L03 P4-34. Restating Revenue for Retailer with 53-Week Fiscal Year ANALYST ADJUSTMENTS 4.1 In a press release that accompanied its 2016 annual earnings announcement of Michael Kors Holdings Ltd, its CEO John D. Idol, said, "We are pleased with our financial and operational accomplishments during fiscal year 2016, as we delivered continued growth across regions despite the challenging retail environment."

The press release went on to report that, for the fiscal year ended April 2, 2016, total revenue increased 7 .8% to $4.7 billion from $4.4 billion in fiscal 2015. On a constant currency basis, total revenue increased 11.7%. The income statement disclosed the following.

$ thousands Net sales ..................... •. . ..• ..•..•..

Licensing revenue . ........ ... ... . .......... .

Total revenue .............................. .

Apr. 02, 2016<1>

$4,538,800 173,300 4,712,100 Mar. 28, 2015

$4,199,700 171 ,800 4,371 ,500 c•> Fiscal year ended April 2, 2016, contains 53 weeks, whereas all other fiscal years presented are based on 52-week periods.

a. Compute growth in total revenue for 2016. How do we assess the validity of the claims made by its CEO? Explain.

b. Consider that total revenue increased 11 .7%, on a constant currency basis. What is meant by this statement involving "constant currency basis"? How did foreign exchange rates change, on average, during 2016 (in the currencies in which Michael Kors transacts its sales)?