Greetings and welcome to the Capri Holdings Limited Fourth Quarter and Full Year Fiscal 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jennifer Davis, Vice President, Investor Relations for Capri Holdings Limited. Thank you. You may begin.

Good morning, everyone, and thank you for joining us on Capri Holdings Limited fourth quarter and full year fiscal '23 conference call. With me this morning are Chairman and Chief Executive Officer, John Idol; and Chief Financial and Chief Operating Officer, Tom Edwards. Before we begin, let me remind you that certain statements made on today's call may constitute forward-looking statements which are subject to risks and uncertainties that could cause actual results to differ from those we expect. Those risks and uncertainties are described in today's press release and in the company's SEC filings, which are available on the company's website. Investors should not assume that the statements made during this call will remain operative at a later time, and the company undertakes no obligation to update any information discussed on the call. Unless otherwise noted, all financial information on today's call will be presented on a non-GAAP basis. These non-GAAP measures exclude certain costs associated with COVID-19 related charges, long-lived asset impairments, ERP implementation costs, Capri transformation costs, restructuring and other charges, charitable donations and the war in Ukraine. To view the corresponding GAAP measures and related reconciliation, please view the earnings release posted to our website earlier today at capriholdings.com. Additionally, as a reminder, last year's fourth quarter and full year included an extra week in the fiscal calendar. Therefore, revenue growth rates for the fourth quarter and fiscal year '23 will be discussed on a 52-week constant currency basis unless otherwise noted. Now, I would like to turn the call over to Mr. John Idol, Chairman and Chief Executive Officer. John?

Thank you, Jennifer, and good morning, everyone. Looking back on fiscal '23, revenue increased high single digits, and earnings per share increased mid-single digits. These results were measured on a 52-week constant currency basis. While this was not up to our original expectations, many aspects of our business performed well. First, revenue increased across all houses with double-digit growth at Versace and Jimmy Choo, as well as mid-single digit growth at Michael Kors. In fact, we achieved record revenue at Versace and Jimmy Choo in fiscal '23. Second, we accelerated growth of accessories across all houses, with retail sales of women's accessories increasing over 40% at Versace, over 20% at Jimmy Choo, and low single digits at Michael Kors. Third, we continued to grow footwear across all brands, with retail sales of women's footwear increasing low double-digits at Versace and Michael Kors, as well as high single digits at Jimmy Choo. Fourth, we added 12.6 million new names to our database, representing an 18% increase in our total database size. This is the largest year-over-year increase in the company's history. Combined with the growth in our own retail channel, we believe this continues to demonstrate the strength and desirability of our luxury houses. Fifth, we returned $1.35 billion to shareholders through share repurchases, reflecting our strong balance sheet and free cash flow generation. These results demonstrate the power of our business model, the strength of our luxury houses, and the execution of our strategic initiatives. Now I'd like to update you with the progress we made by brand in fiscal '23. Starting with Versace, in fiscal '23, we achieved record revenue of over $1.1 billion, demonstrating the momentum of the brand and the success of our strategic growth initiatives. Versace revenue in fiscal '23 increased 14% in constant currency. Looking at product, starting with accessories, which are a key component of our growth strategy. Women's accessories were Versace's strongest performing category, with fiscal '23 sales in our retail channel up over 40% versus the prior year. With our pillars La Medusa, Virtus, and Greca Goddess, we are making significant progress in our goal to position Versace as a leading luxury leather house. Turning to footwear, which is another component of our growth strategy. Footwear performed well as we continued to build our core offering focused on our iconic brand codes. In fiscal '23, women's footwear sales in our own retail channel increased double digits as we continued to gain authority in women's luxury fashion footwear. In terms of ready-to-wear, women's performed well with sales in our own retail channels increasing double digits. Looking at men's ready-to-wear, we are in the early stages of repositioning the brand. We are elevating the assortment to include more tailored styles to capitalize on the sartorial fashion trend. As expected, sales declined in the back half of the year, which resulted in flat men's ready-to-wear sales in fiscal '23. Another key indicator of demand for the Versace brand is the strength of our fragrance, eyewear, and jewelry businesses, which increased strong double digits. Moving to brand awareness and consumer engagement, Versace's Fall-Winter 2023 show was held in Los Angeles to kick off the Oscars weekend with a collection inspired by the energy, glamour, and power of Hollywood. This collection marked the full repositioning of Versace's women's ready-to-wear. The show was widely attended by Friends of the House, including Anne Hathaway, Dua Lipa, Chris Lee, Miley Cyrus, Lil Nas X, Channing Tatum, and Elton John, among others. The fashion show generated over 400 million impressions, as well as a 60% increase in social media engagements relative to the spring '23 show. The energy and excitement around the fashion show helped contribute to an approximate 40% year-over-year increase in Versace's global database. Overall, we made significant progress executing our strategic initiatives in fiscal '23. We remain steadfast and clear in our efforts to position Versace as a leading global luxury brand with a focus on leather goods. Turning to Jimmy Choo, in fiscal '23, we achieved record revenue of $633 million as we continue to execute on our strategic initiatives to expand our accessories revenue and capitalize on our glamorous footwear opportunities. Revenue in fiscal '23 increased 13% on a 52-week constant currency basis. Looking at product, starting with accessories, which is a key component of our growth strategy. We are successfully expanding our collection as we develop and invest in timeless iconic styles. At the same time, we are driving newness and excitement with novelty and fashion updates. Sales of our Avenue and Bon Bon families increased strong double digits in fiscal '23. As a result, women's accessories was Jimmy Choo's strongest performing category with fiscal '23 sales in our retail channel up over 20% versus the prior year. Turning to footwear, in fiscal '23, footwear sales were driven primarily by growth in occasion footwear. This category performed well as people continued to embrace social activities and enjoy special events. Sneakers also performed well, driven by our new Diamond Maxi. Beyond our core categories, we saw growth in fragrance, eyewear, and jewelry, which reinforced our luxury lifestyle positioning. Now turning to brand awareness and consumer engagement. During the fourth quarter, Jimmy Choo launched a successful capsule collection in celebration of the 30th anniversary of the Japanese animated series Sailor Moon. The collaboration included accessories and footwear. Sell-through rates of over 90% were achieved. Additionally, the collaboration generated strong engagement across social media, including approximately 80 million impressions and helped contribute to a 17% year-over-year increase in Jimmy Choo's Global Consumer Database. Overall, we are pleased with the progress at Jimmy Choo as we continue to execute on our strategic initiatives. Now turning to Michael Kors. Revenue of $3.9 billion increased 4% on a 52-week constant currency basis. We were pleased with the continued growth in our own retail channel with full year sales up mid-single digits. However, total revenue was below our original expectations, driven by double-digit declines in wholesale in the back half of fiscal '23. Turning to product, in accessories, fiscal '23 sales in our retail channel increased low single digits globally. Consumers responded positively to our core iconic collections featuring Michael Kors Signature and Hardware. With our Signature and Hardware strategy, we continue to create desire as our iconic Michael Kors branding resonated with consumers. Signature continues to represent over 50% of accessory sales in fiscal '23. Looking at footwear, we continue to believe we can significantly expand Michael Kors footwear to drive incremental revenue. Footwear sales in our retail channel increased double digits as we delivered exciting fashion featuring iconic Hardware, branding elements, and Signature detailing. Turning to Men's, Men's was the strongest performing category in our retail channel in fiscal '23, with sales increasing strong double digits. We remain enthusiastic about our opportunity to significantly grow our accessories collection as we diversify the offering. In terms of licensing, revenue declined low double digits. This was driven by a decline in watches as well as a significant decline in fragrance due to the transition to our new license EuroItalia. Now turning to brand awareness and consumer engagement. During the quarter, we focused on reigniting the Jet Set storytelling of Michael Kors in China with an impressive two-day brand experience in Sanya. This resort destination on the island of Hainan was the perfect backdrop for over 100 friends of the brand to experience the full world of Michael Kors. Guests included Michael Kors' newest global Brand Ambassador Shu Qi, China Brand Ambassador Feifei Wang and Bai Lu, as well as top celebrities, performers, influencers, and the press. The event generated over 4 billion impressions across celebrity, social media, and the press. We intend to execute more brand activations in China now that the country has reopened. During New York Fashion Week, Michael Kors was once again the most engaged fashion brand on social media. The show, which took place in the West Village, celebrated the timeless glamour and Bohemia of New York in the 1970s. Attendees included Kate Hudson, Lea Michele, Katie Holmes, and Ellen Pompeo. The show generated over 25 million live stream views. Our marketing initiatives helped contribute to a 17% year-over-year increase in Michael Kors' global database, demonstrating the continued strength and desirability of the brand. Overall, we were pleased with the growth in our own retail channel in fiscal '23 as consumers responded to our Jet Set positioning and elevation strategy. Now turning to Capri's outlook for fiscal '24. With Versace, Jimmy Choo, and Michael Kors, we have three incredibly powerful brands to drive growth. We recognize there are near-term uncertainties in the Americas. However, we are encouraged by the strong trends in Asia and continued growth in EMEA. For the full year, we anticipate revenue will increase low single digits and EPS will increase mid-single digits. In fiscal '24 and beyond, we will continue to drive growth as we execute on our strategic initiatives. Across all our luxury houses, we are focused on continuing to grow our e-commerce channel as well as increasing store productivity through clienteling, store renovations, and product expansion opportunities. We intend to grow and leverage our databases. Our data analytics capabilities will help us foster deeper connections with our consumers. Furthermore, we will utilize this data to empower our sales associates with more impactful clienteling opportunities. Now looking at some of our brand-specific initiatives. At Versace, we will capitalize on our powerful brand awareness and engagement to influence consumer desire. We have made significant progress in our ambition to position Versace as a leading luxury leather house. Women's accessories is one of our fastest growing categories as we continue to gain authority and expand our platforms. Additionally, Versace has tremendous growth potential in Asia as it remains significantly under-penetrated relative to our luxury peers. We remain confident that we have the right strategies in place to grow Versace to at least $2 billion in revenue over time. Turning to Jimmy Choo, we will continue to drive brand heat through our emphasis on glamour. We remain optimistic about our ability to significantly grow accessories revenue as we gain authority in the category. Additionally, we have a meaningful opportunity to increase our casual footwear business. With the growth potential of these two categories as well as continued growth in our core occasion footwear business, we remain confident in Jimmy Choo's ability to achieve $1 billion in revenue over time. Finally turning to Michael Kors, by reinforcing our iconic Jet Set brand codes, we see meaningful growth opportunity. First, we will continue to grow our core accessories where consumers turn to us as a fashion authority. Second, footwear remains an important driver of future growth, especially as we renovate stores and allocate more space to the category. Third, we have a significant opportunity to grow Men's, particularly given our authority in the accessories category. And fourth, Michael Kors' largest growth opportunity will come from Asia, where we are significantly under-penetrated relative to our luxury peers. We remain optimistic that with these opportunities, we will grow Michael Kors' revenue to $5 billion over time. In closing, our three powerful iconic brands have enduring value and strong brand equity, giving us confidence in our ability to deliver sustainable revenue and earnings growth over time. Now, let me turn the call over to Tom, who will review our fourth quarter results and guidance in more detail.

Thank you, John, and good morning, everyone. Starting with fourth quarter results, revenue of $1.3 billion decreased 3% on a 52-week constant currency basis, slightly ahead of our expectations. Net income was $121 million, resulting in diluted earnings per share of $0.97. This was also slightly above our expectations, reflecting better than anticipated revenue and operating margin, partially offset by higher than expected interest expense and taxes. Now turning to fourth quarter results in more detail. Revenue growth rates will be shared on a 52-week constant currency basis unless otherwise stated. Starting with revenue by channel, total company retail sales increased low single digits. These results were driven by growth in both e-commerce and store sales. We saw continued growth in e-commerce driven by our large and growing database and data analytics capabilities. In the wholesale channel, revenue declined double digits impacted by lower POS sales in the Americas as well as lapping strong sell-ins in the prior year, as our partners began to build back their inventory positions. Turning to revenue performance by geography. In the Americas, revenue decreased 10%. Retail sales declined low single digits as we saw consumer spending soften across all brands. In wholesale, revenue declined double digits. In EMEA, revenue increased 6% as all houses benefited from continued strong consumer demand. And in Asia, revenue increased 7%, primarily reflecting improving trends in China. Looking at revenue performance by brand. At Versace, revenue decreased 9% compared to the prior year. As anticipated, global retail sales increased in the low single digits but were offset by declines in wholesale. By geography, total Versace revenue in the Americas decreased double digits, driven by significant declines in wholesale. Revenue in EMEA increased low single digits, reflecting growth in our own retail channel. Revenue in Asia increased in the mid-single digits, primarily driven by improving trends in China. For Jimmy Choo, revenue increased 6% compared to the prior year. Global retail sales increased low single digits. By geography, total revenue in the Americas decreased slightly. Revenue in EMEA increased in the low 20% range. Revenue in Asia decreased in the mid-single digits, a sequential improvement relative to the prior quarter driven by the reopening of China. At Michael Kors, revenue decreased 2% compared to the prior year. Global retail sales increased low single digits, offset by double-digit declines in wholesale. By geography, sales in the Americas decreased high single digits. Retail sales declined low single digits, while wholesale revenue declined double digits. Revenue in EMEA increased low single digits. Revenue in Asia increased in the mid-teens, primarily reflecting improving trends in China. Now looking at total company margin performance. Gross margin expanded 90 basis points to 64.6% with expansion across all three of our houses. This improvement primarily reflects moderating inbound transportation costs, price increases, and channel mix. Operating expense as a percent of revenue was 55.6% compared to 49.5% last year, reflecting expense deleverage driven by lower wholesale sales. Total company operating margin was 9.1% compared to 14.2% last year, driven by operating expense deleverage. At Versace, operating margin of 5.1% compared to 15.9% last year. This was below our expectations, primarily reflecting expense deleverage on lower than anticipated wholesale revenue. At Jimmy Choo, operating margin of negative 4.6% compared to negative 9.6% last year. This was ahead of our expectations, driven by leverage on higher than anticipated revenue. And in Michael Kors, operating margin of 16.2% compared to 20.6% last year. The decline reflects expense deleverage on lower wholesale revenue. Our tax rate for the quarter was negative 16.2% compared to last year's rate of positive 28.3%, primarily reflecting the resolution of uncertain foreign tax positions as well as the mix of earnings in lower tax jurisdictions. Now turning to our balance sheet. We ended the quarter with cash of $249 million and debt of $1.83 billion, resulting in net debt of $1.58 billion. We repurchased approximately $400 million worth of shares in the fourth quarter and $1.35 billion worth for the fiscal year, demonstrating our strong balance sheet and free cash flow generation. Capital expenditures for the year were $226 million and were primarily spent on new store development, renovations, IT and e-commerce enhancements. Looking at inventory, we ended the quarter with $1.06 billion, a 4% decline versus the prior year. Now turning to guidance where I will discuss revenue growth rates on a reported basis unless otherwise stated. We expect total company fiscal '24 revenue of approximately $5.7 billion. This outlook includes stronger than previously anticipated trends from the reopening of China, as well as slower consumer trends in the Americas. Additionally, it reflects the recent strengthening of the US dollar. By brand, we expect Versace revenue of approximately $1.2 billion, increasing approximately 8% over fiscal '23. Jimmy Choo revenue of approximately $700 million increasing approximately 11%, and Michael Kors revenue of approximately $3.8 billion decreasing approximately 2%. For the year, we anticipate modest growth margin expansion driven by regional mix, channel mix, and lower freight. We continue to expect a full year operating margin of approximately 16.5%. By brand, we anticipate Versace operating margin in the mid-teens range, Jimmy Choo operating margin in the high single-digit range and Michael Kors operating margin in the low 20% range. Turning to our expectations around certain non-operating items, we expect net interest expense of approximately $20 million and an effective tax rate of approximately 15%. We anticipated weighted average shares outstanding of 122 million. As a result, we continue to expect to generate diluted earnings per share of approximately $6.40. Turning to capital expenditures, we anticipate spending approximately $260 million, which includes store openings and remodels as well as IT expenditures, including investments in our digital platforms. In terms of our capital allocation plans for fiscal '24, given the macro environment and higher interest rates, we believe it is prudent to reintroduce debt repayment in conjunction with share repurchases. Now, I would like to take a moment to provide some perspective around the cadence of revenue and earnings between the first and second half of the year. We expect first half revenue to decline in the mid-single-digit range. In our own retail channel, we anticipate a low single-digit increase in revenue. This reflects strong double-digit trends in Asia and continued growth in EMEA, partially offset by softer trends in the Americas. In wholesale, we expect sales down double digits, given declines at POS in addition to lapping strong sell-ins in the prior year as our partners built back their inventory positions. In the second half of the year, we anticipate revenue will increase high single digits. In our own retail channel, we expect sales to increase low double digits, but high single digits on a constant currency basis, driven by strong trends in Asia as well as modest growth in the rest of the world. In wholesale, we anticipate trends to normalize as we anniversary the significant declines in the second half of fiscal '23. And as we begin to benefit from increasing staffing levels in American department stores. Relative to the prior year, this revenue cadence will result in lower margins in the first half of fiscal '24 due to deleverage. In the back half of the year, we expect margin expansion. This will be driven by expense leverage on higher sales as well as the expense reduction initiatives we have implemented. We anticipate first half operating margin of approximately 13% and second half operating margin of approximately 19.5%. Now, turning to first quarter guidance. We expect total company revenue of approximately $1.2 billion. This represents an approximate 12% decrease versus prior year, which we expect to be the largest year-over-year decline in quarterly revenue for fiscal '24. In our own retail channel, we anticipate revenue will decline mid-single digits. While we are seeing strong trends in Asia and continued growth in EMEA, we anticipate revenue will decrease in the Americas given the challenging consumer environment. Additionally, as anticipated in the first quarter, we expect to see the largest year-over-year decline in the wholesale channel with revenue down approximately 30%. We expect first quarter wholesale performance to be the weakest year-over-year, given declines at POS sales in the Americas, as well as lapping strong sell-ins in the prior year as our partners built back their inventory positions. For first quarter revenue by brand, we forecast Versace revenue of approximately $245 million, decreasing approximately 11%. We expect a decline in sales as we are lapping the incredibly successful Spring '22 Fendace collaboration in both the retail and wholesale channels. Additionally, in wholesale, we anticipate sales will decline as our partners are taking a more cautious approach to planning the business due to the uncertain macroeconomic environment. We anticipate Jimmy Choo revenue of approximately $180 million, increasing approximately 5%, driven primarily by retail, and Michael Kors revenue of approximately $775 million, decreasing approximately 15%. We expect sales in our own retail channel will decline modestly, reflecting the challenging consumer environment in the Americas, partially offset by strong trends in Asia and continued growth in EMEA. In wholesale, we anticipate significant declines. Looking at operating margin, as anticipated, we expect first quarter operating margin will be approximately 8.5% compared to prior year of 18.5%. The majority of this decline reflects the significant deleverage on lower wholesale revenue. In addition, it also includes higher investments, primarily in marketing, which will normalize in future quarters. In terms of operating margin by brand, we anticipate Versace operating margin of approximately breakeven. The majority of this decline reflects significant deleverage on lower revenue, including the significant decline in wholesale. In addition, it also reflects $20 million higher marketing investments year-over-year to support the full repositioning of the women's collection. This includes the Fall-Winter Fashion show in Los Angeles, The La Vacanza Show last week in Cannes, and the new campaign featuring Anne Hathaway and Chris Lee. We anticipate marketing investments will normalize in future quarters. We anticipate Jimmy Choo operating margin in the high single digits and Michael Kors operating margin in the mid-teens, primarily reflecting expense deleverage on lower wholesale sales. Turning to our expectations around certain non-operating items, we forecast net interest expense of approximately $4 million and an effective tax rate of approximately 15%, and weighted average shares outstanding of 120 million. As a result, we expect diluted earnings per share of approximately $0.70. In conclusion, looking back on fiscal '23, Capri generated high single digit revenue growth and mid-single digit earnings per share growth on a 52-week constant currency basis. While this was not up to our original expectations, we were still able to deliver strong operating margins of 16.2% and return $1.35 billion to shareholders. This is a testament to the power of our diversified business model. We remain confident in our ability to achieve our long-term goals over time due to the resilience of the luxury industry, the strength of our three powerful iconic brands and the talented group of employees executing our strategic initiatives. Now, we will open up the line for questions.

Thank you. At this time, we'll be conducting a question-and-answer session. Our first question comes from the line of Matthew Boss with JPMorgan. Please proceed with your question.

Great. Thanks. Good morning, John. So maybe could you elaborate on the near-term uncertainties you cited in the Americas? Any notable differences that you're seeing across distribution channels today and then as we look to FY'24, to me, the big question is just the visibility that you have today or what gives you confidence in the retail channel improvement that you're embedding in the guide beyond the first quarter?

Good morning, Matt. First, I want to express my pride in our results from last year, which showed high single-digit revenue growth and mid-single-digit earnings per share growth on a constant currency basis over 52 weeks. Even though we experienced a drop in the wholesale part of our business in the latter half of the year, we are satisfied with the performance at Versace and Jimmy Choo, which achieved record results. Jimmy Choo has seen growth every year since its inception, excluding the COVID period. Although Michael Kors encountered the most significant impact in wholesale, we still grew on a constant currency basis over 52 weeks. With our company's operating margin at 16%, I believe there are many positive aspects to Capri, especially considering the $1.35 billion returned to shareholders. Our business model is solid, and our three brands are well-positioned for future growth. Regarding global markets, as we mentioned in our prepared remarks, Asia, particularly China, has been performing exceptionally well, aided by the reopening of the market. We're seeing strength there that has exceeded our expectations, which is a positive indicator. Additionally, we're re-engaging with all three luxury brands to animate our offerings with events. For instance, the Sanya event for Michael Kors was very successful, and our collaboration with Sailor Moon was highly effective in both China and Japan. Versace has also allowed us to create more unique animations, and we're excited for more significant presentations planned for fiscal '24. We have considerable room to grow compared to our competitors in both luxury and accessible luxury segments, and we are gearing up to make substantial progress in the next few years. In EMEA, we are happy with the steady and growing performance across all three brands, benefiting from increased tourism within Europe. While we have seen American, Middle Eastern, and Indian tourists coming to Europe, we are still awaiting the return of Asian tourists, which we anticipate will be more pronounced in 2024, possibly towards the latter part of this year. Overall, we see two strong markets globally. Looking at the Americas, we have observed a sequential decline in North America, particularly in department stores, affecting not just Michael Kors but also the luxury segments of Versace and Jimmy Choo, especially evident in the first quarter of this calendar year. This situation has two facets: first, many stores were not adequately stocked at this time last year, particularly for Michael Kors, and we faced challenges in getting inventory levels up. In Versace, we dealt with the large shipments and the substantial success of Fendace early in the year, contributing to the noise. Consumers who felt positive about their finances in calendar 2022 have become more cautious at the start of 2023, but we are starting to observe some improvement with spring merchandise and summer deliveries, indicating increased consumer confidence. While we don't expect a dramatic change, there is definitely a positive response to new products in stores across all three brands. In North America, we expect the business to remain soft for most of the summer—fluctuating slightly here and there—but we anticipate softer comparisons in the latter half of the year, with minor increases expected. We believe that Europe and Asia will continue to advance positively, which reassures us about the second half of the year regarding our retail channels. I’d like to highlight our recent successes, particularly with Versace's Los Angeles show, which marked a complete repositioning of the women's collection, emphasizing our work on accessories and footwear. Early indications from high-net-worth clients show promising pre-orders. Our collaboration with Dua Lipa in Cannes has also attracted a new customer base, boosting our outlook for Versace in the latter part of the year. Jimmy Choo continues to perform well, especially in accessories, and we see that positively impacting our global reach. For Michael Kors, we are encouraged by our revitalization around the Jet Set concept, which resonates with customers, and our database reflects 17% growth, a significant achievement. Looking ahead, we expect to navigate through the challenges in department stores, addressing previous understaffing issues at sales points which we plan to rectify by the fall. We’ve noticed that our strategy to elevate brand positioning has been effective in our stores, and while department store customers have reacted sluggishly to price increases, we remain committed to our elevation strategy with some adjustments to better align with department store offerings. Furthermore, we’ve reduced our full-price promotions in Michael Kors by 33% in both Q3 and Q4, suggesting a conscious effort to promote brand health over volume, and we intend to maintain this approach. Lastly, we will launch two new prototype stores for Michael Kors in Miami and Vancouver in the next couple of months, and if successful, we will initiate a significant global remodeling program for the brand. We have a solid plan in place, and I appreciate the opportunity to share these insights, and now I’ll turn it over to Tom.

And Matt just one additional point here on the second half for FY'24 visibility. As I mentioned in the prepared remarks, we expect retail to be up high single digits on a constant currency basis. It's really driven by significant strong double-digit growth in China, where we're already seeing the results and great momentum. Europe will remain positive, which it's already doing now, and the Americas turns to moderate growth. And those are really the components there, and John provided all the context, but I wanted to give that in the context of what's really driving it.

And I want to again remind everyone the first two quarters are where we're going to see the significant wholesale declines, and that's what we said was going to happen, and that's what you see in the Q1 forecast. That's really the greatest impact to our profitability is really around the wholesale declines across the group as the North American department stores really reset their inventory levels. And we know that's the right thing to do for us so that we don't end up, once again, we don't want too much inventory sitting for markdowns. We want to protect brand health, and we think we're doing the right things in order to set ourselves up for that success. Thank you, Matt.

Thank you. Our next question comes from the line of Ike Boruchow with Wells Fargo. Please proceed with your question.

Hey, good morning, everyone. A couple of questions on the outlook. I guess, John, looking at the Kors outlook, so you cut $100 million off of that and Versace $50 million. I guess just for Kors specifically, is that incremental pressure in wholesale that you're adding on to that? Or is that some potential weakness at retail versus the outlook at three months ago? And then with Versace is that US consumer weakness at the high end that is leading to that slight revision down and then maybe, Tom, on the gross margin helpful for the year. Just kind of curious the shape, maybe first half, back half, it seems to me like the gross is actually might be front-half weighted in terms of expansion just based on the channel mix. But with wholesale down so much, but I just kind of wanted to get a little bit more clarity there? Thank you.

Sure. I can start. Regarding the change in guidance for revenue for Kors and I'll talk about it in general first for $100 million from $5.8 billion to $5.7 billion, the majority of that was driven by a change in FX. So the dollar strengthened versus our prior forecast, and we adjusted that. The other piece reflects the trends in North America that we were seeing. So those pieces flow through to Michael Kors and also to Versace. We're seeing great strength in Jimmy Choo and very pleased with that performance. For gross margin for the year, we expect expansion in gross margin in both first half and second half. There are slightly different drivers in it. And in the first half, it's going to mirror what we saw in Q4 where we have transportation, inbound freight, and channel mix helping, and we'll see that continue into the first half as well as a region mix. And then in the second half, transportation will begin to tail off, but the region, with China growing even stronger, we'll continue to drive results as well as the strategic initiatives that John mentioned across all of our houses, which is underlying our margin growth over the past several years that will continue and drive gross margin in the back half of the year. So again, we expect margin expansion for the year and expect it in both halves.

Let me address one more point regarding Versace. We anticipate that Versace will experience growth in every quarter following the upcoming first quarter. There are a few key factors at play. First, we have the major anniversary of the Fendace collaboration, which was highly successful, and we couldn't plan for that anniversary as it happened very quickly over a six-week period. If we set aside the impact of that success, we are actually seeing a slight increase in Q1. We just need to move past that moment. Secondly, as I mentioned earlier, our initial focus when we began revamping Versace was on improving and cleaning up the stores, which we've successfully accomplished. Next, we eliminated $150 million worth of products that were being sold at low prices under various labels, which has also been addressed. We then worked on enhancing the accessories business, which has proven to be very successful for us. Remember, this brand transitioned from having minimal profitability to achieving reasonable operating margins, which we are maintaining while continuing our investments. Fourth, we focused on developing the women's footwear line, which has progressed faster than we expected and we are very pleased with this development. We are now working on refining the women's ready-to-wear line, and we feel confident about it. You will start to see this reflected in the products arriving in stores for the fall season, including some items from the Dua Lipa buy-now, wear-now collection that are already coming in. Lastly, we need to address the Men's segment, which still accounts for 50% of Versace's business and significantly influences our overall revenue. We plan to reduce that percentage to about 40% as we allow the Women's segment to grow, which we believe will enhance our margins, particularly in women's accessories. In this process, we have intentionally scaled back on certain classifications, such as T-shirts, pool slides, and sneakers, which, while desirable, do not cater to luxury customer perceptions. If you visit our stores now, you'll notice more refined tailoring and products that focus on evening wear, work attire, and daytime options. The primary decline in Versace's performance, in contrast to gains in North America, is stemming from the Men's segment, and we are actively driving this change. I encourage you to visit our stores to witness the transformations taking place. Our goal is to ensure that the sophistication level of both women's and men's offerings aligns within the stores, which we believe is the right approach. This shift not only reflects current fashion trends but also gets back to the historical roots of Versace, which is where we aim to return. Thank you, Ike.

Thank you.

Thank you. Our next question comes from the line of Brooke Roach with Goldman Sachs. Please proceed with your question.

Good morning and thank you for taking our question. I was hoping you could talk to your efforts to align the cost structure of the business to the current level of demand that you're seeing. What actions are you taking to improve your margins? And can you provide an update on your thoughts to return Capri to an 18% or greater operating profit margin over time? Thank you.

Sure, Brooke. I'd be happy to do that. So for this year, given the large change in wholesale, and we noted this in prior quarters, we've worked through a number of initiatives to reduce our cost structure and recalibrate the rate of spending on initiatives. We are looking at back-office type activities as well as corporate overhead and focusing on non-revenue driving expenses, projects, initiatives while continuing to invest in marketing and in e-commerce and those initiatives like the replatforming of our e-commerce systems that will help us drive revenue and expand margins in the future. As we look ahead to getting to 18% and we've ultimately given a long-term goal of 20% operating margin, that will really come with, as we noted in this year, gross profit expansion, but mostly of leverage. And the leverage on the SG&A will be driven, first and foremost, by increased store sales densities and then leverage on our corporate activities. Within that, we're going to continue to spend on marketing, and we've increased it in fiscal '23 significantly as a percent of revenue and as a total. And we've also built in an increase in fiscal '24 as that's going to be key to driving our long-term revenue and margin expansion via that leverage.

Thank you, Brooke.

Thank you. Our next question comes from the line Rick Patel with Raymond James. Please proceed with your question.

Thank you and good morning, everyone. Can you provide some additional color on what you're seeing at wholesale in terms of sell-in versus sell-through? We're trying to better understand what guidance reflects in terms of evolving market conditions versus Capri pulling back intentionally to protect its brands. Also, you touched on wholesale normalizing in the back half. Perhaps some additional color here on the direction of revenue growth and which brands we should see the most improvement?

Thank you, Rick, and good morning. Rick, I think we have always been a company that really looks at our, I think, you're in particular referring to wholesale, our sell-in versus sell-through. I think we did a great job managing our inventories all the way through COVID and then coming out of COVID, and I think we told you that we would sequentially reduce our inventories across the company, and I think we did that. And you saw that in our inventory reduction this year at the end of the year. So I think we feel good about our inventory positions that we own in our own retail stores as well as the inventory we own that will be available to ship to our wholesale partners. We monitor it weekly. And so we're really in lockstep with our partners on how that product ends up in the stores. Again, you'll see wholesale will decline much more significantly than what's happening at POS because again we're up against last year where we were restocking the stores at this point in time when they were, quite frankly, below targeted inventory levels. So I think we feel good about that. And as I said, we're seeing some green shoots on some of the new products that we've delivered really across the group. When I look at some of the new Jimmy Choo Totes that just got delivered that you see in canvas and in straw performing extremely well. I'm very proud of everything that team is doing. The JC logo on the bags are kind of a very, very strong driver for us. I hope you saw the new campaign with Giselle. We were one of the first companies to really work with Giselle since she's come back to the fashion industry. And so we've got, I think, the right marketing around Glamour. We've got the right products around signature and logo happening there, and we're seeing the results. At Versace, as I said, we're very pleased with what's happening with our accessories, both in wholesale and in our own retail channels, and the women's business has been strong as well. The men's business is going to take time for us to rebalance. It's the right thing to do. If we believe in luxury, if we believe in the future, we have to really reset that part of the business. And we'll take some hits on that. But this is about the future of $2 billion plus for Versace, not whether we get there in a quarter or two. But I do think we have the ammunition, in particular, with the new Anne Hathaway campaign with icons coming for Versace in terms of the ready-to-wear. And of course, we're having very good success with our La Greca launch and the solid performance of La Medusa and Virtus, so our codes are really starting to resonate. And again, we just came off of a record year for Versace, and I think we're quite proud of that. And then in terms of Michael Kors, I think that look this is a very painful thing that we're going through with the reduction in the wholesale channel for us. I think that that is something that we have to work harder at, and I said that in the last call, in particular, with getting more sales associates into the stores to really be present and to clientele and to be able to conclude transactions. I think that we were slow to rebuild that program coming out of COVID, and that's a mistake that we made. I think you'll see that in a much better place come fall season. We're also seeing some green shoots while our hardware program was launched last fall season and probably didn't deliver exactly the results we were looking for. As we reduce some of the size of that hardware, we're getting very, very strong performance on that now. So between our signature, which I mentioned is over 50% of our business. And now the hardware growth, we're really starting to see come online. We think we've got the product in place to reset with our wholesale partners. And again, all we're looking to do is to stabilize that business. We're not looking for growth. We're not there yet, but we do think that we will be there for the fall season. Thank you, Rick.

Thank you.

Thank you. Our next question comes from the line of Simeon Siegel with BMO Capital Markets. Please proceed with your question.

Thanks. Good morning, everyone. John, can you share what the Average Unit Retail was this quarter, particularly in relation to marketing as a percentage of sales? And Tom, could you provide some insight into your thoughts on managing debt levels? I also noticed that the full year shares were projected to be above the first quarter. Could you give us any information on the stock repurchases related to that? Thank you.

Sure. At Versace, average unit retails have increased, driven by price increases and full-price sell-throughs, especially in accessories and footwear. We're pleased with the progress in this area. As I mentioned in the previous call, we will not implement any further price increases for now, as we have already made substantial price adjustments. For Jimmy Choo, average unit retails are also up. We have made several price increases there and plan to make a few more, probably concluding by the third and fourth calendar quarters of this year. We're in a strong position with both brands, balancing within those price points. This strategy reflects our approach at Michael Kors as well. It's essential to have a good, better, best pricing strategy to appeal to consumers across different income levels, and we're fine-tuning that in these areas. At Michael Kors, the average unit retail has remained steady, while average transactions have slightly decreased due to a notable rise in smaller bags. Despite a reported decline in our own stores this past quarter, unit sales have actually increased. Following COVID, we saw a rise in revenue from totes, backpacks, and large handbags, but that growth has slowed, and smaller bags are becoming more popular now that people are returning to social activities. This trend is not limited to the US. We are seen as a fashion-forward company and are attracting younger consumers, and we believe we have an above-average share of this demographic. This audience tends to enjoy dressing up more, and we think they are responding positively to our fashion offerings. Additionally, smaller hardware bags are gaining traction within the company, which is encouraging given current fashion trends. I’ll turn it over to Tom.

Simeon, regarding debt levels, first, I'd like to say our debt levels are very manageable, and our leverage is below two times and as we guided, net interest is $20 million for the year expected to be. However, in the past, we've always been balanced between buying back shares and repaying debt. So this is really a return to our usual practice, and in the current environment, we think it's prudent to do so and to manage both with really strong free cash flow, which ended the year last year at about $540 million and expect to continue to generate strong free cash flow going forward. With regard to shares, the full year share count was guided above Q1, and that's due to the normal issuance of shares in the June time frame for our employees as part of long-term compensation. So that's why the year is above the run rate coming out of the prior year, which included the $1.35 billion of share repurchases and that's flowing through.

Thank you, Simeon.

Thank you. Our next question comes from the line of Alex Straton with Morgan Stanley. Please proceed with your question.

Great. Thanks a lot for taking the question. I just had a couple of follow-ups on pricing and promotions. It sounds like you guys had some department store pushback on pricing, but have you observed any of that or sensitivity there in the direct-to-consumer channel? If you have any color on variation by household income level, that also be helpful. I think just finally, it's great to hear that you guys have an ongoing commitment to limited promotions, but how would you describe the broader environment there and what expectations you have embedded into the guidance? Thanks a lot.

Thanks and good morning, Alex. I want to clarify that there was no pushback from department stores. Both consumers and our department store partners in the U.S., Europe, and Japan have been outstanding and fully supportive of our elevation strategy. We've seen better sales at higher price points in our own stores compared to the department stores, partly because we had fewer sales associates available to engage with customers and explain why our products were priced higher. This is a significant oversight on our part, and we plan to address it quickly. Hiring the right staff will take some time, but we expect to have our department stores fully staffed by September, which will still be below pre-pandemic levels but significantly higher than what we had during the last holiday season. Our partners in North America and Europe are excited about this improvement. As I mentioned earlier, it's important to adjust our pricing strategy, whether for high-end luxury retailers or more accessible luxury brands. We will be fine-tuning our accessories and footwear offerings in the department stores, particularly with Michael Kors and also with Versace, as we want to balance those price points. We are noticing a more active promotional environment, likely due to many companies having excess inventory following the holiday season and some retailers cutting back on orders. We have proactively managed our inventory, so we feel well-positioned without needing to take actions that could harm our brand. As we’ve communicated before, particularly regarding Michael Kors, we are willing to sacrifice some volume to maintain brand integrity. This situation is mainly relevant to North America, as the dynamics differ in Europe and Asia for the Michael Kors brand. We are committed to our strategy, and a 17% increase in our customer database highlights the growing interest in our brand and the Michael Kors lifestyle. Thank you very much, Alex.

Thank you. Our next question comes from the line of Dana Telsey with Telsey Advisor Group. Please proceed with your question.

Hi. Good morning, everyone. John, as you think about the Americas business and your retail store profile, what is the right number of stores? How do you see these remodels transforming the business? And what percentage of CapEx do you think goes into it? Thank you.

Good morning, Dana. First off, as you know, we had closed close to 150 stores over the last few years to get to the right profile. And that really was a result of the e-commerce business. Once we turned on e-commerce, a number of our stores, the volumes reduced quite significantly. We have a very, very strong e-commerce business, as you know, growing. And as I indicated before, we've got a younger customer who's always been part of the Michael Kors profile. And that customer is a bit more digital native. So we've got a few more to go, a few more stores to close, probably another 25 or 30 or so in North America, and then we're done. And then we are going to renovate every single store in North America. We went on the same mission at Versace. I think it's working quite well for us there. We were fortunate when we bought Jimmy Choo, most of the store fleet was renovated. We've got a handful of stores to do there. But Michael Kors, we want to reset the stores for two reasons. Number one, it's time to refresh many of the stores, and we are a few years behind on that, mainly because of COVID. We just didn't feel like that was the right moment to make those investments. And secondly, as we've said, I think in our Investor Day, summer of last year, we're going to upsize the shoe spaces inside of our retail stores. We talk so much about our accessories business. But as we noted, we had very good growth across the whole group in footwear. We've learned a lot from our partners at Jimmy Choo about how to service customer create a really luxury environment for footwear. And we think we can do that much better than we're doing it today. You'll see that in the two prototype stores that open, and then that will be one of the core pillars when we start to renovate the stores to be able to give footwear a much bigger presence, and you see many luxury companies doing this. Again, we're not the only one who is looking at this as an opportunity for us. So you'll actually see the store count while I said we probably have another 20 or 25 to close in North America. You'll actually see the store count remain roughly flat or go up slightly, and that's mainly because of the stores we're opening in China. And we have some additional stores we're opening in the Middle East and in India as well. So there are markets we will grow. North America will shrink a little bit and completely renovate the fleet here in North America. And that will be a few hundred million dollars over a few year time period. We'll get back to you with more details around that, but we certainly have the cash flow to be able to do this. And as Tom mentioned before, we're going to invest in everything from stores in the company to our technology inside the company. We have a belief that we have three very powerful brands that can all grow and we're going to invest to be able to support that growth.

And Dana, I'd add, we guided to a CapEx this year of $260 million. A little over half of that is for stores and renovations that at Investor Day we provided a longer-term number of about 300 a year. So as John was noting, as we finished Versace's store refurbishments, then and remodeling, then move into Michael Kors. Will provide more details in the future, but that provides a little context.

Yes. And those new store renovations like they've done in Versace, like they've done in Jimmy Choo, should give those stores a lift, which is another avenue for us for increasing store productivity. Thank you, Dana.

Thank you. Our next question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question.

Thank you. Good morning. Can you provide details on the peak to trough wholesale revenues at Michael Kors? Additionally, do you believe you have positioned the business at the right level currently, or is there a possibility of another decline in that channel?

We are closely monitoring our wholesale business, which currently operates in the twenty-something percentage range for us. We have expressed a desire for the decline in wholesale to occur more rapidly than we initially anticipated. While we experienced some challenges in the fall and early spring seasons, particularly regarding the Michael Kors brand, we are also witnessing declines in Versace and Jimmy Choo, similar to reports from other luxury brands. Our aim is to stabilize the wholesale business, not to grow it; in fact, we intend to reduce its percentage of total sales. We are proud of our partnerships with leading stores in Europe and North America and some of the finest specialty retailers across our brands. However, we believe our future growth lies in our direct-to-consumer segment, primarily through our retail stores, which represent the largest part of our revenue, along with our e-commerce efforts. We are committed to enhancing clienteling, which has become a significant revenue contributor for Michael Kors. This progress has been accelerated by technology, allowing our sales associates to effectively engage with customers. We have integrated data analytics from our e-commerce operations into our clienteling and direct customer communications, which will play an increasingly important role in our business. Therefore, we will focus on stabilizing our existing wholesale relationships but do not foresee it becoming a major growth driver for the company. Thank you, Lorraine.

Thank you.

So I'd like to thank everyone for taking the time. We ran a little bit over because usually, at the year-end call, it's time to give you a broader perspective. I hope what has come through loud and clear is that we have three very powerful names, starting with Michael Kors, our biggest business in the company. We do believe that, that brand will grow to $5 billion over time. We do believe that we will double our business in Asia, and we do believe that we will continue to grow our accessories and footwear business. And we like what we're doing with repositioning to be more aspirational and to reset the values especially around Jet Set for Michael Kors. Secondly, Jimmy Choo, we are feeling very good about what's happening in Jimmy Choo. In particular, you're going to see operating margin expansion. We've been talking about that for some time. We feel like we're in a very good position. We won't get to probably double digit this year, but we think next year, we will. And as that business gets closer to $1 billion, it's going to be able to generate significant operating profit dollars for the company. And then lastly, Versace, as we've talked about many times, we have our sights set on $2 billion. We feel that we have a very good roadmap to get there. And we also believe that there's more upside beyond that, and you can certainly see that through some of the very, very powerful names across the globe, and we believe that Versace sits in that world. So we feel strong about our future at Capri, and we look forward to giving you more feedback on our progress. Thank you very much for joining us today.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.