CAPRI HOLDINGS LTD, 10-K filed on 7/8/2020
Annual Report
v3.20.2
Cover Page - USD ($)
12 Months Ended
Mar. 28, 2020
Jul. 01, 2020
Sep. 28, 2019
Cover [Abstract]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Mar. 28, 2020    
Document Transition Report false    
Entity File Number 001-35368    
Entity Incorporation, State or Country Code D8    
Entity Address, Address Line One 33 Kingsway    
Entity Address, City or Town London    
Entity Address, Country GB    
Entity Address, Postal Zip Code WC2B 6UF    
Country Region 44    
City Area Code 207    
Local Phone Number 632 8600    
Title of 12(b) Security Ordinary Shares, no par value    
Trading Symbol CPRI    
Security Exchange Name NYSE    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Public Float     $ 4,791,368,573
Entity Common Stock, Shares Outstanding   150,184,409  
Documents Incorporated by Reference The information required by Part III of this report, to the extent not set forth herein, is incorporated by reference from the Registrant’s definitive Proxy Statement, which will be filed in July 2020, for the 2020 Annual Meeting of the Shareholders.    
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
Entity Registrant Name CAPRI HOLDINGS LTD    
Entity Central Index Key 0001530721    
Current Fiscal Year End Date --03-28    
Amendment Flag false    
v3.20.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Mar. 28, 2020
Mar. 30, 2019
Current assets    
Cash and cash equivalents $ 592 $ 172
Receivables, net 308 383
Inventories, net 827 953
Prepaid expenses and other current assets 167 221
Total current assets 1,894 1,729
Property and equipment, net 561 615
Operating lease right-of-use assets 1,625  
Intangible assets, net 1,986 2,293
Goodwill 1,488 1,659
Deferred tax assets 225 112
Other assets 167 242
Total assets 7,946 6,650
Current liabilities    
Accounts payable 428 371
Accrued payroll and payroll related expenses 93 133
Accrued income taxes 42 34
Short-term operating lease liabilities 430  
Short-term debt 167 630
Accrued expenses and other current liabilities 241 374
Total current liabilities 1,401 1,542
Long-term operating lease liabilities 1,758  
Deferred rent   132
Deferred tax liabilities 465 438
Long-term debt 2,012 1,936
Other long-term liabilities 142 166
Total liabilities 5,778 4,214
Commitments and contingencies
Redeemable noncontrolling interest 0 4
Shareholders’ equity    
Ordinary shares, no par value; 650,000,000 shares authorized; 217,320,010 shares issued and 149,425,612 outstanding at March 28, 2020; 216,050,939 shares issued and 150,932,306 outstanding at March 30, 2019 0 0
Treasury shares, at cost (67,894,398 shares at March 28, 2020 and 65,118,633 shares at March 30, 2019) (3,325) (3,223)
Additional paid-in capital 1,085 1,011
Accumulated other comprehensive income (loss) 75 (66)
Retained earnings 4,332 4,707
Total shareholders’ equity of Capri 2,167 2,429
Noncontrolling interest 1 3
Total shareholders’ equity 2,168 2,432
Total liabilities and shareholders’ equity $ 7,946 $ 6,650
v3.20.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Mar. 28, 2020
Mar. 30, 2019
Statement of Financial Position [Abstract]    
Ordinary shares, par value (in dollars per share) $ 0 $ 0
Ordinary shares, shares authorized (in shares) 650,000,000 650,000,000
Ordinary shares, shares issued (in shares) 217,320,010 216,050,939
Ordinary shares, shares outstanding (in shares) 149,425,612 150,932,306
Treasury shares (in shares) 67,894,398 65,118,633
v3.20.2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME - USD ($)
$ in Millions
12 Months Ended
Mar. 28, 2020
Mar. 30, 2019
Mar. 31, 2018
Income Statement [Abstract]      
Total revenue $ 5,551 $ 5,238 $ 4,719
Cost of goods sold 2,280 2,058 1,860
Gross profit 3,271 3,180 2,859
Selling, general and administrative expenses 2,464 2,075 1,767
Depreciation and amortization 249 225 208
Impairment of assets 708 21 33
Restructuring and other charges [1] 42 124 102
Total operating expenses 3,463 2,445 2,110
(Loss) Income from operations (192) 735 749
Other income, net (6) (4) (2)
Interest expense, net 18 38 22
Foreign currency loss (gain) 11 80 (13)
(Loss) income before provision for income taxes (215) 621 742
Provision for income taxes 10 79 150
Net (loss) income (225) 542 592
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest (2) (1) 0
Net (loss) income attributable to Capri $ (223) $ 543 $ 592
Weighted average ordinary shares outstanding:      
Basic (in shares) 150,714,598 149,765,468 152,283,586
Diluted (in shares) 150,714,598 151,614,350 155,102,885
Net (loss) income per ordinary share attributable to Capri:      
Basic (in dollars per share) $ (1.48) $ 3.62 $ 3.89
Diluted (in dollars per share) $ (1.48) $ 3.58 $ 3.82
Statements of Comprehensive (Loss) Income:      
Net (loss) income $ (225) $ 542 $ 592
Foreign currency translation adjustments 145 (134) 148
Net (loss) gain on derivatives (4) 17 (16)
Comprehensive (loss) income (84) 425 724
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest (2) (1) 0
Comprehensive (loss) income attributable to Capri $ (82) $ 426 $ 724
[1] Restructuring and other charges includes store closure costs recorded in connection with the Michael Kors Retail Fleet Optimization Plan (as defined in Note 11) and other restructuring initiatives, and costs recorded in connection with the acquisitions of Gianni Versace S.r.l and Jimmy Choo Group Limited (see Note 5 and Note 11).
v3.20.2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)
$ in Millions
Total
Ordinary Shares
Additional Paid-in Capital
Treasury Shares
Accumulated Other Comprehensive (Loss) Income
Retained Earnings
Total Equity of Capri
Non-controlling Interests
Beginning balance at Apr. 01, 2017 $ 1,595 $ 0 $ 768 $ (2,655) $ (81) $ 3,560 $ 1,592 $ 3
Beginning balance (in shares) at Apr. 01, 2017   209,332,000            
Beginning balance, treasury (in shares) at Apr. 01, 2017       (53,499,000)        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net income (loss) 592         592 592 0
Other comprehensive income (loss) 132       132   132 0
Comprehensive (loss) income 724           724 0
Non-controlling interest of Jimmy Choo joint ventures 3             3
Partial repurchase of non-controlling interest (1)             (1)
Vesting of restricted awards, net of forfeitures (in shares)   542,000            
Exercise of employee share options 14   14       14  
Exercise of employee share options (in shares)   1,117,000            
Equity compensation expense 50   50       50  
Purchase of treasury shares (361)     $ (361)     (361)  
Purchase of treasury shares (in shares)       (7,794,000)        
Redemption of capital/dividends (1)             (1)
Other (1)   (1)       (1)  
Ending balance, treasury (in shares) at Mar. 31, 2018       (61,293,000)        
Ending balance (in shares) at Mar. 31, 2018   210,991,000            
Ending balance at Mar. 31, 2018 2,022 $ 0 831 $ (3,016) 51 4,152 2,018 4
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Adoption of accounting standard 12         12 12  
Beginning balance after adoption of accounting standards 2,034   831 (3,016) 51 4,164 2,030 4
Net income (loss) 542         543 543 (1)
Other comprehensive income (loss) (117)       (117)   (117) 0
Comprehensive (loss) income 425           426 (1)
Issuance of ordinary shares 91   91       91  
Issuance of ordinary shares (in shares)   2,395,000            
Vesting of restricted awards, net of forfeitures (in shares)   818,000            
Exercise of employee share options 29   29       29  
Exercise of employee share options (in shares)   1,847,000            
Equity compensation expense 60   60       60  
Purchase of treasury shares $ (207)     $ (207)     (207)  
Purchase of treasury shares (in shares)       (3,826,000)        
Ending balance, treasury (in shares) at Mar. 30, 2019 (65,118,633)     (65,119,000)        
Ending balance (in shares) at Mar. 30, 2019 216,050,939 216,051,000            
Ending balance at Mar. 30, 2019 $ 2,432 $ 0 1,011 $ (3,223) (66) 4,707 2,429 3
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Adoption of accounting standard (152)         (152) (152)  
Beginning balance after adoption of accounting standards 2,280   1,011 (3,223) (66) 4,555 2,277 3
Net income (loss) (225)           (223) (2)
Other comprehensive income (loss) 141       141   141 0
Comprehensive (loss) income (84)           (82) (2)
Vesting of restricted awards, net of forfeitures (in shares)   1,262,000            
Exercise of employee share options 0              
Exercise of employee share options (in shares)   7,000            
Equity compensation expense 70   70       70  
Purchase of treasury shares (102)     $ (102)     (102)  
Purchase of treasury shares (in shares)       (2,775,000)        
Adjustment of redeemable non-controlling interests to redemption value $ 4   4       4  
Ending balance, treasury (in shares) at Mar. 28, 2020 (67,894,398)     (67,894,000)        
Ending balance (in shares) at Mar. 28, 2020 217,320,010 217,320,000            
Ending balance at Mar. 28, 2020 $ 2,168 $ 0 $ 1,085 $ (3,325) $ 75 $ 4,332 $ 2,167 $ 1
v3.20.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
12 Months Ended
Mar. 28, 2020
Mar. 30, 2019
Mar. 31, 2018
Cash flows from operating activities      
Net (loss) income $ (225) $ 542 $ 592
Adjustments to reconcile net (loss) income to net cash provided by operating activities:      
Depreciation and amortization 249 225 208
Equity compensation expense 70 60 50
Impairment of assets 708 21 33
Bad debt expense 29 4 8
Losses on store lease exits 0 18 29
Deferred income taxes (73) (71) 9
Changes to lease related balances, net (55)    
Amortization of deferred financing costs 8 4 4
Tax deficit (benefit) on exercise of share options 2 (24) (7)
Foreign currency losses (gains) 11 80 (13)
Other non-cash charges 3 0 0
Change in assets and liabilities:      
Receivables, net 42 (23) 11
Inventories, net 115 (125) 46
Prepaid expenses and other current assets 20 (31) 49
Accounts payable 63 (48) (21)
Accrued expenses and other current liabilities (95) 20 56
Other long-term assets and liabilities (13) 42 8
Net cash provided by operating activities 859 694 1,062
Cash flows from investing activities      
Capital expenditures (223) (181) (120)
Purchase of intangible assets 0 (3) (3)
Cash paid for business acquisitions, net of cash acquired (13) (1,875) (1,415)
Realized (loss) gain on hedge related to acquisitions 0 (77) 5
Settlement of a net investment hedge 298 11 0
Net cash provided by (used in) investing activities 62 (2,125) (1,533)
Cash flows from financing activities      
Debt borrowings 2,282 4,204 2,520
Debt repayments (2,676) (2,560) (1,784)
Debt issuance costs (1) (15) 0
Purchase of treasury shares (102) (207) (361)
Exercise of employee share options 0 29 14
Net cash (used in) provided by financing activities (497) 1,451 389
Effect of exchange rate changes on cash and cash equivalents (4) (11) 15
Net increase (decrease) in cash and cash equivalents 420 9 (67)
Beginning of period 172 163 230
End of period 592 172 163
Supplemental disclosures of cash flow information      
Cash paid for interest 80 45 11
Cash paid for income taxes 98 172 104
Supplemental disclosure of non-cash investing and financing activities      
Accrued capital expenditures $ 30 $ 25 $ 26
v3.20.2
Business and Basis of Presentation
12 Months Ended
Mar. 28, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business and Basis of Presentation Business and Basis of Presentation
The Company was incorporated in the British Virgin Islands (“BVI”) on December 13, 2002 as Michael Kors Holdings Limited and changed its name to Capri Holdings Limited (“Capri,” and together with its subsidiaries, the “Company”) on December 31, 2018. The Company is a holding company that owns brands that are leading designers, marketers, distributors and retailers of branded women’s and men’s accessories, apparel and footwear bearing the Versace, Jimmy Choo and Michael Kors tradenames and related trademarks and logos. The Company operates in three reportable segments: Versace, Jimmy Choo and Michael Kors. See Note 20 for additional information.
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company’s audited consolidated financial statements include the following operations for the periods from the respective acquisition/consolidation date through March 28, 2020:
Gianni Versace S.r.l. (“Versace”), acquired on December 31, 2018;
Jimmy Choo Group Limited (“Jimmy Choo”), acquired on November 1, 2017;
See Note 5 for additional information related to the above acquisitions.
The Company utilizes a 52 to 53 week fiscal year ending on the Saturday closest to March 31. As such, the fiscal years ending on March 28, 2020, March 30, 2019, and March 31, 2018 (“Fiscal 2020”, “Fiscal 2019” and “Fiscal 2018”, respectively) contain 52 weeks.
Timing of Filing of Annual Report on Form 10-K
As a result of the impacts of the COVID-19 pandemic on the business and employees of the Company, the Company has relied on the Securities and Exchange Commission’s Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020, to delay the filing of its Annual Report on Form 10-K for Fiscal 2020 by up to 45 days from May 27, 2020, which is the original filing due date.
The Company’s operations and business have experienced significant disruption due to the unprecedented conditions surrounding the COVID-19 global pandemic. The Company has been following the recommendations of local government and health authorities to minimize exposure risk for its employees. As a result, most of the Company’s corporate offices globally have been temporarily closed due to the pandemic and corporate employees involved in the Company’s annual financial statement closing process and finalizing the audit of the Company’s financial statements for Fiscal 2020 are working remotely. In addition, the Company required additional time to prepare analyses related to the impact of COVID-19 on its business and complete related required disclosures. This has resulted in delays in finalizing the Annual Report on Form 10-K for Fiscal 2020 and accompanying audited financial statements.
v3.20.2
Summary of Significant Accounting Policies
12 Months Ended
Mar. 28, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. The most significant assumptions and estimates involved in preparing the financial statements include allowances for customer deductions, sales returns, sales discounts and doubtful accounts, estimates of inventory net realizable value, the valuation of share-based compensation, the valuation of deferred taxes and the valuation of goodwill, intangible assets and property and equipment, along with the estimated useful lives assigned to these assets. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the prior periods’ financial information in order to conform to the current period’s presentation.
Seasonality
The Company experiences certain effects of seasonality with respect to its business. The Company generally experiences greater sales during its third fiscal quarter, primarily driven by holiday season sales, and the lowest sales during its first fiscal quarter.
Revenue Recognition
The Company accounts for contracts with its customers when there is approval and commitment from both parties, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when control of the promised goods or services is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. The Company recognizes retail store revenues when control of the product is transferred at the point of sale at Company owned stores, including concessions, net of estimated returns. Revenue from sales through the Company’s 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 the Company’s wholesale customers. To arrive at net sales for retail revenue, 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 future customer return expectations. Sales taxes collected from retail customers are presented on a net basis and, as such, are excluded from revenue. To arrive at net sales for wholesale revenue, gross sales are 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. These estimates are based on such factors as historical trends, actual and forecasted performance and current market conditions, which are reviewed by management on a quarterly basis.
The following table details the activity and balances of the Company’s sales reserves for the fiscal years ended March 28, 2020, March 30, 2019, and March 31, 2018 (in millions):
Balance
Beginning
of Year
Amounts
Charged to
Revenue
Write-offs
Against
Reserves
Balance
at
Year End
Retail
Return Reserves:
Fiscal Year Ended March 28, 2020$15  $231  $(234) $12  
Fiscal Year Ended March 30, 201912  226  (223) 15  
Fiscal Year Ended March 31, 2018 161  (156) 12  
 Balance
Beginning
of Year
Amounts
Charged to
Revenue
Write-offs
Against
Reserves
Balance
at
Year End
Wholesale
Total Sales Reserves:
Fiscal Year Ended March 28, 2020$112  $266  $(224) $154  
Fiscal Year Ended March 30, 2019109  262  (259) 112  
Fiscal Year Ended March 31, 201897  258  (246) 109  
Royalty revenue generated from product licenses, which includes contributions for advertising, is based on reported sales of licensed products bearing the Company’s trademarks 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 the Company’s tradenames to sell its branded products in specific geographic regions.
The adverse impact from the COVID-19 pandemic which includes, but is not limited to, temporary retail store closures, wholesale customer store closures, a reduction in retail store traffic, a decline in international tourism and a decrease in consumer consumption is reflected in the Company's Fiscal 2020 total revenue.
Loyalty Program
The Company has a Michael Kors customer loyalty program in the United States, which allows customers to earn points on qualifying purchases toward monetary and non-monetary rewards that may be redeemed for purchases at the Company’s retail stores and e-commerce site. The Company allocates a portion of the initial sales transaction based on the estimated relative fair value of the benefits using statistical formulas based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed. The contract liability, net of an estimated “breakage,” is recorded as a reduction to revenue in the consolidated statements of income and comprehensive income and within accrued expenses and other current liabilities in the Company’s consolidated balance sheets. See Note 3 for additional information.
Advertising and Marketing Costs
Advertising and marketing costs are expensed over the period of benefit and are recorded in selling, general and administrative expenses. Advertising and marketing expense was $201 million, $158 million and $167 million in Fiscal 2020, Fiscal 2019 and Fiscal 2018, respectively.
Cooperative advertising expense, which represents the Company’s participation in advertising expenses of its wholesale customers, is reflected as a reduction of net sales. Expenses related to cooperative advertising for Fiscal 2020, Fiscal 2019 and Fiscal 2018, were $7 million, $8 million and $6 million, respectively.
Shipping and Handling
Freight-in expenses are recorded as part of cost of goods sold, along with product costs and other costs to acquire inventory. The costs of preparing products for sale, including warehousing expenses, are included in selling, general and administrative expenses. Selling, general and administrative expenses also include the costs of shipping products to the Company’s e-commerce customers. Shipping and handling costs included within selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income were $157 million, $132 million and $129 million for Fiscal 2020, Fiscal 2019 and Fiscal 2018, respectively. Shipping and handling costs charged to customers are included in total revenue.
Cash and Cash Equivalents
All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. Included in the Company’s cash and cash equivalents as of March 28, 2020 and March 30, 2019 are credit card receivables of $4 million and $24 million, respectively, which generally settle within two to three business days. The decrease in credit card receivables year over year is mainly due to the impact on sales from the COVID-19 pandemic.
Inventories
Inventories mainly consist of finished goods with the exception of raw materials and work in process inventory. The combined total of raw materials and work in process inventory recorded on the Company's consolidated balance sheets as of March 28, 2020 and March 30, 2019 were $27 million and $25 million, respectively. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted-average cost method. 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 Company continuously evaluates the composition of its inventory and makes adjustments when the cost of inventory is not expected to be fully recoverable. The net realizable value of the Company’s 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 physical inventory counts. The Company’s 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.
The net realizable value of the Company's inventory as of March 28, 2020 includes the adverse impacts connected to the COVID-19 pandemic. This includes the impact from temporary retail store closures, wholesale customer store closures, reductions in retail store traffic, a decline in international tourism and a decrease in consumer consumption.
Store Pre-opening Costs
Costs associated with the opening of new retail stores and start up activities, are expensed as incurred.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and amortization (carrying value). Depreciation is recorded on a straight-line basis over the expected remaining useful lives of the related assets. Equipment, furniture and fixtures, are depreciated over five to seven years, computer hardware and software are depreciated over three to five years. The Company’s share of the cost of constructing in-store shop displays within its wholesale customers’ floor-space (“shop-in-shops”), which is paid directly to third-party suppliers, is capitalized as property and equipment and is generally amortized over a useful life of three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated remaining useful lives of the related assets or the remaining lease term, including highly probable renewal periods. The Company includes all depreciation and amortization expense as a component of total operating expenses, as the underlying long-lived assets are not directly or indirectly related to bringing the Company’s products to their existing location and condition. Maintenance and repairs are charged to expense in the year incurred.
The Company capitalizes, in property and equipment, direct costs incurred during the application development stage and the implementation stage for developing, purchasing or otherwise acquiring software for its internal use. These costs are amortized over the estimated useful lives of the software, generally five years. All costs incurred during the preliminary project stage, including project scoping and identification and testing of alternatives, are expensed as incurred.
Definite-Lived Intangible Assets
The Company’s definite-lived intangible assets consist of trademarks and customer relationships which are stated at cost less accumulated amortization. The Company’s customer relationships are amortized over five to eighteen years. Reacquired rights recorded in connection with the acquisition of MKHKL are amortized through March 31, 2041, the original expiration date of the Michael Kors license agreement in the Greater China region. The trademark for the Michael Kors brand is amortized over twenty years.
Impairment of Long-lived Assets
The Company evaluates its 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. The Company’s impairment testing is based on its best estimate of its future operating cash flows. To the extent the sum of the estimated undiscounted future cash flows associated with the asset is less than the carrying value, the Company typically recognizes an impairment loss measured by the amount in which the carrying value exceeds the fair value of the asset, taking into consideration other market assumptions. 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 current real estate market values. As such, these estimates may differ from actual results and are affected by future market and economic conditions.
Goodwill and Other Indefinite-lived Intangible Assets
The Company records indefinite-lived intangible assets based on fair value on the date of acquisition. Goodwill is recorded for the difference between the fair value of the purchase consideration over 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. The Company performs an impairment assessment of goodwill, as well as the Versace 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.
The Company may assess its goodwill and its 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, the Company assesses various factors including industry and market conditions, macroeconomic conditions and performance of the Company’s businesses. If the results of the qualitative assessment indicate that it is more likely than not that the Company’s goodwill and other indefinite-lived intangible assets are impaired, a quantitative impairment analysis would be performed to determine if impairment is required. The Company may also elect to perform a quantitative analysis of goodwill and its indefinite-lived intangible assets initially rather than using a qualitative approach.
The impairment testing for goodwill is performed at the reporting unit level. The valuation methods used in the quantitative fair value assessment included a discounted cash flow analysis which requires the Company’s management to make certain assumptions and estimates regarding industry trends and future profitability of the Company’s reporting units. 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. This valuation is affected by certain estimates including the Company’s future revenue growth rates, margins and discount rates. Future events could cause the Company to conclude that impairment indicators exist, and, therefore, that goodwill may be impaired.
When performing a quantitative impairment assessment of the Company’s brand indefinite-lived 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 growth, royalty rates, and discount rates. Actual future results may differ from these estimates. Impairment loss is recognized when the estimated fair value of the indefinite-lived brand intangible assets is less than its carrying amount.
The Company recorded impairment charges of $171 million related to the goodwill associated with the Jimmy Choo Retail and Jimmy Choo Licensing reporting units and $180 million related to the Jimmy Choo brand indefinite-lived intangible asset during Fiscal 2020. The impairment charges were recorded within impairment of assets on the Company's consolidated statement of operations and comprehensive income for the fiscal year ended March 28, 2020. See Note 9 and Note 14 for information relating to the Company’s annual impairment analysis performed during the fourth quarter of Fiscal 2020.
Insurance
The Company uses a combination of insurance and self-insurance for losses related to a number of risks, including workers’ compensation and employee-related health care benefits. The Company also maintains stop-loss coverage with third-party insurers to limit its exposure arising from claims. Self-insurance claims filed and claims incurred but not reported are accrued based upon management’s estimates of the discounted cost for self-insured claims incurred using actuarial assumptions, historical loss experience, actual payroll and other data. Although the Company believes that it can reasonably estimate losses related to these claims, actual results could differ from these estimates.
The Company also maintains other types of customary business insurance policies, including business interruption insurance. Insurance recoveries represent gain contingencies and are recorded upon actual settlement with the insurance carrier.
Share-based Compensation
The Company grants share-based awards to certain employees and directors of the Company. The grant date fair value of share options is calculated using the Black-Scholes option pricing model. The Company uses its own historical experience in determining the expected holding period and volatility of its time-based share option awards. The risk-free interest rate is derived from the zero-coupon United States (“U.S.”) Treasury Strips yield curve based on the grant’s estimated holding period. Determining the grant date fair value of share-based awards requires considerable judgment, including estimating expected volatility, expected term and risk-free rate. If factors change and the Company employs different assumptions, the fair value of future awards and the resulting share-based compensation expense may differ significantly from what the Company has estimated in the past.
The closing market price of the Company’s shares on the date of grant is used to determine the grant date fair value of restricted shares, time-based restricted shares units (“RSU”s) and performance-based RSUs. These fair 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.
Foreign Currency Translation and Transactions
The financial statements of the majority of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. The Company’s functional currency is the United States Dollar (“USD”) for Capri and its United States based subsidiaries. Assets and liabilities are translated using period-end exchange rates, while revenues and expenses are translated using average exchange rates over the reporting period. The resulting translation adjustments are recorded separately in shareholders’ equity as a component of accumulated other comprehensive (loss) income. Foreign currency income and losses resulting from the re-measuring of transactions denominated in a currency other than the functional currency of a particular entity are included in foreign currency loss (gain) on the Company’s consolidated statements of operations and comprehensive income.
Derivative Financial Instruments
Forward Foreign Currency Exchange Contracts
The Company uses forward currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these forward currency contracts to hedge the Company’s 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 the Company’s derivative instruments are recorded in the Company’s consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation.
In connection with the September 24, 2018 definitive agreement to acquire all of the outstanding shares of Versace, the Company entered into forward foreign currency exchange contracts with notional amounts totaling €1.680 billion (approximately $2.001 billion) to mitigate its foreign currency exchange risk through the expected closing date of the acquisition, which were settled on December 21, 2018. Likewise, in connection with the July 25, 2017 cash offer to acquire Jimmy Choo, the Company entered into a forward foreign currency exchange contract with a notional amount of £1.115 billion (approximately $1.469 billion) to mitigate its foreign currency exchange risk through the expected closing date of the acquisition, which was settled on October 30, 2017. These derivative contracts were not designated as accounting hedges. Therefore, changes in fair value are recorded to foreign currency loss (gain) in the Company’s consolidated statements of operations and comprehensive income. The Company’s accounting policy is to classify cash flows from derivative instruments in the same category as the cash flows from the items being hedged. Accordingly, the Company classified $77 million of realized losses and $5 million of realized gains, respectively, relating to these derivative instruments within cash flows from investing activities during Fiscal 2019 and Fiscal 2018.
The Company designates 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 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 (loss) 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 (loss) income are recognized within cost of goods sold. The Company uses regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item. If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency loss (gain) in the Company’s consolidated statements of operations and comprehensive income. The Company classifies cash flows relating to its forward foreign currency exchange contracts related to purchase of inventory consistently with the classification of the hedged item, within cash flows from operating activities.
The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters 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
The Company also uses fixed-to-fixed cross currency swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between its U.S. Dollars and these foreign currencies. The Company has elected the spot method of designating these contracts under ASU 2017-12 and has 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 (loss) income on the Company’s consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense in the Company’s statement of operations and comprehensive income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated.
During the fourth quarter of Fiscal 2020, the Company terminated all of its net investment hedges related to its Euro-denominated subsidiaries. The early termination of these hedges resulted in the Company receiving $296 million in cash during the fourth quarter of Fiscal 2020.
Income Taxes
Deferred income tax assets and liabilities have been provided for temporary differences between the tax bases and financial reporting bases of the Company’s assets and liabilities using the tax rates and laws in effect for the periods in which the differences are expected to reverse. The Company periodically assesses 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 estimates and judgments used.
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. The Company periodically reviews the recoverability of its deferred tax assets and provides valuation allowances, as deemed necessary, to reduce deferred tax assets to amounts that more-likely-than-not will be realized. The Company’s management considers many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within various taxing 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 the Company’s estimates of taxable income during the carryforward period are significantly reduced or alternative tax strategies are no longer viable.
The Company recognizes the impact of an uncertain income tax position taken on its income tax returns at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will be recognized if it has less than a 50% likelihood of being sustained. The tax positions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments for those positions. The Company records interest expense and penalties payable to relevant tax authorities as income tax expense.
Leases
On March 31, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet for all leases, except certain short-term leases. The Company adopted the new standard recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating the comparative prior year periods.
The Company leases retail stores, office space and warehouse space under operating lease agreements that expire at various dates through September 2043. The Company’s leases generally have terms of up to 10 years, generally require a fixed annual rent and may require the payment of additional rent if store sales exceed a negotiated amount. Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through May 2024. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores under its Michael Kors Retail Fleet Optimization Plan, as defined in Note 11. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. The Company determines the sublease term based on the date it provides possession to the subtenant through the expiration date of the sublease.
The Company recognizes operating lease right-of-use assets and lease liabilities at lease commencement date, based on the present value of fixed lease payments over the expected lease term. The Company uses its incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable for the Company’s leases. The Company’s incremental borrowing rates are based on the term of the leases, the economic environment of the leases and reflect the expected interest rate it would incur to borrow on a secured basis. Certain leases include one or more renewal options, generally for the same period as the initial term of the lease. The exercise of lease renewal options is generally at the Company’s sole discretion and as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company generally does not include the renewal option period in the expected lease term and the associated lease payments are not included in the measurement of the operating lease right-of-use asset and lease liability. Certain leases also contain termination options with an associated penalty. Generally, the Company is reasonably certain not to exercise these options and as such, they are not included in the determination of the expected lease term. The Company recognizes operating lease expense on a straight-line basis over the lease term.
Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for its short-term leases on a straight-line basis over the lease term.
The Company’s leases generally provide for payments of non-lease components, such as common area maintenance, real estate taxes and other costs associated with the leased property. The Company accounts for lease and non-lease components of its real estate leases together as a single lease component and, as such, includes fixed payments of non-lease components in the measurement of the operating lease right-of-use assets and lease liabilities for its real estate leases. Variable lease payments, such as percentage rentals based on location sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred as variable lease costs and are not recorded on the balance sheet. The Company’s lease agreements do not contain any material residual value guarantees or material restrictions or covenants.
Debt Issuance Costs and Unamortized Discounts
The Company defers debt issuance costs directly associated with acquiring third party financing. These debt issuance costs and any discounts on issued debt are amortized on a straight-line basis, which approximates the effective interest method, as interest expense over the term of the related indebtedness. Deferred financing fees associated with the Company’s revolving credit facilities are recorded within prepaid expenses and other current assets. Deferred financing fees and unamortized discounts associated with the Company’s other borrowings are recorded as an offset to long-term debt in the Company’s consolidated balance sheets. See Note 12 for additional information.
Net (Loss) Income per Share
The Company’s basic net (loss) income per ordinary share is calculated by dividing net loss by the weighted average number of ordinary shares outstanding during the period. Diluted net loss per ordinary share reflects the potential dilution that would occur if share option grants or any other potentially dilutive instruments, including restricted shares and restricted share units ("RSUs"), were exercised or converted into ordinary shares. These potentially dilutive securities are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods. Performance-based RSUs are
included in diluted shares if the related performance conditions are considered satisfied as of the end of the reporting period and to the extent they are dilutive under the treasury stock method.
The components of the calculation of basic net (loss) income per ordinary share and diluted net loss per ordinary share are as follows (in millions, except share and per share data):

 Fiscal Years Ended
 March 28,
2020
March 30,
2019
March 31,
2018
Numerator:
Net (loss) income attributable to Capri$(223) $543  $592  
Denominator:
Basic weighted average shares150,714,598  149,765,468  152,283,586  
Weighted average dilutive share equivalents:
Share options and restricted shares/units, and performance restricted share units—  1,848,882  2,819,299  
Diluted weighted average shares150,714,598  151,614,350  155,102,885  
Basic net (loss) income per share (1)
$(1.48) $3.62  $3.89  
Diluted net (loss) income per share (1)
$(1.48) $3.58  $3.82  

(1)Basic and diluted net (loss) income per share are calculated using unrounded numbers.
Share equivalents for 3,752,560 shares, 1,409,415 shares and 1,662,889 shares, for Fiscal 2020, Fiscal 2019 and Fiscal 2018, respectively, have been excluded from the above calculation due to their anti-dilutive effect.
Diluted net loss per share attributable to Capri for Fiscal 2020 excluded all potentially dilutive securities because there was a net loss attributable to Capri for the period and, as such, the inclusion of these securities would have been anti-dilutive.
Noncontrolling Interest and Redeemable Noncontrolling Interest
The Company has an ownership interest in the Michael Kors Latin American joint venture, MK (Panama) Holdings, S.A. and subsidiaries of 75%, an ownership interest in the Jimmy Choo EMEA Joint Ventures, JC Industry S.r.L of 33% and JC Gulf Trading LLC of 49%, a 50% ownership interest in J. Choo Russia J.V. Limited, and a 70% interest in Versace Australia PTY Limited (“Versace Australia”).
Recently Adopted Accounting Pronouncements
Lease Accounting
On March 31, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet for all leases, except certain short-term leases. In evaluating the impact of ASU 2016-02, the Company considered guidance provided by several additional ASUs issued by the FASB, including ASU 2018-01, “Land Easement Practical Expedient for Transition to Topic 842” in January 2018, ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” both issued in July 2018, and ASU 2018-20, “Leases (Topic 842) - Narrow-Scope Improvements for Lessors” issued in December 2018. In connection with its implementation of ASU 2016-02, the Company adopted the package of three practical expedients, allowing it to carry forward its previous lease classification and embedded lease evaluations and not to reassess initial direct costs as of the date of adoption. The Company also adopted the practical expedient allowing it to combine lease and non-lease components for its real estate leases. Lastly, the Company adopted the practical expedient provided by ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” allowing it to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating the comparative prior year periods.
The Company’s existing lease obligations, which relate to stores, corporate locations, warehouses, and equipment, are subject to the new standard and resulted in recording of lease liabilities and right-of-use assets for operating leases on the Company’s consolidated balance sheet.
The below table details the balance sheet adjustments recorded on March 31, 2019 in connection with the Company’s adoption of ASU 2016-02 (in millions):
March 30, 2019
As Reported under ASC 840
ASC 842 AdjustmentsMarch 31, 2019
As Reported Under ASC 842
Assets
Prepaid expenses and other current assets$221  $(23) 
(1)
$198  
Operating lease right-of-use assets—  1,876  
(2)
1,876  
Intangible assets, net2,293  (40) 
(3)
2,253  
Deferred tax assets112  38  
(4)
150  
Liabilities
Current portion of operating lease liabilities—  386  
(5)
386  
Accrued expenses and other current liabilities374  (72) 
(6)
302  
Long-term portion of operating lease liabilities—  1,828  
(5)
1,828  
Deferred Rent132  (132) 
(7)
—  
Deferred tax liabilities438  (7) 
(4)
431  
Shareholders’ Equity
Retained earnings4,707  (152) 
(4)
4,555  

(1)Represents the reclassification of rent paid in advance to current operating lease liabilities.
(2)Represents the recognition of operating lease right-of-use assets, reflecting the reclassifications of deferred rent, sublease liabilities, tenant allowances, and lease rights. This balance also reflects the initial impairments of the operating lease right-of-use assets recorded through retained earnings, as described below.
(3)Represents the reclassifications of lease rights for leases recorded in conjunction with the Company’s acquisitions to operating lease right-of-use assets.
(4)Represents the initial impairment recognized through retained earnings for certain underperforming retail store locations for which property and equipment were previously impaired, net of associated deferred taxes.
(5)Represents the recognition of current and non-current lease liabilities for fixed payments associated with the Company’s operating leases.
(6)Represents the reclassification of $54 million in sublease liabilities, primarily related to Michael Kors retail stores closed under the Michael Kors Retail Fleet Optimization Plan as defined in Note 10, as well as the reclassification of $18 million of deferred rent and tenant allowances to operating lease right-of-use assets.
(7)Represents the reclassification of noncurrent deferred rent and tenant improvement allowances to operating lease right-of-use assets.
See Note 4 for additional disclosures related to the Company’s lease accounting policy.
Recently Issued Accounting Pronouncements
The Company has considered all new accounting pronouncements and have concluded that there are no new pronouncements that are expected to have a material impact on our results of operations, financial condition or cash flows based on current information.
Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which amends the guidance on measuring credit losses for certain financial assets measured at amortized cost, including trade receivables. The FASB has subsequently issued several updates to the standard, providing additional guidance on certain topics covered by the standard. This update requires entities to recognize an allowance for credit losses using a forward-looking expected loss impairment model, taking into consideration historical experience, current conditions, and supportable forecasts that impact collectibility. ASU No. 2016-13 is effective for the Company beginning in its Fiscal 2021. The adoption of this update is not expected to have a material impact on the Company's consolidated financial statements.
v3.20.2
Revenue Recognition
12 Months Ended
Mar. 28, 2020
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
The Company accounts for contracts with its customers when there is approval and commitment from both parties, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services.
The Company sells its products through three primary channels of distribution: retail, wholesale and licensing. Within the retail and wholesale channels, substantially all of the Company’s revenues consist of sales of products that represent a single performance obligation, where control transfers at a point in time to the customer. For licensing arrangements, royalty and advertising revenue is recognized over time based on access provided to the Company’s brands.
The Company has chosen to apply the practical expedient allowing it not to disclose the amount of the transaction price allocated to the remaining performance obligations that have an expected duration of 12 months or less.
Retail
The Company generates sales through directly operated stores and e-commerce throughout the Americas (U.S., Canada and Latin America), EMEA (Europe, Middle East and Africa) and certain parts of Asia. Retail revenue is recognized when control of the product is transferred at the point of sale at Company owned stores, including concessions. For e-commerce transactions, control is transferred and revenue is recognized when products are delivered to the customer, net of estimated returns. 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.
Sales tax collected from retail customers are presented on a net basis and, as such, are excluded from revenue. Shipping and handling costs that are billed to customers are included in net sales, with the related costs recorded in cost of goods sold. Shipping and handling costs that are not billed to customers are accounted for as fulfillment costs.
Gift Cards. The Company sells gift cards that can be redeemed for merchandise, resulting in a contract liability upon issuance. Revenue is recognized when the gift card is redeemed or upon “breakage” for the estimated portion of gift cards that are not expected to be redeemed. “Breakage” revenue is calculated under the proportional redemption methodology, which considers the historical patterns of redemption in jurisdictions where the Company is not required to remit the value of the unredeemed gift cards as unclaimed property. The Company anticipates that substantially all of its outstanding gift cards will be redeemed within the next 12 months. The contract liability related to gift cards, net of estimated “breakage”, was $11 million and $13 million as of March 28, 2020 and March 30, 2019, respectively, and is included in accrued expenses and other current liabilities in the Company’s consolidated balance sheet.
Loyalty Program. The Company offers a loyalty program, which allows its Michael Kors U.S. customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at Michael Kors retail stores and e-commerce sites. The Company defers a portion of the initial sales transaction based on the estimated relative fair value of the benefits based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed. The contract liability, net of an estimated “breakage,” of $2 million and $3 million as of March 28, 2020 and March 30, 2019, respectively, is recorded as a reduction to revenue in the consolidated statements of income and comprehensive income and within accrued expenses and other current liabilities in the Company’s consolidated balance sheet and is expected to be recognized within the next 12 months.
Wholesale
The Company’s products are sold primarily to major department stores, specialty stores and travel retail shops throughout the Americas, EMEA and Asia. The Company also has arrangements where its products are sold to geographic licensees in certain parts of EMEA, Asia and South America. Wholesale revenue is recognized net of estimates for sales returns, discounts, markdowns and allowances, when merchandise is shipped and control of the underlying product is transferred to the Company’s wholesale customers. To arrive at net sales for wholesale, gross sales are reduced by provisions for estimated future returns, as well as trade discounts, markdowns, allowances, operational chargebacks and certain cooperative selling expenses. These estimates are developed based on historical trends, actual and forecasted performance and market conditions, and are reviewed by management on a quarterly basis. Unfulfilled, non-cancelable purchase orders for products from wholesale customers (including the Company’s geographic licensees) are expected to be fulfilled within the next 12 months.
Licensing
The Company provides its third-party licensees with the right to access its Versace, Jimmy Choo and Michael Kors trademarks under product and geographic licensing arrangements. Under product licensing arrangements, the Company allows third parties to manufacture and sell luxury goods, including watches and jewelry, fragrances, sunglasses and eyewear, using the Company’s trademarks. Under geographic licensing arrangements, third party licensees receive the right to distribute and sell products bearing the Company’s trademarks in retail and/or wholesale channels within certain geographical areas, including Brazil, the Middle East, Eastern Europe, South Africa, certain parts of Asia and Australia.
The Company recognizes royalty revenue and advertising contributions based on the percentage of sales made by the licensees. Advertising contributions are received to support the Company’s branded advertising and marketing campaigns and are viewed as part of a single performance obligation with the right to access the Company’s trademarks. Royalty revenue generated from licenses, which includes contributions for advertising, may be subject to contractual minimum levels, as defined in the contract. Such minimums are generally fixed annually, based on the previous year’s sales. Licensing revenue is based on reported current period sales of licensed products at rates that are specified in the license agreements for contracts that are expected to exceed the related guaranteed minimums. If the Company expects the minimum guaranteed amounts to exceed amounts calculated based on actual sales, the guaranteed minimums are recognized ratably over the contractual year to which they relate. Generally the Company’s guaranteed minimum royalty amounts due from licensees relate to contractual periods that do not exceed 12 months, however, some of our guaranteed minimums for Versace are multi-year based. As of March 28, 2020, contractually guaranteed minimum fees from our license agreements expected to be recognized as revenue during future periods were as follows (in millions):
Contractually Guaranteed Minimum Fees
Fiscal 2021$27  
Fiscal 202226  
Fiscal 202320  
Fiscal 202410  
Fiscal 2025 
Fiscal 2026 and thereafter29  
 Total
$118  
Sales Returns
For the sale of goods with a right of return, the Company recognizes revenue for the consideration to which it expects to be entitled and a refund liability for the amount it expects to refund to its customers within accrued expenses and other current liabilities. The refund liability is estimated based on management’s review of historical and current customer returns for its retail and wholesale customers, estimated future returns, adjusted for non-resalable products. The Company also considers its product strategies, as well as the financial condition of its customers, store closings by wholesale customers, changes in the retail environment and other macroeconomic factors. The Company recognizes an asset with a corresponding adjustment to cost of sales for the right to recover the products from its retail and wholesale customers. The refund liability recorded as of March 28, 2020 and March 30, 2019 was $37 million and $35 million, respectively, and the related asset for the right to recover returned product as of March 28, 2020 and March 30, 2019 was $14 million and $12 million, respectively.
Contract Balances
The Company’s contract liabilities are recorded within accrued expenses and other current liabilities and other long-term liabilities in its consolidated balance sheets depending on the short- or long-term nature of the payments to be recognized. The Company’s contract liabilities primarily consist of gift card liabilities, loyalty program liabilities and advanced payments from product licensees. Total contract liabilities were $22 million and $31 million as of March 28, 2020 and March 30, 2019, respectively. Contract liabilities decreased $5 million as a result of the adoption of ASC 606 on April 1, 2018, due to recognition of gift card breakage revenue (see Note 2). During Fiscal 2020 and Fiscal 2019, the Company recognized $20 million and $16 million in revenue, respectively, relating to contract liabilities that existed at March 28, 2020 and March 30, 2019, respectively. There were no contract assets recorded as of March 28, 2020 and March 30, 2019.
There were no changes in historical variable consideration estimates that were materially different from actual results.
Disaggregation of Revenue
The following table presents the Company’s segment revenues disaggregated by geographic location (in millions):
 Fiscal Years Ended
 March 28,
2020
March 30,
2019
March 31,
2018
Versace revenue - the Americas$186  $22  $—  
Versace revenue - EMEA420  66  —  
Versace revenue - Asia237  49  —  
 Total Versace
843  137  —  
Jimmy Choo revenue - the Americas107  96  37  
Jimmy Choo revenue - EMEA282  321  123  
Jimmy Choo revenue - Asia166  173  63  
 Total Jimmy Choo
555  590  223  
Michael Kors revenue - the Americas2,822  3,064  2,996  
Michael Kors revenue - EMEA821  892  970  
Michael Kors revenue - Asia510  555  530  
 Total Michael Kors
4,153  4,511  4,496  
Total revenue - the Americas3,115  3,182  3,033  
Total revenue - EMEA1,523  1,279  1,093  
Total revenue - Asia913  777  593  
Total revenue$5,551  $5,238  $4,719  
v3.20.2
Leases
12 Months Ended
Mar. 28, 2020
Leases [Abstract]  
Leases Leases
The following table presents the Company’s supplemental balance sheet information related to leases (in millions):
Balance Sheet LocationMarch 28, 2020
Assets
Operating leasesOperating lease right-of-use assets$1,625  
Liabilities
Current:
Operating leasesShort-term portion of operating lease liabilities$430  
Non-current:
Operating leasesLong-term portion of operating lease liabilities$1,758  
The components of net lease costs for the fiscal year ended March 28, 2020 were as follows (in millions):
Statement of Operations and
Comprehensive Income Location
March 28, 2020
Operating lease costSelling, general and administrative expenses$449  
Short-term lease costSelling, general and administrative expenses18  
Variable lease cost (1)
Selling, general and administrative expenses155  
Sublease incomeSelling, general and administrative expenses(6) 
Total lease cost$616  
(1)The Company elected to account for rent concessions negotiated in connection with COVID-19 as if it were contemplated as part of the existing contract and these concessions are recorded as variable lease expense. There is an immaterial impact from these concession for the fiscal year ended March 28, 2020.
The following table presents the Company’s supplemental cash flow information related to leases (in millions):
March 28, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases$495  
Non-cash transactions:
Lease assets obtained in exchange for new lease liabilities$428  
The following tables summarizes the weighted average remaining lease term and weighted average discount rate related to the Company’s operating lease right-of-use assets and lease liabilities recorded on the balance sheet as of March 28, 2020:
March 28, 2020
Operating leases:
Weighted average remaining lease term (years)6.6
Weighted average discount rate2.9 %
At March 28, 2020, the future minimum lease payments under the terms of these noncancelable operating lease agreements are as follows (in millions):
March 28, 2020
Fiscal 2021$489  
Fiscal 2022432  
Fiscal 2023369  
Fiscal 2024312  
Fiscal 2025239  
Thereafter566  
Total lease payments2,407  
Less: interest(219) 
Total lease liabilities$2,188  
At March 28, 2020, the future minimum sublease income under the terms of these noncancelable operating lease agreements are as follows (in millions):
March 28, 2020
Fiscal 2021$ 
Fiscal 2022 
Fiscal 2023 
Fiscal 2024 
Fiscal 2025 
Thereafter12  
Total sublease income$36  
Additionally, the Company had approximately $13 million of future payment obligations related to executed lease agreements for which the related lease has not yet commenced as of March 28, 2020.
See Note 2 for additional information on the Company's accounting policies related to leases.
v3.20.2
Acquisitions
12 Months Ended
Mar. 28, 2020
Business Combinations [Abstract]  
Acquisitions Acquisitions
Fiscal 2020
Acquisition of Alberto Gozzi S.r.L.
On December 16, 2019, the Company entered into a definitive agreement to acquire Italian atelier and shoe manufacturer Alberto Gozzi S.r.L. The transaction was completed in the Company's fourth quarter of Fiscal 2020 and the assets and liabilities acquired approximated fair value. The acquired identifiable assets and liabilities net to a nominal amount, with $11 million recognized in goodwill allocated to the Jimmy Choo reportable segment.
Fiscal 2019
Acquisition of Versace
On December 31, 2018, the Company completed the acquisition of Versace for a total enterprise value of approximately €1.753 billion (or approximately $2.005 billion), giving effect to an investment made by the Versace family at acquisition of 2.4 million shares. The acquisition was funded through a combination of borrowings under the Company’s 2018 Term Loan Facility, drawings under the Company’s Revolving Credit Facility and cash on hand (see Note 12 for additional information).
Versace’s results of operations have been included in our consolidated financial statements beginning on December 31, 2018. Versace contributed total revenue of $137 million and net loss of $12 million, after amortization of non-cash purchase accounting adjustments and transition and transaction costs, from the date of acquisition on December 31, 2018 through February 28, 2019 (reflecting a one-month reporting lag).
The Company recorded measurement period adjustments during Fiscal 2020. The measurement period adjustments are primarily related to conclusions reached on the ability to utilize certain deferred tax assets based on new facts and circumstances identified which existed at the acquisition date and if known, would have affected the measurement of the amounts recognized as of that date. The net measurement period adjustments increased goodwill by $26 million.
The following table summarizes the unaudited pro-forma consolidated results of operations for the fiscal years ended March 30, 2019 and March 31, 2018 as if the acquisition had occurred on April 2, 2017, the beginning of Fiscal 2018 (in millions):
Fiscal Years Ended
March 30, 2019March 31, 2018
Pro-forma total revenue$5,983  $5,473  
Pro-forma net income579  526  
Pro-forma net income per ordinary share attributable to Capri:
Basic
$3.82  $3.40  
Diluted
$3.78  $3.34  
The unaudited pro-forma consolidated results above are based on the historical financial statements of the Company and Versace and are not necessarily indicative of the results of operations that would have been achieved if the acquisition was completed at the beginning of Fiscal 2018 and are not indicative of the future operating results of the combined company. The financial information for Versace prior to the acquisition has been included in the pro-forma results of operations on a calendar-year basis and includes certain adjustments to Versace’s historical consolidated financial statements to align with U.S. GAAP and the Company’s accounting policies. The pro-forma consolidated results of operations also include the effects of purchase accounting adjustments, including amortization charges related to the definite-lived intangible assets acquired, fair value adjustments relating to leases and property and equipment, and the related tax effects assuming that the business combination occurred on April 2, 2017. Purchase accounting amortization of the inventory step-up adjustment has been excluded from the above pro-forma amounts due to the short-term nature of this adjustment. The pro-forma consolidated financial statements also reflect the impact of debt repayment and borrowings made to finance the acquisition (see Note 12) and exclude historical interest expenses related to Versace’s €90 million pre-existing debt. Transaction costs of $41 million for Fiscal 2019, which have been recorded within restructuring and other charges in the Company’s consolidated statements of operations and comprehensive income, have been excluded from the above pro-forma consolidated results of operations due to their non-recurring nature. The shares used to calculate the pro-forma net income per ordinary share attributable to Capri reflect the weighted average impact of a 2.4 million ordinary share investment made by the Versace family at acquisition date.
Fiscal 2018
Acquisition of Jimmy Choo Group Limited
On November 1, 2017, the Company completed the acquisition of Jimmy Choo, whereby the Company's wholly-owned subsidiary acquired all of Jimmy Choo’s issued and to be issued shares at a purchase price of 230 pence per share in cash, for a total transaction value of $1.447 billion, including the repayment of existing debt obligations, which was funded through a combination of borrowings under the Company’s new $1.0 billion term loan facility, the issuance of the Senior Notes and cash on hand (please refer to Note 12 for additional information).
Jimmy Choo’s results of operations have been included in our consolidated financial statements beginning on November 1, 2017. Jimmy Choo contributed revenue of $223 million and net loss of $15 million (after amortization of non-cash purchase accounting adjustments and transition and transaction costs) for the period from the date of acquisition through March 31, 2018.
The following table summarizes the unaudited pro-forma consolidated results of operations for the fiscal years ended March 31, 2018 and April 1, 2017 as if the acquisition had occurred on April 3, 2016, the beginning of Fiscal 2017 (in millions):
Fiscal Years Ended
March 31, 2018April 1, 2017
Pro-forma total revenue$5,012  $4,985  
Pro-forma net income623  554  
Pro-forma net income per ordinary share attributable to Capri:
Basic
$4.09  $3.34  
Diluted
$4.02  $3.29  
The unaudited pro-forma consolidated results above are based on the historical financial statements of the Company and Jimmy Choo and are not necessarily indicative of the results of operations that would have been achieved if the acquisition was completed at the beginning of Fiscal 2017 and are not indicative of the future operating results of the combined company. The financial information for Jimmy Choo prior to the acquisition has been included in the pro-forma results of operations on a calendar-year basis and includes certain adjustments to Jimmy Choo’s historical consolidated financial statements to align with U.S. GAAP and the Company’s accounting policies. The pro-forma consolidated results of operations also include the effects of purchase accounting adjustments, including amortization charges related to the definite-lived intangible assets acquired, fair value adjustments relating to leases and property and equipment, and the related tax effects assuming that the business combination occurred on April 3, 2016. Purchase accounting amortization of the inventory step-up adjustment has been excluded from the above pro-forma amounts due to the short-term nature of this adjustment. The pro-forma consolidated financial statement also reflect the impact of debt repayment and borrowings made to finance the acquisition (see Note 12) and exclude historical interest expense for Jimmy Choo. Transaction costs of $41 million for Fiscal 2018, which have been recorded within restructuring and other charges in the Company’s consolidated statements of operations and comprehensive income, have been excluded from the above pro-forma consolidated results of operations due to their non-recurring nature.
v3.20.2
Receivables, net
12 Months Ended
Mar. 28, 2020
Receivables [Abstract]  
Receivables, net Receivables, net
Receivables, net consist of (in millions):
March 28,
2020
March 30,
2019
Trade receivables (1)
$432  $459  
Receivables due from licensees14  23  
446  482  
Less: allowances(138) (99) 
$308  $383  

(1)As of March 28, 2020 and March 30, 2019, $80 million and $317 million, respectively, of trade receivables were insured.
Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and doubtful accounts. Discounts are based on open invoices where trade discounts have been extended to customers. Markdowns are based on wholesale customers’ sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in revenues.
The Company’s allowance for doubtful accounts is determined through analysis of periodic aging of receivables that are not covered by insurance and assessments of collectability based on an evaluation of historic and anticipated trends, the financial condition of the Company’s customers and the impact of general economic conditions. The past due status of a receivable is based on its contractual terms. Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered. Allowance for doubtful accounts was $39 million as of March 28, 2020, including the impact related to COVID-19. Allowance for doubtful accounts was $18 million as of March 30, 2019, which included an $11 million allowance within the opening balance sheet of the newly acquired Versace business. The Company had bad debt expense of $29 million, $4 million and $8 million, respectively, for Fiscal 2020, Fiscal 2019 and Fiscal 2018.
v3.20.2
Concentration of Credit Risk, Major Customers and Suppliers
12 Months Ended
Mar. 28, 2020
Risks and Uncertainties [Abstract]  
Concentration of Credit Risk, Major Customers and Suppliers Concentration of Credit Risk, Major Customers and Suppliers
Financial instruments that subject the Company to concentration of credit risk are cash and cash equivalents and receivables. As part of its ongoing procedures, the Company monitors its concentration of deposits with various financial institutions in order to avoid any undue exposure. The Company mitigates its risk by depositing cash and cash equivalents in major financial institutions. The Company also mitigates its credit risk by obtaining insurance coverage for a portion of its receivables (see Note 6). No individual customer accounted for 10% or more of the Company’s total revenues during Fiscal 2020, Fiscal 2019 or Fiscal 2018.
The Company contracts for the purchase of finished goods principally with independent third-party contractors, whereby the contractor is generally responsible for all manufacturing processes. Although the Company does not have any long-term agreements with any of its manufacturing contractors, the Company believes it has mutually satisfactory relationships with them. The Company allocates product manufacturing among agents and contractors based on their capabilities, the availability of production capacity, quality, pricing and delivery. The inability of certain contractors to provide needed services on a timely basis could adversely affect the Company’s operations and financial condition. For Fiscal 2020, Fiscal 2019 and Fiscal 2018, one contractor accounted for approximately 20%, 21% and 26%, respectively, of the Company’s total finished goods purchases, based on dollar volume.
The Company also has relationships with various agents who source finished goods with numerous contractors on behalf of its Michael Kors brand. For Fiscal 2020, Fiscal 2019 and Fiscal 2018, one agent sourced approximately 26%, 24% and 24%, respectively, of Michael Kors finished goods, based on unit volume.
v3.20.2
Property and Equipment, Net
12 Months Ended
Mar. 28, 2020
Property, Plant and Equipment [Abstract]  
Property and Equipment, Net Property and Equipment, Net
Property and equipment, net, consists of (in millions):
March 28,
2020
March 30,
2019
Leasehold improvements$704  $639  
In-store shops236  270  
Furniture and fixtures329  292  
Computer equipment and software329  292  
Equipment136  123  
Building 49  47  
Land19  15  
1,802  1,678  
Less: accumulated depreciation and amortization(1,310) (1,115) 
492  563  
Construction-in-progress69  52  
$561  $615  
Depreciation and amortization of property and equipment for the fiscal years ended March 28, 2020, March 30, 2019, and March 31, 2018 was $200 million, $188 million and $182 million, respectively. During Fiscal 2020, the Company recorded property and equipment impairment charges of $77 million, $66 million of which related to the Company's retail store locations and $11 million of which related to determining asset groups for the Company’s premier store locations at an individual store level. See Note 14 for additional information. During Fiscal 2019 and Fiscal 2018, the Company recorded property and equipment impairment charges of $19 million and $28 million, respectively, primarily related to underperforming Michael Kors retail locations.
v3.20.2
Intangible Assets and Goodwill
12 Months Ended
Mar. 28, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Goodwill Intangible Assets and Goodwill
The following table details the carrying values of the Company’s intangible assets other than goodwill (in millions):
 March 28, 2020March 30, 2019
 Gross
Carrying
Amount
Accumulated
Amortization
NetGross
Carrying
Amount
Accumulated
Amortization
Net
Definite-lived intangible assets:
Reacquired rights $400  $61  $339  $400  $45  $355  
Trademarks23  20   23  19   
Lease rights (1)
—  —  —  96  56  40  
Customer relationships404  51  353  415  23  392  
827  132  695  934  143  791  
Indefinite-lived intangible assets:
Jimmy Choo brand (2)
547  180  367  572  —  572  
Versace brand (3)
924  —  924  930  —  930  
1,471  180  1,291  1,502  —  1,502  
Total intangible assets, excluding goodwill
$2,298  $312  $1,986  $2,436  $143  $2,293  
________________________________
(1)The March 30, 2019 balance includes certain lease rights that were reclassified to the operating lease right-of-use asset as part of the adoption of ASU 2016-02 in Fiscal 2020. Includes $2 million and $5 million, respectively, of impairment charges recorded during Fiscal 2019 and Fiscal 2018, primarily in connection with underperforming full-price Michael Kors retail stores. See Note 14 for additional information.
(2)The year-over-year change in carrying value reflects an impairment charge of $180 million and foreign currency translation of $25 million. The Company did not incur any impairment charges in prior periods.
(3)The year-over-year change in carrying value relates to foreign currency translation.
Reacquired rights relate to the Company’s reacquisition of the rights to use the Michael Kors trademarks and to import, sell, advertise and promote certain of its products in the previously licensed territories in the Greater China region and are being amortized through March 31, 2041, the expiration date of the related license agreement. The trademarks relate to the Michael Kors brand name and are amortized over twenty years. Customer relationships are amortized over five to eighteen years. Key money is amortized over the respective terms of the underlying lease, including highly probable renewal periods. Amortization expense for the Company’s definite-lived intangibles was $49 million, $37 million and $26 million, respectively, for each of the fiscal years ended March 28, 2020, March 30, 2019 and March 31, 2018.
Indefinite-lived intangible assets other than goodwill included the Versace and Jimmy Choo brands, which were recorded in connection with the acquisitions of Versace and Jimmy Choo, and have an indefinite life due to being essential to the Company’s ability to operate the Versace and Jimmy Choo businesses for the foreseeable future.
Estimated amortization expense for each of the next five years is as follows (in millions):
Fiscal 2021$46  
Fiscal 202246  
Fiscal 202346  
Fiscal 202445  
Fiscal 202545  
Fiscal 2026 and thereafter467  
$695  
The future amortization expense above reflects weighted-average estimated remaining useful lives of 21 years for reacquired rights, 3 years for trademarks and 13 years for customer relationships.
The following table details the changes in goodwill for each of the Company’s reportable segments (in millions):
VersaceJimmy Choo
Michael
    Kors (1)
Total
Balance at March 31, 2018$—  $728  $120  $848  
Acquisition of Versace (1)
878  —  —  878  
Foreign currency translation
(17) (50) —  (67) 
Balance at March 30, 2019861  678  120  1,659  
Acquisition—  11  —  11  
Measurement period adjustment (1)
26  —  —  26  
Impairment charges (2)
—  (171) —  (171) 
Foreign currency translation
(6) (31) —  (37) 
Balance at March 28, 2020$881  $487  $120  $1,488  

(1)See Note 5 for additional information.
(2)The Company recorded impairment charges of $171 million related to the Jimmy Choo retail and licensing reporting units. The Company did not incur any goodwill impairment charges in prior periods.
The Company’s goodwill and the Versace and Jimmy Choo brands are not subject to amortization but are evaluated for impairment annually in the last quarter of each fiscal year, or whenever impairment indicators exist. During the fourth quarter of Fiscal 2020, the Company performed its annual goodwill and indefinite-lived intangible assets impairment analysis for its three segments. The Company performed its goodwill impairment assessment for its Michael Kors segment using a qualitative assessment. As a result of realigning its segment reporting structure during the fourth quarter of Fiscal 2019, the Company presented the carrying amount of goodwill for the Michael Kors Retail, Michael Kors Wholesale and Michael Kors Licensing reporting units within the Michael Kors reportable segment. Based on the results of the Company’s qualitative impairment assessment, the Company concluded that it is more likely than not that the fair value of the Michael Kors’ reporting units exceeded their carrying value and, therefore, were not impaired.
The Company performed its annual goodwill and indefinite-lived intangible asset impairment analysis for both the Versace and Jimmy Choo reporting units using a quantitative approach, using a discounted cash flow analysis to estimate the fair values of the each brands' reporting units. Based on the results of these assessments, the Company concluded that the fair values of the Jimmy Choo retail and licensing reporting units and the Jimmy Choo brand indefinite-lived intangible asset did not exceed the related carrying amounts. Jimmy Choo expects to experience a reduction in profitability trends, primarily related to the ongoing impact of the COVID-19 pandemic, resulting in declines in sales driven by the full and partial closures of a significant portion of our stores globally.
The Company also concluded that the fair values of the Versace reporting units and the Versace brand indefinite-lived intangible asset exceeded the related carrying amounts and there was no impairment recorded.
Accordingly, the Company recorded impairment charges of $171 million related to the Jimmy Choo retail and licensing reporting units and $180 million related to the Jimmy Choo brand intangible asset during Fiscal 2020. The impairment charges were recorded within impairment of assets on the Company's consolidated statement of operations and comprehensive income for the fiscal year ended March 28, 2020. See Note 14 to the accompanying audited financial statements for information relating to its annual impairment analysis performed during the fourth quarter of Fiscal 2020.
v3.20.2
Current Assets and Current Liabilities
12 Months Ended
Mar. 28, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Current Assets and Current Liabilities Current Assets and Current Liabilities
Prepaid expenses and other current assets consist of the following (in millions):
March 28,
2020
March 30,
2019
Prepaid taxes$116  $125  
Prepaid contracts17  15  
Other accounts receivables10  10  
Interest receivable related to net investment hedges 11  
Prepaid rent—  24  
Other23  36  
$167  $221  
Accrued expenses and other current liabilities consist of the following (in millions):
March 28,
2020
March 30,
2019
Other taxes payable$38  $47  
Return liabilities37  35  
Accrued capital expenditures31  25  
Gift cards and retail store credits11  13  
Accrued rent (1)
10  34  
Professional services10  12  
Accrued litigation10  11  
Restructuring liability (2)
 64  
Accrued advertising and marketing 10  
Accrued interest 10  
Accrued purchases and samples  29  
Other65  84  
$241  $374  
(1)The accrued rent balance relates to variable lease payments.
(2)In connection with the adoption of ASU 2016-02, certain lease related assets and liabilities were reflected within operating lease right-of-use assets and liabilities as of March 28, 2020. See Note 2 and Note 4 for additional information.
v3.20.2
Restructuring and Other Charges
12 Months Ended
Mar. 28, 2020
Restructuring and Related Activities [Abstract]  
Restructuring and Other Charges Restructuring and Other Charges
Michael Kors Retail Fleet Optimization Plan
During Fiscal 2020, the Company completed its plan to close between 100 and 150 of its Michael Kors retail stores in order to improve the profitability of its retail store fleet (“Michael Kors Retail Fleet Optimization Plan”). The Company expected approximately $100 - $125 million of one-time costs associated with these store closures, with total costs in line with its original expectations. Collectively, the Company continues to anticipate ongoing savings as a result of the store closures and lower depreciation expense associated with the impairment charges being recorded.
During Fiscal 2020, the Company closed 43 of its Michael Kors retail stores under the Michael Kors Retail Fleet Optimization Plan, for a total of 143 stores closed at a cost of $99 million since plan inception. Restructuring charges recorded in connection with the Michael Kors Retail Fleet Optimization Plan during Fiscal 2020 was $5 million. The below table presents a rollforward of the Company’s remaining restructuring liability related to this plan (in millions):
Severance and benefit costsLease-related and other costsTotal
Balance at March 30, 2019$ $53  $55  
ASC 842 (Leases) Adjustment (1)
—  (46) (46) 
Balance at March 31, 2019   
Additions charged to expense—    
Payments(1) (8) (9) 
Balance at March 28, 2020$ $