# Capri Holdings Ltd (CPRI) FY 2025 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Capri Holdings Ltd's 10-K for fiscal year 2025.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1530721/000153072125000052/cpri-20250329.htm
Accession: 0001530721-25-000052
Filing date: 2025-05-28
Report date: 2025-03-29
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/CPRI/
All MD&A years: /company/CPRI/mda/
Previous year: /company/CPRI/mda/fy2024/ (FY 2024)
Next year: /company/CPRI/mda/fy2026/ (FY 2026)

ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Our Business

Capri Holdings Limited is a global fashion luxury group consisting of iconic brands Versace, Jimmy Choo and Michael Kors. Our commitment to glamorous style and craftsmanship is at the heart of each of our luxury brands. We have built our reputation on designing exceptional, innovative products that cover the full spectrum of fashion luxury categories. Our strength lies in the unique DNA and heritage of each of our brands, the diversity and passion of our people and our dedication to the clients and communities we serve.

Our Versace brand has long been recognized as one of the world’s leading international fashion design houses and is synonymous with Italian glamour and style. Founded in 1978 in Milan, Versace is known for its iconic and unmistakable style and unparalleled craftsmanship. Over the past several decades, the House of Versace has grown globally from its roots in haute couture, expanding into the design, manufacturing, distribution and retailing of ready-to-wear, accessories, footwear, eyewear, watches, jewelry, fragrance and home furnishings. Until recently, Versace’s design team was led by Donatella Versace, who had been the brand’s Artistic Director for almost 30 years. Effective April 1, 2025, Dario Vitale became Versace’s Chief Creative Officer. Versace distributes its products through a worldwide distribution network, which includes boutiques in some of the world’s most fashionable cities, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.

Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, jewelry, scarves and belts, as well as men’s luxury shoes and accessories. In addition, certain categories, including fragrance and eyewear, are produced under licensing agreements. Jimmy Choo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic. The brand offers classic and timeless luxury products, alongside innovative collections that are intended to set and lead fashion trends. Jimmy Choo is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.

Our Michael Kors brand was launched over 40 years ago by Michael Kors, a world-renowned designer, whose vision has taken the Company from its beginnings as an American luxury sportswear house to a global accessories, ready-to-wear, and footwear company with a global distribution network that has presence in over 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners. Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with growing brand awareness in other international markets. Michael Kors features distinctive designs, materials and craftsmanship that combines stylish elegance and a sporty attitude. Michael Kors offers three primary collections: the Michael Kors Collection line, the MICHAEL Michael Kors line and the Michael Kors Mens line. The Michael Kors Collection establishes the aesthetic authority of the entire brand and is carried by select retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world. MICHAEL Michael Kors has a strong focus on accessories, in addition to offering ready-to-wear and footwear. We have also been developing our men’s business in recognition of the significant opportunity afforded by the Michael Kors brand’s established fashion authority and the expanding men’s market. Taken together, our Michael Kors collections target a broad customer base while retaining our premium luxury image.

Termination of the Agreement and Plan of Merger

As previously disclosed, on August 10, 2023, Capri entered into an Agreement and Plan of Merger with Tapestry, Inc., a Maryland corporation, and Sunrise Merger Sub, Inc., a British Virgin Islands business company limited by shares and a direct wholly owned subsidiary of Tapestry. The Merger Agreement provided that, among other things and on the terms and subject to the conditions set forth therein, Tapestry would acquire Capri in an all-cash transaction by means of a merger of Merger Sub with and into Capri, with Capri surviving the Merger as a wholly owned subsidiary of Tapestry.

The Merger had been approved by the boards of directors of Capri and Tapestry and by the shareholders of Capri. Completion of the Merger was subject to, among other customary conditions, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Company received regulatory approval from all countries except for the United States. In connection with Tapestry’s proposed acquisition of

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Capri, on April 22, 2024, the U.S. FTC filed a lawsuit in the United States District Court for the Southern District of New York (the “District Court”) against Tapestry and the Company seeking to block the Merger, claiming that the Merger would violate Section 7 of the Clayton Act and that the Merger Agreement and the Merger constituted unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act and should be enjoined. The preliminary injunction hearing concluded in September 2024, and on October 24, 2024, the District Court granted the FTC's motion for a preliminary injunction to enjoin the Merger pending the completion of the FTC's in-house administrative proceeding. On October 28, 2024, Tapestry and Capri jointly filed a notice of appeal to the U.S. Court of Appeals for the Second Circuit (the “Second Circuit”).

On November 13, 2024, the parties to the Merger Agreement entered into a termination agreement pursuant to which they agreed to terminate the Merger Agreement, effective immediately. In connection with the termination, consistent with the Merger Agreement, Tapestry agreed to reimburse the Company approximately $45 million in cash for certain expenses on November 14, 2024. The parties to the Merger Agreement also agreed to release each other and their related parties from any and all liability, claims, rights, actions, causes of action, suits, liens, obligations, accounts, debts, demands, agreements, promises, liabilities, controversies, costs, charges, damages, expenses and fees (including attorney’s, financial advisor’s or other fees) in connection with, arising out of or related to the Merger Agreement or the transactions contemplated therein or thereby. On November 15, 2024, Capri and Tapestry stipulated to the dismissal of the appeal to the Second Circuit. On December 4, 2024, the FTC’s in-house administrative proceeding was dismissed without prejudice.

Certain Factors Affecting Financial Condition and Results of Operations

Impairment losses. During the third quarter of Fiscal 2025, we identified impairment indicators due to the termination of the Merger Agreement, the decline in our share price, continued softening of consumer demand for fashion luxury goods globally and the continuing decline in operating results during the third quarter impacting all three of our brands. As we determined that it was more likely than not that the fair values of certain reporting units and/or brands were below their carrying amounts, we performed an interim impairment test during the third quarter of Fiscal 2025. As a result of our impairment assessment, we recorded $671 million of impairment charges related to our Versace and Jimmy Choo goodwill and intangible assets. It is possible that our conclusions regarding impairment or recoverability of goodwill or other intangible assets could change in future periods. Such changes could result in future impairment charges of goodwill or other intangible assets and such amounts could be significant. See Item 1A. Risk Factors - “We may incur significant goodwill and/or intangible asset impairment charges with respect to one or more of our brands which could have a material adverse impact on our results of operations and financial condition.”

Macroeconomic conditions and inflationary pressures. Global economic conditions and the related impact on levels of consumer spending worldwide impacted our business in Fiscal 2025, and are likely to continue to impact our business and the luxury accessories, footwear and apparel industry overall for the foreseeable future. Inflation, rising interest rates, higher fuel and energy costs and commodity prices, reductions in net worth based on stock market declines and uncertainty, home prices, credit availability and consumer debt levels, political instability due to war or other geopolitical factors, including the presidential change in the U.S., and other macroeconomic pressures and general uncertainty regarding the overall future economic environment along with tariffs and foreign currency fluctuations have created a challenging retail environment, which is expected to continue in the near term. There continues to be uncertainty in the current macroeconomic environment due to the above-mentioned items. Our revenue and earnings in future periods may be subject to significant material change as a result of these and other macroeconomic factors. Purchases of discretionary luxury items, such as the accessories, footwear and apparel that we produce tend to decline when disposable income is lower or when there are recessions, inflationary pressures or other economic uncertainty which could negatively affect our financial condition and results of operations.

Costs of manufacturing, tariffs and import regulations. Our industry is subject to volatility in costs related to certain raw materials used in the manufacturing of our products. This volatility applies primarily to costs driven by commodity prices, which can increase or decrease dramatically over a short period of time, as well as manufacturing labor costs which are also subject to degrees of volatility based on local and global economic conditions. In addition, our costs may be impacted by sanction tariffs imposed on our products due to changes in trade terms. Virtually all of our products are subject to duties which may impact the cost of our products. In April 2025, the U.S. Government announced tariffs on imports from select countries. The majority of the Company's products sold in the U.S. are imported from countries in which these tariffs were announced, including Vietnam, Cambodia, Indonesia and Bangladesh, where the primary manufacturers of Michael Kors products are located. Increased tariffs or other trade restrictions against countries where our products are manufactured, and/or any tariffs or other trade restrictions implemented by these countries in retaliation, could materially impact our revenue and profitability. We use commercially reasonable efforts to mitigate these effects by sourcing our products as efficiently as possible and diversifying the countries where we produce, and we are continuing to explore ways to mitigate our potential exposure to risks associated with new or increased duties, tariffs, or other import controls or restrictions but we may not be able to mitigate the risk fully or at all. See Item 1A. Risk Factors - “Our business is subject to risks associated with importing products, and the imposition or

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threat of imposition of new or additional duties, tariffs or trade restrictions could have a material adverse effect on our business, results of operations and financial condition."

Luxury goods trends and demand for our accessories and related merchandise. 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. We have experienced, and may continue to experience, material reductions in revenues across our brands and regions driven by softening demand globally for fashion luxury goods as well as Versace and Michael Kors’ brand repositioning efforts. If demand for global fashion luxury goods continues to soften and/or if we do not correctly gauge consumer needs and fashion trends and respond appropriately, our future results of operations may be materially impacted.

Foreign currency fluctuation. Our consolidated operations are impacted by the relationships between our reporting currency, the United States dollar, and those of our non-United States subsidiaries whose functional/local currency is other than the United States dollar, primarily the Euro, the British Pound, the Chinese Renminbi and the Japanese Yen, among others. We continue to expect volatility in the global foreign currency exchange rates, which may have a negative impact on the reported results of certain of our non-United States subsidiaries in the future, when translated to the United States dollar.

Disruptions or delays in shipping and distribution and other supply chain constraints. Any disruptions in our shipping and distribution network, including port congestion, vessel availability, container shortages and temporary factory closures, could have a negative impact on our results of operations. 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.

Implementing and updating information technology systems. During Fiscal 2024, we began implementing a new state of the art e-commerce platform across certain of our brands which was completed in Fiscal 2025. While the new platform is designed to improve the user experience and enhance consumer engagement, the transition created unanticipated challenges which have negatively impacted our results of operations. See Item 1A. Risk Factors - “A material delay or disruption in our information technology systems or e-commerce websites or our failure or inability to upgrade our information technology systems precisely and efficiently could have a material adverse effect on our business, results of operations and financial condition” for additional discussion.

Segment Information

We operate in three reportable segments, which are as follows:

Versace

We generate revenue through the sale of Versace luxury accessories, ready-to-wear and footwear through directly operated Versace boutiques throughout North America (United States and Canada), certain parts of EMEA (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 the Versace Jeans Couture product line, fragrances, watches, eyewear and home furnishings.

Jimmy Choo

We generate revenue through the sale of Jimmy Choo luxury goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas (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.

Michael Kors

We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our

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products, as well as licensed products bearing our name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia. Our Michael Kors e-commerce business includes e-commerce sites in the United States, Canada, EMEA and Asia. We also sell Michael Kors products directly to department stores, primarily located across the Americas and EMEA, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of EMEA, Asia and Brazil. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear, as well as through geographic licensing arrangements, which allow third parties to use the Michael Kors tradename in connection with the retail and/or wholesale sales of our Michael Kors branded products in specific geographic regions.

Unallocated Corporate Expenses

In addition to the reportable segments discussed above, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information technology systems expenses, including enterprise resource planning system implementation costs and Capri transformation program costs. In addition, certain other costs are not allocated to segments, including transaction related income (costs), impairment charges and restructuring and other expense. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance.

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The following table presents our total revenue and (loss) income from operations by segment for Fiscal 2025, Fiscal 2024 and Fiscal 2023 (in millions):

[[GREPCENT_TABLE]]
[["","","Fiscal Years Ended"],["","","March 29, 2025","","March 30, 2024","","April 1, 2023"],["Total revenue:"],["","Versace","$","821","","","$","1,030","","","$","1,106"],["","Jimmy Choo","605","","","618","","","633"],["","Michael Kors","3,016","","","3,522","","","3,880"],["Total revenue","$","4,442","","","$","5,170","","","$","5,619"],["Cost of goods sold:"],["","Versace","$","246","","","$","306","","","$","277"],["","Jimmy Choo","200","","","192","","","186"],["","Michael Kors","1,170","","","1,333","","","1,432"],["Total cost of goods sold","$","1,616","","","$","1,831","","","$","1,895"],["Selling, general and administrative expenses:"],["","Versace","$","571","","","$","644","","","$","615"],["","Jimmy Choo","393","","","394","","","380"],["","Michael Kors","1,426","","","1,473","","","1,484"],["","Corporate","191","","","273","","","229"],["Total selling, general and administrative expenses","$","2,581","","","$","2,784","","","$","2,708"],["Depreciation and amortization:"],["","Versace","$","58","","","$","55","","","$","51"],["","Jimmy Choo","29","","","29","","","29"],["","Michael Kors","79","","","82","","","95"],["","Corporate","27","","","22","","","4"],["Total depreciation and amortization","$","193","","","$","188","","","$","179"],["(Loss) income from operations:"],["","Versace","$","(54)","","","$","25","","","$","152"],["","Jimmy Choo","(17)","","","3","","","38"],["","Michael Kors","341","","","634","","","868"],["","270","","","662","","","1,058"],["Less:","Corporate expenses","(233)","","","(275)","","","(233)"],["","Impairment of assets (1)","(797)","","","(575)","","","(142)"],["","Transaction related income (costs)","15","","","(20)","","","\u2014"],["","COVID-19 related charges (2)","\u2014","","","\u2014","","","9"],["","Impact of war in Ukraine (3)","\u2014","","","\u2014","","","3"],["","Restructuring and other expense (4)","(7)","","","(33)","","","(16)"],["(Loss) income from operations","$","(752)","","","$","(241)","","","$","679"]]
[[/GREPCENT_TABLE]]

(1)Impairment of assets during Fiscal 2025 includes $656 million, $91 million and $50 million of impairment charges related to the Versace, Jimmy Choo and Michael Kors reportable segments, respectively. Impairment of assets during Fiscal 2024 includes $283 million, $267 million and $25 million of impairment charges related to the Versace, Jimmy Choo and Michael Kors reportable segments, respectively. Impairment of assets during Fiscal 2023 includes $2 million, $110 million and $30 million of impairment charges related to the Versace, Jimmy Choo and Michael Kors reportable segments, respectively.

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(2)COVID-19 related charges during Fiscal 2023 primarily include net inventory credits of $9 million and are recorded within costs of goods sold in the consolidated statements of operations and comprehensive (loss) income.

(3)These charges primarily relate to incremental credit losses and inventory reserves which are a direct impact of the war in Ukraine. 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 (loss) income.

(4)See Note 11 to the accompanying consolidated financial statements for details on our restructuring program.

The following table presents our global network of retail stores:

[[GREPCENT_TABLE]]
[["","As of"],["","March 29, 2025","","March 30, 2024","","April 1, 2023"],["Number of full price retail stores (including concessions):"],["Versace","166","","","174","","","160"],["Jimmy Choo","163","","","177","","","182"],["Michael Kors","399","","","461","","","508"],["","728","","","812","","","850"],["Number of outlet stores:"],["Versace","62","","","62","","","63"],["Jimmy Choo","56","","","57","","","55"],["Michael Kors","312","","","308","","","304"],["","430","","","427","","","422"],["Total number of retail stores","1,158","","","1,239","","","1,272"]]
[[/GREPCENT_TABLE]]

The following table presents our retail stores by geographic location:

[[GREPCENT_TABLE]]
[["","As of","","As of"],["","March 29, 2025","","March 30, 2024"],["","Versace","","Jimmy Choo","","Michael Kors","","Versace","","Jimmy Choo","","Michael Kors"],["Store count by region:"],["The Americas","46","","","41","","","275","","","45","","","43","","","293"],["EMEA","51","","","64","","","143","","","60","","","68","","","156"],["Asia","131","","","114","","","293","","","131","","","123","","","320"],["","228","","","219","","","711","","","236","","","234","","","769"]]
[[/GREPCENT_TABLE]]

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Key Performance Indicators and Statistics

We use a number of key indicators of operating results to evaluate our performance, including the following (dollars in millions):

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended"],["","March 29, 2025","","March 30, 2024","","April 1, 2023"],["Total revenue","$","4,442","","","$","5,170","","","$","5,619"],["Gross profit as a percent of total revenue","63.6","%","","64.6","%","","66.3","%"],["(Loss) income from operations","$","(752)","","","$","(241)","","","$","679"],["(Loss) income from operations as a percent of total revenue","(16.9)","%","","(4.7)","%","","12.1","%"]]
[[/GREPCENT_TABLE]]

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Critical accounting policies are those that are the most important to the portrayal of our results of operations and financial condition and that require our most difficult, subjective and complex judgments to make estimates about the effect of matters that are inherently uncertain. In applying such policies, we must use certain assumptions that are based on our informed judgments, assessments of probability and best estimates. Estimates, by their nature, are subjective and are based on analysis of available information, including current and historical factors and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis. While our significant accounting policies are detailed in Note 3 to the accompanying financial statements, our critical accounting policies are discussed below and include revenue recognition, inventories, long-lived assets, goodwill and other indefinite-lived intangible assets, share-based compensation, derivatives and income taxes.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for goods or services. We recognize retail store revenue when control of the product is transferred at the point of sale at our owned stores, including concessions. Revenue from sales through our e-commerce sites is recognized at the time of delivery to the customer, reduced by an estimate of returns. Wholesale revenue is recognized net of estimates for sales returns, discounts, markdowns and allowances, after merchandise is shipped and control of the underlying product is transferred to our wholesale customers. 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. The amounts reserved for retail sales returns were $18 million, $18 million and $22 million at March 29, 2025, March 30, 2024 and April 1, 2023, 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. Total sales reserves for wholesale were $63 million, $61 million and $73 million at March 29, 2025, March 30, 2024 and April 1, 2023, 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. Our historical estimates of these costs were not materially different from actual results.

Royalty revenue generated from product licenses, which includes contributions for advertising, is based on reported sales of licensed products bearing our tradenames at rates specified in the license agreements. These agreements are also subject to contractual minimum levels. Royalty revenue generated by geographic licensing agreements is recognized as it is earned under the licensing agreements based on reported sales of licensees applicable to specified periods, as outlined in the agreements. These agreements allow for the use of our tradenames to sell our branded products in specific geographic regions.

Inventories

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. The combined total of raw materials and work in process recorded on our consolidated balance sheets as of both March 29, 2025 and March 30, 2024 was $45 million. We continuously evaluate the composition of our inventory and make adjustments when the cost of inventory is not expected to be fully recoverable. The net

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realizable value of our inventory is estimated based on historical experience, current and forecasted demand and market conditions. In addition, reserves for inventory losses are estimated based on historical experience and inventory counts. Our inventory reserves are estimates, which could vary significantly from actual results if future economic conditions, customer demand or competition differ from expectations. Our historical estimates of these adjustments have not differed materially from actual results.

Long-lived Assets

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. 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. If the sum of our estimated undiscounted future cash flows associated with the asset is less than the asset’s carrying value, we would recognize an impairment charge, which is measured as the amount by which the carrying value exceeds the fair value of the asset. The fair values determined by management require significant judgment and include certain assumptions regarding future sales and expense growth rates, discount rates and estimates of real estate market fair values. As such, these estimates may differ from actual results and are affected by future market and economic conditions.

During Fiscal 2025, Fiscal 2024 and Fiscal 2023, we recorded impairment charges of $136 million, $88 million and $36 million, respectively, which were primarily related to operating lease right-of-use assets and fixed assets of our retail store locations. Please refer to Note 8 and Note 14 of the accompanying consolidated financial statements for additional information.

Goodwill and Other Indefinite-lived Intangible Assets

We record intangible assets based on their fair value on the date of acquisition. Goodwill is recorded as the difference between the fair value of the purchase consideration and the fair value of the net identifiable tangible and intangible assets acquired. The brand intangible assets recorded in connection with the acquisitions of Versace and Jimmy Choo were determined to be indefinite-lived intangible assets, which are not subject to amortization. We perform an impairment assessment of goodwill, as well as the Versace brand and Jimmy Choo brand intangible assets on an annual basis, or whenever impairment indicators exist. In the absence of any impairment indicators, goodwill, the Versace brand and the Jimmy Choo brand are assessed for impairment during the fourth quarter of each fiscal year. Judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business.

We may assess our goodwill and our brand indefinite-lived intangible assets for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of these assets is greater than their carrying value. When performing a qualitative test, we assess various factors including industry and market conditions, macroeconomic conditions and performance of our businesses. If the results of the qualitative assessment indicate that it is more likely than not that our goodwill and other indefinite-lived intangible assets are impaired, a quantitative impairment analysis is performed to determine if impairment is required. We may also elect to perform a quantitative analysis of goodwill and our indefinite-lived intangible assets initially rather than using a qualitative approach.

The impairment testing for goodwill is performed at the reporting unit level. 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. We believe the blended use of both models, when applicable, compensates for the inherent risk associated with either model if used on a stand-alone basis, and this combination is indicative of the factors a market participant would consider when performing a similar valuation. If the fair value of a reporting unit exceeds the related carrying value, the reporting unit’s goodwill is considered not to be impaired and no further testing is performed. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded for the difference. These valuations are affected by certain estimates, including future revenue growth rates, future operating expense growth rates, gross margins, discount rates and market multiples. Future events could cause us to conclude that impairment indicators exist and goodwill may be impaired.

When performing a quantitative impairment assessment of our brand intangible assets, the fair value of the Versace and the Jimmy Choo brands is estimated using a discounted cash flow analysis based on the “relief from royalty” method, assuming that a third-party would be willing to pay a royalty in lieu of ownership for this intangible asset. This approach is dependent on many factors, including estimates of future revenue growth rates, royalty rates and discount rates. Actual future results may

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differ from these estimates. An impairment loss is recognized when the estimated fair value of the brand intangible assets is less than its carrying amount.

During the third quarter of Fiscal 2025, we identified impairment indicators due to the reduction of our share price following the termination of the Merger Agreement, continued softening of consumer demand for fashion luxury goods globally and the continuing decline in operating results during the third quarter impacting all three of our brands. As a result of these factors, we concluded that impairment indicators existed during the third quarter of Fiscal 2025, resulting in an interim impairment assessment of goodwill and intangible assets. We performed a goodwill impairment analysis for the Versace and Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair value of each brands’ reporting units. We also performed an impairment analysis for both the Versace and Jimmy Choo brand indefinite-lived intangible assets and definite-lived customer relationship intangible assets using an income approach to estimate their fair values.

Based on the results of these assessments, we determined there was no impairment for the Jimmy Choo Licensing reporting unit goodwill as the fair value exceeded the related carrying value. However, we concluded that the fair value of the Jimmy Choo Wholesale reporting unit goodwill and Retail and Wholesale brand indefinite-lived intangible assets did not exceed their related carrying amounts and we recorded impairment. These impairment charges were primarily related to a decline in revenue driven by softening demand globally for fashion luxury goods. Accordingly, we recorded goodwill impairment charges of $66 million related to the Jimmy Choo Wholesale reporting unit that has a remaining balance of $27 million. The Jimmy Choo Retail reporting unit’s goodwill balance was fully impaired during Fiscal 2024. We also recorded impairment charges of $15 million related to the Jimmy Choo Retail and Wholesale brand intangible assets that have remaining balances of $151 million and $53 million, respectively.

Further, based on the results of these assessments, we determined that there was no impairment for the Versace Licensing reporting unit goodwill as the fair value exceeded the related carrying value. However, the fair value of the Versace Retail and Wholesale reporting units goodwill and Retail and Wholesale brand indefinite-lived intangible assets did not exceed their related carrying amounts. These impairment charges were primarily related to a decline in revenue driven by softening demand globally for fashion luxury goods as well as strategic initiatives previously put in place at Versace that did not perform as expected. Accordingly, we recorded goodwill impairment charges of $364 million related to the Versace Retail and Wholesale reporting units goodwill that have remaining balances of $101 million and $23 million, respectively. We also recorded impairment charges of $216 million related to the Versace Retail and Wholesale brand intangible assets that have remaining balances of $365 million and $88 million, respectively.

Lastly, based on a 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, were not impaired. The impairment charges were recorded within impairment of assets on our consolidated statement of operations and comprehensive (loss) income for the period ended March 29, 2025.

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During the fourth quarter of Fiscal 2025, we performed our annual goodwill and indefinite-lived intangible asset impairment assessment for our Versace, Jimmy Choo and Michael Kors reporting units using a qualitative assessment. In performing this assessment, we identified and considered the significance of relevant key factors, events and circumstances that affected the fair values and/or carrying amounts of its reporting units. These factors included external factors such as macroeconomic, industry and market conditions, as well as entity-specific factors, such as our actual and expected financial performance. Additionally, we also considered the results of our most recent quantitative goodwill impairment test which was performed during the third quarter of Fiscal 2025 as noted above. Based on the results of our qualitative impairment assessment, we concluded that it is more likely than not that the fair value of the Versace, Jimmy Choo and Michael Kors reporting units exceeded their carrying values and, therefore, were not impaired.

In Fiscal 2024, we recorded goodwill impairment charges of $192 million related to the Jimmy Choo Retail and Wholesale reporting units, $70 million related to the Jimmy Choo Retail and Wholesale brand intangible assets and $227 million related to the Versace Retail and Wholesale brand intangible assets. In Fiscal 2023, we recorded goodwill impairment charges of $82 million related to the Jimmy Choo Retail and Wholesale reporting units and $24 million related to the Jimmy Choo brand intangible assets. 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 30, 2024 and April 1, 2023, respectively. See Note 9 to the accompanying financial statements for information relating to the annual impairment analysis performed during Fiscal 2025, Fiscal 2024 and Fiscal 2023.

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. Such changes could result in a future impairment charge of goodwill or other indefinite-lived intangible assets.

Share-based Compensation

We grant share-based awards to certain of our employees and directors. The closing market price at the grant date is used to determine the grant date fair value of restricted share units (“RSUs”) and performance-based RSUs. These values are recognized as expense over the requisite service period, net of estimated forfeitures, based on expected attainment of pre-established performance goals for performance grants, or the passage of time for those grants which have only time-based vesting requirements. Compensation expense for performance-based RSUs is recognized over the employees’ requisite service period when attainment of the performance goals is deemed probable, which involves judgment as to achievement of certain performance metrics. The grant date fair value of share options is calculated using the Black-Scholes option pricing model, which requires us to use subjective assumptions.

We use our own historical experience in determining the expected holding period and volatility of our time-based share option awards. Determining the grant date fair value of share options requires considerable judgment, including estimating expected volatility, expected term, risk-free rate and forfeitures. If factors change and we employ different assumptions, the fair value of future awards and resulting share-based compensation expense may differ significantly from what we have estimated in the past.

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Derivative Financial Instruments

Forward Foreign Currency Exchange Contracts

We use forward foreign currency exchange contracts to manage our exposure to fluctuations in foreign currency for certain transactions. We, in our normal course of business, enter into transactions with foreign suppliers and seek to minimize risks related to these transactions. We employ these contracts to hedge our cash flows, as they relate to foreign currency transactions. 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.

We designate certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges. Formal hedge documentation is prepared for all derivative instruments designated as hedges, including a description of the hedged item and the hedging instrument and the risk being hedged. 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. 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. We use 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. For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency loss in our consolidated statements of operations and comprehensive (loss) income. 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.

We are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. 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. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign transaction they are intended to hedge.

Net Investment Hedges

We also use cross currency swap agreements to hedge our net investments in foreign operations against future volatility in the exchange rates between different currencies. We have elected the spot method of designating these contracts under ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”, and have designated these contracts as net investment hedges. 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. Interest accruals and coupon payments are recognized directly in interest (income) expense, net, in our consolidated statements of operations and comprehensive (loss) income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold or liquidated.

We are exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. 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.

As of March 30, 2024, we had $2.5 billion of hedges outstanding to hedge our net investment in Swiss Franc (“CHF”) denominated subsidiaries, of which we will exchange semi-annual fixed rate payments on United States dollar notional amounts for fixed rate payments of 0.0% in CHF. During the first quarter of Fiscal 2025, we entered into additional fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $450 million, of which we will exchange monthly fixed rate payments on United States dollar notional amounts for fixed rate payments of 0.0% in CHF.

During the second quarter of Fiscal 2025, we terminated multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $325 million related to our net investment in CHF denominated subsidiaries which resulted in us receiving an immaterial amount of cash. Subsequently, we entered into multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $325 million related to our net investment in CHF denominated subsidiaries, of which we will exchange monthly fixed rate payments on United States dollar notional amounts for fixed rate payments of 0.0% in CHF.

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During the fourth quarter of Fiscal 2025, we entered into additional fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $550 million, of which we will exchange monthly fixed rate payments on United States dollar notional amounts for fixed rate payments of 0.0% in CHF. As of March 29, 2025, we had $3.5 billion of hedges outstanding to hedge our net investment in CHF denominated subsidiaries. These contracts have maturity dates between July 2025 and October 2030 and are designated as net investment hedges.

As of March 30, 2024, we had $1.35 billion of cross-currency hedges outstanding related to our net investment in Euro denominated subsidiaries, of which $1 billion was related to float-to-float cross-currency hedges and $350 million was related to fixed-to-fixed cross currency hedges. During the first quarter of Fiscal 2025, we entered into additional fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $534 million, of which we will exchange monthly fixed rate payments on United States dollar notional amounts for fixed rate payments of 0.0% in Euro. During the second quarter of Fiscal 2025, we entered into additional fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $500 million, of which we will exchange monthly fixed rate payments on United States dollar notional amounts for fixed rate payments of 0.0% in Euro.

During the third quarter of Fiscal 2025, we terminated our float-to-float cross-currency swap agreements with an aggregate notional amount of $1 billion, which resulted in us receiving $42 million of cash. These were subsequently replaced by fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $1 billion related to our net investment in Euro denominated subsidiaries, of which we will exchange monthly fixed rate payments on United States dollar notional amounts for fixed rate payments of 0.0% in Euro.

During the fourth quarter of Fiscal 2025, we terminated our fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $2.384 billion, which resulted in the receipt of $42 million of cash. These were subsequently replaced by fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $2.364 billion related to our net investment in Euro denominated subsidiaries, of which we will exchange monthly fixed rate payments on United States dollar notional amounts for fixed rate payments of 0.0% in Euro. As of March 29, 2025, we had $2.364 billion of fixed-to-fixed cross-currency hedges outstanding related to our net investment in Euro denominated subsidiaries. These contracts have maturity dates between January 2027 and July 2031 and have been designated as net investment hedges.

When a cross-currency swap is used as a hedging instrument in a net investment hedge assessed under the spot method, the cross-currency basis spread is excluded from the assessment of hedge effectiveness and is recognized as a reduction in interest income in our consolidated statements of operations and comprehensive (loss) income. Accordingly, we recorded interest income of $117 million, $95 million and $38 million, respectively, during Fiscal 2025, Fiscal 2024 and Fiscal 2023.

The net gain or loss on net investment hedges are reported within CTA as a component of accumulated other comprehensive income on our consolidated balance sheets. Upon discontinuation of the hedge, such amounts remain in CTA until the related net investment is sold or liquidated.

Interest Rate Swaps

During the second quarter of Fiscal 2025, we entered into multiple interest rate swaps with aggregate notional amounts of €800 million. The swaps were designed to mitigate the impact of adverse interest rate fluctuations for a portion of our variable rate debt. €500 million of the total interest rate swaps entered into relate to our Senior Revolving Credit Facility expiring July 2027. The remaining €300 million of the interest rate swaps entered into relate to our Versace Term Loan expiring December 2025. During the fourth quarter of Fiscal 2025, we terminated our interest rate swaps to coincide with our debt refinancing and paid $13 million. As of both March 29, 2025 and March 30, 2024, we did not have any interest rate swap agreements outstanding. See Note 12 for further detail on our debt refinancing.

When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive income and are reclassified into interest (income) expense, net, in the same period in which the hedged transactions affect earnings. During Fiscal 2025, we recorded $1 million of interest income related to this agreement. As of March 30, 2024, we did not have interest income related to interest rate swap agreements as they were entered into during the second quarter of Fiscal 2025.

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Fair Value Hedges

We are exposed to transaction risk from foreign currency exchange rate fluctuations with respect to various cross-currency intercompany loans which will impact earnings on a consolidated basis. To manage the foreign currency exchange rate risk related to these balances, we previously entered into cross-currency swap agreements to hedge our exposure in GBP denominated subsidiaries on Euro denominated intercompany loans. As of March 29, 2025 and March 30, 2024, there were no fair value hedges outstanding.

When a cross-currency swap is designated as a fair value hedge and qualifies as highly effective, the fair value hedge will be recorded at fair value each period on our consolidated balance sheets, with the difference resulting from the changes in the spot rate recognized in foreign currency loss on our consolidated statements of operations and comprehensive (loss) income, which will offset the earnings impact of the underlying transaction being hedged. If the fair value hedge is terminated and the underlying intercompany loans are settled, the accumulated other comprehensive income (“AOCI”) remaining from the hedge at the time of termination will be reclassified to foreign currency loss on our consolidated statements of operations and comprehensive (loss) income.

In the fourth quarter of Fiscal 2024, we settled its Euro denominated intercompany loan and recognized $14 million of foreign currency loss within our consolidated statements of operations and comprehensive (loss) income from AOCI. The Company recorded a foreign currency gain of $28 million in foreign currency loss within the Company’s consolidated statements of operations and comprehensive (loss) income during Fiscal 2024 from the GBP Fair Value Hedge which offset translation losses from the underlying transaction.

Income Taxes

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. We periodically assess the realizability of deferred tax assets and the adequacy of deferred tax liabilities, based on the results of local, state, federal or foreign statutory tax audits or our own estimates and judgments.

Realization of deferred tax assets associated with net operating loss and tax credit carryforwards is dependent upon generating sufficient taxable income prior to their expiration in the applicable tax jurisdiction. We periodically review the recoverability of our deferred tax assets and record valuation allowances as deemed necessary to reduce deferred tax assets to amounts that more-likely-than-not will be realized. This determination involves considerable judgment and our management considers many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within various tax jurisdictions, expectations of future taxable income, the carryforward periods remaining and other factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Deferred tax assets could be reduced in the future if our estimates of taxable income during the carryforward period are significantly reduced or alternative tax strategies are no longer viable.

We recognize the impact of an uncertain income tax position taken on our income tax returns at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authorities. 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. Our tax positions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those positions. We record interest and penalties payable to relevant tax authorities as income tax expense.

New Accounting Pronouncements

Please refer to Note 3 to the accompanying consolidated financial statements for detailed information relating to recently adopted and recently issued accounting pronouncements and the associated impacts.

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Results of Operations

A discussion regarding our results of operations for Fiscal 2025 compared to Fiscal 2024 is presented below. A discussion regarding our results of operations for Fiscal 2024 compared to Fiscal 2023 can be found under Item 7 in our Annual Report on Form 10-K for the year ended March 30, 2024, filed with the SEC on May 29, 2024.

Comparison of Fiscal 2025 with Fiscal 2024

The following table details the results of our operations for Fiscal 2025 and Fiscal 2024 and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended","","$ Change","","% Change","","% of Total Revenue for Fiscal Year Ended"],["","March 29, 2025","","March 30, 2024","","","","March 29, 2025","","March 30, 2024"],["Statements of Operations Data:"],["Total revenue","$","4,442","","","$","5,170","","","$","(728)","","","(14.1)","%"],["Cost of goods sold","1,616","","","1,831","","","(215)","","","(11.7)","%","","36.4","%","","35.4","%"],["Gross profit","2,826","","","3,339","","","(513)","","","(15.4)","%","","63.6","%","","64.6","%"],["Selling, general and administrative expenses","2,581","","","2,784","","","(203)","","","(7.3)","%","","58.1","%","","53.8","%"],["Depreciation and amortization","193","","","188","","","5","","","2.7","%","","4.3","%","","3.6","%"],["Impairment of assets","797","","","575","","","222","","","38.6","%","","17.9","%","","11.1","%"],["Restructuring and other expense","7","","","33","","","(26)","","","(78.8)","%","","0.2","%","","0.6","%"],["Total operating expenses","3,578","","","3,580","","","(2)","","","(0.1)","%","","80.5","%","","69.2","%"],["Loss from operations","(752)","","","(241)","","","(511)","","","NM","","(16.9)","%","","(4.7)","%"],["Other expense (income), net","8","","","(1)","","","9","","","NM","","0.2","%","","\u2014","%"],["Interest (income) expense, net","(37)","","","6","","","(43)","","","NM","","(0.8)","%","","0.1","%"],["Foreign currency loss","4","","","37","","","(33)","","","(89.2)","%","","0.1","%","","0.7","%"],["Loss before provision (benefit) for income taxes","(727)","","","(283)","","","(444)","","","NM","","(16.4)","%","","(5.5)","%"],["Provision (benefit) for income taxes","452","","","(54)","","","506","","","NM","","10.2","%","","(1.0)","%"],["Net loss","(1,179)","","","(229)","","","(950)","","","NM"],["Less: Net income attributable to noncontrolling interests","3","","","\u2014","","","3","","","NM"],["Net loss attributable to Capri","$","(1,182)","","","$","(229)","","","$","(953)","","","NM"]]
[[/GREPCENT_TABLE]]

NM Not meaningful

Total Revenue

Total revenue decreased $728 million, or 14.1%, to $4.442 billion for Fiscal 2025, compared to $5.170 billion for Fiscal 2024, which included net unfavorable foreign currency effects of $32 million as a result of the strengthening of the United States dollar compared to all major currencies in which we operate. On a constant currency basis, our total revenue decreased $696 million, or 13.5%. The decrease is primarily attributable to an overall slowdown in demand for luxury fashion goods globally, as well as the result of certain strategic initiatives previously put in place at Versace and Michael Kors that did not perform as expected.

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[[GREPCENT_TABLE]]
[["","Fiscal Years Ended","","","","% Change"],["(in millions)","March 29, 2025","","March 30, 2024","","$ Change","","As Reported","","Constant Currency"],["Versace","$","821","","","$","1,030","","","$","(209)","","","(20.3)","%","","(19.6)","%"],["Jimmy Choo","605","","","618","","","(13)","","","(2.1)","%","","(1.5)","%"],["Michael Kors","3,016","","","3,522","","","(506)","","","(14.4)","%","","(13.8)","%"],["Total revenue","$","4,442","","","$","5,170","","","$","(728)","","","(14.1)","%","","(13.5)","%"]]
[[/GREPCENT_TABLE]]

•Versace revenues decreased $209 million, or 20.3%, to $821 million during Fiscal 2025, compared to $1.030 billion for Fiscal 2024, which included unfavorable foreign currency effects of $7 million. On a constant currency basis, revenue decreased $202 million, or 19.6%, primarily due to softening demand globally for fashion luxury goods along with strategic initiatives previously put in place at Versace that did not perform as expected.

•Jimmy Choo revenues decreased $13 million, or 2.1%, to $605 million during Fiscal 2025, compared to $618 million for Fiscal 2024, which included unfavorable foreign currency effects of $4 million. On a constant currency basis, revenue decreased $9 million, or 1.5%, primarily attributable to softening demand globally for fashion luxury goods partially offset by higher revenues in EMEA.

•Michael Kors revenues decreased $506 million, or 14.4%, to $3.016 billion during Fiscal 2025, compared to $3.522 billion for Fiscal 2024, which included unfavorable foreign currency effects of $21 million. On a constant currency basis, revenue decreased $485 million, or 13.8%, primarily due to softening demand globally for fashion luxury goods, as well as the result of certain strategic initiatives previously put in place at Michael Kors that did not perform as expected.

See Note 4 to the accompanying consolidated financial statements for additional information.

Gross Profit

Gross profit decreased $513 million, or 15.4%, to $2.826 billion during Fiscal 2025, compared to $3.339 billion for Fiscal 2024, which included net unfavorable foreign currency effects of $17 million. Gross profit as a percentage of total revenue decreased 100 basis points to 63.6% during Fiscal 2025, compared to 64.6% during Fiscal 2024. The 100 basis point decrease in gross profit margin was primarily attributable to lower full price sell-throughs and unfavorable geographic revenue mix, partially offset by favorable channel mix of approximately 100 basis points.

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended"],["(in millions)","March 29, 2025","","March 30, 2024","","$ Change","","% Change"],["Gross Profit:"],["Versace","$","575","","","$","724","","","$","(149)","","","(20.6)","%"],["Jimmy Choo","405","","","426","","","(21)","","","(4.9)","%"],["Michael Kors","1,846","","","2,189","","","(343)","","","(15.7)","%"],["Total gross profit","$","2,826","","","$","3,339","","","$","(513)","","","(15.4)","%"],["Gross Profit Margin:"],["Versace","70.0","%","","70.3","%"],["Jimmy Choo","66.9","%","","68.9","%"],["Michael Kors","61.2","%","","62.2","%"]]
[[/GREPCENT_TABLE]]

•Versace gross profit decreased $149 million, or 20.6%, to $575 million during Fiscal 2025, compared to $724 million for Fiscal 2024. Gross profit as a percentage of total revenue decreased 30 basis points to 70.0% during Fiscal 2025, compared to 70.3% during Fiscal 2024. The 30 basis point decrease in gross profit margin was attributable to lower full price sell-throughs substantially offset by favorable channel mix compared to the prior year.

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•Jimmy Choo gross profit decreased $21 million, or 4.9%, to $405 million during Fiscal 2025, compared to $426 million for Fiscal 2024. Gross profit as a percentage of total revenue decreased 200 basis points to 66.9% during Fiscal 2025, compared to 68.9% during Fiscal 2024. The 200 basis point decrease in gross profit margin was primarily attributable to the unfavorable impact of the Sicla Acquisition on gross margin due to third party sales which typically carry lower manufacturer margins and lower full price sell-throughs compared to the prior year.

•Michael Kors gross profit decreased $343 million, or 15.7%, to $1.846 billion during Fiscal 2025, compared to $2.189 billion for Fiscal 2024. Gross profit as a percentage of total revenue decreased 100 basis points to 61.2% during Fiscal 2025, compared to 62.2% during Fiscal 2024. The 100 basis point decrease in gross profit margin was primarily attributable to lower full price sell-throughs and unfavorable geographic revenue mix partially offset by favorable channel mix of approximately 50 basis points.

Total Operating Expenses

Total operating expenses decreased $2 million, or 0.1%, to $3.578 billion during Fiscal 2025, compared to $3.580 billion for Fiscal 2024. Our operating expenses included a net favorable foreign currency impact of approximately $18 million. Total operating expenses as a percentage of total revenue increased to 80.5% in Fiscal 2025, compared to 69.2% in Fiscal 2024. The components that comprise total operating expenses are detailed below.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $203 million, or 7.3%, to $2.581 billion during Fiscal 2025, compared to $2.784 billion for Fiscal 2024, primarily due to lower marketing spend, lower retail store costs and decreased unallocated corporate expenses.

As a percentage of total revenue, selling, general and administrative expenses increased to 58.1% during Fiscal 2025, compared to 53.8% for Fiscal 2024, primarily due to deleveraging of expenses on lower revenues.

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended"],["(in millions)","March 29, 2025","","March 30, 2024","","$ Change","","% Change"],["Selling, general and administrative expenses:"],["Versace","$","571","","","$","644","","","$","(73)","","","(11.3)","%"],["Jimmy Choo","393","","","394","","","(1)","","","(0.3)","%"],["Michael Kors","1,426","","","1,473","","","(47)","","","(3.2)","%"],["Corporate","191","","","273","","","(82)","","","(30.0)","%"],["Total selling, general and administrative expenses","$","2,581","","","$","2,784","","","$","(203)","","","(7.3)","%"]]
[[/GREPCENT_TABLE]]

•Versace selling, general and administrative expenses decreased $73 million, or 11.3%, to $571 million during Fiscal 2025, compared to $644 million for Fiscal 2024. This decrease was primarily due to lower marketing expense, particularly related to the timing of the fall fashion show, as well as a decrease in store related expenses and personnel expenses from cost savings initiatives compared to the prior year.

•Jimmy Choo selling, general and administrative expenses decreased $1 million, or 0.3%, to $393 million during Fiscal 2025, compared to $394 million for Fiscal 2024. The decrease was primarily due to lower marketing expenses partially offset by increased retail store costs compared to the prior year.

•Michael Kors selling, general and administrative expenses decreased $47 million, or 3.2%, to $1.426 billion during Fiscal 2025, compared to $1.473 billion for Fiscal 2024. The decrease was primarily due to lower personnel expenses from cost savings initiatives and retail store related costs.

Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, decreased $82 million, or 30.0%, to $191 million for Fiscal 2025,

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compared to $273 million for Fiscal 2024, primarily due to a decrease in professional fees and information technology costs related to certain Capri transformation projects which are now complete.

Depreciation and Amortization

Depreciation and amortization increased $5 million, or 2.7%, to $193 million during Fiscal 2025, compared to $188 million for Fiscal 2024. Depreciation and amortization increased to 4.3% as a percentage of total revenue during Fiscal 2025, compared to 3.6% for Fiscal 2024. The increase in depreciation and amortization expense was primarily attributable to information technology assets associated with Capri transformation projects which are now in service.

Impairment of Assets

During Fiscal 2025, we recognized asset impairment charges of $797 million, primarily related to the impairment of the Versace Retail and Wholesale and Jimmy Choo Wholesale reporting units’ goodwill and Versace and Jimmy Choo brand intangible assets as well as operating lease right-of-use assets at certain Versace, Jimmy Choo and Michael Kors store locations. During Fiscal 2024, we recognized asset impairment charges of approximately $575 million, primarily related to the impairment of the Jimmy Choo Retail and Wholesale reporting units’ goodwill and Versace and Jimmy Choo brand intangible assets as well as the impairment of operating lease right-of-use assets at certain Versace, Jimmy Choo and Michael Kors store locations (see Note 14 to the accompanying consolidated financial statements for additional information).

Restructuring and Other Expense

During Fiscal 2025, we recognized restructuring and other expense of $7 million, primarily related to severance and store closure costs, partially offset by gains on lease terminations. During Fiscal 2024, we recognized restructuring and other expense of $33 million, primarily relating to severance costs in connection with the Global Optimization Plan and equity awards associated with the acquisition of Versace partially offset by a $10 million gain on the sale of a long-lived corporate asset (see Note 11 to the accompanying consolidated financial statements for additional information).

Loss from Operations

As a result, loss from operations was $752 million during Fiscal 2025, compared to $241 million for Fiscal 2024. Loss from operations as a percentage of total revenue was 16.9% in Fiscal 2025, compared to 4.7% in Fiscal 2024.

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended"],["(in millions)","March 29, 2025","","March 30, 2024","","$ Change","","% Change"],["Loss from operations:"],["Versace","$","(54)","","","$","25","","","$","(79)","","","NM"],["Jimmy Choo","(17)","","","3","","","(20)","","","NM"],["Michael Kors","341","","","634","","","(293)","","","NM"],["","270","","","662","","","(392)","","","(59.2)","%"],["Unallocated corporate and other expenses, net (1)","(1,022)","","","(903)","","","119","","","13.2","%"],["Loss from operations","$","(752)","","","$","(241)","","","$","(273)","","","NM"],["Operating Margin:"],["Versace","(6.6)","%","","2.4","%"],["Jimmy Choo","(2.8)","%","","0.5","%"],["Michael Kors","11.3","%","","18.0","%"],["Capri","(16.9)","%","","(4.7)","%"]]
[[/GREPCENT_TABLE]]

(1)Certain corporate costs are not directly attributable to our brands and, therefore, are not allocated to segments. See Note 20 to the accompanying consolidated financial statements for additional information.

•Versace recorded a loss from operations of $54 million for Fiscal 2025, compared to income of $25 million for Fiscal 2024. Operating margin decreased from 2.4% for Fiscal 2024, to an operating loss of 6.6% for Fiscal 2025, primarily due to deleveraging of operating expenses on lower revenues partially offset by lower marketing expenses compared to the prior year as noted above.

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•Jimmy Choo recorded a loss from operations of $17 million for Fiscal 2025, compared to income of $3 million for Fiscal 2024. Operating margin decreased from 0.5% for Fiscal 2024, to an operating loss of 2.8% for Fiscal 2025, primarily due to the unfavorable impact of the Sicla Acquisition on gross margin due to third party sales which typically carry lower manufacturer margins and increased retail store costs compared to the prior year as noted above.

•Michael Kors recorded income from operations of $341 million for Fiscal 2025, compared to $634 million for Fiscal 2024. Operating margin decreased from 18.0% for Fiscal 2024, to 11.3% for Fiscal 2025, due to lower full price sell-throughs as well as the deleveraging of operating expenses on lower revenues compared to the prior year as noted above.

Other Expense (Income), net

We recognized $8 million of other expense during Fiscal 2025 compared to $1 million of other income during Fiscal 2024. The $8 million of other expense recognized during Fiscal 2025 related to non-income taxes associated with certain legal entity restructuring activities.

Interest (Income) Expense, net

We recognized $37 million of interest income during Fiscal 2025 compared to $6 million of interest expense during Fiscal 2024. The $43 million improvement in interest (income) expense, net, is primarily due to higher interest income earned from our net investment hedges and lower average borrowings and effective interest rates on our outstanding debt (see Note 12 and Note 15 to the accompanying consolidated financial statements for additional information).

Foreign Currency Loss

During Fiscal 2025, we recognized a net foreign currency loss of $4 million primarily attributable to the remeasurement of intercompany loans with certain of our subsidiaries. During Fiscal 2024, we recognized a net foreign currency loss of $37 million primarily attributable to the remeasurement of an intercompany loan associated with restructuring activities to rationalize certain legal entities within our structure and a loss related to the termination of a GBP fair value hedge.

Provision (Benefit) for Income Taxes

During Fiscal 2025, we recognized $452 million of an income tax provision on a pre-tax loss of $727 million compared with $54 million of income tax benefit on a pre-tax loss of $283 million for Fiscal 2024. Our effective tax rate for Fiscal 2025 compared to our effective tax rate in Fiscal 2024 is not a meaningful metric due to the increased pre-tax loss for Fiscal 2025. The income tax provision of $452 million was primarily related to the full valuation allowance recorded against the Company's net deferred tax assets (see Note 18 to the accompanying consolidated financial statements for additional information).

On January 10, 2025, the United States Treasury and the IRS issued final regulations that address several long-standing issues related to dual consolidated losses and introduce new rules for disregarded payment losses. The changes related to disregarded payment losses could impact how we utilize certain deductions and losses to offset our U.S. income as part of our global financing activities beginning in Fiscal 2027. We will continue to evaluate its impact as further information becomes available.

Our effective tax rate may fluctuate from time to time due to the effects of changes in United States federal, state and local taxes and tax rates in foreign jurisdictions. In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.

Net Loss Attributable to Capri

As a result of the above, during Fiscal 2025 our net loss attributable to Capri was $1.182 billion, compared to $229 million for Fiscal 2024.

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Liquidity and Capital Resources

Our primary sources of liquidity are the cash flows generated from our operations, along with borrowings available under our credit facilities (see below discussion regarding “Revolving Credit Facilities”) and available cash and cash equivalents. Our primary use of this liquidity is to fund the ongoing cash requirements, including our working capital needs and capital investments in our business, debt repayments, acquisitions, returns of capital, including share repurchases and other corporate activities. We believe that the cash generated from our operations, together with borrowings available under our revolving credit facilities and available cash and cash equivalents, will be sufficient to meet our working capital needs for the next 12 months and beyond, including investments made and expenses incurred in connection with our store opening and renovation plans, investments in corporate and distribution facilities, continued IT system development, e-commerce and marketing initiatives. We spent $128 million on capital expenditures during Fiscal 2025 and expect to spend approximately $110 million during Fiscal 2026. The majority of the Fiscal 2025 expenditures related to our retail operations (including e-commerce), enhancements to Information Technology systems and the Capri transformation program.

The Capri transformation program represents a multi-year, multi-project initiative extending through Fiscal 2026 intended to improve the operating effectiveness and efficiency of our organization by creating best in class shared platforms across our brands and by expanding our digital capabilities. These initiatives cover multiple aspects of our operations including supply chain, marketing, omni-channel customer experience, e-commerce, data analytics and IT infrastructure. During Fiscal 2024, some transformation projects were paused and we will re-assess this program, along with related timing, in Fiscal 2026.

The following table sets forth key indicators of our liquidity and capital resources (in millions):

[[GREPCENT_TABLE]]
[["","As of"],["","March 29, 2025","","March 30, 2024"],["Balance Sheet Data:"],["Cash and cash equivalents","$","166","","","$","199"],["Working capital","$","185","","","$","(87)"],["Total assets","$","5,213","","","$","6,689"],["Short-term debt","$","24","","","$","462"],["Long-term debt","$","1,476","","","$","1,261"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended"],["","March 29, 2025","","March 30, 2024","","April 1, 2023"],["Cash flows provided by (used in):"],["Operating activities","$","281","","","$","309","","","$","771"],["Investing activities","(53)","","","(135)","","","183"],["Financing activities","(242)","","","(208)","","","(776)"],["Effect of exchange rate changes","(16)","","","(17)","","","(94)"],["Net (decrease) increase in cash, cash equivalents and restricted cash","$","(30)","","","$","(51)","","","$","84"]]
[[/GREPCENT_TABLE]]

Cash Provided by Operating Activities

Net cash provided by operating activities was $281 million during Fiscal 2025, as compared to $309 million for Fiscal 2024. The decrease in net cash provided by operating activities was primarily attributable to a decrease in our net income after non-cash adjustments and stabilization of inventory levels, partially offset by timing of payments due to improved management of Accounts Payable and Accounts Receivable in the current year.

Net cash provided by operating activities was $309 million during Fiscal 2024, as compared to $771 million for Fiscal 2023. The decrease in net cash provided by operating activities were primarily attributable to a decrease in our net income after non-cash adjustments which includes significant transformation costs for projects which are largely complete. In addition, our net cash provided by operating activities benefited from lower inventory levels, partially offset by unfavorable decreases in accounts payable and accrued expenses.

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Cash (Used In) Provided by Investing Activities

Net cash used in investing activities was $53 million during Fiscal 2025, as compared to net cash used in investing activities of $135 million during Fiscal 2024. The decrease in net cash used in investing activities was primarily attributable to an increase in cash received from the settlement of net investment hedges of $30 million and lower capital expenditures of $61 million due to information technology assets associated with Capri transformation projects which are now in service, partially offset by $9 million of acquisition related payments compared to prior year.

Net cash used in investing activities was $135 million during Fiscal 2024, as compared to net cash provided by investing activities of $183 million during Fiscal 2023. The increase in net cash used in investing activities were primarily attributable to the lower settlement of net investment hedges of $355 million, partially offset by lower capital expenditures of $37 million compared to prior year.

Cash (Used in) Financing Activities

Net cash used in financing activities was $242 million during Fiscal 2025, as compared to $208 million during Fiscal 2024. The increase in cash used in financing activities of $34 million was primarily attributable to higher net debt payments of $116 million and termination payments related to interest rate swaps of $13 million, partially offset by a decrease in cash used to repurchase our ordinary shares of $103 million compared to prior year.

Net cash used in financing activities was $208 million during Fiscal 2024, as compared to $776 million during Fiscal 2023. The decrease in cash used in financing activities of $568 million was primarily attributable to a decrease in cash payments to repurchase our ordinary shares of $1.257 billion, offset by lower net debt borrowings of $689 million compared to prior year.

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Debt Facilities

The following table presents a summary of our borrowing capacity and amounts outstanding as of March 29, 2025 and March 30, 2024 (in millions):

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended"],["","March 29, 2025","","March 30, 2024"],["Revolving Credit Facility (1)"],["Total availability","$","1,500","","","$","1,500"],["Borrowings outstanding (2)","755","","","764"],["Letter of credit outstanding","1","","","2"],["Remaining availability","$","744","","","$","734"],["2025 Term Loans"],["Borrowings outstanding, net of debt issuance costs (3)","$","706","","","$","\u2014"],["Versace Term Loan (450 Million Euro)"],["Borrowings outstanding, net of debt issuance costs (3)","$","\u2014","","","$","485"],["Senior Notes due 2024"],["Borrowings outstanding, net of debt issuance costs and discount amortization (2)","$","\u2014","","","$","450"],["Other Borrowings (4)","$","39","","","$","24"],["Hong Kong Uncommitted Credit Facility:"],["Total availability (45 million and 70 million Hong Kong Dollars) (5)","$","6","","","$","9"],["Borrowings outstanding","\u2014","","","\u2014"],["Remaining availability (45 million and 70 million Hong Kong Dollars)","$","6","","","$","9"],["China Uncommitted Credit Facility:"],["Total availability (75 million Chinese Yuan) (5)","$","10","","","$","10"],["Borrowings outstanding","\u2014","","","\u2014"],["Total and remaining availability (75 million Chinese Yuan)","$","10","","","$","10"],["Japan Credit Facility:"],["Total availability (1.0 billion Japanese Yen)","$","7","","","$","7"],["Borrowings outstanding","\u2014","","","\u2014"],["Remaining availability (1.0 billion Japanese Yen)","$","7","","","$","7"],["Versace Uncommitted Credit Facilities:"],["Total availability (25 million and 40 million Euro) (5)","$","27","","","$","43"],["Borrowings outstanding","\u2014","","","\u2014"],["Remaining availability (25 million and 40 million Euro)","$","27","","","$","43"],["Total borrowings outstanding (1)","$","1,500","","","$","1,723"],["Total remaining availability","$","794","","","$","803"]]
[[/GREPCENT_TABLE]]

(1)The financial covenant in our 2025 Credit Facilities requires us to comply with a quarterly maximum net leverage ratio test of 4.0 to 1.0. The Revolving Credit Facility excludes up to a $750 million and $500 million accordion feature as of March 29, 2025 and March 30, 2024, respectively. As of March 29, 2025 and March 30, 2024, we were in compliance with all covenants related to our agreements then in effect governing our debt. See Note 12 to the accompanying consolidated financial statements for additional information.

(2)As of March 29, 2025 and March 30, 2024, all amounts are recorded as long-term debt in our consolidated balance

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sheets, besides the Senior Notes, due in November 2024, which are recorded within short-term debt on our consolidated balance sheets as of March 30, 2024.

(3)During the fourth quarter of Fiscal 2025, we entered into the Amended and Restated Credit Agreement. As of March 29, 2025 and March 30, 2024, all amounts are recorded as long-term debt in our consolidated balance sheets. See Note 12 to the accompanying consolidated financial statements for additional information.

(4)The balance as of March 29, 2025 primarily consists of $24 million related to our supplier financing program recorded within short-term debt in our consolidated balance sheets, $10 million related to the sale of certain Versace tax receivables recorded as long-term debt in our consolidated balance sheets and $5 million of other loans recorded as long-term debt on our consolidated balance sheets. The balance as of March 30, 2024 consists of $11 million related to our supplier finance program recorded within short-term debt on our consolidated balance sheets, $11 million related to the sale of certain Versace tax receivables, with $1 million and $10 million recorded within short-term debt and long-term debt, respectively, and $2 million of other loans recorded as long-term debt on our consolidated balance sheets.

(5)The balance as of March 29, 2025 and March 30, 2024 represents the total availability of the credit facility, which excludes bank guarantees.

We believe that our 2025 Credit Facilities is adequately diversified with no undue concentration in any one financial institution. As of March 29, 2025, there were 17 financial institutions participating in the facility, with none maintaining a maximum commitment percentage in excess of 10%. We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the 2025 Credit Facilities.

See Note 12 in the accompanying consolidated financial statements for detailed information relating to our credit facilities and debt obligations.

Share Repurchase Program

The following table presents our treasury share repurchases during the fiscal years ended March 29, 2025 and March 30, 2024 (dollars in millions):

[[GREPCENT_TABLE]]
[["","Fiscal Years Ended"],["","March 29, 2025","","March 30, 2024"],["Cost of shares repurchased under share repurchase program","$","\u2014","","","$","100"],["Fair value of shares withheld to cover tax obligations for vested restricted share awards","4","","","7"],["Total cost of treasury shares repurchased","$","4","","","$","107"],["Shares repurchased under share repurchase program","\u2014","","","2,637,102"],["Shares withheld to cover tax withholding obligations","117,710","","","185,133"],["","117,710","","","2,822,235"]]
[[/GREPCENT_TABLE]]

On November 9, 2022, we announced that our Board of Directors approved a two-year share repurchase program to purchase up to $1.0 billion of our outstanding ordinary shares. Share repurchases may be made in open market or privately negotiated transactions and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors. However, pursuant to the terms of the previously terminated Merger Agreement, and subject to certain limited exceptions, we were prohibited from repurchasing our ordinary shares other than the acceptance of our ordinary shares as payment of the exercise price of our options or for withholding taxes with respect of our equity awards. Accordingly, we did not repurchase any of our ordinary shares during the pendency of the Merger Agreement pursuant to the share repurchase program. The share repurchase program expired on November 9, 2024.

See Note 16 to the accompanying consolidated financial statements for additional information.

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Contractual Obligations and Commercial Commitments

As of March 29, 2025, our contractual obligations and commercial commitments were as follows (in millions):

[[GREPCENT_TABLE]]
[["Fiscal Years","Fiscal2026","","Fiscal2027-2028","","Fiscal2029-2030","","Fiscal2031 and Thereafter","","Total"],["Operating leases","$","420","","","$","588","","","$","373","","","$","501","","","$","1,882"],["Interest, net (1)","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Inventory purchase obligations","553","","","\u2014","","","\u2014","","","\u2014","","","553"],["Other commitments","61","","","25","","","\u2014","","","\u2014","","","86"],["Short-term debt","24","","","\u2014","","","\u2014","","","\u2014","","","24"],["Long-term debt","\u2014","","","1,482","","","\u2014","","","\u2014","","","1,482"],["Total","$","1,058","","","$","2,095","","","$","373","","","$","501","","","$","4,027"]]
[[/GREPCENT_TABLE]]

(1)Beginning in Fiscal 2026, we expect to be in a net interest income position, therefore, we would not expect to have interest obligations 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. In addition to the above amounts, we are typically required to pay real estate taxes, contingent rent based on sales volume and other occupancy costs relating to leased properties for our retail stores.

Interest, net represents the estimated net interest income from our net investment hedges and the estimated interest expense associated with our 2025 Credit Facilities based on their current interest rate.

Inventory purchase obligations represent contractual obligations for future purchases of inventory.

Other commitments include non-cancelable contractual obligations related to marketing and advertising agreements, information technology agreements and supply agreements.

The above table excludes current liabilities (other than short-term debt and short-term operating lease liabilities) recorded as of March 29, 2025, 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. In addition to the commitments in the above table, our off-balance sheet commitments relating to our outstanding letters of credit were $24 million at March 29, 2025, including $23 million in letters of credit issued outside of the 2025 Credit Facilities. In addition, as of March 29, 2025, bank guarantees of approximately $46 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.