Earnings Call: Q4 2021

May 26, 2021

Greetings. Welcome to the Capri Holdings Limited 4th Quarter 2021 Earnings Conference Call. At this time, Please note, this conference is being recorded. I will now turn the conference over to Jennifer Davis, Vice President of Investor Relations. Thank you. You may begin. Good morning, everyone, and thank you for joining us on Capri Holdings Limited's 4th quarter our fiscal 2021 conference call. With me this morning are Chairman and Chief Executive Officer, John Idol and Chief Financial and Chief Operating Officer, Tom Edwards. Before we begin, let me remind you that certain statements made on today's call may constitute forward looking statements, which are subject to risks and uncertainties that could cause our results to differ from those we expect. Those risks and uncertainties are described in today's press release and in the company's SEC filings, which are available on the company's website. Investors should not assume that the statements made during this call will remain operative at a later time and the company undertakes no obligation to update any information discussed on the call. In addition, certain financial information discussed today will be presented on a non GAAP basis. These non GAAP measures all of these items include certain costs associated with COVID-nineteen related charges, long lived asset impairment, ERP implementation costs, Capri transformation costs, charitable donations and inventory step up adjustment, acquisition, foreign currency effects, restructuring and other charges. Unless otherwise noted, all financial information on today's call will be presented on a non GAAP basis. To view the corresponding GAAP measures and related reconciliation, please view the earnings release posted on our website earlier today at cuckreholdings.com. Before we begin, I would like to note that we have accompanying slides posted to our website. I would like to turn the call over to Mr. John Idol, Chairman and Chief Executive Officer. Thank you, Jennifer, and good morning, everyone. Looking back, fiscal 2021 was a year like no other. Over this time, the COVID-nineteen pandemic has had a profound effect on the entire world. The unprecedented challenges tested our business and industry in ways we could never have imagined. My thoughts go out to all those affected by the virus and to everyone on the front lines who are tirelessly all participants are helping combat this pandemic. The entire Capri team came together not only to successfully navigate these challenging times, but also to position the company to emerge from this global crisis even stronger. I want to thank all of our employees around the world for the hard work and dedication they demonstrate every day to support each other and their communities. It has been inspiring to see the entire organization rally together. I'm incredibly proud of the team and what Capri Holdings has been able to accomplish during these unprecedented times. Looking at fiscal 2021, we are encouraged by the performance of all three our luxury houses. Revenue and earnings results significantly exceeded our original expectations. Retail sales improved sequentially every quarter, while e commerce sustained strong increases across all brands, with growth rates accelerating even after stores began reopening. Gross margin increased approximately 3.40 basis points in fiscal 2021. Furthermore, we attracted nearly 9,000,000 new consumers across our luxury houses our earnings call is now available as evidenced by the double digit increases in our customer databases over the last year. Our success is a testament to the strength of our brands as well as the dedication, resilience and agility of the entire Capri Holdings team. During the year, we reevaluated and refined Capri Holdings' strategic direction to ensure the company emerges from the pandemic stronger and more profitable. For Versace and Jimmy Choo, we reaffirmed our long term plans and are even more enthusiastic about the prospects of these luxury houses. For Michael Kors, we recalibrated our plans to further elevate the brand positioning with the strategic reset of our business, we believe Capri Holdings is well positioned our goal to grow to $7,000,000,000 in revenue. Looking forward, as the world starts to recover from the pandemic, we are confident in our growth opportunities for Versace, Jimmy Choo and Michael Kors. Consumer optimism is returning with the vaccine rollout progressing in many parts of the world. While the pace of recovery is still dependent on the vaccinations progress, we believe the luxury market will resume a steady growth trajectory and Capri Holdings is well positioned to participate. Now turning to the 4th quarter performance. We were pleased revenue, gross margin our earnings per share all significantly exceeded our expectations. The company achieved these results despite greater than anticipated challenges in EMEA and Canada due to additional restrictions and store closures associated with COVID. Total revenue in the 4th quarter our earnings conference call was flat compared to prior year, with strength in the retail channel in the Americas and Asia, offsetting the challenged environment in EMEA. Additionally, Gross margin expanded 280 basis points, more than double our expectation, I'll turn the call over to the operator for questions. As a result, earnings per share of $0.38 were stronger than expected. Looking at group revenue trends, total sales for our retail channel increased 13%, our earnings call will be recorded significantly exceeding our expectations. The better results were driven in part by robust e commerce sales, which e commerce sales are benefiting from our increased use of data analytics to support more targeted our earnings call is now open to the Q1 and personalized marketing. Additionally, store performance improved significantly quarter over quarter, our earnings call is driven by local clienteling initiatives and improved traffic trends. In the wholesale channel, sales also improved once again revenue in the region increased across all three of our luxury houses, driven primarily by strong growth in Mainland China, our sales increased triple digits. In the Americas, retail revenue also increased double digits, On the other hand, in EMEA, revenue trends remain negative as an average of 60% of our stores in the region were closed during the quarter. Despite the increased restrictions Now turning to 4th quarter performance by brand. Starting with Versace, we were pleased with the results, which were significantly ahead of our expectations. Revenues increased 10% in the 4th quarter, demonstrating the strength of the brand and the success of our strategic growth initiatives. Sales in our retail channel increased double digits globally. In the Americas and Asia, we delivered double digit growth, triple digits year over year. We were encouraged with the performance of our spring collections, our results are resonating with consumers. We saw strength across categories reflecting enthusiastic customer responses I'll turn the call over to the brand and product. Women's accessories and footwear are key strategic growth drivers. These categories performed exceptionally well with sales nearly doubling prior year levels during the quarter. We continue to see strong consumer response to Virtuis as well as with Virtus and Laomedusa, we now have 2 powerful, highly recognizable brand pillars we will soon introduce a 3rd pillar all participants are participating with the fall launch of our LaGreca signature pattern. I hope you were able to watch the Versace Fashion Show in March, our earnings call will be recorded in the Q1 of 2019, where we debuted the new signature pattern, which combines our iconic Greek key motif we believe the introduction of the new LaGreca signature pattern our earnings conference call will significantly accelerate the trajectory of Versace's revenues as it expands the brand's a portfolio of recognizable iconic pillars. Additionally, we saw strength across both women's and men's ready to wear. Our seasonal offerings incorporated the Tresor De La Mer pattern, which was featured our results are in the Versace Spring 2021 Runway Show. We also continue to expand our core lines that incorporate another key indicator of strength of the Versace brand is our very successful fragrance collection, our earnings call is now open to the Q1, which is one of the largest designer fragrance businesses in the world. We were very pleased with the continued strength our new Dylan Turquoise and the refresh of our successful Dylan Blue Fragrances as sales continue to exceed our expectations. In terms of brand awareness and consumer engagement, Versace's springsummer 20 21 campaign reflected Donatella's underwater fantasy world, Versaceopolis, starring Kendall Jenner, Hailey Bieber and Precious Lee, the Modern Versace Muses our expectations are not subject to the future with optimism and hope. In addition, in China, Versace launched a dedicated campaign our next call is from the line of Robert W. The Chinese singer and actress has over 25,000,000 followers on our social media Also, Versace debuted Donatella's new collection during its fallwinter 2021 fashion show in March, which introduced our new LaGreca signature pattern. Our conference call is presented in a vertical maze inspired by our iconic Greco motif our press release will be recorded and featured top fashion models, including Irina Shanks, Gigi and Bella Hadid, among others. The fashion show generated more than 20,000,000 views on our own channels and Versace ranked the first These initiatives, among others, helped to drive a 22% year over year increase in Versace's global database. Overall Versace's results speak to the strength of the brand and reinforce our confidence our luxury houses long term growth potential. Versace represents the largest growth opportunity for Capri Holdings as we continue to believe revenue will increase to $2,000,000,000 Moving to Jimmy Choo, results we're also ahead of our expectations with revenue increasing 16%. Sales in our retail channel all increased in the high single digits globally. In the Americas and Asia, we delivered double digit our earnings call will be recorded in the EMEA. E commerce sales improved sequentially and increased over 50% versus prior year. We are encouraged with the performance of our spring collection, which encompasses 90 chic and celebrates the notion of contradictory glamour. Accessories sales showed strong growth, driven by our signature JC Varen and continued success our earnings call is now available to our shareholders. As restrictions begin to ease in many parts of the world, we have seen trends improve in the dress footwear category. In our casual offerings, we saw continued success of Hawaii and the Diamond sneaker franchise. We also saw success with our Jimmy Choo Marine Fair collaboration, which combined Jimmy Choo's feminine aesthetic with the futuristic vision all participants are in the same store and signature crescent moon print to create limited edition footwear. In terms of brand awareness and consumer engagement. Jimmy Choo's spring 2021 campaign is a modern ode to springtime in Paris. The imagery captures model artist, Sharon Alexei's vibrancy with key Parisian landmarks Jimmy Choo also continued to drive localized marketing. Our Asian brand ambassador, Chinese actress and singer, Victoria Song, presented the springsummer collection to her 50,000,000 plus followers on social media accounts. In the Q1 alone, the dedicated hashtag for Victoria's Song has Jimmy Choo's Asia ambassador our customers garnered 60,000,000 reads. Our luxurious product and engaging marketing helped contribute overall, we are encouraged by the progress we are making towards our goal of growing revenue at Jimmy Choo revenue again improved sequentially in the 4th quarter declining 4% as compared to last year. Sales in our retail channel increased in the mid teens globally. In the Americas and Asia, we delivered double digit growth, which more than offset declines in EMEA. E commerce sales once again accelerated relative to the our Q1 increased approximately 75%, benefiting from our increased use of data analytics to drive more targeted And personalized marketing. Moving to product performance. We continue to increase signature penetration across all categories by expanding our offering and developing new designs. Overall, Signature represented approximately 35% of the assortment across all categories we believe Signature can eventually grow to approximately 50% of our overall product assortments, our earnings call will be recorded in the Q1 of 2019, which will drive higher margins. Accessories sales in our retail channel increased double digits globally, as consumers responded to fresh updates for spring, including flashes of color that energized our iconic signature styles. Sales of totes and larger bags our earnings call remains strong as we continue to build upon the assortment, offering a variety of new shapes and functionalities. Within footwear, we have seen a positive response to new spring updates driven by Signature, Shine and Feminine Details. Turning to men's, which remained our fastest growing category in the 4th quarter, sales increased double digits, driven by signature and accessories. I am excited to say that our watch sales were positive for the Q1 since 2016, all participants are in line with retail sales up double digits. We continue to see a resurgence in our traditional styles during the quarter, we also launched Michael Kors newest fragrance, Gorgias. The launch our press release was extremely successful resulting in fragrance sales significantly exceeding our expectations. Our dedicated campaign stores model and actress, Sara Sampaio, who fully embodies With respect to brand awareness and consumer engagement, Michael's spring 2021 our campaign reflects his love of travel and features supermodel Bella Hadid, the quintessential jet center as she rediscovers iconic New York I'll turn the call over to Citi Sykes. In China, for the Lunar New Year, Michael Kors launched a capsule collection all of our accessories are featuring a luxe selection of our most loved accessories, including the SoHo shoulder bag, all of our brands are being offered in a new special edition red and black tweed. Our brand ambassadors, Gao Yunyun, Leo Wu, Lorena Song and Wang Fei Fei our press release will be recorded in the Q1 of 2019. We will continue to amplify Michael Kors' Jet Set brand messaging to their more than 120,000,000 social media followers. I'm also excited to talk about Michael Kors 40th anniversary show the show immersed guests in the inspiration for this collection. The idea of stepping out once the world opens up again. The collection featured a selection of Michaels' most iconic looks from different eras over the past 40 years. All participants are in the same store. Past and present supermodels, including Naomi Campbell, Helena Christensen, Carolyn Murphy, Ashley Graham, Shalon Harlow and Bella Hadid all paid tribute to Michael. The show generated more than 30 4,000,000 views on our own channels. These marketing initiatives continue to underpin our brand pillars of speed, energy and optimism. This helped contribute as a result, we remain confident in our ability to grow our revenue at Michael Kors to $4,000,000,000 all participants are in total Capri Holdings 4th quarter and full year results significantly exceeded our expectations, demonstrating the strength of our brands and the resiliency of our teams across the globe. During these unprecedented times, we have stayed focused on executing our strategic initiatives across all three luxury houses. We believe Capri Holdings will emerge a stronger our earnings call is now a more profitable company and remain confident in the long term opportunities for each of our unique global luxury houses. With the combined power of our 3 iconic founder led fashion luxury brands Versace, Jimmy Choo and Michael Kors, Capri Holdings is positioned to accelerate revenues to $7,000,000,000 and deliver multiple years of earnings growth. Now let me turn the call over to Tom. All participants are ready to take questions. Thank you, John, and good morning, everyone. Starting with 4th quarter, revenue of 1,200,000,000 our earnings call was $59,000,000 resulting in diluted earnings per share of $0.38 This was above our expectations, reflecting better than anticipated revenue and gross margin along with lower operating expenses. Looking at revenue trends by channel, total company retail sales increased 13%. These results were driven in part by robust e commerce sales, our earnings call was recorded, which increased approximately 80% and once again accelerated relative to the prior quarter. Additionally, store performance improved significantly quarter over quarter, driven by local clienteling initiatives and improved traffic trends. All participants are in the same store. In the wholesale channel, revenue also improved sequentially. By geography, in Asia, retail sales increased double digits versus prior year. Once again revenue in the region increased across all three of our luxury houses, driven primarily by stronger growth in Mainland China, our sales were up over 100%. In the Americas, retail revenue increased double digits Despite store closures in Canada. Conversely, in EMEA, retail revenue trends remain negative as an average of 60% of our stores all of our earnings were closed during the quarter. Despite the increased restrictions and store closures in EMEA, retail sales trends improved Versace revenue was $235,000,000 representing a 10% increase to the prior year and above our expectation. Global sales in our retail channel increased double digits with e commerce sales once again increasing triple digits. Sales in Asia grew double digits, driven by strong double digit growth in Mainland China. The Americas was once again the best performing region all participants are in line with revenue up strong double digits. Trends in EMEA remained below prior year impacted by increased restrictions and store closures. Versace ended March with a global luxury fleet of 210 retail stores, a net increase of 4 from prior year. All participants are in the same store. For Jimmy Choo, revenue during the quarter increased 16% to $124,000,000 also above expectations. Our retail sales in Mainland China increased triple digits, resulting in double digit sales growth in the total Asia region. In the Americas, retail revenue increased in the low double digits. While in EMEA, trends remain negative, but improved sequentially despite the increased restrictions all participants are in the same store closures. Jimmy Choo ended the quarter with a global fleet of 227 retail stores, a net increase of 1 from prior year. At Michael Kors, total revenue of $838,000,000 declined 4% compared to last year. Overall retail sales increased in the mid teens all are expected to be significantly better than expectations. E commerce sales growth accelerated sequentially, increasing approximately 75%. Retail revenue in Mainland China increased triple digits, driving double digit retail sales growth in the total Asia region. In the Americas, retail revenue increased double digits. In EMEA, trends remain negative but improved sequentially despite the increased restrictions in store closures. For our global wholesale business, Sales at retail and shipments both improved sequentially. However, overall shipments remain below prior year. Michael Kors ended the quarter with a global fleet of 820 retail stores, a net decrease of 19 from prior year. All participants are now ready to begin. Now looking at total company margin performance. We were pleased with gross margin expansion of 280 basis points, our expectations were up slightly below our expectations. As John mentioned, gross margins expanded across all three of our luxury houses. This improvement primarily reflected increased full price sell throughs and select price increases at Jimmy Choo and Michael Kors. These gains were partially offset by higher tariffs related to the expiration of the GSP trade program, as well as increased transportation costs. Operating expense as a percent of revenue was 51.5% compared to 52.3% last operator will be recorded for the Q1 of 2019. Total company operating expenses were modestly below prior year, reflecting our expense reduction initiatives, partially offset by higher foreign currency exchange rates and variable costs associated with increased retail revenue. As a result, total company operating margin expanded 360 basis points to 11.9% our earnings call was recorded in the prior year and was well ahead of our expectations. Looking at operating margin by brand. Versace's operating margin of 12.3 percent was above our expectations and improved over 1,000 basis points, all participants are in the range of $1,000,000 reflecting both gross margin expansion and expense leverage. Jimmy Choo's operating margin of negative 14.5 percent reflects expense deleverage partially offset by gross margin expansion. Michael Kors operating margin of 20.5 our expectations and expanded 4 60 basis points over prior year, reflecting higher gross margin and lower operating expenses. Our tax rate for the quarter was 59%, driven primarily by mix of income across different tax jurisdictions. Our earnings call will be recorded. Now turning to our balance sheet. We ended the year with cash of $232,000,000 and debt of $1,300,000,000 resulting in net debt of approximately $1,100,000,000 We paid down approximately $70,000,000 of debt during the quarter and approximately $850,000,000 during the year. Total liquidity at the end of the year was 1,500,000,000 Given our strong cash flow generation, we are exiting our covenant waiver and 3 64 day credit facility ahead of schedule. Additionally, we are now reinstating our share repurchase authorization, which has $400,000,000 of availability remaining. Looking at inventory, we ended the quarter with $736,000,000 down 11% compared to prior year. We we expect to build inventory to support sales growth over the year. While we are seeing delays in receiving merchandise, the current situation is incorporated in our outlook for the year and we continue to work on initiatives to further mitigate transportation challenges. Our capital expenditures for the year were $111,000,000 and were primarily spent on new store development, renovations, IT and e commerce enhancements. All participants are in the line with us. Now turning to fiscal 2022 guidance. While not our normal practice, we believe it is important to lay out our view the COVID-nineteen pandemic has had a significant impact on both revenue and expense comparisons. Our forecast incorporates our expectations for the pace of the recovery on revenue as we move through the year, as well as the amount and timing of expenses, such as marketing and reopening costs. 2nd, as previously discussed, we have reset our business strategies and objectives. Most notably, we are planning for a smaller but more a profitable Michael Kors business. As a result, we believe the most appropriate benchmark to evaluate our progress against our revised objectives is this forecast, which we believe will provide a more accurate reflection of the success of our initiatives. For the full year, we forecast our freeholdings revenue of approximately $5,100,000,000 This includes approximately $75,000,000 associated with the 53rd week approximately $500,000,000 to $525,000,000 and Michael Kors revenue of approximately $3,500,000,000 to 3,600,000,000 in EMEA, we anticipate revenue will continue to be impacted by regional restrictions, including store closures. Turning to the 2nd quarter, we anticipate revenue of approximately $1,200,000,000 supported by reopening in EMEA, Canada, Japan and Southeast Asia. As we look to the second half, we are optimistic about a stronger recovery after vaccines are more widely distributed. All of our luxury houses all should benefit as people begin to feel more comfortable returning to more normalized routines. In the Q3, we expect revenue of approximately $1,400,000,000 and for the Q4, we anticipate revenue of approximately $1,400,000,000 Now let me talk about the remainder of the full year P and L. All participants are ready to begin. Starting with gross margin. For fiscal 2022, we continue to see underlying strength in our ability to expand gross margin our earnings call will be recorded through higher full price sell throughs, select price increases at Jimmy Choo and Michael Kors, as well as increased penetration of accessories at Versace and Jimmy Choo. As I previously noted, we are experiencing higher transportation costs. As a result, we now anticipate approximately 50 basis it also reflects higher variable expenses related to increased revenue, additional reinvestments in our business to accelerate growth, in particular marketing, as well as the impact of foreign currency exchange rate. Taken together, we anticipate Re Holdings operating margin of approximately 14%, reflecting year over year operating margin improvement across all brands. For Versace, we anticipate operating margin in the low double digit range. For Jimmy Choo, we expect operating margin in the negative mid single digit range due to continued expense deleverage. For Michael Kors, we anticipate operating margin in the low 20% range. Turning to our expectations around certain non operating items. For fiscal 2022, we estimate net interest expense of approximately $20,000,000 our effective tax rate is estimated to be approximately 15% and we forecast weighted average shares outstanding of approximately 156,000,000. As a result for fiscal 2022, we expect to generate earnings per share of approximately $3.70 to $3.80 Turning to capital expenditures, we anticipate spending approximately $200,000,000 in fiscal 2022, which includes store openings and remodels expectations for fiscal 2022. We anticipate transformation expenses of approximately $20,000,000 implementation costs for of approximately $30,000,000 and restructuring charges of approximately $70,000,000 related to our fleet optimization program. Turning to our Q1 guidance, as I said earlier, we expect revenue of approximately $1,100,000,000 This assumes Versace revenue of approximately 220,000,000 Jimmy Choo revenue of approximately $110,000,000 and Michael Kors revenue of approximately 770,000,000 for gross profit, we expect continued margin expansion in our retail channel. For the quarter, this improvement will be offset by higher wholesale penetration as shipments normalize. We expect wholesale penetration to nearly double our earnings call will be recorded to approximately 25% in the Q1. Therefore, we anticipate total company gross margin contraction of approximately $150,000,000 year over year. This reflects the significant increase in revenue relative to last year, which is generating higher variable additionally, it reflects reinvestments in our business as sales recover as well as the impact of foreign currency exchange taken together, we anticipate 1st quarter operating margin of approximately 12%. For Versace, we anticipate operating margin in the high single digit range. For Jimmy Choo, we expect operating margin in the negative low to mid teens range. For Michael Kors, we anticipate operating margin in the low 20% range. Now looking at certain non operating items. Our earnings call will be recorded. For the Q1 of fiscal 2022, we estimate net interest expense of approximately 5,000,000. Our effective tax rate is estimated to be approximately 9% and we assume weighted average shares outstanding of approximately 155,000,000. Our earnings call will be recorded. As a result, we anticipate 1st quarter earnings per share of approximately $0.75 Now, I would like to share our expectations around our quarterly earnings per share assumptions for the remainder of the year. Again, while this is not our normal practice, we thought it would be helpful to lay out our view of the quarterly earnings progression through fiscal 2022 based on the impact of the COVID-nineteen pandemic and the reset our business strategies and objectives. For the Q2, we anticipate earnings per share in the range of $0.70 to 0.75 for the Q3, we expect earnings per share in the range of $1.65 to 1.70 any additional store closures or new government restrictions that could further impact our business. In summary, we believe the progression of our initiatives throughout fiscal 2022 positions CapRe to deliver on its long term goals. As we look beyond to fiscal 2023, we continue to anticipate revenue and earnings per share will exceed pre pandemic levels. Our results are now in line with our expectations. In conclusion, we are pleased with the trajectory of our business, reflecting the strength of our fashion luxury houses and the execution of our strategy. Versace's results speak to the power of the brand and reinforce our confidence in the luxury houses long term potential. Versace represents our largest growth opportunity for Capri Holdings as we continue to believe revenue will increase to $2,000,000,000 while operating margins expand sequential improvement in revenue trends and continued gross margin expansion. Longer term, we remain confident in our ability to position Michael Kors as a smaller, more our profitable business with revenue of $4,000,000,000 and operating margins of approximately 25%. Taken together, we believe Capri Holdings is well positioned approximately 1 third of total company earnings. As the world emerges from the pandemic, we remain confident that our 3 luxury houses position Capri Holdings to deliver multiple years of revenue and earnings growth as well as increased shareholder value. We look forward to sharing more of our future outlook with you our Investor Day on June 29. Now, we will open up the lines for questions. It may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question. Our first question is from Omar Saad with Evercore ISI. Please proceed. Good morning. Thanks for taking my question and great job in the quarter. Pretty exciting stuff. I guess I'll use my one question to ask about how sticky some of these margin gains are that you guys are generating, especially around the Kors brand. I think it's up 400 bps gross margin, up 400 bps versus kind of pre pandemic, less promos, more pricing power. And I'm wondering if we should think about longer term as supply and demand normalized. Do you think some of that promotionality will go away I'm sorry, could return? And or Or should we think about Kors as kind of like a smaller a little bit smaller, leaner, more profitable brand, steadier grower in terms of long term algorithm? Thanks. Thank you, Omar, and good morning. I'll take part of it and I'll let Tom take part of it as well. To begin with, I think we're extraordinarily pleased with what happened in the quarter for all three of our luxury houses and really the margin expansion we saw, which was I think really important because we've been focused on reducing the SKU counts across all three of the companies and really putting a laser focus on full price sell throughs And that's gone up right across the group. And so I think we're seeing the impact of that. Also, I just might add that The performance of accessories at Versace is really extraordinary and far ahead of what we had where we had expected to be at and when you look at this brand having about a 10% increase in the quarter And remember 2 years ago, we dropped almost $150,000,000 when we bought the company From its revenue base to really clean it up and set it as a luxury company, where we eliminated 2 of the lines. So That whole strategy is working in place. And I think we're also seeing at Jimmy Choo the Power of our of 2 things happening again, reducing our SKUs. We are seeing better full price sell through our press release in the dress shoe business, which is returning and our active business, in particular, our Hawaii and Diamond platforms are having great sell through. So really good things happening there. Again, that's helping to improve margin. And then at Michael Kors, there's a number of things going on. Again, SKU reduction is part of the story. Clearly, price increases that we've taken and we will take more. I we talked about that on our previous calls, more will happen this fall season and we will probably take more even further in spring of 2022. Our feeling is, as we've stated a number of times, we want the Michael Kors brand to be higher positioning from a luxury standpoint. We want to reduce the amount of promotional activity and the way we do that is to really curtail the amount of supply. And then the biggest part of the story is quite frankly our focus on our Signature business And the designs that Michael and his team have been putting forth in our marketing campaigns. We are resonating with the customer. There's no question what's happening. I think that kind of the cool and interesting thing that we found is this new customer who in many cases is Z or early the latter part of the millennial, the Michael Kors brand is new to them and that's what's so exciting. And we find that in the watch And we talked about our Q1 seeing watch comps up for many years. And this is because it's a new customer finding our brand. So we're super excited That we can see that happening. So I do believe that this is going to be, to use your term, sticky. And I think we're going to see a continued expanded gross margin at Michael Kors really again based around price increases that we're going to take, again, we talked I think we talked about Signature across the Total group this time, normally we only talked about it in accessories and what you're finding is a more total number And we're seeing that this could really be 50% across the entire all categories of business in the company. So that's Quite exciting. And that gives us better full price sell throughs and more sustained product life our earnings call cycle, which is another very important thing as we look at profitability. So I'll let Tom talk to the actual numbers himself. Sure. And thanks again, Omar. So As John noted, we did exceed expectations all this year and it was really through fundamental actions and initiatives the business is taking. And more importantly, there are initiatives that are going to continue and expand upon in fiscal 2022 and into 2023. So we've forecasted 50 basis points our expectations are expected to be a key component of expansion for margin in 'twenty two, and that includes all of these initiatives, plus a little headwinds related to transportation costs, And particularly in Q1, the wholesale mix. But as you look at the quarterly progression, which we've provided, you And then for fiscal 'twenty three, we continue to expect 100 basis points of expansion. So when we look at the total company, we'll be And then when we look at Michael Kors in particular, we'll be on a path to the 25% margin, which operating margins, which is well ahead of Where we have been historically. And Amar, I'll just add one last point as well in terms of the KPI. When you look at the our results are in the same store. We've been raising prices in Michael Kors, really there's been less promotional merchandise available. Our inventories are down, it's less for the customer to find. And remember, that's more of a North America situation. When you go outside of North America, we don't have that A cadence in the business. We follow a much similar cadence to the luxury industry. But we grew our database 18% in the last And that means 2 things. As the customer is responding to our marketing and Michael's phenomenal designs, it also means The price increases are not stopping that customer from crossing the line and purchasing products. So thanks a lot for that question, Omar. Great color. Thank you. Our next question is from Kimberly Greenberger with Morgan Stanley. Please proceed. Okay, great. Thanks so much. Really, really nice numbers here in 4th quarter. Thank you so much for the rundown. John, it sounds like just an answer to Omar's question that you might be sort of rethinking your view on long term margins, given maybe the higher margin rates that you guys are delivering right With the ongoing opportunity, so I'm just wondering, am I reading you correctly? Do you think that longer term operating margins, both in aggregate and by brand could in fact be higher than the targets you established several years ago. And if you could Tom, can you just help us understand how margins change over time through international growth and e commerce growth? Thank you so much. Kimberly, great question and good morning. I would answer that in 2 ways. First off, I think you saw in our press release today, we've announced in Investor Day, where we're going to lay out some of those longer term strategic goals and some more detailed timing around them. Again, we don't have a crystal clear vision as you can only imagine, we're still coming out of the pandemic and the business in Greater China it has been the lead. The business in North America has had strong growth, especially this last quarter. And I might add, it's continuing On into this quarter, and one of the things we're really pleased about is the department store business in North America is quite strong. So we're really pleased to see that. And again, this is on significantly reduced inventories. So the sell throughs, The turn, the margins, it's all really in a great place. I might add, you'll still see depressed wholesale numbers For two reasons. Number 1, Europe is not back by any stretch of the imagination. We're going to be well into latter part Of Q3, I think until we see something get healthier there. And as I want to talk about that, I'm talking about calendar Q3. And then hopefully into calendar Q4 as the vaccines get rolled out there and you get more borders opened. And then lastly, while I think we've all been reading about the return of domestic air travel and we're all excited about how many people are going to travel this weekend, From an international duty free business that we've talked about, which is the 3rd component of our wholesale business, That still is basically shut down. We think that will return in 2022. So that's going to be a nice addition For us, when that business does come back, we will basically have been out of that business for all intents and purposes for 2 years. Besides duty free business has been strong in China, but again that can offset what we were doing globally. So answering your question about long term margins, I think we feel very good about the targets that we set for Michael Kors. I think this Closer to a 25% range over a period of time is and that hopefully won't take too long, It's definitely within our window. We see it and we feel great about that. I think that now moving to Versace, clearly the mid teens operating margin that we've given is our let's call that our first step. Over time, as we get To more sizable volumes, I think we have loftier goals than that. I think we've said that to you all in the past. Again, we don't want to get in front of ourselves because we're going to make investments. Versace is doing really well right now. And as I said a moment ago, we are pleasantly surprised at how quickly our accessories business And quite frankly, our footwear business as well, but our accessories business is growing. We've got the 2 strong pillars. We've got LaGreca, which is off to just a really phenomenal start. Virtus, a very, very strong group for us. And now we have LaGreca coming and that's going to take time even though we have a tremendous amount of confidence in that new collection and pillar for us, it's going to take time. But if those things work, I think we have You're not going to probably see us change off of that today. We need to get that leverage. We need to get that volume. But we are without question on the right Track. The consumer is absolutely responding to us. And again, remember, Michael Kors and Versace, when you look at the volumes today and quite frankly Jimmy Choo, we've got a big hole in terms of Europe not Being turned on for all intents and purposes that business is still not back and yes we've had sequential improvement because of The digital part of the business, but our stores are not really producing today. Again, we're very hopeful that My calendar Q3 calendar Q4 will be back, but when you get a full year of that under your belt, that's going to create some very nice leverage for the company. And then lastly, Jimmy Choo, which is going to take us a little more time than we probably had originally thought, in particular because of what happened during the pandemic with the stress footwear business being really hurt badly. But I think that again, we're talking about mid teens and that will be reliant also on us getting our accessories business developed. And again, we're in early days with that. And I think we've I've said in the past, it's going to take us a little longer with Jimmy Choo than we probably had hoped for 2 years ago, but still very, very confident we've got the right pieces in place And we should be able to deliver on our objectives. And Kimberly, there were 2 other items you'd asked about on international and e commerce and how they impact our margins longer term, they're actually both positives for our margins and would support additional growth our earnings call is now open. When we look at international and I'm speaking about Asia in particular, it grew this year to over 20% of our total revenue And all three of our brands are growing and performing well in the region. And that is a region that structurally has higher margins historically and we anticipate that continue in the future. So as we increase our penetration in Asia and China in particular, that will help the overall company margin base. The second item is e commerce and now for all three brands, our e commerce margins are positive for Junichu and Versace. They always were and in line with We're better than stores. And now for Michael Kors, with the growth that we saw this year and the leverage that we've seen in e commerce, our margins are At or above store levels. So as we increase penetration and by the way, e commerce penetration about doubled in fiscal 2021 And we'll be growing off a much larger base as we move forward that will also be accretive to margins. We'll be making investments to help support that growth across the business as part of our CapEx plans and we're really excited about it. And I might add lastly that on the part about Greater China in particular, our competitors all across the group are running in the almost $1,000,000,000 to $2,500,000,000 just in Greater China in terms of revenues. So you think about the opportunity we have and those are on single branded basis And think about the opportunities that we have for Versace and Michael Kors, probably more able to get into those all types of ranges, Jimmy Choo, a little less so, but still a lot of opportunity. And it's there's a very big runway of growth for this company with our brands. Thank you very much, Kimberly. Great call. Thank you so much. Our next question is from Ike Alberto with Wells Fargo. Please proceed. Hey, everyone. Let me add my congrats. I just wanted to dig into the gross margin real quick. I guess on the outlook, can you talk about, especially in the near term, the pressures you're seeing on supply chain And fulfillment, just any detail there would be kind of interesting to hear. And then maybe Tom, on GSP, just Are you assuming that GSP is not renewed in your guidance? And then if you are, you aren't. If you're not, what would the benefit be if something retroactively does go through at some point this year. Thank you. Thanks, Ike. And with regard to supply chain and fulfillment, we are seeing delays as I noted and costs are higher. We're seeing challenges, for instance, just getting container space in their port delays Coming out of Asia in particular and then more delays in Long Beach and LA. However, as I noted, we have built Into our forecast and we have incorporated the higher costs. Our teams are doing an amazing job working to mitigate that both what they have done and additional plans that we're putting in place. So we do no plans that we're putting in place. So we do anticipate that it will continue, ultimately normalized, but it's incorporated in our forecast right now. With regard to GSP, we do assume that ultimately it will be renewed. There was actually some legislation put forward in the Senate that was introduced to start that process. And but overall when you look at the GM impact, I think you have to look at the total puts and takes As to where this would fall if for instance it were not done. It's really too early to tell the impact of GSP since we don't know the timing and the form of renewal. And as John mentioned and I also noted, we have a number of other actual base business initiatives, both price sell through and increasing signature, our pricing all participants are participating in the activities, as well as those other items like Asia growth and e commerce that we've over delivered on in the past. So with all the puts and takes, I think it's a little too early to talk about the overall impact and net impact to our gross margins right we're very comfortable with the 50 basis point increase this year and 100 next. Got it. Thank you, Ike. Our next question is from Matthew Boss with JPMorgan. Please proceed. Thanks and congrats on the improvement. So maybe John, it's a little bit larger picture, but I know we've talked about it at length in the past. As we exit the pandemic, Hopefully sooner than later. I guess how would you reframe the relative growth rates and opportunity as we think 1st, the accessible luxury market that Michael Kors operates in. And then second, maybe trends in the forward do you have on coreluxury that would be more Versace and Jimmy Choo on a go forward basis? Thank you and good morning, Matt. So, Matt, a couple of things. Number 1, in terms of the growth We've really reevaluated and refined our vision for this company. I think that's been quite a seminal moment for us is to say profitability is going to be one of the things that It is absolutely critical in terms of growth and also gross margin expansion and full price sell through. So as we did that and looked at that Strategy, we thought that our business initiatives around could somebody mute their phone by the way, because there's a beeping noise. So we really looked around our business strategies and how we could execute against those in light of our goals. And I think we came away saying Versace for sure we're on the right track. We know what we're doing. The company is really, I think been cleaned up and more importantly has a very clear product strategy and vision and that's resonating with the consumer. So We're looking for a 32% increase in growth in Versace this year. And by the way, again, that's really without having Europe. We'll be lucky if Europe is in a healthy place by the second half of our fiscal year. And again, I'm not trying to be negative. I'm just I'm trying to say it just takes time. And remember, Europe doesn't have the same levels of stimulus being provided as North America does. So Again, we're just cautious about what we see happening there. At Jimmy Choo, I think we feel much more comfortable today with reopenings and how we see the world moving forward and that business with our estimated $500,000,000 to $525,000,000 is a 23% our core is where we've reset the business. And in that particular case, we think we're going to have a healthier business. We think it's going to be a business that will be our very consumer led and not led around again in North America promotional activity. We don't take that same posture outside of North America and Europe and in Asia. So we think we're going to have a much healthier business and that's going to be a 21% growth. Again, not back to its historic levels, but we think that's the right thing to do from a Structure standpoint and the consumer seems to be responding, resonating with those strategies. As it relates to the market and I know, Matt, you and I've talked about We don't really view the I guess you refer to it as the accessible luxury market or whatnot as dramatically different But in particular in accessories, we see consumers cross shopping with what you would consider the more pure play luxury brands and us as well. And what you saw during the pandemic is both markets growing very, very nicely. And of course, we saw tremendous growth in our 4th quarter, as we pointed out in our own retail channel, where revenues were up double digit in accessories And also revenues are climbing above LY levels in the department store world as well. And you've heard other I'll talk about the category. So the category in general, we think is growing not only in North America, but clearly is growing very rapidly In China, in particular, it's a little hard to tell where things are in Japan and Southeast Asia because, again, there's still And in Europe, again, we can't tell until The travel retail business comes back, etcetera, but we're assuming growth there as well. So we think we're in a category of business that is going to grow just naturally. And once again, we think all 3 of our luxury houses will benefit from that. But we're not we're trying to chase the revenue. We're trying to do it very methodically, design and marketing driven. Again, Donatella has done an amazing job with these New accessories platforms and pillars that we've launched. Sandra is doing a terrific job. We've got some new hires that we've at Jimmy Choo, which we think is going to really improve our accessories product. And then Michael, my hats off to him and everything that he did during the last 2 years to really make Signature and new shapes, be have a customer desirability and that's really what we think Shows the health of the business. So we think we're in a growing market. We think we've got 3 really excellent luxury houses 3 houses to be able to grow. And someone asked me, do you think we'll take market share? I think the market is going to grow 5%, 6%, 7%. So whether we take market share or whether we're just getting part of the market growth, I think that's in case of each of the brands will be looked at slightly all participants are in the range of $1,000,000,000. But there's plenty of opportunity for Aetna to execute against our initiatives based on what's happening in the luxury accessories market. Thank you, Matt. Great color. Best of luck. Our next question is from Erinn Murphy with Piper Sandler. Please proceed. Great. Thanks. Good morning. John, my question is for you on Versace. The logo product that you recently unveiled back at the end of March, can you talk about what distribution will look like this fall and then into next spring? And then Tom, if I can just follow-up on the gross margin, what is embedded in the outlook for any raw material cost price increases that you're seeing? Thanks so much. Good morning and thank you, Erin. Erin, the La Breca, which is what you saw in the show in March, I hope you all got excited about that. Again, I take my hat off to Donatella and the design team under the leadership of our CEO, Jonathan Akeroyd. And this This is a very important moment for the company. The company, while we've had our iconic Medusa emblem, it really is not a full signature logo strategy, and the company's never really had this in its history. And also what is I'm so excited about what's happening at Versace. When you think about Italian luxury goods companies, you typically think about leather goods. And this company, while it's been in the business, never used it as its lead. Obviously, we were always about runway and fashion and ready to wear. And the customer has just absolutely accepted our entry into this market. And as I said, much quicker than we I had anticipated or maybe even dreamed. And again, we're not even fully put our foot on the accelerator. We're just kind of Mapping this very tight and strategically. So the distribution for LaGreca will be Again, we're going to go slow. This takes time. This is not going to just all of a sudden hit and be a huge takeoff. What I really am pleased about is we now and this is in 2 years, we have 3 pillars. We have La Medusa, Virtus And honestly, we don't need anymore. We've got what we need. And now we can build upon this with our marketing strategies, our storytelling, and I think if Versace can't tell a story, then I don't know who can. And we're so really excited about how that's going to look. And the last thing you should know for Versace and the same thing really holds true at Jimmy We have some of the best store locations in the world. We're about 40 plus percent renovated in the stores. We will hopefully be Maybe 60 ish by the end of the year. And then over the next couple of years, we'll 100% renovate fleet. And as we do more business in these stores that either go from a low level of profitability to very significant levels of profitability or some stores might have been losing money that will become profitable. So you'll see quite a bit of a step Change with Versace in its own retail network. So again, that's what you're going to see happen. And I think what I mentioned earlier to Kimberly about aspirations, as we see those step change happen, we think, we're not exactly sure 100 percent what volume levels, but there's opportunity to go above even our stated goals on operating margin. I'll turn it over to Tom. And Aaron, with regard to raw material costs, we have Increases in raw material costs and input costs and specifically leather for instance. That is embedded in our outlook for our gross margin levels and 50 basis points increase for the year as well as the progression through the year. So if you looked at the puts and takes, the takes being transportation and then the input costs and wholesale in the beginning of the year, overall, we're going to be more than offset by the positives of the full price sell through, our pricing actions and growing the accessories business among other activities. So that's how we see it laying out. And then progression wise, the first half, a little more impacted in particular Q1 by the wholesale mix. As that normalizes and we get into the second half, then the benefits and the strength of those initiatives kind of shine through. They're there the whole time, but that's when you'll see them picking up in terms of gross margin expansion. Thank you, Erin. Thank you. Our next question is from Paul Luis with Citigroup. Please proceed. Hey, thanks guys. On the Michael Kors brand within North America, just I'm curious what your assumptions are for this year on the wholesale side and what percent of that brand sales are going to be U. S. Department stores and how does that compare I'm now just curious if you could talk about performance of urban stores, I'll turn the call over to Mark. Thank you, Paul. So Paul, as I've I think I've pointed out over the last 2 years, we've made we tried to make a very specific point of this that we look at the wholesale business I have Michael Kors in 3 buckets. We look at the North American department store business, which I'll talk to in a moment. We look at the European business, which is a combination of both department stores and specialty And by the way, there's also some regional licenses, which we don't even talk about in there, which could be our licenses in Russia or the Middle East, All reside in that category. And then lastly is the travel retail business, which was a sizable wholesale business for us. So let me go back and start from the beginning. The North American business will probably be more dominant of the wholesale business really because these other two categories Europe or EMEA and then travel retail is as we've talked about, it's really been shut down. So when you look at our next fiscal year, those businesses will be back our fiscal year 2023. And so the youth the North American wholesale business will be less It's weighted to the total that it is today. But in North America, as we've said, what we did was we reduced the amount of sell in of product to really push up the sell through and to reduce And I have to tell you our partners here in North America have been really thrilled with the strategy. They're on board with the strategy. They're and they're really executing on the strategy. And If anything right now, we're a little lean on inventory and our seltzers are so high in some of these stores and that's a great place to be right now. So again, North American Michael Kors wholesale will be more heavily weighted than it has been in the future, only because these other two marketplaces are suffer continue to suffer. But we do expect, as I said before, really in the Q4 of this year, Europe to be back probably to 80 plus percent of its normalized volume rates, but we are expecting Q2 and Q3 to still be very sluggish and kind of bouncing around and we do not expect the wholesale business to return in travel retail until I'm going to call it calendar 2022. And that's where you're going to see a lot more international flights being accepted at airports and it will just flow a lot easier and we think that there's going to be a very nice rebound as a result to that. In terms of the regional stores versus the metropolitan or the big cities, it's still the larger cities in North America and Europe have not returned. We're seeing some small return, but they're not anywhere close to where they were before. Conversely, some of the regional or suburban mall locations in I have to always speak to the U. S. Because Europe is only recently reopening, is showing very strong size and in many cases our earnings are showing even increases back to 2019 levels. So we're quite I'm excited and pleased about that. And so when we're seeing traffic really improve every single week, The mall traffic is getting better and better every single week. Again, we're still not back to pre pandemic levels, But it's you can see the consumer is getting more comfortable in shopping. I might add one other thing too. You will definitely see across the group because the retail store trend is improving, there will be some deceleration in terms of the e commerce raw percentages and that's really A, it's coming off of a much bigger base, given what's happened over the past 18 months and B, people are shopping in stores and that's Kind of exciting for us to see people coming back out and getting excited about being in there. So still going to see very nice increases in e commerce, But there won't be quite the dramatic levels that we've seen over the past just given the fact that stores are reopening and consumers are shopping. Thanks a lot Paul. That's helpful, John. Thanks. Our next question is from Jay Sole with UBS. Please proceed. Great. Thank you so much. My question is just on the balance sheet and free cash flow. John, if you could just sort of elaborate what your priorities are for the free cash the company is going to generate this year and if M and A is something that's rising in terms of the priorities, that would be super helpful. Thank you. Jay, thank you. I'm going to let Tom answer that just before he does. I want to make sure everyone knows as you're looking at your developing your thoughts around our company. We intend to spend into this year. So our objective is to really I'll now turn the call over to Steve. Thank you, Steve. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of I'll turn to ultimately pre pandemic levels. And so we will be using our upside in many cases, to spend into great marketing initiatives and in particular, that's something like Versace, If we see LaGreca happening, we're going to spend into it and we're going to really develop that communication with our So please make sure you keep that in your mind. And we think that's the right thing for us to do, continue to build brand equity. And in certain cases, in certain regions of the world where we are underdeveloped and Asia would be that in particular, we want to try to ride the wave and or take market share and we think to do that we'll need to spend into those activities. Sure. Jay, when you look at the free cash flow this year is a little over $500,000,000 is pretty close to where we were pre COVID at over 600. So we're really pleased with how the business performed based on all the different initiatives we put in place. And as we look forward, I think that the operating income being up at guidance levels over 60% and that's really going to help build back up our cash flow profile and just the testament to the fundamental strength of the businesses. As John mentioned, we will be investing this year in really two areas, a little higher capital expenditures as we renovate stores and build out particularly in Asia and also investing in inventory to support the higher sales growth, I feel like we're very much on the path to continue to generate strong free cash flow. From an allocation perspective, we'll be investing in the business and this includes areas like digital. We'll be paying down debt. We have paid down significant amounts for this year $850,000,000 but we will continue to do that and further strengthen our balance sheet and that does give us capacity in the future our shareholders are very strong with leverage under 3 times at this point. And at some point in the future, we may look at additional acquisitions, but really focused on our business right now. Our next question is from Dana Telsey with Telsey Advisory Group. Please proceed. Good morning, everyone, and nice to see the progress. As you talked about the digital margins and the retail margins, what are the opportunities and where do you see the digital margin getting to given that it is surpassing retail margins? And is there a difference by region or by Brand. Thank you. Good morning, Dana, and thank you for that question. Dana, look, our digital business is exciting. We're using data analytics to support more targeted and personalized marketing. And we're really seeing all three of our brands excel under this strategy. And it's great to see the teams get together and I'll talk about what's happening in each one of the business units and share learnings. So we find our expertise growing every day in this area. I wanted to also make sure everyone knows that we really believe in an omni experience. And we think that As exciting as the growth is in digital and e commerce and we want that and we're going to make sure that we continue to power that, we're going to be equally as focused on stores. Stores will still be the predominant part of our business and We think also we're seeing consumers moving between stores, moving between online and requiring a new thing Which is in home experience and our clienteling initiatives that you've heard us talk about over the past few calls I've really been extraordinary by all three of the groups. We're helping people by having an in home experience, whether that's virtually, whether that's something that we're sending the products to the consumer, and we're seeing excellent results from that. So we view our initiatives to be very omni based and our data analytics to be very omni based. That being said, there's clearly huge opportunity for us to continue to grow our digital pieces of the business. And what we're excited about, I'll just give you a good example of that, is that Michael Kors, we have something called MK GO, really kind of a more sporty side of the business, and that business is running at triple digit growth rates. And that's Predominantly being driven by online only almost. There's some limited representation in the stores. But what we see is the opportunity to build out other categories that really haven't been distorted on a retail basis. At Versace, our underwear business is significant, predominantly driven by online activity. So there's other areas inside the company where we're going to be able to take categories and we'll talk to you more about some initiatives that we have with Jimmy Choo coming up that are really exciting, where we can build businesses that we might not be able to actually house in our stores or the our traffic is related to those categories in our stores and that can expand both revenues and margin because many of those businesses again in in the case of MKGO for Michael Kors, that's a business that we're going to run more as an annual product offering And then not even to have the seasonal markdowns in the majority of that business. It's very high margin business for us. It's engaging with the consumer in part of their wardrobe that they're excited about and it's an addition to our very dominant active footwear business. So we see these opportunities as well as our existing, whether it's in Michael Kors, our accessories, our watch, our footwear ready to wear, those are existing businesses that we'll both have in retail. But there's a real opportunity to drive other things online. And the reason why we also like this is, Again, it takes away the positioning that you only have to rely sometimes on promotional activity to generate revenues and we don't want to be in that That's a business that we think long term doesn't really help the health of the brand. So we'll have a piece of that, but we'll certainly have other activities that will drive additional revenues at high profit margins. I'll let Tom speak to the other part of your question. Sure. And when you ask about upside, Dana, I think there is upside. We saw it this year just by building scale, for instance, in Michael the impact it had on the e commerce margins being very, very positive. So as we continue to grow the size, the absolute size of that business, I think that will certainly help. Also, we're going to be making investments in our digital platforms and continue to expand our analytics capabilities, So that's also an efficiency I think we can apply against all three of our brands. Finally, when you look across the businesses just due to the price points, Jimmy Choo and I have a higher structural e commerce margin than Michael Kors, but again that Michael Kors business is improving rapidly. Thank you, Dana. I'd like to take this time to thank everyone for joining us this morning. I know this was a little longer than normal, but it is our year end call and I think we also I wanted to take the time to really provide some more detailed guidance. It's not our normal practice, but we felt that given the fact that we had reevaluated and refined Capri's strategic direction and that we've got a little better insight into how that I'll close, but it was important to share that information with you. And we look forward to giving you further updates in the calls ahead. And of course, we'll hopefully see and I'll talk to most of you at the upcoming Investor Day. Thank you very much and nice speaking with you all. Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation.