Capri Holdings Limited (CPRI) Earnings Call Transcript & Summary

Hello, and welcome, everyone. Thank you for joining. us today at our Virtual Investor Day. I'm Jennifer Davis, Vice President of Investor Relations. With me today are John Idol, our Chairman and Chief Executive Officer; Tom Edwards, our Chief Financial Officer and Chief Operating Officer; Jonathan Akeroyd, Chief Executive Officer of Versace; and Hannah Colman, Chief Executive Officer of Jimmy Choo. We're looking forward to sharing our group's vision, growth strategies and long-term outlook with you today. Before we get started, I just want to share a quick reminder about forward-looking statements. So in today's presentation, we may make forward-looking statements, which are subject to risks and uncertainties. Please familiarize yourself with our disclosures language, which is on the screen now, or you can refer to our filings on our website for more extensive risk factors. In addition, certain financial information discussed today will be presented on a non-GAAP basis. These non-GAAP measures exclude certain costs associated with COVID-19 related charges, long-lived asset impairments, ERP implementation costs, the pre-transformation costs, charitable donations and inventory step-up adjustment, acquisition, foreign currency effects, restructuring and other charges. Unless otherwise noted, all financial information during today's event will be presented on a non-GAAP basis. To view the corresponding GAAP measures and related reconciliation, please view the appendix at the end of the slide presentation. In terms of our program for the day, we will start with Capri's strategy and outlook. We'll then turn to Versace, Jimmy Choo and Michael Kors, finishing the event with questions and answers. And with that, I'm going to turn it over to the Chairman and Chief Executive Officer of Capri Holdings, Mr. John Idol.

Everyone, and welcome to our Investor Day. I'm John Idol, Chairman and Chief Executive Officer of Capri Holdings, joining you from our Michael Kors flagship store at Rockefeller Center in New York. Today, I'm pleased to have the opportunity to share our group's vision, growth strategies and long-term outlook. Looking ahead, we believe that the world is beginning to heal from the unprecedented global pandemic. While many countries still need to achieve higher vaccination rates in order to fully reopen, we anticipate that will happen over the next 12 months. As part of the global reopenings, we also anticipate many large and important regions will return to pre-pandemic revenue levels. Additionally, in our fiscal 2023, global travel should return to a significantly higher level than we are seeing today. We now have greater visibility into the path of the global economic recovery, which gives us confidence in our future growth. At Capri Holdings, each of our 3 luxury brands, Versace, Jimmy Choo and Michael Kors, has a unique identity that we will amplify with exciting communication campaigns, extraordinary product design as well as engaging customer journeys on our websites and in our stores. We are fortunate to have Donatella Versace, Sandra Choi and Michael Kors leading the design vision for our luxury houses. Additionally, we have one of the most talented senior management teams, architecting the execution of our brands' strategies. The successful implementation of our objectives is a direct result of the dedication, focus and talent of our 14,000 employees around the world. With our iconic fashion luxury brands and strong teams across the globe, we have the talent, the capital and the tools to accomplish our strategic vision. Now I'd like to take a moment to outline Capri Holdings' strategic pillars. First, we plan to maximize the full potential of our 3 distinct fashion luxury houses. While each brand is unique with its own heritage, they all have consistent philosophies on fashion leadership and luxury. Second, we will create the most innovative and exciting fashion luxury product led by the design visions of Donatella Versace, Sandra Choi and Michael Kors. Third, we will create compelling communication to deepen consumer desire and engagement with each of our luxury houses. Fourth, we will leverage our seamless omnichannel capabilities to accelerate revenue growth. And fifth, we will build upon our corporate values with communities, both internally and externally. Capri Holdings is proud to drive positive environmental and social change within our organization and our world. We believe that sound environmental and social policies are both ethically correct and fiscally responsible. To that end, we are committed to improving the way we work in order to better the world that we live in. With our fashion luxury brands and strong teams across the globe, we have the talent, the capital and the tools to accomplish our strategic vision. Now let me turn it over to Tom, who is going to discuss our financial outlook.

Thank you, John. It is a pleasure to be here today and have the opportunity to share our group's vision, growth strategies and long-term outlook. As Capri continues to move forward, we are gaining more clarity around the pace of global reopening and appreciation for the momentum behind our own strategic growth initiatives. Given this, we have updated our fiscal 2022 guidance and now feel comfortable providing a more specific longer-term outlook. Starting with revenue. We are raising our fiscal '22 guidance to $5.15 billion, reflecting better-than-expected first quarter sales trends. For fiscal 2023, we anticipate revenue will increase at a strong double-digit rate to $5.9 billion. And beyond fiscal '23, we now expect to generate low double-digit revenue growth. Turning to operating margin. We forecast steady expansion as the business grows. This improvement reflects both higher gross margins and sales leverage on our fixed cost and retail store base. For fiscal '23, we anticipate 250 basis points of operating margin expansion to 16.5%. Longer-term, we now believe we will achieve a new operating margin target of 20%. Looking at earnings per share. We are raising our fiscal 2022 EPS estimate to $3.80 to $3.90 as a result of the better first quarter outlook. In fiscal 2023, we now expect to generate EPS of $5. And beyond fiscal '23, we believe we can continue to deliver mid-teens EPS growth driven by higher revenue and robust margin expansion. We are already seeing strong results from the execution of our strategic initiatives as our 3 brands resonate with consumers, giving us even more confidence in this long-term growth outlook. Turning to revenue by brand. We expect Versace and Jimmy Choo will deliver strong growth and make up approximately 40% of total Capri revenue over time. Versace is expected to double in size over the next several years, while Jimmy Choo will grow with a strong double-digit trajectory. Both brands' revenue performance will be fueled by strong e-commerce growth, expanded retail store presence and increased retail store sales densities. For Michael Kors, we now expect the brand to reach $4 billion in revenue in fiscal '23, which is somewhat sooner than we anticipated. This revenue level is in line with our strategic direction for Michael Kors to deliver higher margins on a smaller business. Looking beyond fiscal '23, we expect Michael Kors will continue to grow in the mid-single digits while maintaining our 25% margin target. We believe our 3 brands form an elevated, complementary and balanced fashion luxury portfolio, providing Capri with the potential to deliver strong revenue growth and higher profits. Now I would like to review revenue by region starting with Asia. We expect this will be our fastest-growing region across all of our brands. For total Capri, we anticipate adding $1 billion of revenue in Asia, while increasing penetration from 21% to nearly 30% of the company. In EMEA, we believe the region will deliver solid growth in line with total Capri revenue with region penetration remaining consistent around 25%. For Versace and Jimmy Choo, we see continued opportunity in e-commerce growth, store development and increased store sales densities. At Michael Kors, we expect revenue growth led by e-commerce development and higher store productivity. In the Americas, revenue is expected to increase from fiscal 2021, reflecting strong retail growth while region penetration is expected to be slightly lower, declining from 54% to 47%. Versace and Jimmy Choo will continue to grow, led by e-commerce, store expansion and increased store productivity. Michael Kors, which is Capri's largest business in the Americas, will continue to grow in the retail channel led by our profitable e-commerce business and higher store productivity. The brand will continue the fleet rationalization program, which will support productivity and profitability in the region. In addition, our Michael Kors wholesale business will be smaller, in line with our strategy to improve profitability. Now looking at revenue by channel. We expect strong growth in retail across all 3 brands, increasing retail penetration to nearly 75% of total company revenue. Our retail results will be driven by both e-commerce and stores. On the e-commerce front, we anticipate adding over $1 billion in revenue. E-commerce penetration will increase from 26% of retail revenue to approximately 33%. On the retail store side, revenue is also expected to increase led by higher store sales densities across all brands. With regard to wholesale, we expect channel penetration to decline to 22%. We expect Versace and Jimmy Choo will continue to grow in the channel with luxury partners and travel retail, while Michael Kors will have a smaller, more profitable business. Moving to our retail store base. We anticipate opening stores with Versace and Jimmy Choo globally and for Michael Kors in the Asia region. Additionally, our fleet optimization program at Michael Kors will continue in the Americas, which improves margins by closing unprofitable stores. With an appropriately sized luxury retail fleet across all regions and brands, we expect to drive significantly higher store sales density, which will help deliver higher operating margins. This goal is further supported by our omnichannel efforts and other strategic initiatives you will be hearing more about shortly. Looking at margins. I am pleased to share that we now expect to achieve an operating margin of 20% for Capri. This higher-margin is expected to be driven by several factors. First, we forecast gross margin expansion from higher full price sell-throughs, select pricing and expanded accessories offerings. Second, for expense leverage, we forecast a significant benefit as sales increase, [ floor ] densities improve and we close unprofitable locations. And finally, we expect a mixed benefit from Greater Asia and e-commerce penetration, both of which have higher margins. By brand, we expect margin expansion at each of our luxury houses. We now forecast Versace's operating margin in the low 20% range, an increase from our prior expectations. For Jimmy Choo, we continue to forecast a mid-teens operating margin longer term. And for Michael Kors, we see the brand firmly on the path to deliver an operating margin of approximately 25%. As we executed our strategies over the past year, we have already seen them bear fruit with both gross margin and overall operating margin expansion. Looking ahead, we see the benefits from these strategies contributing to continued margin growth. To support our growth and strategic initiatives, we expect to spend approximately $200 million per year on capital expenditures. Approximately 60% of this will go towards new retail store development and renovations as we continue to believe that the store experience will remain a critical and compelling part of our brand and customer engagement. We expect to deploy approximately 25% of our expenditures on digital technology. This includes expanding and building digital analytics capabilities across all businesses, enhancing our omnichannel experience and improving e-commerce platforms. All of these efforts will further help our brands develop and expand customer relationships and leverage their growing databases. Finally, we will spend 15% of capital expenditures to create common corporate IT platforms that will be shared across all the Capri brands. Now turning to capital allocation. I would like to begin by noting that Capri has historically generated robust cash flow. As the business grows in the future, we expect to further increase cash flow levels. Our first priority will always be to invest in the business. Second, we believe it is important to maintain a strong balance sheet and we'll continue to pay down debt. By the end of fiscal 2023, we expect to reduce net debt to $300 million. Third, we will resume returning cash to shareholders. And finally and longer term, we would also consider luxury fashion acquisitions. But at this time, we are focused on delivering against our 3 amazing luxury brands as we believe our growth opportunities with this portfolio are extraordinary. Now we would like to conclude the Capri financial outlook. We believe our company and brands have an incredibly bright future and clear path to growth. We are already seeing results and momentum across all 3 luxury houses. And our strategies, investments and outlook are aligned to accelerate this progression. We remain confident that the strength of our brands, combined with our strategic initiatives, position Capri Holdings to deliver multiple years of revenue and earnings growth as well as increased shareholder value. With that, I would like to turn over the presentation to Jonathan Akeroyd, CEO of Versace, who will share the exciting Versace story and compelling brand direction.

Good morning, I am Jonathan Akeroyd, Chief Executive Officer of Versace, joining you today from our Via Montenapoleone store in Milan, it is a pleasure to be here with you. Over the past 5 years, I've been honored to be part of Versace and have had the amazing opportunity to partner with Donatella Versace during this time. Together, we are focused on expanding the luxury segment of our business and have aligned all aspects of the organization to our elevated vision. As part of this direction, we've also put in place the key building blocks and initiative to realize the full potential of this incredible house of Versace. We're already seeing the fruits of these efforts. I'm more than excited than ever about our future growth potential and look forward to providing a window into the Versace brand journey today. Now I would like to discuss the Versace brand vision, then go through our growth initiatives and conclude the presentation with our financial outlook. Versace is known for its iconic Italian heritage and unapologetic glamour. Donatella is a true visionary with an intuition of how to blend fashion, design and culture. I'll let Donatella tell you all about her vision.

Hello, everyone. It is my absolute pleasure to have the chance to speak with you all. I wanted to share with you the story about a new signature Versace Cord that I introduced this Fall/Winter 2021. The new code is called La Greca. My brother Johnny and I grew up in the south of Italy, Calabria, where we are from, was once occupied by ancient Greeks. As children, we were surrounded by artifacts and ruins that were a big source of inspiration for us. It was there that Johnny first became transfixed by La Medusa and ancient Greek mythology, including the Greek key. La Greca is a modern interpretation of the classic Greek key. It is very Versace and are sure that we will become a loved and iconic symbol of the house. We love and believe in it so much that we'll put it on everything from bags to clothing and shoes and fashion jewelry. It quickly became the protagonist of the Fall/Winter 2021 collection and is here to stay as a new pillar of the brand. Thank you all. I hope to see you all again soon. [Presentation]

As you just saw, Versace is glamourous, Versace is bold, Versace is rock and roll. Now let's turn to our growth initiatives. We developed growth initiatives based on 4 categories: communication, product, omnichannel and regional strategy. Through our communication strategy, we are focused on creating emotional brand engagement with our consumers using storytelling through content. I'll show you some recent and future examples. Versace's Spring/Summer 2021 campaign reflected Donatella's Versace [ Opulus ], an underwater fantasy world ruled by Medusa starred Kendall Jenner, Hailey Bieber and Precious Lee. These modern Versace muses exhibit an empowered attitude that looks to the future with optimism and hope. As you can see from these pictures, the newly launched La Medusa handbag was at the forefront of the campaign. Our summer campaign today, iconic very Versace look, the Italian Riviera. We showed what it was like for Versace to go on holiday, which is some of the most popular volume drivers such as swimwear, poolsides and summer accessories. Our upcoming 4 Winds campaign features Grammy winning global singer Dua Lipa, who's a long time friend of the brand and of Donatella. We are thrilled to have one of the most popular faces of pop culture to introduce our new La Greca signature pattern. In coordination with the Spring/Summer '21 campaign launch, we refreshed our seeding strategy to be hyper-focused and thoughtful about the La Medusa bag. Here, you can see top fashion celebrities, fashion icons and influences, sharing pictures with their La Medusa bag. Similar to our seeding strategy, we calibrated our PR strategy to focus on handbags. As John stated on the last earnings call, we saw strong sales in accessories with sales nearly double prior year levels. Global influences also helped to create relevance and excitement. Local ambassadors in important growth regions, a critical component of our communication strategy. Our China brand ambassador is Betty Wu, a Chinese singer and actress has over 25 million followers on her social media accounts. Looking at Versace's global social media following. We have nearly 40 million engaged followers around the world on platforms like Instagram, TikTok and WeChat, which provides us with an incredible marketing tool to use to talk to our fans. Our global database grew over 20% in fiscal 2021, reaching over 3 million customers. Our goal is to now grow it to 10 million in the near future. Turning to our product strategy. Key component of our growth will come from capitalizing on our iconic brand codes across all product categories. When our La Greca signature launches, you will see it significantly amplify our global communications around this new and exciting house code, and we will expand accessories and footwear growing accessories to approximately 50% of total revenue. Our 3 iconic house pillars are our La Greca Signature, La Medusa and Virtus. First, our new La Greca signature is a contemporary rework of our iconic Greca motif code. The geometric pattern features the Greek Keys as well as the Versace logo in various sizes and color combinations. Sharp angles, clean lines and a strong pallet are La Greca's signature, represents power and self-confidence. We believe it will significantly change the trajectory of Versace's revenues as it expands the brand's portfolio across all categories. Second, Medusa is an instantly recognizable signature of the Versace brand. Medusa has long been a symbol of power, while Versace sure represents unapologetic authority and feel as self-belief. Medusa has always been a key brand code for the house that has been used in a more contemporary dynamic way. Third, Virtus or Barocco V. As you can see, it is a V [ dawned ] with the acanthus leaf, which is a symbol of rebirth and longevity. The motif was first introduced in the Versace Spring/Summer 1992 Barocco print. It's a bold symbol of Versace's aesthetic heritage, taking its name from Roman deity. Virtus symbolizes strength, courage and character. We will capitalize on these 3 iconic pillars across all categories. And most importantly, they are the foundation of our accessories growth strategy. Now turning to our accessories growth strategy. We're so excited with the traction we are seeing. The category has grown faster than we anticipated. We've expanded our assortment, offering a wider variety of styles and are seeing strength globally. With Virtus and La Medusa, we have 2 powerful, highly recognizable brand pillars to grow accessories. As you have seen, we will soon introduce our third pillar with the full launch of our La Greca signature patent. In a relatively short period of time, we've been able to build 3 solid pillars of which to grow our accessories assortment. This is such an incredible accomplishment and is the foundation for future growth of this category. Here are some of the examples of our new La Greca signature pattern in accessories. Again, this will launch in the fall. La Greca signature will reinforce season-after-season by maintaining core colors as well as by adding newness with animations, including new colors, mix of scales and trends. Since launch, La Medusa's outperformed our expectations, and it's clear that we have potential to push this further. We purchase, we believe that we now have a brand code that is easily identified but will continue to expand. Given this amazing foundation, we are confident in our ability to establish authority as a luxury leather house. We are confident in our ability to significantly increase sales and expand the category to $1 billion. Turning to our footwear strategy. We've also seen strong growth in footwear with the category doubling year-over-year, the fourth quarter of fiscal 2021. The key strategy behind our footwear growth has been to consistently utilize brand codes. You can see the safety pin, La Medusa, the Virtus, Barocco V and soon to be launched Greca Signature pattern. We've grown opportunities to sneakers and in women's footwear. Looking at sneakers. Over the past few years, Versace has been successful in establishing its position in the sneaker arena. Season after season, we've been able to create a strong hype around the new XXXXXXXXXXXXXXX sneakers continuously, renovating our brand codes and creating a highly sought-after models. The offering covers a wide range of occasions from sporty, dressy and addresses both male and female clientele. In women's footwear. We have begun to build out our core offering of focusing on our iconic brand codes. We've been able to maximize the potential of stars that resonate with the glamourous and bold brand image, but also broaden the client base by introducing a broader assortment that is easier to wear. As a result, we are gaining authority as a women's footwear brand. And our final product strategy is driving signals across all categories. We're establishing the La Greca Signature as a newly highly recognizable pillar of the brand across different product categories. You saw it across accessories and footwear in prior slides. In ready-to-wear, it has a clear branding element used either as an all over print or as a detail to reinforce and drive volume across a wide range of categories. In summary, as we look at our product progression mix, we plan to significantly grow our accessory business to 50% of revenue, which is still below most of our luxury peers, but where penetration will also expand slightly. But in terms of dollars, revenue were more than double. While women's and men's ready-to-wear will decline as a percent of sales, we still expect both categories to grow in dollars. Now turning to our omni-channel growth strategy. We plan to develop our omnichannel capabilities, grow our e-commerce revenue, increase the retail fleet to 300 doors and increase the retail stores' density to drive higher profitability. As we look at our combined physical and digital footprint to provide to best way to serve our clients and to create synergies that will drive greater levels of productivity across all channels, we are focused on developing our omnichannel capabilities and have a number of exciting initiatives being implemented. Our e-commerce sales increased triple-digit in fiscal 2021. We're aiming to grow triple digits again in fiscal 2022. Database and growth in customer acquisition is key to growing our e-commerce sales. We are using customer insights and data analytics to support growth. Our teams are using data analytics, not only to better understand product sales trend, also to better understand our customers' behavior with our website to help curate more targeted messaging. Additionally, e-commerce will grow as we expand our accessories assortment. While e-commerce is growing rapidly, the majority of our business will continue to come from our stores. Our current retail fleet is underdeveloped compared to our luxury peers. There's significant opportunity to open Versace stores in major cities globally. Stores are a vital component of our omnichannel strategy as they provide an exciting experience of the Versace customer. In addition to opening new stores, we plan to improve the sales density of our existing stores. Store renovations and closures have already contributed to higher productivity and profitability. To date, approximately 40% of our global fleet is in our new store format. This includes new stores as well as renovation. We're targeting to have the entire fleet renovated by fiscal 2025. Another key to increasing sales density will be the growth of our accessories category. All of our new stores and renovated stores have been configured to have accessories at the forefront of our retail store experience. Part of our strategy to become a leading luxury leather goods house, we began to open new flagship stores in the most prestigious cities around the world. This is a picture of our new flagship location on Bond Street in London. As you can see, the boutique captures Versace's powerful vision of the future, while staying true to the brand's instantly recognizable designer setting. This is our new store flagship in Rue Saint Honore in Paris. Again, you can see the spectacular accessories display at the front of the store. Additionally, the store highlights Donatella's men's and women's runway collection. And here is our newly renovated store in Caesars Palace in Las Vegas. This store shows our dedicated footwear spaces that we're rolling out in all of our new and renovated stores as we look to grow sales in this category. Finally, we've refurbished multiple locations in China, including Shanghai Plaza 66, one of the most important shopping locations in China. Looking at our regional strategy. Our plan is to increase revenues in Asia to $700 million. We will do this by significantly increasing our investment in localized marketing, including runway shows and dedicated pop-ups. Additionally, we are focused on e-commerce growth. We launched a Tmall Luxury Pavilion less than a year ago and have had a significant opportunity to meaningfully increase sales there. New store openings and store renovations are also a very important component of our growth strategy. Finally, we have an opportunity in travel retail where we are currently underpenetrated relative to our luxury peers. In America, new store growth and store renovations are an important component of our growth opportunity. Additionally, we believe we have tremendous growth potential as we roll out omnichannel capabilities and increase e-commerce sales. Finally, like many of our luxury peers, we have the opportunity to increase our shop-in-shop presence in luxury department stores. In EMEA, sales in fiscal '21 were impacted more than other regions due to the importance of tourism. Sales will recover as tourism comes back, but we also have an opportunity to capitalize on local clienteling. We also believe we have a tremendous growth potential as we roll out omnichannel capabilities and increase e-commerce sales. And finally, as in the Americas, we have the opportunity to increase our shop-in-shop presence in luxury department stores, where again, we are underpenetrated relative to our luxury peers. Now I will turn to our financial outlook. I'm very excited to share with you that we now believe Versace will achieve approximately $1 billion in revenue this year. This is a milestone putting us amongst the largest luxury houses in the world. This serves as the first stepping stone on our path to $2 billion in revenue. Fiscal 2023, we anticipate continued strong revenue growth, with margin expansion driving greater profitability. We expect to achieve mid-teens operating margins in fiscal 2023 on approximately $1.25 billion in revenue. We are seeing faster than anticipated margin expansion being driven by our merchandise mix, greater full price sell-throughs, better inventory management and expense leverage. And as a result, we are raising our long-term operating margin outlook below 20% range. Turning to our revenue by region. Our regional mix will change over time. As you can see, Versace's underpenetrated in the Americas, while historically, EMEA was our largest region. We expect to generate higher sales in the Americas and in Asia in the future, with a more balanced split between regions. Ultimately, we anticipate Asia will be our largest region. Now I'd like to discuss our revenue by channel. We anticipate retail will account for approximately 75% of total sales with wholesale compromising approximately 20%. While retail will remain the most significant component of revenue, we see strong wholesale growth opportunity in luxury department stores as well as travel retail globally. In conclusion, both Donatella and I are more optimistic than ever about Versace's future. We have the key building blocks and initiatives to realize the full potential of this incredible brand. We will capitalize on our iconic brand codes, the Barocco V or Virtus, La Medusa and our La Greca signature pattern, which we'll be launching in the coming months. These 3 solid pillars give us a runway for growth across all of our product categories. Both in men's and women's accessories is a tremendous opportunity, and we are beyond excited about the potential with the success we've seen to date. The development of our omnichannel capabilities and acceleration of e-commerce growth will drive strong incremental sales. And finally, we will also drive additional revenue as we continue to increase the size of our store fleet globally. As you can see, Versace has an incredible opportunity in front of it to reach $2 billion and beyond. We've laid the foundation and have the road map for our future growth. I would like to take this opportunity to say that all of these achievements are thanks to a world-class Versace management team as well as our dedicated group of over 2,000 employees globally. We're confident that this commitment and passion will help us deliver future long-term growth. Now I would like to turn it over to Hannah Colman, CEO of Jimmy Choo, to discuss the great opportunities that Capri sees at Jimmy Choo.

Good morning. I'm Hannah Colman, Chief Executive Officer of Jimmy Choo, joining you today from our flagship store on Bond Street in London. I have had the privilege of being a part of the amazing Jimmy Choo story for nearly 25 years. In fact, I was one of the first employees to join the company back in 1997. My appreciation for the brand started with a love of our product design and craftsmanship. And over time with the company, I've developed a deep understanding of every aspect of the business as well as a clear vision for the future direction of the brand. I am delighted to share more about our future with you today, and I'm more optimistic than ever about the growth potential for Jimmy Choo. I'm going to start talking about the Jimmy Choo brand, then go through our growth initiatives and conclude the section with our financial outlook. Confidence, glamour, daring. These are the Jimmy Choo brand values that are at the heart and soul of everything we do. They are referenced across all our communication touch points from product to marketing, they embody the essence of the Jimmy Choo personality and our community globally. Storytelling is key to engaging our existing audience whilst expanding reach. Our storytelling for the next season will focus on bringing to life the concept of time today. Our Creative Director, Sandra Choi's brand vision, is founded in our inherent glamour that is at the heart and soul of the brand. As Sandra says, glamour is an attitude, a sense of confidence that is not limited to a time or a place. I'll let Sandra tell you about her vision.

I'm Sandra Choi, Creative Director of Jimmy Choo and one of the founders of this incredible brand. As we prepare to celebrate our 25th anniversary, we are focused more than ever on highlighting that glamour that is at the heart and soul of the house. To me, glamour is an attitude, a sense of confidence that is not limited to a time or place. We will be bringing the glamour, the confidence and the daring values of Jimmy Choo to life with our time to day campaign launching this September. I'm so excited to start the next chapter of this amazing brand.

Moving on to our growth initiatives. Our growth initiatives are focused on 4 key strategies, around communication, product, omni-channel and region. I will elaborate on our strategy for each of these areas in the next slide. Our communication strategy is designed to combine storytelling with data analytics. We own glamour with our campaign narrative. Our communications are designed to create an emotional brand engagement with our consumers. Our campaigns populate across all communication touch points globally on and offline. They consistently reinforce our signature glamour. Here are some images from our Spring 2021 campaign, a modern ode to springtime in Paris. The imagery capture model and artist Sharon Alexi's vibrancy with her key Peruvian landmarks as backdrop. Here are some of the pictures from our Summer Campaign that capture the essence of summer laid-back glamour, the warmth and energy of a destination. Here is the campaign for our inaugural Beach Capsule Collection, which shows our first expression into beachwear as we reinforce our lifestyle positioning. We also use local ambassadors in important growth regions. The actress and singer, Victoria Song Kuan has been our Asia brand ambassador since 2018. And in that time, her endorsements of Jimmy Choo have resulted in 1.2 billion reads and over 10 million discussions, and our Weibo fan base has increased by over 100%. She has over 50 million followers across social media and is one of the most sought-after ambassadors in the region. She continues to be loyal to Jimmy Choo, generating strong engagement and conversion. And we adapt our global campaigns locally to feature regional brand ambassadors. Here is an example with Victoria Song Kuan. Our ongoing strategy is grounded in reinforcing our glamourous DNA, our core brand codes translate into glamour every day, any time, anywhere, from formal to casual across multiple product categories, including footwear and accessories. Glamour is one of our core values and comes across everything we do. We own glamour. Jimmy Choo has a long history of having a high-profile fan base. Some of the world's leading talents choose to step out in Jimmy Choo for key moments. The pictures have huge organic reach and fuel our brand heat. This translates across social media with a consistently strong organic response to our most glamourous styles. It helps to generate brand awareness on key social channels and expand our sphere of influence. We also use global influencers to help create excitement around products and the brand. At Jimmy Choo, we have unique success with our user-generated content, specifically in the bridal sector with the #IDoinChoo. Jimmy Choo dominates the luxury fashion bridal sector. Bridal is often the first touch point to the brand. We capitalize on that, and we take our brides on a lifetime journey with us. In fact, the top trending bridal hashtag on Instagram is #idoinchoo. We repost user-generated content on our Jimmie Choo-owned channels to increase social community engagement. Looking at Jimmy Choo's global social media following. We have nearly 20 million engaged followers around the world on multiple platforms, providing us with an incredible tool to use to talk to our fans. Our global database grew double digits in fiscal 2021, reaching nearly 4 million consumers. Our goal is to double the size and grow to 7.5 million customers. We have 4 key product strategies: capitalize on iconic core brand pillars, expand in accessories, [ roll ] casual and develop new categories such as beauty and our beach capsule, which you saw earlier. First, capitalize on our iconic brand pillars. I'm so excited to be able to share with you our core collection ahead of the launch tomorrow. The collection is designed to be permanent, and it is built around 3 distinct brand codes, the Monogram, Crystal and Pearl. I'm going to show you a video that will give you an introduction into the collection and the power that our 3 brand pillars have to create recognizable and authentic identity for Jimmy Choo. The core collection enables us to translate our brand codes across all product categories and marketing to embrace the power of repetition and customer recognition. [Presentation]

Let's take a closer look at each of our brand pillars. A long time in development, I am thrilled to launch our Monogram signature pattern. It is a visual hallmark for the brand and will be used across categories and styles from formal to casual. The Crystal Sea reflects the inherent sparkle of the Jimmy Choo brand and decorates a glamourous emblem across heels, trainers, off-duty boots, slides and accessories. The timelessness of the Pearl is modernized in exaggerated proportions, punctuating product in playful applications. Our second product strategy is to expand accessories. We believe we have significant opportunity in accessories as we grow the category from nearly 20% of the mix up to 30%. We intend to do this, leveraging our core brand pillars of Monogram, Crystal and Pearl, across accessories from bags to small leather goods. Additionally, we will focus on our 3 hero handbag families, Varenne, Bon Bon and Madeline. Our 3 key hero families are the Varenne family, which is characterized by our iconic JC logo in a focused range of top handle and clutch bag; the Madeline family, which ties back to our crystal pillar with the iconic crystal C buckle; and the Bon Bon which was born as a smaller evening bag and which has evolved to a larger day bag, which we launched earlier this year. We will also use our 3 brand pillars to maximize our casual opportunity. We believe we have the opportunity to increase our casual assortment to approximately 35% of footwear sales. The largest driver of growth will be in trainers. As we grow the mix to 25% of footwear sales, we have had tremendous success with our HAWAII and Diamond franchises and continue to build off the strength of both of them. Beyond trainers, we have the opportunity to build upon our casual boot assortment as we reinforce our authority in off-duty boots, such as our iconic XXXXXXXXXXXXXXX silhouette. Additionally, we can expand our casual footwear offering with new functions. We will continue to build on the success of our HAWAII Trainer by introducing new seasonal animations. We have expanded our Diamond family to now have 2 unique diamond soles, an oversized version and a slimmer streamlined version. And in September, we will be launching our new Memphis Runner, which combines a sporty soul and glamourous design details. Additionally, we can grow our casual footwear offering by expanding across specialist functions. We have seen fantastic results from our pool slides this summer, and we continue to expand this category. As a British brand, the Wellington Rain Boot is a product that we can have real authority in. This fall, we are launching a new biker-inspired Wellington in sustainable rubber and fun colors. We also see an opportunity in snow boots to round out our casual range. Jimmy Choo is seen as a leader in surprising yet authentic collaboration, the meeting of brands or creative minds that fuels brand heat while engaging and expanding our conversation to new audiences. Last year's collaboration with Timberland delivered a 90% sell-through whilst reinforcing our casual product authority. And finally, our fourth strategy, category expansion. We have exciting new launches coming up that will really reinforce our luxury lifestyle positioning. We launched Beauty last year, and we have seen great success with our lipstick category and will expand into new shades and gloss. We are also thrilled to be launching a small casual ready-to-wear capsule so we can dress our Jimmy Choo clients from head to toe. In March of 2022, we will be launching our first jewelry collection. This beautiful collection ties very closely back to our core pillars of monogram, crystal and pearl. These additional categories will help us tell stories as well as drive incremental sales. In summary, as we look at our product progression mix, we plan to significantly grow our accessories business. And while our footwear mix will shrink as a percentage of total sales, we expect the category in dollars to increase to approximately 50% as we grow our casual assortment and build upon our core pillars. Turning to our omnichannel growth strategy. We are focused on enhancing our omnichannel services from product discovery to aftersales; accelerating e-commerce growth through localization and personalized journeys; increasing our global retail footprint to 300 stores, with expansion opportunities across all regions; and finally, increasing the retail store sales density to drive higher profitability. We look at our total physical and digital footprint to drive a seamless cross-channel client experience. By connecting the experience between stores and online, we can meet our client wherever, whenever and however they want to shop. We are investing in enhanced omni services. One example is our virtual sales assistant that connects store staff to clients browsing online. The virtual sales assistant has helped increase conversion online and drive traffic in store. Turning to e-commerce. Globally, our e-commerce business grew double digits in fiscal 2021, and we have a number of initiatives to drive future growth. First and foremost is accelerating the growth of our global client database. Similarly, we are using data analytics to unlock real-time site personalization to drive conversion. We will continue to use more video and digital innovation to give our clients engaging, immersive experiences on our platforms. We are also focused on driving localized luxury experiences. We launched our China website in 2020 and just launched on Luxury Pavilion Tmall in September. Before the end of the fiscal year, we will launch localized sites for Korea, Australia and the rest of Asia. Jimmy Choo has world-class luxury retail locations in the most fashionable cities and most sought-after shopping destinations around the globe. Over the next several years, we plan to expand our retail footprint with the greatest growth opportunity coming from Asia, specifically China. We expect our sales density to increase approximately 25% over time. The key drivers will be expanding accessories in our casual footwear assortment. We will continue our strategy to grow and enhance our store fleet in the most glamorous and prestigious locations around the world. These slides show images of some of our key flagships across the globe. This is our Bond Street location in London; the Mall of the Emirates in Dubai; Madison Avenue in New York City; Harbour City in Hong Kong; and SKP in Beijing. Looking at our regional strategy, we plan to more than double revenue in Asia as the region grows to approximately 40% of total sales. We will achieve this by expanding our store network in China and South Korea, where Jimmy Choo is significantly underpenetrated relative to our luxury peers. We are also focused on e-commerce growth. As I said earlier, we launched on Luxury Pavilion on Tmall, and we have a significant opportunity to increase sales there. Additionally, we are expanding our localized marketing programs and doing more with regional brand ambassadors, like the example I showed you with Victoria Song Qian. Turning to EMEA. We expect to resume revenue growth. Sales in fiscal 2021 were impacted more than other regions due to the importance of tourism. Sales will recover as tourism comes back, but we also believe we have growth potential as we roll out omnichannel capabilities and increase e-commerce sales. We can capitalize on our CRM system to increase sales to local clientele, and we intend to expand our travel retail presence in the region. In the Americas, we will increase sales through amplifying our marketing communications to engage a broader client base. Part of that will be driven by expansion of accessories and casual footwear. We also have additional growth potential as we roll out omnichannel capabilities and increase e-commerce sales, and we will continue to expand our retail store network. Now turning to our financial outlook. Our business is starting to recover from the pandemic and related store closures. We are beginning to see a significant improvement in performance as regions open around the globe. In fiscal 2023, we anticipate sales will reach approximately $650 million. As our revenue grows, we will realize significant leverage against fixed cost and the retail store base. And we are excited about our opportunity for margin expansion as the initiatives we put in place are starting to bear fruit. Longer term, we continue to believe we can generate $1 billion in sales at a mid-teens operating margin. Turning to our revenue by region. Our regional mix will change over time, the Americas growing to approximately 30% of the total. Asia will remain our largest region, where we generate approximately 40% of our revenue. While that rate will remain fairly constant, we expect the largest dollar growth to come from Asia. Finally, we expect EMEA to decline as a percentage of total sales. But as I outlined, we anticipate revenue dollars will increase. And here, we have revenue by channel. As you can see, we expect retail to increase as a percent of total driven by e-commerce as well as stores. As I shared earlier, we anticipate e-commerce revenue would triple to $200 million, approximately 25% of retail sales. We also assume retail store revenue will increase as we continue to expand our global luxury fleet and increase sales density within our stores. In conclusion, I'm so excited about Jimmy Choo's future. With our 3 brand pillars, the monogram, crystal and pearl, we have the key building blocks to expand our assortment to meet all of our consumers' needs every day, anytime, anywhere from formal to casual and across multiple product categories. Through our communication strategy, we are supercharging our brand heat. Through our product strategy, we are growing accessories to 30% of our revenue. We are going to realize the full potential of casual, where we are already seeing that expansion take place. Our database is growing double digits, and we are accelerating growth with a goal to double its size. We will triple our e-commerce revenue, where we are seeing strong momentum, with sales up double digits in fiscal 2021. We will drive incremental sales as we continue to open new stores in the most glamorous locations across the globe. And finally, our success in executing these strategies will be driven by the incredible talent we have at Jimmy Choo and the dedication of over 1,500 global team members. For all of these reasons, Sandra and I are more optimistic than ever about the future growth potential for Jimmy Choo. Now I'd like to turn it over to John Idol, Chairman and CEO of Capri and CEO of Michael Kors, to share with you the Jet Set vision of Michael Kors.

Thank you, Hannah. Now I would like to discuss the Michael Kors brand vision, then go through our growth initiatives and conclude this presentation with our financial outlook. We are celebrating Michael's 40th anniversary this year. Looking back over the last 40 years, Michael has always stood for timeless glamor and optimism. Our vision and identity begins with Michael. Now let's hear from him directly. [Presentation]

As you just saw, Michael Kors is a fashion luxury house, which embodies the Jet Set lifestyle that is filled with glamour, travel and adventure. As Michael would say, the Jet Set lifestyle is all about being on-the-go and looking chic every step of the way. Today, we define Jet Set as speed, energy and optimism. After the past year, I think we all are more than ready to immerse ourselves in the glamor and excitement that lie at the heart of our brand. Now let us turn to our growth initiatives. We developed growth initiatives based on 4 categories: communication strategy, product strategy, omnichannel strategy and regional strategy. Our communication strategy is focused on creating emotional brand engagement with our consumers. There are 2 critical elements of our overall strategy: brand communication and consumer communication. Brand communication gives us the opportunity to create consumer desire and engagement through storytelling, utilizing our fashion shows, our glamorous fashion campaigns, celebrity dressing and influencers, all of which are viewed and amplified through our Jet Set lens. Consumer communication uses analytics and customer data to create, capitalize and convert on consumer desire. It is much more targeted. Every day, we analyze how people interact with our digital and social channels. Then we use this data to optimize our messaging. Now let me share some examples of our brand marketing. At Michael Kors, our story always starts with our consumers' Jet Set lifestyle. The spring season began with our highly successful the I Must Travel campaign, which told the story of spring time in New York City. This campaign was particularly important to Michael, as a lifelong New Yorker who wanted to show that speed, energy and optimism were back in the city. For summer, the I Must Travel campaign focused on Escape. The campaign was shot in the Bahamas and is filled with color, sun and sea, which are also trademarks of the Michael Kors Jet Set lifestyle. For fall, the I Must Travel campaign returned to New York. The speed, energy and optimism of New York City is always an inspiration for Michael. The campaign highlights our successful signature house coats. As we rapidly increase our database, targeted brand and consumer communication is essential to engagement and conversion. We continue to focus and refine our data analytics to optimize our consumer traffic to both our website and our stores. We also use global influencers to create local relevance and generate global buzz. Here, you can see some of the global influencers we use for the launch of our highly successful Soho bag. The MK Soho hashtag amassed 765 million social impressions globally. Additionally, we use global influencers to launch the newly trending Bradshaw bag, which generated approximately 120 million impressions. Lastly, we use local ambassadors in important growth regions like China. These 4 ambassadors alone have over 120 million followers on social media. In terms of social media following, Michael Kors has approximately 50 million engaged fans around the world. This provides us with an incredible marketing tool to speak to our new and loyal fan base. We continue to see engagement and conversion increasing on our social media platform. Our global database grew to over 50 million customers, increasing 18% compared to last year. This demonstrates the continued strength and desirability of the Michael Kors brand. We are rapidly expanding our database and now expect that we will reach 75 million customers in the near future. Now turning to our product strategy. We believe that we have focused product and category initiatives that will drive growth for Michael Kors. As we have previously discussed, Signature is a core growth strategy. We plan to grow Signature to 50% across all product categories. Additionally, we have 2 product categories which are adding incremental revenue opportunities for Michael Kors: MK Go and Michael Kors men's. Starting with Signature, we are creating desire with our highly recognizable brand codes. It is one of the biggest initiatives for the brand and a key focus of our future growth strategy. Our design teams have been collaborating across all categories to incorporate Signature into our Jet Set DNA. Today, the message is clear at Michael Kors. We believe Signature is fashion. It is part of every story we tell, and it builds brand identity as well as drives customer loyalty. Signature is the driving force behind revenue growth in every region globally. It currently represents 30% of our sales across all product categories. Our goal is that Signature will represent 50% of Michael Kors' revenue in the near future, ultimately generating $2 billion in revenue. As we continue to build out the Signature category, this strategy enables us to generate higher AURs and gross margins, therefore, increasing our overall profitability. Turning to MK Go, which was originally launched in fall of 2019. This category has become an extension of the overall Michael Kors Lifestyle brand. MK Go capitalizes on the trend towards comfort and a sporty lifestyle with a fashion point of view that stays true to our heritage. It consists of active ready-to-wear and footwear for both men and women, which is seeing strong growth and engagement with a new and younger consumer. We believe that MK Go is an incremental $250 million revenue opportunity. That is a true product extension, not cannibalizing our existing accessories or casual and formal footwear business. We will be marketing MK Go with a powerful 360-degree communications campaign in our global retail and wholesale channels. Now turning to our men's growth strategy. The Jet Set lifestyle that we built at Michael Kors extends to the world of men's, and it's fueled by the same speed, energy and optimism that we see across our women's business. Michael Kors men's style is confident, connected and effortless with a modern edge. We believe that men's is a $300 million incremental revenue opportunity. In men's, we will lead with accessories, a category Michael Kors is well known for. And we will maximize our Signature brand codes as we have in our women's business. We continue to increase our omnichannel men's exposure through both e-commerce and across our retail fleet. In summary, as we look forward, our product mix will shift over time. As you can see, accessories will remain our largest category by far. Accessories are the cornerstone of Michael Kors, and we are seeing strong growth in the category as our product innovation strategies are resonating with consumers. But we also believe that MK Go and men's will create incremental revenue opportunities that will bring new customers to the brand in categories that we do not have large exposure to today. Turning to our omnichannel growth strategy. We plan to leverage our seamless omnichannel experience to grow revenue. We expect to double our e-commerce revenue and increase the retail store sales density to drive higher profitability. Starting with our omnichannel experience. As we think about the future of our retail business, we are focusing on the customer experience and journey first. We are looking at our combined digital and physical footprint to create synergies across all channels. We are connecting the experience between online and in-store by meeting our customer wherever, whenever and however they want to shop. Turning to e-commerce. Our goal is to increase our e-commerce revenue to over $1 billion. We plan to do this by accelerating the growth of our global consumer database, utilizing data analytics to increase consumer engagement and expanding our lifestyle product categories such as MK Go and men's. Now turning to our retail fleet. Stores are a vital part of our ecosystem, helping to bring our Jet Set story to life. We have world-class luxury retail locations in the most fashionable cities and most sought-after shopping destinations around the globe. We intend on improving store sales densities by increasing local clienteling, expanding signature assortments and adding both MK Go and men's to the majority of our fleet. Additionally, our sales densities will improve as we continue to close underperforming stores in North America and open stores in Asia, where our sales densities are higher. Now I would like to show you a few pictures of our flagship stores. First, this is a picture of our iconic Rockefeller Center store, which I opened our presentation at earlier today. Next, these are pictures of our recently renovated store on Rue Saint-Honore in Paris, one of the most highly sought-after luxury retail locations in the world. Lastly, this is our Regent Street store in London, which spans 3 floors, showcasing the entire world of Michael Kors. Physical orders continue to account for the majority of our overall revenue. As we focus on profitability in our retail fleet, we continue to rebalance stores by geography. We generate higher operating profit in Asia and, therefore, we'll be expanding our fleet in that region to maximize profitability. Looking at our regional strategy. We plan to double revenue in Asia from $500 million to $1 billion. This growth will be primarily driven by expansion in Greater China. Turning to EMEA. We expect to resume revenue growth, driven primarily by our e-commerce expansion and increased store sales density as well as a return of tourism in the region. And finally, in the Americas, we expect to resume revenue growth, driven primarily by our e-commerce expansion and increased store density, albeit on a smaller store base over time. Additionally, we anticipate resumed growth in our wholesale channel but on a lower than historical revenue base. Now I would like to review the financial outlook for Michael Kors. In fiscal 2023, we anticipate revenue will increase low double digits to approximately $4 billion and margins will expand to the low 20% to mid-20% range. Beyond fiscal 2023, we expect Michael Kors revenue to increase in the mid-single-digit range, while operating margins will expand to approximately 25%. Turning to revenues by region. Michael Kors will see its greatest expansion in the Asia region, growing to approximately 23% of revenue. In the Americas, overall revenue will decline to 57% of sales as we manage this region's growth to maximize profitability. Finally, turning to revenue by channel. We expect retail to continue to grow, driven by e-commerce and increased store sales densities. In conclusion, we are extremely optimistic about the future of Michael Kors. Our strategies that we put in place over the past 2 years have been working and are generating higher consumer engagement and attracting new and younger customers to the brand. We are continuing to elevate the brand positioning at Michael Kors. We are leveraging our omnichannel capabilities to drive revenue growth. We are increasing our global database to expand our consumer engagement. And lastly, we are increasing our profitability by delivering exciting fashion luxury product. Our Jet Set vision for Michael Kors is clear. With one of the most talented senior management teams architecting the execution of our brand strategy and over 9,000 dedicated Michael Kors team members, we have the plan set in place to deliver long-term future growth at Michael Kors.

Thank you, John. We'll now go to our Q&A session. [Operator Instructions]

We have our first question from the line of Simeon Siegel.

Great. Thanks for all that information. That was great. Great to see the increased Versace margin expectations. Can you elaborate on the bridge to the increased goal there? Maybe talk about the comfort in how you approached it. I don't know if you thought about benchmarking against other peers. That would be really helpful.

Tom, do you want to take that question?

Sure. Simeon, happy to kick that one off. Thanks for the question. And when we looked at the Versace targets, which previously had been mid-teens, what we're seeing is the brand really progressing at a faster and better rate than we had initially anticipated, so we're raising our long-term targets to low 20% range. And that's going to be driven by 2 things. First, there will be some gross margin expansion as the brand launches accessories and gets better full price sell-throughs across the business with a new signature and [ Lacrecia ] pattern. Additionally, we're going to see significant sales leverage as the brand continues to grow at very, very small ways and leverages a fixed cost base as well as increased store sales densities. So it's really a number of factors that we see building over time to deliver those margin rates.

Our next question will come from the line of Erinn Murphy.

Great. John, we were having a little bit of difficulty hearing you on the answer to the last question, so I hope I'm not too repetitive. But I wanted to follow up on just the margin profile longer term of Versace versus Michael Kors. I'm just curious why structurally, you're looking at that being a 20% margin versus the 25% EBIT margin that you spoke to for Michael Kors. And then secondly, just curious, I didn't hear any commentary on the core news discussion on AUR expectations across the 3 brands over the duration of the plan. Could you just speak to what you're expecting for AURs over the long-term plan?

I'm going to Tom's office.

Okay. And Erinn, while John is coming over, I can start a little bit on the margin discussion for Versace versus MK. As we look at the margin profile for Michael Kors, it does have a significantly higher accessories business. So as we grow that business for Versace, I think there's significant opportunity to grow the margin return. So we're really looking at it as a progression. Versace as a private company had never earned above the mid- to high single digits on an operating margin, so we feel like the progression from a target of mid-teens to now low 20s with a lot more confidence around that target puts us on a really great path to really see the full potential. And as we've noted before, other luxury peers have significantly higher margins, but we'll look to get to these targets initially.

Yes. And Erinn, I think that we'll let Jonathan speak about the progression of what's happening at the company. But as Tom said, these are just initial targets. I think you can see that in today's presentation, we've already raised our targets. So we're -- I think we're -- we want to give reasonable expectations that we think that we can achieve both from the external financial community but also internally. And I think one of the things we're extremely proud about as a group for Versace, for Jimmy Choo and Michael Kors is we've been working very hard on elevating all the assets around all 3 of these brands, whether that's marketing, whether that's product, whether that's personnel, whether that's store presentation, whether that's systems. And we're investing to make sure that Capri Holdings has a sustainable foundation and a bright future that we can build upon. So I think that's really what we want to continue to stay focused on. But I'll let Jonathan speak a little bit more about how he is developing the margin across Versace.

Yes. I mean I think, first and foremost, we have -- as I mentioned, we're really driving across these 3 pillars that we have. But these are -- it's important to sort of mention that these are brand codes that we've had within the house for 40 years. I think the big difference that we've got now is that we're elevating them and we have a much better focus on them. And we're already seeing the benefits of that focus. So really, it's about merchandising productivity that is really going to support this growth as we're seeing at the moment. And then as, I don't know if you heard before, but the refurbishment of our store network, more than 40% of our stores now are either new or fully refurbished. And they are -- they've been shifted towards this focus -- stronger focus towards accessories but also highlighting that innovative product that we now have.

Yes. And Erinn, you asked a question about AURs. Again, this presentation is a little less about a quarterly earnings call and really to give you the more long-term strategic vision. Clearly, in the Michael Kors brand, we've talked about the fact that we are raising prices, which is something that we believe will elevate AURs and increase full price sell-throughs. I think every one of our presentations were talking about that. But just you can assume that, that's something that over the next 12 to 18 months, if we don't mention each call, I apologize, but this is something we're working towards. Again, we want to see higher price -- greater full price sell-through. I think that's the most important part of the mission. And we get that, first and foremost, with a product that really consumers desire.

Our next question will come from the line of Omar Saad.

Nice job troubleshooting on the fly there with the Zoom call. Appreciate that. I wanted to follow up...

Not problem solving. I'm a little upset. Tom looks much taller than me. I need to sit up and look taller.

No worries. You guys look great. So I wanted to follow up on the gross margin. I mean, you guys had a record gross margin year last year. A lot of players in the industry are really enjoying very strong gross margin trends. How do you think about the sustainability of promotional levels, especially for the Michael Kors brand? That segment has gone through some ups and downs in terms of promotionality over the years. Why is this time different and that promotionality level should stay low and the gross margin gains for you guys and the industry hold? And then I'd also love to hear from Hannah and Jonathan about Capri Holdings, the platform. And I'm sure, John, you want to chime in, too, but the platform advantages of being part of this big group, is it -- how do you really see leveraging scaled capabilities, operational advantages, whether it's technology into the brand portfolio as you develop them and grow in size?

Sure. Omar, I'm going to take it from a kind of a strategic level and a little Michael Kors and then I'm going to turn it over to -- we'll go Hannah and then Jonathan. Because I think this conversation about promotionality is, you have to remember, that's a North America conversation. And I think what had happened in particular with Michael Kors is we were chasing revenue, and we were trying to drive more business, and we were trying to do whatever we put to go after quarterly revenues. And we made a decision, as you know, kind of during the COVID time period, but that's not going to be the single most important thing that we're going to do. I think the most important thing at Michael Kors is we're going to increase full price sell-throughs. We're going to reduce the amount of markdowns that we put in front of the customer. And if our competition wants to be more promotional and do other things that maybe don't fit with our long-term vision of our brand, then we're going to take that perspective. So that is what's different this time versus where we were before. But I have to say, for the group, in general, our full price sell-throughs were deteriorating from all 3 brands over a period of time. And we, together, the 3 of us in the management team along with our design groups and our merchant groups, we've decided that by actually offering less product, reducing SKUs, being more focused and believing more in certain product categories or launches that we can have better full price sell-throughs. And when I turn it over to Hannah and Jonathan, they're going to tell you that's what's happening in their business. Their full price sell-throughs are all going up dramatically. So even though we haven't talk about price increases at Versace or AUR increases, what's happening is its focused and the direction towards more accessories has really helped full price sell-throughs. And by virtue of that, we get higher AURs. But it isn't a focus on price increases, et cetera. So why don't I turn it over next to Hannah and let her speak about that in the job.

Thank you, John. Yes. Similarly at Jimmy Choo, we've really focused on what we're doing in terms of our product strategy. So we've actually reduced from 4 collections per year to 2 collections per year. And as I alluded to in the presentation, we're relaunching our core collection actually tomorrow, which we're really excited about, which is a permanent collection within the Jimmy Choo product offer, which really leverages across the 3 pillars that we were talking about, which is pearl, logo and crystal. And I think with all of these focuses and strategic price increases that we have passed across, we are benefiting from seeing higher full price sell-throughs, higher stock returns, lower inventory and overall lower discounts. So we feel very optimistic about the opportunity for gross margin improvements at Jimmy Choo. You also mentioned, I think, a question regarding the synergies of working as part of the Capri Group. I think that there are many synergies coming from different group solutions, whether that be through technology or whether that be through logistics, and that transformation road map as a group is already very much underway. I also think what's interesting is that we have a lot of cross branded group tax forces, which really leverages on the expertise across the different companies, which, from a Jimmy Choo perspective, we found really beneficial. Thank you.

And from Versace's side, I really echo what Hannah said. Obviously, there's a lot more synergies across most of the areas, including merchandising and real estate store planning. But obviously, the investment that we've had coming in over the last 2 months has really been an enabler for the growth that we're now experiencing. We wouldn't have been able to refurbish as many stores as we've just done in the last 2 years. And also our digital growth has been exceptional triple digit last year, and we expect the same for this coming year. And this has to do with the increased investment that we've had across our IT systems and on our digital channels as well.

And Omar, I'll conclude on one last thing, too. What's been great about having a group is the internal movement, the promotions that we've had inside the group has been outstanding, the different people coming from Versace or Jimmy Choo into Michael Kors or vice versa, going the other direction. So that, to me, has been one of the greatest synergies that we now have. And the second is actually everything around our data analytics. Our companies are sharing so much information together about performance marketing and how we're seeing our activation of consumers. Obviously, we can't share databases, but What we can share is tactics and how those tactics are working. And I think that's been a real proof that you've seen in our e-commerce results across the group and even so of our omnichannel capabilities, clienteling capabilities. We're studying all these things together with the 3 houses, and there's so much learning there. We're really -- it's been a terrific add-on to having all 3 of the companies together. Thank you, Omar.

Our next question will come from the line of Kimberly Greenberger.

Great. And thanks for all the detail today. I wanted to just talk about the raised margin targets at Versace. And obviously, you've been talking about the increasing opportunity in accessories for that business that would sort of help drive that margin higher. Could you give us an update? I think you launched accessories a couple of years ago in the brand. What's been the progress on accessories penetration so far? I think I saw your long-term targets. I was writing as quickly as I could, but I wasn't able to get all the details. But if you could just tell us sort of where you started in accessories penetration, where it is today. And where are you seeing the most success so far, the most traction with consumers in that accessory strategy? That would be great.

Kimberly, I've got to just mention 1 thing. There is a slide in the presentation that tells you where we were in 2020, I believe, and then a future kind of goals. That is there, and Jonathan will speak to that. So I just wanted to remind you. But Jonathan, why don't you take that question?

Yes. So hi. We start -- we're on FY '20. We're 25% accessories share of our business. And as we discussed, we're working towards 50%. The significant change that we've had really in terms of the product category has been in the last 12 months. So we launched our Virtuous line 18 months ago. And then 6 months ago, we launched our La Medusa line. So now we have a full complement of offer. And coming in the fall, we'll have the third pillar, which is the Signature line. We've already seen in the last 6 months especially, a significant ramp-up in sales in the accessories category. So we're very confident that we'll get to where we need to be. But I think the biggest change that we've done within the company is the elevation of the offer, first and foremost, and also, again, focusing on these great brand codes that we have but really kind of making them more updated in a much more contemporary kind of spirit. And we're also extremely excited about the launch of the signature in the autumn, which we believe will give us another enabler to really accelerate that growth. But we're very confident in the ability to get to the 50%.

And I want to add 1 additional thing too, Kimberly. I'm so proud of Jonathan, and I'm really proud of Donatella, who knows that we are an accessories led company now. And around the world, consumers view Italian luxury companies most times as leather first, and this company did not have history or a heritage of really being focused on that. It was much more about ready-to-wear and much more about runway, both of which we still believe in, and we are -- when we have our strategy sessions, it is absolute beacon for us. But the company now has great talent inside of it in terms of design talent, in terms of merchandising talent and is focused on taking the accessories business and making it a very significant part. And as Jonathan said before, we're building out the stores, basically 1/3 of the presentation of all the stores now are focused on accessories. Some stores even larger than that. And so we have the ability that we're going to renovate the entire store fleet, about 40% is done right now. Over the next 2 years, we'll have the entire fleet done, more or less. So we get to almost start new in our ability to do that. Just jumping for 1 second to Jimmy Choo, we're going through a similar exercise at Jimmy Choo. And the great news about the Jimmy Choo stores are the way that they were built. They're very flexible. And we were able to really, and this ended up being a good thing for us, shrink our shoe collection by 1/3 and then replace that with accessories without almost no construction inside of our stores and improve -- it's going to improve our profitability because of exiting shoe inventory sometimes can be more expensive than exiting accessories in particular. So as we go down this journey, I think one of the things that Capri has really brought to the table is the knowledge of accessories, is the knowledge of that development, the merchandising, how to really work through that product. And now what you're seeing in our marketing initiatives, you can see behind Jonathan, some 2 fabulous pictures of 2 of our recent La Medusa campaign, but you're seeing accessories from both of these companies on a regular basis and the consumer's response.

Okay. That's great color. John and Jonathan, can I just follow up with 1 item on that. I wanted to bridge from the $1 billion in revenue that you're currently seeing to the $2 billion. And that incremental $1 billion revenue opportunity, is there a way for us to think about bucketing that? Is it $500 million in accessories and $300 million ready-to-wear? How does that incremental $1 billion of revenue breakdown, just so we can think about the path from $1 billion to $2 billion in revenue?

Well, let me just take a part of that, and I'll turn it over to Jonathan. We clearly believe, as Jonathan just said a minute ago, that we're going to do half of our revenues in accessories, and that will be 50%. So $1 billion of the business at Versace will be accessories. And again, we are gearing the company for that. I think we have a little experience on doing that previously. I think we have, again, an incredible e-commerce operation in place is growing, as Jonathan's been talking about triple digits, we're going to actually re-platform that next year with more technology, with a new skin. There's so many things that we're going to do to continue to drive that. And then we have the stores. So a lot of the store network, it's already there in place. We're in the best locations in the world, whether that's in China, North America, et cetera. It's about improving the productivity of those stores. And you can see, to be honest with you, we're not very proud of where we are today in our productivity. We've got a tremendous amount of room to grow in that. And even the numbers that we've given you in this presentation in terms of growth of productivity is still below where many of our luxury competitors are with inside of the existing store network. We can go beyond what we've performed in this presentation. But I'll let Jonathan speak to, we're not going to give you exact time line, but how that's going to feel as we move over the next few years to get to that $2 billion.

Yes. I mean, obviously, we expect to see revenue growth across all the 4 major categories, but we really see leather goods as the accelerator. With regards to footwear, we think that we've got great potential both in men's and women's footwear. But again, going back to the refurbishment that we've done in our stores with the productivity expectations that we have shared with you, we really need to be getting a high level of productivity in the stores, which should also mean a better management of our ready-to-wear business, which is obviously more seasonal-driven, where we should really -- where we've reallocated our stores to make sure that we're getting a high level of sell-throughs and able to get a better performance from permanent stock, especially coming through from carryover accessories. With regards to footwear, we think that we've got great potential both in men's and women's footwear. But again, going back to the refurbishment that we've done in our stores with the productivity expectations that we have shared with you, we really need to be getting a high level of productivity in the stores, which should also mean a better management of our ready-to-wear business, which is obviously more seasonal-driven where we should really -- where we've reallocated our stores to make sure that we're getting a high level of sell-throughs and able to get a better performance from permanent stock, especially coming through from carryover accessories. So we expect to see growth across all channels in terms of actual cash, but definitely a bigger push towards accessories.

And one last thing, just a conclusion, Kimberly. If you recall, when we bought the company, the business was approximately 50-50 between men's and women's. So again, Versace has this very large image for how big the women's business is. And it's actually not as big as probably the image indicates it to be. When we look at things like our fragrance business, and we've talked about it in our last earnings call, we're one of the largest designer fragrance businesses in the world, and it continues to grow very, very rapidly. So we know that we've got consumer interest. We know we've got female consumer interest. And we're so excited because when we, all of a sudden, have these 3 pillars of accessories to really start driving and a better women's footwear business, we're going to have more product that people can purchase from us and be able to really get a piece of the Versace lifestyle. So that's exciting for us. But women's category in total is going to be the main driving growth category when you put together the accessories, the women's footwear, et cetera. And quite frankly, the opportunity is very significant.

Our next question will come from the line of Ike Boruchow.

I guess two questions from me. Number one, maybe Tom, just trying to understand the $200 million CapEx is the annual spend to expect going forward. Just kind of curious about the free cash flow and then how much of that free cash flow maybe goes to debt paydown. And then I don't think you talked about share repurchases. So just trying to understand if that's in the plan. And then the second question is on Jimmy Choo. It looks like a big jump year-over-year next year in terms of the negative mid-single-digit margin this year going to double digits next year. Just any building blocks to help us get comfortable with that jump would be really helpful.

Sure. Thanks, Ike. I appreciate the question. On the CapEx, yes, it was $200 million that we would expect to be spending on an ongoing basis most of it for stores and renovations, which we've talked about in growing the fleet, particularly in Asia, and renovating Versace, Jimmy Choo and parts of Michael Kors. And then a good portion on our investments in digital and IT. So we had talked about common platforms across e-commerce, across digital analytics and all the things that support our omnichannel business as well as other common platforms like the SAP project we had mentioned previously. Now as we look forward, we haven't guided to free cash flow. But I anticipate, in the past, we've been at this $600 million level and would anticipate getting back and exceeding that as our revenues grow and our margins increase. Now as we look at usage, first usage is investment, as we mentioned, on CapEx. The second is pay down debt. So we expect over the next year or 2 to get down to a net debt number of approximately $300 million and leverage below 2x. We're seeing significant reduction in debt, which gives us flexibility going forward. But we believe even in that scenario, we will have additional cash and we'll first look to spend on paying back for our share repurchases.

Jimmy Choo, I'll take a piece of it, and then I'll turn it over to Hannah. Look, really, there's 2 things that are going to happen to Jimmy Choo. Again, when COVID hit, Jimmy Choo was adversely impacted, probably worse than any other company in the group because of the amount of our retail business and our stores, which were heavily weighted to driving velocity, and as those rents are obviously fixed in many cases. So we were -- really had deleveraged during that situation. And when you see the fact that adding not a tremendous amount of volume even in terms of where the company was before, operating profit really picks up very quickly in Jimmy Choo. So this is purely an option. It is significantly a leverage story for Jimmy Choo. The second thing that's happened at Jimmy Choo, and this was, again, prior to COVID, we were really working on our accessories growth, which is going to have a higher margin for the company; and secondly, the expansion of our casual footwear business, which also should give us some margin expansion. But let me turn it over to Hannah to give you a little clearer picture.

Thank you very much. Yes. So as John spoke to, a lot of this is realizing significant leverage against fixed costs in our retail store base as we see our revenues growing back again. Some of the big drivers behind that are the accessories. So moving the mix from almost 20% of the business in time up to 30% of the revenue. We feel very optimistic about expanding our accessories category. We've recently hired one of the most -- one of the best accessories designers from the luxury industry. She started with us a couple of months ago, and her new bags will be coming out in spring, which will add additional product to our growing accessories business. We're already seeing growth in accessories, double digits, in fact, in quarter 4 fiscal year '21 driven by our 3 main Hero families, VARENNE, Madeline and Bon Bon. And we'll continue to build on that strength by capitalizing on those iconic brand pillars I talked about before, the Monogram, the Crystal and the Pearl. We also have a big, big potential in terms of casual. We saw, even pre-COVID, there was a big trend towards casualization in the footwear category, and that just accelerated over COVID. Our belief is that, that will not be going anywhere, although we're very confident in the return to the dress shoe business. But I think it's important to note that Jimmy Choo is more than a dress shoe business. And we're already starting to see really great numbers coming out of our casual category driven predominantly by sneakers. And so this is really -- and then we've also conducted some strategic price increases across the business in the last month, and we'll continue to do so as we go forward. So we do expect to see strong progression in margins in 2022 and '23 as that revenue improves. Thank you.

Our next question is from the line of Michael Binetti.

Tom, if I could start with a financial question. Just I'm curious how to think about the dynamics you built into the growth rates underlying the framework you gave us here today at a high level. I think the outlook is for 30% EPS growth in fiscal '23 compared to '22. Obviously, John mentioned that you put out internally achievable targets here. But to the extent that you over deliver on EPS this year, just for example, should we think about the EPS growth rate still being 30% in the out-year off that? Or does outperformance this year drive those numbers higher? Do you have more to invest behind it? Or maybe you can just help us think how we move as we go forward from today.

Yes. I'd be careful thinking that way. I don't think that's the right thought process. I think that what you're going to see -- and again, we've put out a modest increase in guidance today from an EPS standpoint. I think I told you on the last earnings call, even if we do better over the next couple of quarters, don't be counting that into our EPS for the year because we're going to continue to take a lot of that money and invest in more marketing. I'm really excited about what you're going to -- I hope hear about it in the July earnings call from 2Q. I see a big smile you have in the face. We've got something that's really powerful coming under Hannah's new leadership. She has really set a new strategic plan for Jimmy Choo. And you're going to start to see that executed in the spring season of next year. That's going to require additional marketing efforts on our part. We're also really investing in China for both Jimmy Choo, Versace, Michael Kors. So we're going to spend more money marketing. And I am not as driven to try and deliver significantly higher EPS this year, but more focused on next year because next year, if we do our job right this year and really continue to set the foundations and build upon that, then to be able to achieve that $5 EPS that Tom and I put out there from a guidance standpoint, I think is going to be quite significant. We told you all along during the pandemic that we would exceed prepandemic revenue and earnings per share. I think we're, at least from a guidance standpoint, delivering upon that. And this company is going to start to go places that it hasn't been in a long time or even in its history. And that takes investment. And that takes the time and patience to do that. And I think we've proved that in part in the acquisition of Versace. I think there were many people who didn't think we could take on a European luxury goods company and be successful. I think they felt the same thing when we did the acquisition of Jimmy Choo. And in both cases, as you recall, we took the EPSs and -- or the operating margin of these companies, and we took them to 0 and negative. We didn't want them to be quite as negative as they were last year driven by COVID, but we did that purposely because we were investing in the future. And that future, you're going to start to see coming in fiscal '23, '24, '25. And I think Tom's guidance around low double-digit increases beyond 2023 in revenue and mid-double-digit increases in earnings per share. I think those are pretty strong results that we can -- we believe we can deliver upon. And again, whether we make a few more cents per share this year, that's not going to change really what the outlook is. And then, quite frankly, we want to invest in marketing, in particular, and really around delivering on growing our database. So why don't I let Jonathan first speak about the growth of his database, Hannah about hers, and I'll conclude with Michael Kors. Jonathan, you want to take a minute to speak about that?

Yes. I mean -- sorry, John, the line is a bit bad. But with regards to the marketing, we're ramping up particularly our investment in marketing in Asia. We still see that with a better localized focus there. We had a big event launching our La Medusa bag in March, which proved very successful to launch out there, huge response to it. It also enabled us to really increase our database. So as the year progresses, we plan more activity in Asia. And obviously, with the signature launch globally that we have, we anticipate to amplify that across America and EMEA as well.

Hannah?

From a Jimmy Choo perspective, we grew last year double digits our client database. But as we look forward, our goal is to double the size of the existing database to take it to 7.5 million. I spoke about in the presentation before about accelerated growth coming through localization through localized marketing. So we launched all within the last sort of 18 months our .cn website, our WeChat mini programs, Luxury Pavilion on Tmall. All of this is really to serve better these audiences, to resonate more with local audiences and to drive up brand resonance globally. I think there's lots of opportunity. I wish I was in a position to tell you more about the upcoming time today, marketing plans for Jimmy Choo, but we'll be able to unveil that soon. And I think it's exciting times ahead when it comes to Jimmy Choo and the opportunity in terms of database expansion as well as brand heat.

And then lastly, at Michael Kors, as you have seen from our presentation and from our calls, we grew the database to $51 million last year, again, double-digit significant growth. And our goal is to get that to about $75 million. And again, as we build out these very large databases, which have new customers and existing customers, they become ecosystems for us. And really, we're able to -- in the case of every one of our companies, if you were a Versace customer before and you bought women's ready-to-wear, now we can serve you up in the bag or a shoe. Or at Jimmy Choo, if you've been a very loyal customer to us in trainers or sneakers, we're going to serve you up a new bathing suit or a new other product, jewelry or whatnot. So this really -- what we're doing with our digital ecosystem is quite exciting. And it not only drives customers to our website, but we're also getting very good about driving them to the stores as well with that ecosystem. So again, I want to make sure you all understand. We look to invest. We look to continue to solidify our foundation and then be able to really grow off that. And I think the acceleration is going to be quite significant. Because, again, when you talk about double-digit revenue off of bases that are getting larger and larger each year, that's going to really drop down to the EPS level. And I think it's going to be very strong for us. Thank you very much.

Our next question will come from the line of Matthew Boss.

So maybe two-part question. John, could you speak to the interplay that you're seeing between e-commerce and stores as regions across the globe reopen? And then, Tom, maybe along those same lines, what's the profitability of the e-commerce channel by brand today and how best to think about the margin opportunity?

Sure. And I'll also let Jonathan and Hannah speak to this as well. But it's interesting, in North America where we saw our stores reopened, our digital business continued to accelerate. We really didn't see any deceleration in that. Now I think that's going to happen over time. We won't continue to run at the rates that we were running at -- I don't want to say during the pandemic because it still exists. But that really -- what was exciting for us in North America and, quite frankly, all 3 of our brands was that really consumer engagement continued to rise both online and in stores. And quite frankly, we saw that even again in this quarter, which was a really powerful thing. In China, I have to refer to that differently than Asia. What we're seeing is, again, something similar happened. We're seeing very strong double-digit growth, again, just this past quarter for all the brands. And that was with a very strong performance on Tmall in the Luxury Pavilion and also on our own .cn sites. So we're seeing, again, just a significant consumer lift. And as you recall from seeing in all 3 of the presentations, we are very underdeveloped in Asia as a company in all 3 of our brands. And so we look to double and, in some cases, triple our revenues in that region. And so you will see us, again, across all 3 brands, opening stores as well as growing our e-commerce businesses or our digital businesses. And one of the other things that's happening, and I'll come to your [ question in a minute ]. In both of those regions, you see this engagement with the consumer doing click-and-collect inside the stores. And that's creating an engagement at the store level that is actually rising. And on top of that, we've talked a lot about clienteling. And if anything, we learned coming out of this horrible pandemic was our sales associates are better and better at that. And the clienteling is also -- we're servicing that client from our e-commerce, which is really quite extraordinary. EMEA is a different story. Unfortunately, the -- while stores have reopened, shopping is very, very slow in that region for all of our brands. The consumer has not really tremendously reengaged in going into stores. Our e-commerce businesses are all holding up well. We anticipate, again, in calendar third and calendar fourth quarter, things will improve. As I'm sure you're all aware, you still can't cross borders inside of Europe. Many countries don't allow the other European countries to enter. We're hoping for the European passport to be functioning sometime in the mid to late part of July. And of course, the tourist business has been, for all intents and purposes, decimated in Europe where that was such a big part of the business for us. While that all sounds negative, I think we're extremely positive about what that -- how that's going to look for us for next year or next fiscal year and the return of tourism both in our own stores as well as in the department store community and specialty store community as well as travel retail in the airports. So as that all turns on next year, when you look at the group's revenue growth, up to $5.9 billion, that's going to be one of the things that will add a tremendous amount of volume is kind of the restart of Europe. But let me turn it over to Hannah to talk about the interaction of how we've seen digital or e-commerce in stores.

We're really encouraged by our e-commerce sales both over the last year and actually quarter-to-date as well. We've seen some really strong progression there. I think what's great to see as well is the adoption of enhanced omnichannel services, which we've rolled out throughout this last sort of 12 to 18 months, and that we will continue to optimize as we look forward to grow this business. We're very excited to be launching client -- digital clienteling tools for all of our stores around the world. We started that rollout already in the last quarter, and we will complete that rollout by quarter 3 of this year. And the initial results are exciting. I think just to give the sales consultants all of that knowledge and data in the palm of their hand is truly exciting. I think as we've spoken a lot about it today and in the presentations that category expansion also offers such a great opportunity for Jimmy Choo in terms of client acquisition and growing those digital channels. As we expand into other product categories, as we really exploit the opportunity that is casual, that we really drive that accessories business, I just think we'll have more and more opportunity from a total omnichannel perspective. We're seeing some really great numbers coming out of China at the moment. I've spoken a lot about the digital enhancements that we're making in China. By the end of this year, we will have fully localized websites for South Korea, for Australia. So everything that we're doing is really enhancing that client experience at Jimmy Choo and making sure we can bring the right product to our customers wherever and whenever they want it. Thank you.

Jonathan?

And I think from the Versace side, it's probably one of the biggest things that I'm most proud about is the fact that we've been able to have such strong growth on our e-commerce channels both last year and to this year. And the reason for this was we've had a number of initiatives in terms of investment onto our site, but also in terms of our omnichannel capabilities not just at the front-end, but also on the warehousing as well. So we're now able to have omnishipping from our European warehouses, and we will have from America as well at the end of this year. So constant involvement of that. But also, a huge traffic is coming to our site, which clearly shows the appetite that there is for the brand as well. So it's very encouraging. And also the shift of sales that are going in line with our strategic goals as well. So we've seen a big uplift in accessories this year that's coupled with the launches of our bags as well, which is obviously driving the AURs up on the site. So there's -- conversions are going up. All of the KPIs are going in the right direction. And we're confident as we're also now going in and looking into and we've opened, as you heard, at the beginning of this year, our Tmall site on the Luxury Pavilion, a great response to that, good growth there, and we see that will only continue to get stronger and stronger. And then just further afield, just to say that the breadth of the customers that we have, huge appetite for the brand in countries like Australia. We've got a very strong e-commerce business in Australia. So as we develop our retail network as well, it also shows us where the opportunities are in terms of where we could potentially have more retail goods.

And Matt, just to speak a little bit about the margins for the e-commerce business, it is accretive to our margin. And when we had a prepared slide on margin expansion drivers, one item noted was mix. And part of that mix was e-commerce. So as we grow e-commerce, we expect it to be accretive and help expand margins for the group. When we look at it by brand, Jimmy Choo and Versace has always had strong e-commerce margins with luxury price points. Michael Kors, when we started this journey, did not have a stronger margin. But what we have seen is a significant growth in that, particularly in the last year as we grew the Michael Kors e-commerce business significantly and we're able to leverage costs there. So now it's above store levels and again, accretive just like the remainder of the group. So we're excited about e-commerce growth, which is from both the top line and bottom line perspective.

Our next question will come from the line of Camilo Lyon.

I wanted to ask two questions. First, how is Versace positioned in China versus other luxury brands and across which consumer age demographic are you seeing the greatest brand adoption? And then more broadly, it's great to hear the database growth you're experiencing and expecting over time. Where would you say you are in the data journey with respect to the sales growth opportunities that it offers as we think about KPIs like AOV conversion, LTVs?

I'm going to turn it over to Jonathan. I don't think we're going to quite get into some of the metrics that you've outlined. It's a little more detailed than we would normally do in a call like this. But why don't I turn it over to Jonathan to talk about the consumer database total journey and then in China, our journey? And again, we're going to get a little less into demographics just to let you know. But, Jonathan, go ahead.

Yes. I mean with regards to China, I mean we're still seeing strong double-digit growth in China, in Greater China. We believe that there's far more opportunity for us as we push through with these. Particularly these areas in terms of women's wear, accessories, we think that we can -- we've got continued opportunity to accelerate even faster, to be honest with you. We are below our peers. We have a strong, good positioning in terms of our retail network. There is opportunity to increase our store footprint in China as well. But we definitely feel that this will be a -- as you saw in the presentation, this will be our biggest region there in the longer term. With regards to customer, we've seen -- and this is obviously important for China as well, we've seen a good growth with our customer spending in the age group of 30 and below. We've seen a significant growth in the last 12 months in that area, which is positive. And we've also seen as well a good growth in terms of a shift towards our female customers improving as well. So again, highlighting the goals that we have with regards to developing our women's category business, especially. But certainly, going back to our database, we do believe that we're probably softer than we should be with $3 million as it is today. But with the traffic that we're getting to the site with initiatives that we've got with regards to growing our database, we're confident that we can get to $5 million within the next 12 months. We'll continue to push on to $10 million from there.

Our next question comes from the line of Paul Lejuez.

This is Tracy Kogan filling in for Paul. I have a follow-up question on the new store format you've been talking about for Versace. I know you mentioned that there'd be a stronger focus on accessories. But I was wondering if you could maybe highlight some of the other key differences in this new store format, maybe its size or even switching locations. And then if you could talk about the performance of the stores in the new format versus those that have not yet been converted, that would be very helpful.

I'm going to -- before I turn it over to Jonathan, I have to remind you that we've just gone through COVID -- or we're still in the middle of a pandemic. So some of the measurement is not exactly going to be relevant. So we're not going to talk to that. The only thing we can say is we had limited number of stores that were opened prior to the pandemic in terms of refit, but those stores didn't really have new accessories pillars, but those stores were averaging about a 50-plus percent lift. So again, it's -- we can't really give you those numbers. We'll probably be able to have that conversation maybe a year from now. But Jonathan, go ahead.

Yes. I mean it's beyond elevated, I would say, in terms of what we've achieved to date. Previously, a lot of the stores, we've actually -- we targeted the older stores first. So I would say the rest of the network isn't in need of such an accelerated refurbishment program, if that makes sense. But we've refurbished most of our very old stores. But quite frankly, we're very much ready-to-wear focused in terms of how they were zoned in terms of the merchandise journey, very little space for accessories and very little space to kind of show the true offer what -- where the brand is today. So it's been, in some ways, as well as hugely elevated upgrade of our retail network. It's also been a bit of a reveal as well to our customers in terms of our products. And I think this has been one of the reasons why the perception of the brand has changed significantly over the last 2 years. In terms of the store sizes -- well, first of all, the location of our stores, generally speaking, we've got very good and always have had very good positioning across most major cities in the world. We're in the right streets. We're in the right locations, and we definitely have the right adjacencies. But I think that certainly, maybe potentially, some of them were a bit too big. We feel that we can be a bit more efficient with our sizes. We feel in a number of cities we only need to be something like 3,000 square meters, so -- 300 square meters. So we feel that we have opportunity being tighter, more efficient and again, drive that productivity to a higher level. And then finally, I think they are much more, as I mentioned earlier, far more elevated in terms of the experience with the customer as well. And it has been a big reveal, particularly, I would really pick out here America where the network needed refurbishing quicker. The stores needed updating. And the response to that has been incredible. We've seen, as you probably saw in the last earnings review, we had an incredible business in America recently. And part of this is really coupled with the fact that we've refurbished so many of these stores and bringing in that newer customer that I highlighted earlier.

Yes. I'd like to just really conclude with what Jonathan said before, the size of the stores has really been an important kind of reset for us. I'd say 3,000 to 4,000 square feet is what we're really focused on today. And for those of you in North America, you'll be able to see quite a few of those, whether it's in Miami, in Bal Harbour. We'll open a new one in Soho here in 2 weeks in the Americana Shopping Center. We're getting ready to refit our store in South Coast Plaza, which is in about that size range. We're getting ready to have a new smaller but better located store in Beverly Hills. All of them are in the same kind of footprint. And most of the stores we're opening in China now are in that footprint as well. So we've really got a rhythm that we can kind of grow and hit with. We've got a handful of bigger stores. We opened in London on Milk Street; and in Paris, which is really our super flagship around the world. And we refitted our flagship sadly before the pandemic in Hong Kong and relocated our significant flagship in Beijing in China World. So we have some that are in that 6,000, 7,000 square foot range, but the majority of them 3,000, 4,000 feet, we can really be super profitable in the stores and drive productivity. And as I said earlier, even our goals that we laid out for you today, we would be very straightforward with you and say those still aren't even good enough. And clearly, as we go beyond the $2 billion mark, which we do believe we will do, these stores then can start to hit some productivity levels that will be much closer to our luxury competitors in the marketplace. Thank you very much for that question.

Great. I just have one follow-up for Tom, actually. You mentioned some of the upside this year would perhaps be invested in marketing. And I was just curious, you raised our guidance for the year by $0.10. Did you beat your first quarter guidance by $0.10? Or did you beat by more and you're actually planning on investing -- reinvesting some of that later in the year?

Sure, Tracy. We just updated the full year guidance, so we did not specify the quarter particularly. However, what we did say was that the sales growth and upside we were seeing in Q1. So we would expect some higher Q1, but it was an update for the full year. And we look forward to talking a lot more about the full year and, of course, the final numbers for the quarter because we're not actually closed. The quarter ended a few days ago, but we still have to work through the normal processes to get to the final numbers. So more to come on that.

Yes. Let me reiterate what I had said earlier. We will invest in additional marketing initiatives across the company. Very significant investments will be added to China. So as we do better, we're going to take off our marketing comp, in particular, in those markets. So we are not looking to have significant earnings upside to what we are forecasting. We'd rather invest that money in the future. And the future really is in fiscal '23 because as you can see, that's quite a big leap for us to go from our current guidance range of $3.80 to $3.90 up to $5 per share. And we have a high degree of confidence in our ability to do that. And we think if we can continue to build and accelerate on this customer desire, and you've heard it across all 3 of our luxury houses. If you take away one thing from this call, take away the smile from Jonathan and Hannah and myself about feeling really good about the product that we're developing, the marketing campaigns that Jonathan announced this morning, Dua Lipa being the face for Versace, a pretty good deal; and again, with Donatella, she's never short on surprises. And Michael, in his -- really, our Jet Set campaigns and we previewed for you what fall looks like from Michael Kors. And again, Michael is still on the mark right now with product and with our marketing initiatives, and we're seeing the consumer resonate with that, and Hannah has got some big surprises that we'll talk to you about in the upcoming earnings call. We're feeling good about where we are. It's taken us a bit of time to get here. But we're kind of here now. And now what we need to do is put our feet on the accelerator. And as the world is reopening, we have a confidence level that we can do that and take -- I wouldn't even say take market share because remember, the luxury business will return to this 5% to 6% growth rate. And when you think about the size of this market and how it's growing, we're just going to participate in that. And yes, we'll take some market share, but the dollars that are on the table here for us to participate in are quite extraordinary. And so we like being in the space that we're in. Thank you very much.

And our last question will come from the line of Mark Altschwager.

I wanted to follow up on Michael Kors. I guess both the sales and the margin goals there are a bit higher than you previously outlined. Your sales closer to $4.4 billion versus $4 billion, I think 25% on margin versus 20% to 25%. So could you just give a bit more color on the build there versus your prior thinking? And specific to margins, how much of that's being driven by growth in Asia? And how is the MKGO and the men's kind of growth goal impacting the overall margin outlook?

Yes. So I'll take the revenue side of it, and I'll turn the margin side over Tom. So we are definitely ahead of what we -- where we thought we'd be when we sat down and kind of gave you our last long-term vision for Michael Kors. And there's 2 things that are happening. First off, the consumer is responding. There's just no question about it. We see it. And what's exciting, and I mentioned this to you on a previous call, is the amount of new customers that we have coming to the brand, and they're younger, many of them have never been a part of the Michael Kors brand. So it's a little bit of what we saw 10 years ago when people were discovering Michael Kors. When you look at things on our watch business, all of a sudden getting very, very strong again. We know that a lot of these customers didn't have a Michael Kors watch. We're looking at our accessories business, and the amount of new customers we have coming into the brand is really exciting. And so we believe that, that is going to continue. We also think the second thing that's happening for us is as this ecosystem grows and as our digital capabilities continue to get better and our data analytics continue to get better, we're able to engage with that customer on multiple products, not just accessories, but on footwear, on ready-to-wear where maybe they were only a handbag customer for us. So we're getting multiple purchases from that customer. And by the way, that's something we're seeing at Versace and Jimmy Choo as well. And our -- again, our data analytics are really getting better and better every single quarter and how we're able achieve additional customer engagement and revenues with that existing customer and new customers. So you have that happening. You have the fact that our signature business is on fire, basically. It's really quite strong. And if anything, right now, unfortunately, we're a little short on inventory mainly because of sell-throughs, and we're trying to catch up. So that's going to be, if anything, I wouldn't call it a headwind, but it's going to be a challenge for us as we go into the back half of the year to try and keep up with the demand. That's a very good place to be because then you're not taking markdowns, you're getting that margin expansion, that AUR growth that we want to continue to see as well as remember, in Michael Kors, we're going to continue to take price increases. We're taking more in the fall. And I announced on the last call, we're taking more in the spring. So prices are going to continue to go up in Michael Kors. The idea around MKGO in men's is very strategic. First off, we don't want to put so much emphasis on our accessories business, that we're trying to push it too hard. And I told you when you asked about previously, the question came up about why is it different now than before? We're not looking to try and oversell accessories. We want them to grow in the mid-single digits. We think that's a very healthy place for them to go, which, by the way, is coming off from a pretty big downturn from where we were at our peak. So again, that's a very steady growth. What we see is, first off, in the men's area, we're completely underdeveloped at Michael Kors as we are at Jimmy Choo. That's not the case at Versace where we have a very strong business. So we see that as a big opportunity. And that business has been growing very, very nicely, strong, strong, strong double digits every single quarter. And so we have some pretty big growth plans around that. You can see that we're going to add approximately $300 million to that business. And again, that's new business, that's not impacting any of the other businesses that we're in today. And we'll either get that by growth of the overall men's market or by taking market share, whichever. But we think we have a pretty good opportunity in the consumer response. And then MKGO is another pretty interesting opportunity for us. We started it as a fun capsule collection in 2019 in the fall not knowing obviously that this interesting or devastating situation we have with the pandemic, which has really taken on a whole active category and made it much more highlighted for people. And active doesn't only mean sports and you're working out, but it means just I want to be in a more casual lifestyle, in a more casual clothing one. And that's working really well for us. Again, it's highly signature-driven. And of course, we've always had a very good sneaker business in the company. So we look at these 2 businesses, and again, we say it's not going to cannibalize our accessories business. They are pretty high-margin businesses for us. We can drive them not only in our stores, but even bigger online for us. It's another way for us to interact with our consumer, engage with them and connect with them on multiple parts of their experience with Michael Kors as a lifestyle brand. And so we feel really good about this. And again, as Tom said, we're looking for mid-single-digit growth for Michael Kors after the upcoming year. And we think that's very strong and steady. And we'll able to be able to maintain that 25% margin target that we have. And we think that's going to really be a very, very sound base for us as we grow going forward. But I'll turn it over to Tom.

Thanks, Mark. And we feel really confident in the 25% number. We're already seeing the brand perform above 20% over the last few quarters of fiscal '21 and the initiatives we have in place to support that further growth and expansion of that. And of course, John mentioned we'll be investing in the business as we are upholding that to that level. So there will be some time as we build up and ramp up to it. But when you look at the gross margin side, we have higher full-price sell-throughs driven by our signature items, SKU, lower SKUs and inventory management and tighter buys as we look forward as well as the pricing that John just spoke about. On the other hand, I would note that the ready-to-wear MKGO in the men's, it does have a lower margin at the gross margin level, but that's built into our expectations and forecasts, and we believe we will add in about absolute dollars and achieve the 25% margin. The other piece is at the SG&A level. We're going to be leveraging sales at Michael Kors as well as Versace and Jimmy Choo. So we grow our revenue in leveraging our fixed costs base and increasing store sales densities. And in addition, Michael Kors is the additional lever of clothing in profitable stores. We are finishing the initial program. In the second program, we talked through of 170 stores that will be complete this year. And as you saw in the prepared slides, we anticipate a Michael Kors fleet in 700 ultimately, which will be a much more profitable fleet as we move forward. So when we look at all those things together, we have great confidence in it. And of course, growth in Asia and e-commerce are also accretive to margins as we move forward.

And I might add just on the retail side, we very much believe in brick-and-mortar. So I don't want you to think that we don't think that that's important. And in fact, a very big part of the CapEx that we talked about will be going to Michael Kors store renovations, in particular, in North America where we see pretty good opportunity in terms of a consumer returning to shopping malls and that kind of traffic getting better. So as we get finished with the Versace store renovation program over the next 2 years, Michael Kors will start to get a lot of those dollars moving towards it. The great news about Jimmy Choo historically, it was really renovated over the past 3 or 4 years. So it's in excellent condition. We have a few that are on the docket for us. But with Jimmy Choo, it remains new store openings. So we very much believe, again, as you've now seen from our e-commerce numbers, we've kind of laid it out for you, retail is still pretty much the 75%, 80% of our business. And we need that to be a very profitable part of our business and a growing part of our business globally. So thank you very much for that question, Mark. So I would now like to conclude by saying, first and foremost, you heard today from Jonathan, you heard today from Hannah, you heard today from myself speaking to the brands. You heard from our founders, you heard From Donatella, you heard from Sandra, you heard from Michael. And you I think saw their enthusiasm. You think -- I think you saw their dedication. I think you saw, heard that they have a great vision for the future growth of all 3 of those luxury houses. And I think you heard from Tom about our financial goals and how confident we are in achieving those goals. So we believe where we sit today is that Capri Holdings has an extremely bright future. We think that our opportunity to grow revenues and to grow earnings long term is very, very good. Additionally, you heard us talk about our debt reduction. We will be down to very, very little debt by the end of next year. That puts us in an excellent position for, number one, share repurchase, which we have said that, that is an option for us on the table; but secondly, for additional luxury acquisitions. I think when we saw and talked about a year ago, I said to you, we would not be really seriously considering any of those until we felt that we had put the building blocks in place for both Versace and Jimmy Choo. While I'm not going to declare victory here yet, we're getting close to that. We're getting close to a point where we think we've got both of these 2 acquisitions in a place where we can really accelerate the growth. And hopefully, really in the next few quarters, we'll be able to indicate and show you that we're able to do that. And therefore, that gives us great confidence in our ability to look at least one additional European luxury acquisition in the future. We will have the capital structure to execute on that. And we also think that we have the management team and resources in place to be able to do that. That is not going to necessarily be something that is going to be the high focus for us, but it is going to be a very significant option that will be on the table if an asset becomes available that we think that will fit inside of our portfolio. The last thing I'd like to say is I want to thank again the 14,000 people around the world, our teams, our communities who are executing for us every day. You heard from the 4 of us today or actually the 7 of us, including Donatella and Sandra and Michael, but really, the people who are executing this are the extraordinary management teams that we have as well as these incredibly dedicated teams. I want to put a special shout out to all the people who are in our stores, the people who are in our distribution centers. They kept the lights on during the pandemic. They put themselves in front of the consumer, and they really delivered. And without their extraordinary efforts and the accomplishments that they were able to have for the company, we wouldn't be able to be sitting here today with the great successes that we're seeing. So I want to thank you all for everything that you did on behalf of Capri and that you continue to do. Lastly, I want to thank everyone for joining us today. We look forward to speaking to you in the not-too-distant future with our first quarter earnings call. And hopefully, we'll have some very good news for you to report on that call. Thank you very much and stay safe. Have a great day.