Capri Holdings Limited

Greetings and welcome to the Capri Holdings Limited third quarter fiscal 2026 financial results call. At this time, all participants are in a 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'd now like to turn the conference over to your host, Jennifer Davis, Vice President of Investor Relations. Thank you. You may begin.

Good morning, everyone, and thank you for joining us on Capri Holdings Limited third quarter fiscal 2026 conference call. With me this morning are Chairman and Chief Executive Officer John Idle and Interim Chief Financial Officer Raj Mehta. 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 today's 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 reserves related to a wholesale customer bankruptcy, restructuring and other charges, store renovation program costs, merger and divestiture transaction-related costs, impairment charges, and CAPRI transformation costs. To view the core spending gap measures and related reconciliation, please review our latest earnings release posted to our website earlier today at CapriHoldings.com. Additionally, the company has classified the results of today's operations and cash flows from its Versace business as discontinued operations. Unless otherwise noted, all information on today's call relates only to continuing operations. 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. We were pleased with our third quarter performance, which exceeded our expectations. Across both Michael Kors and Jimmy Choo, we continue to execute on our strategic initiatives to position our iconic brands for long-term success. Our strategies remain anchored in strengthening brand desirability through delivering compelling storytelling and creating fashion luxury products that excite and inspire consumers. Together with our advanced data analytics and deep consumer insights, these initiatives are designed to strengthen consumer engagement and reinforce the long-term equity of our brands. We remain confident that these strategies will support a return to growth in fiscal 2027. as well as establish the groundwork for sustainable performance well into the future. Recently, we completed the sale of Versace, which was a thoughtful decision to strengthen our financial foundation, ensuring we have the flexibility to support Michael Kors and Jimmy Choo's strategic initiatives and enhance long-term shareholder value. The proceeds from the sale were used to significantly reduce debt levels. As a result, we ended the quarter with $80 million of net debt. Now turning to our third quarter results. Total company revenue exceeded our expectations, decreasing 4% versus last year to $1.025 billion. Underlying gross margins Excluding the impact of tariffs expanded 70 basis points, reflecting better-than-expected performance driven primarily by improved full-price sell-throughs and reduced promotional activity. Earnings per share increased approximately 30 percent to 81 cents.