Capri Holdings Limited

Greetings and welcome to the Capri Holdings Limited fourth quarter and full year fiscal 2023 earnings call. At this time, all participants are in the listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jennifer Davis, Vice President, Investor Relations for Capri Holdings Limited.

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

Thank you, Jennifer, and good morning, everyone. Looking back on fiscal 23, revenue increased high single digits and earnings per share increased mid single digits. These results were measured on a 52 week constant currency basis. While this was not up to our original expectations, many aspects of our business performed well. First, revenue increased across all houses with double digit growth at Versace, and Jimmy Choo, as well as mid single digit growth at Michael Kors. In fact, we achieved record revenue at Versace and Jimmy Choo in fiscal 23. Second, we accelerated growth of accessories across all houses with retail sales of women's accessories increasing over 40% at Versace, over 20% at Jimmy Choo, and low single digits at Michael Kors. Third, we continued to grow footwear across all brands with retail sales of women's footwear increasing low double digits at Versace and Michael Kors, as well as high single digits at Jimmy Choo. Fourth, we added 12.6 million new names to our database, representing an 18% increase in our total database size. This is the largest year-over-year increase in the company's history. Combined with the growth in our own retail channel, we believe this continues to demonstrate the strength and desirability of our luxury houses. Fifth, we returned $1.35 billion to shareholders through share repurchases, reflecting our strong balance sheet and free cash flow generation. These results demonstrate the power of our business model, the strength of our luxury houses, and the execution of our strategic initiatives. Now, I'd like to update you with the progress we made by brand in fiscal 23. Starting with Versace, in fiscal 23, we achieved record revenue of over 1.1 billion, demonstrating the momentum of the brand and the success of our strategic growth initiatives. Versace revenue in fiscal 23 increased 14% in constant currency. Looking at product, starting with accessories, which are a key component of our growth strategy. Women's accessories was Versace's strongest performing category with fiscal 23 sales in our retail channel up over 40% versus prior year. With our pillars La Medusa, Virtus, and Greco Goddess, we are making significant progress in our goal to position Versace as a leading luxury leather house. Turning to footwear, which is another component of our growth strategy. Footwear performed well as we continued to build our core offering focused on our iconic brand codes. In fiscal 23, women's footwear sales in our own retail channel increased double digits as we continued to gain authority in women's luxury fashion footwear. In terms of ready-to-wear, women's performed well with sales in our own retail channels increasing double digits. Looking at men's ready-to-wear, we are in the early stages of repositioning the brand. We are elevating the assortment to include more tailored styles to capitalize on the sartorial fashion trend. As expected, sales declined in the back half of the year, which resulted in flat men's ready-to-wear sales in fiscal 23. Another key indicator of demand for the Versace brand is the strength of our fragrance, eyewear, and jewelry businesses, which increased strong double digits.