3 unchanged sentences
All statements other than statements of historical facts included herein, may be forward-looking statements.
+Added: Forward-looking statements include information concerning the Company’s goals, future plans and strategies, including with respect to ESG goals, initiatives and ambitions as well as the Company’s possible or assumed future results of operations, including descriptions of its business strategy.
Without limitation, any statements preceded or followed by or that include the words “plans”, “believes”, “expects”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “might” or similar words or phrases, are forward-looking statements.
1 unchanged sentence
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.
−Removed: These risks, uncertainties and other factors include the impact of the COVID-19 pandemic, levels of cash flow and future availability of credit, compliance with restrictive covenants under the Company’s credit agreement, the Company’s ability to integrate successfully and to achieve anticipated benefits of any acquisition and to successfully execute our growth strategies;
+Added: These risks, uncertainties and other factors include the effect of the COVID-19 pandemic and its potential material and significant impact on the Company’s future financial and operational results if retail stores are forced to close again and the pandemic is prolonged, including that our estimates could materially differ if the severity of the COVID-19 situation worsens, or if there are further supply chain disruptions, including additional production delays and increased costs, the length and severity of such outbreak across the globe and the pace of recovery following the COVID-19 pandemic, levels of cash flow and future availability of credit, compliance with restrictive covenants under the Company’s credit agreement, the Company’s ability to integrate successfully and to achieve anticipated benefits of any acquisition and to successfully execute our growth strategies;
the risk of disruptions to the Company’s businesses;
7 unchanged sentences
levels of indebtedness (including the indebtedness incurred in connection with acquisitions);
−Removed: the timing and scope of future share buybacks, which may be made in open market or privately negotiated transactions, and are subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors, and which share repurchases may be suspended or discontinued at any time, the level of other investing activities and uses of cash;
+Added: the timing and scope of future share buybacks, which may be made in open market or privately negotiated transactions, and are subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors, and such share repurchases may be suspended or discontinued at any time, the level of other investing activities and uses of cash;
changes in consumer traffic and retail trends;
−Removed: loss of market share and industry competition;
+Added: higher consumer debt levels, recession and inflationary pressures, loss of market share and industry competition;
fluctuations in the capital markets;
1 unchanged sentence
the occurrence of unforeseen epidemics and pandemics, disasters or catastrophes;
+Added: extreme weather conditions and natural disasters;
political or economic instability in principal markets;
adverse outcomes in litigation;
−Removed: and general, local and global economic, political, business and market conditions, as well as those risks set forth in the Company’s filings with the U.S.
+Added: and general, local and global economic, political, business and market conditions including acts of war and other geopolitical conflicts, as well as those risks set forth in the Company’s filings with the U.S.
Securities and Exchange Commission, including in this Annual Report on Form 10-K, particularly under “Item 1A.
4 unchanged sentences
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.
−Removed: 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 businesses.
+Added: Founded in 1978 in Milan, Versace is known for its iconic and unmistakable style and unparalleled craftsmanship.
+Added: Over the past several decades, the House of Versace has grown globally from its roots in haute couture, expanding into the design, manufacturing, distribution and retailing of accessories, ready-to-wear, footwear, eyewear, watches, jewelry, fragrance and home furnishings businesses.
Versace’s design team is led by Donatella Versace, who has been the brand’s Artistic Director for over 20 years.
−Removed: Versace distributes its products through a worldwide distribution network, which includes boutiques in some of the world’s most glamorous cities, its e-commerce site, as well as through the most prestigious department and specialty stores worldwide.
−Removed: Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, scarves and belts, as well as a growing men’s luxury shoes and accessory business.
+Added: Versace distributes its products through a worldwide distribution network, which includes boutiques in some of the world’s most glamorous cities, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.
+Added: Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, jewelry, scarves and belts, as well as a growing men’s luxury shoe and accessory business.
In addition, certain categories, such as fragrances and eyewear are produced under licensing agreements.
3 unchanged sentences
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.
−Removed: Our Michael Kors brand was launched 40 years ago by Michael Kors, whose vision has taken the Company from its beginnings as an American luxury sportswear house to a global accessories, footwear and apparel 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.
+Added: Our Michael Kors brand was launched 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, footwear and ready-to-wear company with a global distribution network that has presence in over 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners.
Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with growing brand awareness in other international markets.
2 unchanged sentences
the Michael Kors Collection luxury line, the MICHAEL Michael Kors accessible luxury line and the Michael Kors Mens line.
−Removed: The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried by many of our retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world.
−Removed: MICHAEL Michael Kors has a strong focus on accessories, in addition to offering footwear and apparel, and addresses the significant demand opportunity in accessible luxury goods.
+Added: 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.
+Added: MICHAEL Michael Kors has a strong focus on accessories, in addition to offering footwear and ready-to-wear, and addresses the significant demand opportunity in accessible luxury goods.
We have also been developing our men’s business in recognition of the significant opportunity afforded by the Michael Kors brand’s established fashion authority and the expanding men’s market.
2 unchanged sentences
COVID-19 Pandemic.
−Removed: A novel strain of coronavirus commonly referred to as COVID-19 has spread rapidly across the globe, including throughout all major geographies in which we operate (the Americas, EMEA and Asia), resulting in adverse economic conditions and business disruptions, as well as significant volatility in global financial markets.
−Removed: Governments worldwide have imposed varying degrees of preventative and protective actions, such as temporary travel bans, forced business closures, and stay-at-home orders, all in an effort to reduce the spread of the virus.
−Removed: Such factors, among others, have resulted in a significant decline in retail traffic, tourism and consumer spending on discretionary items.
−Removed: Additionally, during this period of uncertainty, companies across a wide array of industries have implemented various initiatives to reduce operating expenses and preserve cash balances, including work furloughs and reduced pay, which could lower consumers’ disposable income levels or willingness to purchase discretionary items.
−Removed: Further, even after such government restrictions and company initiatives are lifted, consumer behavior, spending levels and/or shopping preferences, such as their willingness to congregate in shopping centers or other populated locations, could be adversely affected.
−Removed: In connection with the COVID-19 pandemic, we have experienced varying degrees of business disruptions and periods of closures of our stores, distribution centers and corporate facilities, as have our wholesale customers, licensing partners, suppliers and vendors.
−Removed: Retail traffic also continues to be challenging in those regions in which our stores are open.
−Removed: Additionally, our stores in the Americas and in Europe closed mid-March 2020, and although the majority of our stores have since reopened, certain stores remain closed due to local government mandates.
−Removed: Our wholesale business has also been adversely affected, particularly in the Americas and Europe, as a result of department store closures and lower traffic and consumer demand.
−Removed: In response to the COVID-19 pandemic, during Fiscal 2021 we took a number of preemptive actions to preserve cash and strengthen our liquidity, including:
−Removed: • for Fiscal 2021, our board of directors annual total cash compensation was reduced;
−Removed: • temporarily foregoing and reducing executive compensation for Fiscal 2021.
−Removed: In addition, the company reduced overall salaries at various levels throughout the organization;
−Removed: • reducing our corporate workforce in order to generate additional payroll savings;
−Removed: • temporarily furloughing or reducing work hours for a significant portion of our retail employees who nevertheless remain eligible for employee benefits during such period;
−Removed: • applying for national payroll subsidy programs in various countries throughout Europe to further reduce payroll expense;
−Removed: • significantly reducing inventory purchases by reducing or canceling commitments, redeploying inventory and consolidating upcoming seasons;
−Removed: • extending payment terms of our payables with our partners in order to maintain our financial flexibility for the long term;
−Removed: • reducing capital expenditures in Fiscal 2021;
−Removed: • minimizing operating expenses, including decreasing marketing spend, delaying or canceling select new store openings, reducing external third-party services and halting non-critical systems implementations in order to reduce costs;
−Removed: • temporarily suspending our ERP project;
−Removed: • suspending the remaining $400 million under our current share repurchase program;
−Removed: • adding a $230 million 364-day Revolver due June 2021 to bolster cash availability.
−Removed: The COVID-19 pandemic remains highly volatile and continues to evolve on a daily basis.
−Removed: Accordingly, we cannot predict for how long and to what extent this crisis will impact our business operations or the global economy as a whole.
−Removed: We will continue to assess our operations location-by-location, taking into account the guidance of local governments and global health organizations to determine when our operations can return to normal course of business.
−Removed: See Item 1A — "Risk Factors" — “The COVID-19 pandemic may continue to have a material adverse effect on our business and results of operations.” For additional discussion regarding risks to our business associated with the COVID-19 pandemic.
−Removed: Establishing brand identity and enhancing global presence.
−Removed: We intend to continue to increase our international presence and global brand recognition by growing our existing international operations through the formation of various joint ventures with international partners and continuing with our international licensing arrangements.
−Removed: We feel this is an efficient method for continued penetration into the global luxury goods market, especially for markets where we have yet to establish a substantial presence.
−Removed: In addition, our growth strategy includes assuming direct control of certain licensed international operations to better manage our growth opportunities in the related regions.
−Removed: Channel shift and demand for our accessories and related merchandise .
−Removed: Our performance is affected by trends in the luxury goods industry, as well as shifts in demographics and changes in lifestyle preferences.
−Removed: Although overall consumer spending for personal luxury products has increased in recent years, consumer shopping preferences have continued to shift from physical stores to on-line shopping.
−Removed: We currently expect that this trend will continue in the foreseeable future.
−Removed: We continue to adjust our operating strategy to the changing business environment.
−Removed: In addition, last year we announced our Capri Retail Store Optimization Program to close approximately 170 of our retail stores over the next two years, in order to improve the profitability of our retail store fleet.
−Removed: Over this time period, we expect to incur approximately $75 million of one-time costs associated with these store closures.
−Removed: As of March 27, 2021, we have closed a total of 101 stores relating to the plan.
−Removed: We recorded net restructuring charges of $5 million during Fiscal 2021 relating to the plan.
+Added: The ongoing COVID-19 pandemic has caused significant disruption to the global economy, consumer spending and behavior, tourism and to financial markets.
+Added: While the overall COVID-19 situation appears to be improving, our business and operating results may be negatively impacted if the virus worsens or mutates, if vaccination efforts are unsuccessful and/or if regions or countries take further actions to contain the virus (including additional extended lock-downs and travel restrictions), among others.
+Added: We continue to monitor the latest developments regarding the pandemic and have made certain assumptions about the pandemic for purposes of our business and operating results, including assumptions regarding the duration, severity and global macroeconomic impacts of the pandemic;
+Added: however, the full extent of the impact of COVID-19 on our business and operating results will depend largely on future events outside of our control, including the duration and severity of the pandemic and the success of vaccination efforts, new information concerning the virus or variants of the virus, actions different states, regions or countries may take to contain the virus (including extended lock-downs and travel restrictions) and the economic impacts of the pandemic, including recent inflationary pressures, among others.
+Added: “Risk Factors” — “The COVID-19 pandemic may continue to have a material adverse effect on our business and results of operations.” for additional discussion regarding risks to our business associated with the COVID-19 pandemic.
+Added: Channel shift, macroeconomic factors and demand for our accessories and related merchandise .
+Added: Our performance is affected by trends in the luxury goods industry, global consumer spending, macroeconomic factors, overall levels of consumer travel and spending on discretionary items as well as shifts in demographics and changes in lifestyle preferences.
+Added: Through 2019, the personal luxury goods market grew at a mid-single digit rate over the past 20 years, with more recent growth driven by stronger Chinese demand from both international and local consumers and demographic and socioeconomic shifts resulting in younger consumers purchasing more luxury goods.
+Added: However, in 2020, due to the impact of the COVID-19 crisis, the personal luxury goods market declined 23%.
+Added: Market studies indicate that the personal luxury goods market returned to 2019 levels in 2021, and the market is predicted to increase at a 10% compound annual growth rate between 2020 and 2025.
+Added: Future growth is expected to be driven by e-commerce, Chinese consumers and younger generations.
+Added: As the personal luxury goods market continues to evolve, Capri is committed to creating engaging luxury experiences globally.
+Added: In our view, increased customer engagement and tailoring merchandise to customer shopping and communication preferences are key to growing market share.
+Added: We also continue to adjust our retail operating strategy to the changing business environment.
+Added: We have finalized the planned store closures under the Capri Retail Store Optimization Program as of the end of Fiscal 2022.
+Added: As of April 2, 2022, we closed a total of 167 stores and recorded total net restructuring charges of $14 million relating to the plan.
+Added: We recorded net restructuring charges of $9 million and $5 million during Fiscal 2022 and Fiscal 2021, respectively, relating to the plan.
See Item 9B - Other Information for additional information.
1 unchanged sentence
Foreign currency fluctuation.
−Removed: Our consolidated operations are impacted by the relationships between our reporting currency, the U.S.
−Removed: dollar, and those of our non-U.S.
−Removed: subsidiaries whose functional/local currency is other than the U.S.
−Removed: dollar, particularly the Euro, the British Pound, the Chinese Renminbi, the Japanese Yen, the Korean Won and the Canadian Dollar, among others.
−Removed: 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-U.S.
−Removed: subsidiaries in the future, when translated to U.S.
−Removed: Disruptions in shipping and distribution .
−Removed: Our operations are subject to the impact of shipping disruptions as a result of changes or damage to our distribution infrastructure, as well as due to external factors, including the impacts of COVID-19.
−Removed: Any future disruptions in our shipping and distribution network could have a negative impact on our results of operations.
−Removed: See Item 1A — "Risk Factors" — "We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods and our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments." for additional discussion.
−Removed: Costs of Manufacturing and Tariffs.
+Added: 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, the Japanese Yen, the Korean Won and the Canadian dollar, among others.
+Added: 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.
+Added: Disruptions or delays in shipping and distribution and other supply chain constraints .
+Added: We have been experiencing global logistics challenges, including delays as a result of port congestion, vessel availability, container shortages and temporary factory closures which are expected to continue for Fiscal 2023.
+Added: Our freight costs have increased as carrier rates for ocean and air shipments have increased significantly, and the supply chain disruptions have caused us to increase our use of air freight with greater frequency than in the past.
+Added: Any future disruptions in our shipping and distribution network, including impacts on our supply chain due to temporary closures of our manufacturing partners and shipping and fulfillment constraints, could have a negative impact on our results of operations.
+Added: “Risk Factors” — “We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods and our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments.” for additional discussion.
+Added: 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.
1 unchanged sentence
In addition, our costs may be impacted by sanction tariffs imposed on our products due to changes in trade terms.
−Removed: For example, we have historically received benefits from duty-free imports on certain products from certain countries pursuant to the U.S.
−Removed: Generalized System of Preferences ("GSP") program.
+Added: For example, we have historically received benefits from duty-free imports on certain products from certain countries pursuant to the GSP program.
The GSP program expired on December 31, 2020.
−Removed: If the GSP program is not renewed or otherwise made retroactive, we could experience significant additional duties and our gross margin could be negatively impacted.
−Removed: Additionally, we are subject to government import regulations, including U.S.
−Removed: Customs and Border Protection ("CBP") withhold release orders.
+Added: If the GSP program is not renewed or otherwise made retroactive, we will continue to experience significant additional duties and our gross margin will continue to be negatively impacted.
+Added: Additionally, we are subject to government import regulations, including CBP withhold release orders.
The imposition of taxes, duties and quotas, the withdrawal from or material modification to trade agreements and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on our business, results of operations and financial condition.
−Removed: If additional tariffs or trade restrictions are implemented by the U.S.
−Removed: or other countries, the cost of our products could increase which could adversely affect our business.
+Added: If additional tariffs or trade restrictions are implemented by the United States or other countries, the cost of our products could increase which could adversely affect our business.
In addition, commodity prices and tariffs may have an impact on our revenues, results of operations and cash flows.
1 unchanged sentence
In addition, manufacturing labor costs are also subject to degrees of volatility based on local and global economic conditions.
−Removed: We use commercially reasonable efforts to source from localities that suit our manufacturing standards and result in more favorable labor driven costs to our products.
+Added: We use commercially reasonable efforts to source from localities that suit our manufacturing standards and result in more favorable labor driven costs to our product.
Segment Information
We operate in three reportable segments, which are as follows:
−Removed: We generate revenue through the sale of Versace luxury ready-to-wear, accessories and footwear through directly operated Versace boutiques throughout North America (United States and Canada), EMEA (Europe, Middle East and Africa) and certain parts of Asia, as well as through Versace outlet stores and e-commerce sites.
+Added: We generate revenue through the sale of Versace luxury accessories, ready-to-wear and footwear through directly operated Versace boutiques throughout North America (United States and Canada), certain parts of EMEA (Europe, Middle East and Africa) and certain parts of Asia (Asia and Oceania), as well as through Versace outlet stores and e-commerce sites.
In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of products, including jeans, fragrances, watches, jewelry, eyewear and home furnishings.
−Removed: We generate revenue through the sale of Jimmy Choo luxury goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas (United States, Canada and Latin America), EMEA and certain parts of Asia, through our e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo tradename in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide.
+Added: We generate revenue through the sale of Jimmy Choo luxury goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas (United States, Canada and Latin America), certain parts of EMEA and certain parts of Asia, through our e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo tradename in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide.
In addition, revenue is generated through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of products, including fragrances and eyewear.
We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail store formats:
−Removed: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our products, as well as licensed products bearing our name, directly to consumers throughout the Americas, Europe and certain parts of Asia.
−Removed: Our Michael Kors e-commerce business includes e-commerce sites in the U.S., Canada and certain parts of Europe and Asia.
−Removed: We also sell Michael Kors products directly to department stores, primarily located across the Americas and Europe, 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.
+Added: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our products, as well as licensed products bearing our name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia.
+Added: Our Michael Kors e-commerce business includes e-commerce sites in the United States, Canada and EMEA and Asia.
+Added: 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.
−Removed: Unallocated Expenses
+Added: 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.
−Removed: Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including ERP system implementation costs.
−Removed: In addition, certain other costs are not allocated to segments, including restructuring and other charges (including transaction and transition costs related to our acquisitions), impairment costs and COVID-19 related charges.
+Added: Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including ERP system implementation costs and Capri transformation program costs.
+Added: In addition, certain other costs are not allocated to segments, including restructuring and other charges, impairment costs, COVID-19 related charges, charitable donations and the war in Ukraine.
The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance.
15 unchanged sentences
Impairment of assets (1)
+Added: (73) (316) (708)
COVID-19 related charges (2)
+Added: 14 (42) (119)
+Added: Impact of war in Ukraine (3)
Restructuring and other charges (42) (32) (42)
Total income (loss) from operations $ 903 $ 19 $ (192)
−Removed: (1) COVID-19 related charges during Fiscal 2021 primarily include net incremental inventory reserves and severance expense of $10 million and $24 million, respectively, recorded within costs of goods sold and selling, general and administrative expenses in the consolidated statements of income and comprehensive (loss) income.
−Removed: COVID-19 related charges during Fiscal 2020, primarily include additional inventory reserves and credit losses of $92 million and $25 million, respectively, recorded within costs of goods sold and selling, general and administrative expenses in the consolidated statements of operations and comprehensive (loss) income.
+Added: (1) Impairment of assets during Fiscal 2022 includes $50 million, $19 million and $4 million of impairment charges related to the Michael Kors, Versace and Jimmy Choo reportable segments, respectively.
+Added: Impairment of assets during Fiscal 2021 includes $191 million, $91 million and $34 million of impairment charges related to the Jimmy Choo, Michael Kors and Versace reportable segments, respectively.
+Added: Impairment of assets during Fiscal 2020 includes $434 million, $187 million and $87 million of impairment charges related to the Jimmy Choo, Michael Kors and Versace reportable segments, respectively.
+Added: (2) COVID-19 related charges during Fiscal 2022 primarily include net inventory credits of $16 million as a result of better than expected sell-through and severance expense of $2 million, respectively.
+Added: Net inventory credits during
+Added: Fiscal 2022 is change of estimate from better than expected sell-through.
+Added: COVID-19 related charges during Fiscal 2021, primarily include net inventory credits and severance expense of $10 million and $24 million, respectively.
+Added: COVID-19 related charges during Fiscal 2020, primarily include additional inventory reserves and credit losses of $92 million and $25 million, respectively.
+Added: Inventory related costs are recorded within costs of goods sold and severance expense and credit losses are recorded within selling, general and administrative expenses in the consolidated statements of operations and comprehensive income (loss).
+Added: (3) These charges primarily relate to incremental credit losses and inventory reserves which are a direct impact of the war in Ukraine.
+Added: Credit losses are recorded within selling, general and administrative expenses and inventory related costs are recorded within costs of goods sold in the consolidated statements of operations and comprehensive income (loss).
The following table presents our global network of retail stores and wholesale doors:
16 unchanged sentences
The following table presents our retail stores by geographic location:
−Removed: March 27, 2021 March 28, 2020
+Added: April 2, 2022 March 27, 2021
Versace Jimmy Choo Michael Kors Versace Jimmy Choo Michael Kors
13 unchanged sentences
Income (loss) from operations as a percent of total revenue 16.0 % 0.5 % (3.5) %
−Removed: Critical Accounting Policies
+Added: Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S.
11 unchanged sentences
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, which is based on management’s review of historical and current customer returns.
−Removed: The amounts reserved for retail sales returns were $20 million, $12 million and $15 million at March 27, 2021, March 28, 2020 and March 30, 2019, respectively.
+Added: The amounts reserved for retail sales returns were $22 million, $20 million and $12 million at April 2, 2022, March 27, 2021 and March 28, 2020, respectively.
Net sales for wholesale equals gross sales, reduced by provisions for estimated future returns based on current expectations, as well as trade discounts, markdowns, allowances, operational chargebacks, and certain cooperative selling expenses.
−Removed: Total sales reserves for wholesale were $78 million, $154 million and $112 million at March 27, 2021, March 28, 2020 and March 30, 2019, respectively.
+Added: Total sales reserves for wholesale were $70 million, $78 million and $154 million at April 2, 2022, March 27, 2021 and March 28, 2020, respectively.
These estimates are based on such factors as historical trends, actual and forecasted performance and market conditions, which are reviewed by management on a quarterly basis.
5 unchanged sentences
Our inventory costs include amounts paid to independent manufacturers, plus duties and freight to bring the goods to the Company’s warehouses, as well as shipments to stores.
−Removed: We continuously evaluate the composition of our inventory and make adjustments when the cost of inventory is not expected to be fully recoverable.
+Added: The combined total of raw materials and work in process inventory recorded on our consolidated balance sheets as of April 2, 2022 and March 27, 2021 were $31 million and $28 million, respectively.
+Added: We continuously evaluate the composition of our inventory and make adjustments when the cost of inventory is
+Added: not expected to be fully recoverable.
The net realizable value of our inventory is estimated based on historical experience, current and forecasted demand and market conditions.
2 unchanged sentences
Our historical estimates of these adjustments have not differed materially from actual results.
−Removed: The combined total of raw materials and work in process inventory recorded on the our consolidated balance sheets as of March 27, 2021 and March 28, 2020 were $28 million and $27 million, respectively.
−Removed: The net realizable value of our inventory as of March 27, 2021 includes the adverse impacts related to the COVID-19 pandemic.
−Removed: This includes the impact from temporary retail store closures, wholesale customer store closures, reductions in retail store traffic, international tourism and consumer consumption.
Long-lived Assets
−Removed: We evaluate all long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of any
−Removed: such asset may not be recoverable.
+Added: We evaluate all long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable.
For the purposes of impairment testing, we group long-lived assets at the lowest level of identifiable cash flow.
−Removed: Our leasehold improvements are typically amortized over the life of the store lease, including reasonably assured renewals and our shop-in-shops are amortized over a useful life of three or four years.
+Added: Our leasehold improvements are typically amortized over the life of the store lease, including reasonably assured renewals and our shop-in-shops are amortized over a useful life of three to five years.
Our impairment testing is based on our best estimate of the future operating cash flows.
3 unchanged sentences
During Fiscal 2022, Fiscal 2021 and Fiscal 2020, we recorded impairment charges of $83 million, $158 million and $357 million, respectively, which were primarily related to operating lease right-of-use assets and fixed assets of our retail store locations.
−Removed: Please refer to Note 8 and Note 14 of the accompanying consolidated audited financial statements for additional information.
+Added: Please refer to Note 7 and Note 13 of the accompanying consolidated financial statements for additional information.
Goodwill and Other Indefinite-lived Intangible Assets
10 unchanged sentences
The impairment testing for goodwill is performed at the reporting unit level.
−Removed: We use industry accepted valuation models and set criteria that are reviewed and approved by various levels of management and, in certain instances, we engage independent third-party valuation specialists for advice.
+Added: We use industry accepted valuation models and set criteria that are reviewed and approved by various levels of management and, in certain instances, we engage independent third-party valuation specialists for assistance.
To determine the fair value of a reporting unit, we use a combination of the income and market approaches, when applicable.
8 unchanged sentences
An impairment loss is recognized when the estimated fair value of the brand intangible assets is less than its carrying amount.
−Removed: During the fourth quarter of Fiscal 2021, we performed our annual goodwill and indefinite-lived intangible assets impairment analysis for each brand.
+Added: During the fourth quarter of Fiscal 2022, we performed our annual goodwill and indefinite-lived intangible assets impairment analysis.
Based on qualitative impairment assessment of the Michael Kors reporting units, we concluded that it is more likely than not that the fair value of the Michael Kors reporting units exceeded its carrying value and, therefore, was not impaired.
−Removed: We elected to perform quantitative impairment analyses for both the Versace and Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair values of each brand's reporting units.
−Removed: We also elected to perform an impairment analysis for both the Versace and Jimmy Choo brand intangible assets using an income approach to estimate the fair values.
−Removed: Based on the results of these assessments, we determined there was no impairment
−Removed: loss for the Jimmy Choo retail reporting unit as its fair value is approximately 3% higher than the carrying value, which has a goodwill balance of $221 million.
−Removed: We also concluded that the fair values of the Versace reporting units and the brand intangible assets exceeded the related carrying amounts and no impairment was required.
−Removed: The fair value of the Versace retail reporting unit, Versace wholesale reporting unit and Versace licensing reporting unit are at least 20% higher than their respective carrying values.
−Removed: The fair value of the Versace retail brand and Versace wholesale brand are more than 10% higher than their respective carrying values.
−Removed: However, we concluded that the fair values of the Jimmy Choo wholesale and Jimmy Choo licensing reporting units, along with the Jimmy Choo brand intangible assets, did not exceed their related carrying amounts.
−Removed: These impairment charges were primarily related to higher discount rates in the current year driven by a change in market factors as well as a shift in expected revenue and earnings mix to the retail segment.
−Removed: Accordingly, we recorded a goodwill impairment charge of $94 million related to the Jimmy Choo wholesale and Jimmy Choo licensing reporting units and $69 million impairment charge related to the Jimmy Choo brand intangible assets during Fiscal 2021.
+Added: We elected to perform quantitative impairment analyses for the Versace and Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair values of reporting units.
+Added: We also elected to perform an impairment analysis for the Versace and Jimmy Choo brand intangible assets using an income approach to estimate the fair values.
+Added: Based on the results of these assessment, we concluded that the fair values of the Versace and Jimmy Choo reporting units and the brand intangible assets exceeded the related carrying amounts and no impairment was required.
+Added: In Fiscal 2021, we recorded a goodwill impairment charge of $94 million related to the Jimmy Choo wholesale and Jimmy Choo licensing reporting units and $69 million impairment charge related to the Jimmy Choo brand intangible assets during Fiscal 2021.
We recorded a goodwill impairment charge of $171 million related to the Jimmy Choo retail and Jimmy Choo licensing reporting units and $180 million impairment charge related to the Jimmy Choo brand intangible assets during Fiscal 2020.
−Removed: The impairment charges were recorded within impairment of assets on our consolidated statement of operations and comprehensive (loss) income for the fiscal years ended March 27, 2021 and March 28, 2020.
−Removed: We did not incur any impairment charges in Fiscal 2019.
−Removed: See Note 9 to the accompanying audited financial statements for information relating to the annual impairment analysis performed during the fourth quarters of Fiscal 2021, Fiscal 2020 and Fiscal 2019.
+Added: The impairment charges were recorded within impairment of assets on our consolidated statement of operations and comprehensive income (loss) for the fiscal years ended March 27, 2021 and March 28, 2020.
+Added: See Note 8 to the accompanying financial statements for information relating to the annual impairment analysis performed during the fourth quarters of Fiscal 2022, Fiscal 2021 and Fiscal 2020.
It is possible that our conclusions regarding impairment or recoverability of goodwill or other indefinite intangible assets could change in future periods if, for example, (i) our businesses do not perform as projected, (ii) overall economic conditions in future years vary from current assumptions, (iii) business conditions or strategies change from our current assumptions, (iv) discount rates change, (v) market multiples change or (vi) the identification of our reporting units change, among other factors.
11 unchanged sentences
Forward Foreign Currency Exchange Contracts
−Removed: We use forward currency exchange contracts to manage our exposure to fluctuations in foreign currency for certain of our transactions.
−Removed: 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.
−Removed: As such, we enter into forward currency contracts that generally mature in 12 months or less, which is consistent with the related purchase commitments.
−Removed: We designate certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges.
+Added: We use forward foreign currency exchange contracts to manage our exposure to fluctuations in foreign currency for certain transactions.
+Added: We, in our normal course of business, enter into transactions with foreign suppliers and seeks to minimize risks related to these transactions.
+Added: We employ these contracts to hedge the our cash flows, as they relate to foreign currency transactions.
+Added: Certain of these contracts are designated as hedges for accounting purposes, while others remain undesignated.
All of our derivative instruments are recorded in our consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation.
−Removed: The effective portion of changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income (loss) until the hedged item effects earnings.
−Removed: When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income (loss) are recognized within cost of goods sold.
−Removed: We use regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change
−Removed: in the fair value of the derivative instrument to the change in the related hedged item.
−Removed: Effectiveness is assessed on a quarterly basis and any portion of the designated hedge contracts deemed ineffective is recorded to foreign currency (gain) loss.
+Added: We designate certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges.
+Added: Formal hedge documentation is prepared for all derivative instruments designated as hedges, including a description of the hedged item and the hedging instrument and the risk being hedged.
+Added: The changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income until the hedged item affects earnings.
+Added: When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income are recognized within cost of goods sold.
+Added: The Company uses regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item.
If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings.
−Removed: For those contracts that are not designated as hedges, changes in the fair value are recorded in foreign currency (gain) loss in our consolidated statements of operations and comprehensive (loss) income.
+Added: For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency (gain) loss in our consolidated statements of operations and comprehensive income (loss).
+Added: We classify cash flows relating to our forward foreign currency exchange contracts related to purchases of inventory consistently with the classification of the hedged item within cash flows from operating activities.
+Added: We are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations.
+Added: In order to mitigate counterparty credit risk, we only enter into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure.
+Added: The aforementioned forward contracts generally have a term of no more than 12 months.
+Added: The period of these contracts is directly related to the foreign transaction they are intended to hedge.
Net Investment Hedges
−Removed: We also use fixed-to-fixed cross currency swap agreements to hedge our net investments in foreign operations against future volatility in the exchange rates between its U.S.
−Removed: Dollars and these foreign currencies.
−Removed: We have elected the spot method of designating these contracts under ASU 2017-12, as defined in Note 2 to the accompanying consolidated financial statements, and have designated these contracts as net investment hedges.
−Removed: The net gain or loss on net investment hedges is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income (loss) on our consolidated balance sheets.
−Removed: Interest accruals and coupon payments are recognized directly in interest expense in our consolidated statements of operations and comprehensive (loss) income.
+Added: We also use fixed-to-fixed cross currency swap agreements to hedge our net investments in foreign operations against future volatility in the exchange rates between the United States dollar and the associated foreign currencies.
+Added: We have elected the spot method of designating these contracts under ASU 2017-12, “Derivatives and Hedging (Topic 815):
+Added: Targeted Improvements to Accounting for Hedging Activities”, and have designated these contracts as net investment hedges.
+Added: The net gain or loss on the net investment hedge is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income on our consolidated balance sheets.
+Added: Interest accruals and coupon payments are recognized directly in interest (income) expense, net, in our consolidated statements of operations and comprehensive income (loss).
Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated.
3 unchanged sentences
The early termination of these hedges resulted in the receipt of $296 million in cash during the fourth quarter of Fiscal 2020.
−Removed: During Fiscal 2021, the Company resumed its normal hedging program and entered into multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $3 billion to hedge its net investment in Euro-denominated subsidiaries.
+Added: During Fiscal 2021, the Company resumed its normal hedging program and entered into multiple fixed-to-fixed cross-currency swap agreements to hedge its net investment in Euro-denominated and Japanese Yen-denominated subsidiaries against future volatility in the exchange rate between the United States dollar and these currencies.
+Added: During Fiscal 2021, the Company entered into multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $4 billion to hedge its net investment in Euro-denominated subsidiaries and $194 million to hedge its net investment in Japanese Yen-denominated subsidiaries against future volatility in the exchange rates between the United States dollar and these currencies.
+Added: During the first quarter of Fiscal 2022, we modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $2.875 billion to hedge its net investment in Euro denominated subsidiaries.
+Added: Due to an other-than-insignificant financing element for certain of the first quarter modifications, net interest cash inflows of $31 million during Fiscal 2022 related to these contracts are classified as financing activities in our consolidated statements of cash flows.
+Added: During the third and fourth quarter of Fiscal 2022, we modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $1.5 billion and $2.475 billion, respectively.
+Added: The modification of these hedges resulted in the receipt of $59 million and $130 million in cash during the third and fourth quarter of Fiscal 2022, respectively.
+Added: These amounts are classified within investing activities in our consolidated statements of cash flows.
Interest Rate Swap Agreements
We also use interest rate swap agreements to hedge the variability of our cash flows resulting from floating interest rates on our borrowings.
−Removed: When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded within equity as a component of accumulated other comprehensive income (loss) and are reclassified into interest expense in the same period during which the hedged transactions affect earnings.
+Added: When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in
+Added: the fair value are recorded in equity as a component of accumulated other comprehensive income and are reclassified into interest (income) expense, net, in the same period during which the hedged transactions affect earnings.
+Added: During the third quarter of Fiscal 2022, we terminated our only interest rate swap.
+Added: As a result, we recognized a $1 million gain within interest (income) expense, net, within our consolidated statements of operations and comprehensive income (loss).
Deferred income tax assets and liabilities reflect temporary differences between the tax basis and financial reporting basis of our assets and liabilities and are determined using the tax rates and laws in effect for the periods in which the differences are expected to reverse.
7 unchanged sentences
The effect of an uncertain income tax position will not be taken into account if the position has less than a 50% likelihood of being sustained.
−Removed: Our tax positions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments for those positions.
−Removed: We record interest expense and penalties payable to relevant tax authorities as income tax expense.
+Added: Our tax positions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those positions.
+Added: We record interest and penalties payable to relevant tax authorities as income tax expense.
In response to the COVID-19 pandemic, local governments enacted, or are in the process of enacting, measures to provide aid and economic stimulus to companies.
−Removed: On March 27, 2020, the United States government enacted the Coronavirus
−Removed: Aid, Relief, and Economic Security Act (the “CARES Act”), which includes various tax provisions aimed at providing economic relief.
+Added: On March 27, 2020, the United States government enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which includes various tax provisions aimed at providing economic relief.
We realized a slight favorable cash flow impact in Fiscal 2021 as a result of the deferral of income tax payments under the CARES Act and other local government relief initiatives.
We also considered the significant adverse impact of COVID-19 on our business in assessing the realizability of our deferred tax assets.
−Removed: Based on this assessment, we determined that valuation allowances of approximately $65 million were needed against a portion of our non-US deferred tax assets in Fiscal 2020 and increased to $95 million in Fiscal 2021.
+Added: Based on this assessment, we determined that valuation allowances of approximately $65 million were needed against a portion of our non-United States deferred tax assets in Fiscal 2020 which increased to $95 million in Fiscal 2021 and during Fiscal 2022 decreased to $36 million.
We will continue to monitor the impacts of COVID-19 on our ability to realize our deferred tax assets and on the tax provision.
Another provision of the CARES Act applicable to us is the modification to allow for a five-year carryback of net operating losses.
−Removed: We recognized a $13 million benefit from the net operating loss (“NOL”) carryback claim in Fiscal 2021.
−Removed: This reflects our provisional estimate and is subject to adjustment as estimation approaches are refined.
+Added: We recognized a $13 million benefit from a net operating loss (“NOL”) carryback claim in Fiscal 2021, which represented our provisional estimate at that time.
+Added: During Fiscal 2022, we finalized our accounting for the carryback and recognized an additional $43 million income tax benefit.
New Accounting Pronouncements
2 unchanged sentences
A discussion regarding our results of operations for Fiscal 2022 compared to Fiscal 2021 is presented below.
−Removed: A discussion regarding our results of operations for Fiscal 2020 compared to Fiscal 2019 can be found under Item 7 in our Annual Report on Form 10-K for the year ended March 28, 2020, filed with the SEC on July 8, 2020, which is available on the SEC’s website at www.sec.gov and our investor website at www.capriholdings.com .
+Added: A discussion regarding our results of operations for Fiscal 2021 compared to Fiscal 2020 can be found under Item 7 in our Annual Report on Form 10-K for the year ended March 27, 2021, filed with the SEC on May 26, 2021, which is available on the SEC’s website at www.sec.gov and our investor website at www.capriholdings.com .
Comparison of Fiscal 2022 with Fiscal 2021
11 unchanged sentences
Total operating expenses 2,841 2,578 263 10.2 % 50.2 % 63.5 %
−Removed: Income (loss) from operations 19 (192) 211 NM 0.5 % (3.5) %
+Added: Income from operations 903 19 884 NM 16.0 % 0.5 %
Other income, net (2) (7) 5 71.4 % — % (0.2) %
−Removed: Interest expense, net 43 18 25 NM 1.1 % 0.3 %
−Removed: Foreign currency (gain) loss (20) 11 (31) NM (0.5) % 0.2 %
−Removed: Income (loss) before provision for income taxes 3 (215) 218 NM 0.1 % (3.9) %
−Removed: Provision for income taxes 66 10 56 NM 1.6 % 0.2 %
−Removed: Net loss (63) (225) 162 (72.0) %
−Removed: Net loss attributable to noncontrolling interests (1) (2) 1 NM
−Removed: Net loss attributable to Capri $ (62) $ (223) $ 161 (72.2) %
+Added: Interest (income) expense, net (18) 43 (61) NM (0.3) % 1.1 %
+Added: Foreign currency loss (gain) 8 (20) 28 NM 0.1 % (0.5) %
+Added: Income before provision for income taxes 915 3 912 NM 16.2 % 0.1 %
+Added: Provision for income taxes 92 66 26 39.4 % 1.6 % 1.6 %
+Added: Net income (loss) 823 (63) 886 NM
+Added: Net income (loss) attributable to noncontrolling interests 1 (1) 2 NM
+Added: Net income (loss) attributable to Capri $ 822 $ (62) $ 884 NM
NM Not meaningful
Total Revenue
−Removed: Total revenue decreased $1.491 billion, or 26.9%, to $4.060 billion for Fiscal 2021, compared to $5.551 billion for Fiscal 2020, which included net favorable foreign currency effects of $107 million primarily related to the strengthening of the Euro, the Chinese Renminbi and the British Pound against the U.S.
−Removed: Dollar in Fiscal 2021, as compared to Fiscal 2020.
−Removed: On a constant currency basis, our total revenue decreased $1.598 billion, or 28.8%.
−Removed: The decrease is attributable to lower revenues across all three brands, as compared to the prior year, reflecting the adverse impact of COVID-19.
−Removed: Gross profit decreased $674 million, or 20.6%, to $2.597 billion during Fiscal 2021, compared to $3.271 billion for Fiscal 2020, which included net favorable foreign currency effects of $64 million.
+Added: Total revenue increased $1.594 billion, or 39.3%, to $5.654 billion for Fiscal 2022, compared to $4.060 billion for Fiscal 2021, which included net favorable foreign currency effects of $25 million primarily related to the strengthening of the British Pound against the United States dollar in Fiscal 2022, as compared to Fiscal 2021.
+Added: On a constant currency basis, our total revenue increased $1.569 billion, or 38.6%.
+Added: The increase is attributable to the continued recovery from the COVID-19 pandemic.
+Added: In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.
+Added: Fiscal 2022 also included approximately $70 million of incremental revenue attributable to the inclusion of the 53rd week.
+Added: Gross profit increased $1.147 billion, or 44.2%, to $3.744 billion during Fiscal 2022, compared to $2.597 billion for Fiscal 2021, which included net favorable foreign currency effects of $5 million.
Gross profit as a percentage of total revenue increased 220 basis points to 66.2% during Fiscal 2022, compared to 64.0% during Fiscal 2021.
−Removed: The increase in gross profit margin was primarily attributable to a higher gross profit margin for Michael Kors driven by a higher average unit price and favorable channel mix during Fiscal 2021, as compared to Fiscal 2020.
+Added: The increase in gross profit margin was primarily attributable to a higher average unit price and lower promotional activity, partially offset by increases in supply chain costs and unfavorable channel mix.
Total Operating Expenses
−Removed: Total operating expenses decreased $885 million, or 25.6%, to $2.578 billion during Fiscal 2021, compared to $3.463 billion for Fiscal 2020.
+Added: Total operating expenses increased $263 million, or 10.2%, to $2.841 billion during Fiscal 2022, compared to $2.578 billion for Fiscal 2021.
Our operating expenses included a net unfavorable foreign currency impact of approximately $2 million.
−Removed: Total operating expenses as a percentage of total revenue increased to 63.5% in Fiscal 2021, compared to 62.4% in Fiscal 2020.
+Added: Total operating expenses as a percentage of total revenue decreased to 50.2% in Fiscal 2022, compared to 63.5% in Fiscal 2021.
The components that comprise total operating expenses are detailed below.
Selling, General and Administrative Expenses
−Removed: Selling, general and administrative expenses decreased $446 million, or 18.1%, to $2.018 billion during Fiscal 2021, compared to $2.464 billion for Fiscal 2020, primarily due to lower variable costs, as well as decreases from our cost reduction initiatives as a result of COVID-19.
−Removed: Selling, general and administrative expenses as a percentage of total revenue increased to 49.7% during Fiscal 2021, compared to 44.4% for Fiscal 2020, primarily due to deleverage on lower revenue and increased e-commerce related costs as a percentage of total revenue.
−Removed: Corporate unallocated expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, were $152 million in Fiscal 2021 and Fiscal 2020.
+Added: Selling, general and administrative expenses increased $515 million, or 25.5%, to $2.533 billion during Fiscal 2022, compared to $2.018 billion for Fiscal 2021, primarily due to increased retail store, e-commerce, corporate and marketing expenses during Fiscal 2022.
+Added: Selling, general and administrative expenses as a percentage of total revenue decreased to 44.8% during Fiscal 2022, compared to 49.7% for Fiscal 2021, primarily due to leveraging of operating expenses as a result of higher revenue.
+Added: Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $38 million, or 25.0%, to $190 million for Fiscal 2022, compared to $152 million for Fiscal 2021, primarily due to an increase in professional fees related to the ERP system implementation and Capri transformation projects and an increase in compensation expense.
Depreciation and Amortization
Depreciation and amortization decreased $19 million, or 9.0%, to $193 million during Fiscal 2022, compared to $212 million for Fiscal 2021.
−Removed: The decrease in depreciation and amortization expense was primarily attributable to lower depreciation due to previously recorded property and equipment impairment charges.
−Removed: Depreciation and amortization increased to 5.2% as a percentage of total revenue during Fiscal 2021, compared to 4.5% for Fiscal 2020 primarily due to lower revenues during Fiscal 2021 due to COVID-19.
+Added: The decrease in depreciation and amortization expense was primarily attributable to lower depreciation due to lower capital expenditures in Fiscal 2022 and Fiscal 2021.
+Added: Depreciation and amortization decreased to 3.4% as a percentage of total revenue during Fiscal 2022, compared to 5.2% for Fiscal 2021 primarily due to higher revenues during Fiscal 2022.
Impairment of Assets
−Removed: During Fiscal 2021, we recognized asset impairment charges of $316 million.
−Removed: The decrease was primarily related to lower impairment of operating lease right-of-use assets, as well as lower impairment of Jimmy Choo goodwill and its brand intangible assets.
−Removed: During Fiscal 2020, we recognized asset impairment charges of approximately $708 million, which were primarily related to the impairment of operating right-of-use assets, as well as the impairment of Jimmy Choo goodwill and its brand intangible assets as part of our annual assessments (see Note 14 to the accompanying consolidated financial statements for additional information).
+Added: During Fiscal 2022, we recognized asset impairment charges of $73 million, primarily related to the impairment of operating lease right-of-use assets.
+Added: During Fiscal 2021, we recognized asset impairment charges of approximately $316 million, primarily related to the impairment of Jimmy Choo goodwill and its brand intangible assets, as well as the impairment of operating lease right-of-use assets (see Note 13 to the accompanying consolidated financial statements for additional information).
Restructuring and Other Charges
−Removed: During Fiscal 2021, we recognized restructuring and other charges of $32 million, which included other costs of $27 million, primarily related to equity awards associated with the acquisition of Versace and closures of corporate locations during Fiscal 2021 and $5 million related to our Capri Retail Store Optimization Program.
−Removed: During Fiscal 2020, we recognized restructuring and other charges of $42 million, which included restructuring charges of $8 million, primarily related to our Michael Kors Retail Fleet Optimization Plan and other costs of $34 million.
−Removed: The other costs recorded during Fiscal 2020 primarily related to equity awards associated with the acquisition of Versace and Jimmy Choo (see Note 11 to the accompanying consolidated financial statements for additional information).
−Removed: Income (Loss) from Operations
−Removed: As a result of the foregoing, income (loss) from operations increased $211 million to income from operations of $19 million during Fiscal 2021, compared to a loss from operations of $192 million for Fiscal 2020.
−Removed: Income (loss) from operations as a percentage of total revenue increased to 0.5% in Fiscal 2021, compared to (3.5)% in Fiscal 2020.
−Removed: See Note 20 to the accompanying consolidated financial statements for a reconciliation of our segment operating income to total operating income.
−Removed: Interest expense, net
−Removed: Interest expense, net increased $25 million, to $43 million for Fiscal 2021 as compared to $18 million for Fiscal 2020, primarily due to a decrease of interest income attributable to lower average interest rates and lower average notional amount outstanding on our net investment hedges in the current year.
−Removed: The decrease in interest income was largely offset by a decrease in interest expense attributable to lower average borrowings outstanding in the current year and the addition of an interest rate swap in the current year which converts the one-month Adjusted LIBOR interest rate on these borrowings to a fixed interest rate of 0.237% through December 2022 (see Note 12 and Note 15 to the accompanying consolidated financial statements for additional information).
+Added: During Fiscal 2022, we recognized restructuring and other charges of $42 million, which included other costs of $33 million, primarily related to equity awards associated with the acquisition of Versace and severance for an executive officer and $9 million related to our Capri Retail Store Optimization Program (see Note 10 to the accompanying consolidated financial statements for additional information).
+Added: During Fiscal 2021, we recognized restructuring and other charges of $32 million, which included other costs of $27 million, primarily related to equity awards associated with the acquisition of Versace and the closure of certain corporate locations and $5 million related to our Capri Retail Store Optimization Program.
+Added: Income from Operations
+Added: As a result of the foregoing, income from operations increased $884 million to $903 million during Fiscal 2022, compared to $19 million for Fiscal 2021.
+Added: Income from operations as a percentage of total revenue increased to 16.0% in Fiscal 2022, compared to 0.5% in Fiscal 2021.
+Added: See Segment Information above for a reconciliation of our segment operating income to total operating income.
+Added: Interest (Income) Expense, net
+Added: During Fiscal 2022, we recognized $18 million of interest income compared to $43 million of interest expense during Fiscal 2021.
+Added: The $61 million improvement in interest (income) expense, net, is primarily due to an increase of interest income from higher average notional amounts outstanding on our net investment hedges in the current year and a decrease in interest expense attributable to lower average borrowings outstanding (see Note 11 and Note 14 to the accompanying consolidated financial statements for additional information).
Foreign Currency (Gain) Loss
−Removed: We recognized a net foreign currency gain of $20 million during Fiscal 2021, primarily attributable to the remeasurement of U.S.
−Removed: dollar-denominated intercompany payables with certain of our subsidiaries.
−Removed: We recognized a net foreign currency loss of $11 million during Fiscal 2020, primarily attributable to the revaluation and settlement of certain of our accounts payable in currencies other than their functional currency, as well as the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries.
+Added: During Fiscal 2022 and Fiscal 2021, we recognized a net foreign currency loss of $8 million and a net foreign currency gain of $20 million, respectively, primarily attributable to the remeasurement of intercompany loans with certain of our subsidiaries.
Provision for Income Taxes
−Removed: We recognized $66 million of income tax expense on pre-tax income of $3 million during Fiscal 2021, compared with $10 million of income tax expense on a pre-tax loss of $215 million for Fiscal 2020.
−Removed: Our effective tax rate for Fiscal 2021 was significantly higher than our effective tax rate in Fiscal 2020, and not a meaningful or comparable metric, primarily due to the relationship between our income tax expense and minimal pre-tax income in the current year.
−Removed: The Fiscal 2021 income tax expense was higher than Fiscal 2020 primarily due to tax effects of changes in our geographic mix of earnings, a lower favorable effect of our global financing activities during Fiscal 2021 compared to Fiscal 2020, increases in uncertain tax positions during Fiscal 2021 as well as the impact of the United Kingdom’s increase in the enacted corporate income tax rate during Fiscal 2021.
−Removed: The increase was partially offset by reduced effects of valuation allowances established on a portion of our non-US deferred tax assets, a release of a valuation allowance on a portion of our deferred tax assets, and a lower unfavorable impact of non-tax deductible goodwill impairment during Fiscal 2021, compared to Fiscal 2020.
−Removed: The variance between Fiscal 2021 and Fiscal 2020 effective income tax rates is substantially affected by the material change in our pre-tax (loss) income.
+Added: During Fiscal 2022, we recognized $92 million of income tax expense on pre-tax income of $915 million compared with $66 million of income tax expense on a pre-tax income of $3 million for Fiscal 2021.
+Added: Our effective tax rate for Fiscal 2022 was significantly lower than our effective tax rate in Fiscal 2021, and not a meaningful or comparable metric, primarily due to the relationship between our income tax expense and minimal pre-tax income in the prior year as compared to the current year.
+Added: The Fiscal 2022 income tax expense was higher than Fiscal 2021 primarily due to the increase in pre-tax income and increases in uncertain tax positions during Fiscal 2022.
+Added: The increase was partially offset by a release of a valuation allowance in certain European subsidiaries, the impact of recently enacted tax legislation in Italy which allowed the Company to reduce its deferred tax liabilities, as well as a more favorable effect of our global financing activities during Fiscal 2022 compared to Fiscal 2021.
As a result, the effect that discrete tax amounts have on the effective income tax rate during the year is not comparable.
3 unchanged sentences
tax resident.
−Removed: In connection with this decision, we funded our international growth strategy through intercompany debt financing arrangements between certain of our U.S., U.K.
−Removed: and Switzerland subsidiaries in December 2015.
+Added: In connection with this decision, we funded our international growth strategy through intercompany debt financing arrangements between certain of our United States, United Kingdom and Hungarian subsidiaries.
Accordingly, due to the difference in the statutory income tax rates between these jurisdictions, we realized a lower effective tax rate on consolidated pre-tax income.
−Removed: Our effective tax rate may fluctuate from time to time due to the effects of changes in U.S.
−Removed: state and local taxes and tax rates in foreign jurisdictions.
+Added: Our effective tax rate may fluctuate from time to time due to the effects of changes in United States 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.
−Removed: Net Loss Attributable to Capri
−Removed: As a result of the foregoing, our net loss attributable to Capri decreased $161 million, or 72.2%, to a net loss of $62 million during Fiscal 2021, compared to net loss of $223 million for Fiscal 2020.
+Added: Net Income (Loss) Attributable to Noncontrolling Interest
+Added: During Fiscal 2022, we recorded net income attributable to noncontrolling interest of $1 million and during Fiscal 2021, we recorded a net loss of $1 million, attributable to the noncontrolling interest in our joint ventures.
+Added: These amounts represent the share of income (loss) that is not attributable to the Company.
+Added: Net Income (Loss) Attributable to Capri
+Added: As a result of the foregoing, during Fiscal 2022 our net income attributable to Capri increased $884 million to $822 million, compared to a net loss of $62 million for Fiscal 2021.
Segment Information
3 unchanged sentences
Revenues $ 1,088 $ 718 $ 370 51.5 % 52.8 %
−Removed: Income (loss) from operations 21 (8) 29 NM
+Added: Income from operations 185 21 164 NM
Operating margin 17.0 % 2.9 %
NM Not meaningful
−Removed: Versace revenues decreased $125 million to $718 million for Fiscal 2021, compared to $843 million for Fiscal 2020, which included favorable foreign currency effects of $42 million.
−Removed: On a constant currency basis, revenue decreased $167 million, or 19.8%, primarily reflecting the adverse impacts related to COVID-19.
−Removed: Income (loss) from Operations
−Removed: During Fiscal 2021, Versace recorded income from operations of $21 million compared to a loss from operations of $8 million for Fiscal 2020.
−Removed: Operating margin increased from (0.9)% for Fiscal 2020 to 2.9% for Fiscal 2021, primarily due to a favorable channel mix, partially offset by a decline in revenue as a result of COVID-19.
+Added: Versace revenues increased $370 million, or 51.5%, to $1.088 billion for Fiscal 2022, compared to $718 million for Fiscal 2021, which included unfavorable foreign currency effects of $9 million.
+Added: On a constant currency basis, revenue increased $379 million, or 52.8%, primarily attributable to the continued recovery from the COVID-19 pandemic.
+Added: In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.
+Added: Income from Operations
+Added: During Fiscal 2022, Versace recorded income from operations of $185 million compared to $21 million for Fiscal 2021.
+Added: Operating margin increased from 2.9% for Fiscal 2021 to 17.0% for Fiscal 2022, primarily due to a higher average unit price and leveraging of operating expenses due to higher revenue.
Fiscal Years Ended % Change
2 unchanged sentences
Revenues $ 613 $ 418 $ 195 46.7 % 40.4 %
−Removed: Loss from operations (55) (13) (42) NM
+Added: Income (loss) from operations 13 (55) 68 NM
Operating margin 2.1 % (13.2) %
NM Not meaningful
−Removed: Jimmy Choo revenues decreased $137 million, or 24.7% to $418 million for Fiscal 2021, compared to $555 million for Fiscal 2020, which included favorable foreign currency effects of $12 million.
−Removed: On a constant currency basis, revenue decreased $149 million, or 26.8%, primarily reflecting adverse impacts related to COVID-19.
−Removed: Loss from Operations
−Removed: During Fiscal 2021, Jimmy Choo recorded a loss from operations of $55 million compared to $13 million for Fiscal 2020.
−Removed: Operating margin declined from (2.3)% for Fiscal 2020 to (13.2)% for Fiscal 2021, primarily reflecting adverse impacts related to COVID-19.
+Added: Jimmy Choo revenues increased $195 million, or 46.7%, to $613 million for Fiscal 2022, compared to $418 million for Fiscal 2021, which included favorable foreign currency effects of $26 million.
+Added: On a constant currency basis, revenue increased $169 million, or 40.4%, primarily attributable to the continued recovery from the COVID-19 pandemic.
+Added: In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.
+Added: Fiscal 2022 also included incremental revenue attributable to the inclusion of the 53rd week.
+Added: Income (Loss) from Operations
+Added: During Fiscal 2022, Jimmy Choo recorded income from operations of $13 million compared to a loss from operations of $55 million for Fiscal 2021.
+Added: Operating margin improved from (13.2)% for Fiscal 2021 to 2.1% for Fiscal 2022, primarily due to a higher average unit price and leveraging of operating expenses due to higher revenue.
Fiscal Years Ended % Change
4 unchanged sentences
Operating margin 25.4 % 20.3 %
−Removed: Michael Kors revenues decreased $1.229 billion, or 29.6%, to $2.924 billion for Fiscal 2021, compared to $4.153 billion for Fiscal 2020, which included favorable foreign currency effects of $53 million.
−Removed: On a constant currency basis, revenue decreased $1.282 billion, or 30.9%, primarily reflecting adverse impacts related to COVID-19.
+Added: Michael Kors revenues increased $1.029 billion, or 35.2%, to $3.953 billion for Fiscal 2022, compared to $2.924 billion for Fiscal 2021, which included favorable foreign currency effects of $8 million.
+Added: On a constant currency basis, revenue increased $1.021 billion, or 34.9%, primarily attributable to the continued recovery from the COVID-19 pandemic.
+Added: In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.
+Added: Fiscal 2022 also included incremental revenue attributable to the inclusion of the 53rd week.
Income from Operations
−Removed: During Fiscal 2021, Michael Kors recorded income from operations of $595 million compared to $850 million for Fiscal 2020.
−Removed: Operating margin declined from 20.5% for Fiscal 2020 to 20.3% for Fiscal 2021, primarily due to a decline in revenue related to COVID-19, partially offset by higher gross profit margins related to a higher average unit price and favorable channel mix, as well as our cost reduction initiatives as a result of COVID-19.
+Added: During Fiscal 2022, Michael Kors recorded income from operations of $1.005 billion compared to $595 million for Fiscal 2021.
+Added: Operating margin increased from 20.3% for Fiscal 2021 to 25.4% for Fiscal 2022, primarily due to a higher average unit price and leveraging of operating expenses due to higher revenue, partially offset by increases in supply chain costs.
Liquidity and Capital Resources
1 unchanged sentence
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.
−Removed: 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 growth plans, shop-in-shop growth, investments in corporate and distribution facilities, continued systems development, e-commerce and marketing initiatives.
+Added: 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 growth plans, investments in corporate and distribution facilities, continued systems development, e-commerce and marketing initiatives.
We spent $131 million on capital expenditures during Fiscal 2022 and expect to spend approximately $300 million during Fiscal 2023.
−Removed: This anticipated increase reflects continued expenditures related to our retail operations (including e-commerce), ERP system implementation and our corporate offices.
+Added: This anticipated increase reflects continued expenditures related to our retail operations (including e-commerce), ERP system implementation and Capri transformation programs.
The majority of the Fiscal 2022 expenditures related to our retail operations (including e-commerce) and our corporate offices.
17 unchanged sentences
Cash Provided by Operating Activities
+Added: Cash provided by operating activities increased $80 million to $704 million during Fiscal 2022, as compared to $624 million for Fiscal 2021, which was due to an increase in our net income after non-cash adjustments, partially offset by decreases related to changes in our working capital.
+Added: The decreases related to the changes in our working capital are primarily attributable to an increase in our inventory levels and fluctuations in the timing of payments and receipts when compared to the prior year.
Cash provided by operating activities decreased $235 million to $624 million during Fiscal 2021, as compared to $859 million for Fiscal 2020, which was due to a decrease in our net income after non-cash adjustments, primarily driven by a decrease in impairments and a decrease in net loss, partially offset by increases related to changes in our working capital, primarily attributable to fluctuations in the timing of payments and receipts due to the impact of COVID-19.
−Removed: Cash provided by operating activities increased $165 million to $859 million during Fiscal 2020, as compared to $694 million for Fiscal 2019, which was primarily due to increases related to changes in our working capital, primarily attributable to decreased inventory purchases, as well as the timing of payments and receipts.
−Removed: The net increase in cash flows also included decreases to our net income after non-cash adjustments.
−Removed: Cash (Used in) Provided by Investing Activities
+Added: Cash Provided by (Used in) Investing Activities
+Added: Net cash provided by investing activities was $58 million during Fiscal 2022, as compared to net cash used in investing activities of $124 million during Fiscal 2021.
+Added: The $182 million increase in cash provided by investing activities was primarily attributable to $189 million cash received on the settlement of certain net investment hedges during Fiscal 2022.
Net cash used in investing activities was $124 million during Fiscal 2021, as compared to net cash provided by investing activities of $62 million during Fiscal 2020.
−Removed: The $186 million increase in cash used in investing activities was primarily attributable to a $298 million settlement of net investment hedges during Fiscal 2020, partially offset by a $112 million decrease in capital expenditures compared to prior year.
−Removed: Net cash provided by investing activities was $62 million during Fiscal 2020, as compared to net cash used in investing activities of $2.125 billion during Fiscal 2019.
−Removed: The $2.187 billion increase in cash from investing activities was primarily attributable to $1.862 billion of cash paid, net of cash acquired, in connection with our Fiscal 2019 acquisition of the Versace business.
−Removed: The increase in cash from investing activities was also due to a $77 million realized loss related to an undesignated derivative contract during Fiscal 2019 associated with the Versace acquisition and the settlement of net investment hedges of $298 million during Fiscal 2020, partly offset by higher capital expenditures of $42 million, due to higher spending related to the ERP system implementation and expenditures related to corporate infrastructure.
−Removed: Cash (Used in) Provided by Financing Activities
+Added: The $186 million increase in cash used in investing activities was primarily attributable to a $298 million settlement of net investment hedges during Fiscal 2020, partially offset by a $112 million decrease in capital expenditures compared to Fiscal 2020.
+Added: Cash Used in Financing Activities
Net cash used in financing activities was $800 million during Fiscal 2022, as compared to $870 million during Fiscal 2021.
+Added: The decrease in cash used by financing activities of $70 million was primarily due to a decrease in net debt repayments of $681 million, higher cash proceeds from other financing activities and employee option exercises, partially offset by an increase of $660 million in cash payments to repurchase our ordinary shares during Fiscal 2022.
+Added: Net cash used in financing activities was $870 million during Fiscal 2021, as compared to $497 million during Fiscal 2020.
The increase in cash used by financing activities of $373 million was primarily due to an increase in net debt repayments of $474 million, partially offset by a decrease of $101 million in cash payments to repurchase our ordinary shares during Fiscal 2021.
−Removed: Net cash used in financing activities was $497 million during Fiscal 2020, as compared to net cash provided by financing activities of $1.451 billion during Fiscal 2020.
−Removed: The increase in cash used by financing activities of $1.948 billion was due to decreased debt borrowings of $2.038 billion, net of debt repayments, primarily attributable to higher term loan borrowings to finance the acquisition of Versace during Fiscal 2019, partially offset by a decrease of $105 million in cash payments to repurchase our ordinary shares during Fiscal 2020.
Debt Facilities
−Removed: The following table presents a summary of the Company’s borrowing capacity and amounts outstanding as of March 27, 2021 and March 28, 2020 (dollars in millions):
+Added: The following table presents a summary of the Company’s borrowing capacity and amounts outstanding as of April 2, 2022 and March 27, 2021 (dollars in millions):
Fiscal Years Ended
8 unchanged sentences
Borrowings Outstanding, net of debt issuance costs (2)
−Removed: $ 865 $ 1,010
Remaining availability $ — $ —
6 unchanged sentences
Hong Kong Uncommitted Credit Facility:
−Removed: Total availability (100 million Hong Kong Dollars) $ 13 $ 14
+Added: Total availability (80 million and 100 million Hong Kong Dollar) (4)
Borrowings outstanding — —
−Removed: Bank guarantees outstanding (3 million and 4 million Hong Kong Dollars) — 1
−Removed: Remaining availability (97 million and 96 million Hong Kong Dollars) $ 13 $ 13
+Added: Remaining availability (80 million and 100 million Hong Kong Dollar) $ 10 $ 13
China Uncommitted Credit Facility:
+Added: Total availability (45 million and 100 million Chinese Yuan) (4)
Borrowings outstanding — $ —
−Removed: Remaining availability (100 million Chinese Yuan) $ 15 $ 14
+Added: Remaining availability (45 million and 100 million Chinese Yuan) $ 7 $ 15
Japan Credit Facility:
4 unchanged sentences
Total availability (48 million and 57 million Euro) (4)
−Removed: Borrowings outstanding (0 million and 35 million Euro) (4)
+Added: Borrowings outstanding (0 million Euro) — —
Remaining availability (48 million and 57 million Euro) $ 52 $ 67
2 unchanged sentences
Total remaining availability $ 881 $ 1,298
−Removed: (1) The financial covenant in our 2018 Credit Facility requiring us to maintain a ratio of the sum of total indebtedness plus the capitalized amount of all operating lease obligations for the last four fiscal quarters to Consolidated EBITDAR of no greater than 3.75 to 1 has been waived through the fiscal quarter ending June 26, 2021.
+Added: (1) The financial covenant in our 2018 Credit Facility requiring us to maintain a ratio of the sum of total indebtedness plus the capitalized amount of all operating lease obligations for the last four fiscal quarters to Consolidated EBITDAR of no greater than 3.75 to 1 was previously waived through the fiscal quarter ending June 26, 2021.
We terminated the waiver period effective May 26, 2021.
−Removed: Effective as of that date, the applicable ratio will be calculated
−Removed: net of our unrestricted cash and cash equivalents to the extent in excess of $100 million and shall exclude up to $150 million of supply chain financings, and the maximum permitted net leverage ratio will be 4.00 to 1.0.
−Removed: As of March 27, 2021 and March 28, 2020, we were in compliance with all covenants related to our agreements then in effect governing our debt.
−Removed: (2) Recorded as long-term debt in our consolidated balance sheets as of March 27, 2021 and March 28, 2020, except for the current portion of $97 million and $128 million, respectively, outstanding under the 2018 Term Loan Facility, which was recorded within short-term debt at March 27, 2021 and March 28, 2020.
+Added: Effective as of that date, the Company was required to comply with the quarterly maximum net leverage ratio test of 4.00 to 1.0.
+Added: As of April 2, 2022 and March 27, 2021, we were
+Added: in compliance with all covenants related to our agreements then in effect governing our debt.
+Added: (2) As of April 2, 2022, all amounts are recorded as long-term debt in our consolidated balance sheets.
+Added: As of March 27, 2021, all amounts were recorded as long-term debt, except for the current portion of $97 million outstanding under the 2018 Term Loan Facility, which was recorded within short-term debt in our consolidated balance sheets.
+Added: (3) The balance as of April 2, 2022 consists of $21 million related to our supplier finance program recorded within short-term debt in our consolidated balance sheets, $18 million related to the sale of certain Versace tax receivables, with $8 million and $10 million, respectively, recorded within short-term debt and long-term debt in our consolidated balance sheets and $3 million of other loans recorded as long-term debt in our consolidated balance sheets.
The balance as of March 27, 2021 consists of $17 million related to our supplier finance program recorded within short term debt in our consolidated balance sheets and $4 million of other loans recorded as long-term debt in our consolidated balance sheets.
−Removed: The balance as of March 28, 2020 consists of $3 million of other loans recorded as long-term debt in our consolidated balance sheets.
−Removed: (4) Recorded as short-term debt in our consolidated balance sheets as of March 27, 2021 and March 28, 2020.
+Added: (4) The balance as of April 2, 2022 represents the total availability of the credit facility, which excludes bank guarantees.
+Added: (5) Recorded as short-term debt in our consolidated balance sheets as of March 27, 2021.
We believe that our 2018 Credit Facility is adequately diversified with no undue concentration in any one financial institution.
−Removed: As of March 27, 2021, there were 29 financial institutions participating in the facility, with none maintaining a maximum commitment percentage in excess of 10%.
+Added: As of April 2, 2022, there were 25 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 2018 Credit Facility.
−Removed: See Note 12 and Note 22 in the accompanying consolidated financial statements for detailed information relating to our credit facilities and debt obligations.
+Added: See Note 11 in the accompanying consolidated financial statements for detailed information relating to our credit facilities and debt obligations.
Share Repurchase Program
−Removed: The following table presents our treasury share repurchases during the fiscal years ended March 27, 2021 and March 28, 2020 (dollars in millions):
+Added: The following table presents our treasury share repurchases during the fiscal years ended April 2, 2022 and March 27, 2021 (dollars in millions):
Fiscal Years Ended
8 unchanged sentences
See Note 15 in the accompanying financial statements for additional information.
−Removed: As of March 27, 2021, the remaining availability under our share repurchase program was $400 million.
−Removed: Under this program, share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading restrictions under our insider trading policy and other relevant factors.
−Removed: This program may be suspended or discontinued at any time.
+Added: On November 3, 2021, we announced that our Board of Directors had terminated our existing $500 million share repurchase program (the “Prior Plan”), with $250 million of availability remaining, and authorized a new share repurchase program (the “Fiscal 2022 Plan”) pursuant to which we may, from time to time, repurchase up to $1.0 billion of our outstanding ordinary shares within a period of two years from the effective date of the program.
+Added: As of April 2, 2022, the remaining availability under the Fiscal 2022 Plan was $500 million.
+Added: Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading transactions under our insider trading policy and other relevant factors.
+Added: The program may be suspended or discontinued at any time.
+Added: On June 1, 2022, we announced that its Board of Directors has terminated our Fiscal 2022 Plan, with $500 million of availability remaining, and authorized a new share repurchase program pursuant to which we may, from time to time, repurchase up to $1.0 billion of our outstanding ordinary shares within period of two years from the effective date of the program.
+Added: Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading restrictions under our insider trading policy and other relevant factors.
+Added: The program may be suspended or discontinued at any time.
See Note 15 and Note 20 to the accompanying consolidated financial statements for additional information.
Contractual Obligations and Commercial Commitments
−Removed: As of March 27, 2021, our contractual obligations and commercial commitments were as follows (in millions):
+Added: As of April 2, 2022, our contractual obligations and commercial commitments were as follows (in millions):
Fiscal Years Fiscal 2023 Fiscal
7 unchanged sentences
Total $ 1,604 $ 1,895 $ 427 $ 426 $ 4,352
+Added: (1) Beginning in Fiscal 2023, we will be in an interest income position, therefore we would not have interest expense obligations due through the above periods.
Operating lease obligations represent equipment leases and the minimum lease rental payments due under non-cancelable operating leases for our real estate locations globally.
4 unchanged sentences
Other commitments include non-cancelable contractual obligations related to marketing and advertising agreements, information technology agreements and supply agreements.
−Removed: Excluded from the above commitments is $107 million of long-term liabilities related to net uncertain tax positions, due to the uncertainty of the timing and nature of resolution.
−Removed: The above table also excludes current liabilities (other than short-term debt and short-term operating lease liabilities) recorded as of March 27, 2021, as these items will be paid within one year, and non-current liabilities that have no cash outflows associated with them (e.g., deferred taxes).
+Added: The above table excludes current liabilities (other than short-term debt and short-term operating lease liabilities) recorded as of April 2, 2022, as these items will be paid within one year, and non-current liabilities that have no cash outflows associated with them (e.g., deferred taxes).
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.
−Removed: In addition to the commitments in the above table, our off-balance sheet commitments relating to our outstanding letters of credit were $33 million at March 27, 2021, including $6 million in letters of credit issued outside of the 2018 Credit Facility.
−Removed: In addition, as of March 27, 2021, bank guarantees of approximately $35 million were supported by our various credit facilities.
+Added: In addition to the commitments in the above table, our off-balance sheet commitments relating to our outstanding letters of credit were $36 million at April 2, 2022, including $15 million in letters of credit issued outside of the 2018 Credit Facility.
+Added: In addition, as of April 2, 2022, bank guarantees of approximately $30 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.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.