MICHAEL KORS HOLDINGS LTD, 10-Q filed on 2/5/2015
Quarterly Report
Document and Entity Information
9 Months Ended
Dec. 27, 2014
Feb. 2, 2015
Document Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Dec. 27, 2014 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q3 
 
Trading Symbol
KORS 
 
Entity Registrant Name
MICHAEL KORS HOLDINGS LTD 
 
Entity Central Index Key
0001530721 
 
Current Fiscal Year End Date
--03-28 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
200,755,876 
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Mar. 29, 2014
Current assets
 
 
Cash and cash equivalents
$ 949,846 
$ 955,145 
Receivables, net
364,070 
314,055 
Inventories
537,501 
426,938 
Deferred tax assets
21,555 
30,539 
Prepaid expenses and other current assets
110,347 
50,492 
Total current assets
1,983,319 
1,777,169 
Property and equipment, net
532,304 
350,678 
Intangible assets, net
63,644 
48,034 
Goodwill
14,005 
14,005 
Deferred tax assets
3,740 
3,662 
Other assets
33,576 
23,425 
Total assets
2,630,588 
2,216,973 
Current liabilities
 
 
Accounts payable
175,197 
131,953 
Accrued payroll and payroll related expenses
50,642 
54,703 
Accrued income taxes
29,757 
47,385 
Accrued expenses and other current liabilities
105,726 
74,329 
Total current liabilities
361,322 
308,370 
Deferred rent
94,926 
76,785 
Deferred tax liabilities
145 
5,887 
Other long-term liabilities
22,710 
19,800 
Total liabilities
479,103 
410,842 
Commitments and contingencies
   
   
Shareholders' equity
 
 
Ordinary shares, no par value; 650,000,000 shares authorized, and 201,029,249 shares issued and outstanding at December 27, 2014, and 204,291,345 shares issued and outstanding at March 29, 2014
Treasury shares, at cost (5,139,365 shares at December 27, 2014, and 29,765 at March 29, 2014)
(405,702)
(2,447)
Additional paid-in capital
610,938 
527,213 
Accumulated other comprehensive loss
(39,870)
(6,373)
Retained earnings
1,986,119 
1,287,738 
Total shareholders' equity
2,151,485 
1,806,131 
Total liabilities and shareholders' equity
$ 2,630,588 
$ 2,216,973 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Dec. 27, 2014
Mar. 29, 2014
Ordinary shares, par value
   
   
Ordinary shares, shares authorized
650,000,000 
650,000,000 
Ordinary shares, shares issued
201,029,249 
204,291,345 
Ordinary shares, shares outstanding
201,029,249 
204,291,345 
Treasury shares, at cost
5,139,365 
29,765 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (USD $)
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Net sales
$ 1,263,226,000 
$ 964,787,000 
$ 3,159,932,000 
$ 2,288,479,000 
Licensing revenue
51,500,000 
47,442,000 
130,553,000 
104,912,000 
Total revenue
1,314,726,000 
1,012,229,000 
3,290,485,000 
2,393,391,000 
Cost of goods sold
514,583,000 
392,731,000 
1,273,682,000 
926,747,000 
Gross profit
800,143,000 
619,498,000 
2,016,803,000 
1,466,644,000 
Selling, general and administrative expenses
344,174,000 
254,603,000 
915,443,000 
648,695,000 
Depreciation and amortization
37,492,000 
21,655,000 
100,554,000 
55,687,000 
Total operating expenses
381,666,000 
276,258,000 
1,015,997,000 
704,382,000 
Income from operations
418,477,000 
343,240,000 
1,000,806,000 
762,262,000 
Other expense (income)
150,000 
(1,396,000)
Interest expense, net
116,000 
109,000 
147,000 
409,000 
Foreign currency loss
1,201,000 
3,000 
4,946,000 
279,000 
Income before provision for income taxes
417,010,000 
343,128,000 
997,109,000 
761,574,000 
Provision for income taxes
113,335,000 
113,485,000 
298,728,000 
261,127,000 
Net income
303,675,000 
229,643,000 
698,381,000 
500,447,000 
Weighted average ordinary shares outstanding:
 
 
 
 
Basic
202,668,541 
203,175,380 
203,627,688 
202,314,813 
Diluted
205,647,816 
206,088,062 
206,752,103 
205,192,959 
Net income per ordinary share:
 
 
 
 
Basic
$ 1.50 
$ 1.13 
$ 3.43 
$ 2.47 
Diluted
$ 1.48 
$ 1.11 
$ 3.38 
$ 2.44 
Statements of Comprehensive Income:
 
 
 
 
Net income
303,675,000 
229,643,000 
698,381,000 
500,447,000 
Foreign currency translation adjustments
(22,220,000)
(1,745,000)
(46,824,000)
3,228,000 
Net realized and unrealized gains (losses) on derivatives
2,769,000 
(496,000)
13,327,000 
(3,709,000)
Comprehensive income
$ 284,224,000 
$ 227,402,000 
$ 664,884,000 
$ 499,966,000 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $)
In Thousands, except Share data
Total
USD ($)
Ordinary Shares
Additional Paid-in Capital
USD ($)
Treasury Shares
USD ($)
Accumulated Other Comprehensive Loss
USD ($)
Retained Earnings
USD ($)
Beginning Balance at Mar. 29, 2014
$ 1,806,131 
 
$ 527,213 
$ (2,447)
$ (6,373)
$ 1,287,738 
Beginning Balance (in shares) at Mar. 29, 2014
 
204,261,580 
 
 
 
 
Net income
698,381 
 
 
 
 
698,381 
Foreign currency translation adjustment
(46,824)
 
 
 
(46,824)
 
Net unrealized gain on derivatives (net of taxes of $1.7 million)
13,327 
 
 
 
13,327 
 
Total comprehensive income
664,884 
 
 
 
 
 
Issuance of restricted shares
 
415,162 
 
 
 
 
Exercise of employee share options (in shares)
1,462,107 
1,462,107 
 
 
 
 
Exercise of employee share options
10,060 
 
10,060 
 
 
 
Equity compensation expense
33,445 
 
33,445 
 
 
 
Tax benefits on exercise of share options
40,220 
 
40,220 
 
 
 
Purchase of Treasury Shares
 
(5,109,600)
 
 
 
 
Purchase of Treasury Shares
(403,255)
 
 
(403,255)
 
 
Ending Balance at Dec. 27, 2014
$ 2,151,485 
 
$ 610,938 
$ (405,702)
$ (39,870)
$ 1,986,119 
Ending Balance (in shares) at Dec. 27, 2014
 
201,029,249 
 
 
 
 
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Dec. 27, 2014
Net unrealized gain on derivatives, taxes
$ 1.7 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Cash flows from operating activities
 
 
Net income
$ 698,381 
$ 500,447 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
100,554 
55,687 
Loss on disposal of fixed assets
1,802 
2,135 
Unrealized foreign exchange loss
165 
279 
Loss (income) earned on joint venture
242 
(125)
Amortization of deferred financing costs
560 
560 
Amortization of deferred rent
3,933 
5,116 
Deferred income taxes
(8,636)
2,507 
Equity compensation expense
33,445 
20,919 
Tax benefits on exercise of share options
(40,220)
(44,731)
Change in assets and liabilities:
 
 
Receivables, net
(59,483)
(83,994)
Inventories
(125,251)
(162,230)
Prepaid expenses and other current assets
(42,340)
(5,250)
Other assets
(8,993)
(6,063)
Accounts payable
46,491 
62,028 
Accrued expenses and other current liabilities
52,118 
84,824 
Other long-term liabilities
19,297 
17,734 
Net cash provided by operating activities
672,065 
449,843 
Cash flows from investing activities
 
 
Capital expenditures
(282,733)
(126,942)
Investment in joint venture
(2,940)
 
Purchase of intangible assets
(26,150)
(21,962)
Net cash used in investing activities
(311,823)
(148,904)
Cash flows from financing activities
 
 
Repayments of borrowings under revolving credit agreement
 
(21,120)
Borrowings under revolving credit agreement
 
21,120 
Exercise of employee share options
10,060 
13,535 
Purchase of Treasury Shares
(403,255)
(2,447)
Tax benefits on exercise of share options
40,220 
44,731 
Payment of deferred financing costs
 
(176)
Net cash (used in) provided by financing activities
(352,975)
55,643 
Effect of exchange rate changes on cash and cash equivalents
(12,566)
(752)
Net (decrease) increase in cash and cash equivalents
(5,299)
355,830 
Beginning of period
955,145 
472,511 
End of period
949,846 
828,341 
Supplemental disclosures of cash flow information
 
 
Cash paid for interest
537 
513 
Cash paid for income taxes
315,608 
206,552 
Supplemental disclosure of noncash investing and financing activities
 
 
Accrued capital expenditures
$ 25,790 
$ 18,635 
Business and Basis of Presentation
Business and Basis of Presentation

1. Business and Basis of Presentation

Michael Kors Holdings Limited (“MKHL,” and together with its subsidiaries, the “Company”) was incorporated in the British Virgin Islands (“BVI”) on December 13, 2002. The Company is a leading designer, marketer, distributor and retailer of branded women’s apparel and accessories and men’s apparel bearing the Michael Kors tradename and related trademarks “MICHAEL KORS,” “MICHAEL MICHAEL KORS,” and various other related trademarks and logos. The Company’s business consists of retail, wholesale and licensing segments. Retail operations consist of collection stores, lifestyle stores, including concessions and outlet stores located primarily in the United States, Canada, Europe and Japan. Wholesale revenues are principally derived from major department and specialty stores located throughout the United States, Canada and Europe. The Company licenses its trademarks on products such as fragrances, cosmetics, eyewear, leather goods, jewelry, watches, coats, men’s suits, swimwear, furs and ties.

The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The consolidated financial statements as of December 27, 2014, and for the three and nine months ended December 27, 2014 and December 28, 2013, are unaudited. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The interim financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation in conformity with GAAP. The interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended March 29, 2014, as filed with the Securities and Exchange Commission on May 28, 2014, in the Company’s Annual Report on Form 10-K. The results of operations for the interim periods should not be considered indicative of results to be expected for the full fiscal year.

The Company utilizes a 52 to 53 week fiscal year ending on the Saturday closest to March 31. As such, the term “Fiscal Year” or “Fiscal” refers to the 52-week or 53-week period, ending on that day. The results for the three and nine months ended December 27, 2014 and December 28, 2013, are based on a 13-week and 39-week period, respectively.

Share Repurchase Program
Share Repurchase Program

2. Share Repurchase Program

On November 14, 2014, the Company entered into a $355.0 million accelerated share repurchase program (the “ASR program”) with a major financial institution (the “ASR Counterparty”) to repurchase the Company’s ordinary shares. Under the ASR program, the Company paid $355.0 million to the ASR Counterparty and received 4,437,516 of its ordinary shares from the ASR Counterparty, which represents 100 percent of the shares expected to be purchased pursuant to the ASR program, based on an initial share price determination. However, additional shares may be delivered to the Company by January 29, 2015 (the settlement date), subject to the provisions of the ASR program, should the share price decline from that price, limited to a stated share price “floor”, and would not require any additional cash outlay by the Company. The total number of shares to be repurchased/acquired will be determined on final settlement, with any additional shares reacquired being based generally on the volume-weighted average price of the Company’s ordinary shares, less a discount, during the repurchase period, subject to aforementioned price floor. The ASR program is accounted for as treasury stock repurchase transactions, reducing the weighted average number of basic and diluted ordinary shares outstanding by the 4,437,516 shares initially repurchased, and as a forward contract indexed to the Company’s own ordinary shares for the future settlement provisions. The forward contract is accounted for as an equity instrument. In addition to shares purchased under the ASR, the Company, through open market transactions, purchased an additional 631,297 shares, under its’ current share-repurchase program.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

3. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. The most significant assumptions and estimates involved in preparing the financial statements include allowances for customer deductions, sales returns, sales discounts and doubtful accounts, estimates of inventory recovery, the valuation of share-based compensation, valuation of deferred taxes and the estimated useful lives used for amortization and depreciation of intangible assets and property and equipment. Actual results could differ from those estimates.

Store Pre-opening Costs

Costs associated with the opening of new retail stores and start up activities are expensed as incurred.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and amortization (carrying value). Depreciation is provided on a straight-line basis over the expected remaining useful lives of the related assets. Equipment, furniture and fixtures are depreciated over five to seven years, computer hardware and software are depreciated over three to five years, and in-store shops are amortized over three to four years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated remaining useful lives of the related assets or remaining lease term. The Company includes all amortization and depreciation expense as a component of total operating expenses, as the underlying long-lived assets are not directly or indirectly related to bringing the Company’s products to their existing location and condition.

Derivative Financial Instruments

The Company uses forward currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain of its transactions. The Company in its normal course of business enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these forward currency contracts to hedge the Company’s cash flows, as they relate to foreign currency transactions, of which certain of these contracts are designated as hedges for accounting purposes, while others are undesignated hedges for hedge accounting purposes. These derivative instruments are recorded on the Company’s consolidated balance sheets at fair value, regardless of if they are designated or undesignated as hedges.

The Company designates the majority of these forward currency contracts as hedges for hedge accounting purposes which are related to the purchase of inventory. Accordingly, the effective portion of changes in the fair value for contracts entered into during the nine months ended December 27, 2014, designated as hedges, are recorded in equity as a component of accumulated other comprehensive income, and to cost of goods sold for any portion of those contracts deemed ineffective. The Company will continue to record changes in the fair value of hedge designated contracts in this manner until their maturity, where the unrealized gain or loss will be recognized into earnings in that period. For those contracts that are entered into that are not designated as hedges, changes in the fair value, as of each balance sheet date and upon maturity, are recorded in other income, within the Company’s consolidated statements of operations. During the nine months ended December 27, 2014, a gain of approximately $0.2 million related to the change in fair value of these contracts was recorded in other income. In addition, the net unrealized gain related to contracts designated as hedges for $13.3 million, was charged to equity as a component of accumulated other comprehensive income during the nine months ended December 27, 2014. For the nine months ended December 27, 2014, amounts related to the ineffectiveness of these contracts were de minimis. The following table details the fair value of these contracts as of December 27, 2014, and March 29, 2014 (in thousands):

 

     December 27,
2014
    March 29,
2014
 

Prepaid expenses and other current assets

   $ 13,892      $ 12   

Accrued expenses and other current liabilities

   $ (476   $ (1,875

The Company expects the entirety of these balances to be reclassified into earnings within the next twelve months, subject to changes in the fair value of these contracts up to such time the related purchase of the underlying hedged item is completed.

The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In attempts to mitigate counterparty credit risk, the Company enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign transaction they are intended to hedge. The notional amount of these contracts outstanding at December 27, 2014 was approximately $176.2 million, which was comprised predominately of those designated as hedges.

 

Net Income Per Share

The Company’s basic net income per share excludes the dilutive effect of share options and units, as well as unvested restricted shares. It is based upon the weighted average number of ordinary shares outstanding during the period divided into net income.

Diluted net income per share reflects the potential dilution that would occur if share option grants or any other dilutive equity instruments were exercised or converted into ordinary shares. These equity instruments are included as potential dilutive securities to the extent they are dilutive under the treasury stock method for the applicable periods.

The components of the calculation of basic net income per ordinary share and diluted net income per ordinary share are as follows (in thousands except share and per share data):

 

     Three Months Ended      Nine Months Ended  
     December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Numerator:

           

Net Income

   $ 303,675       $ 229,643       $ 698,381       $ 500,447   

Denominator:

           

Basic weighted average ordinary shares

     202,668,541        203,175,380        203,627,688        202,314,813  

Weighted average dilutive share equivalents:

           

Share options and restricted shares/units

     2,979,275        2,912,682        3,124,415        2,878,146  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average ordinary shares

     205,647,816        206,088,062        206,752,103        205,192,959  

Basic net income per ordinary share

   $ 1.50       $ 1.13       $ 3.43       $ 2.47   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted net income per ordinary share

   $ 1.48       $ 1.11       $ 3.38       $ 2.44   
  

 

 

    

 

 

    

 

 

    

 

 

 

Share equivalents for the three and nine months ended December 27, 2014 for 284,344 shares and 185,261 shares, respectively, have been excluded from the above calculation as they were anti-dilutive. Share equivalents for the three and nine months ended December 28, 2013 for 22,283 shares and 57,505 shares, respectively, have been excluded from the above calculation as they were anti-dilutive.

Recent Accounting Pronouncements—The Company has considered all new accounting pronouncements and, and with the exception of the below, has concluded that there are no new pronouncements that have a material impact on results of operations, financial condition, or cash flows, based on current information.

In May, 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers, which amends how an entity is currently required to recognize revenue from contracts with its customers. The ASU will replace the existing revenue recognition guidance in GAAP when it becomes effective for entities in January 2017. Early application is not permitted. The Company is currently evaluating the impact that ASU 2014-09 will have on its consolidated financial statements and related disclosures.

Receivables, net
Receivables, net

4. Receivables, net

Receivables, net consist of (in thousands):

 

     December 27,
2014
    March 29,
2014
 

Trade receivables:

    

Credit risk assumed by factors/insured

   $ 317,559      $ 261,900   

Credit risk retained by Company

     116,415        109,094   

Receivables due from licensees

     37,291        11,302   
  

 

 

   

 

 

 
     471,265        382,296   

Less allowances:

     (107,195     (68,241
  

 

 

   

 

 

 
   $ 364,070      $ 314,055   
  

 

 

   

 

 

 

The Company has historically assigned a substantial portion of its trade receivables to factors in the United States and Europe whereby the factors assumed credit risk with respect to such receivables assigned. Under the factor agreements, factors bear the risk of loss from the financial inability of the customer to pay the trade receivable when due, up to such amounts as accepted by the factor; but not the risk of non-payment of such trade receivable for any other reason. Beginning in July 2012, the Company assumed responsibility for a large portion of previously factored accounts receivable balances the majority of which were insured at December 27, 2014. The Company provides an allowance for such non-payment risk at the time of sale, which is recorded as an offset to revenue.

Receivables are presented net of allowances for sales returns, discounts, markdowns, operational chargebacks and doubtful accounts. Sales returns are determined based on an evaluation of current market conditions and historical returns experience. Discounts are based on open invoices where trade discounts have been extended to customers. Markdowns are based on retail sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in net sales.

The allowance for doubtful accounts is determined through analysis of periodic aging of receivables for which credit risk is not assumed by the factors, or which are not covered under insurance, and assessments of collectability based on an evaluation of historic and anticipated trends, the financial conditions of the Company’s customers and the impact of general economic conditions. The past due status of a receivable is based on its contractual terms. Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered. Allowances for doubtful accounts were $1.1 million and $1.5 million, at December 27, 2014 and March 29, 2014, respectively.

Property and Equipment, net
Property and Equipment, net

5. Property and Equipment, net

Property and equipment, net consist of (in thousands):

 

     December 27,
2014
    March 29,
2014
 

Furniture and fixtures

   $ 149,405      $ 108,757   

Equipment

     70,719        31,683   

Computer equipment and software

     94,788        50,646   

In-store shops

     176,105        123,637   

Leasehold improvements

     271,773        216,451   
  

 

 

   

 

 

 
     762,790        531,174   

Less: accumulated depreciation and amortization

     (310,623     (234,381
  

 

 

   

 

 

 
     452,167        296,793   

Construction-in-progress

     80,137        53,885   
  

 

 

   

 

 

 
   $ 532,304      $ 350,678   
  

 

 

   

 

 

 

Depreciation and amortization of property and equipment for the three and nine months ended December 27, 2014, was $35.7 million and $95.2 million, respectively, and for the three and nine months ended December 28, 2013, was $20.7 million and $53.8 million, respectively.

Intangible Assets and Goodwill
Intangible Assets and Goodwill

6. Intangible Assets and Goodwill

The following table discloses the carrying values of intangible assets and goodwill (in thousands):

 

     December 27, 2014      March 29, 2014  
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net      Gross
Carrying
Amount
     Accumulated
Amortization
     Net  

Trademarks

   $ 23,000       $ 13,707       $ 9,293       $ 23,000       $ 12,845       $ 10,155   

Lease Rights

     62,112         7,761         54,351         41,748         3,869         37,879   

Goodwill

     14,005         —           14,005         14,005         —           14,005   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 99,117       $ 21,468       $ 77,649       $ 78,753       $ 16,714       $ 62,039   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The trademarks relate to the Company’s brand name and are amortized over twenty years. Lease rights are amortized over the respective terms of the underlying lease. Amortization expense was $1.8 million and $5.3 million, respectively, for the three and nine months ended December 27, 2014, and $1.0 million and $1.9 million, respectively, for the three and nine months ended December 28, 2013.

Goodwill is not amortized but will be evaluated for impairment in the last quarter of Fiscal 2015, or whenever impairment indicators exist. There were no charges related to the impairment of goodwill in the periods presented.

 

Estimated amortization expense for each of the next five years is as follows (in thousands):

 

Remainder of Fiscal 2015

   $ 2,005   

Fiscal 2016

     9,825   

Fiscal 2017

     9,824   

Fiscal 2018

     9,790   

Fiscal 2019

     8,862   

Thereafter

     23,338   
  

 

 

 
   $ 63,644   
  

 

 

 
Credit Facilities
Credit Facilities

7. Credit Facilities

Senior Unsecured Revolving Credit Facility

On February 8, 2013, the Company entered into a senior unsecured credit facility (“2013 Credit Facility”). Pursuant to the agreement the 2013 Credit Facility provides for up to $200.0 million of borrowings, and expires on February 8, 2018. The agreement also provides for loans and letters of credit to the Company’s European subsidiaries of up to $100.0 million. The 2013 Credit Facility contains financial covenants such as requiring an adjusted leverage ratio of 3.5 to 1.0 (with the ratio being total consolidated indebtedness plus 8.0 times consolidated rent expense to EBITDA plus consolidated rent expense) and a fixed charge coverage ratio of 2.0 to 1.0 (with the ratio being EBITDA plus consolidated rent expense to the sum of fixed charges plus consolidated rent expense), restricts and limits additional indebtedness, and restricts the incurrence of additional liens and cash dividends. As of December 27, 2014, the Company was in compliance with all covenants related to this agreement.

Borrowings under the 2013 Credit Facility accrue interest at the rate per annum announced from time to time by the agent at a rate based on the rates applicable for deposits in the London interbank market for U.S. Dollars or the applicable currency in which the loans are made (the “Adjusted LIBOR”) plus an applicable margin. The applicable margin may range from 1.25% to 1.75%, and is based, or dependent upon, a particular threshold related to the adjusted leverage ratio calculated during the period of borrowing. The 2013 Credit Facility requires an annual facility fee of $0.1 million, and an annual commitment fee of 0.25% to 0.35% on the unused portion of the available credit under the facility.

As of December 27, 2014, there were no amounts outstanding under the 2013 Credit Facility, and there were no amounts borrowed during the nine months ended December 27, 2014. The amount available for future borrowings under this agreement was $188.6 million at December 27, 2014. At December 27, 2014, there were stand-by letters of credit of $11.4 million.

Commitments and Contingencies
Commitments and Contingencies

8. Commitments and Contingencies

In the ordinary course of business, the Company is party to various legal proceedings and claims. Although the outcome of such items cannot be determined with certainty, the Company’s management does not believe that the outcome of all pending legal proceedings in the aggregate will have a material adverse effect on its cash flow, results of operations or financial position.

Fair Value of Financial Instruments
Fair Value of Financial Instruments

9. Fair Value of Financial Instruments

Financial assets and liabilities are measured at fair value using a valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date.

 

Level 2 – Valuations based on quoted inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The Company has historically entered into forward exchange contracts to hedge the foreign currency exposure for certain inventory purchases from its manufacturers in Europe and Asia, as well as commitments for certain services. The forward contracts that are used for these purposes mature in twelve months or less, consistent with the related planned purchases or services. The Company attempts to hedge the majority of its total anticipated European and Asian purchase and service contracts. Realized gains and losses applicable to derivatives used for inventory purchases are recognized in cost of sales, and those applicable to other services are recognized in selling, general and administrative expenses (see Note 3, Summary of Significant Accounting Policies- Derivative Financial Instruments, for further detail regarding hedge accounting treatment as it relates to gains and losses). At December 27, 2014, the fair value of the Company’s foreign currency forward contracts, the Company’s only derivatives, were valued using broker quotations which were calculations derived from observable market information: the applicable currency forward rates at the balance sheet date and those forward rates particular to the contract at inception. The Company makes no adjustments to these broker obtained quotes or prices, but does assess the credit risk of the counterparty and would adjust the provided valuations for counterparty credit risk when appropriate. The fair value of the forward contracts are included in prepaid expenses and other current assets, and in accrued expenses and other current liabilities in the consolidated balance sheets, depending on whether they represent assets or (liabilities) to the Company. All contracts are categorized in Level 2 of the fair value hierarchy as shown in the following table:

 

     Total     Fair value at December 27, 2014, using:  
(In thousands)      Quoted prices in
active markets for
identical assets
(Level 1)
     Significant other
observable inputs
(Level 2)
    Significant
unobservable
inputs
(Level 3)
 

Foreign currency forward contracts- Euro to U.S. Dollar

   $ 13,604      $ —         $ 13,604      $ —     

Foreign currency forward contracts- Canadian Dollar to U.S. Dollar

     288        —           288        —     

Foreign currency forward contracts- U.S. Dollar to Euro

     (476     —           (476     —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ 13,416      $ —         $ 13,416      $ —     
  

 

 

   

 

 

    

 

 

   

 

 

 

The Company’s cash and cash equivalents, accounts receivable and accounts payable, are recorded at carrying value, which approximates fair value. Borrowings under the Credit Facility are recorded at face value as the fair value of the Credit Facility is synonymous with its recorded value as it is a short-term debt facility due to its revolving nature.

Other Comprehensive Income- Hedging Instruments
Other Comprehensive Income- Hedging Instruments

10. Other Comprehensive Income- Hedging Instruments

The Company designates certain forward currency exchange contracts as hedges for hedge accounting purposes (see Note 3, Summary of Significant Accounting Policies- Derivative Financial Instruments). The Company employs forward currency contracts to hedge the Company’s exposures, as they relate to certain forecasted inventory purchases in foreign currencies, and as such are regarded as cash flow hedges up to such time the forecasted transaction occurs.

Changes in the fair value of the effective portion of these contracts are recorded in equity as a component of accumulated other comprehensive income, as of each balance sheet date, and are reclassified from accumulated other comprehensive income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of sales within the Company’s consolidated statements of operations.

 

The following table summarizes the impact of the effective portion of gains and losses of the forward contracts designated as hedges for the three and nine months ended December 27, 2014 (in thousands):

 

     Three Months Ended December 27, 2014      Nine Months Ended December 27, 2014  
     Pre-Tax
Gain
Recognized
in OCI
(Effective Portion)
     Gain
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
     Pre-Tax
Gain
Recognized
in OCI
(Effective Portion)
     Gain
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
 

Forward currency exchange contracts

   $  3,139       $  1,956       $  15,034       $  573   

The following table summarizes the impact of the effective portion of gains and losses of the forward contracts designated as hedges for the three and nine months ended December 28, 2013:

 

     Three Months Ended December 28, 2013      Nine Months Ended December 28, 2013  
     Pre-Tax
(Loss)
Recognized
in OCI
(Effective Portion)
     (Loss)
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
     Pre-Tax
(Loss)
Recognized
in OCI
(Effective Portion)
     Gain
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
 

Forward currency exchange contracts

   $ (695    $ (422    $ (4,208    $ 133   
Share-Based Compensation
Share-Based Compensation

11. Share-Based Compensation

The Company issues equity grants to certain employees and directors of the Company at the discretion of the Company’s Compensation Committee. The Company has two equity plans, one adopted in Fiscal 2008, the Michael Kors (USA), Inc. Stock Option Plan (as amended and restated, the “2008 Plan”), and the other adopted in the third fiscal quarter of Fiscal 2012, the Michael Kors Holdings Limited Omnibus Incentive Plan (the “2012 Plan”). The 2008 Plan provided for the granting of share options only and was authorized to issue up to 23,980,823 ordinary shares. Subsequent to the adoption of the 2012 Plan, there were no shares available for the granting of equity awards under the 2008 Plan. The 2012 Plan allows for the granting of share options, restricted shares and restricted share units, and other equity awards, and authorizes a total issuance of up to 15,246,000 ordinary shares. At December 27, 2014, there were 10,642,111 ordinary shares available for the granting of equity awards under the 2012 Plan. Option grants issued from the 2008 Plan generally expire ten years from the date of the grant, and those issued under the 2012 Plan generally expire seven years from the date of the grant.

Share Options

Share options are generally exercisable at no less than the fair market value on the date of grant. The Company has issued two types of option grants, those that vest based on the attainment of a performance target and those that vest based on the passage of time. Performance based share options may vest based upon the attainment of one of two performance measures. One performance measure is an individual performance target, which is based upon certain performance targets unique to the individual grantee, and the other measure is a company-wide performance target, which is based on a cumulative minimum growth requirement in consolidated net equity. The individual performance target vests 20% of the total option grant each year the target is satisfied. The individual has ten years in which to achieve five individual performance vesting tranches. The company-wide performance target must be achieved over the ten-year term. Performance is measured at the end of the term, and any unvested options under the grant vest if the target is achieved. The Company-wide performance target is established at the time of the grant. The target metrics underlying individual performance vesting requirements are established for each recipient each year up until such time as the grant is fully vested. Options subject to time based vesting requirements generally become vested in four equal increments on each of the first, second, third and fourth anniversaries of the date on which such options were awarded.

 

The following table summarizes the share option activity during the nine months ended December 27, 2014, and information about options outstanding at December 27, 2014:

 

     Number of
Options
    Weighted
Average
Exercise price
     Weighted
Average
Remaining
Contractual
Life (years)
     Aggregate
Intrinsic
Value
(in thousands)
 

Outstanding at March 29, 2014

     8,377,928      $ 13.69         

Granted

     795,255      $ 90.95         

Exercised

     (1,462,107   $ 6.88         

Canceled/forfeited

     (177,845   $ 29.14         
  

 

 

         

Outstanding at December 27, 2014

     7,533,231      $ 22.79         5.59       $ 407,380   
  

 

 

   

 

 

    

 

 

    

 

 

 

Vested or expected to vest at December 27, 2014

     7,382,566      $ 22.79         5.59      
  

 

 

   

 

 

    

 

 

    

 

 

 

Vested and exercisable at December 27, 2014

     3,504,844      $ 11.92         5.17       $ 221,824   
  

 

 

   

 

 

    

 

 

    

 

 

 

There were 4,028,387 non-vested and 3,504,844 vested outstanding options at December 27, 2014. The total intrinsic value of options exercised during the nine months ended December 27, 2014 was $114.4 million, and the cash received from options exercised during this period was $10.1 million. The total intrinsic value of options exercised during the nine months ended December 28, 2013 was $133.3 million, and the cash received from options exercised during this period was $13.5 million. As of December 27, 2014, the remaining unrecognized share-based compensation expense for non-vested share options to be expensed in future periods is $35.1 million, and the related weighted-average period over which it is expected to be recognized is approximately 2.95 years.

The weighted average grant date fair value for options granted during the three and nine months ended December 27, 2014 was $22.25 and $28.09, respectively, and for the three and nine months ended December 28, 2013 was $26.36 and $24.94, respectively. The following table represents assumptions used to estimate the fair value of options:

 

     Three Months Ended     Nine Months Ended  
     December 27,
2014
    December 28,
2013
    December 27,
2014
    December 28,
2013
 

Expected dividend yield

     0.0     0.0     0.0     0.0

Volatility factor

     32.8     38.4     33.2     46.1

Weighted average risk-free interest rate

     1.5     1.3     1.5     1.0

Expected life of option

     4.75 years        4.75 years        4.75 years        4.75 years   

Restricted Shares and Restricted Share Units

The Company grants restricted shares and restricted share units at the fair market value at the date of the grant. Expense for restricted share grants is calculated based on the intrinsic value of the grant, which is the difference between the cost to the recipient and the fair market value of the underlying share (grants are generally issued at no cost to the recipient). Expense is recognized ratably over the vesting period which is generally three to four years from the date of the grant. Similar to share options, restricted share grants generally vest in four equal increments on each of the first, second, third and fourth anniversaries of the date on which such grants were awarded. With respect to restricted share units, there are two types: performance based vesting grants and time based vesting grants. Share units whose vesting is based on meeting certain performance criteria, vest in full, three years from their anniversary date only if certain cumulative performance targets are met at the end of the three year period. Expense related to these grants is recognized ratably over the three year performance period subject to the probability of the attainment of the related performance targets. Share units that vest based on time generally vest in full either on the first or fourth anniversary of the date of the grant, and are expensed accordingly.

 

The following table summarizes restricted shares under the 2012 Plan as of December 27, 2014 and changes during the fiscal period then ended:

 

     Number of Unvested
Restricted Shares
    Weighted
Average Grant
Date Fair Value
 

Unvested at March 29, 2014

     657,853      $ 38.38   

Granted

     433,126      $ 90.57   

Vested

     (212,853   $ 32.12   

Canceled/forfeited

     (29,734   $ 68.37   
  

 

 

   

Unvested at December 27, 2014

     848,392      $ 65.68   
  

 

 

   

The total fair value of restricted shares vested during the nine months ended December 27, 2014 was $18.7 million. The total fair value of restricted shares vested during the nine months ended December 28, 2013 was $14.0 million. As of December 27, 2014, the remaining unrecognized share-based compensation expense for non-vested restricted share grants to be expensed in future periods is $45.7 million, and the related weighted-average period over which it is expected to be recognized is approximately 3.05 years.

 

The following table summarizes restricted share units under the 2012 Plan as of December 27, 2014 and changes during the fiscal period then ended:

 

     Number of Unvested
Restricted Units
    Weighted
Average Grant
Date Fair Value
 

Unvested at March 29, 2014

     199,779      $ 58.31   

Granted

     245,591      $ 81.61   

Vested

     (11,770   $ 30.04   

Canceled/forfeited

     (10,846   $ 62.24   
  

 

 

   

Unvested at December 27, 2014

     422,754      $ 73.25   
  

 

 

   

As of December 27, 2014, the remaining unrecognized share-based compensation expense for non-vested restricted share units to be expensed in future periods is $19.4 million, and the related weighted-average period over which it is expected to be recognized is approximately 2.06 years.

Compensation expense attributable to share-based compensation for the three and nine months ended December 27, 2014 was approximately $12.1 million and $33.4 million, respectively. Compensation expense attributable to share-based compensation for the three and nine months ended December 28, 2013 was approximately $7.8 million and $20.9 million, respectively. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on its historical forfeiture rate since the inception of stock option granting. The estimated value of future forfeitures for equity grants as of December 27, 2014 is approximately $1.4 million.

Segment Information
Segment Information

12. Segment Information

The Company operates its business through three operating segments—Retail, Wholesale and Licensing—which are based on its business activities and organization. The operating segments are segments of the Company for which separate financial information is available and for which operating results are evaluated regularly by executive management in deciding how to allocate resources, as well as in assessing performance. The primary key performance indicators are net sales or revenue (in the case of Licensing) and operating income for each segment. The Company’s reportable segments represent channels of distribution that offer similar merchandise, customer experience and sales/marketing strategies. Sales of the Company’s products through Company owned stores for the Retail segment include “Collection,” “Lifestyle” including “concessions,” and outlet stores located throughout North America, Europe, and Japan. Products sold through the Retail segment include women’s apparel, accessories (which include handbags and small leather goods such as wallets), footwear and licensed products, such as watches, jewelry, fragrances and eyewear. The Wholesale segment includes sales primarily to major department stores and specialty shops throughout North America and Europe. Products sold through the Wholesale segment include accessories (which include handbags and small leather goods such as wallets), footwear and women’s and men’s apparel. The Licensing segment includes royalties earned on licensed products and use of the Company’s trademarks, and rights granted to third parties for the right to sell the Company’s products in certain geographical regions such as the Middle East, Eastern Europe, Latin America and the Caribbean, throughout all of Asia (excluding Japan), as well as Australia. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance. Corporate overhead expenses are allocated to the segments based upon specific usage or other allocation methods.

 

The Company has allocated $12.1 million and $1.9 million of its recorded goodwill to its Wholesale and Licensing segments, respectively. The Company does not have identifiable assets separated by segment. The following table presents the key performance information of the Company’s reportable segments (in thousands):

 

         Three Months Ended      Nine Months Ended  
         December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Revenue:

             

Net sales:

 

Retail

   $ 689,388       $ 503,380       $ 1,665,209       $ 1,184,625   
 

Wholesale

     573,838         461,407         1,494,723         1,103,854   

Licensing

       51,500         47,442         130,553         104,912   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 1,314,726       $ 1,012,229       $ 3,290,485       $ 2,393,391   
    

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations:

  

Retail

   $ 214,928       $ 171,281       $ 484,951       $ 377,528   

Wholesale

     170,487         140,685         444,811         320,262   

Licensing

     33,062         31,274         71,044         64,472   
    

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations

   $ 418,477       $ 343,240       $ 1,000,806       $ 762,262   
    

 

 

    

 

 

    

 

 

    

 

 

 

Depreciation and amortization expense for each segment are as follows (in thousands):

 

     Three Months Ended      Nine Months Ended  
     December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Depreciation and amortization:

           

Retail

   $ 22,414       $ 12,316       $ 62,401       $ 32,749   

Wholesale

     15,007         9,145         37,505         22,519   

Licensing

     71         194         648         419   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total depreciation and amortization

   $ 37,492       $ 21,655       $ 100,554       $ 55,687   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue (as recognized based on country of origin), and long-lived assets by geographic location of the consolidated Company are as follows (in thousands):

 

     Three Months Ended      Nine Months Ended  
     December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Revenue:

           

North America (U.S. and Canada)

   $ 1,057,281       $ 862,619       $ 2,578,396       $ 2,032,450   

Europe

     241,415         140,294         664,836         335,822   

Japan

     16,030         9,316         47,253         25,119   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 1,314,726       $ 1,012,229       $ 3,290,485       $ 2,393,391   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     December 27,
2014
     March 29,
2014
 

Long-lived assets:

     

North America (U.S. and Canada)

   $ 411,669       $ 283,162   

Europe

     173,010         108,074   

Japan

     11,269         7,476   
  

 

 

    

 

 

 

Total Long-lived assets:

   $ 595,948       $ 398,712   
  

 

 

    

 

 

 
Other Expense (Income)
Other Expense (Income)

13. Other expense (income)

Other expense (income) consists of the following (in thousands):

 

    Three Months Ended     Nine Months Ended  
    December 27,
2014
    December 27,
2014
 

Losses related to joint venture

  $ 553      $ 242   

Income related to anti-counterfeit program

    (365     (1,403

Net unrealized gains on foreign currency forward contracts

    (38     (235
 

 

 

   

 

 

 

Total Other expense (income)

  $ 150      $ (1,396
 

 

 

   

 

 

 

There were no amounts related to Other expense (income) during the three and nine months ended December 28, 2013.

Summary of Significant Accounting Policies (Policies)

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. The most significant assumptions and estimates involved in preparing the financial statements include allowances for customer deductions, sales returns, sales discounts and doubtful accounts, estimates of inventory recovery, the valuation of share-based compensation, valuation of deferred taxes and the estimated useful lives used for amortization and depreciation of intangible assets and property and equipment. Actual results could differ from those estimates.

Store Pre-opening Costs

Costs associated with the opening of new retail stores and start up activities are expensed as incurred.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and amortization (carrying value). Depreciation is provided on a straight-line basis over the expected remaining useful lives of the related assets. Equipment, furniture and fixtures are depreciated over five to seven years, computer hardware and software are depreciated over three to five years, and in-store shops are amortized over three to four years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated remaining useful lives of the related assets or remaining lease term. The Company includes all amortization and depreciation expense as a component of total operating expenses, as the underlying long-lived assets are not directly or indirectly related to bringing the Company’s products to their existing location and condition.

Derivative Financial Instruments

The Company uses forward currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain of its transactions. The Company in its normal course of business enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these forward currency contracts to hedge the Company’s cash flows, as they relate to foreign currency transactions, of which certain of these contracts are designated as hedges for accounting purposes, while others are undesignated hedges for hedge accounting purposes. These derivative instruments are recorded on the Company’s consolidated balance sheets at fair value, regardless of if they are designated or undesignated as hedges.

The Company designates the majority of these forward currency contracts as hedges for hedge accounting purposes which are related to the purchase of inventory. Accordingly, the effective portion of changes in the fair value for contracts entered into during the nine months ended December 27, 2014, designated as hedges, are recorded in equity as a component of accumulated other comprehensive income, and to cost of goods sold for any portion of those contracts deemed ineffective. The Company will continue to record changes in the fair value of hedge designated contracts in this manner until their maturity, where the unrealized gain or loss will be recognized into earnings in that period. For those contracts that are entered into that are not designated as hedges, changes in the fair value, as of each balance sheet date and upon maturity, are recorded in other income, within the Company’s consolidated statements of operations. During the nine months ended December 27, 2014, a gain of approximately $0.2 million related to the change in fair value of these contracts was recorded in other income. In addition, the net unrealized gain related to contracts designated as hedges for $13.3 million, was charged to equity as a component of accumulated other comprehensive income during the nine months ended December 27, 2014. For the nine months ended December 27, 2014, amounts related to the ineffectiveness of these contracts were de minimis. The following table details the fair value of these contracts as of December 27, 2014, and March 29, 2014 (in thousands):

 

     December 27,
2014
    March 29,
2014
 

Prepaid expenses and other current assets

   $ 13,892      $ 12   

Accrued expenses and other current liabilities

   $ (476   $ (1,875

The Company expects the entirety of these balances to be reclassified into earnings within the next twelve months, subject to changes in the fair value of these contracts up to such time the related purchase of the underlying hedged item is completed.

The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In attempts to mitigate counterparty credit risk, the Company enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign transaction they are intended to hedge. The notional amount of these contracts outstanding at December 27, 2014 was approximately $176.2 million, which was comprised predominately of those designated as hedges.

Net Income Per Share

The Company’s basic net income per share excludes the dilutive effect of share options and units, as well as unvested restricted shares. It is based upon the weighted average number of ordinary shares outstanding during the period divided into net income.

Diluted net income per share reflects the potential dilution that would occur if share option grants or any other dilutive equity instruments were exercised or converted into ordinary shares. These equity instruments are included as potential dilutive securities to the extent they are dilutive under the treasury stock method for the applicable periods.

The components of the calculation of basic net income per ordinary share and diluted net income per ordinary share are as follows (in thousands except share and per share data):

 

     Three Months Ended      Nine Months Ended  
     December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Numerator:

           

Net Income

   $ 303,675       $ 229,643       $ 698,381       $ 500,447   

Denominator:

           

Basic weighted average ordinary shares

     202,668,541        203,175,380        203,627,688        202,314,813  

Weighted average dilutive share equivalents:

           

Share options and restricted shares/units

     2,979,275        2,912,682        3,124,415        2,878,146  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average ordinary shares

     205,647,816        206,088,062        206,752,103        205,192,959  

Basic net income per ordinary share

   $ 1.50       $ 1.13       $ 3.43       $ 2.47   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted net income per ordinary share

   $ 1.48       $ 1.11       $ 3.38       $ 2.44   
  

 

 

    

 

 

    

 

 

    

 

 

 

Share equivalents for the three and nine months ended December 27, 2014 for 284,344 shares and 185,261 shares, respectively, have been excluded from the above calculation as they were anti-dilutive. Share equivalents for the three and nine months ended December 28, 2013 for 22,283 shares and 57,505 shares, respectively, have been excluded from the above calculation as they were anti-dilutive.

Recent Accounting Pronouncements—The Company has considered all new accounting pronouncements and, and with the exception of the below, has concluded that there are no new pronouncements that have a material impact on results of operations, financial condition, or cash flows, based on current information.

In May, 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers, which amends how an entity is currently required to recognize revenue from contracts with its customers. The ASU will replace the existing revenue recognition guidance in GAAP when it becomes effective for entities in January 2017. Early application is not permitted. The Company is currently evaluating the impact that ASU 2014-09 will have on its consolidated financial statements and related disclosures.

Summary of Significant Accounting Policies (Tables)

The following table details the fair value of these contracts as of December 27, 2014, and March 29, 2014 (in thousands):

 

     December 27,
2014
    March 29,
2014
 

Prepaid expenses and other current assets

   $ 13,892      $ 12   

Accrued expenses and other current liabilities

   $ (476   $ (1,875

The components of the calculation of basic net income per ordinary share and diluted net income per ordinary share are as follows (in thousands except share and per share data):

 

     Three Months Ended      Nine Months Ended  
     December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Numerator:

           

Net Income

   $ 303,675       $ 229,643       $ 698,381       $ 500,447   

Denominator:

           

Basic weighted average ordinary shares

     202,668,541        203,175,380        203,627,688        202,314,813  

Weighted average dilutive share equivalents:

           

Share options and restricted shares/units

     2,979,275        2,912,682        3,124,415        2,878,146  
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average ordinary shares

     205,647,816        206,088,062        206,752,103        205,192,959  

Basic net income per ordinary share

   $ 1.50       $ 1.13       $ 3.43       $ 2.47   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted net income per ordinary share

   $ 1.48       $ 1.11       $ 3.38       $ 2.44   
  

 

 

    

 

 

    

 

 

    

 

 

 
Receivables, net (Tables)
Receivables, net

Receivables, net consist of (in thousands):

 

     December 27,
2014
    March 29,
2014
 

Trade receivables:

    

Credit risk assumed by factors/insured

   $ 317,559      $ 261,900   

Credit risk retained by Company

     116,415        109,094   

Receivables due from licensees

     37,291        11,302   
  

 

 

   

 

 

 
     471,265        382,296   

Less allowances:

     (107,195     (68,241
  

 

 

   

 

 

 
   $ 364,070      $ 314,055   
  

 

 

   

 

 

 
Property and Equipment, net (Tables)
Property and Equipment, Net

Property and equipment, net consist of (in thousands):

 

     December 27,
2014
    March 29,
2014
 

Furniture and fixtures

   $ 149,405      $ 108,757   

Equipment

     70,719        31,683   

Computer equipment and software

     94,788        50,646   

In-store shops

     176,105        123,637   

Leasehold improvements

     271,773        216,451   
  

 

 

   

 

 

 
     762,790        531,174   

Less: accumulated depreciation and amortization

     (310,623     (234,381
  

 

 

   

 

 

 
     452,167        296,793   

Construction-in-progress

     80,137        53,885   
  

 

 

   

 

 

 
   $ 532,304      $ 350,678   
  

 

 

   

 

 

 
Intangible Assets and Goodwill (Tables)

The following table discloses the carrying values of intangible assets and goodwill (in thousands):

 

     December 27, 2014      March 29, 2014  
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net      Gross
Carrying
Amount
     Accumulated
Amortization
     Net  

Trademarks

   $ 23,000       $ 13,707       $ 9,293       $ 23,000       $ 12,845       $ 10,155   

Lease Rights

     62,112         7,761         54,351         41,748         3,869         37,879   

Goodwill

     14,005         —           14,005         14,005         —           14,005   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
   $ 99,117       $ 21,468       $ 77,649       $ 78,753       $ 16,714       $ 62,039   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Estimated amortization expense for each of the next five years is as follows (in thousands):

 

Remainder of Fiscal 2015

   $ 2,005   

Fiscal 2016

     9,825   

Fiscal 2017

     9,824   

Fiscal 2018

     9,790   

Fiscal 2019

     8,862   

Thereafter

     23,338   
  

 

 

 
   $ 63,644   
  

 

 

 
Fair Value of Financial Instruments (Tables)
Contracts Categorized in Level 2 of Fair Value Hierarchy

All contracts are categorized in Level 2 of the fair value hierarchy as shown in the following table:

 

     Total     Fair value at December 27, 2014, using:  
(In thousands)      Quoted prices in
active markets for
identical assets
(Level 1)
     Significant other
observable inputs
(Level 2)
    Significant
unobservable
inputs
(Level 3)
 

Foreign currency forward contracts- Euro to U.S. Dollar

   $ 13,604      $ —         $ 13,604      $ —     

Foreign currency forward contracts- Canadian Dollar to U.S. Dollar

     288        —           288        —     

Foreign currency forward contracts- U.S. Dollar to Euro

     (476     —           (476     —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ 13,416      $ —         $ 13,416      $ —     
  

 

 

   

 

 

    

 

 

   

 

 

 
Other Comprehensive Income- Hedging Instruments (Tables)
Impact of Effective Portion of Gains and Losses of Forward Contracts Designated as Hedges

The following table summarizes the impact of the effective portion of gains and losses of the forward contracts designated as hedges for the three and nine months ended December 27, 2014 (in thousands):

 

     Three Months Ended December 27, 2014      Nine Months Ended December 27, 2014  
     Pre-Tax
Gain
Recognized
in OCI
(Effective Portion)
     Gain
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
     Pre-Tax
Gain
Recognized
in OCI
(Effective Portion)
     Gain
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
 

Forward currency exchange contracts

   $  3,139       $  1,956       $  15,034       $  573   

The following table summarizes the impact of the effective portion of gains and losses of the forward contracts designated as hedges for the three and nine months ended December 28, 2013:

 

     Three Months Ended December 28, 2013      Nine Months Ended December 28, 2013  
     Pre-Tax
(Loss)
Recognized
in OCI
(Effective Portion)
     (Loss)
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
     Pre-Tax
(Loss)
Recognized
in OCI
(Effective Portion)
     Gain
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
 

Forward currency exchange contracts

   $ (695    $ (422    $ (4,208    $ 133   
Share-Based Compensation (Tables)

The following table summarizes the share option activity during the nine months ended December 27, 2014, and information about options outstanding at December 27, 2014:

 

     Number of
Options
    Weighted
Average
Exercise price
     Weighted
Average
Remaining
Contractual
Life (years)
     Aggregate
Intrinsic
Value
(in thousands)
 

Outstanding at March 29, 2014

     8,377,928      $ 13.69         

Granted

     795,255      $ 90.95         

Exercised

     (1,462,107   $ 6.88         

Canceled/forfeited

     (177,845   $ 29.14         
  

 

 

         

Outstanding at December 27, 2014

     7,533,231      $ 22.79         5.59       $ 407,380   
  

 

 

   

 

 

    

 

 

    

 

 

 

Vested or expected to vest at December 27, 2014

     7,382,566      $ 22.79         5.59      
  

 

 

   

 

 

    

 

 

    

 

 

 

Vested and exercisable at December 27, 2014

     3,504,844      $ 11.92         5.17       $ 221,824   
  

 

 

   

 

 

    

 

 

    

 

 

 

The following table represents assumptions used to estimate the fair value of options:

 

     Three Months Ended     Nine Months Ended  
     December 27,
2014
    December 28,
2013
    December 27,
2014
    December 28,
2013
 

Expected dividend yield

     0.0     0.0     0.0     0.0

Volatility factor

     32.8     38.4     33.2     46.1

Weighted average risk-free interest rate

     1.5     1.3     1.5     1.0

Expected life of option

     4.75 years        4.75 years        4.75 years        4.75 years   

The following table summarizes restricted shares under the 2012 Plan as of December 27, 2014 and changes during the fiscal period then ended:

 

     Number of Unvested
Restricted Shares
    Weighted
Average Grant
Date Fair Value
 

Unvested at March 29, 2014

     657,853      $ 38.38   

Granted

     433,126      $ 90.57   

Vested

     (212,853   $ 32.12   

Canceled/forfeited

     (29,734   $ 68.37   
  

 

 

   

Unvested at December 27, 2014

     848,392      $ 65.68   
  

 

 

   

 

The following table summarizes restricted share units under the 2012 Plan as of December 27, 2014 and changes during the fiscal period then ended:

 

     Number of Unvested
Restricted Units
    Weighted
Average Grant
Date Fair Value
 

Unvested at March 29, 2014

     199,779      $ 58.31   

Granted

     245,591      $ 81.61   

Vested

     (11,770   $ 30.04   

Canceled/forfeited

     (10,846   $ 62.24   
  

 

 

   

Unvested at December 27, 2014

     422,754      $ 73.25   
  

 

 

   
Segment Information (Tables)

The following table presents the key performance information of the Company’s reportable segments (in thousands):

 

         Three Months Ended      Nine Months Ended  
         December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Revenue:

             

Net sales:

 

Retail

   $ 689,388       $ 503,380       $ 1,665,209       $ 1,184,625   
 

Wholesale

     573,838         461,407         1,494,723         1,103,854   

Licensing

       51,500         47,442         130,553         104,912   
    

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 1,314,726       $ 1,012,229       $ 3,290,485       $ 2,393,391   
    

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations:

  

Retail

   $ 214,928       $ 171,281       $ 484,951       $ 377,528   

Wholesale

     170,487         140,685         444,811         320,262   

Licensing

     33,062         31,274         71,044         64,472   
    

 

 

    

 

 

    

 

 

    

 

 

 

Income from operations

   $ 418,477       $ 343,240       $ 1,000,806       $ 762,262   
    

 

 

    

 

 

    

 

 

    

 

 

 

Depreciation and amortization expense for each segment are as follows (in thousands):

 

     Three Months Ended      Nine Months Ended  
     December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Depreciation and amortization:

           

Retail

   $ 22,414       $ 12,316       $ 62,401       $ 32,749   

Wholesale

     15,007         9,145         37,505         22,519   

Licensing

     71         194         648         419   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total depreciation and amortization

   $ 37,492       $ 21,655       $ 100,554       $ 55,687   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue (as recognized based on country of origin), and long-lived assets by geographic location of the consolidated Company are as follows (in thousands):

 

     Three Months Ended      Nine Months Ended  
     December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Revenue:

           

North America (U.S. and Canada)

   $ 1,057,281       $ 862,619       $ 2,578,396       $ 2,032,450   

Europe

     241,415         140,294         664,836         335,822   

Japan

     16,030         9,316         47,253         25,119   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 1,314,726       $ 1,012,229       $ 3,290,485       $ 2,393,391   
  

 

 

    

 

 

    

 

 

    

 

 

 
     December 27,
2014
     March 29,
2014
 

Long-lived assets:

     

North America (U.S. and Canada)

   $ 411,669       $ 283,162   

Europe

     173,010         108,074   

Japan

     11,269         7,476   
  

 

 

    

 

 

 

Total Long-lived assets:

   $ 595,948       $ 398,712   
  

 

 

    

 

 

 
Other Expense (Income) (Tables)
Other Expense (Income)

Other expense (income) consists of the following (in thousands):

 

    Three Months Ended     Nine Months Ended  
    December 27,
2014
    December 27,
2014
 

Losses related to joint venture

  $ 553      $ 242   

Income related to anti-counterfeit program

    (365     (1,403

Net unrealized gains on foreign currency forward contracts

    (38     (235
 

 

 

   

 

 

 

Total Other expense (income)

  $ 150      $ (1,396
 

 

 

   

 

 

 
Share Repurchase Program - Additional Information (Detail) (USD $)
9 Months Ended 0 Months Ended 0 Months Ended
Dec. 27, 2014
Nov. 14, 2014
Accelerated Share Repurchase Program
Nov. 14, 2014
Accelerated Share Repurchase Program
Nov. 14, 2014
Share Repurchase Program
Stock Repurchase Program [Line Items]
 
 
 
 
Ordinary shares repurchased, shares
 
4,437,516 
 
631,297 
Ordinary shares repurchased, value
$ 403,255,000 
$ 355,000,000 
 
 
Ordinary shares repurchased, cash paid
 
 
$ 355,000,000 
 
ASR program, percentage of shares expected to be repurchased
 
 
100.00% 
 
Share repurchase agreement, completion date
 
Jan. 29, 2015 
 
 
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Stock Options
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Anti-dilutive securities excluded from computation of earning per share
284,344 
22,283 
185,261 
57,505 
Equipment, Furniture And Fixtures |
Minimum
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Property, plant and equipment, useful life
 
 
5 years 
 
Equipment, Furniture And Fixtures |
Maximum
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Property, plant and equipment, useful life
 
 
7 years 
 
Computer Equipment And Software |
Minimum
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Property, plant and equipment, useful life
 
 
3 years 
 
Computer Equipment And Software |
Maximum
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Property, plant and equipment, useful life
 
 
5 years 
 
In-Store Shops |
Minimum
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Property, plant and equipment, useful life
 
 
3 years 
 
In-Store Shops |
Maximum
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Property, plant and equipment, useful life
 
 
4 years 
 
Foreign Exchange Forward |
Not Designated as Hedging Instrument
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Forward contracts term, maximum
 
 
12 months 
 
Foreign Exchange Forward |
Not Designated as Hedging Instrument |
Other Income
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Gain (loss) on forward contracts
 
 
$ 200,000 
 
Foreign Exchange Forward |
Designated as Hedging Instrument
 
 
 
 
Significant Accounting Policies [Line Items]
 
 
 
 
Net unrealized gain on derivatives
 
 
13,300,000 
 
Notional amount of forward contract
$ 176,200,000 
 
$ 176,200,000 
 
Fair Values of Forward Foreign Currency Exchange Contracts (Detail) (Foreign Exchange Forward, Not Designated as Hedging Instrument, USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Mar. 29, 2014
Prepaid Expenses and Other Current Assets
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair value of derivative assets
$ 13,892 
$ 12 
Accrued Expenses and Other Current Liabilities
 
 
Derivatives, Fair Value [Line Items]
 
 
Fair value of derivative liabilities
$ (476)
$ (1,875)
Components of Calculation of Basic Net Income Per Ordinary Share and Diluted Net Income Per Ordinary Share (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Numerator:
 
 
 
 
Net income
$ 303,675 
$ 229,643 
$ 698,381 
$ 500,447 
Denominator:
 
 
 
 
Basic weighted average ordinary shares
202,668,541 
203,175,380 
203,627,688 
202,314,813 
Weighted average dilutive share equivalents:
 
 
 
 
Share options and restricted shares/units
2,979,275 
2,912,682 
3,124,415 
2,878,146 
Diluted weighted average ordinary shares
205,647,816 
206,088,062 
206,752,103 
205,192,959 
Basic net income per ordinary share
$ 1.50 
$ 1.13 
$ 3.43 
$ 2.47 
Diluted net income per ordinary share
$ 1.48 
$ 1.11 
$ 3.38 
$ 2.44 
Receivables, net (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Mar. 29, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Receivables due from licensees
$ 37,291 
$ 11,302 
Receivables, Gross, Current
471,265 
382,296 
Less allowances
(107,195)
(68,241)
Receivables, net
364,070 
314,055 
Credit Risk Assumed by Factors/Insured
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Trade receivables
317,559 
261,900 
Credit Risk Assumed by Company
 
 
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Trade receivables
$ 116,415 
$ 109,094 
Receivables - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
Dec. 27, 2014
Mar. 29, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
 
 
Allowance for doubtful accounts
$ 1.1 
$ 1.5 
Property and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Mar. 29, 2014
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
$ 762,790 
$ 531,174 
Less: accumulated depreciation and amortization
(310,623)
(234,381)
Subtotal
452,167 
296,793 
Construction-in-progress
80,137 
53,885 
Property and equipment, net
532,304 
350,678 
Furniture and Fixtures
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
149,405 
108,757 
Equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
70,719 
31,683 
Computer Equipment And Software
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
94,788 
50,646 
In-Store Shops
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
176,105 
123,637 
Leasehold Improvement
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment, gross
$ 271,773 
$ 216,451 
Property and Equipment, Net - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Property, Plant and Equipment [Line Items]
 
 
 
 
Depreciation and amortization of property and equipment
$ 35.7 
$ 20.7 
$ 95.2 
$ 53.8 
Carrying Values of Intangible Assets and Goodwill (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Mar. 29, 2014
Intangible Assets And Goodwill [Line Items]
 
 
Goodwill, Gross Carrying Amount
$ 14,005 
$ 14,005 
Goodwill, Net
14,005 
14,005 
Gross Carrying Amount
99,117 
78,753 
Accumulated Amortization
21,468 
16,714 
Net
63,644 
48,034 
Net
77,649 
62,039 
Trademarks
 
 
Intangible Assets And Goodwill [Line Items]
 
 
Gross Carrying Amount
23,000 
23,000 
Accumulated Amortization
13,707 
12,845 
Net
9,293 
10,155 
Lease Rights
 
 
Intangible Assets And Goodwill [Line Items]
 
 
Gross Carrying Amount
62,112 
41,748 
Accumulated Amortization
7,761 
3,869 
Net
$ 54,351 
$ 37,879 
Intangible Assets and Goodwill - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Intangible Assets And Goodwill [Line Items]
 
 
 
 
Amortization expense
$ 1.8 
$ 1.0 
$ 5.3 
$ 1.9 
Trademarks
 
 
 
 
Intangible Assets And Goodwill [Line Items]
 
 
 
 
Amortization period
 
 
20 years 
 
Estimated Amortization Expense (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Mar. 29, 2014
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
 
 
Remainder of Fiscal 2015
$ 2,005 
 
Fiscal 2016
9,825 
 
Fiscal 2017
9,824 
 
Fiscal 2018
9,790 
 
Fiscal 2019
8,862 
 
Thereafter
23,338 
 
Net
$ 63,644 
$ 48,034 
Credit Facilities - Additional Information (Detail) (USD $)
9 Months Ended 9 Months Ended 9 Months Ended
Dec. 28, 2013
Dec. 27, 2014
Credit Facility 2013
Dec. 27, 2014
Credit Facility 2013
Europe
Dec. 27, 2014
Credit Facility 2013
Minimum
Dec. 27, 2014
Credit Facility 2013
Minimum
L I B O Rate
Dec. 27, 2014
Credit Facility 2013
Maximum
Dec. 27, 2014
Credit Facility 2013
Maximum
L I B O Rate
Dec. 27, 2014
Standby Letters of Credit
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
Line of credit facility maximum borrowing capacity
 
$ 200,000,000 
$ 100,000,000 
 
 
 
 
 
Secured revolving credit facility, Expiration date
 
Feb. 08, 2018 
 
 
 
 
 
 
Line of credit facility covenant adjusted leverage ratio
 
3.5 
 
 
 
 
 
 
Line of credit facility consolidated rent expense
 
8.0 times 
 
 
 
 
 
 
Minimum fixed charge coverage ratio
 
2.0 
 
 
 
 
 
 
Interest rate
 
 
 
 
1.25% 
 
1.75% 
 
Line of Credit Annual Facility fee on unused portion
 
100,000 
 
 
 
 
 
 
Line of Credit Annual Commitment fees on unused portion
 
 
 
0.25% 
 
0.35% 
 
 
Line of credit facility amount outstanding
 
 
 
 
 
 
11,400,000 
Line of credit facility, amounts borrowed
21,120,000 
 
 
 
 
 
 
Line of credit facility available for future borrowings
 
$ 188,600,000 
 
 
 
 
 
 
Fair Value of Financial Instruments - Additional Information (Detail) (Foreign Exchange Forward, Not Designated as Hedging Instrument)
9 Months Ended
Dec. 27, 2014
Foreign Exchange Forward |
Not Designated as Hedging Instrument
 
Fair Value of Financial Instruments [Line Items]
 
Forward contracts term, maximum
12 months 
Contracts Categorized in Level 2 of Fair Value Hierarchy (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 27, 2014
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Total
$ 13,416 
Euro to U.S. Dollar
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Foreign currency forward contracts-Asset
13,604 
Canadian Dollar to U.S. Dollar
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Foreign currency forward contracts-Asset
288 
U.S. Dollar to Euro
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Foreign currency forward contracts-Liability
(476)
Fair Value, Inputs, Level 2
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Total
13,416 
Fair Value, Inputs, Level 2 |
Euro to U.S. Dollar
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Foreign currency forward contracts-Asset
13,604 
Fair Value, Inputs, Level 2 |
Canadian Dollar to U.S. Dollar
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Foreign currency forward contracts-Asset
288 
Fair Value, Inputs, Level 2 |
U.S. Dollar to Euro
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Foreign currency forward contracts-Liability
$ (476)
Impact of Effective Portion of Gains and Losses of Forward Contracts Designated as Hedges (Detail) (Foreign Exchange Contract, Designated as Hedging Instrument, USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Foreign Exchange Contract |
Designated as Hedging Instrument
 
 
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Pre-Tax Gain (Loss) Recognized in OCI (Effective Portion)
$ 3,139 
$ (695)
$ 15,034 
$ (4,208)
Gain (Loss) Reclassified from Accumulated OCI into Earnings (Effective Portion)
$ 1,956 
$ (422)
$ 573 
$ 133 
Share-Based Compensation - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Dec. 27, 2014
EquityPlan
Dec. 28, 2013
Dec. 27, 2014
OptionPlan
Dec. 28, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Number of equity plans
 
 
 
Number of stock option grants
 
 
 
Outstanding option non-vested
4,028,387 
 
4,028,387 
 
Outstanding option vested
 
 
3,504,844 
 
Intrinsic value of option exercised
 
 
$ 114.4 
$ 133.3 
Cash received from options exercised
 
 
10.1 
13.5 
Unrecognized stock based compensation expense
35.1 
 
35.1 
 
Weighted average period of recognition
 
 
2 years 11 months 12 days 
 
Weighted average grant date fair value of option
$ 22.25 
$ 26.36 
$ 28.09 
$ 24.94 
Equity compensation expense
12.1 
7.8 
33.4 
20.9 
Estimated value of future forfeitures
1.4 
 
1.4 
 
Individual Performance Based Stock Option
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Vesting percentage on achievement of individual performance
 
 
20.00% 
 
Performance target achievement term
 
 
10 years 
 
Individual performance vesting tranches
 
 
Company Wide Performance Based Stock Option
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Performance target achievement term
 
 
10 years 
 
Time Based Option Award
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Number of installments for vesting period on each of the first, second, third and fourth anniversaries date of award
 
 
 
Restricted Shares
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Number of installments for vesting period on each of the first, second, third and fourth anniversaries date of award
 
 
 
Weighted average period of recognition
 
 
3 years 18 days 
 
Fair value of restricted shares vested during a period
 
 
18.7 
14.0 
Unrecognized stock based compensation expense
45.7 
 
45.7 
 
Restricted Shares |
Minimum
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation, vesting period
 
 
3 years 
 
Restricted Shares |
Maximum
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation, vesting period
 
 
4 years 
 
Restricted Share Units
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Weighted average period of recognition
 
 
2 years 22 days 
 
Unrecognized stock based compensation expense
$ 19.4 
 
$ 19.4 
 
Restricted Stock Units Performance Vesting
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based compensation, vesting period
 
 
3 years 
 
Expense related to grants recognizable period
 
 
3 years 
 
Stock Option Plan 2008
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share authorized for issuance
23,980,823 
 
23,980,823 
 
Expiration period
10 years 
 
 
 
Omnibus Incentive Plan, Twenty Twelve
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share authorized for issuance
15,246,000 
 
15,246,000 
 
Shares available for grant
10,642,111 
 
10,642,111 
 
Expiration period
7 years 
 
 
 
Option Activity and Information about Options Outstanding (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
9 Months Ended
Dec. 27, 2014
Number of options
 
Outstanding at beginning of period
8,377,928 
Granted
795,255 
Exercised
(1,462,107)
Canceled/forfeited
(177,845)
Outstanding at end of period
7,533,231 
Vested or expected to vest at end of period
7,382,566 
Vested and exercisable at end of period
3,504,844 
Weighted Average Exercise Price
 
Outstanding at beginning of period
$ 13.69 
Granted
$ 90.95 
Exercised
$ 6.88 
Canceled/forfeited
$ 29.14 
Outstanding at end of period
$ 22.79 
Vested or expected to vest at end of period
$ 22.79 
Vested and exercisable at end of period
$ 11.92 
Weighted Average Remaining Contractual Life (years)
 
Outstanding at end of period
5 years 7 months 2 days 
Vested or expected to vest at end of period
5 years 7 months 2 days 
Vested and exercisable at end of period
5 years 2 months 1 day 
Aggregate Intrinsic Value
 
Outstanding at December 27, 2014
$ 407,380 
Vested and exercisable at December 27, 2014
$ 221,824 
Assumptions Used to Estimate Fair Value of Options (Detail)
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Expected dividend yield
0.00% 
0.00% 
0.00% 
0.00% 
Volatility factor
32.80% 
38.40% 
33.20% 
46.10% 
Weighted average risk-free interest rate
1.50% 
1.30% 
1.50% 
1.00% 
Expected life of option
4 years 9 months 
4 years 9 months 
4 years 9 months 
4 years 9 months 
Restricted Shares and Restricted Share Units (Detail) (USD $)
9 Months Ended
Dec. 27, 2014
Restricted Shares
 
Number of Unvested Restricted Shares/Units
 
Unvested at beginning of period
657,853 
Granted
433,126 
Vested
(212,853)
Canceled/forfeited
(29,734)
Unvested at end of period
848,392 
Weighted Average Grant Date Fair Value
 
Unvested at beginning of period
$ 38.38 
Granted
$ 90.57 
Vested
$ 32.12 
Canceled/forfeited
$ 68.37 
Unvested at end of period
$ 65.68 
Restricted Share Units
 
Number of Unvested Restricted Shares/Units
 
Unvested at beginning of period
199,779 
Granted
245,591 
Vested
(11,770)
Canceled/forfeited
(10,846)
Unvested at end of period
422,754 
Weighted Average Grant Date Fair Value
 
Unvested at beginning of period
$ 58.31 
Granted
$ 81.61 
Vested
$ 30.04 
Canceled/forfeited
$ 62.24 
Unvested at end of period
$ 73.25 
Segment Information - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Dec. 27, 2014
Segment
Mar. 29, 2014
Segment Reporting Information [Line Items]
 
 
Number of operating segments
 
Goodwill
$ 14,005 
$ 14,005 
Wholesale
 
 
Segment Reporting Information [Line Items]
 
 
Goodwill
12,100 
 
Licensing
 
 
Segment Reporting Information [Line Items]
 
 
Goodwill
$ 1,900 
 
Key Performance Information of Reportable Segments (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
$ 1,314,726 
$ 1,012,229 
$ 3,290,485 
$ 2,393,391 
Income from operations
418,477 
343,240 
1,000,806 
762,262 
Retail
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
689,388 
503,380 
1,665,209 
1,184,625 
Income from operations
214,928 
171,281 
484,951 
377,528 
Wholesale
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
573,838 
461,407 
1,494,723 
1,103,854 
Income from operations
170,487 
140,685 
444,811 
320,262 
Licensing
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
51,500 
47,442 
130,553 
104,912 
Income from operations
$ 33,062 
$ 31,274 
$ 71,044 
$ 64,472 
Depreciation and Amortization Expense for Each Segment (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Depreciation By Segment [Line Items]
 
 
 
 
Depreciation and amortization
$ 37,492 
$ 21,655 
$ 100,554 
$ 55,687 
Retail
 
 
 
 
Depreciation By Segment [Line Items]
 
 
 
 
Depreciation and amortization
22,414 
12,316 
62,401 
32,749 
Wholesale
 
 
 
 
Depreciation By Segment [Line Items]
 
 
 
 
Depreciation and amortization
15,007 
9,145 
37,505 
22,519 
Licensing
 
 
 
 
Depreciation By Segment [Line Items]
 
 
 
 
Depreciation and amortization
$ 71 
$ 194 
$ 648 
$ 419 
Total Revenue (as Recognized Based on Country of Origin), and Long-Lived Assets by Geographic Location (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Mar. 29, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
Revenue
$ 1,314,726 
$ 1,012,229 
$ 3,290,485 
$ 2,393,391 
 
Long-lived assets
595,948 
 
595,948 
 
398,712 
North America (U.S. and Canada)
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
Revenue
1,057,281 
862,619 
2,578,396 
2,032,450 
 
Long-lived assets
411,669 
 
411,669 
 
283,162 
Europe
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
Revenue
241,415 
140,294 
664,836 
335,822 
 
Long-lived assets
173,010 
 
173,010 
 
108,074 
Japan
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
Revenue
16,030 
9,316 
47,253 
25,119 
 
Long-lived assets
$ 11,269 
 
$ 11,269 
 
$ 7,476 
Other Expense (Income) (Detail) (USD $)
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Components of Other Income (Expense) [Line Items]
 
 
 
 
Losses related to joint venture
$ 553,000 
 
$ 242,000 
 
Income related to anti-counterfeit program
(365,000)
 
(1,403,000)
 
Net unrealized gains on foreign currency forward contracts
(38,000)
 
(235,000)
 
Total Other expense (income)
$ 150,000 
$ 0 
$ (1,396,000)
$ 0 
Other expense (income) - Additional Information (Detail) (USD $)
3 Months Ended 9 Months Ended
Dec. 27, 2014
Dec. 28, 2013
Dec. 27, 2014
Dec. 28, 2013
Components of Other Income (Expense) [Line Items]
 
 
 
 
Other expense (income)
$ 150,000 
$ 0 
$ (1,396,000)
$ 0