Greetings and welcome to the Capri Holdings Limited Strategy Update Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, 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 strategic update 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 today's 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 impairment charges, restructuring and other charges, ERP implementation costs, Capri transformation costs, and costs related to the merger. To view the corresponding GAAP measures and related reconciliation, please review our latest earnings release posted on our website on November 7th at capriholdings.com. Now, I would like to turn the call over to Mr. John Idol, Chairman and Chief Executive Officer. Thank you, Jennifer. Good morning, everyone. Today, we announce that Capri and Tapestry have mutually agreed to terminate our merger agreement. We strongly disagree with the district court's decision to grant a preliminary injunction which fundamentally ignored the market realities of the fiercely competitive and highly fragmented handbag market in which we compete. We are now focusing on the future of Capri and our three iconic luxury brands. We remain confident in our long-term growth potential and look forward to sharing a more in-depth overview of our strategy at an investor day that we will be holding in late February. Today, we want to take the opportunity to reconnect with our shareholders and the analyst community to discuss what has been happening with our business since we last spoke. We also want to touch on some of the initiatives that we will discuss in more detail at our investor day. Overall, we have been disappointed with our results over the last 18 months. A lot has changed since we last spoke over a year ago, both externally and internally. Externally, consumer demand for fashion luxury goods has softened globally with an outsized decline in China. This impacted our retail sales but had a more significant impact on our wholesale business. Internally, due to the merger, we did not place as much of an emphasis on our long-term planning. At the same time, we made a number of missteps in our efforts to reposition our brands, in particular at Michael Kors and Versace, which I will discuss in more detail in a moment. Looking ahead with the termination of the merger agreement, we are now well-positioned to move forward as an independent public company, looking at both our short-term and long-term strategies to drive revenue and earnings growth. While these efforts will take time, we are fully committed, and I am confident that we will succeed for several reasons. First, we have three incredible fashion luxury brands with Versace, Jimmy Choo, and Michael Kors. Our brands are well-established and resonate with consumers. Second, we have a solid distribution network to build upon. With 1,200 luxury retail locations globally combined with our robust digital platform, we have a strong framework for the future. Additionally, our extensive wholesale network serves as an important channel to reach consumers in areas where we do not have our own stores. Third, we have the management team, design talent, and a global workforce of 15,000 employees to successfully execute our initiatives. Fourth, we have the financial strength to implement our strategies. Across all our luxury houses, we are focused on brand desirability through exciting communication, compelling product, and omnichannel consumer experience. While our strategies are tailored uniquely for each brand, our overarching goals are similar. First, in terms of communication, our primary objective is to engage and inspire both new and existing consumers. Second, in terms of product, we are committed to creating exciting fashion that resonates with our consumers. Third, our retail omnichannel strategy entails leveraging our enhanced digital capabilities to grow e-commerce revenues as well as increasing our store sales densities. Fourth, we are focused on stabilizing our wholesale businesses. Fifth, we will continue to build upon our corporate values with communities both internally and externally. Now, turning to each of our fashion luxury houses in more detail. Michael Kors is a powerful brand with a 43-year legacy, tremendous brand loyalty, a database that has been growing double digits and now exceeds 80 million consumers, approximately 750 stores worldwide, and an extensive wholesale network. To return Michael Kors to growth, we are focusing on engaging and energizing both new and loyal consumers, optimizing the balance between our fashion and core offerings, improving store productivity, and stabilizing our wholesale business. Now, let me take a moment to reflect on what has transpired at Michael Kors since we last spoke. Sales have been impacted by softening demand for luxury fashion goods globally with an outsized decline in China. Additionally, we recognize that the Michael Kors brand was not evolving as needed, so we began implementing a comprehensive transformation plan. While some initiatives succeeded, others have not, but the learnings have been invaluable in forming our path forward. Now, looking at some specific areas of our Michael Kors 2024 transformation plan. In our marketing and communication efforts, we aimed to appeal to a younger audience. While we have seen some initial successes, the campaigns did not resonate as strongly with our core consumer base. In terms of product, we attempted to elevate price points too quickly over the last two years in accessories, footwear, and ready-to-wear. Simultaneously, we significantly reduced our signature product offering and inventory levels while injecting too much fashion for our core consumer. As a result, we had to promote deeper to drive sales, which significantly impacted our AUR. The decline in AUR was further amplified by an increasingly promotional environment. Looking ahead, we have initiatives underway to re-energize the Michael Kors brand. First, we are implementing dynamic new marketing plans that will begin in spring of 2025. Additionally, we will be increasing our marketing investment levels to support these efforts. Second, in terms of product, we are focusing on rebuilding our core and signature assortments to achieve a more balanced product mix. While we are not where we need to be yet, we already have begun to increase our mix of core and signature. In terms of pricing, we are implementing a strategic pricing review across categories to drive better full-price sell-throughs. Third, we will continue to improve our omnichannel retail network, which includes leveraging our enhanced digital capabilities to grow e-commerce revenues. It also includes increasing retail store sales densities. We will be reducing Michael Kors' store fleet by approximately 75 locations over the next two years. Additionally, to enhance our remaining retail network, we will be resuming our store renovation program, which had been paused during the merger process. Our goal is to renovate approximately 150 stores over the next two years. Fourth, we are focused on stabilizing our wholesale business by aligning our product offering to better meet the needs of consumers in this channel. In summary, we believe that Michael Kors continues to remain a powerful brand that has the ability to return to growth. We look forward to sharing Michael Kors' future initiatives and strategies in more detail with you at our investor day. Turning to Versace, which is one of the world's most storied luxury houses with a 46-year heritage. To return the brand to growth, we are focusing on engaging and energizing both new and loyal consumers, broadening our product offering, improving store productivity, and returning our wholesale business to growth. Taking a step back, over the past year and a half, Versace sales have been impacted by softening demand for luxury fashion goods globally with an outsized decline in China. Additionally, fashion trends shifted towards a more refined and understated style. We are repositioning the brand to place more emphasis on luxury and quality, which we believe is the right strategy. However, we believe we removed too many unique Versace statement items, which resulted in a less exciting brand and product identity. We also significantly reduced our offering of products for aspirational consumers as we tried to elevate the brand. Making matters more difficult, we did all this amid challenging conditions across the luxury sector, which further impacted our performance. Going forward, we have initiatives underway to return Versace to growth. First, we will continue to leverage our high levels of brand awareness and engagement. We have had successful marketing campaigns driven by Versace's celebrity connections, including our recent Icons campaign, which featured Anne Hathaway and Cillian Murphy. Additionally, friend of the house Channing Tatum was the face of the Eros Fragrance campaign. The success of these initiatives has contributed to double-digit growth in Versace's database, which now exceeds eight million consumers. Second, our product strategy consists of a number of initiatives. We are focused on injecting more energy into Versace's assortments to achieve the ideal balance of fun and elegant style. We are also strategically adjusting our assortments to appeal to a broader consumer. The aspirational luxury consumer presents a large opportunity to drive revenue for the brand. Therefore, we will be introducing a wider range of product pricing in our accessories, footwear, and ready-to-wear businesses. Additionally, we had previously been focused on developing our accessories business, which we continue to believe is a meaningful growth opportunity. We will be introducing a new highly recognizable code at our upcoming February fashion show. We believe it will establish a new icon in the Versace family and appeal to a wide range of new and existing consumers. Third, we will continue to improve our omnichannel retail network. This includes leveraging our enhanced digital capabilities to grow e-commerce revenues. It also includes increasing retail store sales densities. We anticipate our retail network will remain flat over the next two years at approximately 230 stores. Fourth, we see opportunity to resume growth in our wholesale business over the next few years. We will be aligning our product offering to better meet the needs of consumers in this channel. We view the wholesale channel as a future growth opportunity for Versace, as the brand is underpenetrated relative to our peers. In summary, we believe we have key building blocks and initiatives in place to realize the full potential of this incredible brand. We remain steadfast in our efforts to position Versace as a leading global luxury brand with a focus on leather goods. Turning to Jimmy Choo, which is a powerful brand with a 28-year legacy and tremendous consumer loyalty. To accelerate Jimmy Choo's growth, we are focusing on engaging and energizing both new and loyal consumers, broadening our product offering, improving store productivity, and stabilizing wholesale. Reflecting on the past year and a half, like our other brands, Jimmy Choo's sales have been impacted by softening demand for luxury fashion goods globally with an outsized decline in China. Additionally, occasion wear experienced a notable slowdown following the post-COVID rebound, impacting Jimmy Choo's sales of both footwear and accessories. Although we have been expanding our casual assortments, we need to respond more quickly to this shift in trend. Sales of our casual assortments continued to increase double digits over the past two years. However, this growth was not enough to offset the more significant declines in occasion wear. Going forward, we have initiatives underway to accelerate Jimmy Choo's growth. First, in terms of communication, we are actively engaging with both new and existing consumers. Our recent marketing campaigns featuring Sydney Sweeney and Winona Ryder proved highly effective. Additionally, our recent collaborations generated strong consumer engagement as Jimmy Choo partnered with golf lifestyle brand Malbon and Japanese animated series Sailor Moon. The success of these initiatives has contributed to double-digit growth in Jimmy Choo's database, which now exceeds 6 million consumers. Second, our product strategy remains focused on further developing accessories and expanding our casual footwear offering. In terms of accessories, we continue to believe we can expand the category to 30% of the mix. We will be refocused on future launches of accessories group around our JC Signature Hardware and our Jimmy Choo brand name. In footwear, we are broadening the assortment to feature a higher proportion of casual options, including flats, low heels, and sneakers. Third, we will continue to improve our omnichannel retail network. This includes leveraging our enhanced digital capabilities to grow e-commerce revenues. It also includes increasing retail store sales densities. We anticipate our retail network will remain flat over the next two years at approximately 220 stores. Fourth, we anticipate stabilizing our wholesale business as department store digital mergers and travel retail sales begin to normalize, therefore mitigating some of our more recent declines. In summary, we are confident that we have the foundational elements and strategies needed to fully harness the potential of Jimmy Choo. Before turning the call over to Tom, I want to take a moment to say that the board of directors and I are focused on our priority to create value for shareholders, and we remain committed to do so. We are regularly evaluating our portfolio of brands to assess how to best drive shareholder value, and we will continue to do so. In conclusion, we are looking forward to sharing our growth strategies with you in more detail at our upcoming investor day. I am confident that we can return Capri Holdings to growth over time. We have an incredible portfolio of luxury houses, each with their own rich heritage, exclusive DNA, and strong consumer loyalty. Our brands have enduring value and proven resilience. We also have a group of 15,000 employees around the world whose commitment and dedication to Capri's success is unwavering. Now, I'd like to turn the call over to Tom. Good morning, everyone. With the termination of the transaction behind us, we will begin to put more emphasis on building out our future strategies and growth plans, which we look forward to sharing with you at our upcoming investor day. Looking ahead, I am optimistic about Capri's future. We have three powerful, iconic brands and a talented group of employees globally. With that combination, I am confident that Capri Holdings is positioned to return to revenue and earnings growth over time. Now, looking back over the past 18 months, we are disappointed with our performance and recognize our results are not where they should be. We have been impacted by a slowdown in consumer demand for fashion luxury goods globally with an outsized decline in China. Additionally, as we tried to reposition Michael Kors and Versace, our initiatives did not perform to our expectations. Together, these issues have affected sales in our retail channel and have had a more significant impact on our wholesale revenues. While the wholesale channel has been challenged industry-wide, some of our brand repositioning efforts further amplified declines at both Michael Kors and Versace. We made this a strategic decision to reduce our exposure in the wholesale channel, expecting to recapture a portion of these sales through our own retail channel, but that did not materialize. The revenue declines in both retail and wholesale have created significant deleverage in operating margins as we have not been able to reduce expenses fast enough to offset the revenue declines. As you know, while the wholesale channel has lower gross margins, it has notably lower expenses and therefore generates strong operating margins. Now, I would like to review our first-half performance. Total company revenue of $2.1 billion decreased 15% versus prior year on a reported basis or 14% in constant currency. Looking at revenue by channel, total company retail sales decreased high single digits, while in the wholesale channel, revenue declined double digits. Turning to revenue performance by geography. In the Americas, revenue decreased 12%, with retail down mid-single digits and wholesale down double digits. In EMEA, revenue declined 16%, with retail down low double digits and wholesale down double digits. In Asia, revenue decreased 23% on a reported basis or 19% in constant currency. Constant currency retail sales declined in the low teens while wholesale declined double digits. Looking at revenue performance by brand, at Michael Kors, revenue decreased 15% compared to prior year. Global retail sales decreased high single digits while wholesale declined double digits. At Versace, revenue decreased 22% compared to prior year. Global retail sales decreased in the low double digits while wholesale declined double digits. At Jimmy Choo, revenue was approximately flat compared to prior year. Global retail sales decreased low single digits while wholesale increased high single digits. Now, looking at total company margin performance, gross margin of 64.4% declined 80 basis points versus prior year. The decline was primarily driven by lower full-price sell-throughs, partially offset by favorable channel mix. Operating expense decreased $40 million as we had begun to realize some of the benefits of the cost reduction program that we began to implement earlier this year. However, as a percent of revenue, operating expense was 62.2% compared to 54.6% last year, primarily reflecting expense deleverage on lower revenue. Total company operating margin was 2.2% compared to 10.6% last year. By brand, Versace operating margin of negative 4.8% compared to positive 7.1% last year, primarily reflecting expense deleverage on lower revenue. Jimmy Choo operating margin was slightly negative compared to positive 2.2% last year, primarily due to lower full-price sell-throughs and increased retail store costs compared to prior year. At Michael Kors, operating margin of 11.5% compared to 17.9% last year, primarily reflecting expense deleverage on lower revenue. Turning to guidance, given the complex industry landscape and low visibility as to when markets will stabilize, we are only providing high-level fiscal 2025 earnings guidance at this time. We see sequential improvement in revenue trends in the back half of the year, driven by some of the strategic initiatives that we have already begun to implement. For example, at Michael Kors, our efforts to rebuild the core and signature assortments have already begun, and at Versace, broader assortments with price points targeted at aspirational luxury consumers are being introduced this quarter. Turning to gross profit, we anticipate continued gross profit margin pressure versus prior year. Moving to operating expenses, we expect expenses to decline at a greater rate in the back half of the year as we realize additional benefits from the cost reduction program that we began to implement earlier this year. In the future, we believe the strategic growth initiatives across our luxury houses will begin to stabilize revenue and ultimately return Capri to growth. In terms of gross margin, we see a path to expansion as we believe our product initiatives, including balancing fashion and core as well as broadening our assortments to include more strategically priced items, will lead to better full-price sell-throughs. Looking at operating expenses, we intend to take further action to reduce our expenses, including continuing to close unprofitable stores, realizing supply chain efficiencies, and implementing an additional workforce optimization plan. These actions will lead to higher operating margins, net income, and earnings per share in the future. Now, I would like to discuss capital allocation. As you know, we suspended our share repurchase program and reduced capital expenditures during the term of the merger agreement to focus on repaying debt. As a result, we anticipate ending fiscal year '25 with net debt of approximately $1.2 billion, which reflects a $500 million reduction since the period ending July 1st, 2023, just prior to the announcement of the merger. These actions reflect our continued positive free cash flow and diligent management of our debt. Now, looking at our future capital allocation plans, our first priority is to invest in the business. This includes investments in technology initiatives primarily focused on our e-commerce and data analytics capabilities. Additionally, we will restart our store renovation program at Michael Kors as our retail locations are one of the cornerstones to rebuilding sales growth. Second, we will continue to reduce debt with our excess free cash flow. And third, as our business stabilizes, we anticipate resuming a share repurchase program to create additional shareholder value in the future. In conclusion, with the strength of our three powerful, iconic brands, Versace, Jimmy Choo, and Michael Kors, I am confident that Capri Holdings is positioned to return to revenue and earnings growth as well as increased shareholder value. Now, we will open up the line for questions. Great. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment, please, while we pull up our questions. Our first question is from Matthew Boss from J.P. Morgan. Please go ahead. Great. And thanks for all the color. So maybe, John, to start off, could you elaborate on your portfolio approach or any change in thinking today, maybe relative to 18 months ago, as you consider strategic alternatives for Versace or Jimmy Choo to drive shareholder value? And then, Tom, just how best to think about maybe a multi-year progression of operating margins. You laid out gross margin recapture and expense efficiencies, but then you also laid out operational reinvestments to drive growth. Just any help on the multi-year progression would be great. Thank you, Matt. And good morning, Matt. A few things. First off, I want to say that the management team inside the company has started to implement strategic initiatives to stabilize our company's revenues and ultimately return us to growth. So we have been working diligently over the last few months to put these plans into place, given the fact that we're very disappointed with the retail results that we've seen, and while those are caused by the softening demand for luxury fashion goods, as we said in our prepared remarks, with an outsized decline in China, some of that decline is actually a result of initiatives that we put in place to elevate our brands and to increase pricing, and we moved too fast, in particular in Michael Kors and to a degree in Versace, and again, I'm sure we'll talk about that during the rest of the call, but we are definitively reacting quickly on these issues and around initiatives that will help grow revenues and, obviously, initially stabilize revenues. And I think that's important because as we reflect on our portfolios, we acquired Versace and Jimmy Choo with the vision of having our company balanced with luxury brands. And again, obviously, we're tiered in different pricing inside of that luxury world. And Michael Kors could be referred to as the affordable or accessible or modern or whatever you want to refer to that. It's just really a price segmentation inside the market. And we believe that all three of these houses have tremendous opportunity to grow. And we think we've got the right management teams in place, and we think that we have initiatives that we're going to share a lot more information with you about in the upcoming February Investor Day on exactly what we're doing to develop each of these luxury houses. That being said, we're a public company. We have always been open to conversations with any company that has an interest in any of our assets, as we would always do and always have done. And so I think our first commitment is to rebuild all three of these houses to get them on a growth trajectory and to create value for our shareholders through revenue growth, through operating margin growth, and ultimately through net income growth. And I think, as Tom stated earlier, we have a very solid balance sheet, and we still are generating significant free cash flow. So we have the resources to achieve that. But again, if we do see any opportunity that would create additional shareholder value, we will certainly look at that very carefully. And I'll turn it over to Tom for the second part. Hi, Matt. And so regarding operating margin, we expect to see operating margin expansion ultimately over the longer term. And it's driven by a number of factors. As I mentioned, we expect to see gross margin benefiting by full-price sell-throughs. And that's based on some of the initiatives we already are putting in place, but we'll certainly have more to speak about when we get together for Investor Day later in February. And that includes things like signature for Michael Kors or broader product assortment for Versace. On the SG&A side, we certainly have our savings plans, the one in place for this year, which was originally targeting $80 million-$90 million. We now believe, based on additional actions, it will be over $100 million. And additional actions we will be taking into next fiscal year to help support margins. That will include, at some point, some investments in the brands, but that's included in the thought process of operating margin expansion over time. I think one of the keys to that, particularly on the SG&A side, is productivity and store productivity. That is a two-way street, as we have seen deleverage hurt us significantly over the past year and a half. As we stabilize wholesale through the actions that we're currently taking and plan to, and then grow in retail, that should drive good leverage and productivity in our stores. Matt, let me just add one additional thing because Tom mentioned the greater full-price sell-throughs. First, addressing Michael Kors in particular, the full-price sell-throughs have declined over the past 18 months since we've all spoken. We saw that starting to happen actually slightly before that. And it really was a result of us trying to elevate the brand, and we did it too quickly. We also, as my prepared remarks said, we also tried to shift our marketing initiatives, quite frankly, targeting a customer that was much younger than our core customer. And we really started to not get the same engagement as we did in the past with our core customer. So we've already seen where we have introduced new products at more historical pricing for the company. Our full-price sell-throughs are already rising. And the other thing that I would point out to you in this, our data analytics are quite robust in this company. And we spent over $200 million in the past, really two years, replatforming our e-commerce and as well as adding significant data analytics capacity to the group. What it told us is our unit sales at Michael Kors for the first six months of the year are up mid-single digits. So we have a double-digit growth in database. We have a mid-single digit growth in unit sales. Consumers are responding to the Michael Kors brand. That is not our issue. Our issue is we have pricing that is out of line for what the customer's expectation is. And again, they're being much more choiceful today than they were two years ago. And we stepped out of where we really should have been on certain categories. Women's ready-to-wear is a very good example of that, where we've stepped considerably higher. And the customer has said, "No, that's not what we expect from Michael Kors." So we're going through a strategic price review. We expect to be able to have some implementation around that in the spring season. Really, it'll be fall. But I think you'll see a pretty significant move to getting back to what Michael Kors has always had. It's had a wonderful relationship with the consumer around our brand aesthetic. But we also represented a price-value relationship that the consumer enjoyed. And we've stepped away from that, and we're going to bring that back into scope. And so you're going to see that happen relatively quickly. Some of it's even happening for the holiday season. And then in the case of Versace, as we said, we tried to elevate the brand very quickly, and we really did not have enough breadth of assortment at price points that really are more aspirational. And we've always had a very strong aspirational customer in the Versace business. And that is also going to be here for the holiday season. Some of that, all of this is landing in the next couple of weeks. You'll see it in our stores and online. So again, we don't want to say that for any reason we've got our issues behind us. But I do hope that people know that we are working very quickly to mitigate some of the issues that we have clearly understood and our consumer has given us the feedback on. Thanks a lot, Matt. Great. Great color. Best of luck. Our next question is from Brooke Roach from Goldman Sachs. Please go ahead. Good morning, and thank you for taking our question. John, I was hoping you could elaborate on some of the changes you might have implemented in the processes, tools, or consumer insight work that give you the confidence that these new initiatives and strategies that you've outlined today and into the future will resonate with consumers to a better degree than the initiatives that you implemented over the last 18 months that might have fallen a little bit short with the consumer? Sure. That's a great question. First off, good morning, Brooke, and it's a great question. Brooke, I'd start out by saying that Capri Holdings has had a vision to become an important company in the fashion luxury goods industry, and hence why we made the acquisition of Jimmy Choo and Versace, and along with that, we were trying to elevate the Michael Kors brand to be much higher prices in many cases. We were trying to reduce our store fleet. Additionally, I don't think there's a data point that you know about, but we'll share with you now. We've closed 20%. We, ourselves, have closed 20% of our wholesale distribution points in Michael Kors. We did that with intent. That, by the way, is accounting for approximately half of the wholesale decline that we've seen to date. We made this decision with intent and hoping that that business would return into our own retail channels. That, of course, has not materialized. What happened over this last 18 months, as I said, was we made the decision to raise prices, to elevate the brand. The consumer responded, "No." As we unfortunately discounted to move the inventory through the retail channel, he and she said, "Yes." What we've learned is, and again, we have robust data analytics from everything from age cohorts to income cohorts to where these cohorts are living, whether it's United States or Europe or Canada or China or Japan. We're studying this very, very carefully. That data has really given us some very clear understanding of where we need to go, in particular with the Michael Kors brand, but also with the Versace brand. Just moving to Versace for one minute, we've obviously elevated the brand. We've made it much more sophisticated than it was previously. One of the very strong data points for us is our clienteling business and our top-tier consumer has grown double digits. So that part of our initiative is actually working and working quite well. We've got consumers who haven't shopped with us in 20 years, and we've got consumers who never would have shopped with this brand, and very high luxury consumers. On the other hand, where we lost the most significant amount of our business, both in our own channel and in the wholesale channel, was the aspirational customer. And Versace, we moved too fast. There's no question. We tried to do this in a time when we thought the luxury market was going to continue to grow robustly. And of course, as you know, that on a global basis, the luxury market has seen a softening, and I'll call it a slowdown. And while I'm not trying to make an excuse, I'm trying to tell you what happened. We have, and as I said, you will see this product showing up in our stores in this quarter. We'll get more data from our consumers around the changes that we're going to make in Versace, I think, relatively quickly. The Michael Kors changes will take a little bit longer because most of the changes we've made so far are more in the accessories business and less in some of the other businesses, which, by the way, account for a very large part of our store business, so again, we're using data to give us the information that we need to make decisions, and I think that the moves we're putting in place will bear fruit, and when I say quickly, I think we'll see some of the results of that before the end of this fiscal year, but let me turn it over to Tom. And Brooke, if I could just add a few things to that. So as you well know, we implemented a new e-commerce platform that is state-of-the-art. And then building on top of that, we've put in a customer data platform that allows for a great and new and different customer segmentation that enables us to have a better understanding and engagement with our customer, different tracking tools that allow us to understand how they are interacting with our brands along with site analytics. So as a result of that, what we're seeing is conversion is up versus what it was prior to that. We're getting great capture rates. Our retention is increasing with consumers online. So we're seeing the results of that foundation and then adding the analytics pieces to it as we move forward with continued plans to enhance that even further. And I'd like to add one additional thing that I think you do hear from us: a renewed focus on our wholesale channel, where I said to you in the earlier comments that we reduced 20% of our distribution points globally, and approximately half of our wholesale decline was caused by that. We're not going to go back and open more distribution points in wholesale, but there will be a renewed engagement first with the product that we are going to be developing to better suit that channel's needs. And I'd say that across all three of our brands. Second, we will engage differently than we have around marketing with inside the wholesale channel. We've probably pulled back a bit too much and spent more on our own marketing. If you've seen in my prepared remarks, we are going to spend more on marketing next year, in particular for the Michael Kors brand. Some of that will be directed at the wholesale channel. Then third, we're going to really look at that channel as an opportunity in particular where we don't have stores and markets of a way to connect with our consumers at all three of our luxury houses. So thank you very much, Brooke. Thank you, John. Our next question is from Jay Sole from UBS. Please go ahead. Great. Thank you so much. My question's about the balance sheet a little bit. We noticed that your working capital position was favorable by about $160 million last quarter. Why did that unwind, and how might that impact your ability to generate cash this year? And within that working capital, can you just talk about accounts payable? Obviously, it jumped pretty significantly year over year in the quarter. Any sort of explanation for what's going on there would be super helpful. Thank you. Sure, Jay. Happy to help. And I think what we're seeing is something that we feel we'll maintain, and we expect as a company to continue to generate solid free cash flow. It was one of the areas, if you recall back to last year, where we had it reversed, and it was a negative for working capital. So we have done a number of initiatives to make sure that we are in the right spot and a consistent spot to generate positive working capital numbers, and that's what you're seeing flow through. Got it. And then maybe I could just follow up on that, Tom. You mentioned you gave some guidance. I think you said that you see sequential improvement in sales growth rate. You mentioned that gross profit will be under pressure. How do you feel about gross margin, though? I mean, will gross margin be under pressure in Q3 and Q4 on a year-over-year basis? And I think the sell side is modeling about $1.77 in earnings for this fiscal year. Any thoughts about where that number is relative to your expectations, like higher or lower? Sure. On the first item on the gross margin, that will continue to be under pressure. So that was intended to be the reference. And our gross margin was down about 80 basis points in the first half. We expect it to continue to be under pressure as we begin to implement some of these strategies, but are still working through that process. And right now, we're not providing guidance at that detailed level, more the directional guidance that I've provided. And I'll probably have more to talk to about a little later when we get together. Okay. Sounds good. Thank you so much. Our next question is from Bob Drbul from Guggenheim Partners. Please go ahead. Hi. Good morning. Just a couple of questions. The first one is, John, on the team, the leadership team, have there been any sort of key departures? Do you have any significant openings that you're trying to fill within the businesses? And I just wondered if you could spend some more time just on China generally, one China sourcing, sort of where you guys are today, and I guess specifically more just trends in China, specifically Versace. Thanks. Great. So Bob, first off, good morning. The leadership team, as I think I said in my prepared remarks, we have 15,000 employees around the world who have shown unwavering dedication. The last 18 months have been very challenging given that our teams didn't really know what was happening with their future. And by the way, I want to compliment Joanne and Scott at Tapestry. They are two spectacular people who really the entire organization at Tapestry, the way that they treated our teams was incredible. So huge hats off to them on their professionalism and their warmth. But with that all said, people were very nervous here. They didn't know if they would have a job or not have a job after the integration or the merger. And so we really only saw a handful of people more at the kind of vice president and director level leave the company. And so currently today, besides our one senior position, we really don't have any open positions across the group, which speaks, I think, volumes to the culture inside the company and the people's belief in where we're headed in the future. So I can only tell you that there's quite an excitement level across the organization right now, not because we didn't merge. We would have loved to have merged, but because now they know that we're going to be an independent public company, and let's get on with things, and let's go out and really try to do things that might have been paused for a period of time for various reasons. So I would tell you that that part is exciting. I think they're also excited about getting ready to present to you all and, of course, our board of directors their new three-year plan and how they're going to execute that. As I said, there's a real excitement level. I'm particularly excited to show you the new Michael Kors campaign that was just shot a few days ago in Europe and to unveil what Jet Set is going to mean going forward and what the Versace brand's core values are, as well as Jimmy Choo. There's going to be some changes, and I think some very powerful ones that I think you'll understand why we have an excitement level. On the regional front, I'll just quickly go around the world. I don't think I'm going to tell you anything that you haven't heard from other CEOs in our industry or other industries. We feel good about North America. And one of the things I'm going to tell you is no secret. We are very focused on North America first. That is the number one area that we want to return the company to growth. And we think that we have the distribution network. We have the talent, the team of people here. We probably have spent an enormous amount of time on trying to develop China. Not that we still won't do that, but we are going to dedicate more resources to North America because the economy is good here. Unemployment is good. We think interest rates are coming down. We have a new president who seems to be hopefully putting in some great new programs to move this country forward. So we feel good about North America. Europe, we still feel relatively good about it with the exception of the U.K. and Germany, where things are under enormous pressure. But Italy, our business in France and in Spain, all quite good. So we think there's opportunity to continue to run a stable business there across the group. And then in Asia, obviously, Southeast Asia and Japan are markets that we feel relatively comfortable with. We think Japan will probably come off a bit because of the amount of business that's been transferred from China to Japan. So that'll probably be under some pressure next year. But that being said, our biggest concern is China. We do not know how and when the economic situation will be stabilized there. And again, you see the other luxury goods. The numbers of traffic and revenue declines are between 15% and 30%. There are other people who are doing better than that. But I would say the general luxury industry is in that type of range. That is very hard to plan when you have that level of noise going on without really understanding how that's going to return. Again, we're going to spend as much time and effort and energy as we can to keep that market stabilized and moving forward, but really under the guise that until we can understand something a little bit better, it's better to put more resources into North America for the time being and then see how things play out in China. I'll turn it over to Tom on the sourcing piece. Sure. And thanks, Bob. So first, sourced product out of China. We have very small exposure for our overall group. It's less than 5%. And for anything that we are producing in Asia, we're very well diversified across the region by country. So we feel like this is a modest and a manageable situation. Great. Thank you. Thank you, Bob. Next question is from Oliver Chen from TD Cowen. Please go ahead. Hi, John and Tom. When we look back at different brands that had to think about positioning or changes, sometimes you have to step back to go forward, meaning revenue cuts just to rebase and make sure that you're healthy for the long term. I would love your thoughts on that as it applies to the Michael Kors brand. And also, as you really focus on average unit retail, where do you want to get to in terms of the outcome that looks good to you? And John, also, as we think about the segmentation between outlet and full price, any thoughts as you navigate continuing to elevate the brand? Thank you. Thank you, Oliver. You're 100% right that when you need to reposition brands, you have to step back many times to take a step forward. And I think starting with Michael Kors, that was the intent in our original transformation plan. Unfortunately, as I said, we went a little too fast in that step back, both in raising prices and probably a second thing we did, which I don't think I mentioned previously, we reduced a fair amount of product, in particular for the wholesale channel, that was more value-oriented. And that was very significant volume for the company. And we had that in some of our own retail channel as well. As we stepped away from that, the client really, and I'm talking about things like $295 and $395 bags, where we were pushing more $395, $495, and higher, the customer just said no unless we discounted it back to where we were before. So I think, and Michael is, I think, one of the best at this in the world. We can design beautiful product, and we have teams here who know how to create value around that product. And we've always been proud of the fact that when you look at a Michael Kors handbag or you look at some of our ready-to-wear, we have more hardware. We have more expense, actually, in some of our products than some of our competitors. And so we don't want to walk away from that, but the customer expects us to be at a certain level. And that's been the learning curve for us. I think when you get to see some of our new stores, Rockefeller Center will be renovated, I think, around August of next year. There's new stores that have already opened, just opened in Montreal, etc. When you see the new store concept, we're still not walking away from this perception that we're going to build a more luxury store, a more luxury experience for the consumer, but there's going to be more brand value there. And so as we're looking at the pricing architecture of the line, I think, and again, talking to Michael about it yesterday, we're going to have things that are more expensive. That's not something that we shouldn't have, but we should have plenty for the consumer at a price value that they feel that they can come in and feel great about that purchase. And we probably haven't done enough of that. Again, you look at our database growth. We're growing double digits on that database. We're doing something right. The customer is definitely responding. She's just saying to us, "Look, you've got to get this thing lined up." The important part about that is we want to, and I think you may recall, a little over two and a half years ago, I actually made the statement, which I'm sure everyone will remember and say, "John, you said something, and then you did the opposite." I said, "We don't want to go back to the past. We don't want to go back to that discounting. We're not going to go there." The truth is, we did go back to the discounting, and we went back there. That only ended up being, I think, something that was wrong in hindsight. So starting in the spring season, you're going to see reduced discounting from the brand. That's probably going to take some time to get through from a revenue standpoint. We have to do that. But at the same point in time, we want that product to be priced right to begin with. And we've seen some results already where we priced it right first. And again, these are historical prices for the company. And the sell-throughs have been so much better. So I think you'll see that. And again, we're going to invest in Michael Kors. So this is not a back off to say that we're just going to try and hope it stabilizes. No, quite the opposite. I would say of the company's capital next year and some other internal projects, 75%-80% of it will really be devoted to the Michael Kors brand and making sure that we get that in the right place. As it relates to Versace, I don't think we did the wrong things. I think we really cleaned the brand up, making it luxury, which is what we should do, was the right thing. The wrong thing was not enough assortment for that aspirational customer. That is where we honestly did not spend enough time and focus. We spent too much time trying to cultivate the top end of the business, and that just isn't going to offset what we had before with the aspirational piece, so again, you're going to see these things coming into the store. They're in the store now, many of them. Hopefully, we'll get good customer response. The holiday marketing campaigns are based around some of these products as well. As for Jimmy Choo, that's the most stable brand in the company. They've always offered a wide breadth of assortment. We didn't really have to trade up Jimmy Choo because Jimmy Choo really had its positioning, and it hasn't really moved off that positioning. The only thing in Jimmy Choo that really has shifted on us is the occasion wear business. We're coming out of COVID. People were getting married, and people wanted to put heels on and go out and party. We've gone back to a more casual environment in terms of the fashion statement. At Jimmy Choo, we've had quite a bit of our assortments in casual. We're just going to build out more. Again, we're seeing double-digit growth in that area. So I think we feel of all the brands, we can move much quicker, and we should get some pretty solid, we should see that resonate into revenues for us more quickly than maybe the other two brands. And then lastly, on the outlet versus full price, we really haven't changed the model at all. And I don't see that really changing for us. And if anything, in Michael Kors, we're putting a lot more emphasis on the full price. That's why those 150 store renovations that we talked about, the majority of those will be on full price. And we expect to really reengage with a customer with a new store format that I think you may recall is going to have more space dedicated to ready-to-wear and to footwear as well. And these are two categories that we would like to see greater growth at Michael Kors. We want to take a little emphasis off the handbags because the more emphasis we put on that, sometimes that pushes us to discount. And we'd like to have a little less emphasis on that and get some more revenue growth out of the other categories. And certainly, we're in a ready-to-wear cycle right now, as you know, from some of our other competitors here in North America, North American brands that are doing quite well. And we think we have an opportunity to have share of voice in that area. Very helpful. Thanks. Thanks. Our next question is from Rick Patel from Raymond James. Please go ahead. Thank you. And hope everyone is well. Can you provide additional details on the $100 million cost reduction program in terms of which areas of the business this affected? Do you feel that operating expenses at the end of fiscal 2025 will be aligned with what you see as the right size of the business going forward, or do you think it will remain a work in progress over the next year? And secondly, I was hoping for an update on accessories that Versace and Jimmy Choo, key pillars of the growth strategy before the deal was announced. Just curious how you see the opportunity going forward. Thank you. Rick, we're going to ask you to repeat the first part of the question. You're breaking up, so we kind of can't hear you. Sorry about that. Asking about the $100 million cost reduction program, which areas this affected, and do you feel that OpEx will be aligned with target revenue going forward, or will OpEx need to be cut further next year? Sure. I can start with that, Rick. Our global optimization plan that we implemented at the beginning of this fiscal year included headcount reductions across the business. We closed or are in the process of closing 100 retail stores. We've consolidated offices, and we've taken other efficiency measures that we noted would be generating approximately $80-$90 million of savings. We are seeing long-term that we'll be above that based on additional activities that we're implementing this year and expect to end over $100 million. That is not enough. I also mentioned in the remarks, I believe, that we'll continue to take actions to reduce our expenses into next year. We'll provide more details on that in terms of magnitude at a later date. But that will add to continue to close unprofitable stores. We'll be augmenting that program. We will be realizing good supply chain efficiencies over a number of initiatives and implementing an additional workforce optimization plan, and then ultimately, we will look for productivity to help drive the right relationship and leverage along for the P&L as we continue to work on some of these longer-term items like the store closures and the rent, which is our largest fixed expense and takes some time to work through those plans. And Rick, I'd like to add on that point. We very specifically in our prepared remarks gave store targets, and I think you know that we've been in the process of closing a lot of Michael Kors stores. So also, when you look at the revenue decline in Michael Kors, we've been closing up to 50 stores a year, and so that comes out of our revenue. And we've said that our target is kind of 650 stores. And so between the targets we gave on Versace, the targets we gave on Jimmy Choo and Michael Kors, that's really where we see ourselves leveling out. And I think that's an important note. It doesn't mean that we've gotten rid of all of our loss-making stores, but the majority of them will be gone at that point. And so we really feel good about where the fleet will be. And as we start to reinvest in renovations and stores, typically, you will see sales lift from that. So we're going to be very focused on not store openings, but containing the fleet and really increasing productivity through clienteling, through obviously better initiatives around our data analytics and how we're interacting with customers in those communities. And additionally, with better product and better marketing inside those stores. I feel like we're getting to a point on our strategy around setting our distribution, as well as we've just spent almost $200 million on our e-commerce and data analytics. We're not going to need to have tremendous spend going on around that. We are going to do some more spend, but it's not going to need to be something that's going to be huge in terms of impacting our cash flows. I think we feel good about the foundation of the company and how then really we can lever up and get operating expansion growth. The biggest thing that has impacted us in our operating margin and in dollars in particular is the wholesale business. With the declines, which have been in most cases over 20% for the brands with the exclusion of Jimmy Choo, that's just pure operating margin that just evaporates from the company. We need to stabilize that business. Quite frankly, we need to get back and create different types of interactions with our wholesale partners to grow that business. We've grown our businesses very successfully when we had our own stores and our wholesale partners as well. So again, it's not going to happen overnight, but we are definitely going to stabilize and try to invigorate that channel. Again, that channel is not a growth channel in and of itself. We all know that, that they've struggled as well. We can take market share, and we can get share back that we had previously, share of voice and engagement with the consumers. On the Versace question, as you know, we were off to a spectacular start with accessories. Our stores, which most of them have been renovated and rebuilt across the fleet, we only have a handful left that need to be touched, are now set up segmented to have 25%-30% of the store is now accessories. When we bought the company, that was not the way the company was set up. It was much more an apparel store. And as well as very properly sized shoe departments in these stores as well. So I think competitively against our other European luxury competitors, we're very well balanced. I would say on the product side, we have had modest introduction success. We had some very good success in the beginning. We've had modest introduction success. And what we've learned at both Versace and Jimmy Choo, it's quite interesting. Some of our best-performing products are things that say Versace on them. So for example, one of our totes, the Athena tote, has been spectacular for us. When I look at Jimmy Choo, the same thing when we've had our recent summer collection. So the more branding, and I know people think that branding is maybe waning. It's really not true. When you look at our big luxury competitors, they're using their brands quite successfully. We need to use our branding better at these companies. And we just introduced a new bag at Versace called Tag. You can see it online, and it actually says Versace on the bag. And it's a day bag, which we haven't had such a thing in the past at approximately a little over $1,000. So that's a very strong price point for a luxury company. And so I think we're taking a different approach to how we view accessories. There will be branding. There will be fun, and we will get more aggressive than we have been around that particular category. We spent a bit too much time worrying about repositioning the ready-to-wear as we went through this kind of reset of the brand and didn't spend enough time on the accessories. I can promise you the teams are highly motivated and understand it's the number one priority inside the company is to really position that business. The other thing you should know about Versace that really has impacted our revenues quite significantly, when the street fashion trend was happening, we had a very sizable sneaker business in the company, probably outsized to the company's other parts of their business, and that business has really deteriorated substantially. And because of the way fashion and styling and plus the way we position the company, you're going to see some pretty significant new ramp-ups in that area from us to take advantage of what is still happening. It's just a different way of presenting it to the consumer. So thank you very much, Rick. Very helpful. Thank you. Our next question is from Mark Altschwager from RW Baird. Please go ahead. Great. Thank you. Appreciate you hosting this call today. First, John, understanding we'll be hearing a lot more in February, but would you say today if you believe the business can return to sales growth in fiscal 2026 as the initiatives you outlined today start to gain steam? And then, Tom, I know you had some disruption with the ERP implementation over the past year. So could you just update us? What's the current state of that project, and how should we view the risk of any additional disruption moving forward? Yeah. First off, good morning, Mark. Great question. I would tell you that while we want revenue growth and we anticipate revenue growth in our own retail channel, so that is something we are absolutely anticipating, and we think our initiatives are going to be in place to get growth in our own retail channels. That is something that we can control, and that is something that we think we have the ability to do. Whether we can stabilize the wholesale business or not next year and get that back to at least flat, I would say is a question mark. And again, that's going to take the product that we develop. That's going to take some conversations with our partners. Again, it takes time for them to plan and to get us back into a different position. And again, we have a lot of shop-in-shops out there, so it's not like we can't ramp those up. But I'd be a bit more concerned about that. And remember, in the world, it's not just North American wholesale that we look at. We have a very large European wholesale business. As you know, there's been an impact going on between the merger of two or three of the large e-commerce players. That's caused some decline in our wholesale activities there. And additionally, the travel retail business, which, as you may recall, we had approximately 150 locations just in Michael Kors around the world. That's down to probably about 100 now. But that business has not really returned. We need to see the travel retail business also pick back up. That was a multi-hundred million dollar business for this company. So I'm a little less confident in our ability to fix those things. I think that might be more of a 24-month lift for us. But I do believe that our own retail business, and I want to also, again, applaud our teams at Michael Kors e-commerce. The business is very good, and we're seeing some excellent results from the investments that we made. And so I think that that is a very good indicator of what our capabilities will be moving forward. And so as we kind of refine that, I think that gives us more confidence in driving our business at all three of our brands, given our capabilities in e-commerce and data analytics. But I'll turn the last part over to Tom. Sure. Mark, related to ERP, we implemented SAP for our Michael Kors and our Versace businesses. That actually went very smoothly. This year, we completed the Versace rollout earlier in the year. We're in great shape there. We do not have any current plans to do anything further in the immediate future. We did roll out the e-commerce re-platform that I referenced a little earlier. That did have startup challenges, particularly for Michael Kors. We are through that. It is working as planned. As I mentioned, one of the Q&As, our conversion is actually up versus prior year. We're now building upon that platform with the other capabilities that John was referencing around data analytics and other initiatives. I want to thank everyone for joining us this morning. Thank you for taking the time to hear our strategic initiatives as we move forward as Capri. We know that we have a lot to do. We know that we are not performing at the level that is something that we think is acceptable. We also know that we have the capabilities with Versace and Jimmy Choo and Michael Kors. These are three amazing brands. We start from a position of strength with the brands that we have, and we must execute on better marketing, on better product, and create a better engagement with our consumers. We have the platforms to drive the business, and now we need to execute against that. I want to thank you all very much for taking the time again. We look forward to speaking to you at the end of our third quarter and then at our investor day. Thank you very much. This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.