CPRI 10-Q
Capri Holdings Ltd (CPRI)
10-Q
2025-11-04
For: 2025-09-27
View Original
Added on
April 12, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 27, 2025
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number: 001-35368
(Exact Name of Registrant as Specified in Its Charter)
| N/A | |||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices)
(Registrant’s telephone number, including area code: 44 207 632 8600 )
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on which Registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | ☒ | ☐ | No | |||||||||||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | ☒ | ☐ | No | |||||||||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | |||||||||||||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | ☐ | Yes | No | |||||||||||||||||
As of October 29, 2025, Capri Holdings Limited had 119,143,278 ordinary shares outstanding.
TABLE OF CONTENTS
| Page Number | ||||||||
| Item 1. | Financial Statements: | |||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 2. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
2
Special Note on Forward-Looking Statements
This report contains statements which are, or may be deemed to be, “forward-looking statements.” Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of management of Capri Holdings Limited (“Capri” or the “Company”) about future events and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. All statements other than statements of historical facts included herein, may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words “plans”, “believes”, “expects”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “might” or similar words or phrases, are forward-looking statements. These forward-looking statements are not guarantees of future financial performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions, which could cause actual results to differ materially from those projected or implied in any forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, macroeconomic pressures and general uncertainty regarding the overall future economic environment, the imposition or threat of imposition of new or additional duties, tariffs or trade restrictions on the importation of our products; changes in fashion, consumer traffic and retail trends; fluctuations in demand for our products; loss of market share and increased competition; risks associated with operating in international markets and global sourcing activities, including currency fluctuations, disruptions or delays in manufacturing or shipments; departure of key employees or failure to attract and retain highly qualified personnel; levels of cash flow and future availability of credit, Capri's ability to successfully execute its growth strategies or cost reduction measures; the risk of cybersecurity threats and privacy or data security breaches; reductions in our wholesale channel; high consumer debt levels, recession and inflationary pressures and general economic, political, business or market conditions; the impact of epidemics, pandemics, disasters or catastrophes; our ability to successfully execute the proposed sale of Versace to Prada S.p.A. (“Prada”) and other risks related to the transaction; extreme weather conditions and natural disasters; acts of war and other geopolitical conflicts; the risk of any litigation relating to the Company's previously proposed merger (the “Merger”) with Tapestry, Inc. (“Tapestry”), the termination of the Agreement and Plan of Merger (the “Merger Agreement”) with Tapestry and/or public disclosures related thereto, as well as those risks that are set forth in Part II, Item 1A. “Risk Factors” and elsewhere in this report and in the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2025. Any forward-looking statement in this report speaks only as of the date made and Capri disclaims any obligation to update or revise any forward-looking or other statements contained herein other than in accordance with legal and regulatory obligations.
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data) (Unaudited)
| September 27, 2025 | March 29, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Receivables, net | |||||||||||
| Inventories, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Current assets held for sale | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Deferred tax assets | |||||||||||
| Other assets | |||||||||||
| Noncurrent assets held for sale | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued payroll and payroll related expenses | |||||||||||
| Accrued income taxes | |||||||||||
| Short-term operating lease liabilities | |||||||||||
| Short-term debt | |||||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Current liabilities held for sale | |||||||||||
| Total current liabilities | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Deferred tax liabilities | |||||||||||
| Long-term debt | |||||||||||
| Other long-term liabilities | |||||||||||
| Noncurrent liabilities held for sale | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Shareholders’ equity | |||||||||||
Ordinary shares, no par value; | |||||||||||
Treasury shares, at cost ( | ( | ( | |||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive (loss) income | ( | ||||||||||
| Retained earnings | |||||||||||
| Total shareholders’ equity of Capri | ( | ||||||||||
| Noncontrolling interest | |||||||||||
| Total shareholders’ equity | ( | ||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
See accompanying notes to consolidated financial statements.
4
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(In millions, except share and per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Impairment of assets | |||||||||||||||||||||||
| Restructuring and other expense | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| (Loss) income from operations | ( | ( | |||||||||||||||||||||
| Other income, net | ( | ||||||||||||||||||||||
| Interest income, net | ( | ( | ( | ( | |||||||||||||||||||
| Foreign currency loss (gain) | ( | ( | ( | ||||||||||||||||||||
| Income from continuing operations before income taxes | |||||||||||||||||||||||
| Provision (benefit) for income taxes | ( | ( | |||||||||||||||||||||
| Net (loss) income from continuing operations | ( | ||||||||||||||||||||||
| Net income (loss) from discontinued operations, net of tax | ( | ( | |||||||||||||||||||||
| Net (loss) income | ( | ||||||||||||||||||||||
| Less: Net (loss) income attributable to noncontrolling interest from continuing operations | ( | ||||||||||||||||||||||
| Net (loss) income attributable to Capri | $ | ( | $ | $ | $ | ||||||||||||||||||
| Weighted average ordinary shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Net (loss) income per ordinary share attributable to Capri: | |||||||||||||||||||||||
| Basic from continuing operations | $ | ( | $ | $ | $ | ||||||||||||||||||
| Basic from discontinued operations | ( | ( | |||||||||||||||||||||
| Basic per ordinary share | $ | ( | $ | $ | $ | ||||||||||||||||||
| Diluted from continuing operations | $ | ( | $ | $ | $ | ||||||||||||||||||
| Diluted from discontinued operations | ( | ( | |||||||||||||||||||||
| Diluted per ordinary share | $ | ( | $ | $ | $ | ||||||||||||||||||
| Statements of Comprehensive Loss: | |||||||||||||||||||||||
| Net (loss) income | $ | ( | $ | $ | $ | ||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ( | ( | |||||||||||||||||||
| Net gain (loss) on derivatives | ( | ( | |||||||||||||||||||||
| Comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
| Less: Net (loss) income attributable to noncontrolling interest | ( | ||||||||||||||||||||||
| Comprehensive loss attributable to Capri | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
See accompanying notes to consolidated financial statements.
5
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions, except share data which is in thousands)
(Unaudited)
| Ordinary Shares | Additional Paid-in Capital | Treasury Shares | AOCI(1) | Retained Earnings | Total Equity of Capri | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amounts | Shares | Amounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 28, 2025 | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive loss | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted awards, net of forfeitures | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of ordinary shares | — | — | — | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 27, 2025 | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary Shares | Additional Paid-in Capital | Treasury Shares | AOCI(1) | Retained Earnings | Total Equity of Capri | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amounts | Shares | Amounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 29, 2025 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive loss | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted awards, net of forfeitures | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of ordinary shares | — | — | — | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 27, 2025 | $ | $ | ( | $ | ( | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||||
(1)Accumulated other comprehensive (loss) income.
See accompanying notes to consolidated financial statements.
6
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions, except share data which is in thousands)
(Unaudited)
| Ordinary Shares | Additional Paid-in Capital | Treasury Shares | AOCI(1) | Retained Earnings | Total Equity of Capri | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amounts | Shares | Amounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 29, 2024 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive loss | — | — | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted awards, net of forfeitures | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of ordinary shares | — | — | — | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 28, 2024 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Ordinary Shares | Additional Paid-in Capital | Treasury Shares | AOCI(1) | Retained Earnings | Total Equity of Capri | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amounts | Shares | Amounts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 30, 2024 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total comprehensive (loss) income | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted awards, net of forfeitures | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of ordinary shares | — | — | — | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 28, 2024 | $ | $ | ( | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
(1)Accumulated other comprehensive (loss) income.
See accompanying notes to consolidated financial statements.
7
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions) (Unaudited)
| Six Months Ended | |||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Net income (loss) from discontinued operations, net of tax | ( | ||||||||||
| Net income from continuing operations | |||||||||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation expense | |||||||||||
| Deferred income taxes | ( | ||||||||||
| Impairment of assets | |||||||||||
| Changes to lease related balances, net | ( | ( | |||||||||
| Foreign currency gain | ( | ||||||||||
| Other non-cash adjustments | |||||||||||
| Change in assets and liabilities: | |||||||||||
| Receivables, net | |||||||||||
| Inventories, net | ( | ( | |||||||||
| Prepaid expenses and other current assets | ( | ||||||||||
| Accounts payable | ( | ||||||||||
| Accrued expenses and other current liabilities | ( | ||||||||||
| Other long-term assets and liabilities | ( | ( | |||||||||
| Net cash (used in) provided by operating activities of continuing operations | ( | ||||||||||
| Net cash used in operating activities of discontinued operations | ( | ( | |||||||||
| Net cash (used in) provided by operating activities | ( | ||||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Cash paid for business acquisitions, net of cash acquired | ( | ||||||||||
| Net cash used in investing activities of continuing operations | ( | ( | |||||||||
| Net cash used in investing activities of discontinued operations | ( | ( | |||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Debt borrowings | |||||||||||
| Debt repayments | ( | ( | |||||||||
| Debt issuance costs | ( | ||||||||||
| Repurchase of ordinary shares | ( | ( | |||||||||
| Net cash provided by (used in) financing activities of continuing operations | ( | ||||||||||
| Net cash provided by (used in) financing activities of discontinued operations | |||||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ( | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
| Beginning of period | |||||||||||
| End of period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Net cash paid for income taxes | $ | $ | |||||||||
| Supplemental disclosure of non-cash investing and financing activities | |||||||||||
| Accrued capital expenditures | $ | $ | |||||||||
| Summary of cash, cash equivalents and restricted cash | |||||||||||
| Cash, cash equivalents and restricted cash of continuing operations, end of period | $ | $ | |||||||||
| Cash, cash equivalents and restricted cash of discontinued operations, end of period | |||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
See accompanying notes to consolidated financial statements.
8
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Business and Basis of Presentation
The Company was incorporated in the British Virgin Islands 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 Michael Kors, Jimmy Choo and Versace tradenames and related trademarks and logos. The Company operates in three reportable segments: Michael Kors, Jimmy Choo and Versace. See Note 18 for additional information regarding the Company’s segments.
On April 10, 2025, the Company and Prada S.p.A. (“Prada”) entered into a Stock Purchase Agreement (the “Purchase Agreement”) whereby Prada has agreed to acquire certain subsidiaries of the Company which operate the Company’s Versace business for an aggregate purchase price of $1.375 billion in cash, subject to certain adjustments, including for net indebtedness, working capital and transaction expenses. As a result, the Company determined that the held for sale and discontinued operations criteria were met during the first quarter of Fiscal 2026 and the Company classified its results of operations and cash flows of its Versace business as discontinued operations in its consolidated statements of operations and comprehensive (loss) income and consolidated statements of cash flows for all periods presented. The related assets and liabilities associated with the discontinued operations are classified as held for sale in the consolidated balance sheets as of September 27, 2025 and March 29, 2025. Unless otherwise noted, discussion within these notes to the consolidated interim financial statements relate to continuing operations. Refer to Note 4 - "Discontinued Operations" for further 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 September 27, 2025 and for the three and six months ended September 27, 2025 and September 28, 2024 are unaudited. The Company consolidates the results of its Versace business on a one-month lag, as consistent with prior periods. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation in conformity with U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended March 29, 2025, as filed with the Securities and Exchange Commission on May 28, 2025, in the Company’s Annual Report on Form 10-K. The results of operations for the interim periods should not be considered indicative of results to be expected for the full fiscal year.
The Company utilizes a 52- to 53-week fiscal year and the term “Fiscal Year” or “Fiscal” refers to that 52-week or 53-week period. The results for the three and six months ended September 27, 2025 and September 28, 2024 are based on 13-week and 26-week periods, respectively. The Company’s Fiscal Year 2026 is a 52-week period ending March 28, 2026. The Company’s Fiscal Year 2027 is a 53-week period ending April 3, 2027.
2. Termination of the Merger Agreement with Tapestry
As previously disclosed, on August 10, 2023, Capri entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tapestry, Inc., a Maryland corporation (“Tapestry”), and Sunrise Merger Sub, Inc., a British Virgin Islands business company limited by shares and a direct wholly owned subsidiary of Tapestry (“Merger Sub” and, together with Capri and Tapestry, the “Parties”).
The Merger Agreement provided that, among other things and on the terms and subject to the conditions set forth therein, Tapestry would acquire Capri in an all-cash transaction by means of a merger of Merger Sub with and into Capri (the “Merger”), with Capri surviving the Merger as a wholly owned subsidiary of Tapestry. For additional information related to the Merger Agreement, please refer to Capri’s Definitive Proxy Statement on Schedule 14A filed with the U.S. Securities and Exchange Commission (the “SEC”) on September 20, 2023, as well as the supplemental disclosures contained in Capri’s Current Report on Form 8-K filed with the SEC on October 17, 2023.
9
The Merger had been approved by the boards of directors of Capri and Tapestry and by the shareholders of Capri. Completion of the Merger was subject to, among other customary conditions, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Company received regulatory approval from all countries except for the United States. In connection with the Merger, on April 22, 2024, the U.S. Federal Trade Commission (“FTC”) filed a lawsuit in the United States District Court for the Southern District of New York (the “District Court”) against Tapestry and the Company seeking to block the Merger, claiming that the Merger would violate Section 7 of the Clayton Act and that the Merger Agreement and the Merger constituted unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act and should be enjoined. The preliminary injunction hearing concluded in September 2024, and on October 24, 2024, the District Court granted the FTC's motion for a preliminary injunction to enjoin the Merger pending the completion of the FTC's in-house administrative proceeding. On October 28, 2024, Tapestry and Capri jointly filed a notice of appeal to the U.S. Court of Appeals for the Second Circuit (the “Second Circuit”).
On November 13, 2024, the Parties entered into a Termination Agreement (the “Termination Agreement”), pursuant to which the Parties agreed to terminate the Merger Agreement, effective immediately. In connection with the termination, consistent with the Merger Agreement, Tapestry agreed to reimburse the Company approximately $45 million in cash for certain expenses on November 14, 2024. This reimbursement was recorded within selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive (loss) income. The Parties also agreed to release each other and their related parties from any and all liability, claims, rights, actions, causes of action, suits, liens, obligations, accounts, debts, demands, agreements, promises, liabilities, controversies, costs, charges, damages, expenses and fees (including attorney’s, financial advisor’s or other fees) in connection with, arising out of or related to the Merger Agreement or the transactions contemplated therein or thereby. On November 15, 2024, Capri and Tapestry stipulated to the dismissal of the appeal to the Second Circuit. On December 4, 2024, the FTC’s in-house administrative proceeding was dismissed without prejudice.
3. 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, credit losses, estimates of inventory net realizable value, the valuation of deferred taxes, goodwill, intangible assets, operating lease right-of-use assets and property and equipment, along with the estimated useful lives assigned to these assets. Actual results could differ from those estimates.
Seasonality
The Company experiences certain effects of seasonality with respect to its business. The Company generally experiences greater sales during its third fiscal quarter, primarily driven by holiday season sales, and the lowest sales during its first fiscal quarter.
Cash, Cash Equivalents and Restricted Cash
10
A reconciliation of cash, cash equivalents and restricted cash as of September 27, 2025 and March 29, 2025 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):
| September 27, 2025 | March 29, 2025 | ||||||||||
| Reconciliation of cash, cash equivalents and restricted cash: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash included within prepaid expenses and other current assets | |||||||||||
| Total cash, cash equivalents and restricted cash shown on the consolidated statements of cash flows from continuing operations | $ | $ | |||||||||
Inventories
Derivative Financial Instruments
Forward Foreign Currency Exchange Contracts
The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currencies 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 forward contracts to hedge the Company’s cash flows, as they relate to transactions denominated in foreign currencies. Certain of these contracts are designated as hedges for accounting purposes, while others may 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 transaction, the hedging instrument and the risk being hedged. The changes in the fair value for contracts designated as cash flow hedges are 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, 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 less than 12 months. The period of these contracts is directly related to the transactions they are intended to hedge.
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Net Investment Hedges
The Company also uses cross currency swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between different currencies. The Company has elected the spot method of designating these contracts under ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” and has designated these contracts as net investment hedges. The net gain or loss on the net investment hedge is reported within foreign currency translation adjustments (“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 income, net, in the Company’s consolidated statements of operations and comprehensive (loss) income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold 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 income, net, in the same period during which the hedged transactions affect earnings.
Leases
The Company leases retail stores, office space and warehouse space under operating lease agreements that expire at various dates through September 2043. The Company’s leases generally have terms of up to ten years , generally require fixed rent payments and may require the payment of additional rent if store sales exceed negotiated amounts. Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through December 2029. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores under its restructuring initiatives. 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 the 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 rent based on store 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.
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The following table presents the Company’s supplemental cash flow information related to leases (in millions):
| Six Months Ended | ||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | |||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||||||
Operating cash flows used in operating leases | $ | $ | ||||||||||||||||||
During both the three and six months ended September 27, 2025, the Company recorded sublease income of $1 million and $3 million, respectively, within selling, general and administrative expenses. During the three and six months ended September 28, 2024, the Company recorded sublease income of $3 million and $5 million, respectively, 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 restricted share units (“RSUs”) or any other potentially dilutive instruments, including share option grants, were converted or exercised 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.
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The components of the calculation of basic net (loss) income per ordinary share and diluted net (loss) income per ordinary share are as follows (in millions, except share and per share data):
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net (loss) income from continuing operations | $ | ( | $ | $ | $ | ||||||||||||||||||
| Less: Net (loss) income attributable to noncontrolling interest from continuing operations | ( | ||||||||||||||||||||||
| Net (loss) income attributable to Capri from continuing operations | $ | ( | $ | $ | $ | ||||||||||||||||||
| Net income (loss) from discontinued operations, net of tax | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Less: Net income attributable to noncontrolling interest from discontinued operations | |||||||||||||||||||||||
| Net income (loss) attributable to Capri from discontinued operations | ( | ( | |||||||||||||||||||||
| Net (loss) income attributable to Capri | $ | ( | $ | $ | $ | ||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Basic weighted average shares | |||||||||||||||||||||||
| Weighted average dilutive share equivalents: | |||||||||||||||||||||||
| Share options, restricted stock units, and performance restricted stock units | |||||||||||||||||||||||
| Diluted weighted average shares | |||||||||||||||||||||||
| Net (loss) income per ordinary share attributable to Capri: | |||||||||||||||||||||||
| Basic from continuing operations | $ | ( | $ | $ | $ | ||||||||||||||||||
| Basic from discontinued operations | ( | ( | |||||||||||||||||||||
Basic per ordinary share (1) | $ | ( | $ | $ | $ | ||||||||||||||||||
| Diluted from continuing operations | $ | ( | $ | $ | $ | ||||||||||||||||||
| Diluted from discontinued operations | ( | ( | |||||||||||||||||||||
Diluted per ordinary share (1) | $ | ( | $ | $ | $ | ||||||||||||||||||
(1)Basic and diluted per share amounts are calculated using unrounded numbers.
Diluted net loss per ordinary share attributable to Capri for the three months ended September 27, 2025 excluded all potentially dilutive securities due to the net loss attributable to Capri from continuing operations for the fiscal period as the inclusion of these securities would have been anti-dilutive.
During the six months ended September 27, 2025, share equivalents of 2,102,301 shares have been excluded from the above calculations due to their anti-dilutive effect. During the three and six months ended September 28, 2024, share equivalents of 486,717 and 354,607 shares, respectively, have been excluded from the above calculations due to their anti-dilutive effect.
See Note 3 in the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2025 for a complete disclosure of the Company’s significant accounting policies.
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Recently Issued Accounting Pronouncements
The Company has considered all new accounting pronouncements and, other than the recent pronouncements discussed below, has concluded that there are no new pronouncements that may have a material impact on the Company’s results of operations, financial condition or cash flows based on current information.
Income Taxes
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, to enhance transparency and decision usefulness of income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The Company will adopt the update beginning with disclosure in its Fiscal 2026 annual consolidated financial statements.
Reporting Comprehensive Income—Expense Disaggregation Disclosures
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)”, which requires public entities to disaggregate specific types of expenses, including disclosures for purchases of inventory, employee compensation, depreciation, and intangible asset amortization, as well as selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026. Interim disclosures are required for periods within annual periods beginning after December 15, 2027. Prospective application is required, and retrospective application is permitted. Early adoption is also permitted. We are currently assessing the impact of the requirements on the Company’s consolidated financial statements and disclosures.
Tax Legislation
On December 12, 2022, the European Union member states reached an agreement to implement the Organization for Economic Cooperation and Development’s (“OECD”) reform of international taxation known as Pillar Two Global Anti-Base Erosion ("GloBE") Rules, which broadly mirrors certain provisions of the Inflation Reduction Act by imposing a 15% global minimum tax on multinational companies. GloBE became effective for the Company during Fiscal 2025. Based upon the Company’s analysis, the Pillar Two initiatives are not projected to have a material impact on the Company’s consolidated financial statements.
On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act of 2025 (“OBBBA”) which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act (“Jobs Act”). Based upon the Company’s analysis, the OBBBA did not have a material impact on the Company’s consolidated financial statements.
4. Discontinued Operations
On April 10, 2025, the Company and Prada entered into a Purchase Agreement whereby Prada has agreed to acquire certain subsidiaries of the Company which operate the Company’s Versace business for an aggregate purchase price of $1.375 billion in cash, subject to certain adjustments, including for net indebtedness, working capital and transaction expenses. The sale is anticipated to close in the second half of calendar 2025, subject to customary closing conditions.
The Company determined that the sale of the Versace business represented a strategic shift and the Company concluded that it met the held-for-sale and discontinued operations accounting criteria during the first quarter of Fiscal 2026. Accordingly, the Company is separately reporting the results of the Versace business as discontinued operations in its consolidated statements of operations and presenting the related assets and liabilities as held for sale in its consolidated balance sheets. These changes have been applied to all periods presented. Cash flows from the Company’s discontinued operations are presented as such in the consolidated statements of cash flows for all periods presented.
Additionally, beginning April 10, 2025, in accordance with ASC 360, Property, Plant and Equipment, the Company is no longer depreciating or amortizing Versace’s long-lived tangible and intangible assets or operating lease right-of-use assets.
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The following table represents the carrying amounts of the major classes of assets and liabilities classified as held for sale in the consolidated balance sheets as of September 27, 2025 and March 29, 2025 (in millions):
| September 27, 2025 | March 29, 2025 | ||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Receivables, net | |||||||||||
| Inventories, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Current assets held for sale | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Other assets | |||||||||||
| Noncurrent assets held for sale | |||||||||||
| Total assets held for sale | $ | $ | |||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued payroll and payroll related expenses | |||||||||||
| Accrued income taxes | |||||||||||
| Short-term operating lease liabilities | |||||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Current liabilities held for sale | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Deferred tax liabilities | |||||||||||
| Long-term debt | |||||||||||
| Other long-term liabilities | |||||||||||
| Noncurrent liabilities held for sale | |||||||||||
| Total liabilities held for sale | $ | $ | |||||||||
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The operating results of the discontinued operations of the Versace business only reflect revenues and expenses that are directly attributable to the Versace business that will be eliminated from continuing operations. Discontinued operations do not include any allocation of corporate overhead expense. The following table presents the major components of discontinued operations, net of income taxes, in the Company’s consolidated statements of operations and comprehensive (loss) income:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Impairment of assets | |||||||||||||||||||||||
| Restructuring and other expense | |||||||||||||||||||||||
| Other expense, net | |||||||||||||||||||||||
| Foreign currency loss (gain) | ( | ( | ( | ||||||||||||||||||||
| Income (loss) from discontinued operations before income taxes | ( | ( | |||||||||||||||||||||
| Provision (benefit) for income taxes | ( | ( | |||||||||||||||||||||
| Net income (loss) from discontinued operations, net of tax | $ | $ | ( | $ | $ | ( | |||||||||||||||||
5. 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 apply the practical expedient allowing it not to disclose the amount of the transaction price allocated to remaining performance obligations that have an expected duration of 12 months or less.
Retail
The Company generates sales through directly operated stores and e-commerce sites throughout the Americas (United States, Canada and Latin America), certain parts of EMEA (Europe, Middle East and Africa) and certain parts of Asia (Asia and Oceania). Retail revenue is recognized when control of the product is transferred at the point of sale at Company owned stores, including concessions. For e-commerce transactions, control is transferred and revenue is recognized when products are delivered to the customer. To arrive at net sales for retail, gross sales are reduced by actual customer returns, as well as by a provision for estimated future customer returns.
Sales tax collected from retail customers are presented on a net basis and, as such, are excluded from revenue. Shipping and handling costs that are billed to customers are included in net sales, with the related costs recorded in cost of goods sold. Shipping and handling costs that are not billed to customers are accounted for as fulfillment costs.
Gift Cards. The Company sells gift cards that can be redeemed for merchandise, resulting in a contract liability upon issuance. Revenue is recognized when a 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 Company anticipates that substantially all of its outstanding gift cards will be redeemed within the next 12 months. The contract liability related to gift and retail store credits, net of estimated “breakage”
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was $9 million and $10 million as of September 27, 2025 and March 29, 2025, respectively, and is included in accrued expenses and other current liabilities in the Company’s consolidated balance sheets.
Loyalty Program. The Company offers a loyalty program, which allows its Michael Kors North America customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at Michael Kors retail stores and e-commerce sites. The Company defers a portion of the initial sales transaction based on the estimated relative fair value of the benefits based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed.
Wholesale
The Company’s products are sold primarily to major department stores, specialty stores and travel retail shops throughout the Americas, EMEA and Asia. The Company also has arrangements where its products are sold to geographic licensees in certain parts of EMEA, Asia and South America. Wholesale revenue is recognized net of estimates for sales returns, discounts, markdowns and allowances, when merchandise is shipped and control of the underlying product is transferred to the Company’s wholesale customers. To arrive at net sales for wholesale, gross sales are reduced by provisions for estimated future returns, as well as trade discounts, markdowns, allowances, operational chargebacks and certain cooperative selling expenses. These estimates are developed based on historical trends, actual and forecasted performance and market conditions, and are reviewed by management on a quarterly basis. Unfulfilled, non-cancelable purchase orders for products from wholesale customers (including the Company’s geographic licensees) are expected to be fulfilled within the next 12 months.
Licensing
The Company provides its third-party licensees with the right to access its Michael Kors and Jimmy Choo trademarks under product and geographic licensing arrangements. Under product licensing arrangements, the Company allows third-parties to manufacture and sell luxury goods, including watches and jewelry, fragrances and eyewear, using the Company’s trademarks. Under geographic licensing arrangements, third party licensees receive the right to distribute and sell products bearing the Company’s trademarks in retail and/or wholesale channels within certain geographical areas, including Brazil, the Middle East, Eastern Europe, South Africa and certain parts of Asia.
Sales Returns
The refund liability recorded as of September 27, 2025 was $24 million, and the related asset for the right to recover returned product as of September 27, 2025 was $6 million. The refund liability recorded as of March 29, 2025 was $25 million, and the related asset for the right to recover returned product as of March 29, 2025 was $6 million.
Contract Balances
Total contract liabilities were $13 million and $14 million as of September 27, 2025 and March 29, 2025, respectively. For the three and six months ended September 27, 2025, the Company recognized $2 million and $12 million, respectively, in revenue relating to contract liabilities that existed at March 29, 2025. For the three and six months ended September 28, 2024, the Company recognized $4 million and $12 million in revenue which related to contract liabilities that existed at March 30, 2024. There were no material contract assets recorded as of September 27, 2025 and March 29, 2025.
There were no changes in historical variable consideration estimates that were materially different from actual results.
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Disaggregation of Revenue
The following table presents the Company’s segment revenue disaggregated by geographic location (in millions):
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Michael Kors - the Americas | $ | $ | $ | $ | |||||||||||||||||||
| Michael Kors - EMEA | |||||||||||||||||||||||
| Michael Kors - Asia | |||||||||||||||||||||||
| Total Michael Kors revenue | |||||||||||||||||||||||
| Jimmy Choo - the Americas | |||||||||||||||||||||||
| Jimmy Choo - EMEA | |||||||||||||||||||||||
| Jimmy Choo - Asia | |||||||||||||||||||||||
| Total Jimmy Choo revenue | |||||||||||||||||||||||
| Total - the Americas | |||||||||||||||||||||||
| Total - EMEA | |||||||||||||||||||||||
| Total - Asia | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
See Note 4 in the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2025 for a complete disclosure of the Company’s revenue recognition policy.
6. Receivables, net
Receivables, net, consist of (in millions):
| September 27, 2025 | March 29, 2025 | ||||||||||
Trade receivables (1) | $ | $ | |||||||||
| Receivables due from licensees | |||||||||||
| Less: allowances | ( | ( | |||||||||
| Total receivables, net | $ | $ | |||||||||
(1)As of September 27, 2025 and March 29, 2025, $54 million and $55 million, respectively, of trade receivables were insured.
Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and credit losses. Discounts are based on open invoices where trade discounts have been extended to customers. Markdowns are based on wholesale customers’ sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in revenues.
The Company’s allowance for credit losses is determined through analysis of periodic aging of receivables and assessments of 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 credit losses was $14 million and $13 million as of September 27, 2025 and March 29, 2025, respectively. The Company had credit losses of $1 3 million and $4 million for the three and six months ended September 28, 2024, respectively.
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7. Property and Equipment, net
Property and equipment, net, consists of (in millions):
| September 27, 2025 | March 29, 2025 | ||||||||||
| Leasehold improvements | $ | $ | |||||||||
| Computer equipment and software | |||||||||||
| Furniture and fixtures | |||||||||||
| Equipment | |||||||||||
| Building | |||||||||||
| In-store shops | |||||||||||
| Land | |||||||||||
| Total property and equipment, gross | |||||||||||
| Less: accumulated depreciation | ( | ( | |||||||||
| Subtotal | |||||||||||
| Construction-in-progress | |||||||||||
| Total property and equipment, net | $ | $ | |||||||||
Depreciation of property and equipment for the three and six months ended September 27, 2025 was $23 million and $46 million, respectively. Depreciation of property and equipment for the three and six months ended September 28, 2024 was $28 million and $54 million, respectively. During the three and six months ended September 27, 2025, the Company recorded $5 2
8. Intangible Assets and Goodwill
The following table details the carrying values of the Company’s intangible assets and goodwill (in millions):
| September 27, 2025 | March 29, 2025 | ||||||||||
| Definite-lived intangible assets: | |||||||||||
| Reacquired rights | $ | $ | |||||||||
| Trademarks | |||||||||||
Customer relationships (1) | |||||||||||
| Gross definite-lived intangible assets | |||||||||||
| Less: accumulated amortization | ( | ( | |||||||||
| Net definite-lived intangible assets | |||||||||||
| Indefinite-lived intangible assets: | |||||||||||
Jimmy Choo brand (2) | |||||||||||
| Net indefinite-lived intangible assets | |||||||||||
| Intangible assets, net | $ | $ | |||||||||
Goodwill (3) | $ | $ | |||||||||
(1)The change in the carrying value since March 29, 2025 reflects the impact of foreign currency translation adjustments.
(2)The change in the carrying value since March 29, 2025 reflects the impact of foreign currency translation adjustments. As of September 27, 2025 and March 29, 2025, the Company had accumulated impairment charges of $358
(3)Includes accumulated impairment of $605
20
Amortization expense for the Company’s definite-lived intangible assets was $7 million and $14 million, respectively, for the three and six months ended September 27, 2025. Amortization expense for the Company’s definite-lived intangible assets was $7 million and $13 million, respectively, for the three and six months ended September 28, 2024.
9. Other Current Assets and Other Current Liabilities
Prepaid expenses and other current assets consist of the following (in millions):
| September 27, 2025 | March 29, 2025 | ||||||||||
| Prepaid taxes | $ | $ | |||||||||
| Interest receivable related to hedges | |||||||||||
| Prepaid contracts | |||||||||||
| Restricted cash | |||||||||||
| Other accounts receivables | |||||||||||
| Other prepaid expenses and current assets | |||||||||||
| Total prepaid expenses and other current assets | $ | $ | |||||||||
Accrued expenses and other current liabilities consist of the following (in millions):
| September 27, 2025 | March 29, 2025 | ||||||||||
| Accrued purchases and samples | $ | $ | |||||||||
| Accrued advertising and marketing | |||||||||||
| Other taxes payable | |||||||||||
| Return liabilities | |||||||||||
| Professional services | |||||||||||
| Accrued e-commerce | |||||||||||
Accrued rent (1) | |||||||||||
| Retail store expense accrual | |||||||||||
| Accrued capital expenditures | |||||||||||
| Gift and retail store credits | |||||||||||
| Other accrued expenses and current liabilities | |||||||||||
| Total accrued expenses and other current liabilities | $ | $ | |||||||||
(1)The accrued rent balance relates to variable lease payments.
10. Restructuring and Other Expense
Restructuring Charges - Global Optimization Plan
As previously announced during the fourth quarter of Fiscal 2024, the Board of Directors of the Company approved a Global Optimization Plan in order to streamline the Company’s operating model, maximize efficiency and support long-term profitable growth.
During the three and six months ended September 27, 2025 the Company closed 15 and 30 retail stores, respectively, which have been incorporated into the Global Optimization Plan. The Company closed 8 and 19 retail stores incorporated into the Global Optimization Plan during the three and six months ended September 28, 2024, respectively. Net restructuring charges recorded in connection with the Global Optimization Plan during the three and six months ended September 27, 2025 were $2 million and $3 million, respectively, primarily related to severance and store closure costs, partially offset by gains on lease terminations. Net restructuring charges recorded in connection with the Global Optimization Plan during the three and six months ended September 28, 2024 were $1 million and $2 million, respectively, primarily related to lease termination and store closure costs.
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The below table presents a roll forward of the Company’s restructuring liability related to its Global Optimization Plan (in millions):
| Severance and benefit costs | Lease-related and other costs | Total | |||||||||||||||
Balance at March 29, 2025 | $ | $ | $ | ||||||||||||||
Additions charged to expense | (1) | ||||||||||||||||
| Payments | ( | ( | |||||||||||||||
Balance at September 27, 2025 | $ | $ | $ | ||||||||||||||
(1)Excludes $1 million of gains on lease terminations and store closure costs related to operating lease right-of-use assets recorded within restructuring and other expense on the consolidated statements of operations and comprehensive (loss) income for the six months ended September 27, 2025.
11. Debt Obligations
The following table presents the Company’s debt obligations (in millions):
| September 27, 2025 | March 29, 2025 | ||||||||||
| Revolving Credit Facilities | $ | $ | |||||||||
| 2025 Term Loans | |||||||||||
| Other | |||||||||||
| Total debt | |||||||||||
| Less: Unamortized debt issuance costs | |||||||||||
| Total carrying value of debt | |||||||||||
Less: Short-term debt | |||||||||||
Total long-term debt | $ | $ | |||||||||
Senior Revolving Credit Facility
On February 4, 2025 (the “Closing Date”), the Company entered into the Amended and Restated Credit Agreement with, among others, JPMorgan Chase Bank, N.A., as administrative agent, which amended and restated the Company’s existing credit agreement, dated as of July 1, 2022 (as previously amended, the “Existing Credit Agreement”). The Amended and Restated Credit Agreement provides for senior secured credit facilities in the aggregate principal amount of the United States dollar equivalent of $2.2 billion (the “2025 Credit Facilities”), under which the Company, a U.S. subsidiary of the Company, a Canadian subsidiary of the Company and a Swiss subsidiary of the Company are borrowers, and which will be guaranteed by the borrowers and certain other subsidiaries of the Company (the “Guarantees”). The 2025 Credit Facilities mature on July 1, 2027.
Pursuant to the Amended and Restated Credit Agreement, the obligations under the 2025 Credit Facilities are secured by liens on substantially all of the assets of the Company and its U.S. subsidiaries that are borrowers and guarantors, excluding real property and other customary exceptions, and substantially all of the registered intellectual property of the Company and its subsidiaries. With respect to certain non-ordinary course asset sales, the Company may elect to reinvest the net cash proceeds from such sales in the business of the Company and its subsidiaries, and to the extent it does not do so, the Company is required to apply such net cash proceeds to prepay the 2025 Term Loans, subject to certain thresholds and exceptions. The 2025 Term Loans are also required to be prepaid with the net cash proceeds of any indebtedness for borrowed money that is not permitted under the Amended and Restated Credit Agreement, as well as from certain equity issuances by the Company.
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The 2025 Credit Facilities are comprised of (i) a $700 million senior secured term loan facility comprised of (a) a $392 million tranche of term loans in United States dollars (the “USD Term Loans”), which was fully drawn by Michael Kors (USA), Inc. on the Closing Date, and (b) a tranche of term loans in Euros in an amount equal to the Euro equivalent of $320 million, or €296 million, at the time of closing (the “Euro Term Loans,” and together with the USD Term Loans, the “2025 Term Loans”), which were fully drawn by Michael Kors (Switzerland) GmbH on the Closing Date, and (ii) the existing $1.5 billion revolving credit facility (the “2022 Credit Facility”) as provided under the Existing Credit Agreement, which may be denominated in United States dollars and other currencies, including Euros, Canadian Dollars, Pounds Sterling, Japanese Yen and Swiss Francs, and which includes sub-facilities for the issuance of letters of credit up to $125 million and swing line loans at the administrative agent’s discretion of up to $100 million.
The 2025 Credit Facilities provide for an annual administration fee and the Revolving Credit Facility provides for an unused commitment fee equal to 7.5 basis points to 17.5 basis points per annum, based on the Company’s public debt ratings and/or net leverage ratio, applied to the average daily unused amount of the 2022 Credit Facility, which was 15.0 basis points as of September 27, 2025. Loans under the 2025 Credit Facilities may be prepaid and commitments may be terminated or reduced by the borrowers without premium or penalty other than customary “breakage” costs.
The 2025 Credit Facilities also permit certain working capital facilities between the Company or any of its subsidiaries, on the one hand, and a lender or an affiliate of a lender under the 2025 Credit Facilities, on the other, to be guaranteed under the Guarantees, and permit certain swap obligations and banking services obligations owing to, supply chain financings with, and up to $100 million outstanding principal amount of bilateral letters of credit and bank guarantees issued by, a lender or an affiliate of a lender to be guaranteed and secured under the Guarantees and collateral documents.
The Amended and Restated Credit Agreement continues to require the Company to maintain a net leverage ratio as of the end of each fiscal quarter of no greater than 4.0 to 1; provided, that on no more than two occasions, if the Company consummates a material acquisition, the Company may elect to increase the covenant level to 4.5 to 1 for the four fiscal quarter period commencing with the fiscal quarter in which such material acquisition is consummated. Such net leverage ratio is calculated as the ratio of the sum of total indebtedness, plus the capitalized amount of all operating lease obligations, as of the date of the measurement, minus unrestricted cash and cash equivalents not to exceed $200 million, to Consolidated EBITDAR. The Amended and Restated Credit Agreement also includes customary covenants that limit additional indebtedness, liens, acquisitions and other investments, dispositions, restricted payments and affiliate transactions. The Amended and Restated Credit Agreement contains events of default customary for financings of this type, including, but not limited to, payment defaults, material inaccuracy of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy or insolvency, certain events under the Employee Retirement Income Security Act, material judgments, actual or asserted failure of any guaranty or collateral document supporting the 2025 Credit Facilities to be in full force and effect, and changes of control. If such an event of default occurs and is continuing, the lenders under the 2025 Credit Facilities would be entitled to take various actions, including, but not limited to, terminating the commitments and accelerating amounts outstanding under the 2025 Credit Facilities and exercising remedies against collateral.
The Company had $1.024 billion and $755 million of borrowings outstanding under the 2022 Revolving Credit Facility as of September 27, 2025 and March 29, 2025, respectively. In addition, stand-by letters of credit of $1 475 million and $744 million, respectively.
The Company had $3
As of September 27, 2025, the carrying value of borrowings outstanding under the 2025 Term Loans was $724 million, net of debt issuance costs of $5 million, and are recorded within long-term debt in the Company's consolidated balance sheets.
As of September 27, 2025, and the date these financial statements were issued, the Company was in compliance with all covenants related to the 2025 Credit Facilities.
Supplier Financing Program
The Company offers a supplier financing program which enables the Company’s inventory suppliers, at their sole discretion, to sell their receivables (i.e., the Company’s payment obligations to suppliers) to a financial institution on a non-recourse basis in order to be paid earlier than current payment terms provide. The Company’s obligations, including the amount due and scheduled payment dates, which generally do not exceed 90 days, are not impacted by a suppliers’ decision to
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participate in this program. The Company does not reimburse suppliers for any costs they incur to participate in the program and their participation is voluntary. The amount outstanding under this program as of September 27, 2025 and March 29, 2025 was $11 million and $24 million, respectively, and is presented as short-term debt on the Company’s consolidated balance sheets.
See Note 12 to the Company’s Fiscal 2025 Annual Report on Form 10-K for additional information regarding the Company’s credit facilities and debt obligations.
12. Commitments and Contingencies
The Company is involved in various routine legal proceedings incident to the ordinary course of its business. The Company believes that the outcome of all pending, routine legal proceedings, in the aggregate, will not have a material adverse effect on its business, results of operations and financial condition.
See the matters in Item 1. Legal Proceedings to the accompanying Part II Other Information for additional information on certain non-routine legal proceedings against the Company which may be material.
Please also refer to the Contractual Obligations and Commercial Commitments disclosure within the Liquidity and Capital Resources section of the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2025 for a detailed disclosure of other commitments and contractual obligations as of March 29, 2025.
13. 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.
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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 September 27, 2025 using: | Fair value at March 29, 2025 using: | ||||||||||||||||||||||||||||||||||
| Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||||||||||||||
| Derivative liabilities: | |||||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Net investment hedges | |||||||||||||||||||||||||||||||||||
| Total derivative liabilities | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
The Company’s debt obligations are recorded on its consolidated balance sheets at carrying values, which may differ from the related fair values. The fair value of the Company’s 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 facilities, if outstanding, are recorded at carrying value, which approximates fair value due to the frequent nature of such borrowings and repayments. See Note 11 for detailed information related to carrying values of the Company’s outstanding debt.
The following table summarizes the carrying values and estimated fair values of the Company’s debt, based on Level 2 measurements (in millions):
| September 27, 2025 | March 29, 2025 | ||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||||||||||
| Revolving Credit Facilities | $ | $ | $ | $ | |||||||||||||||||||
| 2025 Term Loans | $ | $ | $ | $ | |||||||||||||||||||
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 are assessed for impairment at least annually, while its other long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The Company determines the fair values of these assets based on Level 3 measurements using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.
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The Company recorded $21 20 The following table details the carrying values and fair values of the Company’s assets that have been impaired during the three and six months ended September 27, 2025 and the three and six months ended September 28, 2024 (in millions):
| Three and Six Months Ended September 27, 2025 | Three and Six Months Ended September 28, 2024 | ||||||||||||||||||||||||||||||||||
| Carrying Value Prior to Impairment | Fair Value | Impairment Charge | Carrying Value Prior to Impairment | Fair Value | Impairment Charge | ||||||||||||||||||||||||||||||
| Operating lease right-of-use assets | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Property and equipment, net | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
14. Derivative Financial Instruments
Forward Foreign Currency Exchange Contracts
The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currencies for certain of its transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to certain forecasted inventory purchases by using forward foreign currency exchange contracts.
As of March 29, 2025, the Company had total notional amounts of $50 million of EUR/USD forward contracts outstanding. During the first quarter of Fiscal 2026, the Company entered into multiple EUR/USD forward contracts with additional notional amounts of $29 million. As of September 27, 2025, the Company had total notional amounts outstanding of $52 million of forward foreign currency exchange contracts.
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 goods sold within the Company’s consolidated statements of operations and comprehensive (loss) income. During both the three and six months ended September 27, 2025, the Company reclassified $1
Net Investment Hedges
As of March 29, 2025, the Company had $3.5 billion of hedges outstanding to hedge its net investment in Swiss Franc (“CHF”) denominated subsidiaries, of which the Company will exchange monthly and semi-annual fixed rate payments on United States dollar notional amounts for fixed rate payments of 0.0 % in CHF. During the first and second quarter of Fiscal 2026, the Company modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $950 million and $275 million, respectively, of which the Company will exchange monthly fixed rate payments on United States dollar notional amounts for fixed rate payments of 0.0 3.5 billion of outstanding hedges to hedge its net investment in CHF denominated subsidiaries. These contracts have maturity dates between March 2027 and May 2045 and are designated as net investment hedges.
Certain of these contracts are supported by a credit support annex (“CSA”) which provides for collateral exchange with the earliest effective date being June 2030. If the fair value of a derivative contract exceeds a certain threshold governed by the aforementioned CSAs, either party is required to post cash collateral.
As of September 27, 2025 and March 29, 2025, the Company had $2.364 0.0
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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 income in the Company’s consolidated statements of operations and comprehensive (loss) income. Accordingly, the Company recorded interest income of $35 million and $71 million during the three and six months ended September 27, 2025, and $29 million and $53 million during the three and six months ended September 28, 2024, respectively.
The net gains or losses on net investment hedges are reported within 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 net investment is sold or liquidated.
Interest Rate Swaps
During the second quarter of Fiscal 2025, the Company entered into multiple interest rate swaps with aggregate notional amounts of €800 million. The swaps were designed to mitigate the impact of adverse interest rate fluctuations for a portion of the Company’s variable rate debt. €500 million of the total interest rate swaps entered into relate to the Company’s Senior Revolving Credit Facility expiring July 2027. The remaining €300 million of the interest rate swaps entered into related to the Company’s previously outstanding Versace Term Loan. During the fourth quarter of Fiscal 2025, the Company terminated these interest rate swaps to coincide with the Company’s debt refinancing and paid $13 million. As of September 27, 2025 and March 29, 2025, the Company did not
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 income, net, in the same period in which the hedged transactions affect earnings. During the three and six months ended September 27, 2025, the Company recognized $2 million and $4 million of interest expense, respectively, related to amortization of the fair value previously recorded as a component of accumulated other comprehensive (loss) income related to the terminated interest rate swaps. During the three and six months ended September 28, 2024, the Company recognized $1
The Company only enters into derivative instruments with highly credit-rated counterparties and does not enter into derivative contracts for trading or speculative purposes.
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 September 27, 2025 and March 29, 2025 (in millions):
| Fair Value | |||||||||||||||||||||||||||||||||||||||||
| Notional Amounts | Assets | Liabilities | |||||||||||||||||||||||||||||||||||||||
| September 27, 2025 | March 29, 2025 | September 27, 2025 | March 29, 2025 | September 27, 2025 | March 29, 2025 | ||||||||||||||||||||||||||||||||||||
| Designated forward foreign currency exchange contracts | $ | $ | $ | $ | $ | (1) | $ | (1) | |||||||||||||||||||||||||||||||||
| Designated net investment hedges | (2) | (2) | |||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
(1)Recorded within accrued expenses and other current liabilities on the Company’s consolidated balance sheets.
(2)As of September 27, 2025, the Company recorded $909 million within other long-term liabilities on the Company’s consolidated balance sheets. As of March 29, 2025, the Company recorded $12 million within accrued expenses and other current liabilities and $277 million within other long-term liabilities on the Company’s consolidated balance sheets.
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The Company records and presents the fair value of all of its derivative assets and liabilities on its consolidated balance sheets on a gross basis, as shown in the above table. However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to set-off amounts for similar transactions denominated in the same currencies and with the same banks, the resulting impact as of September 27, 2025 and March 29, 2025 would be as follows (in millions):
| Forward Currency Exchange Contracts | Net Investment Hedges | ||||||||||||||||||||||
| September 27, 2025 | March 29, 2025 | September 27, 2025 | March 29, 2025 | ||||||||||||||||||||
| Liabilities subject to master netting arrangements | $ | $ | $ | $ | |||||||||||||||||||
| Derivative liabilities, net | $ | $ | $ | $ | |||||||||||||||||||
Currently, the Company’s master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties.
The following tables summarize the losses recognized within the consolidated statements of operations and comprehensive income related to the Company’s hedge contracts for the three and six months ended September 27, 2025 and September 28, 2024 (in millions):
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | Location of Loss Recognized | |||||||||||||||||||||||||
| Designated forward foreign currency exchange contracts | $ | $ | $ | $ | Cost of goods sold | ||||||||||||||||||||||||
| Designated interest rate swaps | $ | $ | $ | $ | Interest expense, net | ||||||||||||||||||||||||
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.
The following table summarizes the pre-tax impact of the losses recorded to other comprehensive income (“OCI”) related to the Company’s designated hedges (in millions):
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Pre-Tax Losses Recognized in OCI | Pre-Tax Losses Recognized in OCI | Pre-Tax Losses Recognized in OCI | Pre-Tax Losses Recognized in OCI | ||||||||||||||||||||
| Designated forward foreign currency exchange contracts | $ | $ | $ | ( | $ | ||||||||||||||||||
| Designated net investment hedges | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Designated interest rate swaps | $ | $ | ( | $ | $ | ( | |||||||||||||||||
15. Shareholders’ Equity
Share Repurchase Program
On November 9, 2022, the Company announced its Board of Directors approved a two-year share repurchase program to purchase up to $1.0 billion of its outstanding ordinary shares which expired on November 9, 2024. Share repurchases were permitted to be made in open market or privately negotiated transactions and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors. However, pursuant to the terms of the Merger Agreement, and subject to certain limited exceptions, the Company was prohibited from repurchasing its ordinary shares other than the acceptance of Company ordinary shares as payment of the exercise price of Company options or for withholding taxes with respect of Company equity awards.
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Accordingly, the Company did no t repurchase any of its ordinary shares during the pendency of the Merger Agreement through the expiration date of the share repurchase program.
During the six months ended September 27, 2025 and September 28, 2024, the Company did not
The Company also has in place a “withhold to cover” repurchase program, which allows the Company to withhold ordinary shares from certain employees and directors to satisfy minimum tax withholding obligations relating to the vesting of their restricted share awards. During the six months ended September 27, 2025 and September 28, 2024, the Company withheld 98,081 shares and 105,470 shares, respectively, with a fair value of $2 million and $4 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, net of taxes, for the six months ended September 27, 2025 and September 28, 2024, respectively (in millions):
Foreign Currency Translation Adjustments (1) | Net Loss on Derivatives (2) | Other Comprehensive (Loss) Income Attributable to Capri | |||||||||||||||
| Balance at March 29, 2025 | $ | $ | ( | $ | |||||||||||||
| Other comprehensive loss before reclassifications | ( | ( | ( | ||||||||||||||
| Loss reclassified from AOCI to earnings | |||||||||||||||||
| Other comprehensive loss, net of tax | ( | ( | |||||||||||||||
| Balance at September 27, 2025 | $ | ( | $ | ( | $ | ( | |||||||||||
| Balance at March 30, 2024 | $ | $ | $ | ||||||||||||||
| Other comprehensive loss before reclassifications | ( | ( | ( | ||||||||||||||
| Balance at September 28, 2024 | $ | $ | ( | $ | |||||||||||||
(1)Foreign currency translation adjustments for the six months ended September 27, 2025 primarily include a $464 million loss, net of taxes of $156 million, relating to the Company’s net investment hedges, as well as a net $27 million translation loss. Foreign currency translation adjustments for the six months ended September 28, 2024 primarily include a $199 million loss, net of taxes of $67 million, relating to the Company’s net investment hedges partially offset by a net $52 million translation gain.
(2)Other comprehensive loss before reclassifications for both the six months ended September 27, 2025 and September 28, 2024 were primarily related to the Company’s forward foreign currency exchange contracts, net of taxes. Reclassifications from AOCI into earnings for six months ended September 27, 2025 were $3 million, net of taxes of $1 million related to the Company’s previously terminated interest rate swaps and $1 million, net of immaterial taxes, related to the Company’s forward foreign currency exchange contracts for inventory purchases.
16. Share-Based Compensation
The Company grants equity awards to certain employees and directors of the Company at the discretion of the Company’s Compensation and Talent Committee. On December 1, 2011, the Company adopted the Omnibus Incentive Plan (the “Incentive Plan”) which allows for grants of share options, restricted shares, RSUs and other forms of equity compensation. On August 7, 2025, the Company’s shareholders approved an amendment to the Incentive Plan to increase the number of ordinary shares authorized for issuance by 2,500,000 increasing the total authorized ordinary shares from 22,471,000 to 24,971,000 . At September 27, 2025, there were 3,633,443 ordinary shares available for future grants of equity awards under the Incentive Plan. Option grants issued under the Incentive Plan generally expire seven years from the grant date.
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The following table summarizes the Company’s share-based compensation activity during the six months ended September 27, 2025:
| Options | Service-Based RSUs | Performance-Based RSUs | |||||||||||||||
Outstanding/Unvested at March 29, 2025 | |||||||||||||||||
| Granted | |||||||||||||||||
| Exercised/Vested | ( | ||||||||||||||||
| Canceled/Forfeited | ( | ( | |||||||||||||||
Outstanding/Unvested at September 27, 2025 | |||||||||||||||||
The weighted average grant date fair value of service-based RSUs granted during the six months ended September 27, 2025 was $17.89 . There were no performance-based RSUs granted during the six months ended September 27, 2025. The weighted average grant date fair value of service-based RSUs granted during the six months ended September 28, 2024 was $32.20 . There were no performance-based RSUs granted during the six months ended September 28, 2024.
Share-Based Compensation Expense
The following table summarizes compensation expense attributable to share-based compensation for the three and six months ended September 27, 2025 and September 28, 2024 (in millions):
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Share-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
| Tax benefit related to share-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on historical forfeiture rates. The estimated value of future forfeitures for equity awards as of September 27, 2025 is $6 million. There were no forfeitures for performance-based RSUs.
See Note 17 in the Company’s Fiscal 2025 Annual Report on Form 10-K for additional information relating to the Company’s share-based compensation awards.
17. Income Taxes
The provision for income taxes was $36 million and $20 million for the three and six months ended September 27, 2025, compared to a benefit of $27 million and $21 million for the three and six months ended September 28, 2024. The Company’s effective tax rate for the three and six months ended September 27, 2025 compared to the effective tax rate for the three and six months ended September 28, 2024 is not a meaningful metric due to the effect of the Company recording $40 million and $14 million of incremental net valuation allowances for the three and six months ended September 27, 2025, respectively.
On January 10, 2025, the United States Treasury and the IRS issued final regulations that address several long-standing issues related to dual consolidated losses and introduce new rules for disregarded payment losses. The changes related to disregarded payment losses could impact how the Company utilizes certain deductions and losses to offset its U.S. income as part of its global financing activities, beginning in Fiscal 2027. Based upon the Company’s analysis, this is not projected to have a material impact on the Company’s consolidated financial statements.
On July 4, 2025, the U.S. government enacted the OBBBA which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Jobs Act. Based upon the Company’s analysis, the OBBBA did not have a material impact on the Company’s consolidated financial statements.
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18. Segment Information
On April 10, 2025, the Company and Prada entered into a Purchase Agreement whereby Prada has agreed to acquire certain subsidiaries of the Company which operate the Company’s Versace business for an aggregate purchase price of $1.375 billion in cash, subject to certain adjustments, including for net indebtedness, working capital and transaction expenses. As a result, the Company determined that the held for sale and discontinued operations criteria were met and the Company has classified the results of operations and cash flows of its Versace business as discontinued operations in its consolidated statements of operations and comprehensive (loss) income and consolidated statements of cash flows for all periods presented. The related assets and liabilities associated with the discontinued operations are classified as held for sale in the consolidated balance sheets as of September 27, 2025 and March 29, 2025. Accordingly, the Versace business has been excluded from the segment information herein for all periods presented. Refer to Note 4 - "Discontinued Operations" for further information.
The Company operates its business through three operating segments — Michael Kors, Jimmy Choo and Versace, 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”), who is the Company’s Chairman and Chief Executive Officer, 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:
•Michael Kors — segment includes revenue generated through the sale of Michael Kors products through four primary Michael Kors retail formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce sites, through which the Company sells Michael Kors products, as well as licensed products bearing the Michael Kors name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia. The Company also sells Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops, and to its geographic licensees. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear.
•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, certain parts of EMEA and certain parts of Asia, through its e-commerce sites. In addition, revenue is generated 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, as well as through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of fragrances and eyewear.
•Versace — segment includes revenue generated through the sale of Versace luxury ready-to-wear, accessories and footwear through directly operated Versace boutiques throughout North America, certain parts of EMEA and certain parts of Asia, as well as through Versace outlet stores and e-commerce sites. In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements that allow third parties to use the Versace trademarks in connection with retail and/or wholesale sales of Versace branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of the Versace Jeans Couture product line, fragrances, watches, eyewear and home furnishings. As noted above, the results of the Versace business are excluded from the segment information herein for all periods presented. Refer to Note 4 - "Discontinued Operations" for further information.
In addition to these reportable segments, the Company has certain corporate costs that are not directly attributable to its brands and, therefore, are not allocated to its segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information technology systems expenses, including enterprise resource planning system implementation costs and Capri transformation program costs. In addition, certain other costs are not allocated to segments, including transaction related costs, impairment charges and restructuring and other expense. 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.
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The following table presents the key performance information of the Company’s reportable segments (in millions):
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | |||||||||||||||||||||||
| Total revenue: | ||||||||||||||||||||||||||
| Michael Kors | $ | $ | $ | $ | ||||||||||||||||||||||
| Jimmy Choo | ||||||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of goods sold: | ||||||||||||||||||||||||||
| Michael Kors | $ | $ | $ | $ | ||||||||||||||||||||||
| Jimmy Choo | ||||||||||||||||||||||||||
| Total cost of goods sold | $ | $ | $ | $ | ||||||||||||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||||||||||||
| Michael Kors | $ | $ | $ | $ | ||||||||||||||||||||||
| Jimmy Choo | ||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||
| Total selling, general and administrative expenses | $ | $ | $ | $ | ||||||||||||||||||||||
| Depreciation and amortization: | ||||||||||||||||||||||||||
| Michael Kors | $ | $ | $ | $ | ||||||||||||||||||||||
| Jimmy Choo | ||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||
| Total depreciation and amortization | $ | $ | $ | $ | ||||||||||||||||||||||
| (Loss) income from operations: | ||||||||||||||||||||||||||
| Michael Kors | $ | $ | $ | $ | ||||||||||||||||||||||
| Jimmy Choo | ( | ( | ( | ( | ||||||||||||||||||||||
| Less: | Corporate expenses | ( | ( | ( | ( | |||||||||||||||||||||
Impairment of assets (1) | ( | ( | ( | ( | ||||||||||||||||||||||
| Transaction related costs | ( | ( | ||||||||||||||||||||||||
| Restructuring and other expense | ( | ( | ( | ( | ||||||||||||||||||||||
| (Loss) income from operations | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||
(1)Impairment of assets during the three and six months ended September 27, 2025 and September 28, 2024 primarily related to operating lease right-of-use assets at certain Michael Kors store locations.
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Total revenue (based on country of origin) by geographic location are as follows (in millions):
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
The Americas (1) | $ | $ | $ | $ | |||||||||||||||||||
| EMEA | |||||||||||||||||||||||
| Asia | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
(1)Total revenue earned in the U.S. was $442 million and $860 million, respectively, for the three and six months ended September 27, 2025. Total revenue earned in the U.S. was $471 million and $929 million, respectively, for the three and six months ended September 28, 2024.
Total long-lived assets of the Company’s reportable segments are as follows (in millions):
| As of | |||||||||||
| September 27, 2025 | March 29, 2025 | ||||||||||
| Long-lived assets: | |||||||||||
| Michael Kors | $ | $ | |||||||||
| Jimmy Choo | |||||||||||
| Total long-lived assets | $ | $ | |||||||||
19. Subsequent Events
On November 4, 2025, the Company announced the Board of Directors approved a three-year share repurchase program of up to $1.0 billion of its outstanding ordinary shares, which the Company expects to begin implementing in Fiscal 2027. Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading restrictions under the Company's insider trading policy and other relevant factors. The program may be suspended or discontinued at any time.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Our Business
Capri Holdings Limited is a global fashion luxury group consisting of iconic brands Michael Kors, Jimmy Choo and Versace. Our commitment to glamorous style and craftsmanship is at the heart of each of our luxury brands. We have built our reputation on designing exceptional, innovative products that cover the full spectrum of fashion luxury categories. Our strength lies in the unique DNA and heritage of each of our brands, the diversity and passion of our people and our dedication to the clients and communities we serve.
Our Michael Kors brand was launched over 40 years ago by Michael Kors, a world-renowned designer, whose vision has taken the Company from its beginnings as an American luxury sportswear house to a global accessories, ready-to-wear, and footwear company with a global distribution network that has presence in over 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners. Michael Kors is a highly recognized fashion luxury brand in the Americas and Europe with growing brand awareness in other international markets. Michael Kors features distinctive designs, materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude. Michael Kors offers three primary collections: the Michael Kors Collection line, the MICHAEL Michael Kors line and the Michael Kors Mens line. The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried by select retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world. MICHAEL Michael Kors has a strong focus on accessories, in addition to offering ready-to-wear and footwear. We have also been developing our men’s business in recognition of the significant opportunity afforded by the Michael Kors brand’s established fashion authority and the expanding men’s market. Taken together, our Michael Kors collections target a broad customer base while retaining our premium luxury image.
Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, jewelry, scarves and belts, as well as men’s luxury shoes and accessories. In addition, certain categories, including fragrance and eyewear, are produced under licensing agreements. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic. The brand offers classic and timeless luxury products, alongside innovative collections that are intended to set and lead fashion trends. Jimmy Choo is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.
Our Versace brand has long been recognized as one of the world’s leading international fashion design houses and is synonymous with Italian glamour and style. Founded in 1978 in Milan, Versace is known for its iconic and unmistakable style and unparalleled craftsmanship. Over the past several decades, the House of Versace has grown globally from its roots in haute couture, expanding into the design, manufacturing, distribution and retailing of ready-to-wear, accessories, footwear, eyewear, watches, jewelry, fragrance and home furnishings. Until recently, Versace’s design team was led by Donatella Versace, who had been the brand’s Artistic Director for almost 30 years. Effective April 1, 2025, Dario Vitale became Versace’s Chief Creative Officer. Versace distributes its products through a worldwide distribution network, which includes boutiques in some of the world’s most fashionable cities, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.
On April 8, 2025, our Board of Directors made the decision to sell Versace to Prada, and a definitive agreement was entered into on April 10, 2025. Accordingly, we determined the Versace business met held-for-sale and discontinued operations accounting criteria during the first quarter of Fiscal 2026 and we began to separately report the results of this business as discontinued operations in our consolidated statements of operations and comprehensive (loss) income and to present the related assets and liabilities as held for sale in our consolidated balance sheets for the second quarter ended September 27, 2025. These changes have been applied to all periods presented. Unless otherwise noted, discussion within this management’s discussion and analysis of financial condition and results of operations relates to our continuing operations. Refer to Note 4 - "Discontinued Operations" to the accompanying consolidated financial statements for additional information.
Termination of the Agreement and Plan of Merger with Tapestry
As previously disclosed, on August 10, 2023, Capri entered into an Agreement and Plan of Merger with Tapestry, a Maryland corporation, and Sunrise Merger Sub, Inc., a British Virgin Islands business company limited by shares and a direct
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wholly owned subsidiary of Tapestry. The Merger Agreement provided that, among other things and on the terms and subject to the conditions set forth therein, Tapestry would acquire Capri in an all-cash transaction by means of a merger of Merger Sub with and into Capri, with Capri surviving the Merger as a wholly owned subsidiary of Tapestry.
The Merger had been approved by the boards of directors of Capri and Tapestry and by the shareholders of Capri. Completion of the Merger was subject to, among other customary conditions, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Company received regulatory approval from all countries except for the United States. In connection with Tapestry’s proposed acquisition of Capri, on April 22, 2024, the U.S. FTC filed a lawsuit in the United States District Court for the Southern District of New York (the “District Court”) against Tapestry and the Company seeking to block the Merger, claiming that the Merger would violate Section 7 of the Clayton Act and that the Merger Agreement and the Merger constituted unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act and should be enjoined. The preliminary injunction hearing concluded in September 2024, and on October 24, 2024, the District Court granted the FTC's motion for a preliminary injunction to enjoin the Merger pending the completion of the FTC's in-house administrative proceeding. On October 28, 2024, Tapestry and Capri jointly filed a notice of appeal to the U.S. Court of Appeals for the Second Circuit (the “Second Circuit”).
On November 13, 2024, the parties to the Merger Agreement entered into a termination agreement pursuant to which they agreed to terminate the Merger Agreement, effective immediately. In connection with the termination, consistent with the Merger Agreement, Tapestry agreed to reimburse the Company approximately $45 million in cash for certain expenses on November 14, 2024. The parties to the Merger Agreement also agreed to release each other and their related parties from any and all liability, claims, rights, actions, causes of action, suits, liens, obligations, accounts, debts, demands, agreements, promises, liabilities, controversies, costs, charges, damages, expenses and fees (including attorney’s, financial advisor’s or other fees) in connection with, arising out of or related to the Merger Agreement or the transactions contemplated therein or thereby. On November 15, 2024, Capri and Tapestry stipulated to the dismissal of the appeal to the Second Circuit. On December 4, 2024, the FTC’s in-house administrative proceeding was dismissed without prejudice.
Certain Factors Affecting Financial Condition and Results of Operations
Macroeconomic conditions and inflationary pressures. Global economic conditions, including inflation, political instability due to war or other geopolitical factors and other macroeconomic uncertainty and the related impact on levels of consumer spending worldwide impacted our business in the first half of Fiscal 2026, and are likely to continue to impact our business and the luxury accessories, footwear and apparel industry overall for the foreseeable future. Purchases of discretionary luxury items, such as the accessories, footwear and apparel that we produce, tend to decline when disposable income is lower or when there are inflationary pressures or other economic uncertainty which could negatively affect our financial condition and results of operations.
Costs of manufacturing, tariffs and import regulations. Our industry is subject to volatility in costs related to certain raw materials used in the manufacturing of our products primarily driven by commodity prices, as well as manufacturing labor costs. In addition, our costs may be impacted by sanction tariffs imposed on our products due to changes in trade terms. In April 2025, the U.S. Government announced tariffs on imports from select countries. The majority of the Company's products sold in the U.S. are imported from countries in which these tariffs were announced, including Vietnam, Cambodia, Indonesia and Bangladesh, where the primary manufacturers of Michael Kors products are located. Increased tariffs or other trade restrictions against countries where our products are manufactured, and/or any tariffs or other trade restrictions implemented by these countries in retaliation, could materially impact our revenue and profitability.
Foreign currency fluctuation. Our consolidated operations are impacted by the relationships between our reporting currency, the United States dollar, and those of our non-United States subsidiaries whose functional/local currency is other than the United States dollar, primarily the Euro, the British Pound, the Chinese Renminbi and the Japanese Yen, among others. We continue to expect volatility in the global foreign currency exchange rates, which may have a negative impact on the reported results of certain of our non-United States subsidiaries in the future, when translated to the United States dollar.
Disruptions or delays in shipping and distribution and other supply chain constraints. Disruptions in our shipping and distribution network, including at U.S. ports and in the Red Sea, as well as port congestion, vessel availability, container shortages and temporary factory closures, have in the past impacted our business, and continued disruptions or delays could negatively impact on our results of operations in the future.
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Segment Information
We operate in three reportable segments, which are as follows:
Michael Kors
We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce sites, through which we sell our products, as well as licensed products bearing our name, directly to consumers throughout the Americas (United States, Canada and Latin America), certain parts of EMEA (Europe, Middle East and Africa) and certain parts of Asia (Asia and Oceania). Our Michael Kors e-commerce business includes e-commerce sites in the United States, Canada, EMEA and Asia. We also sell Michael Kors products directly to department stores, primarily located across the Americas and EMEA, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of EMEA, Asia and Brazil. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear, as well as through geographic licensing arrangements, which allow third parties to use the Michael Kors tradename in connection with the retail and/or wholesale sales of our Michael Kors branded products in specific geographic regions.
Jimmy Choo
We generate revenue through the sale of Jimmy Choo luxury goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas, certain parts of EMEA and certain parts of Asia, through our e-commerce sites. In addition, revenue is generated through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo tradename in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide, as well as through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of products, including fragrances and eyewear.
Versace
We generate revenue through the sale of Versace luxury accessories, ready-to-wear and footwear through directly operated Versace boutiques throughout North America (United States and Canada), certain parts of EMEA 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), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of the Versace Jeans Couture product line, fragrances, watches, eyewear and home furnishings. As previously noted, the results of the Versace business are excluded from the segment information herein for all periods presented.
Unallocated Corporate Expenses
In addition to the reportable segments discussed above, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information technology systems expenses, including enterprise resource planning system implementation costs and Capri transformation program costs. In addition, certain other costs are not allocated to segments, including transaction related costs, impairment charges and restructuring and other expense. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance.
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The following table presents our total revenue and income from operations by segment for the three and six months ended September 27, 2025 and September 28, 2024 (in millions):
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | |||||||||||||||||||||||
| Total revenue: | ||||||||||||||||||||||||||
| Michael Kors | $ | 725 | $ | 738 | $ | 1,360 | $ | 1,413 | ||||||||||||||||||
| Jimmy Choo | 131 | 140 | 293 | 313 | ||||||||||||||||||||||
| Total revenue | $ | 856 | $ | 878 | $ | 1,653 | $ | 1,726 | ||||||||||||||||||
| Cost of goods sold: | ||||||||||||||||||||||||||
| Michael Kors | $ | 295 | $ | 287 | $ | 542 | $ | 543 | ||||||||||||||||||
| Jimmy Choo | 39 | 44 | 87 | 101 | ||||||||||||||||||||||
| Total cost of goods sold | $ | 334 | $ | 331 | $ | 629 | $ | 644 | ||||||||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||||||||||||
| Michael Kors | $ | 339 | $ | 344 | $ | 646 | $ | 668 | ||||||||||||||||||
| Jimmy Choo | 94 | 93 | 197 | 198 | ||||||||||||||||||||||
| Corporate | 48 | 60 | 93 | 122 | ||||||||||||||||||||||
| Total selling, general and administrative expenses | $ | 481 | $ | 497 | $ | 936 | $ | 988 | ||||||||||||||||||
| Depreciation and amortization: | ||||||||||||||||||||||||||
| Michael Kors | $ | 18 | $ | 20 | $ | 36 | $ | 40 | ||||||||||||||||||
| Jimmy Choo | 7 | 8 | 14 | 15 | ||||||||||||||||||||||
| Corporate | 5 | 7 | 10 | 12 | ||||||||||||||||||||||
| Total depreciation and amortization | $ | 30 | $ | 35 | $ | 60 | $ | 67 | ||||||||||||||||||
| (Loss) income from operations: | ||||||||||||||||||||||||||
| Michael Kors | $ | 73 | $ | 87 | $ | 136 | $ | 162 | ||||||||||||||||||
| Jimmy Choo | (9) | (5) | (5) | (1) | ||||||||||||||||||||||
| 64 | 82 | 131 | 161 | |||||||||||||||||||||||
| Less: | Corporate expenses | (53) | (57) | (103) | (119) | |||||||||||||||||||||
Impairment of assets (1) | (21) | (20) | (21) | (20) | ||||||||||||||||||||||
| Transaction related costs | — | (10) | — | (15) | ||||||||||||||||||||||
| Restructuring and other expense | (2) | (1) | (3) | (2) | ||||||||||||||||||||||
| (Loss) income from operations | $ | (12) | $ | (6) | $ | 4 | $ | 5 | ||||||||||||||||||
(1)Impairment of assets during the three and six months ended September 27, 2025 and September 28, 2024 primarily related to operating lease right-of-use assets at certain Michael Kors store locations.
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The following table presents our global network of retail stores by brand:
| As of | |||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||
| Number of full price retail stores (including concessions): | |||||||||||
| Michael Kors | 372 | 446 | |||||||||
| Jimmy Choo | 160 | 169 | |||||||||
| 532 | 615 | ||||||||||
| Number of outlet stores: | |||||||||||
| Michael Kors | 319 | 309 | |||||||||
| Jimmy Choo | 56 | 57 | |||||||||
| 375 | 366 | ||||||||||
| Total number of retail stores | 907 | 981 | |||||||||
The following table presents our retail stores by geographic location:
| As of | As of | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||||||||||||||
| Michael Kors | Jimmy Choo | Michael Kors | Jimmy Choo | ||||||||||||||||||||
| Store count by region: | |||||||||||||||||||||||
| The Americas | 264 | 41 | 292 | 43 | |||||||||||||||||||
| EMEA | 140 | 64 | 153 | 66 | |||||||||||||||||||
| Asia | 287 | 111 | 310 | 117 | |||||||||||||||||||
| 691 | 216 | 755 | 226 | ||||||||||||||||||||
Key Consolidated Performance Indicators and Statistics
We use a number of key indicators of operating results to evaluate our performance, including the following (dollars in millions):
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||
| Total revenue | $ | 856 | $ | 878 | $ | 1,653 | $ | 1,726 | |||||||||||||||
| Gross profit as a percent of total revenue | 61.0 | % | 62.3 | % | 61.9 | % | 62.7 | % | |||||||||||||||
| (Loss) income from operations | $ | (12) | $ | (6) | $ | 4 | $ | 5 | |||||||||||||||
| (Loss) income from operations as a percent of total revenue | (1.4) | % | (0.7) | % | 0.2 | % | 0.3 | % | |||||||||||||||
Seasonality
We experience certain effects of seasonality with respect to our business. We generally experience greater sales during our third fiscal quarter, primarily driven by holiday season sales, and the lowest sales during our first fiscal quarter.
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Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Critical accounting policies are those that are the most important to the portrayal of our results of operations and financial condition and that require our most difficult, subjective and complex judgments to make estimates about the effect of matters that are inherently uncertain. In applying such policies, we must use certain assumptions that are based on our informed judgments, assessments of probability and best estimates. Estimates, by their nature, are subjective and are based on analysis of available information, including current and historical factors and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis. While our significant accounting policies are detailed in Note 3 to the accompanying consolidated financial statements, our critical accounting policies are disclosed, in full, in the MD&A section of our Annual Report on Form 10-K for the fiscal year ended March 29, 2025. There have been no significant changes to our critical accounting policies and estimates since March 29, 2025.
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Results of Operations
Comparison of the three months ended September 27, 2025 with the three months ended September 28, 2024
The following table details the results of our operations for the three months ended September 27, 2025 and September 28, 2024, and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):
| Three Months Ended | $ Change | % Change | % of Total Revenue for the Three Months Ended | ||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||||||||||||||
| Statements of Operations Data: | |||||||||||||||||||||||||||||||||||
| Total revenue | $ | 856 | $ | 878 | $ | (22) | (2.5) | % | |||||||||||||||||||||||||||
| Cost of goods sold | 334 | 331 | 3 | 0.9 | % | 39.0 | % | 37.7 | % | ||||||||||||||||||||||||||
| Gross profit | 522 | 547 | (25) | (4.6) | % | 61.0 | % | 62.3 | % | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | 481 | 497 | (16) | (3.2) | % | 56.2 | % | 56.6 | % | ||||||||||||||||||||||||||
| Depreciation and amortization | 30 | 35 | (5) | (14.3) | % | 3.5 | % | 4.0 | % | ||||||||||||||||||||||||||
| Impairment of assets | 21 | 20 | 1 | 5.0 | % | 2.5 | % | 2.3 | % | ||||||||||||||||||||||||||
| Restructuring and other expense | 2 | 1 | 1 | 100.0 | % | 0.2 | % | 0.1 | % | ||||||||||||||||||||||||||
| Total operating expenses | 534 | 553 | (19) | (3.4) | % | 62.4 | % | 63.0 | % | ||||||||||||||||||||||||||
| Loss from operations | (12) | (6) | (6) | 100.0 | % | (1.4) | % | (0.7) | % | ||||||||||||||||||||||||||
| Interest income, net | (17) | (10) | (7) | 70.0 | % | (2.0) | % | (1.1) | % | ||||||||||||||||||||||||||
| Foreign currency loss (gain) | 3 | (11) | 14 | NM | 0.4 | % | (1.3) | % | |||||||||||||||||||||||||||
| Income from continuing operations before income taxes | 2 | 15 | (13) | (86.7) | % | 0.2 | % | 1.7 | % | ||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 36 | (27) | 63 | NM | 4.2 | % | (3.1) | % | |||||||||||||||||||||||||||
| Net (loss) income from continuing operations | (34) | 42 | (76) | NM | |||||||||||||||||||||||||||||||
| Net income (loss) from discontinued operations, net of tax | 6 | (19) | 25 | NM | |||||||||||||||||||||||||||||||
| Net (loss) income | (28) | 23 | (51) | NM | |||||||||||||||||||||||||||||||
| Less: Net loss attributable to noncontrolling interest from continuing operations | — | (1) | 1 | (100.0) | % | ||||||||||||||||||||||||||||||
| Net (loss) income attributable to Capri | $ | (28) | $ | 24 | $ | (52) | NM | ||||||||||||||||||||||||||||
| NM Not meaningful | ||||||||
Total Revenue
| Three Months Ended | % Change | ||||||||||||||||||||||||||||
| (dollars in millions) | September 27, 2025 | September 28, 2024 | $ Change | As Reported | Constant Currency | ||||||||||||||||||||||||
| Michael Kors | $ | 725 | $ | 738 | $ | (13) | (1.8) | % | (3.3) | % | |||||||||||||||||||
| Jimmy Choo | 131 | 140 | (9) | (6.4) | % | (9.3) | % | ||||||||||||||||||||||
| Total revenue | $ | 856 | $ | 878 | $ | (22) | (2.5) | % | (4.2) | % | |||||||||||||||||||
Total revenue decreased $22 million, or 2.5%, to $856 million for the three months ended September 27, 2025, compared to $878 million for the three months ended September 28, 2024, which included net favorable foreign currency effects of approximately $15 million, primarily as a result of the weakening of the United States dollar compared to the Euro and British Pound. On a constant currency basis, our total revenue decreased $37 million, or 4.2%.
•Michael Kors revenue decreased $13 million, or 1.8%, to $725 million for the three months ended September 27, 2025, compared to $738 million for the three months ended September 28, 2024, which included favorable foreign currency effects of $11 million. On a constant currency basis, revenue decreased $24 million, or 3.3%, primarily due to the result of certain strategic initiatives previously put in place at Michael Kors that did not perform as
40
expected, as well as a decrease in promotions. See Note 5 to the accompanying consolidated financial statements for additional information.
•Jimmy Choo revenues decreased $9 million, or 6.4%, to $131 million for the three months ended September 27, 2025, compared to $140 million for the three months ended September 28, 2024, which included favorable foreign currency effects of $4 million. On a constant currency basis, revenue decreased $13 million, or 9.3%, primarily attributable to a continued slowdown in demand for certain categories of fashion luxury goods, particularly in EMEA and Asia.
Gross Profit
| Three Months Ended | |||||||||||||||||||||||
| (dollars in millions) | September 27, 2025 | September 28, 2024 | $ Change | % Change | |||||||||||||||||||
| Gross Profit: | |||||||||||||||||||||||
| Michael Kors | $ | 430 | $ | 451 | $ | (21) | (4.7) | % | |||||||||||||||
| Jimmy Choo | 92 | 96 | (4) | (4.2) | % | ||||||||||||||||||
| Total gross profit | $ | 522 | $ | 547 | $ | (25) | (4.6) | % | |||||||||||||||
| Gross Profit Margin: | |||||||||||||||||||||||
| Michael Kors | 59.3 | % | 61.1 | % | |||||||||||||||||||
| Jimmy Choo | 70.2 | % | 68.6 | % | |||||||||||||||||||
Gross profit decreased $25 million, or 4.6%, to $522 million for the three months ended September 27, 2025, compared to $547 million for the three months ended September 28, 2024, which included net favorable foreign currency effects of $11 million. Gross profit as a percentage of total revenue was 61.0% and 62.3% for the three months ended September 27, 2025 and September 28, 2024, respectively.
•Michael Kors gross profit decreased $21 million, or 4.7%, to $430 million for the three months ended September 27, 2025, compared to $451 million for the three months ended September 28, 2024. The 180 basis point decrease in gross profit margin was primarily attributable to the unfavorable impact of recently enacted U.S. import tariffs.
•Jimmy Choo gross profit decreased $4 million, or 4.2%, to $92 million for the three months ended September 27, 2025, compared to $96 million for the three months ended September 28, 2024. The 160 basis point increase in gross profit margin was primarily due to favorable channel mix and higher full price sell-throughs.
Total Operating Expenses
Total operating expenses decreased $19 million, or 3.4%, to $534 million for the three months ended September 27, 2025, compared to $553 million for the three months ended September 28, 2024. Our operating expenses included a net unfavorable foreign currency impact of approximately $10 million. Total operating expenses decreased to 62.4% as a percentage of total revenue for the three months ended September 27, 2025, compared to 63.0% for the three months ended September 28, 2024. The components that comprise total operating expenses are explained below.
41
Selling, General and Administrative Expenses
| Three Months Ended | |||||||||||||||||||||||
| (dollars in millions) | September 27, 2025 | September 28, 2024 | $ Change | % Change | |||||||||||||||||||
| Selling, general and administrative expenses: | |||||||||||||||||||||||
| Michael Kors | $ | 339 | $ | 344 | $ | (5) | (1.5) | % | |||||||||||||||
| Jimmy Choo | 94 | 93 | 1 | 1.1 | % | ||||||||||||||||||
| Corporate | 48 | 60 | (12) | (20.0) | % | ||||||||||||||||||
| Total selling, general and administrative expenses | $ | 481 | $ | 497 | $ | (16) | (3.2) | % | |||||||||||||||
Selling, general and administrative expenses decreased $16 million, or 3.2%, to $481 million for the three months ended September 27, 2025, compared to $497 million for the three months ended September 28, 2024. As a percentage of total revenue, selling, general and administrative expenses decreased to 56.2% for the three months ended September 27, 2025, compared to 56.6% for the three months ended September 28, 2024.
•Michael Kors selling, general and administrative expenses decreased $5 million, or 1.5%, to $339 million for the three months ended September 27, 2025, compared to $344 million for the three months ended September 28, 2024. The decrease was primarily due to cost savings initiatives which resulted in lower personnel expenses and retail store related costs.
•Jimmy Choo selling, general and administrative expenses increased $1 million, or 1.1%, to $94 million for the three months ended September 27, 2025, compared to $93 million for the three months ended September 28, 2024, primarily due to increased marketing expenses partially offset by cost savings initiatives which resulted in lower retail store related costs compared to the prior year.
Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, decreased $12 million, or 20.0%, to $48 million for the three months ended September 27, 2025 as compared to $60 million for the three months ended September 28, 2024, primarily due to a decrease in professional fees related to certain Capri transformation projects which are now complete and the absence of transaction related costs incurred in the prior year.
Impairment of Assets
For the three months ended September 27, 2025, we recognized asset impairment charges of $21 million primarily related to the impairment of operating lease right-of-use assets at certain Michael Kors store locations. For the three months ended September 28, 2024, we recognized asset impairment charges of $20 million primarily related to operating lease right-of-use assets at certain Michael Kors store locations. See Note 13 to the accompanying consolidated financial statements for additional information.
Restructuring and Other Expense
During the three months ended September 27, 2025 and September 28, 2024, we recorded expenses of $2 million and $1 million, respectively, primarily related to store closure costs. See Note 10 to the accompanying consolidated financial statements for additional information.
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Loss from Operations
| Three Months Ended | |||||||||||||||||||||||
| (in millions) | September 27, 2025 | September 28, 2024 | $ Change | % Change | |||||||||||||||||||
| Loss from operations: | |||||||||||||||||||||||
| Michael Kors | $ | 73 | $ | 87 | $ | (14) | (16.1) | % | |||||||||||||||
| Jimmy Choo | (9) | (5) | (4) | 80.0 | % | ||||||||||||||||||
| 64 | 82 | (18) | (22.0) | % | |||||||||||||||||||
Unallocated corporate and other expenses, net (1) | (76) | (88) | 12 | (13.6) | % | ||||||||||||||||||
| Loss from operations | $ | (12) | $ | (6) | $ | (6) | 100.0 | % | |||||||||||||||
| Operating Margin: | |||||||||||||||||||||||
| Michael Kors | 10.1 | % | 11.8 | % | |||||||||||||||||||
| Jimmy Choo | (6.9) | % | (3.6) | % | |||||||||||||||||||
(1)Certain corporate costs are not directly attributable to our brands and, therefore, are not allocated to segments. See Note 18 to the accompanying consolidated financial statements for additional information.
Loss from operations was $12 million for the three months ended September 27, 2025, compared to $6 million for the three months ended September 28, 2024. Loss from operations as a percentage of total revenue was 1.4% for the three months ended September 27, 2025, compared to 0.7% for the three months ended September 28, 2024.
•Michael Kors recorded income from operations of $73 million for the three months ended September 27, 2025, compared to $87 million for the three months ended September 28, 2024. Operating margin decreased from 11.8% for the three months ended September 28, 2024, to 10.1% for the three months ended September 27, 2025, primarily due to a decrease in gross profit margin as noted above.
•Jimmy Choo recorded a loss from operations of $9 million for the three months ended September 27, 2025 compared to $5 million for the three months ended September 28, 2024. Operating margin decreased from a loss of 3.6% for the three months ended September 28, 2024 to 6.9% for the three months ended September 27, 2025, primarily due to deleveraging of operating expenses on lower revenues compared to the prior year.
Interest Income, net
For the three months ended September 27, 2025, we recognized $17 million of interest income compared to $10 million of interest income for the three months ended September 28, 2024. The $7 million improvement in interest income, net, is primarily due to higher interest income from our net investment hedges and lower effective interest rates on our outstanding debt (see Note 11 and Note 14 to the accompanying consolidated financial statements for additional information).
Foreign Currency Loss (Gain)
For the three months ended September 27, 2025, we recognized a net foreign currency loss of $3 million compared to a gain of $11 million for the three months ended September 28, 2024, primarily attributable to the remeasurement of intercompany balances between certain of our subsidiaries.
Provision (Benefit) for Income Taxes
The provision for income taxes was $36 million for the three months ended September 27, 2025, compared to a benefit of $27 million for the three months ended September 28, 2024. Our effective tax rate for the three months ended September 27, 2025 compared to our effective tax rate for the three months ended September 28, 2024 is not a meaningful metric due to the effect of an incremental net valuation allowance of $40 million recorded for the three months ended September 27, 2025.
43
On January 10, 2025, the United States Treasury and the IRS issued final regulations that address several long-standing issues related to dual consolidated losses and introduce new rules for disregarded payment losses. The changes related to disregarded payment losses could impact how we utilize certain deductions and losses to offset our U.S. income as part of our global financing activities beginning in Fiscal 2027. Based upon our analysis, this is not projected to have a material impact on our consolidated financial statements.
On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act of 2025 (“OBBBA”) which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act (“Jobs Act”). Based upon our analysis, the OBBBA did not have a material impact on our consolidated financial statements.
Our effective tax rate may fluctuate from time to time due to the effects of valuation allowance on deferred tax assets, changes in United States federal, state and local taxes and tax rates in foreign jurisdictions. In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.
Net (Loss) Income from Continuing Operations
As a result of the above, our net loss was $34 million for the three months ended September 27, 2025, compared to net income of $42 million for the three months ended September 28, 2024.
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Results of Operations
Comparison of the six months ended September 27, 2025 with the six months ended September 28, 2024
The following table details the results of our operations for the six months ended September 27, 2025 and September 28, 2024, and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):
| Six Months Ended | $ Change | % Change | % of Total Revenue for the Six Months Ended | ||||||||||||||||||||||||||||||||
| September 27, 2025 | September 28, 2024 | September 27, 2025 | September 28, 2024 | ||||||||||||||||||||||||||||||||
| Statements of Operations Data: | |||||||||||||||||||||||||||||||||||
| Total revenue | $ | 1,653 | $ | 1,726 | $ | (73) | (4.2) | % | |||||||||||||||||||||||||||
| Cost of goods sold | 629 | 644 | (15) | (2.3) | % | 38.1 | % | 37.3 | % | ||||||||||||||||||||||||||
| Gross profit | 1,024 | 1,082 | (58) | (5.4) | % | 61.9 | % | 62.7 | % | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | 936 | 988 | (52) | (5.3) | % | 56.6 | % | 57.2 | % | ||||||||||||||||||||||||||
| Depreciation and amortization | 60 | 67 | (7) | (10.4) | % | 3.6 | % | 3.9 | % | ||||||||||||||||||||||||||
| Impairment of assets | 21 | 20 | 1 | 5.0 | % | 1.3 | % | 1.2 | % | ||||||||||||||||||||||||||
| Restructuring and other expense | 3 | 2 | 1 | 50.0 | % | 0.2 | % | 0.1 | % | ||||||||||||||||||||||||||
| Total operating expenses | 1,020 | 1,077 | (57) | (5.3) | % | 61.7 | % | 62.4 | % | ||||||||||||||||||||||||||
| Income from operations | 4 | 5 | (1) | (20.0) | % | 0.2 | % | 0.3 | % | ||||||||||||||||||||||||||
| Other income, net | (1) | — | (1) | NM | (0.1) | % | — | % | |||||||||||||||||||||||||||
| Interest income, net | (35) | (14) | (21) | NM | (2.1) | % | (0.8) | % | |||||||||||||||||||||||||||
| Foreign currency gain | (2) | (7) | 5 | (71.4) | % | (0.1) | % | (0.4) | % | ||||||||||||||||||||||||||
| Income before income taxes | 42 | 26 | 16 | 61.5 | % | 2.5 | % | 1.5 | % | ||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 20 | (21) | 41 | NM | 1.2 | % | (1.2) | % | |||||||||||||||||||||||||||
| Net income from continuing operations | 22 | 47 | (25) | (53.2) | % | ||||||||||||||||||||||||||||||
| Net income (loss) from discontinued operations, net of tax | 3 | (36) | 39 | NM | |||||||||||||||||||||||||||||||
| Net income | 25 | 11 | 14 | NM | |||||||||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interest from continuing operations | — | 1 | (1) | (100.0) | % | ||||||||||||||||||||||||||||||
| Net income attributable to Capri | $ | 25 | $ | 10 | $ | 15 | NM | ||||||||||||||||||||||||||||
NM Not meaningful
Total Revenue
| Six Months Ended | % Change | ||||||||||||||||||||||||||||
| (dollars in millions) | September 27, 2025 | September 28, 2024 | $ Change | As Reported | Constant Currency | ||||||||||||||||||||||||
| Michael Kors | $ | 1,360 | $ | 1,413 | $ | (53) | (3.8) | % | (5.2) | % | |||||||||||||||||||
| Jimmy Choo | 293 | 313 | (20) | (6.4) | % | (9.3) | % | ||||||||||||||||||||||
| Total revenue | $ | 1,653 | $ | 1,726 | $ | (73) | (4.2) | % | (5.9) | % | |||||||||||||||||||
Total revenue decreased $73 million, or 4.2%, to $1.653 billion for the six months ended September 27, 2025, compared to $1.726 billion for the six months ended September 28, 2024, which included net favorable foreign currency effects of approximately $29 million, primarily as a result of the weakening of the United States dollar compared to the Euro and British Pound. On a constant currency basis, our total revenue decreased $102 million, or 5.9%.
45
•Michael Kors revenues decreased $53 million, or 3.8%, to $1.360 billion for the six months ended September 27, 2025, compared to $1.413 billion for the six months ended September 28, 2024, which included favorable foreign currency effects of $20 million. On a constant currency basis, revenue decreased $73 million, or 5.2%, primarily due to the result of certain strategic initiatives previously put in place at Michael Kors that did not perform as expected, as well as a decrease in promotions. See Note 5 to the accompanying consolidated financial statements for additional information.
•Jimmy Choo revenues decreased $20 million, or 6.4%, to $293 million for the six months ended September 27, 2025, compared to $313 million for the six months ended September 28, 2024, which included favorable foreign currency effects of $9 million. On a constant currency basis, revenue decreased $29 million, or 9.3%, primarily attributable to a continued slowdown in demand for certain categories of fashion luxury goods, particularly in Asia and North America.
Gross Profit
| Six Months Ended | |||||||||||||||||||||||
| (dollars in millions) | September 27, 2025 | September 28, 2024 | $ Change | % Change | |||||||||||||||||||
| Gross Profit: | |||||||||||||||||||||||
| Michael Kors | $ | 818 | $ | 870 | $ | (52) | (6.0) | % | |||||||||||||||
| Jimmy Choo | 206 | 212 | (6) | (2.8) | % | ||||||||||||||||||
| Total gross profit | $ | 1,024 | $ | 1,082 | $ | (58) | (5.4) | % | |||||||||||||||
| Gross Profit Margin: | |||||||||||||||||||||||
| Michael Kors | 60.1 | % | 61.6 | % | |||||||||||||||||||
| Jimmy Choo | 70.3 | % | 67.7 | % | |||||||||||||||||||
Gross profit decreased $58 million, or 5.4%, to $1.024 billion for the six months ended September 27, 2025, compared to $1.082 billion for the six months ended September 28, 2024, which included net favorable foreign currency effects of $20 million. Gross profit as a percentage of total revenue was 61.9% and 62.7% for the six months ended September 27, 2025 and September 28, 2024, respectively.
•Michael Kors gross profit decreased $52 million, or 6.0%, to $818 million for the six months ended September 27, 2025, compared to $870 million for the six months ended September 28, 2024. The 150 basis point decrease in gross profit margin was primarily attributable to the unfavorable impact of recently enacted U.S. import tariffs and lower initial markups associated with our new pricing strategy.
•Jimmy Choo gross profit decreased $6 million, or 2.8%, to $206 million for the six months ended September 27, 2025, compared to $212 million for the six months ended September 28, 2024. The 260 basis point increase in gross profit margin was primarily due to favorable channel mix and higher full price sell-throughs.
Total Operating Expenses
Total operating expenses decreased $57 million, or 5.3%, to $1.020 billion for the six months ended September 27, 2025, compared to $1.077 billion for the six months ended September 28, 2024. Our operating expenses included a net unfavorable foreign currency impact of approximately $17 million. Total operating expenses decreased to 61.7% as a percentage of total revenue for the six months ended September 27, 2025, compared to 62.4% for the six months ended September 28, 2024. The components that comprise total operating expenses are explained below.
46
Selling, General and Administrative Expenses
| Six Months Ended | |||||||||||||||||||||||
| (dollars in millions) | September 27, 2025 | September 28, 2024 | $ Change | % Change | |||||||||||||||||||
| Selling, general and administrative expenses: | |||||||||||||||||||||||
| Michael Kors | $ | 646 | $ | 668 | $ | (22) | (3.3) | % | |||||||||||||||
| Jimmy Choo | 197 | 198 | (1) | (0.5) | % | ||||||||||||||||||
| Corporate | 93 | 122 | (29) | (23.8) | % | ||||||||||||||||||
| Total selling, general and administrative expenses | $ | 936 | $ | 988 | $ | (52) | (5.3) | % | |||||||||||||||
Selling, general and administrative expenses decreased $52 million, or 5.3%, to $936 million for the six months ended September 27, 2025, compared to $988 million for the six months ended September 28, 2024. As a percentage of total revenue, selling, general and administrative expenses decreased to 56.6% for the six months ended September 27, 2025, compared to 57.2% for the six months ended September 28, 2024.
•Michael Kors selling, general and administrative expenses decreased $22 million, or 3.3%, to $646 million for the six months ended September 27, 2025, compared to $668 million for the six months ended September 28, 2024. The decrease was primarily due to cost savings initiatives which resulted in lower personnel expenses and retail store related costs compared to the prior year.
•Jimmy Choo selling, general and administrative expenses decreased $1 million, or 0.5%, to $197 million for the six months ended September 27, 2025, compared to $198 million for the six months ended September 28, 2024. The decrease was primarily due to cost savings initiatives which resulted in lower retail store related costs compared to the prior year.
Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, decreased $29 million, or 23.8%, to $93 million for the six months ended September 27, 2025 as compared to $122 million for the six months ended September 28, 2024, primarily due to a decrease in professional fees related to certain Capri transformation projects which are now complete and the absence of transaction related costs incurred in the prior year.
Impairment of Assets
For the six months ended September 27, 2025, we recognized asset impairment charges of $21 million primarily related to the impairment of operating lease right-of-use assets at certain Michael Kors store locations. For the six months ended September 28, 2024, we recognized asset impairment charges of $20 million primarily related to operating lease right-of-use assets at certain Michael Kors store locations. See Note 13 to the accompanying consolidated financial statements for additional information.
Restructuring and Other Expense
During the six months ended September 27, 2025 and September 28, 2024, we recorded expenses of $3 million and $2 million, respectively, primarily related to store closure costs. See Note 10 to the accompanying consolidated financial statements for additional information.
47
Income from Operations
| Six Months Ended | |||||||||||||||||||||||
| (dollars in millions) | September 27, 2025 | September 28, 2024 | $ Change | % Change | |||||||||||||||||||
| Income from operations: | |||||||||||||||||||||||
| Michael Kors | $ | 136 | $ | 162 | $ | (26) | (16.0) | % | |||||||||||||||
| Jimmy Choo | (5) | (1) | (4) | NM | |||||||||||||||||||
| $ | 131 | $ | 161 | $ | (30) | (18.6) | % | ||||||||||||||||
Unallocated corporate and other expenses, net (1) | (127) | (156) | 29 | (18.6) | % | ||||||||||||||||||
| Income from operations | $ | 4 | $ | 5 | $ | (1) | (20.0) | % | |||||||||||||||
| Operating Margin: | |||||||||||||||||||||||
| Michael Kors | 10.0 | % | 11.5 | % | |||||||||||||||||||
| Jimmy Choo | (1.7) | % | (0.3) | % | |||||||||||||||||||
(1)Certain corporate costs are not directly attributable to our brands and, therefore, are not allocated to segments. See Note 18 to the accompanying consolidated financial statements for additional information.
Income from operations was $4 million for the six months ended September 27, 2025, compared to $5 million for the six months ended September 28, 2024. Income from operations as a percentage of total revenue was 0.2% for the six months ended September 27, 2025, compared to income from operations of 0.3% for the six months ended September 28, 2024.
•Michael Kors recorded income from operations of $136 million for the six months ended September 27, 2025, compared to $162 million for the six months ended September 28, 2024. Operating margin decreased from 11.5% for the six months ended September 28, 2024, to 10.0% for the six months ended September 27, 2025, primarily due to a decrease in gross profit margin as noted above.
•Jimmy Choo recorded a loss from operations of $5 million for the six months ended September 27, 2025, compared to $1 million for the six months ended September 28, 2024. Operating margin decreased from an operating loss of 0.3% for the six months ended September 28, 2024, to 1.7% for the six months ended September 27, 2025, primarily due to deleveraging of operating expenses on lower revenues compared to the prior year.
Interest Income, net
For the six months ended September 27, 2025, we recognized $35 million of interest income compared to $14 million for the six months ended September 28, 2024. The $21 million improvement in interest income, net, is primarily due to higher interest income from our net investment hedges and lower effective interest rates on our outstanding debt (see Note 11 and Note 14 to the accompanying consolidated financial statements for additional information).
Foreign Currency Gain
For the six months ended September 27, 2025 and September 28, 2024, we recognized a net foreign currency gain of $2 million and $7 million, respectively, primarily attributable to the remeasurement of intercompany balances with certain of our subsidiaries.
Provision (Benefit) for Income Taxes
The provision for income taxes was $20 million for the six months ended September 27, 2025, compared to a benefit of $21 million for the six months ended September 28, 2024. Our effective tax rate for the six months ended September 27, 2025 compared to our effective tax rate for the six months ended September 28, 2024 is not a meaningful metric due to the effect of an incremental net valuation allowance of $14 million recorded for the six months ended September 27, 2025.
48
On January 10, 2025, the United States Treasury and the IRS issued final regulations that address several long-standing issues related to dual consolidated losses and introduce new rules for disregarded payment losses. The changes related to disregarded payment losses could impact how we utilize certain deductions and losses to offset our U.S. income as part of our global financing activities beginning in Fiscal 2027. Based upon our analysis, this is not projected to have a material impact on our consolidated financial statements.
On July 4, 2025, the U.S. government enacted the OBBBA which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Jobs Act. Based upon our analysis, the OBBBA did not have a material impact on our consolidated financial statements.
Our effective tax rate may fluctuate from time to time due to the effects of valuation allowance on deferred tax assets, changes in United States federal, state and local taxes and tax rates in foreign jurisdictions. In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.
Net Income from Continuing Operations
As a result of the above, our net income was $22 million for the six months ended September 27, 2025, compared to net income of $47 million for the six months ended September 28, 2024.
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Liquidity and Capital Resources
Liquidity
Our primary sources of liquidity are the cash flows generated from our operations, along with borrowings available under our credit facilities (see below discussion regarding “Revolving Credit Facilities”) and available cash and cash equivalents. Our primary use of this liquidity is to fund the ongoing cash requirements, including our working capital needs and capital investments in our business, debt repayments, acquisitions, returns of capital, including share repurchases and other corporate activities. We believe that the cash generated from our operations, together with borrowings available under our revolving credit facilities and available cash and cash equivalents, will be sufficient to meet our working capital needs for the next 12 months and beyond, including investments made and expenses incurred in connection with our store opening and renovation plans, investments in corporate and distribution facilities, continued IT system development, e-commerce and marketing initiatives. We spent $26 million on capital expenditures during the six months ended September 27, 2025. We expect to spend approximately $110 million in Fiscal 2026, which includes Michael Kors and Jimmy Choo store renovations, as well as information technology and digital enhancements. Additionally, we expect to receive the proceeds from the sale of the Versace business in Fiscal 2026 for an aggregate purchase price of $1.375 billion in cash, subject to certain adjustments.
The following table sets forth key indicators of our liquidity and capital resources (in millions):
| As of | |||||||||||
| September 27, 2025 | March 29, 2025 | ||||||||||
| Balance Sheet Data: | |||||||||||
| Cash and cash equivalents | $ | 120 | $ | 107 | |||||||
| Working capital | $ | 343 | $ | 185 | |||||||
| Total assets | $ | 5,617 | $ | 5,213 | |||||||
| Short-term debt | $ | 11 | $ | 24 | |||||||
| Long-term debt | $ | 1,753 | $ | 1,466 | |||||||
| Six Months Ended | |||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||
| Cash Flows Data: | |||||||||||
| Operating activities | $ | (13) | $ | 138 | |||||||
| Investing activities | $ | (26) | $ | (45) | |||||||
| Financing activities | $ | 187 | $ | (67) | |||||||
| Effect of exchange rate changes | $ | (36) | $ | (1) | |||||||
Net increase in cash and cash equivalents (1) | $ | 112 | $ | 25 | |||||||
(1)Net increase in cash and cash equivalents is presented on a continuing basis which differs from the Consolidated Statements of Cash Flows which is presented on a consolidated basis including discontinued operations.
Cash (Used in) Provided by Operating Activities
Net cash used in operating activities was $13 million during the six months ended September 27, 2025, as compared to net cash provided by operating activities of $138 million for the six months ended September 28, 2024. The increase in net cash used in operating activities was primarily attributable to the timing of payments for both accounts receivable and accounts payable and a decrease in net income after non-cash adjustments, partially offset by lower inventory purchases in the current year.
Cash Used in Investing Activities
Net cash used in investing activities was $26 million during the six months ended September 27, 2025, as compared to net cash used in investing activities of $45 million during the six months ended September 28, 2024. The decrease in net cash used in investing activities were primarily attributable to lower capital expenditures of $10 million in the current fiscal year and the $9 million acquisition of an Italian shoe manufacturer which occurred in the prior fiscal year.
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Cash Provided by (Used in) Financing Activities
Net cash provided by financing activities was $187 million during the six months ended September 27, 2025, as compared to net cash used in financing activities of $67 million during the six months ended September 28, 2024. The increase in cash provided by financing activities of $254 million was primarily attributable to higher net debt borrowings of $250 million.
Debt Facilities
The following table presents a summary of our borrowing capacity and amounts outstanding as of September 27, 2025 and March 29, 2025 (in millions):
| As of | |||||||||||
| September 27, 2025 | March 29, 2025 | ||||||||||
Revolving Credit Facility (1) | |||||||||||
| Total availability | $ | 1,500 | $ | 1,500 | |||||||
Borrowings outstanding (2) | 1,024 | 755 | |||||||||
| Letter of credit outstanding | 1 | 1 | |||||||||
| Remaining availability | $ | 475 | $ | 744 | |||||||
| 2025 Term Loans | |||||||||||
Borrowings outstanding, net of debt issuance costs (2) | $ | 724 | $ | 706 | |||||||
Other Borrowings (3) | $ | 16 | $ | 29 | |||||||
| Hong Kong Uncommitted Credit Facility: | |||||||||||
Total availability (45 million Hong Kong Dollars) (4) | $ | 6 | $ | 6 | |||||||
| Borrowings outstanding | — | — | |||||||||
| Remaining availability (45 million Hong Kong Dollars) | $ | 6 | $ | 6 | |||||||
| China Uncommitted Credit Facility: | |||||||||||
Total availability (75 million Chinese Yuan) (4) | $ | 11 | $ | 10 | |||||||
| Borrowings outstanding | — | — | |||||||||
| Total and remaining availability (75 million Chinese Yuan) | $ | 11 | $ | 10 | |||||||
| Japan Credit Facility: | |||||||||||
| Total availability (1.0 billion Japanese Yen) | $ | 7 | $ | 7 | |||||||
| Borrowings outstanding | — | — | |||||||||
| Remaining availability (1.0 billion Japanese Yen) | $ | 7 | $ | 7 | |||||||
Total borrowings outstanding (1) | $ | 1,764 | $ | 1,490 | |||||||
| Total remaining availability | $ | 499 | $ | 767 | |||||||
(1)The financial covenant in our 2025 Credit Facilities requires us to comply with a quarterly maximum net leverage ratio test of 4.0 to 1.0. The Revolving Credit Facility excludes up to a $750 million accordion feature as of September 27, 2025 and March 29, 2025, respectively. As of September 27, 2025 and March 29, 2025, we were in compliance with all covenants related to our agreements then in effect governing our debt. See Note 11 to the accompanying consolidated financial statements for additional information.
(2)As of September 27, 2025 and March 29, 2025, all amounts are recorded as long-term debt on our consolidated balance sheets.
(3)The balance as of September 27, 2025 primarily consists of $11 million related to our supplier financing program recorded within short-term debt in our consolidated balance sheets and $5 million of other loans recorded as long-term debt on our consolidated balance sheets. The balance as of March 29, 2025 consists of $24 million related to
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our supplier finance program recorded within short-term debt on our consolidated balance sheets and $5 million of other loans recorded as long-term debt in our consolidated balance sheets.
(4)The balance as of September 27, 2025 and March 29, 2025 represents the total availability of the credit facility, which excludes bank guarantees.
We believe that our 2025 Credit Facilities is adequately diversified with no undue concentration in any one financial institution. As of September 27, 2025, there were 17 financial institutions participating in the facility, with none maintaining a maximum commitment percentage in excess of 10%. We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the 2025 Credit Facilities.
See Note 11 in the accompanying financial statements and Note 12 in our Fiscal 2025 Annual Report on Form 10-K for detailed information relating to our credit facilities and debt obligations.
Share Repurchase Program
The following table presents our treasury share repurchases during the six months ended September 27, 2025 and September 28, 2024 (dollars in millions):
| Six Months Ended | |||||||||||
| September 27, 2025 | September 28, 2024 | ||||||||||
| Cost of shares repurchased under share repurchase program | $ | — | $ | — | |||||||
Fair value of shares withheld to cover tax obligations for vested restricted share awards | 2 | 4 | |||||||||
| Total cost of treasury shares repurchased | $ | 2 | $ | 4 | |||||||
| Shares repurchased under share repurchase program | — | — | |||||||||
| Shares withheld to cover tax withholding obligations | 98,081 | 105,470 | |||||||||
| 98,081 | 105,470 | ||||||||||
On November 9, 2022, we announced that our Board of Directors approved a two-year share repurchase program to purchase up to $1.0 billion of our outstanding ordinary shares which expired on November 9, 2024. Share repurchases were permitted to be made in open market or privately negotiated transactions and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable legal requirements, trading restrictions under our insider trading policy and other relevant factors. However, pursuant to the terms of the Merger Agreement, and subject to certain limited exceptions, we were prohibited from repurchasing our ordinary shares other than the acceptance of our ordinary shares as payment of the exercise price of our options or for withholding taxes with respect of our equity awards. Accordingly, we did not repurchase any of our ordinary shares during the pendency of the Merger Agreement through the expiration date of the share repurchase program.
See Note 15 to the accompanying consolidated financial statements for additional information.
Contractual Obligations and Commercial Commitments
Please refer to the “Contractual Obligations and Commercial Commitments” disclosure within the “Liquidity and Capital Resources” section of our Fiscal 2025 Form 10-K for a detailed disclosure of our other contractual obligations and commitments as of March 29, 2025.
Off-Balance Sheet Arrangements
We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. Our off-balance sheet commitments relating to our outstanding letters of credit were $30 million at September 27, 2025, including $29 million in letters of credit issued outside of the 2025 Credit Facilities. In addition, as of September 27, 2025, bank guarantees of approximately $47 million were supported by our various credit facilities. We do not have any other off-balance sheet arrangements or relationships with entities that are not consolidated into our financial statements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.
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Recent Accounting Pronouncements
See Note 3 to the accompanying interim consolidated financial statements for recently issued accounting standards, which may have an impact on our financial statements and/or disclosures upon adoption.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks during the normal course of business, such as risk arising from fluctuations in foreign currency exchange rates, as well as fluctuations in interest rates. In order to manage these risks, we employ certain strategies to mitigate the effect of these fluctuations, which include entering into foreign currency forward contracts, net investment hedges and interest rate swaps. We do not use derivatives for trading or speculative purposes.
Foreign Currency Exchange Risk
Forward Foreign Currency Exchange Contracts
We are exposed to risks on certain purchase commitments to foreign suppliers based on the value of our purchasing subsidiaries’ local currency relative to the currency requirement of the supplier on the date of the commitment. As such, we may enter into forward foreign currency exchange contracts that generally mature in 12 months or less and are consistent with the related purchase commitments to manage our exposure to the changes in the value of the Euro and the Canadian Dollar. These contracts are recorded at fair value in our consolidated balance sheets as either an asset or liability and are derivative contracts to hedge cash flow risks. Certain of these contracts are designated as hedges for hedge accounting purposes, while others are not designated as hedges for accounting purposes. Accordingly, the changes in the fair value of the majority of these contracts at the balance sheet date are recorded in equity as a component of accumulated other comprehensive (loss) income and upon maturity (settlement) are recorded in, or reclassified into, our cost of goods sold in our consolidated statements of operations and comprehensive (loss) income as applicable to the transactions for which the forward foreign currency exchange contracts were established.
We perform a sensitivity analysis on our forward currency contracts to determine the effects of fluctuations in foreign currency exchange rates. For this sensitivity analysis, we assume a hypothetical change in the United States dollar against the applicable foreign exchange rates. As of September 27, 2025, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of September 27, 2025, would result in a net increase or decrease, respectively, of approximately $6 million in the fair value of these contracts.
Net Investment Hedges
We also use cross currency swap agreements to hedge our net investments in foreign operations against future volatility in the exchange rates between different currencies. We are exposed to risks related to foreign currency exchange rate movements on our net investments in foreign operations due to the volatility in the exchange rates between different functional currencies. As of September 27, 2025, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $3.5 billion to hedge our net investment in CHF denominated subsidiaries against future volatility in the exchange rates between the United States dollar and CHF. Under the terms of these contracts, we will exchange monthly and semi-annual fixed rate payments on United States notional amounts for fixed rate payments of 0% in CHF. Based on the net investment hedges outstanding as of September 27, 2025, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of September 27, 2025, would result in a net increase or decrease, respectively, of approximately $394 million in the fair value of these contracts. These contracts have maturity dates between March 2027 and May 2045.
As of September 27, 2025, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $2.364 billion to hedge our net investment in Euro denominated subsidiaries against future volatility in the exchange rates between the United States dollar and Euro. Under the terms of these contracts, we will exchange monthly fixed rate payments on United States dollar notional amounts for fixed rate payments of 0% in Euros. Based on the net investment hedges outstanding as of September 27, 2025, a 10% appreciation or devaluation of the United States dollar compared to the level of foreign currency exchange rates for currencies under contract as of September 27, 2025, would result in a net increase or decrease, respectively, of approximately $252 million in the fair value of these contracts. These contracts have maturity dates between January 2027 and July 2031.
Interest Rate Risk
We are exposed to interest rate risk related to borrowings outstanding under our 2022 Credit Facility, USD Term Loans and EUR Term Loans. Our 2022 Credit Facility and USD Term Loans carries interest rates that are tied to the prime rate and other institutional lending rates (depending on the particular origination of borrowing), as further described in Note 11 to the accompanying consolidated financial statements. Our EUR Term Loans carries interest rates that are tied to EURIBOR. Our Hong Kong Credit Facility carries interest at a rate that is tied to the Hong Kong Interbank Offered Rate. Our China Credit Facility carries interest at a rate that is tied to the People’s Bank of China’s Benchmark lending rate. Our Japan Credit Facility
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carries interest at a rate posted by the Mitsubishi UFJ Financial Group. Therefore, our consolidated statements of operations and comprehensive (loss) income and cash flows are exposed to changes in those interest rates. At September 27, 2025, we had $1.024 billion borrowings outstanding under our 2022 Credit Facility, $724 million outstanding, net of debt issuance costs, under our 2025 Term Loans and no borrowings outstanding under all other Credit Facilities, as further described in Note 11 to the accompanying consolidated financial statements.
At March 29, 2025, we had $755 million borrowings outstanding under our 2022 Credit Facility, $706 million, outstanding, net of debt issuance costs, under our 2025 Term Loan and no borrowings outstanding under all other Credit Facilities.
These balances are not indicative of future balances that may be outstanding under our credit facilities that may be subject to fluctuations in interest rates. Any increases in the applicable interest rates would cause an increase to the interest expense relative to any outstanding balance at that date.
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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Interim Chief Financial Officer (“CFO”), our principal executive officer and principal financial officer, respectively, of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)), as of September 27, 2025. This evaluation was performed based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the 2013 Framework. Based on the evaluation, the CEO and CFO concluded that disclosure controls and procedures as of September 27, 2025 are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the three months ended September 27, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Ordinary Course Litigation
We are involved in various routine legal proceedings incident to the ordinary course of our business. We believe that the outcome of all pending, routine legal proceedings, in the aggregate, will not have a material adverse effect on our business, results of operations and financial condition.
Litigation Related to Terminated Merger
On December 23, 2024 and January 28, 2025, two purported shareholders of Capri filed putative class action complaints in the United States District Court for the District of Delaware against Capri, Tapestry and certain of their officers (including John D. Idol, our Chairman and Chief Executive Officer, and Thomas J. Edwards, Jr., our former Chief Financial and Chief Operating Officer) alleging violations of the federal securities laws based on certain statements by defendants concerning the previously proposed Merger and the FTC’s action to enjoin the Merger. The Court appointed the lead plaintiff on March 7, 2025, and on May 15, 2025 the lead plaintiff filed the Amended Federal Securities Law Complaint. The Amended Federal Securities Law Complaint seeks to bring federal securities claims on behalf of a class of all persons who purchased Capri stock and sold Capri puts between August 10, 2023 and October 24, 2024. We may incur substantial costs defending the Amended Federal Securities Law Complaint, and we cannot provide assurance regarding the outcome of this Amended Federal Securities Law Complaint. An unfavorable judgment or ruling could result in substantial liability. We may also be subject to additional demands or filed actions. Our potential liability to shareholders for federal securities claims or other matters related to the previously terminated Merger may be covered in part by our insurance policies, but we may not always have adequate insurance to defend all claims.
ITEM 1A. RISK FACTORS
There are no material changes from the risk factors previously disclosed in Part I, Item IA. Risk Factors, in our Annual Report on Form 10-K for the year ended March 29, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Issuer Purchases of Equity Securities
The following table provides information of our ordinary shares repurchased or withheld during the three months ended September 27, 2025:
Total Number of Shares (1) | Average Price per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs | Remaining Dollar Value of Shares That May Be Purchased Under the Programs (in millions) | ||||||||||||||||||||
| June 29 - July 26 | — | $ | — | — | $ | — | |||||||||||||||||
| July 27 - August 23 | 11,716 | $ | 20.77 | — | $ | — | |||||||||||||||||
| August 24 - September 27 | — | $ | — | — | $ | — | |||||||||||||||||
| 11,716 | — | ||||||||||||||||||||||
(1)Shares relate to our “withhold to cover” repurchase program, which allows us to withhold ordinary shares from certain employees and directors to satisfy minimum tax withholding obligations relating to the vesting of their restricted share awards.
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ITEM 5. OTHER INFORMATION
Global Optimization Plan
As previously announced during the fourth quarter of Fiscal 2024, the Board of Directors of the Company approved a Global Optimization Plan in order to streamline the Company’s operating model, maximize efficiency and support long-term profitable growth. This Item 5 is being filed solely to update prior disclosures in order to provide the amount of any material charges relating to the Global Optimization Plan by major type of cost that the Company believes are now determinable.
During the three months ended September 27, 2025, the Company closed 15 of its retail stores which have been incorporated into the Global Optimization Plan, which concluded as of September 27, 2025. Net restructuring expense recorded in connection with the Global Optimization Plan was $2 million during the three months ended September 27, 2025 primarily related to severance and store closure costs, partially offset by gains on lease terminations.
This disclosure is intended to satisfy the requirements of Item 2.05 of Form 8-K.
Rule 10b5-1 Trading Arrangements
During the quarterly period ended September 27, 2025, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted terminated
ITEM 6. EXHIBITS
a. Exhibits
Please refer to the accompanying Exhibit Index included after the signature page of this report for a list of exhibits filed or furnished with this report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 4, 2025.
| CAPRI HOLDINGS LIMITED | ||||||||
| By: | /s/ John D. Idol | |||||||
| Name: | John D. Idol | |||||||
| Title: | Chairman & Chief Executive Officer | |||||||
| By: | /s/ Rajal Mehta | |||||||
| Name: | Rajal Mehta | |||||||
| Title: | Interim Chief Financial Officer | |||||||
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INDEX TO EXHIBITS
| Exhibit No. | Description | ||||||||||
| 101.1 | The following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended September 27, 2025 formatted in Inline eXtensible Business Reporting Language: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) Consolidated Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements. | ||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | ||||||||||
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