Capri Holdings (CPRI) risk factors, FY2025 10-K

Risks Related to Macroeconomic Conditions

1. 01The accessories, footwear and apparel industries are heavily influenced by general macroeconomic cycles that affect consumer spending and a prolonged period of depressed consumer spending could have a material adverse effect on our business, results of operations and financial condition

Risks Related to Our Industry

1. 02We may not be able to respond to changing fashion and retail trends in a timely manner, which could have a material adverse effect on our brands, business, results of operations and financial condition
2. 03The markets in which we operate are highly competitive, both within North America and internationally, and increased competition based on a number of factors could cause our profitability and/or gross margins to decline

Risks Related to Our Business

1. 04We face risks associated with operating globally
2. 05Our business is subject to risks associated with importing products, and the imposition or threat of imposition of new or additional duties, tariffs or trade restrictions could have a material adverse effect on our business, results of operations and financial condition
3. 06Our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments
4. 07The departure of key employees or our failure to attract and retain qualified personnel could have a material adverse effect on our business
5. 08Our inability to execute on our standalone growth strategies or cost reduction measures could have a material adverse effect on our business, results of operations and financial condition
6. 09If we are unable to effectively execute our e-commerce business strategy and provide a reliable digital experience for our customers, our reputation and operating results may be harmed
7. 10Our business could suffer as a result of reductions in our wholesale channel and/or consolidations, liquidations, restructurings and other ownership changes by our wholesale partners
8. 11Our business may be subject to increased costs and a decline in profitability as a result of increasing pressure on margins if we misjudge the demand for our products
9. 12We may incur significant goodwill and/or intangible asset impairment charges with respect to one or more of our brands which could have a material adverse impact on our results of operations and financial condition
10. 13Our current and future licensing and joint venture arrangements may not be successful and may make us susceptible to the actions of third-parties over whom we have limited control
11. 14corporate facilities, requiring future minimum lease payments aggregating to $1.4 billion through Fiscal 2030 and approximately $501 million thereafter through Fiscal 2044. Our substantial operating lease obligations could have a material adverse effect on our business, results of operations and financial condition
12. 15We are dependent on a limited number of distribution facilities. If one or more of our distribution facilities experience operational difficulties or becomes inoperable, it could have a material adverse effect on our business, results of operations and financial condition
13. 16We are dependent on third-parties to perform certain outsourced functions
14. 17Increases in the cost of raw materials could increase our production costs and cause our operating results and financial condition to suffer
15. 18We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods
16. 19Our business is exposed to foreign currency exchange rate fluctuations

Risks Related to Information Technology and Data Security

1. 20Privacy breaches and other cybersecurity risks related to our business could negatively affect our reputation, credibility and business
2. 21A material delay or disruption in our information technology systems or e-commerce websites or our failure or inability to upgrade our information technology systems precisely and efficiently could have a material adverse effect on our business, results of operations and financial condition

Risks Related to Environmental, Social and Governance Issues

1. 22Our business is susceptible to the risks associated with climate change and other environmental impacts which could negatively affect our business and operations

Risks Related to Tax, Legal and Regulatory Matters

1. 23Fluctuations in our tax obligations and changes in tax laws, treaties and regulations may have a material adverse impact on our future effective tax rates and results of operations
2. 24We maintain a valuation allowance for our deferred tax assets where future realization is uncertain, and our inability to fully utilize those assets in future periods may have an adverse impact on our financial condition and results of operations
3. 25If we fail to comply with labor laws or collective bargaining agreements, or if our independent manufacturing contractors fail to use acceptable, ethical business practices, our business and reputation could suffer
4. 26We may be unable to protect our trademarks, copyrights and other intellectual property rights, and others may allege that we infringe upon their intellectual property rights
5. 27We self-insure certain risks and may be impacted by unfavorable claims experience
6. 28We are subject to various proceedings, lawsuits, disputes and claims in the ordinary course of business which could have an adverse impact on our business, financial condition and results of operations
7. 29We are subject to shareholder litigation relating to the terminated Merger

Risks Related to Our Debt

1. 30We have incurred a substantial amount of indebtedness, which could adversely affect our financial condition and restrict our ability to incur additional indebtedness or engage in additional transactions
2. 31We may be unable to meet financial covenants in our indebtedness agreements which could result in an event of default and restrictive covenants in such agreements may restrict our ability to pursue our business strategies
3. 32which collectively may limit our ability to engage in acts that may be in our long-term best interest
4. 33If one or more of our counterparty financial institutions default on their obligations to us, we may incur significant losses or our financial liquidity could be adversely impacted

Risks Related to Our Ordinary Shares

1. 34Our share price may periodically fluctuate based on forward-looking expectations regarding our financial performance
2. 35If we are unable to conduct share repurchases at expected levels, our share price could be adversely affected
3. 36Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting, which could harm our business and cause a decline in the price of our ordinary shares
4. 37Rights of shareholders under British Virgin Islands law differ from those under United States law, and, accordingly, our shareholders may have fewer protections
5. 38The laws of the British Virgin Islands provide limited protection for minority shareholders, so minority shareholders will have limited or no recourse if they are dissatisfied with the conduct of our affairs
6. 39It may be difficult to enforce judgments against us or our executive officers and directors in jurisdictions outside the United States
7. 40British Virgin Islands companies may not be able to initiate shareholder derivative actions, thereby depriving shareholders of one avenue to protect their interests

Risks Related to the Divestiture

1. 41The pendency of the proposed sale of Versace or the failure to complete the proposed sale could adversely affect our business and the market price of our ordinary shares