Cover Page
Cover Page - shares | 3 Months Ended | |
Jun. 27, 2020 | Jul. 29, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 27, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-35368 | |
Entity Registrant Name | CAPRI HOLDINGS LTD | |
Entity Incorporation, State or Country Code | D8 | |
Entity Address, Address Line One | 33 Kingsway | |
Entity Address, City or Town | London | |
Entity Address, Country | GB | |
Entity Address, Postal Zip Code | WC2B 6UF | |
Country Region | 44 | |
City Area Code | 207 | |
Local Phone Number | 632 8600 | |
Title of 12(b) Security | Ordinary Shares, no par value | |
Trading Symbol | CPRI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 150,344,703 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001530721 | |
Current Fiscal Year End Date | --03-27 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 27, 2020 | Mar. 28, 2020 |
Current assets | ||
Cash and cash equivalents | $ 207 | $ 592 |
Receivables, net | 183 | 308 |
Inventories, net | 948 | 827 |
Prepaid expenses and other current assets | 151 | 167 |
Total current assets | 1,489 | 1,894 |
Property and equipment, net | 541 | 561 |
Operating lease right-of-use assets | 1,641 | 1,625 |
Intangible assets, net | 1,977 | 1,986 |
Goodwill | 1,490 | 1,488 |
Deferred tax assets | 226 | 225 |
Other assets | 169 | 167 |
Total assets | 7,533 | 7,946 |
Current liabilities | ||
Accounts payable | 596 | 428 |
Accrued payroll and payroll related expenses | 94 | 93 |
Accrued income taxes | 34 | 42 |
Short-term operating lease liabilities | 431 | 430 |
Short-term debt | 191 | 167 |
Accrued expenses and other current liabilities | 243 | 241 |
Total current liabilities | 1,589 | 1,401 |
Long-term portion of operating lease liabilities | 1,751 | 1,758 |
Deferred tax liabilities | 465 | 465 |
Long-term debt | 1,577 | 2,012 |
Other long-term liabilities | 144 | 142 |
Total liabilities | 5,526 | 5,778 |
Commitments and contingencies | ||
Shareholders’ equity | ||
Ordinary shares, no par value; 650,000,000 shares authorized; 218,272,709 shares issued and 150,340,192 outstanding at June 27, 2020; 217,320,010 shares issued and 149,425,612 outstanding at March 28, 2020 | 0 | 0 |
Treasury shares, at cost (67,932,517 shares at June 27, 2020 and 67,894,398 shares at March 28, 2020) | (3,326) | (3,325) |
Additional paid-in capital | 1,109 | 1,085 |
Accumulated other comprehensive income | 71 | 75 |
Retained earnings | 4,152 | 4,332 |
Total shareholders’ equity of Capri | 2,006 | 2,167 |
Noncontrolling interest | 1 | 1 |
Total shareholders’ equity | 2,007 | 2,168 |
Total liabilities and shareholders’ equity | $ 7,533 | $ 7,946 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 27, 2020 | Mar. 28, 2020 |
Statement of Financial Position [Abstract] | ||
Ordinary shares, par value (in dollars per share) | $ 0 | $ 0 |
Ordinary shares, shares authorized (in shares) | 650,000,000 | 650,000,000 |
Ordinary shares, shares issued (in shares) | 218,272,709 | 217,320,010 |
Ordinary shares, shares outstanding (in shares) | 150,340,192 | 149,425,612 |
Treasury shares (in shares) | 67,932,517 | 67,894,398 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Income Statement [Abstract] | ||
Total revenue | $ 451 | $ 1,346 |
Cost of goods sold | 149 | 512 |
Gross profit | 302 | 834 |
Selling, general and administrative expenses | 402 | 598 |
Depreciation and amortization | 54 | 60 |
Impairment of assets | 0 | 97 |
Restructuring and other charges | 8 | 15 |
Total operating expenses | 464 | 770 |
(Loss) income from operations | (162) | 64 |
Other income, net | (1) | (2) |
Interest expense, net | 17 | 13 |
Foreign currency (gain) loss | (3) | 2 |
(Loss) income before provision for income taxes | (175) | 51 |
Provision for income taxes | 5 | 6 |
Net (loss) income attributable to Capri | $ (180) | $ 45 |
Weighted average ordinary shares outstanding: | ||
Weighted average ordinary shares outstanding, basic (in shares) | 149,556,310 | 151,049,572 |
Weighted average ordinary shares outstanding, diluted (in shares) | 149,556,310 | 152,334,153 |
Net (loss) income per ordinary share attributable to Capri: | ||
Net income per ordinary share, basic (in dollars per share) | $ (1.21) | $ 0.30 |
Net income per ordinary share, diluted (in dollars per share) | $ (1.21) | $ 0.30 |
Statements of Comprehensive (Loss) Income: | ||
Net (loss) income | $ (180) | $ 45 |
Foreign currency translation adjustments | (3) | (25) |
Net loss on derivatives | (1) | (2) |
Comprehensive (loss) income attributable to Capri | $ (184) | $ 18 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - USD ($) $ in Millions | Total | Adoption of accounting standards (See Note 2) | Adjusted balance | Ordinary Shares | Ordinary SharesAdjusted balance | Additional Paid-in Capital | Additional Paid-in CapitalAdjusted balance | Treasury Shares | Treasury SharesAdjusted balance | Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss)Adjusted balance | Retained Earnings | Retained EarningsAdoption of accounting standards (See Note 2) | Retained EarningsAdjusted balance | Total Equity of Capri | Total Equity of CapriAdoption of accounting standards (See Note 2) | Total Equity of CapriAdjusted balance | Non-controlling Interests | Non-controlling InterestsAdjusted balance |
Beginning balance (in shares) at Mar. 30, 2019 | 216,051,000 | ||||||||||||||||||
Beginning balance at Mar. 30, 2019 | $ 2,432 | $ (152) | $ 2,280 | $ 0 | $ 0 | $ 1,011 | $ 1,011 | $ (3,223) | $ (3,223) | $ (66) | $ (66) | $ 4,707 | $ (152) | $ 4,555 | $ 2,429 | $ (152) | $ 2,277 | $ 3 | $ 3 |
Beginning balance, treasury (in shares) at Mar. 30, 2019 | (65,119,000) | ||||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||
Net income (loss) | 45 | 45 | 45 | 0 | |||||||||||||||
Other comprehensive income (loss) | (27) | (27) | (27) | 0 | |||||||||||||||
Total comprehensive income (loss) | 18 | 18 | 0 | ||||||||||||||||
Vesting of restricted awards, net of forfeitures (in shares) | 691,000 | ||||||||||||||||||
Equity compensation expense | 28 | 28 | 28 | ||||||||||||||||
Purchase of treasury shares (in shares) | (58,000) | ||||||||||||||||||
Purchase of treasury shares | (2) | $ (2) | (2) | ||||||||||||||||
Ending balance (in shares) at Jun. 29, 2019 | 216,742,000 | ||||||||||||||||||
Ending balance at Jun. 29, 2019 | $ 2,324 | $ 0 | 1,039 | $ (3,225) | (93) | 4,600 | 2,321 | 3 | |||||||||||
Ending balance, treasury (in shares) at Jun. 29, 2019 | (65,177,000) | ||||||||||||||||||
Beginning balance (in shares) at Mar. 28, 2020 | 217,320,010 | 217,320,000 | |||||||||||||||||
Beginning balance at Mar. 28, 2020 | $ 2,168 | $ 0 | 1,085 | $ (3,325) | 75 | 4,332 | 2,167 | 1 | |||||||||||
Beginning balance, treasury (in shares) at Mar. 28, 2020 | (67,894,398) | (67,894,000) | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||
Net income (loss) | $ (180) | (180) | (180) | 0 | |||||||||||||||
Other comprehensive income (loss) | (4) | (4) | (4) | 0 | |||||||||||||||
Total comprehensive income (loss) | (184) | (184) | 0 | ||||||||||||||||
Vesting of restricted awards, net of forfeitures (in shares) | 953,000 | ||||||||||||||||||
Equity compensation expense | 24 | 24 | 24 | ||||||||||||||||
Purchase of treasury shares (in shares) | (38,000) | ||||||||||||||||||
Purchase of treasury shares | $ (1) | $ (1) | (1) | ||||||||||||||||
Ending balance (in shares) at Jun. 27, 2020 | 218,272,709 | 218,273,000 | |||||||||||||||||
Ending balance at Jun. 27, 2020 | $ 2,007 | $ 0 | $ 1,109 | $ (3,326) | $ 71 | $ 4,152 | $ 2,006 | $ 1 | |||||||||||
Ending balance, treasury (in shares) at Jun. 27, 2020 | (67,932,517) | (67,932,000) |
CONSOLIDATED STATEMENT OF SHA_2
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Parenthetical) | 12 Months Ended |
Mar. 30, 2019 | |
Statement of Stockholders' Equity [Abstract] | |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Cash flows from operating activities | ||
Net (loss) income | $ (180) | $ 45 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 54 | 60 |
Equity compensation expense | 24 | 28 |
Deferred income taxes | 0 | 2 |
Impairment of assets | 0 | 97 |
Changes to lease related balances, net | (24) | (16) |
Tax deficit (benefit) on exercise of share options | 5 | 2 |
Amortization of deferred financing costs | 1 | 1 |
Foreign currency (gains) losses | (3) | 2 |
Other non-cash charges | (6) | 0 |
Change in assets and liabilities: | ||
Receivables, net | 131 | 73 |
Inventories, net | (119) | (63) |
Prepaid expenses and other current assets | 15 | (32) |
Accounts payable | 167 | (8) |
Accrued expenses and other current liabilities | 0 | (51) |
Other long-term assets and liabilities | 2 | 18 |
Net cash provided by operating activities | 67 | 158 |
Cash flows from investing activities | ||
Capital expenditures | (32) | (54) |
Cash paid for business acquisitions, net of cash acquired | 0 | (1) |
Settlement of a net investment hedge | 0 | 23 |
Net cash used in investing activities | (32) | (32) |
Cash flows from financing activities | ||
Debt borrowings | 396 | 390 |
Debt repayments | (811) | (526) |
Debt issuance costs | (4) | 0 |
Purchase of treasury shares | (1) | (2) |
Net cash used in financing activities | (420) | (138) |
Effect of exchange rate changes on cash and cash equivalents | 0 | 0 |
Net decrease in cash and cash equivalents | (385) | (12) |
Beginning of period | 592 | 172 |
End of period | 207 | 160 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 20 | 30 |
Cash received, net of cash paid, for income taxes | (6) | 12 |
Supplemental disclosure of non-cash investing and financing activities | ||
Accrued capital expenditures | $ 20 | $ 23 |
Business and Basis of Presentat
Business and Basis of Presentation | 3 Months Ended |
Jun. 27, 2020 | |
Accounting Policies [Abstract] | |
Business and Basis of Presentation | Business and Basis of Presentation The Company was incorporated in the British Virgin Islands (“BVI”) on December 13, 2002 as Michael Kors Holdings Limited and changed its name to Capri Holdings Limited (“Capri,” and together with its subsidiaries, the “Company”) on December 31, 2018. 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, apparel and footwear 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 June 27, 2020 and for the three months ended June 27, 2020 and June 29, 2019 are unaudited. 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 March 28, 2020, as filed with the Securities and Exchange Commission on July 8, 2020, 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 ending on the Saturday closest to March 31. As such, the term “Fiscal Year” or “Fiscal” refers to the 52-week or 53-week period, ending on that day. The results for the three months ended June 27, 2020 and June 29, 2019, are based on 13-week periods. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Jun. 27, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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 and doubtful accounts, estimates of inventory net realizable value, the valuation of share-based compensation, the valuation of deferred taxes and the valuation of goodwill, intangible assets and property and equipment, along with the estimated useful lives assigned to these assets. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the prior periods’ financial information in order to conform to the current period’s presentation. 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. Inventories, net Inventories mainly 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 recorded on the Company's consolidated balance sheets was $27 million as of both June 27, 2020 and March 28, 2020. The net realizable value of the Company's inventory as of June 27, 2020 and March 28, 2020 includes the expected adverse impacts of the COVID-19 pandemic. This includes the impact from temporary retail store closures, wholesale customer store closures, reductions in retail store traffic, a decline in international tourism and a decrease in consumer consumption. 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 (loss) 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 (loss) 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 loss (gain) in the Company’s consolidated statements of operations and comprehensive (loss) income. The Company classifies cash flows relating to its forward foreign currency exchange contracts related to the 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 swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between its U.S. Dollars and these foreign currencies. The Company has elected the spot method of designating these contracts under ASU 2017-12 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 (loss) income on the Company’s consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense in the Company’s statement of operations and comprehensive (loss) income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated. Interest Rate Swap Agreements The Company also uses interest rate swap agreements to hedge the variability of its cash flows resulting from floating interest rates on the Company's borrowings. When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive (loss) income and are reclassified into interest expense in the same period during which the hedged transactions affect earnings. Leases On March 31, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet for all leases, except certain short-term leases. The Company adopted the new standard recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating the comparative prior year periods. 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 June 2024. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores under its restructuring activities, as discussed in Note 8. 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, generally for the same period as the initial term of the lease. 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 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 location 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 or material restrictions or covenants. The following table presents the Company’s supplemental cash flow information related to leases (in millions): Three Months Ended Three Months Ended June 27, 2020 June 29, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 40 (1) $ 120 (1) Operating cash flows used in operating leases for the three months ended June 27, 2020 reflect $85 million of rent payments that have been deferred due to the COVID-19 pandemic. During the three months ended June 27, 2020 and June 29, 2019, the Company recorded sublease income of $2 million and $1 million, respectively, within selling, general, and administrative expenses. During the three months ended June 27, 2020, the Company recorded $15 million in rent relief for rent concessions negotiated in connection with COVID-19 as if it were contemplated as part of the existing contract, and these concessions are recorded as variable lease costs within selling, general and administrative expenses. Net (Loss) Income per Share The Company’s basic net (loss) income per ordinary share is calculated by dividing net (loss) income by the weighted average number of ordinary shares outstanding during the period. Diluted net (loss) income per ordinary share reflects the potential dilution that would occur if share option grants 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 in 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 (loss) income per ordinary share and diluted net loss per ordinary share are as follows (in millions, except share and per share data): Three Months Ended June 27, June 29, Numerator: Net (loss) income attributable to Capri $ (180) $ 45 Denominator: Basic weighted average shares 149,556,310 151,049,572 Weighted average dilutive share equivalents: Share options and restricted shares/units, and performance restricted share units — 1,284,581 Diluted weighted average shares 149,556,310 152,334,153 Basic net (loss) income per share (1) $ (1.21) $ 0.30 Diluted net (loss) income per share (1) $ (1.21) $ 0.30 (1) Basic and diluted net (loss) income per share are calculated using unrounded numbers. Share equivalents of 5,388,905 and 2,374,578 for the three months ended June 27, 2020 and June 29, 2019, respectively, have been excluded from the above calculations due to their anti-dilutive effect. Diluted net loss per share attributable to Capri for the three months ended June 27, 2020 excluded all potentially dilutive securities because there was a net loss attributable to Capri for the period and, as such, the inclusion of these securities would have been anti-dilutive. See Note 2 in the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2020 for a complete disclosure of the Company’s significant accounting policies. Recently Adopted Accounting Pronouncements Measurement of Credit Losses on Financial Instruments On March 29, 2020, the Company adopted ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which amends the guidance on measuring credit losses for certain financial assets measured at amortized cost, including trade receivables. The Financial Accounting Standards Board has subsequently issued several updates to the standard, providing additional guidance on certain topics covered by the standard. This update requires entities to recognize an allowance for credit losses using a forward-looking expected loss impairment model, taking into consideration historical experience, current conditions and supportable forecasts that impact collectibility. The adoption of this update did not have a material impact on the Company's consolidated financial statements. Implementation Costs Associated with Cloud Computing Arrangements On March 29, 2020, the Company adopted ASU No. 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract" ("ASU 2018-15"), which provides guidance related to the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The adoption of this update did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements The Company has considered all new accounting pronouncements and have concluded that there are no new pronouncements that may have a material impact on our results of operations, financial condition or cash flows based on current information. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Jun. 27, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | 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 collectability 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 brands. The Company has chosen to utilize the exemption allowing it not to disclose the amount of the transaction price allocated to the remaining performance obligations that have an expected duration of twelve months or less. Retail The Company generates sales through directly operated stores and e-commerce throughout the Americas (U.S., Canada and Latin America), EMEA (Europe, Middle East and Africa) and certain parts of Asia. 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 $11 million as of both June 27, 2020 and March 28, 2020, is included in 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 U.S. 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. The contract liability, net of an estimated “breakage,” of $2 million as of both June 27, 2020 and March 28, 2020, is recorded as a reduction to revenue in the consolidated statements of operations and comprehensive (loss) income and within accrued expenses and other current liabilities in the Company’s consolidated balance sheet and is expected to be recognized within the next 12 months. 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, certain parts of Asia and Australia. 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, some of our guaranteed minimums for Versace are multi-year based. As of June 27, 2020, contractually guaranteed minimum fees from our license agreements expected to be recognized as revenue during future periods were as follows (in millions): Contractually Guaranteed Minimum Fees Remainder of Fiscal 2021 $ 19 Fiscal 2022 27 Fiscal 2023 23 Fiscal 2024 20 Fiscal 2025 17 Fiscal 2026 and thereafter 82 Total $ 188 Sales Returns The refund liability recorded as of June 27, 2020 and March 28, 2020 was $35 million and $37 million, respectively, and the related asset for the right to recover returned product as of June 27, 2020 and March 28, 2020 was $10 million and $14 million, respectively. Contract Balances Total contract liabilities were $21 million and $22 million as of June 27, 2020 and March 28, 2020, respectively. For the three months ended June 27, 2020, the Company recognized $3 million in revenue which related to contract liabilities that existed at March 28, 2020. For the three months ended June 29, 2019, the Company recognized $14 million in revenue which related to contract liabilities that existed at March 30, 2019. There were no contract assets recorded as of June 27, 2020 and March 28, 2020. There were no changes in historical variable consideration estimates that were materially different from actual results. Disaggregation of Revenue The following table presents the Company’s segment revenues disaggregated by geographic location (in millions): Three Months Ended June 27, June 29, Versace revenue - the Americas $ 15 $ 44 Versace revenue - EMEA 27 92 Versace revenue - Asia 51 71 Total Versace 93 207 Jimmy Choo revenue - the Americas 6 30 Jimmy Choo revenue - EMEA 16 79 Jimmy Choo revenue - Asia 29 49 Total Jimmy Choo 51 158 Michael Kors revenue - the Americas 156 655 Michael Kors revenue - EMEA 79 189 Michael Kors revenue - Asia 72 137 Total Michael Kors 307 981 Total revenue - the Americas 177 729 Total revenue - EMEA 122 360 Total revenue - Asia 152 257 Total revenue $ 451 $ 1,346 See Note 3 in the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2020 for a complete disclosure of the Company’s revenue recognition policy. |
Receivables, net
Receivables, net | 3 Months Ended |
Jun. 27, 2020 | |
Receivables [Abstract] | |
Receivables, net | Receivables, net Receivables, net, consist of (in millions): June 27, March 28, Trade receivables (1) $ 263 $ 432 Receivables due from licensees 21 14 284 446 Less: allowances (101) (138) $ 183 $ 308 (1) As of June 27, 2020 and March 28, 2020, $56 million and $80 million, respectively, of trade receivables were insured. Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and doubtful accounts. 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 doubtful accounts is determined through analysis of periodic aging of receivables that are not covered by insurance and assessments of collectability 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 doubtful accounts was $31 million and $39 million as of June 27, 2020 and March 28, 2020, respectively, including the impact related to COVID-19. The Company had a credit loss of $(6) million for the three months ended June 27, 2020. All other periods presented were immaterial. |
Property and Equipment, net
Property and Equipment, net | 3 Months Ended |
Jun. 27, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | Property and Equipment, net Property and equipment, net, consists of (in millions): June 27, March 28, Leasehold improvements $ 706 $ 704 Computer equipment and software 342 329 Furniture and fixtures 332 329 In-store shops 236 236 Equipment 137 136 Building 49 49 Land 19 19 1,821 1,802 Less: accumulated depreciation and amortization (1,343) (1,310) 478 492 Construction-in-progress 63 69 $ 541 $ 561 Depreciation and amortization of property and equipment for the three months ended June 27, 2020 and June 29, 2019 was $43 million and $47 million, respectively. During the three months ended June 27, 2020, the Company did not record any property and equipment impairment charges. During the three months ended June 29, 2019, the Company recorded property and equipment impairment charges of $13 million, $11 million of which related to determining asset groups for the Company’s premier store locations at an individual store level (see Note 11 for additional information). |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 3 Months Ended |
Jun. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Intangible Assets and Goodwill The following table details the carrying values of the Company’s intangible assets and goodwill (in millions): June 27, March 28, Definite-lived intangible assets: Reacquired Rights $ 400 $ 400 Trademarks 23 23 Customer Relationships 404 404 Total definite-lived intangible assets 827 827 Less: accumulated amortization (144) (132) Net definite-lived intangible assets 683 695 Indefinite-lived intangible assets: Jimmy Choo brand (1) 364 367 Versace brand (2) 930 924 1,294 1,291 Total intangible assets, excluding goodwill $ 1,977 $ 1,986 Goodwill (3) $ 1,490 $ 1,488 (1) Includes an accumulated impairment loss of $180 million recorded during the fourth quarter of Fiscal 2020. The change in the carrying value since March 28, 2020 reflects currency translation. (2) The change in the carrying value since March 28, 2020 reflects currency translation. (3) Includes an accumulated impairment loss of $171 million related to the Jimmy Choo retail and licensing reporting units recorded during the fourth quarter of Fiscal 2020. The change in the carrying value since March 28, 2020 reflects currency translation. Amortization expense for the Company’s definite-lived intangible assets for the three months ended June 27, 2020 and June 29, 2019 was $11 million and $13 million, respectively. There were no goodwill or definite-lived and indefinite-lived intangible asset impairment charges recorded during any of the periods presented. |
Current Assets and Current Liab
Current Assets and Current Liabilities | 3 Months Ended |
Jun. 27, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Current Assets and Current Liabilities | Current Assets and Current Liabilities Prepaid expenses and other current assets consist of the following (in millions): June 27, March 28, Prepaid taxes $ 95 $ 116 Prepaid contracts 15 17 Other accounts receivables 12 10 Other 29 24 $ 151 $ 167 Accrued expenses and other current liabilities consist of the following (in millions): June 27, March 28, Other taxes payable $ 51 $ 38 Return liabilities 35 37 Accrued capital expenditures 20 31 Accrued rent (1) 18 10 Accrued advertising and marketing 6 9 Gift cards and retail store credits 11 11 Professional services 9 10 Restructuring liability 14 9 Accrued litigation 11 10 Other 68 76 $ 243 $ 241 (1) The accrued rent balance relates to variable lease payments. |
Restructuring and Other Charges
Restructuring and Other Charges | 3 Months Ended |
Jun. 27, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges | Restructuring and Other Charges Capri Retail Store Optimization Program As previously announced, the Company intends to close approximately 170 of its retail stores over the next two fiscal years (Fiscal 2021 and Fiscal 2022) in connection with its Capri Retail Store Optimization Program in order to improve the profitability of its retail store fleet. In addition, the Company expects to incur approximately $75 million of one-time costs related to this program, including lease termination and other store closure costs, the majority of which are expected to result in future cash expenditures. During the three months ended June 27, 2020, the Company closed 28 of its retail stores which have been incorporated into the Capri Retail Store Optimization Program. Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program during the three months ended June 27, 2020 were $3 million. Michael Kors Retail Fleet Optimization Plan During the three months ended June 29, 2019, the Company incurred charges of $1 million relating to the Michael Kors Retail Fleet Optimization Plan, which was completed during the fourth quarter of Fiscal 2020. Other Restructuring Charges In addition to the restructuring charges related to the Michael Kors Retail Fleet Optimization Plan, the Company incurred charges of $2 million relating to Jimmy Choo lease-related charges during the three months ended June 29, 2019. Other Costs During the three months ended June 27, 2020, the Company recorded costs of $5 million, primarily related to equity awards associated with the acquisition of Versace. During the three months ended June 29, 2019, the Company recorded costs of $12 million, which included $7 million in connection with the acquisition of Versace and $5 million in connection with the Jimmy Choo acquisition. |
Debt Obligations
Debt Obligations | 3 Months Ended |
Jun. 27, 2020 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations The following table presents the Company’s debt obligations (in millions): June 27, March 28, Term Loan $ 991 $ 1,015 Revolving Credit Facilities 333 720 4.000% Senior Notes due 2024 450 450 Other 4 3 Total debt 1,778 2,188 Less: Unamortized debt issuance costs 9 8 Less: Unamortized discount on long-term debt 1 1 Total carrying value of debt 1,768 2,179 Less: Short-term debt 191 167 Total long-term debt $ 1,577 $ 2,012 Senior Unsecured Revolving Credit Facility On June 25, 2020, the Company entered into the second amendment (the “Second Amendment”) to its third amended and restated senior unsecured credit facility, dated as of November 15, 2018 (the “2018 Credit Facility”), with, among others, JPMorgan Chase Bank, N.A., as administrative agent. Pursuant to the Second Amendment, the obligations under the 2018 Credit Facility will be secured by liens on substantially all of the assets of the Company and its U.S. subsidiaries that are borrowers and guarantors, subject to certain exceptions, and substantially all of the registered intellectual property of the Company and its subsidiaries. This requirement for collateral will fall away if the Company achieves an investment grade ratings requirement for two consecutive full fiscal quarters. The Amendment adds a restriction on the disposition of assets and a requirement to prepay the term loans with certain net cash proceeds of non-ordinary course asset sales, subject to certain exceptions and a reinvestment option with respect to up to $100 million of net cash proceeds in the aggregate. Pursuant to the Second Amendment, the financial covenant in the Company's 2018 Credit Facility requiring it to maintain a ratio of the sum of total indebtedness plus the capitalized amount of all operating lease obligations for the last four fiscal quarters to Consolidated EBITDAR of no greater than 3.75 to 1.0 has been waived through the fiscal quarter ending June 26, 2021. When this financial covenant is reinstated, the applicable ratio will be calculated net of the Company's unrestricted cash and cash equivalents in excess of $100 million and shall exclude up to $150 million of supply chain financings, and the maximum permitted net leverage ratio will be 4.00 to 1.0. In addition, until March 31, 2021, the material adverse change representation required to be made in connection with revolving borrowings and the issuance or amendment of letters of credit will be modified to disregard certain COVID-19 pandemic-related impacts to the business, results of operations or financial condition of the Company and its subsidiaries, taken as a whole. The Second Amendment also requires the Company, during the period from June 25, 2020 until it delivers its financial statements with respect to the fiscal quarter ending June 26, 2021, to maintain at all times unrestricted cash and cash equivalents plus the aggregate undrawn amounts under the revolving facilities under the 2018 Credit Facility of not less than $300 million, increasing to $400 million on October 1, 2020 and $500 million on December 1, 2020. The 2018 Credit Facility and the Indenture governing the Company's senior notes contain certain restrictive covenants that impose operating and financial restrictions on the Company, and the Second Amendment imposes incremental restrictions on certain of these covenants during the covenant relief period provided under the 2018 Credit Facility, including restrictions on its ability to incur additional indebtedness and guarantee indebtedness, pay dividends or make other distributions or repurchase or redeem capital stock, make loans and investments, including acquisitions, sell assets, incur liens, enter into transactions with affiliates and consolidate, merge or sell all or substantially all of its assets. In addition, the Second Amendment adds a new $230 million revolving line of credit that matures on June 24, 2021 (the “364 Day Facility”). The terms of the 364 Day Facility are substantially similar to the terms of the existing revolving facility under the 2018 Credit Facility except that (i) no letters of credit or swingline loans are provided and (ii) for loans subject to Adjusted LIBOR, the applicable margin is 225 basis points per annum, for loans subject to the base rate the applicable margin is 125 basis points per annum and the commitment fee is 35 basis points per annum. In addition, while the 364 Day Facility is outstanding, (i) if the Company incurs any incremental indebtedness under the 2018 Credit Facility or certain permitted indebtedness in lieu of such incremental indebtedness, the 364 Day Facility will be reduced on a dollar for dollar basis and the Company will be required to make corresponding prepayments and (ii) the Company will be required to prepay amounts outstanding under the 364 Day Facility on a weekly basis to the extent that cash and cash equivalents of the Company and its subsidiaries exceed $200 million. The Second Amendment also permits certain working capital facilities between the Company or any of its subsidiaries with a lender or an affiliate of a lender under the 2018 Credit Facility to be guaranteed under the 2018 Credit Facility guarantees and certain supply chain financings with, and up to $50 million outstanding principal amount of bilateral letters of credit and bilateral bank guarantees issued by a lender or an affiliate of a lender to be guaranteed and secured under the 2018 Credit Facility guarantees and collateral documents. As of June 27, 2020 and the date these financial statements were issued, the Company was in compliance with all covenants related to the 2018 Credit Facility as amended by the Second Amendment. As of June 27, 2020 and March 28, 2020, the Company had borrowings of $270 million and $681 million, respectively, outstanding under the 2018 Revolving Credit Facility, which were recorded within long-term debt in its consolidated balance sheets. In addition, stand-by letters of credit of $22 million were outstanding as of June 27, 2020. At June 27, 2020, the amount available for future borrowings under the 2018 Revolving Credit Facility was $938 million. As of June 27, 2020 and March 28, 2020, the carrying value of borrowings outstanding under the 2018 Term Loan Facility was $985 million and $1.010 billion, respectively, of which $128 million was recorded within short-term debt for both periods and $857 million and $882 million, respectively, was recorded within long-term debt in its consolidated balance sheets. See Note 12 to the Company’s Fiscal 2020 Annual Report on Form 10-K for additional information regarding the Company’s credit facilities and debt obligations. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Jun. 27, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies In the ordinary course of business, the Company is party to various legal proceedings and claims. Although the outcome of such items cannot be determined with certainty, the Company’s management does not believe that the outcome of all pending legal proceedings in the aggregate will 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 section of the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2020 for a detailed disclosure of other commitments and contractual obligations as of March 28, 2020. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jun. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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 June 27, 2020 and March 28, 2020, the fair values of the Company’s forward foreign currency exchange contracts and net investment hedges 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 values of net investment hedges are included in other assets, as detailed in Note 12. 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 June 27, 2020 using: Fair value at March 28, 2020 using: Quoted prices in Significant Significant Quoted prices in Significant Significant Derivative assets: Forward foreign currency exchange contracts $ — $ — $ — $ — $ 1 $ — Net investment hedges — 3 — — 3 — Total derivative assets $ — $ 3 $ — $ — $ 4 $ — Derivative liabilities: Designated interest rate swaps $ — $ 1 $ — $ — $ — $ — 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 short-term nature of such borrowings. See Note 9 for detailed information relating 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): June 27, 2020 March 28, 2020 Carrying Estimated Carrying Estimated 4.000% Senior Notes $ 446 $ 422 $ 446 $ 443 Term Loan $ 985 $ 817 $ 1,010 $ 957 Revolving Credit Facilities $ 333 $ 333 $ 720 $ 720 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 fair values of these assets were determined 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. There were no impairment charges recorded during three months ended June 27, 2020. The following table details the carrying values and fair values of the Company’s assets that have been impaired during the three months ended June 29, 2019 (in millions): Three Months Ended Carrying Value Prior to Impairment Fair Value Impairment Charge Operating Lease Right-of-Use Assets $ 140 $ 56 $ 84 Property and Equipment 20 7 13 Total $ 160 $ 63 $ 97 |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Jun. 27, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 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 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 As of June 27, 2020, the Company had one fixed-to-fixed cross-currency swap agreement with a notional amount of $44 million to hedge its net investment in Japanese Yen-denominated subsidiaries against future volatility in the exchange rate between the U.S. Dollar and Japanese Yen. Under the term of this contract, which has a maturity date of November 2024, the Company will exchange the semi-annual fixed rate payments on U.S. denominated debt for fixed rate payments of 0.89% in Japanese Yen. This contract has been designated as a net investment hedge. 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 (loss) income. Accordingly, the Company recorded a reduction in interest expense of $0 million and $15 million during the three months ended June 27, 2020 and June 29, 2019, respectively. This decrease from prior year reflects the Company’s early termination of certain net investment hedges related to its Euro-denominated subsidiaries during the fourth quarter of Fiscal 2020. Interest Rate Swap During the first quarter of Fiscal 2021, the Company entered into an interest rate swap with an initial notional amount of $500 million that will decrease to $350 million in April 2022. The swap was designated as a cash flow hedge designed to mitigate the impact of adverse interest rate fluctuations for a portion of the Company's variable-rate debt equal to the notional amount of the swap. The interest rate swap converts the one-month Adjusted LIBOR interest rate on these borrowings to a fixed interest rate of 0.237% through December 2022. When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive (loss) income and are reclassified into interest expense in the same period during which the hedged transactions affect earnings. 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 June 27, 2020 and March 28, 2020 (in millions): Fair Values Notional Amounts Assets Liabilities June 27, March 28, June 27, March 28, June 27, March 28, Designated forward foreign currency exchange contracts $ 80 $ 161 $ — $ 1 (1) $ — $ — Designated net investment hedge 44 44 3 (2) 3 (2) — — Designated interest rate swaps 500 — — — 1 (3) — Total designated hedges 624 205 3 4 1 — Undesignated derivative contracts (4) 29 — — — — — Total $ 653 $ 205 $ 3 $ 4 $ 1 $ — (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) Primarily includes 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 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, the resulting impact as of June 27, 2020 and March 28, 2020 would be as follows (in millions): Forward Currency Exchange Contracts Net Investment Interest Rate June 27, March 28, June 27, March 28, June 27, March 28, Assets subject to master netting arrangements $ — $ 1 $ 3 $ 3 $ — $ — Liabilities subject to master netting arrangements $ — $ — $ — $ — $ 1 $ — Derivative assets, net $ — $ 1 $ 3 $ 3 $ — $ — Derivative liabilities, net $ — $ — $ — $ — $ 1 $ — 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 (loss) income, and are reclassified from accumulated other comprehensive (loss) income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of sales within the Company’s consolidated statements of operations and comprehensive (loss) income. The net gain or loss on net investment hedges are reported within foreign currency translation gains and losses (“CTA”) as a component of accumulated other comprehensive (loss) income on the Company’s consolidated balance sheets. Upon discontinuation of the hedge, such amounts remain in CTA until the related investment is sold or liquidated. Changes in the fair value of the Company’s interest rate swaps that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive (loss) income, and are reclassified from accumulated other comprehensive (loss) income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of interest expense within the Company’s consolidated statements of operations and comprehensive (loss) income. The following table summarizes the pre-tax impact of the gains and losses on the Company’s designated forward foreign currency exchange contracts, net investment hedges and interest rate swaps (in millions): Three Months Ended June 27, 2020 June 29, 2019 Pre-Tax Losses Pre-Tax Losses Designated forward foreign currency exchange contracts $ — $ — Designated net investment hedges $ — $ (25) Designated interest rate swaps $ (1) $ — The following table summarizes the pre-tax impact of the gains and losses within the consolidated statements of operations and comprehensive (loss) income related to the designated forward foreign currency exchange contracts for the three months ended June 27, 2020 and June 29, 2019 (in millions): Three Months Ended Pre-Tax (Gain) Loss Reclassified from Location of (Gain) Loss recognized Total Cost of goods sold June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019 Designated forward foreign currency exchange contracts $ (1) $ (3) Cost of goods sold $ 149 $ 512 The Company expects that substantially all of the amounts currently recorded in accumulated other comprehensive (loss) 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 June 27, 2020 and June 29, 2019, the net impact of changes in the fair value of undesignated forward foreign currency exchange contracts recognized within foreign currency loss (gain) in the Company’s consolidated statement of operations and comprehensive (loss) income was immaterial. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Jun. 27, 2020 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Share Repurchase Program During the first quarter of Fiscal 2021, the Company suspended its $500 million share-repurchase program in response to the continued impact of the COVID-19 pandemic. During the three months ended June 27, 2020, the Company did not purchase any shares through open market transactions under the current plan. As of June 27, 2020, the remaining availability under the Company’s share repurchase program was $400 million. During the three months ended June 29, 2019, the Company did not purchase any shares through open market transactions under its previous $1.0 billion share-repurchase program, which expired on May 25, 2019. Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading transactions under the Company’s insider trading policy and other relevant factors. The program may be suspended or discontinued at any time. 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 three month periods ended June 27, 2020 and June 29, 2019, the Company withheld 38,119 shares and 58,304 shares, respectively, with a fair value of $1 million and $2 million, respectively, in satisfaction of minimum tax withholding obligations relating to the vesting of restricted share awards. Accumulated Other Comprehensive (Loss) Income The following table details changes in the components of accumulated other comprehensive (loss) income (“AOCI”), net of taxes for the three months ended June 27, 2020 and June 29, 2019, respectively (in millions): Foreign Currency Translation (Losses) Gains (1) Net Gains (Losses) on Derivatives (2) Other Comprehensive (Loss) Income Attributable to Capri Balance at March 30, 2019 $ (73) $ 7 $ (66) Other comprehensive (loss) income before reclassifications (25) — (25) Less: amounts reclassified from AOCI to earnings — 2 2 Other comprehensive (loss) income, net of tax (25) (2) (27) Balance at June 29, 2019 $ (98) $ 5 $ (93) Balance at March 28, 2020 $ 72 $ 3 $ 75 Other comprehensive (loss) income before reclassifications (3) — (3) Less: amounts reclassified from AOCI to earnings — 1 1 Other comprehensive (loss) income, net of tax (3) (1) (4) Balance at June 27, 2020 $ 69 $ 2 $ 71 (1) Foreign currency translation gains and losses for the three months ended June 27, 2020 include net gains of $1 million on intra-entity transactions that are of a long-term investment nature. Foreign currency translation gains and losses for the three months ended June 29, 2019 include net gains of $3 million on intra-entity transactions that are of a long-term investment nature, a $28 million translation gain relating to the Versace business and a $21 million loss, net of taxes of $4 million, relating to the Company’s net investment hedges. (2) Reclassified amounts 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 (loss) income. All tax effects were not material for the periods presented. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Jun. 27, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based CompensationThe Company issues equity grants 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 the Omnibus Incentive Plan adopted in the third fiscal quarter of Fiscal 2012 and amended and restated with shareholder approval in May 2015 (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 June 27, 2020, 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 15,246,000 ordinary shares. At June 27, 2020, there were 1,554,923 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 three months ended June 27, 2020: Options Service-Based RSUs Performance-Based RSUs Outstanding/Unvested at March 28, 2020 2,071,096 4,311,683 772,172 Granted — 1,772,553 — Exercised/Vested — (850,621) (102,078) Change due to performance condition — — 5,926 Canceled/forfeited (363,087) (152,289) (131,107) Outstanding/Unvested at June 27, 2020 1,708,009 5,081,326 544,913 The weighted average grant date fair value of service-based RSUs granted during the three months ended June 27, 2020 was $16.24. The weighted average grant date fair value of service-based and performance-based RSUs granted during the three months ended June 29, 2019 was $33.90 and $33.86, respectively. Share-Based Compensation Expense The following table summarizes compensation expense attributable to share-based compensation for the three months ended June 27, 2020 and June 29, 2019 (in millions): Three Months Ended June 27, June 29, Share-based compensation expense $ 24 $ 28 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 its historical forfeiture rates. The estimated value of future forfeitures for equity grants as of June 27, 2020 is approximately $13 million. See Note 17 in the Company’s Fiscal 2020 Annual Report on Form 10-K for additional information relating to the Company’s share-based compensation awards. |
Income Taxes
Income Taxes | 3 Months Ended |
Jun. 27, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended June 27, 2020 was (2.9)%. Such rate differs from the United Kingdom (“U.K.”) federal statutory rate of 17% primarily due to the existence of a valuation allowance on a portion of our consolidated pre-tax loss and a tax detriment related to share-based compensation. These decreases were partially offset by the favorable effects related to global financing 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 between certain of our U.S., U.K. and Switzerland subsidiaries in December 2015. Due to the difference in the statutory income tax rates between these jurisdictions, the Company realized a higher effective tax rate on the consolidated pre-tax loss. The Company’s effective tax rate for the three months ended June 29, 2019 was 11.8%. Such rate differed from the United Kingdom (“U.K.”) federal statutory rate of 19% primarily due to the favorable effects of global financing arrangements and net tax benefits in the US and Europe that related to prior tax year positions. These decreases in the effective tax rate for the three months ended June 29, 2019 were partially offset by tax deficits related to share-based compensation awards. |
Segment Information
Segment Information | 3 Months Ended |
Jun. 27, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | 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, footwear and home furnishings through directly operated Versace boutiques throughout North America (United States and Canada), 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 and eyewear. • Jimmy Choo — segment includes revenue generated through the sale of Jimmy Choo luxury footwear, handbags and small leather goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas, 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, sunglasses 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 the end consumer throughout the Americas, Europe 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 segments. Such costs primarily include certain administrative, corporate occupancy, and information systems expenses, including enterprise resource planning system implementation costs. In addition, certain other costs are not allocated to segments, including restructuring and other charges (including transition costs related to the Company’s recent acquisitions), impairment costs and COVID-19 related charges. 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 June 27, June 29, Total revenue: Versace $ 93 $ 207 Jimmy Choo 51 158 Michael Kors 307 981 Total revenue $ 451 $ 1,346 (Loss) income from operations: Versace $ (41) $ (3) Jimmy Choo (29) 11 Michael Kors (48) 201 Total segment income from operations (118) 209 Less: Corporate expenses (31) (33) Restructuring and other charges (8) (15) Impairment of assets — (97) COVID-19 related charges (1) (5) — Total (loss) income from operations $ (162) $ 64 ___________________ (1) COVID-19 related charges primarily related to severance costs, partially offset by a credit loss of $(6) million. Depreciation and amortization expense for each segment are as follows (in millions): Three Months Ended June 27, June 29, Depreciation and amortization: Versace $ 13 $ 14 Jimmy Choo 7 8 Michael Kors 34 38 Total depreciation and amortization $ 54 $ 60 Total revenue (based on country of origin) by geographic location are as follows (in millions): Three Months Ended June 27, June 29, Total revenue: The Americas (1) $ 177 $ 729 EMEA 122 360 Asia 152 257 Total revenue $ 451 $ 1,346 (1) Total revenue earned in the U.S. were $161 million for the three months ended June 27, 2020 and $681 million for the three months ended June 29, 2019, respectively. As of June 27, 2020 and March 28, 2020, the Company's total assets were $7.533 billion and $7.946 billion, respectively. The decrease in total assets was primarily due to the reduction of the Company's cash and cash equivalents from $592 million as of March 28, 2020 to $207 million as of June 27, 2020, due to net payments the Company made to lower the outstanding balance of its Revolving Credit Facilities. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jun. 27, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Net Investment Hedges During the second quarter of Fiscal 2021, the Company entered into multiple fixed-to-fixed cross currency swap agreements with an aggregate notional amount of $1 billion to hedge its net investments in Euro-denominated subsidiaries against future volatility in the exchange rates between the U.S. Dollar and the Euro. These contracts have been designated as net investment hedges. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Jun. 27, 2020 | |
Accounting Policies [Abstract] | |
Consolidation, Policy | 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 June 27, 2020 and for the three months ended June 27, 2020 and June 29, 2019 are unaudited. 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 March 28, 2020, as filed with the Securities and Exchange Commission on July 8, 2020, 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. |
Fiscal Period, Policy | The Company utilizes a 52 to 53 week fiscal year ending on the Saturday closest to March 31. As such, the term “Fiscal Year” or “Fiscal” refers to the 52-week or 53-week period, ending on that day. The results for the three months ended June 27, 2020 and June 29, 2019, are based on 13-week periods. |
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 and doubtful accounts, estimates of inventory net realizable value, the valuation of share-based compensation, the valuation of deferred taxes and the valuation of goodwill, intangible assets and property and equipment, along with the estimated useful lives assigned to these assets. Actual results could differ from those estimates. |
Reclassifications | Certain reclassifications have been made to the prior periods’ financial information in order to conform to the current period’s presentation. |
Seasonality | The Company experiences certain effects of seasonality with respect to its business. |
Inventories, net | Inventories mainly 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 recorded on the Company's consolidated balance sheets was $27 million as of both June 27, 2020 and March 28, 2020.The net realizable value of the Company's inventory as of June 27, 2020 and March 28, 2020 includes the expected adverse impacts of the COVID-19 pandemic. This includes the impact from temporary retail store closures, wholesale customer store closures, reductions in retail store traffic, a decline in international tourism and a decrease in consumer consumption. |
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 (loss) 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 (loss) 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 loss (gain) in the Company’s consolidated statements of operations and comprehensive (loss) income. The Company classifies cash flows relating to its forward foreign currency exchange contracts related to the 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 swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between its U.S. Dollars and these foreign currencies. The Company has elected the spot method of designating these contracts under ASU 2017-12 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 (loss) income on the Company’s consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense in the Company’s statement of operations and comprehensive (loss) income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated. Interest Rate Swap Agreements The Company also uses interest rate swap agreements to hedge the variability of its cash flows resulting from floating interest rates on the Company's borrowings. When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive (loss) income and are reclassified into interest expense in the same period during which the hedged transactions affect earnings. |
Leases | On March 31, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet for all leases, except certain short-term leases. The Company adopted the new standard recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating the comparative prior year periods. 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 June 2024. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores under its restructuring activities, as discussed in Note 8. 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, generally for the same period as the initial term of the lease. 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 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 location 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 or material restrictions or covenants. |
Net (Loss) Income per Share | The Company’s basic net (loss) income per ordinary share is calculated by dividing net (loss) income by the weighted average number of ordinary shares outstanding during the period. Diluted net (loss) income per ordinary share reflects the potential dilution that would occur if share option grants 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 in 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. |
Recently Adopted and Issued Accounting Pronouncements | Measurement of Credit Losses on Financial Instruments On March 29, 2020, the Company adopted ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which amends the guidance on measuring credit losses for certain financial assets measured at amortized cost, including trade receivables. The Financial Accounting Standards Board has subsequently issued several updates to the standard, providing additional guidance on certain topics covered by the standard. This update requires entities to recognize an allowance for credit losses using a forward-looking expected loss impairment model, taking into consideration historical experience, current conditions and supportable forecasts that impact collectibility. The adoption of this update did not have a material impact on the Company's consolidated financial statements. Implementation Costs Associated with Cloud Computing Arrangements On March 29, 2020, the Company adopted ASU No. 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract" ("ASU 2018-15"), which provides guidance related to the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The adoption of this update did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements The Company has considered all new accounting pronouncements and have concluded that there are no new pronouncements that may have a material impact on our results of operations, financial condition or cash flows based on current information. |
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 collectability 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 brands. The Company has chosen to utilize the exemption allowing it not to disclose the amount of the transaction price allocated to the remaining performance obligations that have an expected duration of twelve months or less. Retail The Company generates sales through directly operated stores and e-commerce throughout the Americas (U.S., Canada and Latin America), EMEA (Europe, Middle East and Africa) and certain parts of Asia. 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 $11 million as of both June 27, 2020 and March 28, 2020, is included in 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 U.S. 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. The contract liability, net of an estimated “breakage,” of $2 million as of both June 27, 2020 and March 28, 2020, is recorded as a reduction to revenue in the consolidated statements of operations and comprehensive (loss) income and within accrued expenses and other current liabilities in the Company’s consolidated balance sheet and is expected to be recognized within the next 12 months. 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, certain parts of Asia and Australia. |
Receivables, net | Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and doubtful accounts. 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 doubtful accounts is determined through analysis of periodic aging of receivables that are not covered by insurance and assessments of collectability 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. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Net Lease Costs and Supplemental Cash Flow Information | The following table presents the Company’s supplemental cash flow information related to leases (in millions): Three Months Ended Three Months Ended June 27, 2020 June 29, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 40 (1) $ 120 (1) Operating cash flows used in operating leases for the three months ended June 27, 2020 reflect $85 million of rent payments that have been deferred due to the COVID-19 pandemic. |
Schedule of Components of Calculation of Basic Net Income Per Ordinary Share and Diluted Net Income Per Ordinary Share | The components of the calculation of basic net (loss) income per ordinary share and diluted net loss per ordinary share are as follows (in millions, except share and per share data): Three Months Ended June 27, June 29, Numerator: Net (loss) income attributable to Capri $ (180) $ 45 Denominator: Basic weighted average shares 149,556,310 151,049,572 Weighted average dilutive share equivalents: Share options and restricted shares/units, and performance restricted share units — 1,284,581 Diluted weighted average shares 149,556,310 152,334,153 Basic net (loss) income per share (1) $ (1.21) $ 0.30 Diluted net (loss) income per share (1) $ (1.21) $ 0.30 (1) Basic and diluted net (loss) income per share are calculated using unrounded numbers. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contractually Guaranteed Minimum Fees | As of June 27, 2020, contractually guaranteed minimum fees from our license agreements expected to be recognized as revenue during future periods were as follows (in millions): Contractually Guaranteed Minimum Fees Remainder of Fiscal 2021 $ 19 Fiscal 2022 27 Fiscal 2023 23 Fiscal 2024 20 Fiscal 2025 17 Fiscal 2026 and thereafter 82 Total $ 188 |
Schedule of Segment Revenues Disaggregated by Geographic Location | The following table presents the Company’s segment revenues disaggregated by geographic location (in millions): Three Months Ended June 27, June 29, Versace revenue - the Americas $ 15 $ 44 Versace revenue - EMEA 27 92 Versace revenue - Asia 51 71 Total Versace 93 207 Jimmy Choo revenue - the Americas 6 30 Jimmy Choo revenue - EMEA 16 79 Jimmy Choo revenue - Asia 29 49 Total Jimmy Choo 51 158 Michael Kors revenue - the Americas 156 655 Michael Kors revenue - EMEA 79 189 Michael Kors revenue - Asia 72 137 Total Michael Kors 307 981 Total revenue - the Americas 177 729 Total revenue - EMEA 122 360 Total revenue - Asia 152 257 Total revenue $ 451 $ 1,346 See Note 3 in the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2020 for a complete disclosure of the Company’s revenue recognition policy. |
Receivables, net (Tables)
Receivables, net (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Receivables [Abstract] | |
Receivables, net | Receivables, net, consist of (in millions): June 27, March 28, Trade receivables (1) $ 263 $ 432 Receivables due from licensees 21 14 284 446 Less: allowances (101) (138) $ 183 $ 308 (1) As of June 27, 2020 and March 28, 2020, $56 million and $80 million, respectively, of trade receivables were insured. |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net, consists of (in millions): June 27, March 28, Leasehold improvements $ 706 $ 704 Computer equipment and software 342 329 Furniture and fixtures 332 329 In-store shops 236 236 Equipment 137 136 Building 49 49 Land 19 19 1,821 1,802 Less: accumulated depreciation and amortization (1,343) (1,310) 478 492 Construction-in-progress 63 69 $ 541 $ 561 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Indefinite-Lived Intangible Assets | The following table details the carrying values of the Company’s intangible assets and goodwill (in millions): June 27, March 28, Definite-lived intangible assets: Reacquired Rights $ 400 $ 400 Trademarks 23 23 Customer Relationships 404 404 Total definite-lived intangible assets 827 827 Less: accumulated amortization (144) (132) Net definite-lived intangible assets 683 695 Indefinite-lived intangible assets: Jimmy Choo brand (1) 364 367 Versace brand (2) 930 924 1,294 1,291 Total intangible assets, excluding goodwill $ 1,977 $ 1,986 Goodwill (3) $ 1,490 $ 1,488 (1) Includes an accumulated impairment loss of $180 million recorded during the fourth quarter of Fiscal 2020. The change in the carrying value since March 28, 2020 reflects currency translation. (2) The change in the carrying value since March 28, 2020 reflects currency translation. (3) Includes an accumulated impairment loss of $171 million related to the Jimmy Choo retail and licensing reporting units recorded during the fourth quarter of Fiscal 2020. The change in the carrying value since March 28, 2020 reflects currency translation. |
Schedule of Finite-Lived Intangible Assets | The following table details the carrying values of the Company’s intangible assets and goodwill (in millions): June 27, March 28, Definite-lived intangible assets: Reacquired Rights $ 400 $ 400 Trademarks 23 23 Customer Relationships 404 404 Total definite-lived intangible assets 827 827 Less: accumulated amortization (144) (132) Net definite-lived intangible assets 683 695 Indefinite-lived intangible assets: Jimmy Choo brand (1) 364 367 Versace brand (2) 930 924 1,294 1,291 Total intangible assets, excluding goodwill $ 1,977 $ 1,986 Goodwill (3) $ 1,490 $ 1,488 (1) Includes an accumulated impairment loss of $180 million recorded during the fourth quarter of Fiscal 2020. The change in the carrying value since March 28, 2020 reflects currency translation. (2) The change in the carrying value since March 28, 2020 reflects currency translation. (3) Includes an accumulated impairment loss of $171 million related to the Jimmy Choo retail and licensing reporting units recorded during the fourth quarter of Fiscal 2020. The change in the carrying value since March 28, 2020 reflects currency translation. |
Current Assets and Current Li_2
Current Assets and Current Liabilities (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following (in millions): June 27, March 28, Prepaid taxes $ 95 $ 116 Prepaid contracts 15 17 Other accounts receivables 12 10 Other 29 24 $ 151 $ 167 |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following (in millions): June 27, March 28, Other taxes payable $ 51 $ 38 Return liabilities 35 37 Accrued capital expenditures 20 31 Accrued rent (1) 18 10 Accrued advertising and marketing 6 9 Gift cards and retail store credits 11 11 Professional services 9 10 Restructuring liability 14 9 Accrued litigation 11 10 Other 68 76 $ 243 $ 241 (1) The accrued rent balance relates to variable lease payments. |
Debt Obligations (Tables)
Debt Obligations (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Obligations | The following table presents the Company’s debt obligations (in millions): June 27, March 28, Term Loan $ 991 $ 1,015 Revolving Credit Facilities 333 720 4.000% Senior Notes due 2024 450 450 Other 4 3 Total debt 1,778 2,188 Less: Unamortized debt issuance costs 9 8 Less: Unamortized discount on long-term debt 1 1 Total carrying value of debt 1,768 2,179 Less: Short-term debt 191 167 Total long-term debt $ 1,577 $ 2,012 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Contracts Measured and Recorded at Fair Value on Recurring and Categorized in Level 2 of Fair Value Hierarchy | 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 June 27, 2020 using: Fair value at March 28, 2020 using: Quoted prices in Significant Significant Quoted prices in Significant Significant Derivative assets: Forward foreign currency exchange contracts $ — $ — $ — $ — $ 1 $ — Net investment hedges — 3 — — 3 — Total derivative assets $ — $ 3 $ — $ — $ 4 $ — Derivative liabilities: Designated interest rate swaps $ — $ 1 $ — $ — $ — $ — |
Fair Value Measurement of Long-term 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): June 27, 2020 March 28, 2020 Carrying Estimated Carrying Estimated 4.000% Senior Notes $ 446 $ 422 $ 446 $ 443 Term Loan $ 985 $ 817 $ 1,010 $ 957 Revolving Credit Facilities $ 333 $ 333 $ 720 $ 720 |
Schedule of Long-lived Assets, Nonrecurring | The following table details the carrying values and fair values of the Company’s assets that have been impaired during the three months ended June 29, 2019 (in millions): Three Months Ended Carrying Value Prior to Impairment Fair Value Impairment Charge Operating Lease Right-of-Use Assets $ 140 $ 56 $ 84 Property and Equipment 20 7 13 Total $ 160 $ 63 $ 97 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Value of Derivative Contracts Recorded on Gross Basis in Consolidated Balance Sheets | 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 June 27, 2020 and March 28, 2020 (in millions): Fair Values Notional Amounts Assets Liabilities June 27, March 28, June 27, March 28, June 27, March 28, Designated forward foreign currency exchange contracts $ 80 $ 161 $ — $ 1 (1) $ — $ — Designated net investment hedge 44 44 3 (2) 3 (2) — — Designated interest rate swaps 500 — — — 1 (3) — Total designated hedges 624 205 3 4 1 — Undesignated derivative contracts (4) 29 — — — — — Total $ 653 $ 205 $ 3 $ 4 $ 1 $ — (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) Primarily includes undesignated hedges of inventory purchases. |
Schedule of Derivative Instruments on The Balance Sheets, Net Basis | 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, the resulting impact as of June 27, 2020 and March 28, 2020 would be as follows (in millions): Forward Currency Exchange Contracts Net Investment Interest Rate June 27, March 28, June 27, March 28, June 27, March 28, Assets subject to master netting arrangements $ — $ 1 $ 3 $ 3 $ — $ — Liabilities subject to master netting arrangements $ — $ — $ — $ — $ 1 $ — Derivative assets, net $ — $ 1 $ 3 $ 3 $ — $ — Derivative liabilities, net $ — $ — $ — $ — $ 1 $ — |
Reclassification out of Accumulated Other Comprehensive Income | The following table summarizes the pre-tax impact of the gains and losses on the Company’s designated forward foreign currency exchange contracts, net investment hedges and interest rate swaps (in millions): Three Months Ended June 27, 2020 June 29, 2019 Pre-Tax Losses Pre-Tax Losses Designated forward foreign currency exchange contracts $ — $ — Designated net investment hedges $ — $ (25) Designated interest rate swaps $ (1) $ — The following table summarizes the pre-tax impact of the gains and losses within the consolidated statements of operations and comprehensive (loss) income related to the designated forward foreign currency exchange contracts for the three months ended June 27, 2020 and June 29, 2019 (in millions): Three Months Ended Pre-Tax (Gain) Loss Reclassified from Location of (Gain) Loss recognized Total Cost of goods sold June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019 Designated forward foreign currency exchange contracts $ (1) $ (3) Cost of goods sold $ 149 $ 512 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Equity [Abstract] | |
Changes in Components of Accumulated Other Comprehensive Income (Loss), Net of Taxes | The following table details changes in the components of accumulated other comprehensive (loss) income (“AOCI”), net of taxes for the three months ended June 27, 2020 and June 29, 2019, respectively (in millions): Foreign Currency Translation (Losses) Gains (1) Net Gains (Losses) on Derivatives (2) Other Comprehensive (Loss) Income Attributable to Capri Balance at March 30, 2019 $ (73) $ 7 $ (66) Other comprehensive (loss) income before reclassifications (25) — (25) Less: amounts reclassified from AOCI to earnings — 2 2 Other comprehensive (loss) income, net of tax (25) (2) (27) Balance at June 29, 2019 $ (98) $ 5 $ (93) Balance at March 28, 2020 $ 72 $ 3 $ 75 Other comprehensive (loss) income before reclassifications (3) — (3) Less: amounts reclassified from AOCI to earnings — 1 1 Other comprehensive (loss) income, net of tax (3) (1) (4) Balance at June 27, 2020 $ 69 $ 2 $ 71 (1) Foreign currency translation gains and losses for the three months ended June 27, 2020 include net gains of $1 million on intra-entity transactions that are of a long-term investment nature. Foreign currency translation gains and losses for the three months ended June 29, 2019 include net gains of $3 million on intra-entity transactions that are of a long-term investment nature, a $28 million translation gain relating to the Versace business and a $21 million loss, net of taxes of $4 million, relating to the Company’s net investment hedges. (2) Reclassified amounts 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 (loss) income. All tax effects were not material for the periods presented. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Compensation Activity | The following table summarizes the Company’s share-based compensation activity during the three months ended June 27, 2020: Options Service-Based RSUs Performance-Based RSUs Outstanding/Unvested at March 28, 2020 2,071,096 4,311,683 772,172 Granted — 1,772,553 — Exercised/Vested — (850,621) (102,078) Change due to performance condition — — 5,926 Canceled/forfeited (363,087) (152,289) (131,107) Outstanding/Unvested at June 27, 2020 1,708,009 5,081,326 544,913 |
Summary of Compensation Expense Attributable to Share-Based Compensation | The following table summarizes compensation expense attributable to share-based compensation for the three months ended June 27, 2020 and June 29, 2019 (in millions): Three Months Ended June 27, June 29, Share-based compensation expense $ 24 $ 28 Tax benefit related to share-based compensation expense $ 5 $ 5 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Jun. 27, 2020 | |
Segment Reporting [Abstract] | |
Key Performance Information of Reportable Segments | The following table presents the key performance information of the Company’s reportable segments (in millions): Three Months Ended June 27, June 29, Total revenue: Versace $ 93 $ 207 Jimmy Choo 51 158 Michael Kors 307 981 Total revenue $ 451 $ 1,346 (Loss) income from operations: Versace $ (41) $ (3) Jimmy Choo (29) 11 Michael Kors (48) 201 Total segment income from operations (118) 209 Less: Corporate expenses (31) (33) Restructuring and other charges (8) (15) Impairment of assets — (97) COVID-19 related charges (1) (5) — Total (loss) income from operations $ (162) $ 64 ___________________ (1) COVID-19 related charges primarily related to severance costs, partially offset by a credit loss of $(6) million. |
Depreciation and Amortization Expense for Each Segment | Depreciation and amortization expense for each segment are as follows (in millions): Three Months Ended June 27, June 29, Depreciation and amortization: Versace $ 13 $ 14 Jimmy Choo 7 8 Michael Kors 34 38 Total depreciation and amortization $ 54 $ 60 |
Total Revenue (as Recognized Based on Country of Origin) | Total revenue (based on country of origin) by geographic location are as follows (in millions): Three Months Ended June 27, June 29, Total revenue: The Americas (1) $ 177 $ 729 EMEA 122 360 Asia 152 257 Total revenue $ 451 $ 1,346 (1) Total revenue earned in the U.S. were $161 million for the three months ended June 27, 2020 and $681 million for the three months ended June 29, 2019, respectively. |
Business and Basis of Present_2
Business and Basis of Presentation - Additional Information (Details) | 3 Months Ended |
Jun. 27, 2020segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 3 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Jun. 27, 2020 | Jun. 29, 2019 | Mar. 28, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Raw materials inventory | $ 27 | $ 27 | |
Sublease income | $ 2 | $ 1 | |
Anti-dilutive securities excluded from calculation of basic and diluted net income per ordinary share (in shares) | 5,388,905 | 2,374,578 | |
COVID-19 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Rent relief | $ 15 | ||
Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Forward contracts term, maximum (no more than) | 12 months | ||
Term of lease | 10 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows used in operating leases | $ 40 | $ 120 |
COVID-19 | ||
Cash paid for amounts included in the measurement of lease liabilities: | ||
Deferred rent payments | $ 85 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Components of Calculation of Basic Net Income Per Ordinary Share and Diluted Net Income Per Ordinary Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Numerator: | ||
Net (loss) income attributable to Capri | $ (180) | $ 45 |
Denominator: | ||
Basic weighted average shares (in shares) | 149,556,310 | 151,049,572 |
Weighted average dilutive share equivalents: | ||
Share options and restricted shares/units, and performance restricted share units (in shares) | 0 | 1,284,581 |
Diluted weighted average shares (in shares) | 149,556,310 | 152,334,153 |
Basic net (loss) income per share (in dollars per share) | $ (1.21) | $ 0.30 |
Diluted net (loss) income per share (in dollars per share) | $ (1.21) | $ 0.30 |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) | 3 Months Ended | ||
Jun. 27, 2020 | Jun. 29, 2019 | Mar. 28, 2020 | |
Contract With Customer, Asset And Liability [Line Items] | |||
Deferred loyalty program liabilities | $ 11,000,000 | $ 11,000,000 | |
Return liabilities | 35,000,000 | 37,000,000 | |
Right to recover returned product | 10,000,000 | 14,000,000 | |
Contract liabilities | 21,000,000 | 22,000,000 | |
Revenue recognized during period | 3,000,000 | $ 14,000,000 | |
Contract assets | 0 | 0 | |
Gift Cards | |||
Contract With Customer, Asset And Liability [Line Items] | |||
Deferred loyalty program liabilities | 11,000,000 | 11,000,000 | |
Deferred loyalty program liabilities | |||
Contract With Customer, Asset And Liability [Line Items] | |||
Deferred loyalty program liabilities | $ 2,000,000 | $ 2,000,000 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Contractually Guaranteed Minimum Fees (Details) $ in Millions | Jun. 27, 2020USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remainder of Fiscal 2021 | $ 19 |
Fiscal 2022 | 27 |
Fiscal 2023 | 23 |
Fiscal 2024 | 20 |
Fiscal 2025 | 17 |
Fiscal 2026 and thereafter | 82 |
Total | $ 188 |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Revenue Disaggregation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 451 | $ 1,346 |
The Americas | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 177 | 729 |
EMEA | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 122 | 360 |
Asia | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 152 | 257 |
Versace | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 93 | 207 |
Versace | The Americas | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 15 | 44 |
Versace | EMEA | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 27 | 92 |
Versace | Asia | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 51 | 71 |
Jimmy Choo | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 51 | 158 |
Jimmy Choo | The Americas | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 6 | 30 |
Jimmy Choo | EMEA | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 16 | 79 |
Jimmy Choo | Asia | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 29 | 49 |
Michael Kors | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 307 | 981 |
Michael Kors | The Americas | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 156 | 655 |
Michael Kors | EMEA | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 79 | 189 |
Michael Kors | Asia | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 72 | $ 137 |
Receivables, net - Schedule of
Receivables, net - Schedule of Receivables (Details) - USD ($) $ in Millions | Jun. 27, 2020 | Mar. 28, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade receivables | $ 263 | $ 432 |
Receivables due from licensees | 21 | 14 |
Receivables, gross | 284 | 446 |
Less: allowances | (101) | (138) |
Receivables, net | 183 | 308 |
Credit risk assumed by insured | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Trade receivables | $ 56 | $ 80 |
Receivables, net - Additional I
Receivables, net - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Mar. 28, 2020 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Allowance for doubtful accounts | $ 31 | $ 39 |
COVID-19 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Credit loss | $ (6) |
Property and Equipment, net - S
Property and Equipment, net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Millions | Jun. 27, 2020 | Mar. 28, 2020 |
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 706 | $ 704 |
Computer equipment and software | 342 | 329 |
Furniture and fixtures | 332 | 329 |
In-store shops | 236 | 236 |
Equipment | 137 | 136 |
Building | 49 | 49 |
Land | 19 | 19 |
Property and equipment, gross | 1,821 | 1,802 |
Less: accumulated depreciation and amortization | (1,343) | (1,310) |
Property and equipment, net (excluding construction-in-progress) | 478 | 492 |
Construction-in-progress | 63 | 69 |
Property and equipment, net | $ 541 | $ 561 |
Property and Equipment, net - A
Property and Equipment, net - Additional Information (Details) - USD ($) | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization of property and equipment | $ 43,000,000 | $ 47,000,000 |
Impairment of long-lived assets | $ 0 | 13,000,000 |
Premier Retail Site | ||
Property, Plant and Equipment [Line Items] | ||
Impairment of long-lived assets | $ 11,000,000 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Carrying Values of Finite-Lived Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 28, 2020 | Jun. 27, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Total definite-lived intangible assets | $ 827 | $ 827 |
Less: accumulated amortization | (132) | (144) |
Net definite-lived intangible assets | 695 | 683 |
Indefinite-lived intangible assets | 1,291 | 1,294 |
Total intangible assets, excluding goodwill | 1,986 | 1,977 |
Goodwill | 1,488 | 1,490 |
Reacquired Rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total definite-lived intangible assets | 400 | 400 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total definite-lived intangible assets | 23 | 23 |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total definite-lived intangible assets | 404 | 404 |
Jimmy Choo | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 367 | 364 |
Accumulated impairment loss | 180 | |
Accumulated impairment loss, goodwill | 171 | |
Versace | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 924 | $ 930 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Additional Information (Details) - USD ($) | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 11,000,000 | $ 13,000,000 |
Goodwill and intangible asset impairment charges | $ 0 | $ 0 |
Current Assets and Current Li_3
Current Assets and Current Liabilities - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Millions | Jun. 27, 2020 | Mar. 28, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaid taxes | $ 95 | $ 116 |
Prepaid contracts | 15 | 17 |
Other accounts receivables | 12 | 10 |
Other | 29 | 24 |
Prepaid expenses and other current assets | $ 151 | $ 167 |
Current Assets and Current Li_4
Current Assets and Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Millions | Jun. 27, 2020 | Mar. 28, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Other taxes payable | $ 51 | $ 38 |
Return liabilities | 35 | 37 |
Accrued capital expenditures | 20 | 31 |
Accrued rent | 18 | 10 |
Accrued advertising and marketing | 6 | 9 |
Gift cards and retail store credits | 11 | 11 |
Professional services | 9 | 10 |
Restructuring liability | 14 | 9 |
Accrued litigation | 11 | 10 |
Other | 68 | 76 |
Accrued expenses and other current liabilities | $ 243 | $ 241 |
Restructuring and Other Charg_2
Restructuring and Other Charges - Narrative (Details) $ in Millions | 3 Months Ended | |
Jun. 27, 2020USD ($)store | Jun. 29, 2019USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||
Transition costs | $ 5 | $ 12 |
Gianni Versace S.r.l. | ||
Restructuring Cost and Reserve [Line Items] | ||
Transition costs | 7 | |
Jimmy Choo | ||
Restructuring Cost and Reserve [Line Items] | ||
Transition costs | 5 | |
Contract Termination | Jimmy Choo | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges and other charges | 2 | |
Capri Retail Store Optimization Program | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of stores expected to close | store | 170 | |
Expected restructuring charges | $ 75 | |
Number of store closed | store | 28 | |
Restructuring charges, net | $ 3 | |
Retail Fleet Optimization Plan | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges and other charges | $ 1 |
Debt Obligations - Schedule of
Debt Obligations - Schedule of Debt Obligations (Details) - USD ($) $ in Millions | Jun. 27, 2020 | Mar. 28, 2020 |
Debt Instrument [Line Items] | ||
Total debt | $ 1,778 | $ 2,188 |
Less: Unamortized debt issuance costs | 9 | 8 |
Less: Unamortized discount on long-term debt | 1 | 1 |
Total carrying value of debt | 1,768 | 2,179 |
Less: Short-term debt | 191 | 167 |
Total long-term debt | 1,577 | 2,012 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Total debt | 991 | 1,015 |
Credit Facility | 2018 Credit Facility | Revolving Credit Facilities | ||
Debt Instrument [Line Items] | ||
Total debt | 333 | 720 |
Less: Short-term debt | $ 270 | 681 |
4.000% Senior Notes | ||
Debt Instrument [Line Items] | ||
Stated interest rate percentage | 4.00% | |
4.000% Senior Notes | Revolving Credit Facilities | ||
Debt Instrument [Line Items] | ||
Total debt | $ 450 | 450 |
Other | ||
Debt Instrument [Line Items] | ||
Total debt | $ 4 | $ 3 |
Debt Obligations - Narrative (D
Debt Obligations - Narrative (Details) | Jun. 26, 2021USD ($) | Jun. 25, 2020USD ($) | Dec. 01, 2020USD ($) | Oct. 01, 2020USD ($) | Jun. 27, 2020USD ($) | Mar. 28, 2020USD ($) |
Debt Instrument [Line Items] | ||||||
Short-term debt | $ 191,000,000 | $ 167,000,000 | ||||
Long-term debt | 1,768,000,000 | 2,179,000,000 | ||||
Revolving Credit Facilities | Revolving Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Letter of credit outstanding | 22,000,000 | |||||
Revolving Credit Facilities | 2018 Credit Facility | Revolving Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Net cash proceeds in the aggregate | $ 100,000,000 | |||||
Outstanding principal amount of bilateral letters of credit and bilateral bank guarantees | 50,000,000 | |||||
Short-term debt | 270,000,000 | 681,000,000 | ||||
Amount available for future borrowings | 938,000,000 | |||||
Revolving Credit Facilities | 2018 Credit Facility | Revolving Credit Facilities | Subsequent event | ||||||
Debt Instrument [Line Items] | ||||||
Leverage ratio on credit facility | 3.75 | |||||
Covenant, cash and cash equivalents threshold | $ 500,000,000 | $ 400,000,000 | ||||
Revolving Credit Facilities | 2018 Credit Facility | Revolving Credit Facilities | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Covenant, cash and cash equivalents threshold | $ 300,000,000 | |||||
Revolving Credit Facilities | 2018 Credit Facility | Revolving Credit Facilities | Minimum | Subsequent event | ||||||
Debt Instrument [Line Items] | ||||||
Covenant, cash and cash equivalents threshold | $ 100,000,000 | |||||
Revolving Credit Facilities | 2018 Credit Facility | Revolving Credit Facilities | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Leverage ratio on credit facility | 4 | |||||
Revolving Credit Facilities | 2018 Credit Facility | Revolving Credit Facilities | Maximum | Subsequent event | ||||||
Debt Instrument [Line Items] | ||||||
Supply chain financing | $ 150,000,000 | |||||
Revolving Credit Facilities | 364 Day Facility | Revolving Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 230,000,000 | |||||
Debt term | 364 days | |||||
Commitment fee percentage | 0.35% | |||||
Revolving Credit Facilities | 364 Day Facility | LIBOR | Revolving Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 2.25% | |||||
Revolving Credit Facilities | 364 Day Facility | Base Rate | Revolving Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 1.25% | |||||
Revolving Credit Facilities | 364 Day Facility | Minimum | Revolving Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Covenant, cash and cash equivalents threshold | $ 200,000,000 | |||||
2018 Term Loan Facility | Term Loan Facility | Revolving Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Short-term debt | 128,000,000 | 128,000,000 | ||||
Borrowings outstanding | 985,000,000 | 1,010,000,000 | ||||
Long-term debt | $ 857,000,000 | $ 882,000,000 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Contracts Measured and Recorded at Fair Value on Recurring and Categorized in Level 2 of Fair Value Hierarchy (Details) - USD ($) $ in Millions | Jun. 27, 2020 | Mar. 28, 2020 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | $ 3 | $ 4 |
Derivative liabilities | 1 | 0 |
Fair value, measurements, recurring | Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 0 | 0 |
Fair value, measurements, recurring | Significant other observable inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 3 | 4 |
Fair value, measurements, recurring | Significant unobservable inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 0 | 0 |
Fair value, measurements, recurring | Forward foreign currency exchange contracts | Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 0 | 0 |
Fair value, measurements, recurring | Forward foreign currency exchange contracts | Significant other observable inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 0 | 1 |
Fair value, measurements, recurring | Forward foreign currency exchange contracts | Significant unobservable inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 0 | 0 |
Fair value, measurements, recurring | Net investment hedges | Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 0 | 0 |
Fair value, measurements, recurring | Net investment hedges | Significant other observable inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 3 | 3 |
Fair value, measurements, recurring | Net investment hedges | Significant unobservable inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative assets | 0 | 0 |
Fair value, measurements, recurring | Designated interest rate swaps | Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liabilities | 0 | 0 |
Fair value, measurements, recurring | Designated interest rate swaps | Significant other observable inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liabilities | 1 | 0 |
Fair value, measurements, recurring | Designated interest rate swaps | Significant unobservable inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liabilities | $ 0 | $ 0 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Fair Value Measurement of Long-term Debt (Details) - USD ($) $ in Millions | Jun. 27, 2020 | Mar. 28, 2020 |
4.000% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Stated interest rate percentage | 4.00% | |
4.000% Senior Notes | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, fair value disclosure | $ 446 | $ 446 |
4.000% Senior Notes | Level 2 | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, fair value disclosure | 422 | 443 |
Term Loan | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, fair value disclosure | 985 | 1,010 |
Term Loan | Level 2 | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, fair value disclosure | 817 | 957 |
Revolving Credit Facilities | Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, fair value disclosure | 333 | 720 |
Revolving Credit Facilities | Level 2 | Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt, fair value disclosure | $ 333 | $ 720 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Fair Value Disclosures [Abstract] | ||
Goodwill and intangible asset impairment charges | $ 0 | $ 0 |
Fair Value Measurements - Sch_3
Fair Value Measurements - Schedule of Impaired Long-lived Assets Carrying Value and Fair Value (Details) - USD ($) | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Impairment Charge | $ 0 | $ 13,000,000 |
Significant unobservable inputs (Level 3) | Nonrecurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Value Prior to Impairment | 160,000,000 | |
Fair Value | 63,000,000 | |
Impairment Charge | 97,000,000 | |
Operating Lease Right-of-Use Assets | Significant unobservable inputs (Level 3) | Nonrecurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Value Prior to Impairment | 140,000,000 | |
Fair Value | 56,000,000 | |
Impairment Charge | 84,000,000 | |
Property and Equipment | Significant unobservable inputs (Level 3) | Nonrecurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Carrying Value Prior to Impairment | 20,000,000 | |
Fair Value | 7,000,000 | |
Impairment Charge | $ 13,000,000 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Additional Information (Details) - USD ($) | 3 Months Ended | |||
Jun. 27, 2020 | Jun. 29, 2019 | Apr. 30, 2022 | Mar. 28, 2020 | |
Derivative [Line Items] | ||||
Notional amounts | $ 653,000,000 | $ 205,000,000 | ||
Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Notional amounts | 624,000,000 | 205,000,000 | ||
Net investment hedges | Net investment hedging | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Notional amounts | 44,000,000 | $ 44,000,000 | ||
Reduction in interest expense | 0 | $ 15,000,000 | ||
Net investment hedges | Net investment hedging | Designated as Hedging Instrument | Japan, Yen | ||||
Derivative [Line Items] | ||||
Notional amounts | $ 44,000,000 | |||
Derivative fixed interest rate | 0.89% | |||
Designated interest rate swaps | Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Notional amounts | $ 500,000,000 | |||
Derivative fixed interest rate | 0.237% | |||
Designated interest rate swaps | Designated as Hedging Instrument | Forecast | ||||
Derivative [Line Items] | ||||
Notional amounts | $ 350,000,000 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule of Fair Value of Derivative Contracts Recorded on Gross Basis in Consolidated Balance Sheets (Details) - USD ($) | Jun. 27, 2020 | Mar. 28, 2020 |
Derivatives, Fair Value [Line Items] | ||
Notional Amounts | $ 653,000,000 | $ 205,000,000 |
Assets | 3,000,000 | 4,000,000 |
Liabilities | 1,000,000 | 0 |
Designated as Hedging Instrument | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amounts | 624,000,000 | 205,000,000 |
Assets | 3,000,000 | 4,000,000 |
Liabilities | 1,000,000 | 0 |
Designated as Hedging Instrument | Designated interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amounts | 500,000,000 | |
Not Designated as Hedging Instrument | Forward foreign currency exchange contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amounts | 29,000,000 | 0 |
Assets | 0 | 0 |
Liabilities | 0 | 0 |
Cash flow hedging | Designated as Hedging Instrument | Forward foreign currency exchange contracts | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amounts | 80,000,000 | 161,000,000 |
Assets | 0 | 1,000,000 |
Liabilities | 0 | 0 |
Cash flow hedging | Designated as Hedging Instrument | Designated interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amounts | 500,000,000 | 0 |
Assets | 0 | 0 |
Liabilities | 1,000,000 | 0 |
Designated net investment hedge | Designated as Hedging Instrument | Net investment hedges | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amounts | 44,000,000 | 44,000,000 |
Assets | 3,000,000 | 3,000,000 |
Liabilities | $ 0 | $ 0 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Fair Values of Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 27, 2020 | Mar. 28, 2020 |
Cash flow hedging | Forward Currency Exchange Contracts | ||
Derivative [Line Items] | ||
Assets subject to master netting arrangements | $ 0 | $ 1 |
Liabilities subject to master netting arrangements | 0 | 0 |
Derivative assets, net | 0 | 1 |
Derivative liabilities, net | 0 | 0 |
Cash flow hedging | Interest Rate Swaps | ||
Derivative [Line Items] | ||
Assets subject to master netting arrangements | 0 | 0 |
Liabilities subject to master netting arrangements | 1 | 0 |
Derivative assets, net | 0 | 0 |
Derivative liabilities, net | 1 | 0 |
Net investment hedging | Net investment hedges | ||
Derivative [Line Items] | ||
Assets subject to master netting arrangements | 3 | 3 |
Liabilities subject to master netting arrangements | 0 | 0 |
Derivative assets, net | 3 | 3 |
Derivative liabilities, net | $ 0 | $ 0 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Summary of Pre-tax Impact of Gains (Losses) on Derivative (Details) - Designated as Hedging Instrument - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Forward Currency Exchange Contracts | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Pre-Tax Losses Recognized in OCI | $ 0 | $ 0 |
Net investment hedges | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Pre-Tax Losses Recognized in OCI | 0 | (25) |
Interest Rate Swaps | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Pre-Tax Losses Recognized in OCI | $ (1) | $ 0 |
Derivative Financial Instrume_7
Derivative Financial Instruments - Summary of Pretax Impact of Gain (Loss) Reclassified from AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Cost of goods sold | $ 149 | $ 512 |
Forward Currency Exchange Contracts | Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Pre-Tax (Gain) Loss Reclassified from Accumulated OCI | $ (1) | $ (3) |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Subsidiary or Equity Method Investee [Line Items] | ||
Ordinary shares, shares repurchased amount | $ 1,000,000 | $ 2,000,000 |
Stock Repurchase Program | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Share-repurchase program amount | $ 500,000,000 | $ 1,000,000,000 |
Ordinary shares, shares repurchased (in shares) | 0 | 0 |
Share-repurchase program remaining amount | $ 400,000,000 | |
Withholding Taxes | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Ordinary shares, shares repurchased (in shares) | 38,119 | 58,304 |
Ordinary shares, shares repurchased amount | $ 1,000,000 | $ 2,000,000 |
Shareholders' Equity - Changes
Shareholders' Equity - Changes in Components of Accumulated Other Comprehensive (Loss) Income, Net of Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | $ 2,168 | $ 2,432 |
Other comprehensive (loss) income, net of tax | (4) | (27) |
Ending balance | 2,007 | 2,324 |
Foreign Currency Translation Gains (Losses) | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | 72 | (73) |
Other comprehensive (loss) income before reclassifications | (3) | (25) |
Less: amounts reclassified from AOCI to earnings | 0 | 0 |
Other comprehensive (loss) income, net of tax | (3) | (25) |
Ending balance | 69 | (98) |
Net gain on long-term transactions | 1 | 3 |
Loss related to net investment hedges | 21 | |
Taxes related to the gain on net investment hedges | 4 | |
Foreign Currency Translation Gains (Losses) | Gianni Versace S.r.l. | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Foreign currency translation adjustments | 28 | |
Net Gains (Losses) on Derivatives | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | 3 | 7 |
Other comprehensive (loss) income before reclassifications | 0 | 0 |
Less: amounts reclassified from AOCI to earnings | 1 | 2 |
Other comprehensive (loss) income, net of tax | (1) | (2) |
Ending balance | 2 | 5 |
Other Comprehensive (Loss) Income Attributable to Capri | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | 75 | (66) |
Other comprehensive (loss) income before reclassifications | (3) | (25) |
Less: amounts reclassified from AOCI to earnings | 1 | 2 |
Other comprehensive (loss) income, net of tax | (4) | (27) |
Ending balance | $ 71 | $ (93) |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) $ / shares in Units, $ in Millions | 3 Months Ended | |
Jun. 27, 2020USD ($)equity_plan$ / sharesshares | Jun. 29, 2019$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of equity plans | equity_plan | 2 | |
Estimated value of future forfeitures | $ | $ 13 | |
Service-Based RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average grant date fair value of RSUs (in dollar per share) | $ / shares | $ 16.24 | $ 33.90 |
Performance-Based RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted average grant date fair value of RSUs (in dollar per share) | $ / shares | $ 33.86 | |
2008 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of equity plans adopted | equity_plan | 1 | |
Shares authorized for issuance (up to) (in shares) | 23,980,823 | |
Shares available for grant (in shares) | 0 | |
Option expiration period (years) | 10 years | |
2012 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for issuance (up to) (in shares) | 15,246,000 | |
Shares available for grant (in shares) | 1,554,923 | |
Option expiration period (years) | 7 years |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Share-based Compensation Activity (Details) | 3 Months Ended |
Jun. 27, 2020shares | |
Options | |
Options | |
Outstanding at beginning of period (in shares) | 2,071,096 |
Granted (in shares) | 0 |
Exercised (in shares) | 0 |
Canceled/forfeited (in shares) | (363,087) |
Outstanding at end of period (in shares) | 1,708,009 |
Service-Based RSUs | |
RSUs | |
Unvested at beginning of period (in shares) | 4,311,683 |
Granted (in shares) | 1,772,553 |
Vested (in shares) | (850,621) |
Change due to performance condition (in shares) | 0 |
Canceled/forfeited (in shares) | (152,289) |
Unvested at end of period (in shares) | 5,081,326 |
Performance-Based RSUs | |
RSUs | |
Unvested at beginning of period (in shares) | 772,172 |
Granted (in shares) | 0 |
Vested (in shares) | (102,078) |
Change due to performance condition (in shares) | 5,926 |
Canceled/forfeited (in shares) | (131,107) |
Unvested at end of period (in shares) | 544,913 |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of Compensation Expense Attributable to Share-Based Compensation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Share-based compensation expense | $ 24 | $ 28 |
Tax benefit related to share-based compensation expense | $ 5 | $ 5 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Operating Loss Carryforwards [Line Items] | ||
Effective tax rate | (2.90%) | 11.80% |
United Kingdom | Foreign Tax Authority | ||
Operating Loss Carryforwards [Line Items] | ||
Provision for incomes taxes at the U.K. statutory tax rate | 17.00% | 19.00% |
Segment Information - Additiona
Segment Information - Additional Information (Details) $ in Millions | 3 Months Ended | |
Jun. 27, 2020USD ($)retaile_store_formatsegment | Mar. 28, 2020USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of operating segments | segment | 3 | |
Number of reportable segments | segment | 3 | |
Assets | $ | $ 7,533 | $ 7,946 |
Cash and cash equivalents | $ | $ 207 | $ 592 |
Michael Kors | ||
Segment Reporting Information [Line Items] | ||
Number of retail store formats | retaile_store_format | 4 |
Segment Information - Key Perfo
Segment Information - Key Performance Information of Reportable Segments (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Segment Reporting Information [Line Items] | ||
Total revenue | $ 451 | $ 1,346 |
Less: Corporate expenses | (31) | (33) |
Restructuring and other charges | (8) | (15) |
Impairment of assets | 0 | (97) |
Total (loss) income from operations | (162) | 64 |
COVID-19 | ||
Segment Reporting Information [Line Items] | ||
COVID-19 related charges | (5) | 0 |
Credit loss | (6) | |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total (loss) income from operations | (118) | 209 |
Versace | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 93 | 207 |
Versace | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total (loss) income from operations | (41) | (3) |
Jimmy Choo | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 51 | 158 |
Jimmy Choo | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total (loss) income from operations | (29) | 11 |
Michael Kors | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 307 | 981 |
Michael Kors | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total (loss) income from operations | $ (48) | $ 201 |
Segment Information - Depreciat
Segment Information - Depreciation and Amortization Expense for Each Segment (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Segment Reporting Information [Line Items] | ||
Total depreciation and amortization | $ 54 | $ 60 |
Versace | ||
Segment Reporting Information [Line Items] | ||
Total depreciation and amortization | 13 | 14 |
Jimmy Choo | ||
Segment Reporting Information [Line Items] | ||
Total depreciation and amortization | 7 | 8 |
Michael Kors | ||
Segment Reporting Information [Line Items] | ||
Total depreciation and amortization | $ 34 | $ 38 |
Segment Information - Total Rev
Segment Information - Total Revenue (as Recognized Based on Country of Origin) by Geographic Location (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jun. 27, 2020 | Jun. 29, 2019 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 451 | $ 1,346 |
The Americas | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 177 | 729 |
EMEA | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 122 | 360 |
Asia | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | 152 | 257 |
U.S. | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total revenue | $ 161 | $ 681 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Sep. 27, 2020 | Jun. 27, 2020 | Mar. 28, 2020 |
Subsequent Event [Line Items] | |||
Notional amounts | $ 653,000,000 | $ 205,000,000 | |
Designated as Hedging Instrument | |||
Subsequent Event [Line Items] | |||
Notional amounts | 624,000,000 | 205,000,000 | |
Net investment hedges | Net investment hedging | Designated as Hedging Instrument | |||
Subsequent Event [Line Items] | |||
Notional amounts | $ 44,000,000 | $ 44,000,000 | |
Subsequent event | Euro Member Countries, Euro | Net investment hedges | Net investment hedging | Designated as Hedging Instrument | |||
Subsequent Event [Line Items] | |||
Notional amounts | $ 1,000,000,000 |