Good morning, and welcome to another session of the Goldman Sachs Global Retail and Consumer Conference. My name is Brooke Roach, and I cover the apparel, brands, and softlines sector at GS. I am thrilled to introduce our next session with Capri Holdings Limited. Here with me today is John Idol, Chairman, CEO, and Director, and Tyler Reddien, COO and CFO. Welcome, John and Tyler. Thank you, Brooke. Thank you. Nice to be here. John, let's kick it off by framing the Capri story. What are the key strengths of the company, and what makes you confident in the path ahead? Capri, as you know, is the home to two, I believe, incredible luxury brands. First, Michael Kors and second, Jimmy Choo. These brands have a very strong resonance globally with consumers around the world, and we have the ability to speak to consumers and to create trends and create fashion excitement with these consumers. That's the starting place. These brands have the ability to grow. We have been on a journey, particularly the last 18 months, in both Michael Kors and Jimmy Choo, to reset some of the product strategies, some of the marketing initiatives, and in the case of Michael Kors in particular, some of the store presentations and formats. The early signs, and we call them the green shoots, are starting to really take hold, and those green shoots are turning into more tangible results for the company. I think we're in a very good place, and in particular, to accelerate our growth in the back half of this year, which will serve as a great platform for us to grow in the future. Very clear. John, what's your view of the luxury accessories market today? How does that outlook inform your view on the long-term growth opportunity for each of your brands? The luxury accessories market globally has seen some small declines over the last couple of years, mainly driven by some of the results out of Asia, although that market is starting to recover. Europe has softened, as we've talked about on our earnings calls. But North America has been incredibly strong and resilient. We see the overall market as being roughly flat. We do believe the market will return to growth next year. That really positions our two luxury brands well. Secondly, what we're seeing is in the luxury market, brands that have more, first and foremost, have very strong fashion and/or trend products are doing extremely well. Secondly, brands that have a value associated with them. Whether that's a price value relationship or whether that's the quality that you're delivering at a price, and I think I'll point out examples of that as we talk with Michael Kors and Jimmy Choo, consumers are responding to that. Consumers are definitely more choiceful today. Choiceful just doesn't mean they want something that's inexpensive or cheap, but it means they want value for how they're spending their money. Can you give us an update on the current trends that you see by geography? Certainly. As I think most of you know, North America is a very strong market. The consumer is very healthy in this market. We haven't benefited from that in Michael Kors because of the repositioning work we've been doing, but we can see the underlying health of that consumer is very strong. On the flip side, we've had tremendous benefit from that in Jimmy Choo, from the strength of the luxury consumer, and that resonating with our business. In Europe, unfortunately, we've seen the business soften there, and we're not the only company. I think most companies that you hear from are talking about the softness in the EMEA market, and that's number one, led by what is happening in the Middle East, and that is impeding business on the ground there in that market. It's also impeding travel, both into that market and into Europe. We definitely are seeing a softening, and I think I talked about that some months ago. We do not see that really kind of strengthening at any point in the near future. I think we would look at Europe or EMEA as a market that will continue to remain challenged. Lastly, in Asia and China in particular, we are seeing a very steady return to growth in that market, and the consumer is out. They are shopping. In particular, again, brands that have a bit more value associated with them, and that is at multiple levels in the luxury spectrum, are seeing some quite interesting and strong results in the marketplace. We are optimistic about what that market holds for us for growth over the next few years. Great. Now that we have set the stage, let us dig into Michael Kors and the brand transformation that you have been executing there. Where is the brand in its repositioning journey today, and what aspects of the strategy are giving you the greatest confidence that the business can return to sustainable growth? Yeah. I think we have said that we went from cautiously optimistic, and I think we stated at another conference that we spoke at, that we have become optimistic about where we are in that brand transformation. First, Michael Kors is a brand that is 45 years old. It is a luxury brand. It has got tremendous history. You can look across the landscape of luxury brands, and they go through moments, and it is moments where brands either their communication strategy or their marketing strategies are no longer relevant. Their product gets off trend. You lose the attention or the zeitgeist of the consumer. I would say very much Michael Kors was in that position some 18 plus months ago. We have been on this journey to really reset the Michael Kors brand. We started that with the brand, our halo, which is Jet Set, and we changed the strategy around that, and we are positioning that where our vision of the consumer is that she or he are traveling the world in style. You do not see them on the airplane and in the cars and on the boats anymore. You see them in hotels, or they are glamping or they are having a fun experience. People love to travel, and this is an an experience economy, and we think that our marketing strategies really dovetail perfectly into that zeitgeist. In particular, of a younger consumer. We are pleased with what is happening there with the marketing, and the storytelling that is based around that. We need to do more work on the platforms that we are communicating on. Maybe we will talk about that later. The second thing is I think we are borderline excited about product. We start with some of the introductions that we've had in our full price business have really resonated with the customer. We can see that. We had issues with our brand being on trend. We have gotten past most of those today. We are seeing really solid performance out of many categories inside of our full price business. In terms of our outlet businesses, which is really where we've had our greatest weakness, over the past few years, where we were probably the most off trend. As we were talking earlier, you've seen some of the new product that's arriving. We are getting very strong results, and those are selling results from that. What's been interesting is we, throughout the quarter, have seen an acceleration of our business as we had thought. We've had a delay in inventories that we talked about during our last earnings call. Inventories are starting to build. They're not back still to where we need them to be, want them to be or should be. But it's definitely happening, and as that's happening, we're watching the business start to accelerate. As the new product is arriving, we're seeing the business getting better and healthier. Then lastly is we're really pleased with how the stores, and the renovation program is going and how the consumer is responding to the brand. So between the marketing, between the product, and between the experience inside the stores, we can absolutely see the tangible results are there and happening for the business. We're still, I'm going to call it in early innings of our complete brand repositioning, and I don't want to say that we have completely accomplished everything. But we are laying the foundation for what is going to be future growth. The last thing I'd like to point out as we've gone through this, we've made a very strategic decision to reduce promotional activity. We're not quite finished in full price. I think I talked about it in our last call. This will be probably the most painful quarter for us in our full price business. We ended our inventories down in Michael Kors almost 27% during last quarter. We have 50% less clearance and markdown inventory this year than we did last year. That's a big step for us to be able to say to the consumer we're full price, and you're not going to see as much of that other type of product from us. We're doing almost 50% of our full price business today on our icons in accessories, which do not go on sale. I'm so proud of where we are today and what we've accomplished. As I said, we've got a little more cleanup work to do through the back half of the year. But we'll be past the majority of it here shortly. That's another really good sign for the business because AURs are up, full price sell-throughs are up. That means the customer is engaging with us in a different way than they were engaging with us before. So, a lot of heavy lifting, a lot of hard work, and we're starting to see the beginnings of the dividends to pay off. That's great to hear. Tyler, let's bring you into the conversation. You've continued to point to a return to growth in the back half of the year for the Michael Kors brand. What evidence are you seeing today that supports that expected inflection? Yeah, sure. Thank you for the question. I think we're at a very interesting point, and we continue to be very optimistic about the second half of the year, and this really is the moment of inflection, and we expect to return to growth in the second half. That really is supported by the fact that we're getting new product in, our inventory levels are normalizing, and the very early read that we have on that new product is that it is resonating with customers, and ultimately, that we expect that new product will be very successful. In addition, we are getting additional new product introductions over the course of the fall season and into holiday, which we believe will continue to support the growth trajectory that we believe that we're on. Also, we are investing incrementally in marketing. We're increasing our overall marketing spend. We're approaching 10% of revenue in the back half of the year, which really can help us fuel the overall growth trajectory. We continue to be very optimistic, and like I said, the early indications are that we should be returning to growth in the back half. John, you've mentioned a couple of times about the broader assortment of product and outlet in the back half. What gives you confidence that this product pipeline can help accelerate trends as the year progresses? Sure. I think maybe what I'll do is I'll start about with full price first, which is we've identified these three icons that have been in our assortments, and that's our Laila, Hamilton, and Nolita handbags. Michael Kors has been famous, and it's obviously a highly recognized brand name, but you need to have product that's famous, too. I think we didn't have that as much over the past few years, but we're starting to see that now. In particular, our Hamilton collection, which is an original legacy, one of the founding bags in our company, is doing extremely well. We've just introduced a Hamilton slouch. We are selling thousands of units. We don't even have it all in the stores. It's whether it's online or it's gotten to Asia first. For the first time in probably six or seven years, we now have a bag that we cannot keep up with demand. This is very early days. We saw that with our Nolita collection when we introduced that in full price as well. These icons are starting to resonate not only with our broader consumer, but with a younger customer as well. We're attracting a lot more younger Gen Z and younger millennial into the brand. I think there's a recognition that Michael Kors is maybe not what I thought it was from three and four and five and six and seven years ago. We're really pleased with that. That is starting to roll into the outlet stores right now. We've got a new bag called Sammy, which you can see online. Again, super high sell-throughs on the bag, resonating with the customer. It's also on trend. We have a couple other bags that are arriving as well, and we refer to these as icons. So we have icons in our full price, icons in our outlet. I'd also like to point out that in our outlet business, we are selling full price bags. We're not up to full fleet exposure yet, but we're getting there. It's representing between 5% and 7% of a store's business. Again, it tells you about how the consumer is responding to the new product introductions in the company, in particular, that they're on trend for what the consumer wants. The other thing is in both full price and outlet I've talked about is our footwear and the fact that we really did suffer a quite substantial sales reduction in that category. Again, as the new product is flowing into the stores, which is much more trend right product. We're starting to see a very fast sequential improvement, in particular in our full price business. That product will arrive a little bit later on for the outlet stores. I think between product, number one. Number two, we're going to be lapping some of the promotional activity that we've walked away from. Third-party sales, I think we talked about, and some of the promotional cadence that we walked away from last year was over $150 million in business that we purposely said, "Okay, we're going to get rid of that and try and make this business healthier, higher margins, higher AURs." We think the majority of that, 75% of that will be in place for the back half of the year for the outlet stores, which really tees us up. We have a high level of confidence in our ability to return the Michael Kors brand to growth in the back half of the year. Very clear. Tyler had mentioned marketing earlier in the conversation. John, I'd like to ask for your thoughts on this. Can you talk a little bit about your marketing plans for Michael Kors in the back half of this year? Certainly. First thing I'd like to do is I'd like to say that we've made an incredible hire with Tyler. He's been an outstanding partner for us, and one of the first things he said to me when he joined the company is, "How do we accelerate this business? What do we need to do to grow this business faster?" Tyler knew right away that we needed to have more marketing to really compete, but also to tell the story of Michael Kors and to a different generation. The first thing that he and the finance teams have been able to figure out how to do is how do we spend more money, still preserve margin. We're doing that through some of the activities around expense reduction, which you've seen us do over the last three years. We've reduced SG&A by, I think, close to $400 million, which is quite extraordinary given us going through our transition. We're putting a significant amount of money back into marketing. The storytelling around Jet Set, traveling the world in style, is very strong, and we can see that resonating with the customer, but we've got to get it onto more platforms, whether that's YouTube video. We're very excited about the fact that we just launched on our TikTok shop a few weeks ago. We are 4x over what we had anticipated on the launch of TikTok. It's really extraordinary. That shows you that there's a younger customer out there that wants Michael Kors, maybe didn't know what Michael Kors was, and has really engaging with it. The other thing that's exciting is that part of our marketing initiatives are with influencers. They're not all for free, by the way. I want to be clear about that. I think I've mentioned before that a year and a half ago, we might have had 50 influencers in the world today that are associated with us. Today, we're at about 450, and those are the ones that we're assisting or have on different programs. Then we have hundreds and hundreds more that we're now starting to see build and build and build, that want to be a part of the brand. That's another good indication of you can see this momentum starting to happen. Those influencers, especially the ones that aren't paid, are you can now see them on TikTok, and you can see what's happening with the brand. Those marketing initiatives, we think, are another reason that we will fuel the revenues in the back half of the year. Very clear. Let's talk about another channel where you're starting to see some momentum, which is wholesale. Last quarter trends turned positive in POS. What's driving that improvement, and what's your long-term expectation for this channel for the Michael Kors brand? I would say the first thing is the product. As we have talked about over this, I've said about 18 months journey we've been on since we reset the brand. The department store community was always behind what we were doing in our own full price stores because that's a full price channel. What's happened is, really excited about this. I was talking to one of our key partners at our fashion show on Friday. I hope you all saw Michael's fashion show from the MoMA Garden. That same roughly 50% of our business that's at full price on our icons is happening in the department stores as well. That's a channel that typically leaned into certain other promotional activity. They're excited about the journey that we're on, and they want to have higher AURs to their customers. They are seeing the same reaction, both to product and to product that has value associated with it. I think you know that we have looked at our strategic pricing architecture about 18 months ago, and we actually lowered our prices in full price so that we would increase our full price sell-throughs, and we are absolutely seeing that. In particular, we are seeing that in bags that are under $200, leaning into what Gen Z and some of the younger consumers want. The department store community and specialty store community around the world is starting to see those results come through. The second thing is, I mentioned it before, we have a number of partners in Europe in particular, who had left the brand and who now want the brand back, and we are going back into those stores as we speak. The last thing that is happening is we are seeing our shop-in-shops being rebuilt. We literally have hundreds of shop-in-shops that are either in construction right now or are under construction. Our partners wouldn't want to be building shops with Michael Kors if they didn't see the product resonating. The last point I would like to make is, and I talked about value before. You know the brands. There is a number of brands that are sitting in this opening price point of luxury, and that category is doing extremely well. Many department stores around the world are rebuilding those categories of product, and we are the beneficiary of that. But they wouldn't do that with you if your product wasn't selling. Let's round out the discussion by channel, by talking a little bit about the stores and the renovations that you have made. What are you seeing so far, and what are your plans ahead? Super excited about what has happened with our stores, and if any of you have the time over the next day or two, please go to our Rockefeller Center store. It is our flagship here in the U.S. We renovated that store almost one year ago. It will be October. The traffic in that store is up double digit, and sales are up even higher than very high double digits inside the store. Same location, been renovated, new product. What is so interesting is when customers come in now, they almost say, "Is this Michael Kors?" They look at this and go, "This is not the Michael Kors that I knew. Where is the white shiny store? Where is the people in the very glamorous look?" No, what they are seeing is a store that has a much more residential feel to it. They're seeing product that's much more on-trend, and they're seeing a vision of Michael Kors that's a little bit less polished and a little bit more relevant to where fashion is today. All of those key components coming together are really creating strong results in these renovated stores. We had the same example in Kenwood Towne Centre in Ohio, where super increase in sales and high double-digit growth in traffic were in the same location. It just shows you that the customer has a strong resonance to the brand when we get it all together right. We're going to renovate half of our store fleet around the world. It'll take us two to three years to do that. We're trying to go as fast as we possibly can. As that starts to come, in particular next year, where we'll have 100 stores that will have been completed by then. All of a sudden, that's going to start to build on our sales growth as well, as well as hundreds of shop-in-shops in wholesale. That is really going to be one of the foundations for our future growth inside the company. Lastly, I'm very proud of the fact that I don't know if we have seven or eight or nine or 10 of our Jet Set Lounges open, but please go up to the store. You will get free tea and a free little bite of something sweet. Those lounges inside the store are creating additional dwell time. We happen to position them typically in our shoe department, so hopefully you'll sit and buy a pair of shoes while you're getting some wonderful tea or coffee or whatnot from us. That's another experience for the consumer, whether that be an Instagram moment or whether that be a moment that you're sharing with friends and shopping. We're really trying to create experience inside the store as well. That has got us excited. Tyler, let's round out the discussion on Michael Kors with a discussion on margins. What are the most important building blocks to get the brand back to that low 20% operating margin target in the future? Yeah. Sure. I think when we look at the margin improvement opportunity, we have opportunities both in terms of gross margin improvement as well as operating margin and flow-through. What I would say in terms of gross margin, we are ultimately driving higher full price sell-throughs, higher AURs, and we are reducing the promotional cadence of the business overall. That ultimately is leading to higher gross margins overall. In addition, we are looking for efficiencies across our distribution and logistics network, finding ways to improve our overall cost structure so that we are driving higher gross margins. On SG&A, we continue to be very disciplined in terms of our expense management, and we will continue to look for incremental opportunities to drive improvements across our SG&A base. That, combined with sales growth, creates leverage in terms of operating margin expansion overall. We remain very confident in our long-term ability to generate substantially higher margins than we are generating today. Let's turn to Jimmy Choo. John, what's driving the momentum, and where do you see the biggest opportunities to sustain that growth over the next several years? Jimmy Choo, when you just say the words, it makes you smile. It is such a fabulous luxury brand. As I look around the room, I am sure that many of you have a pair of Jimmy Choos in your closet. It was interesting because when we looked at Jimmy Choo, especially over the last two years, our most important vision for the brand was to not just be a brand that was about wedding and that was about party, but was to be about a full lifestyle. We really looked at how does a woman live today, and how does she want to be perceived. In our mind, she wants to be perceived as effortlessly alluring. We also looked and she wants to be more casual. If you look at our Jimmy Choo campaign today, you are going to see this fabulous influencer who is actually in denim from head to toe, wearing a more casual shoe. That is not something you would have seen from Jimmy Choo 18 months ago. Our campaigns are really focused on this effortless look of fashion around the consumer. We start with the marketing, and that is really resonating with consumers, and we are very pleased with how that has been taken up. Secondly, it is always about product. We have been very focused on our accessories business, which is running over 20% increases as we speak. That is going to be very important, and later maybe Tyler will talk about the profitability of our stores, but that is a market that we can build upon. What we see is an opportunity to grow that to 35%+ of the business over a period of time, and really leaning into the opportunity to sell the consumer either something in addition to the shoes, but also as a way to draw them into the store. That is working. From a client acquisition standpoint, it has been fantastic for us. Jimmy Choo, it is quite interesting. Our Gen Z business is growing very fast there, mainly because of our casual footwear. Whether that be sneakers, whether that be some of the loafers we are selling, I think that had not been a place that Jimmy Choo always thought to go. Because we always thought it was a VIC consumer who was maybe slightly older and had more money. But today, with obviously the wealth that exists around the world, age is not the issue. It is more about the attitude. What we are seeing is, as you know, we have experienced multiple quarters of comp store increases. When you look at things like North America, where the numbers are really quite strong, we think that Jimmy Choo is now in a position to really accelerate its growth trajectory, led by accessories and by more casual footwear. Are there any specific initiatives on accessories or casual footwear that you would like to highlight today? Certainly. Well, I will start with accessories. We have always had this one collection in the business called Bon Bon. It is these fabulous little evening bags that we turned into actually day bags, and we sell them anywhere from $2,000-$6,000 or $7,000. They are just always iconically Jimmy Choo. So that is anything from a wedding to if I want to just go out and have a fun dinner out with my friends. Then we came out with a second group a little over a year, about two years ago, called Cinch. In the accessories business, it takes a little time, and then all of a sudden this bag started to build and build and build, and now it has become a real icon in the assortment. What is interesting is, well, let me go to the next two. Then we decided, again, about 18 months ago when we were resetting the whole company, we thought that the luxury industry had walked away from the $1,500-$795 bag range. We introduced two groups there, Curve and Bar, and both of those groups have started to become very strong. So now we have four platforms, which if we went back 18 months ago, we had one-ish, maybe one and a half. We have our department store partners coming to us. We are opening shop-in- shops on ground floors in department stores. I am very excited about this, right along with our other luxury competitors. Many people think of us as a luxury brand for footwear. We are. But we want to be thought of as a luxury brand for accessories. The momentum that we are gaining in the accessories business is really exciting for us, and is going to help our store productivity. Not only that, it is going to just give another reason for a consumer to engage with Jimmy Choo. On the footwear side, as I said, the casual opportunity is enormous for us. Our sneaker business has already become 10%-15% of the business, and a few years ago, you would never have thought about Jimmy Choo for a sneaker. But that is part of a lifestyle today. When you look at the way kitten heels, as an example, are, that is fashion today. So we consider that actually a casual shoe, between that and loafers, et cetera. Things that you would not have thought of for Jimmy Choo are now becoming much, much more commonplace. The last thing I just want to say is on the footwear side in particular, our VIC business in certain stores can be 20%-25% of the business. That is driven through clienteling, high net worth. We are competing with the best luxury players in the world on the VIC product. We are doing a very good job, and we are winning. There is a lot of good things that are happening in Jimmy Choo, and you can really see this brand. It is starting to hit another stride. Very clear. Tyler, you have seen an improvement in Jimmy Choo margin this year. How should we be thinking about the drivers and cadence of returning that brand to a low double-digit margin? Sure. I think we are very encouraged by the fact that this year we are expecting Jimmy Choo to be profitable. That is really being driven by the substantial revenue momentum that we have seen in the business. Longer term, what we do expect is that we will continue to see improvements in productivity at the stores through increased sales through the store portfolio. We also see substantial opportunity in terms of expanding gross margin. We are ultimately looking at opportunities to drive gross margin up both through the sales of accessories, which tend to be higher gross margin products, but also in terms of selling more of our iconic footwear that ultimately will help to drive increased full price, increased AURs, and then driving gross margin up. In addition, we manufacture about 50% of our footwear, so we are looking for efficiencies across the manufacturing base as well to ensure that we are driving towards higher gross margins. In terms of SG&A, as I mentioned, store productivity is going to drive substantial margin improvement. In addition, we have opportunities in terms of corporate expenses to drive synergies across the Capri platform to be able to really improve our overall SG&A level at the Jimmy Choo brand. So very comfortable and confident with the long-term trajectory of margin improvement that we expect with the brand. Great. Before we close, I do have a couple of rapid-fire questions that we're asking all companies today, starting with the health of the consumer. What are your expectations for the environment in the second half of 2026 relative to your recent results? Same, better, or worse? Do you expect the health of the consumer to be better, the same, or worse in calendar 2027 versus 2026? This is an interesting question because it is a bit geographic specific. As John Idol mentioned, we continue to see the North American consumer to be resilient. We do expect that will be the same. But clearly we're watching closely given the volatile environment. The European consumer, we continue to see a bit under pressure. We think that's likely to continue. The Asian consumer, we're starting to see an improvement there. So we do expect that that will continue as well. Great. From a pricing perspective, do you expect your prices and AURs to be higher, lower, or the same in the back half of this year relative to the rate you delivered in the first half? Our prices are likely to be higher, but that's really more driven by the higher full price sell-throughs, lower promotional cadence generally. So we expect that generally we'll see higher prices going forward. Great. I know we talked about margins for each of the brands, but one question that we are asking all companies is, do you expect to see more margin headwinds or tailwinds in calendar 2027 versus 2026? Yeah. We continue to see inflationary pressures in terms of margin. That said, we do see substantial opportunities for our brands, both in terms of sales growth as well as opportunities to drive margin improvement. We do expect that we will be able to offset those inflationary pressures, but the general inflationary environment will continue to drive pressure and headwind on margins. Very clear. On AI, do you expect a significant increase in efficiency as a result of AI in calendar 2027 versus 2026, yes or no? What part of your business will change the most as a result of AI in the next year? The answer is yes, we do expect to see efficiencies from AI. We are already using AI across the business in terms of customer analytics, in terms of product design, as well as back office functions to help improve the speed and decision-making capability of the business as a whole. But we do continue to see opportunities for us to deploy AI tools and AI more broadly to actually help improve our overall demand planning, allocation, et cetera. We do expect that we are going to see continued efficiencies going forward and our longer-term trajectory in terms of AI, we expect to continue to adopt and continue to drive efficiencies across the business. Excellent. John, any closing thoughts or comments that you'd like to share with the audience? Well, first, thank you for having us here today. Thank you all for joining us. Capri is in a very good place. We are positioned well to have growth in the back half of the year. We think that our revenue expectations for the year are still solidly in place. I think what we are also excited about is that we are going to have a 40% increase in earnings per share for the year. That is a foundation for us to build for our fiscal 2028 and beyond. Capri is a very good company that we think has a huge future in front of it for growth.