Krystyna Lack – Vice President and Treasurer John Idol – Chairman and Chief Executive Officer Joe Parsons – Chief Operating Officer

Kimberly Greenberger – Morgan Stanley. Matthew Bobs – JPMorgan Omar Saad – Evercore ISI Simeon Siegel – Nomura Securities Erinn Murphy – Piper Jaffray Paul Lejuez – Wells Fargo

Please stand by. Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Michael Kors Holdings Limited Second Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. As a reminder, today’s conference is being recorded. And now, I would like to turn the conference over to Krystyna Lack, Vice President and Treasurer. You may begin.

Thank you, good morning. And thank you for joining us for our second quarter earnings call. Presenting on today’s call are John Idol, Chairman and Chief Executive Officer; and Joe Parsons, Chief Financial and Chief Operating Officer. Before we begin, let me remind you that certain statements made on this call may constitute forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ from those than we expect. Those risks and uncertainties are described in today’s press release and in the Company’s SEC filings, which are available on the Company’s website. Investors should not assume that statements made during the call will remain operative at a later time and the Company undertakes no obligation to update any information discussed on the call. I will now turn the call over to Michael Kors’ Chairman and Chief Executive Officer, Mr. John Idol.

Thank you, Krystyna. Good morning, and welcome to Michael Kors’ second quarter fiscal year 2015 earnings call. With me today is Joe Parsons, Chief Financial and Chief Operating Officer. Before I begin, I wanted to take this opportunity to announce that Krystyna has taken on the direct responsibility for Investor Relations at the company in addition to her responsibilities as Treasurer. She has a thorough knowledge of our business and will be a key resource to the investment community. Congratulations Krystyna. My commentary will begin with a brief overview of our second quarter performance and a discussion of our long-term growth opportunities. I’ll then turn it over to Joe for a detailed review of our financial results and our outlook for the third quarter and full year. Our strong second quarter financial performance demonstrates the momentum behind the Michael Kors’ brand. We delivered both revenue and earnings per share growth in excess of 40% with strong results across our operating segments and geographies as we continue to expand our presence globally. We attribute this success to our fashion leadership, our jet-set luxury experience at retail and great execution by the entire Michael Kors’ employee team. Second quarter revenue exceeded $1 billion, an increase of 43% over the prior year. In addition, gross margin expanded 20 basis points, while income from operations grew 38% and operating margin was 29%. We attribute our solid results to the continued execution of our growth strategies, which include first, expanding our global retail presence through new store openings and expansions in key locations. Second, driving increased comparable store sales at our retail stores and wholesale shop-in-shops with great fashion product and a luxury shopping experience. Third, continuing the conversion of department store doors globally into branded shop-in-shops then embody the jet-set Michael Kors’ experience. Fourth,…

Thank you, John. Good morning. I will begin with the review of our fiscal year 2015 second quarter financial results followed by our outlook for the third quarter and full year. We delivered strong financial performance in the second quarter as we continue to execute on our strategic growth plan. Total revenue for the second quarter grew 42.7% to $1.1 billion as compared to $740.3 million for the second quarter of last year with strong growth in each of our retail, wholesale and licensing segments. Retail net sales increased 39.4% to $495.6 million as compared to $355.6 million in the second quarter of last year resulting from an opening of 121 net new stores since the second quarter of last year and a comp-store increase of 16.4%. We also saw a strong performance across categories with the largest increase in accessories primarily handbags and small leather goods. Wholesale net sales grew 46.1% to $514.1 million in the second quarter compared to $351.9 million in the same period last year. The increase was led by the accessories and footwear categories as well as our continued conversion of wholesale doors to shop-in-shops and the expansion of our European operations. In our Licensing segment, revenue grew 42.8% to $46.9 million for the quarter as compared to $32.9 million last year, primarily driven by watches as well as jewelry. As a reminder, we are in the process of transitioning eyewear to our new partner Luxottica in January 2015. We expect this transition to impact our royalties for at least two quarters. As a result, we expect licensing revenue to grow in the low double digit range in our third and fourth quarters. Additionally, because advertising expenses charged to licensing, we anticipate lower operating margins for the year as the expense will be higher relative…

Thank you, Joe. In closing as we look ahead, we see significant growth opportunities across our operating segments, our geographies and our categories. We’ll remain focused on strategically investing in the business to support our long-term growth objectives. We’ll continue to offer a luxury product assortment under the designed leadership of Michael Kors, the driving force behind our brand. In addition, we’ll remain focused on providing a jet-set luxury in-store experience and creating a state of mind for customers that embodies glamour and style. It is these attributes that will enable us to remain a leader in the global luxury fashion market. We will now open up the call for questions.

Thank you. (Operator Instructions) We’ll take our first question today from Kimberly Greenberger with Morgan Stanley. Kimberly Greenberger – Morgan Stanley: Great, thank you and congratulations on a really terrific quarter. John, I am wondering if you can talk about the differential in North American comp here in the second quarter relative to the first quarter. What was the metrics that drove the comp this quarter and how did they change relative to last quarter? And then secondarily, e-commerce was operating I think for about 25 days this quarter, how did – did you have any additional color beyond what you shared with us in the prepared remarks and as you think about the next one or two years in e-commerce, how sizable do you think that business could be either in North America or globally? Thanks.

Well, first off good morning, Kimberly. So let me start with the comps first. There’s a few things that happened in Q2 that we think impacted the North American comps. First that there was definitively a reduction in mall traffic. We’ve kind of been seeing that for the last couple of quarters, but it was more a significant in this quarter than we had anticipated. We obviously speak to other people in the industry who are reporting similar trends and that obviously impacted our business. We did have increase in comp store traffic and we had increase in conversion both, it just wasn’t up to as high as we had initially anticipated. Obviously outside the U.S. we saw excellent results on our comp store sales. In terms of e-commerce, what we said to you in the call is that as we look at the third and fourth quarters, we do think there will be some channel shift between our lifestyle stores and e-commerce. We do see consumers aggressively coming on to our website as we reported to you, our business was up 70% versus the same period last year, and it was operated by Neiman Marcus. And by the way that’s to date, that sales through basically end of last week and it was quite interesting because that increase came before we even really turned on all of our marketing to help support and drive the e-commerce site. We were all afraid to turn it on too early and just because we wanted to make sure that we can handle the traffic coming into the site. So that was really exciting and we think that that’s going to add tremendous top-line to the company. As we’ve said to you before, our goal is approximately 10% as our first goal to…

Thank you. Take your friends and family to the shop during the holidays.

And we’ll move on to our next question from Matthew Bobs with JPMorgan. Matthew Bobs – JPMorgan: Hi, good morning. So with the constraint traffic that you guys have talked about in North America, did you guys find the need to deviate from your promotional or your markdown plan at either retail or wholesale? And John, I’d be interested in your lay of the land that you are heading with the holiday season?

Yes, so we have not deviated from our promotional strategy. Again I read a number of reports that talk about counts of certain styles being increased and whatnot. That’s actually and factually not true. We run the exact same cadence in terms of our promotional activity in our stores that we have for whatever it is seven or eight years and we are running the same, we’re involved in the same promotions at department stores. Again I can’t speak to every single things that they do but I’d say it’s generally some more on a like-for-like basis. So we really have not gone down that path and our strategy is to not go down that path. And our lay of the land for the holiday season is somewhat more conservative, I think, than we had thought about it in years past for two reasons. Number one, we are concerned about more traffic. And again, this is just in North America conversation. We don’t have the same view of international marketplaces. But we do see the consumer being slightly more conservative and I don’t think again that’s only in our case. I think we are seeing that from many other companies. And secondly, I think we’re conservative because we are not taking a promotional posture and we don’t take a promotional posture obviously some of the business goes in different directors. And we think that’s the right thing for us to build to do as a luxury brand and to maintain our integrity with our consumer and continue to build the great brand that we have. And lastly, I might add that 16.5% comp-store growth and almost the 11% comp-store growth which is close to12% when you take the factors of the stores being closed out, it’s still a very, very strong performance by our company and I believe one of the best in the entire luxury industry. So we’re quite proud of that and we think we continue to gain market share, gain mind share and build a great business that’s going to have tremendous legs for the future adding multibillions of dollars over the next few years. Matthew Bobs – JPMorgan: Great and then one quick follow-up. As we take a step back EBIT margin in a high 20s here, I mean if the level not shared by many (ph), could you talk about the multi-year sustainability, really the best way to think about EBIT margins longer-term?

Yeah, as we’ve told you before and I’ll speak more to operating margins if you don’t mind. We’ve told – we’ve said from right when we went public that we have been getting accidental leverage on our operating margin and that was really because we could not catch up to some of the investment spending that we needed to do. We are building a phenomenal new facility in Venlo to support our European development in terms of warehouse and distribution center and we’re buying it. We’re building the land. We are building the facility a 100% ourselves. That’s a very significant investment. We are adding quite a few different robust systems to our company. That is also going to be a significant investment for us in development, particular around e-commerce, big data and data analytics. And then we’re embarking upon a significant renovation in our offices here in New York, almost doubling the size of our space here just because of the amount of people that we’re hiring to run this global business. And as part of that we’re putting in all new modern office facilities. We haven’t really updated our offices in 11 or 12 years. So that’s a big capital project for us. So what is impacting us more than gross margin as you can see is really a D&A and some level of SG&A increase. We fit most to the other metrics were pretty good and sustainable and we like the way the business is being built and grown up. Matthew Bobs – JPMorgan: Great, thanks a lot.

Thank you.

We’ll move along to our next question from Omar Saad with Evercore ISI. Omar Saad – Evercore ISI: Thanks. Good morning, everyone. I wanted to ask another question about the North America retail business. I know you’ve got growth internationally, new categories, you mentioned fragrance and there is so much going on in the business. But I wanted to get a sense for how you feel or how you think about the kind of slower run rate, the comp store sales run rate in North America retail. Obviously, the levels you’ve been running at the last few years have been extremely high and frankly unsustainable, but how do you think about North America retail comps kind of on a sustainable basis going forward now that they are coming down to a more normalized level? How you are going to think about planning your business in the North America retail segment? Thanks.

Sure. First off, good morning, Omar. So we think about North America first if I may and then I’ll address North America retail comps. So North America still is obviously it’s our largest marketplace and we see a lot of growth in this marketplace. So first led by our own retain division, which again we think will grow probably long-term, probably in the high single digits and or to very low double-digits. It’s kind of the range that I think is a more sustainable model for us. Secondly, we see tremendous growth opportunity in our wholesale business. You just saw it’s come off a very, very strong quarter in wholesale and that’s driven by our shop-in-shops with accessories. That’s driven by a great new shoe business that’s developing and I think many of you have seen all the shop-in-shops that are going in around that. That’s kind of a new business for us and getting great traction. And then our women’s ready-to-wear business has come on very, very strong for us also. So there is plenty of growth opportunity in the North American marketplace for Michael Kors and additionally, we’re still finishing our school rollout program in terms of building on our stores. So I know there is concern on many of your points about the North American comp-stores. I think we’re reaching levels that are, as you said before more sustainable but North America as a market that has plenty of growth for us and we’re excited about it and quite frankly we’re executing on it and you can see that both in our retail business, our wholesale business and also look at what’s happening in our license business, big opportunity with jewelry, that’s coming on quite strong in North America and in Europe I might add and then our fragrance business is we can’t close the exact positioning but we are ranking very, very high and we’re doing extremely well. We’re taking market share in that business and we’re becoming a leader in North America in the fragrance business. So again that’s just going to be more royalty income for the company in a great category that will add to brand awareness and engagement with our customers. Omar Saad – Evercore ISI: And then thanks John, it’s really helpful. One follow-up if I could. The profitability, the gross margin profitability in North America, it’s been so steady, I know it’s down a little bit on the retail business, but can you talk about beyond the ability to maintain such steady gross margins in the North America business despite the size of the business and a little bit slower traffic trends. Is it just maintaining discipline on promotions or other factors that allow you to maintain such a steady profitability level, because typically we start to see gross margins come under much more pressure than what you guys are experiencing?

Yeah, Omar I think that the real key to our success is led by general by the name Michael Kors and he and the design team are really at the forefront of fashion. And we think of ourselves competing, we are competing globally against the best of the best and that’s Vuitton, that’s Prada, that’s Gucci, that’s the level of companies that we really believe that we are competing with. So we get up every day, we’re excited about building great product for our customers and as Michael always says, to make them smile, make them happy, make them excited about being an individual who wants to look great. And we think that one of the best companies in the work that doing that and that’s why the Michael Kors business is so strong today, is because of product and that’s why our business is successful in our own freestanding stores as well as the strength inside the department store business, we tend to spend a lot our time talking in these calls about our retain business. And that’s important, I don’t want to take anything away from that. But our business in department stores is very, very strong, very healthy and growing and we’re taking big market share and servicing our customers who are excited to be a part of the Michael Kors lifestyle. Omar Saad – Evercore ISI: Thanks John.

And we’ll take our next question from Simeon Siegel with Nomura Securities. Simeon Siegel – Nomura Securities: Great, thanks, good morning guys. Can you – your texture lies to 280 basis point of SG&A, 80 leverage of retain I guess how much was due to pre-opening expense accelerate depreciation maybe initially you can’t spend, really any other expenses that I want to write out on an ongoing basis. And then (indiscernible) you raise that higher gross margin guide for the full year? Thanks.

So, first of all understand there is a lot going on in our retail business. We recently launched the e-commerce site. We’re expanding our retail stores in Europe, made plans to expand or relocated select stores. We’re improving our distribution centers, which obviously impacts the retail segment. We started planning our new distribution in – new distribution center that John just mentioned in Holland then we’re investing in technology. So really when you go through the categories, the largest impact was accelerated depreciation which was approximately 70 basis points. And then the next impact was really just the increase in depreciation because of our CapEx, then increase in distribution costs, pre-opening costs, which included certain stores that had an opened including 520 Broadway and then amortization with key money (ph) And really as I mention in the script, there were a number of different higher corporate and overhead costs. So that’s a rundown of kind of the magnitude of those different costs. Simeon Siegel – Nomura Securities: Great, thanks. And what was the full year gross margin number? Sorry I missed that.

So we didn’t guide to the full year for retail specifically, our guidance for full year for gross margin was 61%, approximately 61%. Simeon Siegel – Nomura Securities: Okay, perfect. Thanks a lot guys.

Thank you.

And we’ll move along to our next question from Erinn Murphy with Piper Jaffray. Erinn Murphy – Piper Jaffray: Great, thank you, good morning and congrats on another successful quarter. John, I was looking for you, you could speak a little bit more about Europe, could you talk through the quarter where you thought the regional outperformance and then what did you see from a trend perspective between the local and then the non-European tourist shopper. And then if you think bigger picture, if you build into that $1.5 billion sales, within Europe, where you’re seeing the incremental growth from a category perspective?

First of all, good morning, Erinn. So Europe is an exciting and vibrate market for us. As you will know, the consumer is really resonating with the Michael Kors brand and product. And as we said to you before, the business is strong in the UK, it’s strong in Germany, it’s strong in France, are equally as strong in Greece and in Spain, Italy is coming on very, very strong, Italy was an underdeveloped market for us and I believe we’re opening 16-ish pre-standing stores between the beginning of the year. And kind of the end of this year in Italy, we really went after that marketplace in a significant way. So we’re not seeing a geographic play on the business in terms of one market being strong than the other market. And what’s also interesting is we’re getting tremendous attraction obviously in our own lifestyle stores as well as the department stores and you know showing the same types of comp-store increases. So we really like the tone of the business. The marketplace has been led by the accessories business, the handbag business in particular and then the women’s ready-to-wear business was really kind of the second strongest business. What has happened over the past six months in the shoe business is coming on very, very strong for us in the marketplace. So the same thing that we’re seeing inside the United States and similar in Asia is that she is reacting to not only just what was originally a handbag and I would say watch business. But now she is really resonating in terms of the total brand for us. And so we’re seeing great strength. In terms of tourism, again we’re still seeing significant tourist traffic not only in our own freestanding stores but of course you see in the airport businesses that we have. We have very, very strong European airport businesses that are generating significant revenues for the company. And again, we’re resonating with our consumer. And consumers are travelling Pan-European into the various markets and then we’re obviously seeing Chinese and places like Paris and in Italy and we’re seeing also quite a few Brazilians as well in the UK and France and Portugal and in Barcelona. So we’re feeling very good about where we are on our traffic inside of our stores in Europe. Erinn Murphy – Piper Jaffray: Right, that’s helpful. And then second question, in North America the licensing revenue was down 7% in the quarter, was part of that decline related to your eyewear licensing change into Luxottica and then beyond that are outside of the eyewear piece, what are you seeing in North America right now for watches and jewelry?

So, I’ll let Joe answer that question. Erinn Murphy – Piper Jaffray: Right, thank you.

Thanks John. So in terms of the – are you talking about the decrease in the gross margin? Erinn Murphy – Piper Jaffray: The licensing revenue in North America.

So, what? Erinn Murphy – Piper Jaffray: So what portion of that was related to maybe the disruption of your eyewear licensee transition went to Luxottica, I mean what are you seeing right now in terms of just that watch and jewelry business in North America?

So remember, the North America, when you are looking at the licensing it did decline, but we need to look at that globally. What really happened was that we took our international IP and moved it to Europe last year. So previously we were not reporting that as Europe. So that’s really when you look at the North America, when you look at excuse me – the licensing revenue, you need to look at the total international. So for the quarter, we actually went from 32.8 million to 46.9 million. Again last year we did not report anything for Europe and in the current quarter we had 16.4. And then for the six months, we saw 47.5 million growing to 79.1 million. Again in Europe, we didn’t reported anything last year and was 30 million this year. So that’s really a reporting issue. The watch situation was not impacting in Q2 but we do believe that, not the watch, excuse me, the eyewear, the eyewear situation, excuse me, the change to Luxottica. We do not believe impact of Q2 but was started to impact in the next two quarters. Erinn Murphy – Piper Jaffray: Great. Thank you.

Okay, thanks.

You are welcome.

And we will take our next question from (Indiscernible) with Goldman Sachs.

Thanks, good morning, everyone. I had a few questions. The first in the quarter, your inventory outpaced sales growth. I know you had talked about why that might be lumpy or might be negative as of last quarter, but I was hoping if you could give us some details about the quality of your inventory and then also extrapolate to what inventories look like at your department stores and other retail partners? Second, I know that you had an issue with your distribution center last year in the second quarter that pushed sales into the third quarter and also led you to incur extra expenses to every for consultants. I was hoping you could try to split apart what benefit that may have had to you in this quarter? And then lastly, I was happy to see your share repurchase announced. I was wondering if there was any change in the criteria you’ve had before about wanting 10% of your market cap to be cash before you buy back any stock? Thanks.

Okay, first off, good morning. The inventory, we’ve always outpaced – inventories always outpaced our sales and that’s been historical and it’s been as high as 100% and it’s been as low as slightly under what our sales growth rate is. So when we look at the inventory increase that we have this year versus last year, it’s kind of right on pace with what we would normally be doing. And so we believe that the quality of that inventory is excellent that is all inventory that is planned for either new store openings, new shops, for continued replenishment programs, that we talk to you in the last quarter about the fact that in Europe and particularly we increased our inventory levels to put in greater replenishment programs into that region. So inventory is in excellent shape, also at our retail partners in excellent shape. There is no inventory issues at those stores because our sell-through are still very, very strong, returning inventory is very, very quickly and we feel great about what we’re doing in terms of continued to feed product, getting the right product to the right stores at the right time. So inventory is not an issue for us at all. I’ll let Joe talk to the warehouse in a second, but let me just talk to the share repurchase. We believe two things. Number one, we are generating sufficient cash flow, free cash flow to have a sizable share repurchase program and continue to maintain a very sizable cash balance on our balance sheet. We will probably have less than a 10% of our market cap, but it is still something that we think is an important issue for us to maintain a very high cash balance for opportunities for our growth, for opportunities for us to possibly develop repurchases of licenses or joint ventures of licenses. And lastly in the long-term, the company may or may not look at our opportunities that are presented to it. But we think the share repurchase is secondly an indication of how strongly we feel about our share price and the fact that the share price we believe the company is significantly undervalued at this point. So therefore we will take advantage of the marketplace and the disconnect between our value and when the share price is today and we think that’s going to provide an excellent opportunity to create value for our shareholders long time – long-term as we retire our shares on an ongoing basis. I will turn it over to Joe to speak about the warehouse.

So you were correct that we did have a disruption in the warehouse a year ago and we clearly put out a warning about the possible impacts of that but at the end of the day there really wasn’t much of a shift between quarters. We did ship a lot very late in the second quarter last year, which caused some timing issues and some cash flow issues. But in terms of looking at quarter-to-quarter, the shift in sales resulting from that was really minor. So we did not call that out. In terms of additional expenses, we did incur additional expenses related to that disruption. However, we have been incurring expenses since then in order to one reengineer warehouse in California and two, as we mentioned previously, to start working on the plans for our distribution center in Europe. So again there are different types of cost being incurred, but we have continued to incur cost related to our distribution centers and so we did not do a callout related to the difference in those costs.

Thanks.

And we’ll move along to our next question from Dana Telsey with Telsey Advisory Group. Caller, please make sure that your phone is not on mute.

Okay, operator, we will take one last call, one last question, sorry.

We’ll take our next question from Paul Lejuez from Wells Fargo. Paul Lejuez – Wells Fargo: Hey, good morning, guys. Just a couple of questions. One, just wondering what the North America comp assumption is that’s built into your third quarter comp guidance of low double-digits? And then second, you’d mentioned weaker maltraffic, just wondering if that applied equally to factory, outlet malls versus regional malls and curious how that’s stacked up against street locations? And last, you do have a competitor talking about a more promotional factory outlet challenges. Just wondering, if you feel you need to be more promotional in that channel to compete these days? Thanks.

Sure. North America we’ve said for the year that we’re looking for, excuse me, mid-teens. So we’re assuming low teens in the third quarter and kind of the similar type of thing in the fourth quarter. So low double-digit, sorry, low double-digit, I apologize – I correct that for the third quarter and fourth quarter, low double-digit. Paul Lejuez – Wells Fargo: That’s North America or overall?

That’s for North America. So and then in terms of – we saw traffic declining both in factory and in the lifestyle stores as well. So we’ve been watching this sequentially and it’s less so in the factory channel and more so in the lifestyle channel. We have not felt to need to take a different position in our promotional activity whether that be in our own lifestyle stores or in our factory channel, we are kind of doing the same thing that we do year-in, year-out and are trying to really give the most beautiful product to our customer in the best shopping environment with a jet-set service and continue to win with mind share and market share through the beautiful product that Michael and his design team are putting out there for us. Okay, thank you very much and I look forward to speaking to you all on our next conference call.

That concludes today’s conference call. We thank you for your participation.