Capri Holdings Ltd. Q3 FY2023 earnings call

• Overall performance in third quarter was more challenging than anticipated but own retail channel across all three luxury houses performed well. • New customer acquisition was a key driver of growth with over 12 million new names added to database. • Wholesale revenue declined significantly, especially for Michael Kors. • Revenue in Mainland China declined due to COVID cases on reopening. • Versace pleased with revenue performance, strong in accessories and footwear, holiday campaign inspired by theater and arts. • Jimmy Choo pleased with progress, strong in accessories and footwear, successful capsule collaboration with Timberland. • Michael Kors disappointed with performance, focused on elevating brand, strong in own retail channel but wholesale declined, holiday campaign with Bella Hadid and He Cong. • Welcomed Cedric Wilmotte as new CEO of Michael Kors

Total company revenue decreased 6% on a reported basis and 1% in constant currency. Total company retail sales increased mid-single digits globally in constant currency. Versace revenue decreased 1% on a reported basis but increased 11% in constant currency; Jimmy Choo revenue decreased 6% on a reported basis but increased 3% in constant currency; Michael Kors revenue decreased 7% on a reported basis and 4% in constant currency. Versace global retail sales increased in mid-single digits in constant currency; Jimmy Choo global retail sales increased low single digits in constant currency; Michael Kors global retail sales increased low single digits in constant currency with e-commerce penetration increasing 300 basis points. Gross margin expanded 120 basis points to 66.3%

• Fourth quarter total company revenue anticipated to be approximately $1.275 billion, decline of 15% on reported basis, mid-single-digit decline in retail, approximate 35% decline in wholesale. On 52-week constant currency basis, down 8% including mid-single-digit increase in retail. • Fiscal '24 anticipated total revenue and earnings growth in mid-single digits, own retail channel solid growth driven by strategic initiatives, client-telling, personalized strategies and China recovery, wholesale revenue expected to decline in mid-teens with trends normalizing in back half, operating margin expected to modestly expand to 16.5%, EPS approximately $6.40

• Macroeconomic uncertainty impacting consumer confidence and wholesale performance. • COVID cases in Mainland China impacting revenue. • Inventory levels increased, though expected to be below prior year at end of fourth quarter. • Wholesale channel decline impacting cost structure and operating margin

Q: Larger picture on category demand for accessories, difference between direct-to-consumer and wholesale, and if guidance covers macro scenarios.

A: John Idol discussed disappointment in wholesale, strength in own retail, database growth, category strength, issues in North American wholesale channel, and comfort with guidance.

Q: Clarification on 4Q sales guidance, change in China outlook.

A: Tom Edwards said Q4 more cautious due to macro uncertainty, wholesale down 35%, retail mid-single-digit growth, China outlook changed due to COVID surge.

Q: Clarification on wholesale in next year, cost structure alignment.

A: Tom Edwards said wholesale down 15% in '24, first half more declined, John Idol talked about pivot, rebalancing costs.

Q: Focus on gross margin, promotional environment, expansion assumptions.

A: John Idol and Tom Edwards discussed gross margin positive factors like price increases, moderating freight costs, channel mix, and assumptions for next year.

Q: Momentum in income demographics, database growth, repeat purchase.

A: John Idol talked about database growth, e-commerce contribution, marketing investments, clienteling initiatives.

Q: Transactions vs ticket in DTC, free cash flow, China assumption.

A: John Idol talked about transaction and ticket trends, Tom Edwards on cash flow and China growth assumption.

Q: Opinion on domestic department store weakness, Michael Kors EBIT margins.

A: John Idol and Tom Edwards discussed department store weakness, Michael Kors operating margin goals and cost structure adjustment