at any time.

During the ~~nine~~three months ended ~~December 31, 2022,~~July 1, 2023, the Company purchased ~~18,921,459~~2,636,564 shares for a total cost of approximately ~~$950~~$100 million, including commissions, through open market transactions ~~with 15,479,200 shares purchased for a total cost of $750 million including commissions under the Fiscal 2023 plan and 3,442,259 shares purchased for a total cost of $200 million~~ under the Existing Share Repurchase Plan. As of ~~December 31, 2022,~~July 1, 2023, the remaining availability under the Company’s Existing Share Repurchase Plan was ~~$800~~$300 million.

During the ~~nine~~three months ended ~~December 25, 2021,~~July 2, 2022, the Company purchased ~~5,934,244~~6,120,174 shares for a total cost of approximately ~~$350~~$300 million including commissions, through open market transactions ~~with 2,712,275 shares purchased for a total cost of $150 million including commissions under the Prior Plan and 3,221,969 shares purchased for a total cost of $200 million including commissions~~ under the Fiscal ~~2022~~2023 Plan.

The Company also has in place a “withhold to cover” repurchase program, which allows the Company to withhold ordinary shares from certain executive officers and directors to satisfy minimum tax withholding obligations relating to the vesting of their restricted share awards. During the ~~nine~~three month periods ended ~~December 31,~~July 1, 2023 and July 2, 2022, ~~and December 25, 2021,~~ the Company withheld ~~300,722~~164,377 shares and ~~193,322~~265,311 shares, respectively, with a fair value of ~~$14~~$6 million and ~~$10~~$12 million, respectively, in satisfaction of minimum tax withholding obligations relating to the vesting of restricted share awards.

Accumulated Other Comprehensive Income

The following table details changes in the components of accumulated other comprehensive income (“AOCI”), net of taxes, for the ~~nine~~three months ended ~~December 31,~~July 1, 2023 and July 2, 2022, ~~and December 25, 2021,~~ respectively (in millions):


									Foreign Currency Adjustments (1)		Net Gain on Derivatives (2)		Other Comprehensive Income Attributable to Capri
Balance at April 1, 2023								Balance at April 1, 2023	$	143	$	4	$	147
Other comprehensive loss before reclassifications								Other comprehensive loss before reclassifications	(7)		—		(7)
Less: amounts reclassified from AOCI to earnings								Less: amounts reclassified from AOCI to earnings	—		3		3
Other comprehensive loss, net of tax								Other comprehensive loss, net of tax	(7)		(3)		(10)
Balance at July 1, 2023								Balance at July 1, 2023	$	136	$	1	$	137
		Foreign Currency Adjustments (1)		Net Gain (Loss) on Derivatives (2)		Other Comprehensive Income (Loss) Attributable to Capri
Balance at April 2, 2022	Balance at April 2, 2022	$	184	$	10	$	194	Balance at April 2, 2022	$	184	$	10	$	194
Other comprehensive (loss) income before reclassifications	Other comprehensive (loss) income before reclassifications	(87)		8		(79)		Other comprehensive (loss) income before reclassifications	(107)		6		(101)
Less: amounts reclassified from AOCI to earnings	Less: amounts reclassified from AOCI to earnings	—		10		10		Less: amounts reclassified from AOCI to earnings	—		4		4
Other comprehensive (loss) income, net of tax	Other comprehensive (loss) income, net of tax	(87)		(2)		(89)		Other comprehensive (loss) income, net of tax	(107)		2		(105)
Balance at December 31, 2022		$	97	$	8	$	105

Balance at March 27, 2021		$	57	$	(1)	$	56
Other comprehensive income before reclassifications		148		7		155
Less: amounts reclassified from AOCI to earnings		—		(2)		(2)
Other comprehensive income, net of tax		148		9		157
Balance at December 25, 2021		$	205	$	8	$	213
Balance at July 2, 2022								Balance at July 2, 2022	$	77	$	12	$	89

(1)Foreign currency translation adjustments for the ~~nine~~three months ended ~~December 31, 2022~~July 1, 2023 primarily include a ~~net $310~~$58 million ~~translation~~ loss, ~~partially offset by a $219 million gain,~~ net of taxes of ~~$113~~$21 million, relating to the Company’s net investment ~~hedges.~~and fair value hedges partially offset by a net $51 million translation gain. Foreign currency translation adjustments for the ~~nine~~three months ended ~~December 25, 2021~~July 2, 2022 primarily include a ~~$249~~$151 million gain, net of taxes of ~~$78~~$62 million, relating to the Company’s net investment hedges, and a net ~~$102~~$253 million translation loss.

(2)Reclassified amounts primarily relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations and comprehensive income. All tax effects were not material for the periods presented.

14. Share-Based Compensation

The Company grants equity awards to certain employees and directors of the Company at the discretion of the Company’s Compensation and Talent Committee. The Company has two equity plans, one stock option plan adopted in Fiscal 2008 (as amended and restated, the “2008 Plan”), and an Omnibus Incentive Plan adopted in the third fiscal quarter of Fiscal 2012 and amended and restated with shareholder approval in May 2015, and again in June 2020 (the “Incentive Plan”). The 2008 Plan only provided for grants of share options and was authorized to issue up to 23,980,823 ordinary shares. As of ~~December 31, 2022,~~July 1, 2023, there were no shares available to grant equity awards under the 2008 Plan.

The Incentive Plan allows for grants of share options, restricted shares and RSUs, and other equity awards, and authorizes a total issuance of up to 22,471,000 ordinary shares after amendments in August 2022. At ~~December 31, 2022,~~July 1, 2023, there were ~~6,151,690~~4,150,946 ordinary shares available for future grants of equity awards under the Incentive Plan. Option grants issued from the 2008 Plan generally expire ten years from the date of the grant, and those issued under the Incentive Plan generally expire seven years from the date of the grant.

The following table summarizes the Company’s share-based compensation activity during the ~~nine~~three months ended ~~December 31, 2022:~~July 1, 2023:


		Options	Service-Based RSUs	Performance-Based RSUs		Options	Service-Based RSUs	Performance-Based RSUs
Outstanding/Unvested at April 2, 2022		355,448	3,827,700	210,192
Outstanding/Unvested at April 1, 2023					Outstanding/Unvested at April 1, 2023	229,675	3,181,926	165,239
Granted	Granted	—	1,783,479	152,921	Granted	—	1,874,967	203,693
Exercised/Vested	Exercised/Vested	(120,873)	(1,527,843)	(197,874)	Exercised/Vested	(14,503)	(1,589,310)	—

Canceled/Forfeited	Canceled/Forfeited	(4,900)	(395,951)	—	Canceled/Forfeited	(23,205)	(36,481)	—
Outstanding/Unvested at December 31, 2022		229,675	3,687,385	165,239
Outstanding/Unvested at July 1, 2023					Outstanding/Unvested at July 1, 2023	191,967	3,431,102	368,932

The weighted average grant date fair value of service-based and performance-based RSUs granted during the ~~nine~~three months ended ~~December 31, 2022~~July 1, 2023 was ~~$48.39~~$36.86 and ~~$47.41,~~$36.82, respectively. The weighted average grant date fair value of service-based and performance-based RSUs granted during the ~~nine~~three months ended ~~December 25, 2021~~July 2, 2022 was ~~$51.75.~~$49.02 and $47.41, respectively.

Share-Based Compensation Expense

The following table summarizes compensation expense attributable to share-based compensation for the three ~~and nine~~ months ended ~~December 31,~~July 1, 2023 and July 2, 2022 ~~and December 25, 2021~~ (in millions):


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 31, 2022		December 25, 2021		December 31, 2022		December 25, 2021			July 1, 2023		July 2, 2022
Share-based compensation expense	Share-based compensation expense	$	16	$	13	$	60	$	69	Share-based compensation expense	$	30	$	28
Tax benefit related to share-based compensation expense	Tax benefit related to share-based compensation expense	$	2	$	1	$	9	$	12	Tax benefit related to share-based compensation expense	$	5	$	5

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on historical forfeiture rates. The estimated value of future forfeitures for equity awards as of ~~December 31, 2022~~July 1, 2023 is approximately ~~$12~~$14 million.

See Note 16 in the Company’s Fiscal ~~2022~~2023 Annual Report on Form 10-K for additional information relating to the Company’s share-based compensation awards.

15. Income Taxes

The Company’s effective tax rate for the three ~~and nine~~ months ended ~~December 31, 2022~~July 1, 2023 was ~~1.3% and 9.2%, respectively. For both periods, such rates differ~~4.0%. This rate differs from the United Kingdom (“U.K.”) federal statutory rate of 25% primarily due to the release of a valuation allowance on Korean deferred tax assets during the three months ended July 1, 2023 and the impact of global financing activities.

The Company’s effective tax rate for the three months ended July 2, 2022 was 12.1%. Such rates differed from the U.K. federal statutory rate of 19% primarily due to the impact of global financing ~~activities and the release of a valuation allowance on UK deferred tax assets.~~

The Company’s effective tax rate for the three and nine months ended December 25, 2021 was 5.6% and 6.8%, respectively. Such rates differ from the United Kingdom (“U.K.”) federal statutory rate of 19% primarily due to the favorable effect of a net operating loss carryback claim made in the United States as a result of COVID-19 related losses generated in the prior fiscal year and the impact of global financing activities partially offset by the increases in uncertain tax positions during the three and nine months ended December 25, 2021. The tax rate for the nine months ended December 25, 2021 also benefited from enacted tax legislation in Italy which allowed the Company to reduce its deferred tax liabilities by allowing a step up of certain intangible assets resulting in lower future cash taxes partially offset by the impact of tax rate changes in the United Kingdom on the Company’s net deferred tax liabilities.activities.

The global financing activities are related to the Company’s 2014 move of its principal executive office from Hong Kong to the U.K. and decision to become a U.K. tax resident. In connection with this decision, the Company funded its international growth strategy through intercompany debt financing arrangements. These debt financing arrangements reside between certain of our U.S., and U.K. ~~and Hungarian~~ subsidiaries. Due to the difference in the statutory income tax rates between these jurisdictions, the Company realized lower effective tax rates for the three ~~and nine~~ months ended ~~December 31, 2022.~~July 1, 2023.

16. Segment Information

The Company operates its business through three operating segments — Versace, Jimmy Choo and Michael Kors, which are based on its business activities and organization. The reportable segments are segments of the Company for which separate financial information is available and for which operating results are evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to allocate resources, as well as in assessing performance. The primary key performance indicators are revenue and operating income for each segment. The Company’s reportable segments represent components of the business that offer similar merchandise, customer experience and sales/marketing strategies.

The Company’s three reportable segments are as follows:

•Versace — segment includes revenue generated through the sale of Versace luxury ready-to-wear, accessories and footwear through directly operated Versace boutiques throughout the Americas, certain parts of EMEA and certain parts of Asia, as well as through Versace outlet stores and e-commerce sites. In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements that allow third parties to use the Versace trademarks in connection with retail and/or wholesale sales of Versace branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of jeans, fragrances, watches, jewelry, eyewear and home furnishings.

•Jimmy Choo — segment includes revenue generated through the sale of Jimmy Choo luxury footwear, handbags and small leather goods and accessories through directly operated Jimmy Choo retail and outlet stores throughout the Americas, certain parts of EMEA and certain parts of Asia, through its e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo trademarks in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide. In addition, revenue is generated through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of fragrances and eyewear.

•Michael Kors — segment includes revenue generated through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce sites, through which the Company sells Michael Kors products, as well as licensed products bearing the Michael Kors name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia. The Company also sells Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops, and to its geographic licensees. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear.

In addition to these reportable segments, the Company has certain corporate costs that are not directly attributable to its brands and, therefore, are not allocated to its segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information system expenses, including enterprise resource planning system implementation costs and Capri transformation program costs. In addition, certain other costs are not allocated to segments, including restructuring and other ~~charges~~(income) expense and COVID-19 related ~~charges.~~expenses. The segment structure is consistent with how the Company’s CODM plans and allocates resources, manages the business and assesses performance. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance.

The following table presents the key performance information of the Company’s reportable segments (in millions):
Three Months Ended Nine Months Ended
December 31,
2022 December 25,
2021 December 31,
2022 December 25,
2021
Total revenue:
Versace $ 249 $ 251 $ 832 $ 773
Jimmy Choo 168 178 482 457
Michael Kors 1,095 1,180 2,970 2,932
Total revenue $ 1,512 $ 1,609 $ 4,284 $ 4,162
Income from operations:
Versace $ 24 $ 32 $ 138 $ 135
Jimmy Choo 18 16 45 28
Michael Kors 251 335 721 795
Total segment income from operations 293 383 904 958
Less: Corporate expenses
(56) (37) (171) (123)
Impairment of assets (1)
(1) — (12) (33)
Restructuring and other charges (5) (14) (11) (25)
COVID-19 related charges 2 (1) 6 7
Impact of war in Ukraine 3 — 3 —
Total income from operations $ 236 $ 331 $ 719 $ 784


	Three Months Ended
	July 1, 2023		July 2, 2022
Total revenue:
Versace	$	259	$	275
Jimmy Choo	183		172
Michael Kors	787		913
Total revenue	$	1,229	$	1,360

Income from operations:
Versace	$	3	$	52
Jimmy Choo	16		19
Michael Kors	130		222
Total segment income from operations	149		293
Less: Corporate expenses	(71)		(60)

Restructuring and other income (expense)	2		(3)
COVID-19 related expenses	—		1

Total income from operations	$	80	$	231

~~(1)~~Impairment of assets during the nine months ended December 31, 2022 and December 25, 2021, respectively, primarily related to operating lease right-of-use assets at certain Michael Kors store locations.

Depreciation and amortization expense for each segment are as follows (in millions):

Three Months Ended Nine Months Ended
December 31,
2022 December 25,
2021 December 31,
2022 December 25,
2021
Depreciation and amortization:
Versace $ 12 $ 13 $ 36 $ 39
Jimmy Choo 7 8 21 23
Michael Kors 22 26 70 84
Corporate 2 — 4 —
Total depreciation and amortization $ 43 $ 47 $ 131 $ 146


	Three Months Ended
	July 1, 2023		July 2, 2022
Depreciation and amortization:
Versace	$	13	$	12
Jimmy Choo	7		7
Michael Kors	21		25
Corporate	4		1
Total depreciation and amortization	$	45	$	45

Total revenue (based on country of origin) by geographic location are as follows (in millions):


		Three Months Ended				Nine Months Ended					Three Months Ended
		December 31, 2022		December 25, 2021		December 31, 2022		December 25, 2021			July 1, 2023		July 2, 2022
Revenue:	Revenue:									Revenue:
The Americas (United States, Canada and Latin America) (1)	The Americas (United States, Canada and Latin America) (1)	$	916	$	954	$	2,516	$	2,370	The Americas (United States, Canada and Latin America) (1)	$	632	$	794
EMEA	EMEA	395		405		1,159		1,095		EMEA	372		364
Asia	Asia	201		250		609		697		Asia	225		202
Total revenue	Total revenue	$	1,512	$	1,609	$	4,284	$	4,162	Total revenue	$	1,229	$	1,360

(1)Total revenue earned in the U.S. was ~~$840~~$578 million and ~~$2.312 billion, respectively,~~$733 million for the three ~~and nine~~ months ended ~~December 31, 2022. Total revenue earned in the U.S. was $885 million~~July 1, 2023 and ~~$2.207 billion, respectively, for the three and nine months ended December 25, 2021.~~July 2, 2022, respectively.

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17. Subsequent Events

On August 10, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tapestry, Inc., a Maryland corporation (“Tapestry”), and Sunrise Merger Sub, Inc., a British Virgin Islands business company limited by shares and a direct wholly owned subsidiary of Tapestry (“Merger Sub”).

The Merger Agreement provides that, among other things and on the terms and subject to the conditions set forth therein, Tapestry will acquire Capri in an all-cash transaction by means of a merger of Merger Sub with and into Capri (the “Merger”), with Capri surviving the Merger as a wholly owned subsidiary of Tapestry.

On the terms and subject to the conditions set forth therein, at the effective time of the Merger (the “Effective Time”), each issued and outstanding ordinary share, no par value, of the Company (an “Ordinary Share”) (other than (a) Ordinary Shares that are issued and outstanding immediately prior to the Effective Time that are owned or held in treasury by the Company or by Tapestry or any of its direct or indirect subsidiaries and (b) Ordinary Shares that are issued and outstanding immediately prior to the Effective Time that are held by holders who have properly exercised dissenters’ rights in accordance with, and who have complied with, Section 179 of the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands) will be converted into the right to receive $57.00 in cash, without interest, subject to any required tax withholding as provided in the Merger Agreement.

The Company’s Board of Directors has unanimously approved the Merger Agreement and the transactions contemplated thereby and, subject to certain exceptions set forth in the Merger Agreement, resolved to recommend that Capri’s shareholders adopt a resolution authorizing the Merger Agreement and the Plan of Merger (as defined in the Merger Agreement) and approving the Merger and the other transactions contemplated by the Merger Agreement (“Shareholder Approval”).

The completion of the Merger is subject to the fulfillment or waiver of certain customary mutual closing conditions, including (a) the Shareholder Approval having been obtained, (b) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of certain other regulatory approvals, and (c) the absence of any injunction or order by a court or other governmental entity of competent jurisdiction in U.S. or other specified jurisdictions preventing, enjoining, prohibiting or making illegal the consummation of the Merger. The obligation of each party to consummate the Merger is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain customary materiality exceptions) and the other party having performed in all material respects its obligations under the Merger Agreement. Tapestry’s obligation to consummate the Merger is also conditioned upon the absence of a material adverse effect on Capri’s business prior to the Effective Time as more specifically defined in the Merger Agreement. The consummation of the Merger is not subject to any financing condition.

Additional information about the Merger Agreement is set forth in the Company's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on August 10, 2023.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis (“MD&A”) of our Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and notes thereto included as part of this interim report. This report contains statements which are, or may be deemed to be, “forward-looking statements.” Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of ~~the Company~~Capri about future events and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. All statements other than statements of historical facts included herein, may be forward-looking statements. Forward-looking statements include information concerning the Company’s goals, future plans and strategies, including with respect to ESG goals, initiatives and ambitions as well as the Company’s possible or assumed future results of operations, including descriptions of its business strategy. Without limitation, any statements preceded or followed by or that include the words “plans”, “believes”, “expects”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “might” or similar words or phrases, are forward-looking statements. These forward-looking statements are not guarantees of future financial performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions, which could cause actual results to differ materially from those projected or implied in any forward-looking ~~statements.~~statements, including regarding the proposed transaction. These risks, uncertainties and other factors include the effect of the COVID-19 pandemic and its potential material and significant impact on the Company’s future financial and operational results, including that our estimates could materially differ if retail stores are forced to close, or if there are further supply chain disruptions, including production delays and increased costs, changes in consumer traffic and retail trends; ~~higher~~high consumer debt levels, recession and inflationary pressures; loss of market share and industry competition; the impact of the COVID-19 pandemic, levels of cash flow and future availability of credit, compliance with restrictive covenants under ~~the Company’s~~Capri’s credit agreement, ~~the Company’s~~Capri’s ability to integrate successfully and to achieve anticipated benefits of any acquisition and to successfully execute our growth strategies; the risk of disruptions to ~~the Company’s~~Capri’s businesses; risks associated with operating in international markets and our global sourcing ~~activities;~~activities, including disruptions or delays in manufacturing or shipments; the risk of cybersecurity threats and privacy orof data security breaches; the negative effects of events on the market price of ~~the Company’s~~Capri’s ordinary shares and its operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to ~~the Company’s~~Capri’s businesses; fluctuations in demand for ~~the Company’s~~Capri’s products; levels of indebtedness (including the indebtedness incurred in connection with acquisitions); the timing and scope of future share buybacks, which may be made in open market or privately negotiated transactions, ~~and/or pursuant to Rule 10b5-1 trading plans,~~ and are subject to market conditions, applicable legal requirements, trading restrictions under ~~the Company’s~~Capri’s insider trading policy and other relevant factors, and ~~such~~which share repurchases may be suspended or discontinued at any ~~time;~~time, the level of other investing activities and uses of cash; ~~loss of market share and industry competition;~~ fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen epidemics and pandemics, disasters or catastrophes; extreme weather conditions and natural disasters; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions including acts of war and other geopolitical ~~conflicts,~~conflicts; the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed transaction that could delay or result in the termination of the proposed transaction, the occurrence of any other event, change or other circumstances that could give rise to the termination of the merger agreement entered into in connection with the proposed transaction, the possibility that Capri’s shareholders may not approve the proposed transaction, the risk that the parties to the merger agreement may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the proposed transaction, the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of Capri’s ordinary shares, the risk of any unexpected costs or expenses resulting from the proposed transaction, the risk of any litigation relating to the proposed transaction, the risk that the proposed transaction and its announcement could have an adverse effect on the ability of Capri to retain customers and retain and hire key personnel and maintain relationships with customers, suppliers, employees, shareholders and other business relationships and on its operating results and business generally, and the risk the pending proposed transaction could divert the attention of Capri’s management; as well as those risks ~~set forth~~that are outlined in ~~Item 1A. “Risk Factors” in our Annual Report~~Capri’s disclosure filings and materials, which you can find on http://www.capriholdings.com, such as its Form 10-K, ~~for the year ended April 2, 2022,~~Form 10-Q and Form 8-K reports that have been filed with the ~~Securities~~SEC. Please consult these documents for a more complete understanding of these risks and ~~Exchange Commission on June 1, 2022.~~uncertainties. Any forward-looking statement in this report speaks only as of the date made and Capri disclaims any obligation to update or revise any forward-looking or other statements contained herein other than in accordance with legal and regulatory obligations.

Overview

Our Business

Capri Holdings is a global fashion luxury group consisting of iconic, founder-led brands Versace, Jimmy Choo and Michael Kors. Our commitment to glamorous style and craftsmanship is at the heart of each of our luxury brands. We have built our reputation on designing exceptional, innovative products that cover the full spectrum of fashion luxury categories. Our strength lies in the unique DNA and heritage of each of our brands, the diversity and passion of our people and our dedication to the clients and communities we serve.

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

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

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

Certain Factors Affecting Financial Condition and Results of Operations

Macroeconomic conditions and inflationary pressures. ~~Our business is affected by global~~Global economic conditions and the related impact on levels of consumer spending ~~worldwide. While~~worldwide impacted our business in ~~Russia~~the first quarter of Fiscal 2024, and ~~Ukraine represented less than 1% of~~are likely to continue to impact our ~~total net sales for Fiscal 2022,~~business and the ~~war in Ukraine that began in February 2022 has created significant economic uncertainty in the region. We stopped all wholesale shipments to Russia~~accessories, footwear and our third-party partners are winding down retail operations in Russia, including through the closure of our retail stores in the territory. The war has also caused broader macroeconomic implications that we expect to continueapparel industry overall for the foreseeable ~~future, including the continued weakening~~future. Inflation, rising interest rates, higher fuel and energy costs and commodity prices, reductions in net worth based on market declines and uncertainty, home prices, credit availability and consumer debt levels, concerns of ~~the Euro against the US dollar~~a global banking crisis, political instability due to war or other geopolitical factors and other ~~foreign currency volatility, increases in fuel prices, volatility~~macroeconomic pressures and general uncertainty regarding the overall future economic environment have led to recession fears and created a challenging retail environment, which is expected to continue in the financial markets and a decline in consumer spending which may negatively impact our business, financial condition, and results of operations for Fiscal 2023. In addition, inflationary pressures, including increased labor, raw materials, and freight costs are adversely impacting our earnings.near term. Purchases of discretionary luxury items, such as the accessories, footwear and apparel that we produce, tend to decline when disposable income is lower or when there are recessions, inflationary pressures or other economic ~~uncertainty.~~uncertainty which could negatively affect our financial condition and results of operations.

COVID-19 Pandemic. The Company's performance during ~~fiscal~~Fiscal 2023 was adversely impacted due to lockdowns in certain regions, most notably in Greater China, as a result of an increase in infections due to variants of COVID-19. These lockdowns resulted in store closures and an overall decline in demand in the region. ~~The situation continues to be very volatile and infection rates and government restrictions may continue to persist in Greater China or elsewhere.~~

Luxury goods trends and demand for our accessories and related merchandise. Our performance is affected by trends in the luxury goods industry, global consumer spending, macroeconomic factors, overall levels of consumer travel and spending on discretionary items as well as shifts in demographics and changes in lifestyle preferences. Through 2019, the personal luxury goods market grew at a mid-single digit rate over the past 20 ~~years.~~years, with more recent growth driven by stronger Chinese demand from both international and local consumers and demographic and socioeconomic shifts resulting in younger consumers purchasing more luxury goods. However, in 2020, due to the impact of the COVID-19 crisis, the personal luxury goods market declined ~~22%~~23%. ~~The~~Market studies indicate that the personal luxury goods market ~~experienced a strong rebound~~returned to 2019 levels in 2021, ~~with sales exceeding pre-pandemic levels. Market studies forecast~~and the ~~personal luxury goods industry will~~market is predicted to increase at ~~low-double-digit~~a 10% compound annual growth rate between 2020 and 2025. Future growth is expected to be driven by e-commerce, Chinese consumers and younger generations; however, growth may be limited by concerns over inflation, the possibility of a global recession, foreign currency volatility or worsening economic conditions.

~~Retail Fleet Optimization~~. We also continue to adjust our retail operating strategy to the changing business environment. We have finalized the planned store closures under the Capri Retail Store Optimization Program as of the end of Fiscal 2022. At the end of Fiscal 2022, we closed a total of 167 stores and recorded total net restructuring charges of $14 million relating to the program. We recorded net restructuring charges of $9 million and $5 million during Fiscal 2022 and Fiscal 2021, respectively, relating to the plan. Collectively, we continue to anticipate ongoing savings as a result of the store closures and lower depreciation associated with the impairment charges being recorded.

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

Disruptions or delays in shipping and distribution and other supply chain constraints. ~~We have been experiencing global logistics challenges,~~Any disruptions in our shipping and distribution network, including ~~delays as a result of~~ port congestion, vessel availability, container shortages and temporary factory closures, which may continue during Fiscal 2023. Any future disruptions in our shipping and distribution network, including impacts on our supply chain due to temporary closures of our manufacturing partners and shipping and fulfillment constraints and increased transportation costs, could have a negative impact on our results of operations. See Item 1A — “Risk Factors” — “We primarily use foreign manufacturing contractors and independent third-party agents to source our finished ~~goods~~goods” and ~~our~~“Our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments” of our Annual Report on Form 10-K for the fiscal year ended April ~~2, 2022~~1, 2023 for additional discussion.

Costs of manufacturing, tariffs, and import regulations. Our industry is subject to volatility in costs related to certain raw materials used in the manufacturing of our products. This volatility applies primarily to costs driven by commodity prices, which can increase or decrease dramatically over a short period of time. In addition, our costs may be impacted by sanction tariffs imposed on our products due to changes in trade terms. We rely on free trade agreements and other supply chain initiatives in order to maximize efficiencies relating to product importation. We are also subject to government import regulations, including United States Customs and Border Protection (“CBP”) withhold release orders. The imposition of taxes, duties and quotas, the withdrawal from or material modification to trade agreements, and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on our business, results of operations and financial condition. If additional tariffs or trade restrictions are implemented by the United States or other countries, the cost of our products could increase which could adversely affect our business. In addition, commodity prices and tariffs may have an impact on our revenues, results of operations and cash flows. We use commercially reasonable efforts to mitigate these effects by sourcing our products as efficiently as possible and diversifying the countries where we produce. In addition, manufacturing labor costs are also subject to degrees of volatility based on local and global economic conditions. We use commercially reasonable efforts to source from localities that suit our manufacturing standards and result in more favorable labor driven costs to our products.

Segment Information

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

Versace

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

Jimmy Choo

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

Michael Kors

We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our products, as well as licensed products bearing our name, directly to consumers throughout the Americas, certain parts of EMEA

and certain parts of Asia. Our Michael Kors e-commerce business includes e-commerce sites in the United States, Canada,

EMEA and Asia. We also sell Michael Kors products directly to department stores, primarily located across the Americas and EMEA, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of EMEA, Asia and Brazil. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear, as well as through geographic licensing arrangements, which allow third parties to use the Michael Kors tradename in connection with the retail and/or wholesale sales of our Michael Kors branded products in specific geographic regions.

Unallocated Corporate Expenses

In addition to the reportable segments discussed above, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including ERP system implementation costs and Capri transformation program costs. In addition, certain other costs are not allocated to segments, including restructuring and other ~~charges~~income (expense) and COVID-19 related ~~charges.~~expenses. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance. The following table presents our total revenue and income from operations by segment for the three ~~and nine~~ months ended ~~December 31,~~July 1, 2023 and July 2, 2022 ~~and December 25, 2021~~ (in millions):

Three Months Ended Nine Months Ended
December 31,
2022 December 25,
2021 December 31,
2022 December 25,
2021
Total revenue:
Versace $ 249 $ 251 $ 832 $ 773
Jimmy Choo 168 178 482 457
Michael Kors 1,095 1,180 2,970 2,932
Total revenue $ 1,512 $ 1,609 $ 4,284 $ 4,162
Income from operations:
Versace $ 24 $ 32 $ 138 $ 135
Jimmy Choo 18 16 45 28
Michael Kors 251 335 721 795
Total segment income from operations 293 383 904 958
Less: Corporate expenses
(56) (37) (171) (123)
Impairment of assets (1)
(1) — (12) (33)
Restructuring and other charges (5) (14) (11) (25)
COVID-19 related charges 2 (1) 6 7
Impact of war in Ukraine 3 — 3 —
Total income from operations $ 236 $ 331 $ 719 $ 784


	Three Months Ended
	July 1, 2023		July 2, 2022
Total revenue:
Versace	$	259	$	275
Jimmy Choo	183		172
Michael Kors	787		913
Total revenue	$	1,229	$	1,360

Income from operations:
Versace	$	3	$	52
Jimmy Choo	16		19
Michael Kors	130		222
Total segment income from operations	149		293
Less: Corporate expenses	(71)		(60)

Restructuring and other income (expense)	2		(3)
COVID-19 related expenses	—		1

Total income from operations	$	80	$	231

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


		As of			As of
		December 31, 2022	December 25, 2021		July 1, 2023	July 2, 2022
Number of full price retail stores (including concessions):	Number of full price retail stores (including concessions):			Number of full price retail stores (including concessions):
Versace	Versace	161	150	Versace	161	148
Jimmy Choo	Jimmy Choo	186	184	Jimmy Choo	181	181
Michael Kors	Michael Kors	520	535	Michael Kors	504	520
		867	869		846	849

Number of outlet stores:	Number of outlet stores:			Number of outlet stores:
Versace	Versace	64	62	Versace	63	60
Jimmy Choo	Jimmy Choo	56	56	Jimmy Choo	56	55
Michael Kors	Michael Kors	307	299	Michael Kors	306	301
		427	417		425	416

Total number of retail stores	Total number of retail stores	1,294	1,286	Total number of retail stores	1,271	1,265

Total number of wholesale doors:	Total number of wholesale doors:			Total number of wholesale doors:
Versace	Versace	788	803	Versace	751	805
Jimmy Choo	Jimmy Choo	517	456	Jimmy Choo	517	461
Michael Kors	Michael Kors	2,840	2,931	Michael Kors	2,915	2,808
		4,145	4,190		4,183	4,074

The following table presents our retail stores by geographic location:


		As of			As of				As of			As of
		December 31, 2022			December 25, 2021				July 1, 2023			July 2, 2022
		Versace	Jimmy Choo	Michael Kors	Versace	Jimmy Choo	Michael Kors		Versace	Jimmy Choo	Michael Kors	Versace	Jimmy Choo	Michael Kors
Store count by region:	Store count by region:							Store count by region:
The Americas	The Americas	41	45	328	39	46	346	The Americas	42	44	314	39	45	328
EMEA	EMEA	59	72	173	55	74	176	EMEA	58	70	174	57	70	175
Asia	Asia	125	125	326	118	120	312	Asia	124	123	322	112	121	318
		225	242	827	212	240	834		224	237	810	208	236	821

Key Consolidated Performance Indicators and Statistics

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


		Three Months Ended						Nine Months Ended							Three Months Ended
		December 31, 2022			December 25, 2021			December 31, 2022			December 25, 2021				July 1, 2023			July 2, 2022
Total revenue	Total revenue	$	1,512		$	1,609		$	4,284		$	4,162		Total revenue	$	1,229		$	1,360
Gross profit as a percent of total revenue	Gross profit as a percent of total revenue	66.5		%	65.1		%	66.7		%	67.0		%	Gross profit as a percent of total revenue	66.1		%	66.3		%
Income from operations	Income from operations	$	236		$	331		$	719		$	784		Income from operations	$	80		$	231
Income from operations as a percent of total revenue	Income from operations as a percent of total revenue	15.6		%	20.6		%	16.8		%	18.8		%	Income from operations as a percent of total revenue	6.5		%	17.0		%

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Seasonality

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

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Critical accounting policies are those that are the most important to the portrayal of our results of operations and financial condition and that require our most difficult, subjective and complex judgments to make estimates about the effect of matters that are inherently uncertain. In applying such policies, we must use certain assumptions that are based on our informed judgments, assessments of probability and best estimates. Estimates, by their nature, are subjective and are based on analysis of available information, including current and historical factors and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis. While our significant accounting policies are detailed in Note 2 to the accompanying consolidated financial statements, our critical accounting policies are disclosed, in full, in the MD&A section of our Annual Report on Form 10-K for the fiscal year ended April ~~2, 2022.~~1, 2023. There have been no significant changes in our critical accounting policies and estimates since April ~~2, 2022.~~1, 2023.

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Results of Operations

Comparison of the three months ended ~~December 31, 2022~~July 1, 2023 with the three months ended ~~December 25, 2021~~July 2, 2022

The following table details the results of our operations for the three months ended ~~December 31,~~July 1, 2023 and July 2, 2022, ~~and December 25, 2021,~~ and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):


		Three Months Ended				$ Change		% Change		% of Total Revenue for the Three Months Ended					Three Months Ended				$ Change		% Change		% of Total Revenue for the Three Months Ended
		December 31, 2022		December 25, 2021						December 31, 2022		December 25, 2021			July 1, 2023		July 2, 2022						July 1, 2023		July 2, 2022
Statements of Operations Data:	Statements of Operations Data:													Statements of Operations Data:
Total revenue	Total revenue	$	1,512	$	1,609	$	(97)	(6.0)	%					Total revenue	$	1,229	$	1,360	$	(131)	(9.6)	%
Cost of goods sold	Cost of goods sold	507		561		(54)		(9.6)	%	33.5	%	34.9	%	Cost of goods sold	417		459		(42)		(9.2)	%	33.9	%	33.8	%
Gross profit	Gross profit	1,005		1,048		(43)		(4.1)	%	66.5	%	65.1	%	Gross profit	812		901		(89)		(9.9)	%	66.1	%	66.3	%
Selling, general and administrative expenses	Selling, general and administrative expenses	720		656		64		9.8	%	47.6	%	40.8	%	Selling, general and administrative expenses	689		622		67		10.8	%	56.1	%	45.7	%
Depreciation and amortization	Depreciation and amortization	43		47		(4)		(8.5)	%	2.8	%	2.9	%	Depreciation and amortization	45		45		—		—	%	3.7	%	3.3	%
Impairment of assets		1		—		1		NM		0.1	%	—	%
Restructuring and other charges		5		14		(9)		(64.3)	%	0.3	%	0.9	%

Restructuring and other (income) expense														Restructuring and other (income) expense	(2)		3		(5)		NM		(0.2)	%	0.2	%
Total operating expenses	Total operating expenses	769		717		52		7.3	%	50.9	%	44.6	%	Total operating expenses	732		670		62		9.3	%	59.6	%	49.3	%
Income from operations	Income from operations	236		331		(95)		(28.7)	%	15.6	%	20.6	%	Income from operations	80		231		(151)		(65.4)	%	6.5	%	17.0	%
Other income, net		(1)		—		(1)		NM		(0.1)	%	—	%
Other expense, net														Other expense, net	1		—		1		NM		0.1	%	—	%
Interest expense (income), net	Interest expense (income), net	12		(7)		19		NM		0.8	%	(0.4)	%	Interest expense (income), net	8		(4)		12		NM		0.7	%	(0.3)	%
Foreign currency gain		(3)		(4)		1		(25.0)	%	(0.2)	%	(0.2)	%
Foreign currency loss														Foreign currency loss	21		4		17		NM		1.7	%	0.3	%
Income before income taxes	Income before income taxes	228		342		(114)		(33.3)	%	15.1	%	21.3	%	Income before income taxes	50		231		(181)		(78.4)	%	4.1	%	17.0	%
Provision for income taxes	Provision for income taxes	3		19		(16)		(84.2)	%	0.2	%	1.2	%	Provision for income taxes	2		28		(26)		(92.9)	%	0.2	%	2.1	%
Net income	Net income	225		323		(98)		(30.3)	%					Net income	48		203		(155)		(76.4)	%
Less: Net income attributable to noncontrolling interest	Less: Net income attributable to noncontrolling interest	—		1		(1)		NM						Less: Net income attributable to noncontrolling interest	—		2		(2)		NM
Net income attributable to Capri	Net income attributable to Capri	$	225	$	322	$	(97)	(30.1)	%					Net income attributable to Capri	$	48	$	201	$	(153)	(76.1)	%

NM Not meaningful

Total Revenue

Total revenue decreased ~~$97~~$131 million, or ~~6.0%~~9.6%, to ~~$1.512~~$1.229 billion for the three months ended ~~December 31, 2022,~~July 1, 2023, compared to ~~$1.609~~$1.360 billion for the three months ended ~~December 25, 2021,~~July 2, 2022, which included net unfavorable foreign currency effects of approximately ~~$89~~$5 million primarily as a result of the strengthening of the ~~U.S.~~United States dollar compared to ~~all major currencies in which we operate~~the Chinese Renminbi and Japanese Yen partially offset by weakening of the United States Dollar against the Euro for the three months ended ~~December 31, 2022.~~July 1, 2023. On a constant currency basis, our total revenue decreased $8$126 million, or ~~0.5%~~9.3%. ~~The decrease is~~primarily attributable to lower ~~wholesale~~ revenues ~~throughout~~in the Americas, partially offset by increased revenues in Greater China for each of our brands.


	Three Months Ended						% Change
(in millions)	July 1, 2023		July 2, 2022		$ Change		As Reported		Constant Currency
Versace	$	259	$	275	$	(16)	(5.8)	%	(5.8)	%
Jimmy Choo	183		172		11		6.4	%	7.0	%
Michael Kors	787		913		(126)		(13.8)	%	(13.4)	%
Total revenue	$	1,229	$	1,360	$	(131)	(9.6)	%	(9.3)	%

•Versace revenues decreased $16 million, or 5.8%, to $259 million for the three months ended July 1, 2023, compared to $275 million for the three months ended July 2, 2022 primarily attributable to lower revenues in the Americas, partially offset by increased revenues in EMEA and Greater China. The foreign currency effect on revenue was minimal for the three months ended July 1, 2023.

•Jimmy Choo revenues increased $11 million, or 6.4%, to $183 million for the three months ended July 1, 2023, compared to $172 million for the three months ended July 2, 2022, which included unfavorable foreign currency

effects of $1 million. On a constant currency basis, revenue increased $12 million, or 7.0%, primarily attributable to increased revenue in EMEA and Greater China, partially offset by lower revenues in the Americas.

•Michael Kors revenue decreased $126 million, or 13.8%, to $787 million for the three months ended July 1, 2023, compared to $913 million for the three months ended July 2, 2022, which included unfavorable foreign currency effects of $4 million. On a constant currency basis, revenue decreased $122 million, or 13.4%, primarily due to lower revenues in the Americas and EMEA, ~~and decreased~~partially offset by increased revenues in Greater ~~China due to COVID-19 related disruptions for each of our brands.~~China.

Gross Profit

Gross profit decreased ~~$43~~$89 million, or ~~4.1%~~9.9%, to ~~$1.005 billion~~$812 million for the three months ended ~~December 31, 2022,~~July 1, 2023, compared to ~~$1.048 billion~~$901 million for the three months ended ~~December 25, 2021, which included net unfavorable foreign currency effects of $60 million.~~July 2, 2022. Gross profit as a percentage of total revenue was ~~66.5%~~66.1% and ~~65.1%~~66.3% for the three months ended ~~December 31,~~July 1, 2023 and July 2, 2022, ~~and December 25, 2021,~~ respectively. Our gross profit margin ~~increased~~decreased primarily ~~due~~related to a return to more normalized promotional levels supported by an improved inventory position versus the prior year offset by lower supply chain costs for the three months ended ~~December 31, 2022,~~July 1, 2023, as compared to the three months ended ~~December 25, 2021.~~July 2, 2022.

Total Operating Expenses

Total operating expenses increased ~~$52~~$62 million, or ~~7.3%~~9.3%, to ~~$769~~$732 million for the three months ended ~~December 31, 2022,~~July 1, 2023, compared to ~~$717~~$670 million for the three months ended ~~December 25, 2021.~~July 2, 2022. Our operating expenses included a net favorable foreign currency impact of approximately ~~$55~~$3 million. Total operating expenses increased to ~~50.9%~~59.6% as a percentage of total revenue for the three months ended ~~December 31, 2022,~~July 1, 2023, compared to ~~44.6%~~49.3% for the three months ended ~~December 25, 2021.~~July 2, 2022. The components that comprise total operating expenses are explained below.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased ~~$64~~$67 million, or ~~9.8%~~10.8%, to ~~$720~~$689 million for the three months ended ~~December 31, 2022,~~July 1, 2023, compared to ~~$656~~$622 million for the three months ended ~~December 25, 2021,~~July 2, 2022. As a percentage of total revenue, selling, general and administrative expenses increased to 56.1% for the three months ended July 1, 2023, compared to 45.7% for the three months ended July 2, 2022, primarily due to increased marketing and unallocated corporate expenses ~~for the three months ended December 31, 2022.~~

~~Selling, general,~~ and ~~administrative~~deleveraging of operating expenses ~~as a percentage of total revenue increased to 47.6% for the three months ended December 31, 2022, compared to 40.8% for the three months ended December 25, 2021, primarily due to deleverage of costs~~ on lower revenue for the three months ended ~~December 31, 2022, as compared to the three months ended December 25, 2021.~~July 1, 2023.

Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased ~~$19~~$11 million, or ~~51.4%~~18.3%, to ~~$56~~$71 million for the three months ended ~~December 31, 2022~~July 1, 2023 as compared to ~~$37~~$60 million for the three months ended ~~December 25, 2021,~~July 2, 2022, primarily due to an increase in professional fees and information technology costs related to the ongoing Capri transformation projects and ERP system ~~implementation~~implementation.

Restructuring and ~~Capri transformation projects.~~Other (Income) Expense

~~Depreciation~~We recognized restructuring and ~~Amortization~~

~~Depreciation~~other (income) expense of $(2) million and ~~amortization decreased $4 million, or 8.5%, to $43~~$3 million for the three months ended ~~December 31,~~July 1, 2023 and July 2, 2022, ~~compared to $47 million~~respectively. The income for the three months ended ~~December 25, 2021. As~~July 1, 2023 is primarily related to a ~~percentage~~gain on the sale of ~~total revenue, depreciation~~a long-lived corporate asset, partially offset by acquisition related Versace equity awards and ~~amortization decreased to 2.8%~~severance expenses. The expense for the three months ended ~~December 31,~~July 2, 2022 ~~compared to 2.9% for the three months ended December 25, 2021.~~

~~Impairment of Assets~~

During the three months ended December 31, 2022, we recognized asset impairment charges of $1 million, which primarily related to operating lease right-of-use assets at a Jimmy Choo store location. During the three months ended December 25, 2021, we did not recognize any impairment charges. See Note 11 to the accompanying consolidated financial statements for additional information.

~~Restructuring and Other Charges~~

~~We recognized restructuring and other charges of $5 million and $14 million for the three months ended December 31, 2022 and December 25, 2021, respectively. The charges are~~was primarily related to equity awards associated with the acquisition of Versace. See Note 8 to the accompanying consolidated financial statements for additional information.

Restructuring and other ~~charges are~~(income) expense is not evaluated as part of our reportable segments’ results (See Segment Information above for additional information).

Income from Operations

As a result of the foregoing, income from operations decreased ~~$95~~$151 million, to ~~$236~~$80 million for three months ended ~~December 31, 2022,~~July 1, 2023, compared to ~~$331~~$231 million for the three months ended ~~December 25, 2021.~~July 2, 2022. Income from operations as a percentage of total revenue decreased to ~~15.6%~~6.5% for the three months ended ~~December 31, 2022,~~July 1, 2023, compared to ~~20.6%~~17.0% for the three months ended ~~December 25, 2021.~~July 2, 2022. See Segment Information above for a reconciliation of our segment operating income to total operating income.


	Three Months Ended
(in millions)	July 1, 2023			July 2, 2022			$ Change		% Change
Income from operations:
Versace	$	3		$	52		$	(49)	(94.2)	%
Jimmy Choo	16			19			(3)		(15.8)	%
Michael Kors	130			222			(92)		(41.4)	%
Total segment income from operations	$	149		$	293		$	(144)	(49.1)	%
Operating Margin:
Versace	1.2		%	18.9		%
Jimmy Choo	8.7		%	11.0		%
Michael Kors	16.5		%	24.3		%

•Versace recorded income from operations of $3 million for the three months ended July 1, 2023, compared to $52 million for the three months ended July 2, 2022. Operating margin decreased from 18.9% for the three months ended July 2, 2022, to 1.2% for the three months ended July 1, 2023, primarily due to increased marketing investments, particularly related to the timing of the fall fashion show which occurred in the first quarter of this fiscal year, and deleveraging of operating expenses on lower revenues.

•Jimmy Choo recorded income from operations of $16 million for the three months ended July 1, 2023, compared to $19 million for the three months ended July 2, 2022. Operating margin decreased from 11.0% for the three months ended July 2, 2022 to 8.7% for the three months ended July 1, 2023, primarily due to higher employee costs and increased marketing investments.

•Michael Kors recorded income from operations of $130 million for the three months ended July 1, 2023, compared to $222 million for the three months ended July 2, 2022. Operating margin decreased from 24.3% for the three months ended July 2, 2022, to 16.5% for the three months ended July 1, 2023, primarily due to increased marketing investments and deleveraging of operating expenses on lower revenues.

Interest Expense (Income), net

For the three months ended ~~December 31, 2022,~~July 1, 2023, we recognized ~~$12~~$8 million of interest expense compared to $7$4 million of interest income for the three months ended ~~December 25, 2021.~~July 2, 2022. The ~~$19~~$12 million increase in interest expense (income), net, is primarily due to higher effective interest rates and higher average borrowings on our outstanding debt, ~~higher average borrowings outstanding and lower interest income from our net investment hedges,~~ partially offset by higher interest income earned on our cash and cash equivalents (see Note 9 and Note 12 to the accompanying consolidated financial statements for additional information).

Foreign Currency ~~Gain~~Loss

For the three months ended ~~December 31,~~July 1, 2023 and July 2, 2022, ~~and December 25, 2021,~~ we recognized a net foreign currency ~~gain~~loss of $3$21 million and $4 million, respectively, primarily attributable to the remeasurement of intercompany ~~transactions among~~loans with certain of our subsidiaries.

Provision for Income Taxes

The provision for income taxes was $3$2 million for the three months ended ~~December 31, 2022,~~July 1, 2023, compared to ~~$19~~$28 million for the three months ended ~~December 25, 2021.~~July 2, 2022. Our effective tax rates were ~~1.3%~~4.0% and ~~5.6%~~12.1% for the three months ended ~~December 31,~~July 1, 2023 and July 2, 2022, ~~and December 25, 2021,~~ respectively. In the current year, the decrease in our effective tax rate was primarily related to the release of a valuation allowance and a decrease in uncertain tax positions due to the ~~United Kingdom. In the prior year, our effective tax rate included a favorable impact from a net operating loss carryback claim made in the United States as a result~~settlement of ~~COVID-19 related losses.~~an outstanding audit. See Note 15 to the accompanying consolidated financial statements for additional information regarding the effective tax rate for the ~~third~~first quarter of Fiscal ~~2023.~~2024.

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

Net Income Attributable to Capri

As a result of the foregoing, our net income decreased ~~$97~~$153 million to ~~$225~~$48 million for the three months ended ~~December 31, 2022,~~July 1, 2023, compared to ~~$322~~$201 million for the three months ended ~~December 25, 2021.~~

~~Segment Information~~

~~Versace~~
Three Months Ended % Change
(dollars in millions) December 31,
2022 December 25,
2021 $ Change As
Reported Constant
Currency
Revenues $ 249 $ 251 $ (2) (0.8) % 11.2 %
Income from operations $ 24 $ 32 $ (8) (25.0) %
Operating margin 9.6 % 12.7 %

~~Revenues~~

Versace revenues decreased $2 million, or 0.8%, to $249 million for the three months ended December 31, 2022, compared to $251 million for the three months ended December 25, 2021, which included unfavorable foreign currency effects of $30 million. On a constant currency basis, revenue increased $28 million, or 11.2%, primarily attributable to increased retail revenue and higher wholesale shipments in EMEA, partially offset by decreased revenues in Greater China due to COVID-19 related disruptions.

~~Income from Operations~~

For the three months ended December 31, 2022, Versace recorded income from operations of $24 million, compared to $32 million for the three months ended December 25, 2021. Operating margin decreased from 12.7% for the three months ended December 25, 2021, to 9.6% for the three months ended December 31, 2022, primarily due to higher employee costs.

~~Jimmy Choo~~
Three Months Ended % Change
(dollars in millions) December 31,
2022 December 25,
2021 $ Change As
Reported Constant
Currency
Revenues $ 168 $ 178 $ (10) (5.6) % 3.4 %
Income from operations $ 18 $ 16 $ 2 12.5 %
Operating margin 10.7 % 9.0 %

~~Revenues~~

Jimmy Choo revenues decreased $10 million, or 5.6%, to $168 million for the three months ended December 31, 2022, compared to $178 million for the three months ended December 25, 2021, which included unfavorable foreign currency effects of $16 million. On a constant currency basis, revenue increased $6 million, or 3.4%, primarily attributable to increased revenue in the Americas and EMEA, partially offset by decreased revenues in Greater China due to COVID-19 related disruptions.

July 2, 2022.

~~Income from Operations~~

For the three months ended December 31, 2022, Jimmy Choo recorded income from operations of $18 million, compared to $16 million for the three months ended December 25, 2021. Operating margin increased from 9.0% for the three months ended December 25, 2021 to 10.7% for the three months ended December 31, 2022, primarily due to higher average unit price partially offset by deleverage of expense on lower revenues.

~~Michael Kors~~
Three Months Ended % Change
(dollars in millions) December 31,
2022 December 25,
2021 $ Change As
Reported Constant
Currency
Revenues $ 1,095 $ 1,180 $ (85) (7.2) % (3.6) %
Income from operations $ 251 $ 335 $ (84) (25.1) %
Operating margin 22.9 % 28.4 %

~~Revenues~~

Michael Kors revenues decreased $85 million, or 7.2%, to $1.095 billion for the three months ended December 31, 2022, compared to $1.180 billion for the three months ended December 25, 2021, which included unfavorable foreign currency effects of $43 million. On a constant currency basis, revenue decreased $42 million, or 3.6%, primarily due to decreased wholesale revenues throughout the Americas and EMEA and decreased revenues in Greater China due to COVID-19 related disruptions.

~~Income from Operations~~

For the three months ended December 31, 2022, Michael Kors recorded income from operations of $251 million, compared to $335 million for the three months ended December 25, 2021. Operating margin decreased from 28.4% for the three months ended December 25, 2021, to 22.9% for the three months ended December 31, 2022, primarily due to increased marketing investments and deleverage of expenses on lower revenues partially offset by lower supply chain costs.

4037

~~Results of Operations~~

~~Comparison of the nine months ended December 31, 2022 with the ninemonths ended December 25, 2021~~

The following table details the results of our operations for the nine months ended December 31, 2022 and December 25, 2021, and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):
Nine Months Ended $ Change % Change % of Total Revenue for the Nine Months Ended
December 31,
2022 December 25,
2021 December 31, 2022 December 25, 2021
Statements of Operations Data:
Total revenue $ 4,284 $ 4,162 $ 122 2.9 %
Cost of goods sold 1,427 1,374 53 3.9 % 33.3 % 33.0 %
Gross profit 2,857 2,788 69 2.5 % 66.7 % 67.0 %
Selling, general and administrative expenses 1,984 1,800 184 10.2 % 46.3 % 43.2 %
Depreciation and amortization 131 146 (15) (10.3) % 3.1 % 3.5 %
Impairment of assets 12 33 (21) (63.6) % 0.3 % 0.8 %
Restructuring and other charges 11 25 (14) (56.0) % 0.3 % 0.6 %
Total operating expenses 2,138 2,004 134 6.7 % 49.9 % 48.1 %
Income from operations 719 784 (65) (8.3) % 16.8 % 18.8 %
Other income, net (2) (2) — — % — % — %
Interest expense (income), net 13 (11) 24 NM 0.3 % (0.3) %
Foreign currency (gain) loss (10) 1 (11) NM (0.2) % — %
Income before income taxes 718 796 (78) (9.8) % 16.8 % 19.1 %
Provision for income taxes 66 54 12 22.2 % 1.5 % 1.3 %
Net income 652 742 (90) (12.1) %
Less: Net income attributable to noncontrolling interest 2 1 1 100.0 %
Net income attributable to Capri $ 650 $ 741 $ (91) (12.3) %

~~NM Not meaningful~~

~~Total Revenue~~

Total revenue increased $122 million, or 2.9%, to $4.284 billion for the nine months ended December 31, 2022, compared to $4.162 billion for the nine months ended December 25, 2021, which included net unfavorable foreign currency effects of approximately $288 million, as a result of the strengthening of the U.S. dollar compared to all major currencies in which we operate for the nine months ended December 31, 2022. On a constant currency basis, our total revenue increased $410 million, or 9.9%. The increase is attributable to increased retail and wholesale revenues throughout the Americas and EMEA, partially offset by decreased revenues in Greater China due to COVID-19 related disruptions for each of our brands.

~~Gross Profit~~

Gross profit increased $69 million, or 2.5%, to $2.857 billion for the nine months ended December 31, 2022, compared to $2.788 billion for the nine months ended December 25, 2021, which included net unfavorable foreign currency effects of $201 million. Gross profit as a percentage of total revenue was 66.7% for the nine months ended December 31, 2022, compared to 67.0% for the nine months ended December 25, 2021. The decrease in gross profit margin was primarily attributable to increased supply chain costs and unfavorable channel mix for the nine months ended December 31, 2022, as compared to the nine months ended December 25, 2021.

~~Total Operating Expenses~~

Total operating expenses increased $134 million, or 6.7%, to $2.138 billion for the nine months ended December 31, 2022, compared to $2.004 billion for the nine months ended December 25, 2021. Our operating expenses included a net favorable foreign currency impact of approximately $167 million. Total operating expenses increased to 49.9% as a percentage of total revenue for the nine months ended December 31, 2022, compared to 48.1% for the nine months ended December 25, 2021. The components that comprise total operating expenses are explained below.

~~Selling, General and Administrative Expenses~~

Selling, general and administrative expenses increased $184 million, or 10.2%, to $1.984 billion for the nine months ended December 31, 2022, compared to $1.800 billion for the nine months ended December 25, 2021, primarily due to increased marketing and unallocated corporate expenses for the nine months ended December 31, 2022.

Selling, general and administrative expenses as a percentage of total revenue increased to 46.3% for the nine months ended December 31, 2022, compared to 43.2% for the nine months ended December 25, 2021, primarily due to increased marketing investments and unallocated corporate expenses as a percentage of revenue for the nine months ended December 31, 2022, as compared to the nine months ended December 25, 2021.

Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $48 million, or 39.0%, to $171 million for the nine months ended December 31, 2022 as compared to $123 million for the nine months ended December 25, 2021, primarily due to an increase in professional fees and information technology costs related to the ongoing ERP system implementation and Capri transformation projects.

~~Depreciation and Amortization~~

Depreciation and amortization decreased $15 million, or 10.3%, to $131 million for the nine months ended December 31, 2022, compared to $146 million for the nine months ended December 25, 2021. Depreciation and amortization decreased to 3.1% as a percentage of total revenue for the nine months ended December 31, 2022, compared to 3.5% for the nine months ended December 25, 2021. The decrease in depreciation and amortization expense was primarily attributable to lower depreciation due to lower capital expenditures in Fiscal 2022 and Fiscal 2021.

~~Impairment of Assets~~

For the nine months ended December 31, 2022 and December 25, 2021, we recognized asset impairment charges of $12 million and $33 million, respectively, which are primarily related to operating lease right-of-use assets at certain Michael Kors store locations. See Note 11 to the accompanying consolidated financial statements for additional information.

~~Restructuring and Other Charges~~

We recognized restructuring and other charges of $11 million and $25 million for the nine months ended December 31, 2022 and December 25, 2021, respectively. These charges are primarily related to equity awards associated with the acquisition of Versace. See Note 8 to the accompanying consolidated financial statements for additional information.

~~Restructuring and other charges are not evaluated as part of our reportable segments’ results (see Segment Information above for additional information).~~

~~Income from Operations~~

As a result of the foregoing, income from operations decreased $65 million, to $719 million for the nine months ended December 31, 2022, compared to $784 million for the nine months ended December 25, 2021. Income from operations as a percentage of total revenue decreased to 16.8% for the nine months ended December 31, 2022, compared to 18.8% for the nine months ended December 25, 2021. See ~~Segment Information~~ ~~above for a reconciliation of our segment operating income to total operating income.~~

~~Interest Expense (Income), net~~

For the nine months ended December 31, 2022, we recognized $13 million of interest expense compared to $11 million of interest income for the nine months ended December 25, 2021. The $24 million increase in interest expense (income), net, is primarily due to higher effective interest rates on our outstanding debt, higher average borrowings outstanding and lower

interest income from our net investment hedges, partially offset by higher interest income earned on our cash and cash equivalents (see Note 9 and Note 12 to the accompanying consolidated financial statements for additional information).

~~Foreign Currency (Gain) Loss~~

For the nine months ended December 31, 2022, we recognized a net foreign currency gain of $10 million, primarily attributable to a gain related to an undesignated forward foreign currency exchange contract partially offset by losses attributable to intercompany transactions among our subsidiaries. For the nine months ended December 25, 2021, we recognized a net foreign currency loss of $1 million, primarily attributable to the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries.

~~Provision for Income Taxes~~

For the nine months ended December 31, 2022, we recognized $66 million of income tax expense compared to $54 million for the nine months ended December 25, 2021. Our effective tax rate was 9.2% and 6.8% for the nine months ended December 31, 2022 and December 25, 2021, respectively. In the current year, our effective tax rate benefited from the release of a valuation allowance in the United Kingdom. In the prior year, our effective tax rate included a favorable impact from a net benefit recognized as a result of newly enacted tax legislation in Italy and a net operating loss carryback claim made in the United States as a result of COVID-19 related losses. See Note 15 to the accompanying consolidated financial statements for additional information regarding the effective tax rate for the current fiscal year.

~~Net Income Attributable to Capri~~

~~As a result of the foregoing, our net income decreased $91 million to $650 million for the nine months ended December 31, 2022, compared to $741 million for the nine months ended December 25, 2021.~~

~~Segment Information~~

~~Versace~~
Nine Months Ended % Change
(dollars in millions) December 31,
2022 December 25,
2021 $ Change As
Reported Constant
Currency
Revenues $ 832 $ 773 $ 59 7.6 % 22.9 %
Income from operations $ 138 $ 135 $ 3 2.2 %
Operating margin 16.6 % 17.5 %

~~Revenues~~

Versace revenues increased $59 million, or 7.6%, to $832 million for the nine months ended December 31, 2022, compared to $773 million for the nine months ended December 25, 2021, which included unfavorable foreign currency effects of $118 million. On a constant currency basis, revenue increased $177 million, or 22.9%, primarily attributable to increased retail revenue and wholesale shipments in the Americas and EMEA, partially offset by decreased revenues in Greater China due to COVID-19 related disruptions.

~~Income from Operations~~

For the nine months ended December 31, 2022, Versace recorded income from operations of $138 million, compared to $135 million for the nine months ended December 25, 2021. Operating margin decreased from 17.5% for the nine months ended December 25, 2021, to 16.6% for the nine months ended December 31, 2022, primarily due to unfavorable channel mix offset by higher average unit price.

~~Jimmy Choo~~
Nine Months Ended % Change
(dollars in millions) December 31,
2022 December 25,
2021 $ Change As
Reported Constant
Currency
Revenues $ 482 $ 457 $ 25 5.5 % 15.1 %
Income from operations $ 45 $ 28 $ 17 60.7 %
Operating margin 9.3 % 6.1 %

~~Revenues~~

Jimmy Choo revenues increased $25 million, or 5.5%, to $482 million for the nine months ended December 31, 2022, compared to $457 million for the nine months ended December 25, 2021, which included unfavorable foreign currency effects of $44 million. On a constant currency basis, revenue increased $69 million, or 15.1%, primarily attributable to increased retail revenue and wholesale shipments in the Americas and EMEA, partially offset by decreased revenue in Greater China due to the impact of COVID-19 related disruptions.

~~Income from Operations~~

For the nine months ended December 31, 2022, Jimmy Choo recorded income from operations of $45 million, compared to $28 million for the nine months ended December 25, 2021. Operating margin increased from 6.1% for the nine months ended December 25, 2021, to 9.3% for the nine months ended December 31, 2022, primarily due to higher average unit price and leveraging of operating expenses on higher revenue.

~~Michael Kors~~
Nine Months Ended % Change
(dollars in millions) December 31,
2022 December 25,
2021 $ Change As
Reported Constant
Currency
Revenues $ 2,970 $ 2,932 $ 38 1.3 % 5.6 %
Income from operations $ 721 $ 795 $ (74) (9.3) %
Operating margin 24.3 % 27.1 %

~~Revenues~~

Michael Kors revenues increased $38 million, or 1.3%, to $2.970 billion for the nine months ended December 31, 2022, compared to $2.932 billion for the nine months ended December 25, 2021, which included unfavorable foreign currency effects of $126 million. On a constant currency basis, revenue increased $164 million, or 5.6%, primarily due to higher wholesale shipments and increased retail revenue in the Americas and EMEA, partially offset by decreased revenue in Greater China due to the impact of COVID-19 related disruptions.

~~Income from Operations~~

For the nine months ended December 31, 2022, Michael Kors recorded income from operations of $721 million, compared to $795 million for the nine months ended December 25, 2021. Operating margin decreased from 27.1% for the nine months ended December 25, 2021, to 24.3% for the nine months ended December 31, 2022, primarily due to increased supply chain costs, unfavorable regional mix and increased marketing investments.

Liquidity and Capital Resources

Liquidity

Our primary sources of liquidity are the cash flows generated from operations, along with borrowings available under our credit facilities (see below discussion regarding “Revolving Credit Facilities”) and available cash and cash equivalents. Our primary use of this liquidity is to fund the ongoing cash requirements, including our working capital needs and capital investments in our business, debt repayments, acquisitions, returns of capital, including share repurchases and other corporate activities. We believe that the cash generated from operations, together with borrowings available under our revolving credit facilities and available cash and cash equivalents, will be sufficient to meet our working capital needs for the next 12 months and beyond, including investments made and expenses incurred in connection with our store growth plans, investments in corporate and distribution facilities, continued systems development, e-commerce and marketing initiatives. We spent ~~$168~~$50 million on capital expenditures during the ~~nine~~three months ended ~~December 31, 2022.~~July 1, 2023.

The Capri transformation program represents a multi-year, multi-project initiative extending through Fiscal 2026 intended to improve the operating effectiveness and efficiency of our organization by creating best in class shared platforms across our brands and by expanding our digital capabilities. These initiatives cover multiple aspects of our operations including supply chain, marketing, omni-channel customer experience, e-commerce, data analytics and IT infrastructure. Through Fiscal 2026, we expect expenditures up to $220 million related to these efforts.

The Company is also in progress with a multi-year ERP implementation which includes accounting, finance and wholesale and retail inventory solutions in order to create standardized finance IT applications across our organization. This ERP implementation will continue through Fiscal 2026 and we expect expenditures up to $170 million related to these initiatives.

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


		As of					As of
		December 31, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Balance Sheet Data:	Balance Sheet Data:					Balance Sheet Data:
Cash and cash equivalents	Cash and cash equivalents	$	281	$	169	Cash and cash equivalents	$	238	$	249
Working capital	Working capital	$	525	$	325	Working capital	$	472	$	420
Total assets	Total assets	$	7,554	$	7,480	Total assets	$	7,409	$	7,295
Short-term debt	Short-term debt	$	19	$	29	Short-term debt	$	13	$	5
Long-term debt	Long-term debt	$	1,521	$	1,131	Long-term debt	$	1,924	$	1,822


		Nine Months Ended					Three Months Ended
		December 31, 2022		December 25, 2021			July 1, 2023		July 2, 2022
Cash Flows Provided By (Used In):	Cash Flows Provided By (Used In):					Cash Flows Provided By (Used In):
Operating activities	Operating activities	$	616	$	713	Operating activities	$	40	$	137
Investing activities	Investing activities	$	241	$	(26)	Investing activities	$	(50)	$	30
Financing activities	Financing activities	$	(651)	$	(663)	Financing activities	$	(3)	$	(50)
Effect of exchange rate changes	Effect of exchange rate changes	$	(94)	$	6	Effect of exchange rate changes	$	(3)	$	(65)
Net increase in cash and cash equivalents		$	112	$	30
Net (decrease) increase in cash and cash equivalents						Net (decrease) increase in cash and cash equivalents	$	(16)	$	52

Cash Provided by Operating Activities

Net cash provided by operating activities decreased $97 million to ~~$616~~$40 million during the ~~nine~~three months ended ~~December 31, 2022,~~July 1, 2023, as compared to ~~$713~~$137 million for the ~~nine~~three months ended ~~December 25, 2021,~~July 2, 2022, as a result of a decrease in our net income after non-cash adjustments ~~partially offset by deceleration~~and decreases in working capital requirements due to the stabilization of inventory ~~receipts~~levels compared to prior year.

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

Net cash ~~provided by~~used in investing activities was ~~$241~~$50 million during the ~~nine~~three months ended ~~December 31, 2022,~~July 1, 2023, as compared to net cash ~~used in~~provided by investing activities of ~~$26~~$30 million during the ~~nine~~three months ended ~~December 25, 2021.~~July 2, 2022. The increase in net cash ~~provided by~~used

in investing activities were primarily attributable to the ~~higher~~ settlement of net investment hedges of ~~$350~~$66 million during the ~~nine~~three months ended ~~December 31,~~July 2, 2022 partially offset by higher capital expenditures of ~~$83~~$14 million compared to prior year.

Cash Used in Financing Activities

Net cash used in financing activities was ~~$651~~$3 million during the ~~nine~~three months ended ~~December 31, 2022,~~July 1, 2023, as compared to ~~$663~~$50 million during the ~~nine~~three months ended ~~December 25, 2021.~~July 2, 2022. The decrease of cash used in financing activities of ~~$12~~$47 million was primarily attributable to ~~an increase~~a decrease in net debt ~~borrowing~~borrowings of ~~$657~~$158 million, partially offset by a ~~$604~~$206 million ~~increase~~decrease in cash payments to repurchase our ordinary shares compared to prior year.

Debt Facilities

The following table presents a summary of our borrowing capacity and amounts outstanding as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022~~1, 2023 (in millions):


		As of					As of
		December 31, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Senior Unsecured Revolving Credit Facility:	Senior Unsecured Revolving Credit Facility:					Senior Unsecured Revolving Credit Facility:
Revolving Credit Facility (excluding up to a $500 million accordion feature) (1)	Revolving Credit Facility (excluding up to a $500 million accordion feature) (1)					Revolving Credit Facility (excluding up to a $500 million accordion feature) (1)
Total availability	Total availability	$	1,500	$	1,000	Total availability	$	1,500	$	1,500
Borrowings outstanding (2)	Borrowings outstanding (2)	580		175		Borrowings outstanding (2)	973		874
Letter of credit outstanding	Letter of credit outstanding	15		21		Letter of credit outstanding	3		3
Remaining availability	Remaining availability	$	905	$	804	Remaining availability	$	524	$	623

2018 Term Loan ($1.6 billion)
Versace Term Loan (450 Million Euro)						Versace Term Loan (450 Million Euro)
Borrowings outstanding, net of debt issuance costs (3)	Borrowings outstanding, net of debt issuance costs (3)	$	—	$	495	Borrowings outstanding, net of debt issuance costs (3)	$	490	$	487

Versace Term Loan (450 million Euro)
Borrowings outstanding, net of debt issuance costs (4)		$	481	$	—
Senior Notes due 2024						Senior Notes due 2024
Borrowings outstanding, net of debt issuance costs and discount amortization (2)						Borrowings outstanding, net of debt issuance costs and discount amortization (2)	$	449	$	449

Senior Notes due 2024
Borrowings outstanding, net of debt issuance costs and discount amortization (2)		$	448	$	448

Other Borrowings ~~(5)~~(4)	Other Borrowings ~~(5)~~(4)	$	31	$	42	Other Borrowings ~~(5)~~(4)	$	25	$	17

Hong Kong Uncommitted Credit Facility:	Hong Kong Uncommitted Credit Facility:					Hong Kong Uncommitted Credit Facility:
Total availability (100 million and 80 million Hong Kong Dollars) (6)		$	13	$	10
Total availability (70 million Hong Kong Dollars) (5)						Total availability (70 million Hong Kong Dollars) (5)	$	9	$	9

Borrowings outstanding	Borrowings outstanding	—		—		Borrowings outstanding	—		—
Remaining availability (100 million and 80 million Hong Kong Dollars)		$	13	$	10
Remaining availability (70 million Hong Kong Dollars)						Remaining availability (70 million Hong Kong Dollars)	$	9	$	9

China Uncommitted Credit Facility:	China Uncommitted Credit Facility:					China Uncommitted Credit Facility:
Total availability (75 million and 45 million Chinese Yuan) (6)		$	11	$	7
Total availability (75 million Chinese Yuan) (5)						Total availability (75 million Chinese Yuan) (5)	$	10	$	11
Borrowings outstanding	Borrowings outstanding	—		—		Borrowings outstanding	—		—
Total and remaining availability (75 million and 45 million Chinese Yuan)		$	11	$	7
Total and remaining availability (75 million Chinese Yuan)						Total and remaining availability (75 million Chinese Yuan)	$	10	$	11

Japan Credit Facility:	Japan Credit Facility:					Japan Credit Facility:
Total availability (1.0 billion Japanese Yen)	Total availability (1.0 billion Japanese Yen)	$	8	$	8	Total availability (1.0 billion Japanese Yen)	$	7	$	8
Borrowings outstanding	Borrowings outstanding	—		—		Borrowings outstanding	—		—
Remaining availability (1.0 billion Japanese Yen)	Remaining availability (1.0 billion Japanese Yen)	$	8	$	8	Remaining availability (1.0 billion Japanese Yen)	$	7	$	8

Versace Uncommitted Credit Facilities:	Versace Uncommitted Credit Facilities:					Versace Uncommitted Credit Facilities:
Total availability (40 million Euro and 48 million Euro) (6)		$	43	$	52
Total availability (40 million Euro) (5)						Total availability (40 million Euro) (5)	$	44	$	43
Borrowings outstanding	Borrowings outstanding	—		—		Borrowings outstanding	—		—
Remaining availability (40 million Euro and 48 million Euro)		$	43	$	52
Remaining availability (40 million Euro)						Remaining availability (40 million Euro)	$	44	$	43

Total borrowings outstanding (1)	Total borrowings outstanding (1)	$	1,540	$	1,160	Total borrowings outstanding (1)	$	1,937	$	1,827
Total remaining availability	Total remaining availability	$	980	$	881	Total remaining availability	$	594	$	694

(1)The financial covenant in our 2022 Credit Facility requires us to comply with the quarterly maximum net leverage ratio test of 4.00 to 1.0. As of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022,~~1, 2023, we were in compliance with all covenants related to our agreements then in effect governing our debt. See Note 9 to the accompanying consolidated financial statements for additional information.

(2)As of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022,~~1, 2023, all amounts are recorded as long-term debt in our consolidated balance sheets.

(3)As of December 31, 2022, we no longer had an outstanding balance under the 2018 Term Loan as it was repaid. As of April 2, 2022, all amounts are recorded as long-term debt in our consolidated balance sheets.

~~(4)~~On December 5, 2022, Gianni Versace S.r.l., our wholly owned subsidiary, entered into a credit facility, which provides a senior unsecured term loan in an aggregate principal amount of €450 ~~million (approximately $482 million).~~million. As of ~~December 31, 2022~~July 1, 2023 and April 1, 2023, all amounts are recorded as long-term debt in our consolidated balance sheets.

~~(5)~~

(4)The balance as of ~~December 31, 2022~~July 1, 2023 consists of ~~$18~~$12 million related to our supplier financing program recorded within short-term debt in our consolidated balance sheets, $11 million related to the sale of certain Versace tax receivables, with $1 million and $10 million, respectively, recorded within short-term debt and long-term debt in our consolidated balance sheets and $2 million of other loans recorded as long-term debt in our consolidated balance sheets. The balance as of April ~~2, 2022~~1, 2023 consists of ~~$21~~$4 million related to our supplier finance program recorded within short-term debt in our consolidated balance sheets, ~~$18~~$11 million related to the sale of certain Versace tax receivables, with $8$1 million and $10 million ~~respectively,~~ recorded within short-term debt and long-term debt, ~~in our consolidated balance sheets and $3 million of other loans recorded as long-term debt~~respectively, in our consolidated balance sheets.

~~(6)~~(5)The balance as of ~~December 31, 2022~~July 1, 2023 and April ~~2, 2022~~1, 2023 represents the total availability of the credit facility, which excludes bank guarantees.

We believe that our 2022 Credit Facility is adequately diversified with no undue concentration in any one financial institution. As of ~~December 31, 2022,~~July 1, 2023, there were 17 financial institutions participating in the facility, with none maintaining a maximum commitment percentage in excess of 10%. We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the 2022 Credit Facility.

See Note 9 in the accompanying financial statements and Note 11 in our Fiscal ~~2022~~2023 Annual Report on Form 10-K for detailed information relating to our credit facilities and debt obligations.

Share Repurchase Program

The following table presents our ~~ordinary~~treasury share repurchases during the ~~nine~~three months ended ~~December 31,~~July 1, 2023 and July 2, 2022 ~~and December 25, 2021~~ (dollars in millions):


		Nine Months Ended					Three Months Ended
		December 31, 2022		December 25, 2021			July 1, 2023		July 2, 2022
Cost of shares repurchased under share repurchase program	Cost of shares repurchased under share repurchase program	$	950	$	350	Cost of shares repurchased under share repurchase program	$	100	$	300
Fair value of shares withheld to cover tax obligations for vested restricted share awards	Fair value of shares withheld to cover tax obligations for vested restricted share awards	14		10		Fair value of shares withheld to cover tax obligations for vested restricted share awards	6		12
Total cost of ordinary shares repurchased		$	964	$	360
Total cost of treasury shares repurchased						Total cost of treasury shares repurchased	$	106	$	312

Shares repurchased under share repurchase program	Shares repurchased under share repurchase program	18,921,459		5,934,244		Shares repurchased under share repurchase program	2,636,564		6,120,174
Shares withheld to cover tax withholding obligations	Shares withheld to cover tax withholding obligations	300,722		193,322		Shares withheld to cover tax withholding obligations	164,377		265,311
		19,222,181		6,127,566			2,800,941		6,385,485

~~During the first quarter of Fiscal~~On June 1, 2022, the Company reinstated its $500 million share repurchase program, which was previously suspended during the first quarter of Fiscal 2021 in response to the impact of the COVID-19 pandemic and the provisions of the Second Amendment of the 2018 Credit Facility. Subsequently, on November 3, 2021, the Company announced ~~that~~ its Board of Directors ~~had terminated the Company’s existing $500 million share repurchase program (the “Prior Plan”), which had $250 million of availability remaining at the time, and~~ authorized a new share repurchase program (the “Fiscal ~~2022~~2023 Plan”) pursuant to which ~~the Company was permitted,~~we may, from time to time, to repurchase up to $1.0 billion of ~~its~~our outstanding ordinary shares within a period of two years from the effective date of the program.

On June 1, 2022, the Company announced that its Board of Directors had terminated the Fiscal 2022 Plan, with $500 million of availability remaining, and authorized a new share repurchase program (the “Fiscal 2023 Plan”) pursuant to

~~which the Company may, from time to time, repurchase up to $1.0 billion of its outstanding ordinary shares within a period of 2 years from the effective date of the program.~~

On November 9, 2022, the Company announced ~~that~~ its Board of Directors approved a new share repurchase program (the “Existing Share Repurchase Plan”) of up to $1$1.0 billion of ~~its~~our outstanding ordinary shares, providing additional capacity to return cash to shareholders over the longer term. This new two-year program replaced the Fiscal 2023 Plan. As of July 1, 2023, the remaining availability under the Existing Share Repurchase Plan ~~which had $250 million of availability remaining.~~was $300 million.

Share repurchases may be made in open market or privately negotiated transactions and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors. The program may be suspended or discontinued at any time.

Contractual Obligations and Commercial Commitments

Please refer to the “Contractual Obligations and Commercial Commitments” disclosure within the “Liquidity and Capital Resources” section of our Fiscal ~~2022~~2023 Form 10-K for a detailed disclosure of our other contractual obligations and commitments as of April ~~2, 2022.~~1, 2023.

Off-Balance Sheet Arrangements

We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. Our off-balance sheet commitments relating to our outstanding letters of credit were ~~$35~~$33 million at ~~December 31, 2022,~~July 1, 2023, including ~~$20~~$30 million in letters of credit issued outside of the 2022 Credit Facility. In addition, as of ~~December 31, 2022,~~July 1, 2023, bank guarantees of approximately ~~$35~~$38 million were supported by our various credit facilities. We do not have any other off-balance sheet arrangements or relationships with entities that are not consolidated into our financial statements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

Recent Accounting Pronouncements

See Note 2 to the accompanying interim consolidated financial statements for recently issued accounting standards, which may have an impact on our financial statements and/or disclosures upon adoption.

4842

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Foreign Currency Exchange Risk

Forward Foreign Currency Exchange Contracts

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

~~We perform a sensitivity analysis on our~~There were no forward currency contracts, both designated and not designated as hedges for accounting purposes, to determine the effects of fluctuations in foreign currency exchange rates. For this sensitivity analysis, we assume a hypothetical change in the U.S. Dollar against foreign exchange rates. Based on all foreign currency exchange contracts outstanding as of ~~December 31, 2022,~~July 1, 2023 and as a ~~10% appreciation or devaluation of the U.S. Dollar compared~~result we were not required to ~~the level of foreign currency exchange rates for currencies under contract as of December 31, 2022, would result in~~perform a ~~net increase and decrease, respectively, of approximately $3 million in the fair value of these contracts.~~sensitivity analysis.

Net Investment Hedges

We are exposed to adverse foreign currency exchange rate movements related to our net investment hedges. As of ~~December 31, 2022,~~July 1, 2023, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $2.5 billion to hedge our net investment in CHF denominated subsidiaries against future volatility in the exchange rates between the United States dollar and CHF. Under the terms of these contracts, we will exchange the semi-annual fixed rate payments on United States notional amounts for fixed rate payments of 0% in CHF. Based on the net investment hedges outstanding as of July 1, 2023, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of July 1, 2023, would result in a net increase or decrease, respectively, of approximately $240 million in the fair value of these contracts. These contracts have maturity dates between September 2024 and June 2028.

As of July 1, 2023, we have multiple float-to-float cross-currency swap agreements with aggregate notional amounts of $1 billion to hedge our net investment in Euro denominated subsidiaries against future volatility in the exchange rates between the United States dollar and Euro. We will exchange Euro floating rate payments based on EURIBOR for the United States dollar floating rate amounts based on SOFR CME Term over the life of the agreement. The fixed rate component of semi-annual Euro payments range from 1.149% to 1.215%. Based on the net investment hedges outstanding as of July 1, 2023, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of July 1, 2023, would result in a net increase or decrease, respectively, of approximately $106 million in the fair value of these contracts. These contracts have maturity dates between May 2028 and August 2030.

As of July 1, 2023, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $350 million to hedge our net investment in Euro denominated subsidiaries against future volatility in the exchange rates between the United States dollar and Euro. Under the terms of these contracts, we will exchange the semi-annual fixed rate payments on United States notional amounts for fixed rate payments of 0% in Euros. Based on the net investment hedges outstanding as of July 1, 2023, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of July 1, 2023, would result in a net increase or decrease, respectively, of approximately $34 million in the fair value of these contracts. These contracts have maturity dates between January 2027 and April 2027.

As of July 1, 2023, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of €1.15 billion to hedge our net investments in GBP denominated subsidiaries against future volatility in the exchange rates between the Euro and British pound. Under the terms of these contracts, we will exchange the semi-annual fixed rate payments on GBP notional amounts for fixed rate payments of 0% in Euro. Based on the net investment hedges outstanding as of July 1,

2023, a 10% appreciation or devaluation of the British pound compared to the level of foreign currency exchange rates for currencies under contract as of July 1, 2023, would result in a net increase or decrease, respectively, of approximately £87 million (approximately $111 million) in the fair value of these contracts. These contracts have maturity dates between November 2024 and November 2027.

As of July 1, 2023, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $294 million to hedge our net investments in Japanese Yen denominated subsidiaries against future volatility in the exchange rates between the ~~U.S. Dollar~~United States dollar and the Japanese Yen, as well as multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of €1 billion (approximately $1.07 billion) to hedge our net investments in Euro denominated subsidiaries against future volatility in exchange rates between the Euro and British pound.Yen. Under the term of these contracts, we will exchange the semi-annual fixed rate payments on United States ~~denominated debt~~notional amounts for fixed rate payments of 0% to 2.665% in Japanese ~~Yen, while also exchanging the semi-annual fixed rate payments on GBP denominated debt for fixed rate payments of 0% in Euro.~~Yen. Based on the net investment hedges outstanding as of ~~December 31, 2022,~~July 1, 2023, a 10% appreciation or devaluation of the ~~U.S. Dollar~~United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of ~~December 31, 2022,~~July 1, 2023, would result in a net increase or decrease, respectively, of approximately ~~$112~~$37 million in the fair value of these contracts. These contracts have maturity dates between ~~November 2024~~May 2027 and February 2051. In addition, certain other contracts are supported by a credit support annex (“CSA”) which provides for collateral exchange with the earliest effective date being September 2027. If the outstanding position of a contract exceeds a certain threshold governed by the aforementioned CSA’s, either party is required to post cash collateral.

Fair Value Hedges

We are exposed to transaction risk from foreign currency exchange rate fluctuations with respect to various cross-currency intercompany loans which will impact earnings on a consolidated basis. To manage the exchange rate risk related to these balances, we enter into fair value forward cross-currency swap agreements to hedge its exposure in GBP denominated subsidiaries on a Euro denominated intercompany loan. As of July 1, 2023, the total notional values of outstanding fair value cross-currency swaps related to these loans were €1 billion. Based on the fair value hedges outstanding as of July 1, 2023, a 10% appreciation or devaluation of the British pound compared to the level of foreign currency exchange rates for currencies under contract as of July 1, 2023, would result in a net increase or decrease, respectively, of approximately £89 million (approximately $113 million) in the fair value of these contracts. These contracts have maturity dates between March 2025 and March 2026.

Interest Rate Risk

We are exposed to interest rate risk in relation to borrowings outstanding under our 2022 Credit Facility, our Versace Term Loan, our Hong Kong Credit Facility, our Japan Credit Facility and our Uncommitted Versace Credit ~~Facilities and our Versace Term Loan.~~Facilities. Our 2022 Credit Facility carries interest rates that are tied to the prime rate and other institutional lending rates (depending on the particular origination of borrowing), as further described in Note 9 to the accompanying consolidated financial statements. Our Versace Term Loan carries interest rates that are tied to EURIBOR. Our Hong Kong Credit Facility carries interest at a rate that is tied to the Hong Kong Interbank Offered Rate. Our China Credit Facility carries interest at a rate that is tied to the People’s Bank of China’s Benchmark lending rate. Our Japan Credit Facility carries interest at a rate posted by the Mitsubishi UFJ Financial Group. Our Uncommitted Versace Credit Facilities carries interest at a rate set by the bank on the date of borrowing that is tied to the European Central Bank. ~~Our Versace Term Loan carries interest rates that are tied to EURIBOR.~~ Therefore, our consolidated statements of operations and comprehensive

income and cash flows are exposed to changes in those interest rates. At ~~December 31, 2022,~~July 1, 2023, we had ~~$580~~$973 million borrowings outstanding under our 2022 Credit Facility, ~~$481~~$490 million outstanding, net of debt issuance costs, under our Versace Term Loan and no borrowings outstanding under our Uncommitted Versace Credit Facilities. At April ~~2, 2022,~~1, 2023, we had ~~$175~~$874 million borrowings outstanding under our ~~2018~~2022 Credit Facility, ~~$495~~$487 million, outstanding, net of debt issuance costs, ~~outstanding~~ under our ~~2018~~Versace Term Loan and no borrowings outstanding under ~~our Versace~~all other Credit Facilities. These balances are not indicative of future balances that may be outstanding under our revolving credit facilities that may be subject to fluctuations in interest rates. Any increases in the applicable interest ~~rates~~rate(s) would cause an increase to the interest expense relative to any outstanding balance at that date.

Credit Risk

As of ~~December 31, 2022,~~July 1, 2023, our $450 million Senior Notes, due in 2024, bear interest at a fixed rate equal to 4.250% per year, payable semi-annually. Our Senior Notes interest rate payable may be subject to adjustments from time to time if either Moody’s or S&P (or a substitute rating agency), downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Senior Notes.

On an overall basis, our exposure to market risk has not significantly changed from what we reported in our Annual Report on Form 10-K. ~~The ongoing COVID-19 pandemic as well as macroeconomic~~Macroeconomic conditions and inflationary pressures docontinue to present new and emerging uncertainty to the financial markets. See Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended April ~~2, 2022~~1, 2023 for additional information.

5044

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”)) as of ~~December 31, 2022.~~July 1, 2023. This evaluation was performed based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the 2013 Framework. Based on this assessment, our CEO and CFO concluded that our disclosure controls and procedures as of ~~December 31, 2022~~July 1, 2023 are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

Except as discussed below, there have been no changes in our internal control over financial reporting during the three months ended ~~December 31, 2022~~July 1, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We are currently undertaking a major, multi-year ERP implementation to upgrade our information technology platforms and systems worldwide. The implementation is occurring in phases over several years. We have launched the finance functionality of the ERP system in certain regions starting in Fiscal 2023.

As a result of this multi-year implementation, we expect certain changes to our processes and procedures, which in turn, could result in changes to our internal control over financial reporting. While we expect this implementation to strengthen our internal control over financial reporting by automating certain manual processes and standardizing business processes and reporting across our organization, we will continue to evaluate and monitor our internal control over financial reporting as processes and procedures in the affected areas evolve. See Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended April ~~2, 2022~~1, 2023 for additional information.

5145

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

~~In addition to~~The following should be read in conjunction with the ~~other information~~risk factors set forth ~~in this report, you should carefully consider the factors discussed in Item 1A. “Risk Factors”~~ in our Annual Report on Form 10-K for the ~~fiscal~~ year ended April ~~2, 2022, which~~1, 2023.

The announcement and pendency of the proposed merger with Tapestry, Inc. could ~~materially and~~ adversely affect our business, financial ~~condition or~~results and operations.

On August 10, 2023, Capri entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tapestry, Inc., a Maryland corporation (“Tapestry”), and Sunrise Merger Sub, Inc., a British Virgin Islands business company limited by shares and a direct wholly owned subsidiary of Tapestry (“Merger Sub”).The Merger Agreement provides that, among other things and on the terms and subject to the conditions set forth therein, Tapestry will acquire Capri in an all-cash transaction by means of a merger of Merger Sub with and into Capri (the “Merger”), with Capri surviving the Merger as a wholly owned subsidiary of Tapestry.The announcement and pendency of the proposed Merger could cause disruptions in and create uncertainty surrounding our business, including affecting our relationships with our existing and future customers, vendors and employees, which could have a significant negative impact on our future revenues and results of ~~operations. These risks are not~~operations, regardless of whether the ~~only risks that~~Merger is completed. In particular, we ~~face. Our business operations~~ could ~~also be affected by additional factors that are not presently known~~potentially lose important personnel as a result of the departure of employees who decide to ~~us or that we currently consider~~pursue other opportunities in light of the proposed transaction. In addition, management and financial resources have been diverted and will continue to be ~~immaterial~~diverted towards the completion of the Merger, which could have a negative impact on our future revenues and/or results of operations.

We are also subject to restrictions, without the consent of Tapestry, on the conduct of our business prior to the consummation of the Merger as provided in the Merger Agreement, including, among other things, certain restrictions on our ability to make certain capital expenditures, make investments and acquisitions, enter into certain contracts, open store locations, sell, transfer or dispose of our assets and incur indebtedness. These restrictions could prevent us from pursuing otherwise attractive business opportunities, result in our inability to respond effectively and/or timely to competitive pressures, industry developments and future opportunities, and otherwise have a significant negative impact on our future revenues and/or results of operations.

Failure to complete the proposed Merger could adversely affect our business and the market price of our ordinary shares.

There is no assurance that the closing of the Merger will occur. Consummation of the Merger is subject to various conditions, including the approval of the Company’s shareholders, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of certain other regulatory approvals, and certain other conditions. We cannot predict with certainty whether and when any of these conditions will be satisfied. In addition, the Merger Agreement may be terminated under certain specified circumstances, including, but not limited to, a change in the recommendation of the Board or a termination of the Merger Agreement by us to enter into an agreement for a superior proposal, as defined in the Merger Agreement. If the Merger is not consummated, and there are no other parties willing and able to acquire us at a price of $57 per share or higher and on other terms acceptable to us, our share price will likely decline as our shares have recently traded at prices based on the proposed per share price for the Merger. We have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed Merger, as well as the direction of management resources towards the Merger, for which we will have received little or no benefit if the closing of the Merger does not occur. A failed transaction may result in negative publicity and a negative impression of us in the investment community. If the Merger is not consummated, there can be no assurance that any other transaction acceptable to us will be offered or that our business, prospects or results of operations will not be adversely affected. Upon termination of the Merger Agreement by us or Tapestry under specified conditions, we may be required to pay a termination fee of $240 million, and in other circumstances our remedy may be limited to reimbursement of certain expenses or we may not be entitled to receive any reimbursement. The occurrence of any of these events individually or in combination could have a material adverse impact on our results of operations and our stock price.

We may be subject to litigation challenging the Merger, and an unfavorable judgment or ruling in any such lawsuits could prevent or delay the consummation of the Merger and/or result in substantial costs.

Lawsuits related to the Merger may be filed against us, Tapestry, and our respective affiliates, directors and officers. If dismissals are not obtained or a settlement is not reached, these lawsuits could prevent or delay completion of Merger and/or result in substantial costs to us.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information of the Company’s ordinary shares repurchased or withheld during the three months ended ~~December 31, 2022:~~July 1, 2023:

Total Number
of Shares Average Price per Share
Total Number of
Shares
Purchased as Part of
Publicly Announced
Programs(1)
Remaining Dollar Value of Shares That May Be Purchased Under the Programs (in millions)(1)
October 2 - October 29 2,295,845 $ 43.56 2,295,845 $ 250
October 30 - November 26 — $ — — $ 1,000
November 27 - December 31 3,469,784 $ 58.08 3,442,259 $ 800
5,765,629 5,738,104

~~(1)~~On November 9, 2022, the Company announced that its Board of Directors approved a new share repurchase program of up to $1 billion of its outstanding ordinary shares, providing additional capacity to return cash to shareholders over the longer term. This new two-year program will replace the Company’s existing $1 billion share repurchase program which had $250 million of availability remaining. Share repurchases may be made in open market or privately negotiated transactions and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors. The program may be suspended or discontinued at any time.


	Total Number of Shares	Average Price per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Remaining Dollar Value of Shares That May Be Purchased Under the Programs (in millions)
April 2 - April 29	—	$	—	—	$	400
April 30 - May 27	—	$	—	—	$	400
May 28 - July 1	2,800,941	$	37.86	2,636,564	$	300
	2,800,941			2,636,564

ITEM 6. EXHIBITS

a. Exhibits

Please refer to the accompanying Exhibit Index included after the signature page of this report for a list of exhibits filed or furnished with this report.

5247

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on ~~February 8,~~August 10, 2023.



			CAPRI HOLDINGS LIMITED

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

			By:			/s/ Thomas J. Edwards, Jr.
			Name:			Thomas J. Edwards, Jr.
			Title:			Executive Vice President, Chief Financial Officer and Chief Operating Officer

5348

INDEX TO EXHIBITS



Exhibit No.						Description




3.1						Amendment to Amended and Restated Memorandum and Articles of Association of Capri Holdings, effective May 24, 2023 (included as Exhibit 3.2 to th e Company ’s Annual Report on Form 10-K for the fiscal year ended April 1, 2023 (Fi le N o. 001-35368), file d on May 31, 2023 and incorporated herein by re ference).

10.1						~~Term Facility~~Amended and Restated Employment Agreement by and among ~~Gianni Versace S.r.l.~~Capri Holdings Limited, Michael Kors (USA), ~~as borrower, Intesa Sanpaolo S.p.A., Banca Nazionale Del Lavoro S.p.A.~~Inc. and ~~UniCredit S.p.A.~~Thomas J. Edwards, Jr., ~~as arrangers and lenders, and Intesa Sanpaolo S.p.A., as agent,~~ dated as of ~~December 5, 2022~~May 30, 2023 (included as Exh (ibit 10.1 ~~included as Exhibit 10.1~~1 to the Company ’s ~~Current~~Annual Report on Form ~~8-K~~10-K for the fiscal year ended April 1, 2023 (File No. 001-35368), filed on ~~December 6, 2022~~ May 31, 2023 and incorporated herein by ~~reference~~)reference).

10.2						~~Parent Company Guarantee~~Amended and Restated Employment Agreement by and among Capri Holdings Limited, ~~as guarantor, Banca Nazionale del Lavoro S.p.A.~~Michael Kors (USA), ~~Intesa Sanpaolo S.p.A.~~Inc. and ~~UniCredit S.p.A.,~~Krista A. McDonough, dated as of ~~December 5, 2022~~(~~included~~May 30, 2023 (included as Exhibit ~~10.~~2 10.13 to the Company’s ~~Current~~Annual Report on Form ~~8-K~~10-K for the fiscal year ended April 1, 2023 (File No. 001-35368), filed on ~~December 6, 2022~~May 31, 2023 and incorporated herein by ~~reference~~)reference).

10.3						~~Aircraft Time Sharing~~Amended and Restated Employment Agreement ~~effective as of December 20, 2022,~~ by and ~~between~~among Capri Holdings Limited, Michael Kors (USA), Inc. and ~~John Idol.~~Jenna Hendricks, dated as of May 30, 2023 (included as Exhibit 10.1 6 to the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2023 (File No. 001-35368), filed on May 31, 2023 and incorporated herein by reference).

10.4						Change in Control Continuity Agreement by and between Capri Holdings Limited and Thomas J. Edwards, Jr., dated as of May 30, 2023 (included as Exhibit 10.21 to the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2023 (File No. 001-35368), filed on May 31, 2023 and incorporated herein by reference).

10.5						Change in Control Continuity Agreement by and between Capri Holdings Limited and Jenna Hendricks, dated as of May 30, 2023 (included as Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2023 (File No. 001-35368), filed on May 31, 2023 and incorporated herein by reference).

10.6						Change in Control Continuity Agreement by and between Capri Holdings Limited and Krista A. McDonough, dated as of May 30, 2023 (included as Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2023 (File No. 001-35368), filed on May 31, 2023 and incorporated herein by reference).

31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.1						The following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended ~~December 31, 2022~~July 1, 2023 formatted in Inline eXtensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.

5449


	Three Months Ended December 31, 2022						Nine Months Ended December 31, 2022
	Carrying Value Prior to Impairment		Fair Value		Impairment Charge		Carrying Value Prior to Impairment		Fair Value		Impairment Charge
Operating Lease Right-of-Use Assets	$	2	$	1	$	1	$	27	$	17	$	10
Property and Equipment	—		—		—		3		1		2
Total	$	2	$	1	$	1	$	30	$	18	$	12


	Three Months Ended December 25, 2021						Nine Months Ended December 25, 2021
	Carrying Value Prior to Impairment		Fair Value		Impairment Charge(1)		Carrying Value Prior to Impairment		Fair Value		Impairment Charge(1)
Operating Lease Right-of-Use Assets	$	10	$	—	$	10	$	93	$	53	$	40
Property and Equipment	—		—		—		4		1		3
Total	$	10	$	—	$	10	$	97	$	54	$	43


	Three Months Ended								% Change
(dollars in millions)	December 31, 2022			December 25, 2021			$ Change		As Reported		Constant Currency
Revenues	$	249		$	251		$	(2)	(0.8)	%	11.2	%
Income from operations	$	24		$	32		$	(8)	(25.0)	%
Operating margin	9.6		%	12.7		%