CPRI

Capri Holdings Ltd

NYSE · CONSUMER DISCRETIONARY · LEATHER & LEATHER PRODUCTS

15.87

−0.49 −3.00%

USD · close Oct 23

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MKT CAP $1.8BP/E 12.2DIV YIELD —FCF YIELD 4.60%REV TTM $3.4B −3.5%NET INCOME $153MNET DEBT $243M52W 12.71 – 27.66SEC XBRL · TTM TO Invalid Date

How CPRI rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

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Risk Factors You should carefully read this entire report, including, without limitation, the following risk factors and the section of this annual report entitled “Special Note On Forward-Looking Statements.” Any of the following factors could materially adversely affect our business, results of operations and financial condition.
Additional risks and uncertainties not currently known to us or that we currently view as immaterial may also materially adversely affect our business, results of operations and financial condition.
Risks are listed in the categories where they primarily apply, but other categories may also apply.
Risks Related to Macroeconomic Conditions The accessories, footwear and apparel industries are heavily influenced by general macroeconomic cycles that affect consumer spending and a prolonged period of depressed consumer spending could materially adversely affect demand for our products, pricing dynamics and our ability to manage inventory levels and margins.
Global economic conditions and the related impact on levels of consumer spending worldwide, particularly for luxury goods, have adversely affected our business and may continue to do so.
Inflation, higher fuel and energy costs, rising commodity prices for leather, textiles and other raw materials used in our products, tariffs imposed on imported goods, disruptions to global shipping routes, including the Red Sea corridor, resulting from the conflicts in the Middle East, and reduced consumer confidence have increased our cost of goods sold and may reduce demand for our products.
Because our products are produced outside of the United States, these conditions affect both our supply chain costs and our ability to maintain gross margins.
Prolonged or worsening macroeconomic conditions could disproportionately affect demand for our products, particularly where consumers are price sensitive.
In addition, when disposable income is lower we may experience lower store traffic or have to increase our promotional activity.
Other factors that could depress consumer spending and negatively impact our business include extreme weather conditions and natural disasters, pandemics or other public health crisis (including prior events such as COVID-19), high levels of unemployment, fluctuating foreign currency rates and increased taxation.
Reduced consumer confidence and adversely impacted consumer spending patterns in any of the regions in which we operate could materially adversely affect demand for our products, pricing dynamics and our ability to manage inventory levels and margins.
Risks Related to Our Industry We may not be able to respond to changing fashion and retail trends in a timely manner, which could have a material adverse effect on our brands, business, results of operations and financial condition.
The accessories, footwear and apparel industries have historically been subject to rapidly changing fashion trends and consumer preferences.
We believe that our success is largely dependent on the images of our brands and our ability to anticipate and respond promptly to changing consumer demands and fashion trends in the design, styling, sustainable production, merchandising and pricing of products.
Any misstep in product quality or design, executive leadership, customer services, unfavorable publicity or excessive product discounting could negatively affect the image or our brands with our customers.
If we do not correctly gauge consumer needs and fashion trends and respond appropriately, consumers may not purchase our products and our brand names and the images of our brands may be impaired.
Even if we react appropriately to changes in fashion trends and consumer preferences, consumers may consider our brands to be outdated or associate our brands with styles that are no longer popular or trend-setting.
Any of these outcomes could have a material adverse effect on our brands, business, results of operations and financial condition.
The markets in which we operate are highly competitive, both within North America and internationally, and increased competition based on a number of factors could cause our profitability and/or gross margins to decline.
Our brands face intense competition from other accessories, footwear and apparel producers and retailers, including, primarily European and American international luxury brands.
In addition, we face competition through third-party distribution channels that sell our merchandise, such as e-commerce, department stores and specialty stores.
Competition is based on a number of factors, including, without limitation, the following: • anticipating and responding to changing consumer demands in a timely manner; • establishing and maintaining favorable brand name recognition; • determining and maintaining product quality; • retaining key employees; • maintaining and growing market share; Table of Content s • developing quality and differentiated products that appeal to consumers; • establishing and maintaining acceptable relationships with our customers; • pricing products appropriately; • providing appropriate service and support to retailers; • optimizing retail and supply chain capabilities; • determining the size and location of retail and department store selling space; and • protecting intellectual property.
In addition, some of our competitors may be significantly larger and more diversified than us and may have significantly greater financial, technological, manufacturing, sales, marketing and distribution resources than we do.
Their capabilities in these areas may enable them to better withstand periodic downturns in the accessories, footwear and apparel industries (including as a result of recent inflationary pressures and other macroeconomic factors), compete more effectively on the basis of price and production and develop new products more quickly.
The general availability of manufacturing contractors and agents also allows new entrants easy access to the markets in which we compete, which may increase the number of our competitors and adversely affect our competitive position and our business.
Any increased competition, or our failure to adequately address any of these competitive factors, could result in reduced revenues, which could adversely affect our business, results of operations and financial condition.
Competition, along with other factors such as consolidation, changes in consumer spending patterns and a highly promotional retail selling environment, could also result in significant pricing pressure.
These factors may cause us to reduce our sales prices to our wholesale and retail consumers, which could cause our gross margins to decline if we are unable to appropriately manage inventory levels and/or otherwise offset price reductions with comparable reductions in our operating costs.
If our sales prices decline and we fail to sufficiently reduce our product costs or operating expenses, our profitability may decline, which could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Our Business We face risks associated with operating globally.
We operate on a global basis, with approximately 47% of our total revenue from operations outside of the United States during Fiscal 2026.
Our international operations expose us to risks related to: • geopolitical events or other political or civil unrest, including protests and other civil disruption; • unforeseen public health crises, such as pandemic and epidemic diseases, including prior events such as COVID-19 and any variants thereof; • economic instability and unsettled regional and global conflicts (such as the current war in Ukraine and the Middle East conflict), which may negatively affect consumer spending by foreign tourists and local consumers in the various regions where we operate; • regulatory developments and policies of the United States or foreign governments (including sanctions and retaliatory actions by the United States, European Union and others); • potential negative consequences from changes in taxation policies; • natural disasters or other extreme weather events, including those attributed to climate change; • acts of terrorism, military actions or other conditions over which we have no control; and • foreign consumer behavior and demand dynamics, including changing economic and consumer conditions and shifts in domestic spending priorities, which could adversely affect demand for discretionary products in certain markets.
In addition, we pursue selective international expansion in a number of countries around the world and through a number of channels.
If our international expansion plans are unsuccessful, it could have a material adverse effect on our business, results of operations and financial condition.
There are also some countries where we do not yet have significant operating experience, and in most of these countries, we face established competitors with significantly more operating experience in those locations.
We also sell our products at varying retail price points based on geographic location that yield different gross profit margins and we achieve different operating profit margins, depending on geographic region, due to a variety of factors including product mix, store size, occupancy costs, labor costs and retail pricing.
Changes in any one or more of these factors could result in lower revenues, increased costs and negatively impact our business, results of operations and financial condition.
Furthermore, consumer demand and behavior, as well as tastes and purchasing trends may differ in these countries and, as a result, sales of our product may not be successful, or the gross margins on those sales may not be in line with those we currently anticipate.
Table of Content s There can be no assurance that any or all of these events will not have a material adverse effect on our business, results of operations and financial condition.
Our business is subject to risks associated with importing products, and the imposition or threat of imposition of new or additional duties, tariffs or trade restrictions or supply chain diligence requirements could have a material adverse effect on our business, results of operations and financial condition.

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Gone since FY2025

Risk Factors - “We may incur significant goodwill and/or intangible asset impairment charges with respect to one or more of our brands which could have a material adverse impact on our results of operations and financial condition.” Macroeconomic conditions and inflationary pressures.
Global economic conditions and the related impact on levels of consumer spending worldwide impacted our business in Fiscal 2025, and are likely to continue to impact our business and the luxury accessories, footwear and apparel industry overall for the foreseeable future.
Inflation, rising interest rates, higher fuel and energy costs and commodity prices, reductions in net worth based on stock market declines and uncertainty, home prices, credit availability and consumer debt levels, political instability due to war or other geopolitical factors, including the presidential change in the U.S., and other macroeconomic pressures and general uncertainty regarding the overall future economic environment along with tariffs and foreign currency fluctuations have created a challenging retail environment, which is expected to continue in the near term.
There continues to be uncertainty in the current macroeconomic environment due to the above-mentioned items.
Our revenue and earnings in future periods may be subject to significant material change as a result of these and other macroeconomic factors.
Purchases of discretionary luxury items, such as the accessories, footwear and apparel that we produce tend to decline when disposable income is lower or when there are recessions, inflationary pressures or other economic uncertainty which could negatively affect our financial condition and results of operations.
Costs of manufacturing, tariffs and import regulations.
Our industry is subject to volatility in costs related to certain raw materials used in the manufacturing of our products.
This volatility applies primarily to costs driven by commodity prices, which can increase or decrease dramatically over a short period of time, as well as manufacturing labor costs which are also subject to degrees of volatility based on local and global economic conditions.
In addition, our costs may be impacted by sanction tariffs imposed on our products due to changes in trade terms.
Virtually all of our products are subject to duties which may impact the cost of our products.
Government announced tariffs on imports from select countries.
The majority of the Company's products sold in the U.S. are imported from countries in which these tariffs were announced, including Vietnam, Cambodia, Indonesia and Bangladesh, where the primary manufacturers of Michael Kors products are located.
Increased tariffs or other trade restrictions against countries where our products are manufactured, and/or any tariffs or other trade restrictions implemented by these countries in retaliation, could materially impact our revenue and profitability.
We use commercially reasonable efforts to mitigate these effects by sourcing our products as efficiently as possible and diversifying the countries where we produce, and we are continuing to explore ways to mitigate our potential exposure to risks associated with new or increased duties, tariffs, or other import controls or restrictions but we may not be able to mitigate the risk fully or at all.
Risk Factors - “Our business is subject to risks associated with importing products, and the imposition or threat of imposition of new or additional duties, tariffs or trade restrictions could have a material adverse effect on our business, results of operations and financial condition." Luxury goods trends and demand for our accessories and related merchandise .
Our performance is affected by trends in the luxury goods industry, global consumer spending, macroeconomic factors, overall levels of consumer travel and spending on discretionary items as well as shifts in demographics and changes in lifestyle preferences.
We have experienced, and may continue to experience, material reductions in revenues across our brands and regions driven by softening demand globally for fashion luxury goods as well as Versace and Michael Kors’ brand repositioning efforts.
If demand for global fashion luxury goods continues to soften and/or if we do not correctly gauge consumer needs and fashion trends and respond appropriately, our future results of operations may be materially impacted.
Our consolidated operations are impacted by the relationships between our reporting currency, the United States dollar, and those of our non-United States subsidiaries whose functional/local currency is other than the United States dollar, primarily the Euro, the British Pound, the Chinese Renminbi and the Japanese Yen, among others.
We continue to expect volatility in the global foreign currency exchange rates, which may have a negative impact on the reported results of certain of our non-United States subsidiaries in the future, when translated to the United States dollar.
Disruptions or delays in shipping and distribution and other supply chain constraints.
Any disruptions in our shipping and distribution network, including port congestion, vessel availability, container shortages and temporary factory closures, could have a negative impact on our results of operations.
Risk Factors - “We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods” and “Our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments” for additional discussion.
Implementing and updating information technology systems.
During Fiscal 2024, we began implementing a new state of the art e-commerce platform across certain of our brands which was completed in Fiscal 2025.
While the new platform is designed to improve the user experience and enhance consumer engagement, the transition created unanticipated challenges which have negatively impacted our results of operations.
Risk Factors - “A material delay or disruption in our information technology systems or e-commerce websites or our failure or inability to upgrade our information technology systems precisely and efficiently could have a material adverse effect on our business, results of operations and financial condition” for additional discussion.
Segment Information We operate in three reportable segments, which are as follows: Versace We generate revenue through the sale of Versace luxury accessories, ready-to-wear and footwear through directly operated Versace boutiques throughout North America (United States and Canada), certain parts of EMEA (Europe, Middle East and Africa) and certain parts of Asia (Asia and Oceania), as well as through Versace outlet stores and e-commerce sites.
In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of the Versace Jeans Couture product line, fragrances, watches, eyewear and home furnishings.
Jimmy Choo We generate revenue through the sale of Jimmy Choo luxury goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas (United States, Canada and Latin America), certain parts of EMEA and certain parts of Asia, through our e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo tradename in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide.
In addition, revenue is generated through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of products, including fragrances and eyewear.
Michael Kors We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our products, as well as licensed products bearing our name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia.
Our Michael Kors e-commerce business includes e-commerce sites in the United States, Canada, EMEA and Asia.
We also sell Michael Kors products directly to department stores, primarily located across the Americas and EMEA, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of EMEA, Asia and Brazil.
In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear, as well as through geographic licensing arrangements, which allow third parties to use the Michael Kors tradename in connection with the retail and/or wholesale sales of our Michael Kors branded products in specific geographic regions.
Unallocated Corporate Expenses In addition to the reportable segments discussed above, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments.
Such costs primarily include certain administrative, corporate occupancy, shared service and information technology systems expenses, including enterprise resource planning system implementation costs and Capri transformation program costs.
In addition, certain other costs are not allocated to segments, including transaction related income (costs), impairment charges and restructuring and other expense.
The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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