Greetings, and welcome to Capri Holdings Limited first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please limit your question to just one. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Jennifer Davis, Vice President of Investor Relations. Please proceed. Good morning, everyone, and thank you for joining us on Capri Holdings Limited first quarter fiscal 2023 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 actual 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. Unless otherwise noted, all financial information on today's call will be presented on a non-GAAP basis. These non-GAAP measures exclude certain costs associated with COVID-19 related charges, ERP implementation costs, Capri transformation costs, restructuring and other charges. To view the corresponding GAAP measures and related reconciliation, please view the earnings release posted to our website earlier today at capriholdings.com. Now, I would like to turn the call over to Mr. John Idol, Chairman and Chief Executive Officer. Thank you, Jennifer, and good morning, everyone. We are pleased that the year is off to a better than anticipated start, driven by strength across all three of our luxury houses. Our powerful brands continued to resonate with consumers, as evidenced by the 12 million new names added across our databases over the last year. Additionally, consumers are responding to the innovative and exciting fashion luxury products led by the design visions of Donatella Versace, Sandra Choi, and Michael Kors. Capri Holdings' success is a testament to the strength of our brands as well as the dedication, resilience, and agility of our entire team across the globe. Looking forward, we remain optimistic about our future growth potential based on the strategies outlined at our recent Investor Day. While we recognize there are near-term macro uncertainties, our confidence in Capri Holdings ability to achieve our long-term goals is grounded in the proven resilience of the luxury industry, the strength of our luxury portfolio, and the talented group of employees executing our strategic initiatives. As a result, Capri Holdings is positioned to deliver multiple years of revenue and earnings growth, as well as increased shareholder value. Now, turning to the first quarter performance. We were pleased that revenue, gross margin, operating margin, and earnings per share all exceeded our expectations, resulting in record first quarter revenue and earnings per share. Total revenue in the first quarter increased 8.5% on a reported basis or 15.2% in constant currency, reflecting better than anticipated results at all three brands. Operating margin of 18.5% was above our expectations. As a result, earnings per share of $1.50 was better than anticipated. Looking at group revenue trends by geography. In the Americas, revenue growth continued to exceed our expectations, increasing 11% on a reported basis or 13% in constant currency. In EMEA, revenue increased 21% on a reported basis or 37% in constant currency, also above our expectations. This was driven by strong growth across all houses benefiting from robust domestic consumer demand as well as an increase in Pan-European travel. In Asia, revenue decreased 14% on a reported basis or 7% in constant currency. This reflects Mainland China revenue down mid-30%, partially offset by improving trends in Japan and Southeast Asia. Excluding Mainland China, sales in Asia increased 21% on a reported basis or 35% in constant currency. Moving to first quarter performance by brand. Starting with Versace, we were pleased with results which were ahead of our expectations. Revenues increased 15% on a reported basis or 30% in constant currency compared to prior year. Demonstrating the strength of the brand and the success of our strategic growth initiatives. All categories performed well as we continued to reinforce and amplify Versace's iconic brand codes. In women's accessories, which are a key component of Versace's growth strategy, sales in our retail channel increased approximately 80% versus prior year. With our three pillars, La Medusa, Greca, and Virtus, we are gaining traction in accessories. The category is growing much faster than anticipated. We are confident in our ability to position Versace as a leading luxury leather house and expand accessories revenues to $1 billion over time. Footwear also performed well as we continued to build our core offering focused on our iconic brand codes, while also innovating with bold new styles. In the first quarter, women's footwear sales in our retail channel increased approximately 50%. Performance was driven by dress styles, which increased approximately 75% compared to prior year as consumers responded positively to styles featuring a range of Versace codes, including Greca and Medusa. Additionally, we saw strength across both women's and men's ready-to-wear. Donatella's Spring 2022 collection performed well as consumers embraced ornate prints and a celebration of the La Greca brand code. We continue to expand our core lines, which incorporate iconic house codes to broaden Versace's reach. During the quarter, we also saw strong sales across categories from our highly anticipated collaboration with Fendi. Fendace was an amalgamation of signature elements and reimagined classic silhouettes from two iconic Italian luxury houses, Fendi and Versace. With an exchange of roles and brand codes, Donatella designed a Fendi by Versace collection, while Fendi artistic director Kim Jones and Silvia Fendi designed a Versace by Fendi line. This partnership has generated significant revenue and increased brand awareness for Versace. Moving to brand awareness and consumer engagement. Versace continues to deepen consumer desire by combining powerful storytelling with data analytics. Versace's summer campaign, La Vacanza, took the iconic Very Versace look to Calabria, Italy. Iris Law starred in her first Versace campaign with unapologetic flair, embracing the Versace vacation lifestyle and reflecting the latest vibrant summer styles. Versace continued to dress many of the world's most famous celebrities during the quarter, which helped to build consumer desire and increase engagement. Versace's presence at the Met Gala was exceptional, with the Atelier dressing Blake Lively, Cardi B, Gigi Hadid, Lily James, Gabrielle Union, and Dwyane Wade, among others. As a result, Versace was the most engaged brand across all social media channels for the Met Gala. In June 2022, Cher and Donatella united in celebration of Pride Month, as Chersace created a limited capsule collection in support of Gender Spectrum, a charity committed to the health and well-being of gender-diverse youth. The combination of these brand-building activities and our data analytics capabilities led to increased consumer acquisition, driving 40% year-over-year growth in Versace's global database. Overall, Versace's strong first quarter results speak to the strength of the brand and the success of our strategic initiatives, reinforcing our confidence in the luxury house's long-term growth potential. Moving to Jimmy Choo, we were pleased with the results which were ahead of our expectations. Revenues increased 21% on a reported basis or 30% in constant currency compared to prior year as we continued to execute on our strategic initiatives to expand accessories and maximize our casual opportunity. In women's accessories, which are an important pillar of Jimmy Choo's growth strategy, sales in our retail channel increased over 50% in the first quarter. Women's accessories are among the fastest-growing categories driven by strength in our Varenne and Bon Bon families. The Varenne Quad has quickly become one of our iconic handbag styles with its clean lines, timeless design, and exceptional craftsmanship. Turning to footwear, sales in our retail channel increased strong double digits. We continue to see strength in dress styles driven by a return to office, social events, and special occasions. In casual, our glamorous pool slides quickly became a summer wardrobe foundation for our consumers as they responded positively to slides made with our JC logo jacquard, as well as styles embellished with pearls or our crystal C. In sneakers, we have seen strong reaction to our new classic yet contemporary Rome trainer in both women and men's. Moving to brand awareness and consumer engagement. Jimmy Choo continues to drive consumer acquisition and engagement by combining storytelling and data analytics. Our storytelling for summer brought Jimmy Choo's DNA of glamour, daring, and confidence to life. Shot in Miami, the campaign featured Precious Lee and Barbara Palvin celebrating the glamorous Jimmy Choo lifestyle. Jimmy Choo's reputation as a favorite brand among style icons also builds desire and increases brand engagement. During the quarter, celebrities wearing Jimmy Choo included Jennifer Lopez, Selena Gomez, Katy Perry, Billie Eilish, Shawn Mendes, Joe Jonas, and Nick Jonas. We also utilize a wide community of influencers to leverage brand heat and accelerate regional potential. In May, Jimmy Choo hosted 18 global influencers in Saint-Tropez to celebrate the summer collection launch. The influencers shared over 400 posts and generated approximately 20 million impressions. Our engaging customer communication, which combines storytelling with data analytics, helped contribute to a 30% year-over-year increase in Jimmy Choo's global consumer database. Overall, Jimmy Choo's strong revenue growth and operating margin expansion reinforces our confidence in the luxury house's future potential. Turning to Michael Kors. Our first quarter performance was better than anticipated. Revenues increased 5% on a reported basis or 9% in constant currency compared to prior year. We continue to elevate our product, and as part of this strategy, we have achieved our goal to grow signature penetration to 50% of revenue across all product categories. We now see a significant opportunity in products featuring our new MK hardware codes. These highly recognizable codes build brand identity and drive consumer loyalty. In accessories, signature continued to perform well, driven by updates in soft neutrals, feminine pinks, and jacquard materials. Consumers also responded positively to our vacation-inspired collection of ocean blue ombre and white signature. Additionally, we were pleased with the success of our new platforms, Carly and Heather, which feature our MK hardware. In footwear, consumers responded positively to the elevated execution of our seasonal flats and sandals. Branded hardware and bold studding performed exceptionally well. Looking at women's ready-to-wear, we saw strong sales of dresses from romantic palm lace to bodycon logo jacquard styles. Men's remained the best-performing category with robust sales across accessories, footwear, and apparel. During the quarter, we were excited to launch the Michael Kors ellesse capsule collection, offering a luxurious and modern take on retro athleisure. The collection's vibrant, sporty, and glamorous designs were brought to life in a series of pop-up installations and activations around the world. The collaboration created energy and excitement, generating strong engagement as well as solid sell-throughs. In terms of brand awareness and consumer engagement, we continued our jet-set storytelling in Miami. For summer, the campaign again featured quintessential jet-setter Bella Hadid. Wearing Michael's latest fashion designs while carrying statement accessories, Bella and friends enjoyed bright days and cool summer nights on the go in true jet-set style. Michael Kors' presence at the Met Gala was also extensive and drove brand heat and consumer engagement. Michael dressed celebrities including Addison Rae, Ciara, Lori Harvey, Eiza González, Sigourney Weaver, and Chinese supermodel He Cong, among others. In June, we activated our campaign around Pride, celebrating Michael's lifelong support for the LGBTIQ+ community. We launched a dedicated Pride capsule that feature a rainbow MK charm logo on a white background. A portion of the profits were donated to OutRight Action International, which works to advance human rights for the LGBTIQ+ community globally. In China, we launched the Qixi capsule collection for Chinese Valentine's Day, featuring our China watch and jewelry ambassador, Bai Lu, actress Chen Duling, as well as actor and model Liu Haoran. Combined, they have 136 million followers across social media, helping further expand Michael Kors exposure in the region. The combined power of our jet-set storytelling and data analytics capabilities contributed to a 17% year-over-year increase in Michael Kors global database. Overall, we remain optimistic about the future growth of Michael Kors. The strategies we put in place prior to the pandemic have been generating strong consumer demand, as well as attracting new and younger customers. At the same time, they enable us to drive strong profitability, even with elevated supply chain costs and other macro headwinds. In conclusion, we are pleased with the progress our luxury houses are making toward their strategic goals. Looking forward, we remain optimistic about the long-term growth potential for Versace, Jimmy Choo, and Michael Kors. With our portfolio of iconic founder-led fashion luxury houses, Capri Holdings is positioned to deliver multiple years of revenue and earnings growth. Now let me turn the call over to Tom Edwards. Thank you, John, and good morning, everyone. Starting with first quarter results, revenue of $1.36 billion increased 9% versus prior year or 15% in constant currency, exceeding our expectations. Performance was driven by better than anticipated results across all three of our luxury houses. Net income was $215 million, resulting in diluted earnings per share of $1.50. This was above our expectations, reflecting better than anticipated revenue, gross margin, and operating margin. Turning to revenue performance by brand. Versace revenue of $275 million increased 15% versus prior year, or 30% in constant currency, which was above our expectations. Global retail sales increased double digits. By geography, total revenue in the Americas increased 32%. Revenue in EMEA increased 23% on a reported basis, or 40% in constant currency. Revenue in Asia decreased 20% on a reported basis, or 9% in constant currency, reflecting increases in Japan and Southeast Asia, offset by an expected decline in China. Versace ended June with a global luxury fleet of 208 retail stores, flat to prior year. For Jimmy Choo, revenue of $172 million increased 21% to prior year or 30% in constant currency above our expectations. Global retail sales increased strong double digits. By geography, total revenue in the Americas increased 42%. Revenue in EMEA increased 32% on a reported basis, or 51% in constant currency. Revenue in Asia decreased 4% on a reported basis, but increased 3% in constant currency, reflecting increases in Japan and Southeast Asia, partially offset by a decline in China. Jimmy Choo ended the quarter with a global fleet of 236 retail stores, a net increase of three from prior year. At Michael Kors, total revenue of $913 million increased 5% compared to last year, or 9% in constant currency, also exceeding expectations. Global retail sales increased in the low single digits. By geography, total revenue in the Americas increased 6%. Revenue in EMEA increased 16% on a reported basis or 30% in constant currency. Revenue in Asia decreased 16% on a reported basis or 10% in constant currency, reflecting strong increases in Japan and Southeast Asia, offset by a decline in China. Michael Kors ended the quarter with a global fleet of 821 retail stores, a net increase of one from prior year. Now, looking at total company margin performance. Gross margin of 66.2% was below 68.1% last year, primarily due to anticipated higher supply chain costs. Margin performance was above our expectations, reflecting the ongoing benefits of the company's strategic initiatives. Operating expense as a percent of revenue was 47.7% compared to 47.2% last year, reflecting increased marketing in support of the business. On an absolute basis, operating expense increased approximately 10% or $57 million versus prior year. As a result of better than anticipated gross margin and operating expense leverage, total company operating margin of 18.5% was 200 basis points above our expectations. All brand operating margins also exceeded our expectations. At Versace, operating margin was 18.9% compared to 20% last year. At Jimmy Choo, operating margin was 11% compared to 7.7% in the prior year. At Michael Kors, operating margin was 24.3% compared to 27.6% last year. Now turning to our balance sheet. We ended the quarter with cash of $221 million and debt of $1.4 billion, resulting in net debt of approximately $1.2 billion. Total liquidity at the end of the quarter was $900 million. As part of our ongoing commitment to return cash to shareholders, we repurchased approximately $300 million worth of shares in the first quarter. We have an additional $700 million of availability remaining under our share repurchase authorization. Looking at inventory, we ended the quarter with $1.265 billion, a 66% increase over a historically low level last year. Relative to pre-COVID levels, first quarter inventory increased 25%. As a reminder, we anticipated elevated inventory levels as we implemented new programs to receive seasonal merchandise earlier, as well as hold more core inventory given supply chain delays. As we look at inventory flow for the remainder of the year, we expect levels will moderate sequentially and as planned, be below prior year by the end of the fiscal year. Now turning to guidance. Starting with a full-year overview, we are maintaining the outlook we shared during our recent investor day. As we noted then, the U.S. dollar has further strengthened and as a result, we reduced revenue by $100 million for the full year. However, we are pleased to maintain our operating margin expectation of 18% and earnings per share of $6.85. Additionally, as we look at revenue, we now expect the impact of COVID-related restrictions in China will continue into the second half of fiscal 2023. As a result, we anticipate approximately $50 million less in revenue from mainland China relative to our prior forecast. We now assume revenue in mainland China will decline approximately 20% year-over-year in the third quarter and approximately 10% in the fourth quarter. Now turning to detailed full-year guidance. Starting with revenue, we forecast Capri Holdings revenue of approximately $5.85 billion. This represents an approximately 3% increase over prior year on a reported basis, while on a constant currency basis, revenue is expected to increase approximately 10%. Looking at full year revenue guidance by brand, we assume Versace revenue of approximately $1.175 billion, increasing approximately 8% on a reported basis and approximately 24% in constant currency. Jimmy Choo revenue of approximately $650 million, increasing approximately 6% on a reported basis and approximately 13% in constant currency. Michael Kors revenue of approximately $4.025 billion, increasing approximately 2% on a reported basis and approximately 6% in constant currency. For the year, we continue to expect gross margin will be approximately flat to fiscal 2022. This reflects the ongoing benefits from our strategic initiatives, offset by lower sales in China, which is a higher margin region, as well as the negative impact of foreign currency. In addition, we expect transportation costs to remain elevated through the year. We continue to expect a full year operating margin of approximately 18%. For Versace, we anticipate an operating margin of approximately 16%. For Jimmy Choo, we expect an operating margin of approximately 5%. For Michael Kors, we anticipate an operating margin of approximately 24%. Turning to our expectations around certain non-operating items. We now anticipate net interest income of approximately $10 million. Our effective tax rate is expected to be approximately 10%, and we forecast weighted average shares outstanding of 140 million. As a result, we expect to generate diluted earnings per share of approximately $6.85 for fiscal 2023, representing double-digit growth. Turning to second quarter guidance. We anticipate total company revenue of approximately $1.4 billion. This represents an approximate 8% increase versus prior year on a reported basis and an approximate 16% increase in constant currency. We continue to anticipate revenue in mainland China will be down approximately 20% year-over-year in the fiscal second quarter. For second quarter revenue by brand, we forecast Versace revenue of approximately $300 million, increasing approximately 7% on a reported basis and approximately 26% in constant currency. Jimmy Choo revenue of approximately $140 million, increasing approximately 3% on a reported basis and 9% in constant currency. Michael Kors revenue of approximately $960 million, increasing approximately 9% on a reported basis and approximately 14% in constant currency. Looking at operating margin, we continue to expect second quarter operating margin of approximately 17%. As a reminder, we anticipate higher supply and chain costs in the second quarter versus prior year, resulting in gross margin contraction. Additionally, this reflects the negative impact of foreign currency as well as lower revenue from China, which is a structurally higher margin region. In terms of operating margin by brand, for Versace, we anticipate an operating margin in the mid-teens range. For Jimmy Choo, we expect operating margin to be slightly positive. For Michael Kors, we anticipate an operating margin in the low to mid-20% range. Turning to our expectations around certain non-operating items. We forecast net interest income of approximately $3 million, an effective tax rate of approximately 11%, and weighted average shares outstanding of 139 million. As a result, we now expect diluted earnings per share of approximately $1.55. In conclusion, we are pleased with our first quarter results. Looking forward, we remain optimistic about the long-term growth potential for Versace, Jimmy Choo, and Michael Kors. While there'll be macro headwinds in the near term, our powerful brands have enduring value and proven resilience, reinforcing our confidence in the ability to deliver strong revenue and earnings growth over time. Now, we will open up the line for questions. Thank you very much, sir. At this time, we will be conducting a question and answer session. Please limit your question to just one. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question comes from Brooke Roach from Goldman Sachs. Please proceed with your question, Brooke. Good morning, and thank you so much for taking our question. John, given the volatility globally and a very uncertain macro, I'd love to hear your perspective and maybe some additional context around what you're seeing by key geographic region right now and the outlook that you're contemplating into the second half of your fiscal year for each of those regions? Maybe as a follow-up, in North America, how do you see the handbag market evolving into the second half of the fiscal year? Where do you see the biggest opportunity for Michael Kors to gain market share over that period? Thank you. Thank you, and good morning, Brooke. First, I'd like to say, you can see from the earnings release today that we're extremely proud of starting the year off on very good, solid footing. We've shown record revenues during the quarter and the strongest adjusted earnings per share in the company's history. We're off to a very good start, and I think that's a real testament to the three luxury houses, Versace, Jimmy Choo, and Michael Kors, and the strategic initiatives that we put in place, most of them all before the pre-pandemic. As you heard me say at our recent Investor Day, that you know, we've really transitioned this company and our transition is complete in terms of positioning ourselves as a luxury group. I think we're feeling very good about our accomplishments to date. We think that if we continue to stay the course and really execute against our strategic initiatives, that there's going to be significant upside really at all three of the luxury houses. In terms of how we see the regional performance, I'll start with the current performance. As you could see, North America was quite strong, better than our anticipation. We really feel that that seems to be continuing as well. None of us know what's going to happen in the back half of the year with the consumer, but it appears that the luxury industry is quite robust and quite healthy. We think that is going to continue for the foreseeable future in the back half of the year. There might be some consumer adjustments. Again, we don't know. From what we're seeing currently, that seems to be holding up. In terms of Europe, I would say I would use the word surprised. We were very pleasantly surprised at how strong and robust the consumer is in Europe. I think that they are clearly showing a resilience and a desire to get back out and enjoy an opened environment. Lockdowns are basically non-existent in Europe. Even though, you know, COVID cases are on the rise around the world, I think people are learning to live with it. We think that, again, there's quite a bit of pent-up demand in Europe, where they really reopened a bit later than North America. We're seeing that kind of move through. What we're also pleased about in both North America and Europe is the travel, the internal travel, in both of these markets. Let me go back. I should say EMEA, not just Europe, but in EMEA. The travel is quite strong. That's generating business both in the local markets. We're seeing some return with our travel retail business. Now it's not where it was in pre-pandemic, but we're definitely starting to see some pickup in that business. When you move to Asia, I think we are very optimistic about certain of the Asian markets, Japan and Southeast Asia. The reopenings seem to be going quite well there. The economies are building, especially in terms of consumer purchase in the luxury market. We are less optimistic, and you could see that in our forecasts about China. There's a number of things happening there, again, most of which you all on this call know. First, there are different restrictions that are being put in place in multiple cities at multiple different times. We have stores that are opening and closing, working on reduced hours. That's causing some issues in that marketplace. Secondly, travel is down dramatically. We believe the report in June was close to 50%, and that's intra-country travel. That's definitely having an effect on all three of our luxury houses. We believe that it will recover in the latter part of this year. You can see that by our forecasts getting consistently better. We've already seen some recovery to date. We just think it's gonna take us some time, and we thought we would plan more conservatively. I think we planned conservatively going into this year, and we maintain that perspective. Long term, we still have tremendous faith and confidence in how our luxury portfolio will perform in that market. All three of our brands are significantly underdeveloped compared to our competitors. Again, I've referred to this many times over the past two to three years. There are going to be bumps in the road, whether it's certain issues around the macroeconomic headwinds, whether it's certain issues related to the pandemic, and any other issues that might come up. We still believe in the long-term growth of the China market and how that will impact our company's revenues and earnings. Lastly, in terms of the North American market, you know, I view it not just for Michael Kors. I view it for all three of our luxury brands. As you heard us talk in Versace, in our retail channel, accessories grew over 80% during the quarter, which was really an extraordinary performance. In Jimmy Choo, accessories grew over 50%. Michael Kors growing very strong in the mid-single digits. We see the market in totality growing, and Michael Kors will continue to grow with the market. As we reposition the Michael Kors brand and we're a considerable way through that initiative, we think the customer is gonna continue to respond very positively to the elevation, and the Michael Kors brand should continue to grow as we've seen that. If you recall where we had significantly reduced our expectations for the Michael Kors brand, heading, quite frankly, into the pandemic or during the pandemic, we have now been pleasantly surprised at the resilience of the brand, even with the repositioning, raising prices, elevating qualities, and the consumer response to that. We're feeling, again, quite optimistic. There's gonna be bumps in the road for all of us over the next 12 months-24 months. I think we feel that the strength of our three luxury houses will power us through that and continue to see very strong revenue and earnings growth for the company. Thank you, Brooke. Thank you. Thank you. The next question comes from Omar Saad from Evercore. Please proceed with your question, Omar. Good morning. Nice results. My question is actually on inventories. Wanted to see if there was any major variations across the brands, the three brands, or if it's relatively evenly spread across their sizes. Maybe, John, talk a little bit about core inventories. What gives you such confidence in carrying such a higher level of core inventories, especially for those of us who remember Signature several years ago got a little bit over its skis. Maybe also touch upon consumer demand for core classics versus more fashion and newness and what you're seeing in the split there. Thanks. I'm gonna let Tom take the general inventory question, and I'll get to your slightly more specific parts of that. Tom. Thanks, Omar. You know, at first I just say that what we're seeing is how we planned inventory. It's very consistent with our expectations to have the higher inventory and the comparison against what is a really historically low level where we did not have enough inventory last year to meet consumer demand. Compared to pre-COVID levels, inventory is up 25%. As we looked at the broader inventory and supply chain situation, the delays are more related to on the water for a product coming from Asia to the U.S. and to EMEA. That is where we're holding a little more core inventory and pulling up fashion more where that is impacted. Overall, what we're seeing now is delays are shorter. However, compared to pre-COVID, what we're seeing today would still be extremely long, compared to those times. We expect delays to continue and for costs to remain high through the year. We believe that we're in a very good spot to continue to see levels of inventory sequentially decline through the year. As I mentioned in the prepared remarks, at the end of the year, it'll be below the prior year. We see it playing out as anticipated and wanna have the inventory in hand to be able to meet consumer demand as we see it. Omar, I'll take your questions and break them up a little bit. First, I wanna remind everyone on this call, we planned our inventories to be at this level. We did two things. We moved our design calendar up by almost 90 days. We did that purposely because at the time, when the pandemic was probably at its peak, we were seeing delays of up to that amount on the water. We made the determination that we were not satisfying the consumer demand, and we needed to adjust our design calendars as well as adjust the inventories and when we were taking them in to avoid really the delays that we were seeing. Now, this is predominantly in North America, but not exclusively to North America. We were also seeing a pretty significant delays going into Europe as well. That was the first thing that we did. The second decision that we made was to take core and hold it a bit more towards a six-month basis as opposed to a 90-day basis, which had been our historical averages. We're seeing the peak of that as we speak today. We are gonna probably pull back on the core piece of that to a more historic level. And we think that that's probably appropriate given, as Tom mentioned, some of the delays have reduced down, but still, we are still seeing, you know, 30+ day delays at the ports. We'll reduce some of that. Again, as Tom had mentioned, we'll be back to actually below in Q4 prior year levels. That's really when we started this whole initiative to kind of change our inventory flow. There's nothing in our inventories that weren't planned this way. Additionally, we really feel like we're in a good place for the fall season. This is across all three of the group. It's Michael Kors, Jimmy Choo, and Versace where we moved design calendars, and we are also in a better position in terms of our core inventories. Core versus fashion, as you heard me say in the Michael Kors piece, we're up to about 50% signature, and that's kind of where we wanna hold it. We don't want it to go much higher than that. We think that's the right place for us to be. Fashion represents the balance of that. We do believe that there is an opportunity with our new MK hardware pieces to get a further lift with the consumer. Really, you know, as we have said consistently, those brand codes really are engaging with the customer and creates a further loyalty. We'll see hopefully a lift from that, and we've seen some very good initial reactions on some of our new introductions. I might add also that in Jimmy Choo, when we bought the company, the company did not have any signature hardware, and we've introduced that a little over two years ago, and we are seeing incredible response from that. You know, we're learning from some of our sister companies across the group and seeing things happen that are quite strong. Of course, you know, in Versace, we have now three codes. We have La Medusa, Virtus, and we're just introducing La Greca. We feel we're in an excellent place for Versace. We won't really be introducing any new additional brand codes, and we feel quite strong about that. In terms of our inventories, we feel good about where they are right now. I want to remind you also that we have in transit still, Tom, exactly how much? It's double what it was, prior year, and it's a significant percent of what you see on our balance sheet. It is not all here. Right. We're still working our way through this supply chain situation. We think we'll be most of the way through it, kind of the September-October time period here, and that's when you'll start to see the more significant kind of declines in the inventory start to happen. Thank you very much for those questions, Omar. Thanks for the detail. Good luck. Thank you. The next question comes from Matthew Boss from JPMorgan. Please proceed with your question, Matthew. Great, thanks. John, maybe larger picture, what in your view drives the durability of the overall accessories category that we're seeing? Is mid- to high-single-digits still the best growth rate to consider multi-year? Also, are you seeing any signs of softening across the assortment as you dissect the portfolio by income demographic, any pushback at all to your proactive pricing initiatives? Have you seen any changes so far to what has remained a rational promotional backdrop in your segment? Thank you, Matt, for those questions. Number one, again, I wanna re-emphasize that we believe that we are in both footwear and accessories, 'cause footwear is a big part of our growth strategy for this company. Again, you heard about that in Jimmy Choo, and you heard about that in Versace, strong growth. We probably don't talk about it as much in Michael Kors, but you heard about it in the investor day that we think we can add approximately $250 million to that part of our business. So in luxury, it is both accessories and footwear that we think are driving a consumer desire, consumer engagement. Very important that both of those continue to grow in that mid-single digit, possibly high, but I think more realistically mid-single digit range is what we think is the appropriate areas. You know that we've taken price increases in the Michael Kors brand for over two years. There'll be more coming this fall and some in the spring season. At Versace and Jimmy Choo, Jimmy Choo started its price increases a little over a year ago, and Versace is starting those as we speak. I think I've mentioned previously that Versace is probably on the lower end of some of the pricing in particular its accessories versus our luxury competitors. We have not seen any consumer resistance to those increases. We think that's really being driven by the strength of our designs from Donatella, Sandra, and Michael and the great design teams that we have. The other issue is, you know, I think people continue to use accessories as a way to express themselves in terms of their fashion sensibility. We see that as really being a very positive for the future. I would also tell you that interestingly enough, the resale market has, I think, created a comfort level with people in the luxury world, that they can not only purchase and enjoy, but they can. You know, they see value in the ability to be able to resell product. I think we all might have been concerned about it, a few years back, but it's actually created a circular economy and one that we think actually helps people, especially those who want fashion. They want it new, they want it early, and they might not have as much space to either keep these things in their home, or they just wanna update their wardrobes on a more regular basis, and this is a nice way to keep circulating the product. I think we feel very good about that. In terms of the, you know, the last part of your question, promotional rationality. Look, we've said it a number of times. It's not a relevant issue for us in Versace and Jimmy Choo, and this is really a North American issue for Michael Kors. We'd rather give up the revenues. We'd rather walk away from some of the business, even if that means our competitors do certain things that we don't necessarily agree with. We're gonna probably walk away from the business before we start to go back into what we saw before the pandemic. We learned things that we think in the end didn't end up being right for the brand and ultimately for the operating margin and gross margin performance. We stay true to our vision and, you know, the consumer hopefully will respond to us because of the great design. I think really exciting storytelling that's happening across all three of our luxury houses and really excited about what's happening at Michael Kors with our jet set storytelling. You know, the use of data analytics and how we're really targeting and serving customers, I think in a more efficient way for them and a more exciting way. Again, we feel good. We can't predict what's gonna happen in the greater macro headwinds in the back half of the year. We're all certainly reading about it and, you know, we're not going into this with our eyes closed. That being said, I think we feel that our brands offer something that will excite the consumer and hopefully engage them, and have them interact with us. Thank you very much, Matt. Thank you. The next question comes from Kimberly Greenberger from Morgan Stanley. Please proceed with your question, Kimberly. Okay, great. Thanks so much. Thanks for the great discussion and the comprehensive view on revenue. John, I thought that was really helpful. Maybe I'll go to the gross margin because we haven't talked about that a lot here during the Q&A session. Gross margin. Tom, you talked about higher supply chain costs. First, if you could just look at the year-over-year change in gross margin and help us understand what was the merchandise margin performance as separate from some of the supply chain costs. Then within the supply chain costs, could you break down the elements or even just give us rough buckets on which of those things you view as transitory and could be recovered in you know, future quarters or future years? Which of those cost increases in supply chain do you think are likely to be more lasting or more permanent? We're just trying to understand if we're sort of in a moment in time where there are some temporary pressures on the gross margin that could abate in the future, or if anything has sort of fundamentally changed with the cost structure. Thanks so much. Sure. Thank you, Kimberly, for that. Let me start with Q1 because we were really pleased with performance. Gross margin was better than anticipated, and some of the dynamics occurring in the quarter are indicative of how we're looking at the year and how we pace out through the year. It does touch on the strategic initiatives, or as you were referring to them, the merch margin, as well as the supply chain pieces. In the quarter, we saw the strategic initiatives continue to deliver, and that's across all three brands. That includes increase in full price sell-throughs, our pricing activities, growing accessories at Jimmy Choo and Versace. All of that continued to deliver, and that was, of course, in the quarter, offset by high supply chain costs. That was almost entirely the decline versus prior year of supply chain. As well as the impact of negative FX and lower sales in China, which is a structurally higher margin region. Now as we look at it, and I'll talk about the quarter pacing, we expect the supply chain negative to continue into the second quarter compared to prior year because those costs really started to add up in the third quarter and more in our holiday timeframe last year. As we move through, the headwind will lessen in the back half of the year for supply chain costs. Through this entire time, we expect the strategic initiatives or merch margins, as you might have been referring to them, to continue to deliver every quarter. That's what will ultimately come through. First quarter, we expected margin to be down. It was better than expected. Q2, we still expect to be down due to supply chain. In the second half, as that year-over-year mitigates, we now expect gross margin to be positive year-over-year, and for those items to continue on an ongoing basis. Those, we expect through this year and next. On the supply chain side as to what is transitory, certainly the air freight costs were transitory in the past year, and we hope that we're not in a position with dislocations to do that at any high level. The other piece, time will tell as the supply chain environment normalizes and we get into a new season of contracting. We are taking advantage of the lower delays and a little more, not normal by any stretch of the imagination, but better than prior year, to use things like less broker usage. Going forward, we hope that supply chain will ultimately become somewhat of a tailwind. Yeah. Thank you. Great. Thanks so much, Tom. Thank you. The next question comes from Ike Boruchow from Wells Fargo. Please proceed with your question, Ike. Hey. Thank you. Good morning. Maybe John, just on the topic of M&A, you know, there does seem to be some assets out there that do appear attractive. I know Tom Ford's been mentioned in the news of late. I guess I'm curious, current thinking on the M&A landscape timing for CPRI. When you think about potential targets for the business, are you solely focusing on owned brand acquisitions or does the idea of a licensing structure appeal to you as well when you kinda think about potential deals? Thanks. Thank you, good morning, Ike. First and foremost, you know, as it relates to where we see the greatest value that we can create for our shareholders, it is on executing against our growth strategy initiatives. You know, from what you saw at the Investor Day, we firmly believe that we have the opportunity to take this a group to $8 billion. You know, we feel very comfortable with our initiatives and our goals around Versace to grow that to $2 billion. Jimmy Choo, as you can see by the results, is really starting to work now for the group. We do think that that is a billion-dollar brand for the company. We do think operating margins are gonna start to get into that mid-teens range here in the not-too-distant future. Obviously, this quarter was very good for us. Just on a go-forward basis, we think we understand how we can unlock the value there. Then lastly, Michael Kors, as I said before, we're pleasantly surprised at our results and where we think the future lies. In terms of, I'll call it capital allocation, look, the least expensive company that we could buy right now is Capri. Our priority is to continue to return our value to shareholders through share repurchases. We think this is still an asset that is considerably undervalued. Based upon that, the board and myself feel that that is really one of the best uses of our capital. In terms of another acquisition for the company, we've been, I think, very clear that whatever it is has to have scale to it, and because we don't wanna buy something that's small and would distract management, given we have this very big opportunity in front of us with our three existing luxury houses. Secondly, we think it really needs to be a European luxury brand. We believe that's where the value is, and the sustained growth opportunity is for the group over many years. There are assets that either are available or will be available. We've said that previously. I don't think anything's gonna happen that rapidly. When it does, we believe that we have the balance sheet and the capacity to do an acquisition. Again, we don't wanna do anything to distract from our strategic goals that we're trying to execute against today. If the right asset were to come available, we would certainly be in the mix. We know there are competitors who will also bid for those assets. As I've reminded everyone in the past, in the luxury world, these assets are not gonna be inexpensive. They're gonna come with very high multiples on the purchase price, and you either pay for that asset or you don't get the asset. It's just that simple. That's how we would view it. Lastly, we would not be interested in any licensing type of situation at all. On that note, I wanna thank everyone for joining us this morning. Again, we are really pleased with our ability to start the year off on a very solid footing. We think that the balance of the year is gonna be very good for the company. There are going to be some macro headwinds that we will face, and we believe that our three luxury houses have the ability to power us through whatever is in front of us and take us into the future. Thank you very much, and have a great summer. Bye. Thank you very much. This concludes today's conference. You may disconnect your lines at this time, and thank you very much for your participation.