Segment Information

3 Months Ended

Jun. 29, 2019

The Company operates its business through three operating segments—Versace, Jimmy Choo and Michael Kors, which are based on its business activities and organization. The reportable segments are segments of the Company for which separate financial information is available and for which operating results are evaluated regularly by the Company’s chief operating decision maker ("CODM") in deciding how to allocate resources, as well as in assessing performance. The primary key performance indicators are revenue and operating income for each segment. The Company’s reportable segments represent components of the business that offer similar merchandise, customer experience and sales/marketing strategies.

The Company’s three reportable segments are as follows:

•

Versace — segment includes revenue generated through the sale of Versace luxury ready-to-wear, accessories, footwear and home furnishings through directly operated Versace boutiques throughout North America (United States and Canada), EMEA and certain parts of Asia, 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 that allow third parties to use the Versace trademarks in connection with retail and/or wholesale sales of Versace branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of jeans, fragrances, watches, jewelry and eyewear.

•

Jimmy Choo — segment includes revenue generated through the sale of Jimmy Choo luxury footwear, handbags and small leather goods through directly operated Jimmy Choo stores throughout the Americas, EMEA and certain parts of Asia, through its 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 trademarks 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 fragrances, sunglasses and eyewear.

•

Michael Kors — segment includes revenue generated through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which the Company sells Michael Kors products, as well as licensed products bearing the Michael Kors name, directly to the end consumer throughout the Americas (U.S., Canada and Latin America, excluding Brazil), Europe and certain parts of Asia. The Michael Kors e-commerce business includes e-commerce sites in the U.S., Canada, certain parts of Europe, China, Japan and South Korea. The Company also sells Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to its geographic licensees in certain parts of EMEA (Europe, Middle East and Africa), 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.

In addition to these reportable segments, the Company has certain corporate costs that are not directly attributable to its brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, and information systems expenses, including enterprise resource planning system implementation costs. In addition, certain other costs are not allocated to segments, including restructuring and other charges (including transition costs related to the Company’s recent acquisitions) and impairment costs. The segment structure is consistent with how the Company’s CODM plans and allocates resources, manages the business and assesses performance. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance.

The following table presents the key performance information of the Company’s reportable segments (in millions):



	Three Months Ended
	June 29, 2019			June 30, 2018
Total revenue:
Versace	$	207		$	—
Jimmy Choo	158			173
Michael Kors	981			1,030
Total revenue	$	1,346		$	1,203

Income from operations:
Versace	$	(3	)	$	—
Jimmy Choo	11			22
Michael Kors	201			230
Total segment income from operations	209			252
Less: Corporate expenses	(33		)	(22		)
Restructuring and other charges	(15		)	(11		)
Impairment of long-lived assets	(97		)	(4		)
Total income from operations	$	64		$	215

Depreciation and amortization expense for each segment are as follows (in millions):



	Three Months Ended
	June 29, 2019		June 30, 2018
Depreciation and amortization:
Versace	$	14	$	—
Jimmy Choo	8		8
Michael Kors	38		48
Total depreciation and amortization	$	60	$	56

Total revenue (based on country of origin) by geographic location are as follows (in millions):



	Three Months Ended
	June 29, 2019		June 30, 2018
Total revenue:
The Americas ⁽¹⁾	$	729	$	718
EMEA	360		302
Asia	257		183
Total revenue	$	1,346	$	1,203


⁽¹⁾	Total revenue earned in the U.S. were $681 million for the three months ended June 29, 2019 and $668 million for the three months ended June 30, 2018.

As of June 29, 2019 and March 30, 2019, the Company's total assets were $8.308 billion and $6.650 billion, respectively. The increase in total assets was primarily due to the adoption of ASC 842 in the first quarter of Fiscal 2020, which resulted in the Company recording operating lease right-of-use assets of $1.718 billion, of which $1.010 billion related to Michael Kors, $471 million related to Versace, and $237 million related to Jimmy Choo.