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Summary of Significant Accounting Policies | 3 Months Ended
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Jun. 28, 2025
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, credit losses, estimates of inventory net realizable value, the valuation of deferred taxes, goodwill, intangible assets, operating lease right-of-use assets and property and equipment, along with the estimated useful lives assigned to these assets. Actual results could differ from those estimates. 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. Cash, Cash Equivalents and Restricted Cash 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 June 28, 2025 and March 29, 2025 are credit card receivables of $24 million and $20 million, respectively, which generally settle within two to three business days. A reconciliation of cash, cash equivalents and restricted cash as of June 28, 2025 and March 29, 2025 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):
| June 28, 2025 |  | March 29, 2025
Reconciliation of cash, cash equivalents and restricted cash |  |  |
Cash and cash equivalents | $ | 129 |  |  | $ | 107 |
Restricted cash included within prepaid expenses and other current assets | 10 |  |  | 9 |
Total cash, cash equivalents and restricted cash shown on the consolidated statements of cash flows from continuing operations | $ | 139 |  |  | $ | 116 |
Inventories Inventories primarily consist of finished goods with the exception of raw materials and work in process. The combined total of raw materials and work in process recorded on the Company’s consolidated balance sheets was $18 million and $17 million as of June 28, 2025 and March 29, 2025, respectively. Derivative Financial Instruments Forward Foreign Currency Exchange Contracts The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currencies 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 contracts to hedge the Company’s cash flows, as they relate to transactions denominated in foreign currencies. Certain of these contracts are designated as hedges for accounting purposes, while others may 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. 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 a description of the hedged transaction, the hedging instrument and the risk being hedged. The changes in the fair value for contracts designated as cash flow hedges are 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, 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 (gain) loss in the Company’s consolidated statements of operations and comprehensive income (loss). The Company classifies cash flows relating to its forward foreign currency exchange contracts related to the 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 less than 12 months. The period of these contracts is directly related to the transactions they are intended to hedge. Net Investment Hedges The Company also uses cross currency swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between different currencies. The Company has elected the spot method of designating these contracts under ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” and has designated these contracts as net investment hedges. The net gain or loss on the net investment hedge is reported within foreign currency translation adjustments (“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 income, net, in the Company’s consolidated statements of operations and comprehensive income (loss). Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold or liquidated. Interest Rate Swap Agreements The Company also uses interest rate swap agreements to hedge the variability of its cash flows resulting from floating interest rates on the Company’s borrowings. When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive (loss) income and are reclassified into interest income, net, in the same period during which the hedged transactions affect earnings. Leases 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 ten years, generally require fixed rent payments 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 December 2029. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores under its restructuring initiatives. 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 the 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. The following table presents the Company’s supplemental cash flow information related to leases (in millions):
|  |  |  | Three Months Ended
|  |  |  | June 28, 2025 |  | June 29, 2024
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows used in operating leases |  | $ | 85 |  |  | $ | 88 |
During both the three months ended June 28, 2025 and June 29, 2024, the Company recorded sublease income of $2 million within selling, general and administrative expenses. Net Income per Share The Company’s basic net income per ordinary share is calculated by dividing net income by the weighted average number of ordinary shares outstanding during the period. Diluted net income per ordinary share reflects the potential dilution that would occur if restricted share units (“RSUs”) or any other potentially dilutive instruments, including share option grants, were converted or exercised 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 income per ordinary share and diluted net income per ordinary share are as follows (in millions, except share and per share data):
|  |  | Three Months Ended
|  |  |  |  | June 28, 2025 |  | June 29, 2024
Numerator: |  |  |  |  |  |  |
Net income from continuing operations |  |  |  |  | $ | 56 |  |  | $ | 5 |
Less: Net income attributable to noncontrolling interest from continuing operations |  |  |  |  | — |  |  | 2 |
Net income attributable to Capri from continuing operations |  |  |  |  | $ | 56 |  |  | $ | 3 |
Net loss from discontinued operations, net of tax |  |  |  |  | $ | (3) |  |  | $ | (17) |
Less: Net income attributable to noncontrolling interest from discontinued operations |  |  |  |  | — |  |  | — |
Net (loss) attributable to Capri from discontinued operations |  |  |  |  | (3) |  |  | (17) |
Net income (loss) attributable to Capri |  |  |  |  | $ | 53 |  |  | $ | (14) |
Denominator: |  |  |  |  |  |  |
Basic weighted average shares |  |  |  |  | 118,799,819 |  |  | 117,440,282 |
Weighted average dilutive share equivalents: |  |  |  |  |  |  |
Share options, restricted stock units, and performance restricted stock units |  |  |  |  | 307,844 |  |  | 816,135 |
Diluted weighted average shares |  |  |  |  | 119,107,663 |  |  | 118,256,417 |
Net income (loss) per ordinary share attributable to Capri: |  |  |  |  |  |  |
Basic from continuing operations |  |  |  |  | $ | 0.47 |  |  | $ | 0.03 |
Basic from discontinued operations |  |  |  |  | (0.03) |  |  | (0.14) |
Basic per ordinary share (1) |  |  |  |  | $ | 0.44 |  |  | $ | (0.11) |
Diluted from continuing operations |  |  |  |  | $ | 0.47 |  |  | $ | 0.03 |
Diluted from discontinued operations |  |  |  |  | (0.03) |  |  | (0.15) |
Diluted per ordinary share (1) |  |  |  |  | $ | 0.44 |  |  | $ | (0.12) |
(1)Basic and diluted per share amounts are calculated using unrounded numbers. During the three months ended June 28, 2025, share equivalents of 2,689,897 shares have been excluded from the above calculations due to their anti-dilutive effect. Share equivalents of 222,497 shares have been excluded from the above calculations for the three months ended June 29, 2024 due to their anti-dilutive effect. See Note 3 in the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2025 for a complete disclosure of the Company’s significant accounting policies. Recently Issued Accounting Pronouncements The Company has considered all new accounting pronouncements and, other than the recent pronouncements discussed below, has concluded that there are no new pronouncements that may have a material impact on the Company’s results of operations, financial condition or cash flows based on current information. Income Taxes In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, to enhance transparency and decision usefulness of income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The Company will adopt the update on a prospective basis beginning with disclosure in its Fiscal 2026 annual consolidated financial statements. Comprehensive Income In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)”, which requires public entities to disaggregate specific types of expenses, including disclosures for purchases of inventory, employee compensation, depreciation, and intangible asset amortization, as well as selling expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026. Interim disclosures are required for periods within annual periods beginning after December 15, 2027. Prospective application is required, and retrospective application is permitted. Early adoption is also permitted. We are currently assessing the impact of the requirements on the Company’s consolidated financial statements and disclosures. Tax Legislation On December 12, 2022, the European Union member states reached an agreement to implement the OECD’s reform of international taxation known as Pillar Two Global Anti-Base Erosion ("GloBE") Rules, which broadly mirrors certain provisions of the Inflation Reduction Act by imposing a 15% global minimum tax on multinational companies. GloBE became effective for the Company during Fiscal 2025. Based upon the Company’s analysis, the Pillar Two initiatives are not projected to have a material impact on the Company’s consolidated financial statements. On January 10, 2025, the United States Treasury and the IRS issued final regulations that address several long-standing issues related to dual consolidated losses and introduce new rules for disregarded payment losses. The changes related to disregarded payment losses could impact how the Company utilizes certain deductions and losses to offset its U.S. income as part of its global financing activities, beginning in Fiscal 2027. The Company will continue to evaluate its impact as further information becomes available. On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. The Company is evaluating the future impact of these tax law changes on its consolidated financial statements.

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