TAPESTRY INC
For the period ended Dec 28, 2024. Filed Feb 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 28, 2024 · Filed Feb 6, 2025
TPR$132.80-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-28; filed 2024-11-07.
0001116132-24-000023
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-28; filed 2025-02-06.
0001116132-25-000005
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 143 previous paragraphs and 198 current paragraphs.
78 unchanged; 38 reworded; 75 added; 24 removed; 3 previous and 7 current paragraphs rearranged.
Tables are not compared: 12 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (75)
Current report
SECOND QUARTER FISCAL 2025 COMPARED TO SECOND QUARTER FISCAL 2024
Current report
Second Quarter Fiscal 2025 Items
Current report
In the second quarter of fiscal 2025, the Company incurred charges as follows:
Current report
•Acquisition Costs - Total pre-tax charges of $197.6 million attributable to the Capri Acquisition. These charges include:
Current report
◦Loss on extinguishment of debt - $119.4 million primarily related to redemption premiums, as well as unamortized debt issuance costs and discounts, as a result of the redemption of the Capri Acquisition Senior Notes in the second quarter of fiscal 2025 due to the termination of the Capri Acquisition agreement;
Current report
◦SG&A expenses: $55.4 million primarily related to expense reimbursement payment made to Capri and professional fees recorded within Corporate;
Current report
◦Interest expense, net: $22.8 million of financing related charges which primarily includes the net impact of the Capri Acquisition Senior Notes.
Current report
These actions taken together negatively impacted operating income by $55.4 million, increased Loss on extinguishment of debt by $119.4 million, increased interest expense by $22.8 million and reduced the provision for income tax by $57.8 million resulting in a net decrease in net income by $139.8 million or $0.62 per diluted share.
Current report
Second Quarter Fiscal 2024 Items
Current report
In the second quarter of fiscal 2024, the Company incurred charges as follows:
Current report
These actions taken together negatively impacted operating income by $28.3 million, increased interest expense by $44.1 million and reduced the provision for income tax by $18.0 million resulting in a net decrease in net income by $54.4 million or $0.24 per diluted share.
Current report
Tapestry, Inc. Summary – Second Quarter of Fiscal 2025
Current report
•Coach Net Sales increased 10.9% or $167.4 million to $1.71 billion in the second quarter of fiscal 2025. Excluding the impact of foreign currency, net sales increased 10.5% or $161.5 million. This increase in net sales was primarily due to an increase of $135.3 million in DTC sales driven by an increase in both e-commerce and store sales globally, mainly driven by North America, Europe and Greater China. The increase in net sales was also attributed to a $30.3 million increase in wholesale sales, mainly driven by North America and Europe.
Current report
Gross profit increased 9.4% or $139.9 million to $1.63 billion in the second quarter of fiscal 2025 from $1.49 billion in the second quarter of fiscal 2024. Gross margin increased 280 basis points to 74.4% in the second quarter of fiscal 2025 from 71.6% in the second quarter of fiscal 2024. This increase in Gross margin was primarily attributed to net pricing improvements. Refer to "Current Macroeconomic Conditions and Outlook" for further information.
Current report
SG&A expenses increased 9.1% or $94.7 million to $1.14 billion in the second quarter of fiscal 2025 as compared to $1.05 billion in the second quarter of fiscal 2024. As a percentage of net sales, SG&A expenses increased to 51.9% during the second quarter of fiscal 2025 from 50.2% during the second quarter of fiscal 2024. Excluding items affecting comparability of $55.4 million in the second quarter of fiscal 2025, SG&A expenses increased 6.6% or $67.6 million to $1.08 billion from $1.02 billion in the second quarter of fiscal 2024. SG&A as a percentage of net sales increased 70 basis points to 49.4% as compared to 48.7% during the second quarter of fiscal 2024. This increase in SG&A as a percentage of net sales was primarily due to higher marketing spend.
Current report
•Coach Operating Income increased $92.6 million to $620.9 million in the second quarter of fiscal 2025, resulting in an operating margin increase of 210 basis points to 36.4%, as compared to $528.3 million and 34.3%, respectively, in the second quarter of fiscal 2024. This increase in operating margin was primarily attributed to:
Current report
◦Gross Margin, increased 270 basis points mainly due to net pricing improvements;
Current report
•Kate Spade Operating Income decreased $4.1 million to $68.0 million in the second quarter of fiscal 2025 and operating margin increased 70 basis points to 16.4%, as compared to $72.1 million and operating margin of 15.7% in the second quarter of fiscal 2024. This increase in operating margin was primarily attributed to:
Current report
◦Gross Margin, increased 180 basis points mainly due to net pricing improvements and lower duty expenses;
Current report
◦SG&A expenses as a percentage of net sales, increased 110 basis points mainly due to deleverage of marketing spend and compensation costs due to lower net sales.
Current report
•Stuart Weitzman Operating Income decreased $2.4 million to an operating loss of $(1.0) million in the second quarter of fiscal 2025, resulting in an operating margin decrease of 320 basis points to (1.5)%, as compared to operating income of $1.4 million and operating margin of 1.7% in the second quarter of fiscal 2024.
Current report
•Corporate Operating Expenses increased 26.5% or $40.9 million to $195.1 million in the second quarter of fiscal 2025. Excluding items affecting comparability, Corporate operating expenses increased $13.8 million to $139.7 million from $125.9 million in the second quarter of fiscal 2024. This increase in operating expenses was attributed to an increase in SG&A expenses primarily due to higher professional fees and increased compensation costs.
Current report
Loss on Extinguishment of Debt
Current report
Loss on extinguishment of debt increased $120.1 million in the second quarter of fiscal 2025 to $120.1 million as compared to $0.0 million in the second quarter of fiscal 2024. Excluding items affecting comparability, Loss on extinguishment of debt was $0.7 million in the second quarter of fiscal 2025 as compared to $0.0 million in the second quarter of fiscal 2024.
Current report
Net income decreased 3.7% or $11.9 million to $310.4 million in the second quarter of fiscal 2025 as compared to $322.3 million in the second quarter of fiscal 2024. Excluding items affecting comparability, net income increased 19.5% or $73.5 million to $450.2 million in the second quarter of fiscal 2025 from $376.7 million in the second quarter of fiscal 2024.
Current report
RESULTS OF OPERATIONS
Current report
FIRST SIX MONTHS FISCAL 2025 COMPARED TO FIRST SIX MONTHS FISCAL 2024
Current report
NM - Not meaningful
Current report
GAAP to Non-GAAP Reconciliation
Current report
First Six Months of Fiscal 2025 Items
Current report
In the first six months of fiscal 2025, the Company incurred charges as follows:
Current report
•Acquisition Costs - Total pre-tax charges of $268.4 million attributable to the Capri Acquisition. These charges include:
Current report
◦Loss on extinguishment of debt - $119.4 million primarily related to redemption premiums, as well as unamortized debt issuance costs and discounts, as a result of the redemption of the Capri Acquisition Senior Notes in the first six months of fiscal 2025 due to the termination of the Capri Acquisition agreement;
Current report
◦SG&A expenses: $88.8 million primarily related to expense reimbursement payment made to Capri and professional fees recorded within Corporate;
Current report
◦Interest expense, net: $60.2 million of financing related charges which primarily includes the net impact of the Capri Acquisition Senior Notes.
Current report
These actions taken together negatively impacted operating income by $88.8 million, increased Loss on extinguishment of debt by $119.4 million, increased interest expense by $60.2 million and reduced the provision for income tax by $73.6 million resulting in a net decrease in net income by $194.8 million or $0.85 per diluted share.
Current report
First Six Months of Fiscal 2024 Items
Current report
In the first six months of fiscal 2024, the Company incurred charges as follows:
Current report
These actions taken together negatively impacted operating income by $47.9 million, increased interest expense by $50.8 million and reduced the provision for income tax by $23.0 million resulting in a net decrease in net income by $75.7 million or $0.33 per diluted share.
Current report
Currency Fluctuation Effects
Showing the first 40 of 75 passages. Open the source sections for the rest.
Removed paragraphs (24)
Previous report
FIRST QUARTER FISCAL 2025 COMPARED TO FIRST QUARTER FISCAL 2024
Previous report
First Quarter Fiscal 2025 Items
Previous report
These actions taken together negatively impacted operating income by $33.4 million, increased interest expense by $37.4 million and reduced the provision for income tax by $15.8 million resulting in a net decrease in net income by $55.0 million or $0.23 per diluted share.
Previous report
Supplemental Segment Data
Previous report
First Quarter Fiscal 2024 Items
Previous report
These actions taken together negatively impacted operating income by $19.6 million, increased interest expense by $6.7 million and reduced the provision for income tax by $5.0 million resulting in a net decrease in net income by $21.3 million or $0.09 per diluted share.
Previous report
Supplemental Segment Data
Previous report
•Coach Net Sales increased 1.1% or $13.2 million to $1.17 billion in the first quarter of fiscal 2025. Excluding the impact of foreign currency, Net sales increased 1.6% or $18.3 million. This increase in Net sales was primarily due to an increase of $32.9 million in DTC sales driven by e-commerce sales globally. The increase in DTC sales was partially offset by a net $11.7 million decrease in wholesale sales driven by North America, which was partially offset by an increase in international wholesale sales.
Previous report
SG&A expenses increased 4.5% or $38.4 million to $882.9 million in the first quarter of fiscal 2025 as compared to $844.5 million in the first quarter of fiscal 2024. As a percentage of net sales, SG&A expenses increased to 58.6% during the first quarter of fiscal 2025 from 55.8% during the first quarter of fiscal 2024. Excluding items affecting comparability of $33.4 million in the first quarter of fiscal 2025, SG&A expenses increased 3.0% or $24.6 million to $849.5 million from $824.9 million in the first quarter of fiscal 2024. SG&A as a percentage of net sales increased 190 basis points to 56.4% compared to 54.5% during the first quarter of fiscal 2024. This increase in SG&A as a percentage of net sales was primarily due to higher marketing spend and increased compensation costs.
Previous report
•Coach Operating Income increased $15.3 million to $386.6 million in the first quarter of fiscal 2025, resulting in an operating margin increase of 90 basis points to 33.0%, as compared to $371.3 million and 32.1%, respectively, in the first quarter of fiscal 2024. This increase in operating margin was primarily attributed to:
Previous report
◦Gross Margin, increased 330 basis points mainly due to net pricing improvements, favorable currency impacts and lower freight costs;
Previous report
◦SG&A expenses as a percentage of net sales, increased 240 basis points mainly due to higher marketing spend and increased compensation costs.
Previous report
•Kate Spade Operating Income increased $0.4 million to $27.0 million in the first quarter of fiscal 2025, resulting in an operating margin increase of 80 basis points to 9.6%, as compared to $26.6 million and operating margin of 8.8% in the first quarter of fiscal 2024. This increase in operating margin was primarily attributed to:
Previous report
◦Gross Margin, increased 140 basis points mainly due to lower freight costs;
Previous report
Net income decreased 4.3% or $8.4 million to $186.6 million in the first quarter of fiscal 2025 as compared to $195.0 million in the first quarter of fiscal 2024. Excluding items affecting comparability, net income increased $25.3 million to $241.6 million in the first quarter of fiscal 2025 from $216.3 million in the first quarter of fiscal 2024.
Previous report
•Accounts payable were a source of cash of $92.9 million in the first quarter of fiscal 2025 compared to a use of cash of $28.4 million in the first quarter of fiscal 2024, primarily driven by higher in-transit inventory and the timing of payments compared to the prior year.
Previous report
•Other assets were a use of cash of $11.5 million in the first quarter of fiscal 2025 compared to a use of cash of $43.1 million in the first quarter of fiscal 2024, primarily driven by a decrease in prepaid expenses due to the timing of renewed information technology projects and insurance prepayments.
Previous report
The $22.8 million use of cash in the first quarter of fiscal 2024 was primarily due to capital expenditures of $20.9 million.
Previous report
The $74.5 million of cash used in the first quarter of fiscal 2025 was primarily due to dividend payments of $81.4 million and taxes paid to net settle share-based awards of $34.5 million, partially offset by proceeds from share-based awards of $41.7 million.
Previous report
The $149.4 million of cash used in the first quarter of fiscal 2024 was primarily due to dividend payments of $80.2 million and taxes paid to net settle share-based awards of $31.6 million as well as debt issuance costs of $31.4 million.
Previous report
Working Capital and Capital Expenditures
Previous report
If (i) the Capri Acquisition has not been completed by February 10, 2025 (or such later date mutually agreed between the Company and Capri) (such date, the “Special Mandatory Redemption End Date”), (ii) prior to the Special Mandatory Redemption End Date, the Merger Agreement is terminated in accordance with its terms or (iii) the Company otherwise notifies the trustee that it will not pursue the consummation of the Capri Acquisition, all of the Capri Acquisition Senior Notes will be redeemed at a redemption price equal to 101% of their principal amount, plus accrued and unpaid interest to, but excluding, the special mandatory redemption date.
Previous report
Stock Repurchase Plan
Previous report
On May 12, 2022, the Company announced the Board of Directors authorized the additional repurchase of up to $1.50 billion of its common stock (the "2022 Share Repurchase Program"). Pursuant to this program, purchases of the Company's common stock will be made subject to market conditions and at prevailing market prices, through open market purchases. Repurchased shares of common stock will become authorized but unissued shares. These shares may be issued in the future for general corporate and other purposes. In addition, the Company may terminate or limit the stock repurchase program at any time. As of September 28, 2024 the Company had $800.0 million of additional shares available to be repurchased as authorized under the 2022 Share Repurchase Program. In August 2023, the Company suspended its share repurchase activity in connection with the Capri Acquisition. Refer to Note 5, "Acquisitions," for further information. There were no shares repurchased during the first quarter of fiscal 2025.
Reworded paragraphs (38)
Previous wording
•Results of Operations. An analysis of our results of operations in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024.
Current wording
•Results of operations. An analysis of our results of operations in thesecond quarter of fiscal 2025 compared to thesecond quarter of fiscal 2024 and firstsix months of fiscal 2025 compared to the firstsix months of fiscal 2024.
Previous wording
On August 10, 2023, the Company entered into the Merger Agreement by and among the Company, Sunrise Merger Sub, Inc., a direct wholly owned subsidiary of Tapestry, and Capri for $57.00 per share in cash for a total enterprise value of approximately $8.50 billion. The Capri Acquisition, once completed, will bring together six highly complementary brands with global reach, powered by the Company’s data-rich customer engagement platform and diversified, direct-to-consumer operating model. In order to finance the Capri Acquisition, on November 27, 2023, the Company issued $4.50 billion of U.S. dollar-denominated senior unsecured notes (the "Capri Acquisition USD Senior Notes") and €1.50 billion of Euro-denominated senior unsecured notes (the "Capri Acquisition EUR Senior Notes" and, together with the Capri Acquisition USD Senior Notes, the "Capri Acquisition Senior Notes") which, together with the $1.40 billion of delayed draw unsecured term loan facilities (the "Capri Acquisition Term Loan Facilities") executed on August 30, 2023, complete the expected financing for the Capri Acquisition. The Company has received regulatory approval from all applicable jurisdictions except for the United States. On April 22, 2024, the FTC filed a complaint against the Company and Capri in the United States District Court for the Southern District of New York seeking to enjoin the consummation of the Capri Acquisition. The FTC’s complaint alleges that the Capri Acquisition, if consummated, would violate Section 7 of the Clayton Act and that the Merger Agreement and the Capri Acquisition constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act and should be enjoined. The trial commenced on September 9, 2024, and on October 24, 2024, the Court issued its Opinion and Order granting the FTC's request for a preliminary injunction of the Merger, pending an administrative trial on the merits which is scheduled to begin on December 9, 2024. On October 28, 2024, the Company and Capri filed a Notice of Appeal with respect to the October 24, 2024 Opinion and Order. On November 6, 2024, the United States Court of Appeals for the Second Circuit entered an order setting an expedited briefing schedule for the appeal of the decision of the United States District Court of the Southern District of New York granting the preliminary injunction of the merger. Refer to Note 5, "Acquisitions" and Note 16, "Subsequent Events" for further information.
Current wording
On August 10, 2023, the Company entered into the Merger Agreement by and among the Company, Sunrise Merger Sub, Inc., a direct wholly owned subsidiary of Tapestry, and Capri. In order to finance the Capri Acquisition, on November 27, 2023, the Company issued $4.50 billion of U.S. dollar-denominated senior unsecured notes (the "Capri Acquisition USD Senior Notes") and €1.50 billion of Euro-denominated senior unsecured notes (the "Capri Acquisition EUR Senior Notes" and, together with the Capri Acquisition USD Senior Notes, the "Capri Acquisition Senior Notes") which, together with the $1.40 billion of delayed draw unsecured term loan facilities (the "Capri Acquisition Term Loan Facilities") executed on August 30, 2023, completed the expected financing for the Capri Acquisition. On April 22, 2024, the FTC filed a complaint against the Company and Capri in the United States District Court for the Southern District of New York seeking to enjoin the consummation of the Capri Acquisition, and on October 24, 2024, the Court issued its Opinion and Order granting the FTC's request for a preliminary injunction of the Merger, pending an administrative trial on the merits which was scheduled to begin on December 9, 2024. On October 28, 2024, the Company and Capri filed a Notice of Appeal with respect to the October 24, 2024 Opinion and Order. On November 6, 2024, the United States Court of Appeals for the Second Circuit entered an order setting an expedited briefing schedule for the appeal of the decision of the United States District Court of the Southern District of New York granting the preliminary injunction of the merger. On November 13, 2024, the Parties entered into a Termination Agreement (the “Termination Agreement”), pursuant to which the Parties agreed to terminate the Merger Agreement, including all schedules and exhibits thereto and all ancillary agreements contemplated thereby or entered pursuant thereto (the “Termination Date”), effective immediately. Pursuant to the Termination Agreement, the Company agreed to reimburse Capri for its expenses in an amount equal to $45.1 million in cash on November 14, 2024. The Parties also agreed to release each other from claims, demands, damages, actions, causes of action and liability relating to or arising out of the Merger Agreement and the transactions contemplated therein or thereby. Following termination of the Merger Agreement, the Parties and the FTC filed a stipulation withdrawing the appeal to the United States Court of Appeals for the Second Circuit on November 19, 2024 and the Second Circuit dismissed the appeal on November 20, 2024. The Parties and the FTC also filed a Joint Motion to dismiss the complaint in the administrative trial on November 15, 2024 and the FTC dismissed the complaint on December 4, 2024. On November 25, 2024, due to the termination of the Merger Agreement and pursuant to the terms of the indenture governing the Capri Acquisition Senior Notes, as supplemented, the Company…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
During the first quarter of fiscal 2025, the macroeconomic environment remained challenging and volatile. Several organizations that monitor the world’s economy, including the International Monetary Fund, continue to forecast growth in the global economy, and remains unchanged since the fourth quarter of fiscal 2024. The forecast is below the historical growth average and is reflective of the current volatile environment, including tighter monetary and fiscal policies which have continued to moderate inflation, financial market volatility and the negative economic impacts of geopolitical instability in certain regions of the world.
Current wording
During the second quarter of fiscal 2025, the macroeconomic environment remained challenging and volatile. Several organizations that monitor the world’s economy, including the International Monetary Fund, continue to forecast growth in the global economy, and remains unchanged since the first quarter of fiscal 2025. The forecast is below the historical growth average and is reflective of the current volatile environment, including tighter monetary and fiscal policies which have continued to moderate inflation, financial market volatility and the negative economic impacts of geopolitical instability in certain regions of the world.
Previous wording
In the first quarter of fiscal 2025, the U.S. Dollar continued to fluctuate as compared to foreign currencies in regions where we conduct our business. This trend has resulted in impacts to our business including, but not limited to, a decrease in Net sales of $6.0 million, a positive impact to gross margin of approximately 40 basis points which benefited from the Company's hedging activity and approximately 10 basis point positive impact to operating margin.
Current wording
In the second quarter of fiscal 2025, the U.S. Dollar continued to fluctuate as compared to foreign currencies in regions where we conduct our business. This trend has resulted in impacts to our business including, but not limited to, for the three months ended December 28, 2024, increased Net sales of $6.9 million, with no impact to either gross margin or operating margin. For the six months ended December 28, 2024, increased Net sales of $0.8 million, a positive impact to gross margin of approximately 20 basis points which benefited from the Company's hedging activity and approximately 10 basis point positive impact to operating margin.
Previous wording
Currency volatility, political instability, such as the uncertainty associated with the potential impact of the new policies that may be implemented as a result of the U.S. Presidential election and potential changes to trade agreements or duty rates may also contribute to a worsening of the macroeconomic environment or adversely impact our business. Since fiscal 2019, the U.S. and China have both imposed tariffs on the importation of certain product categories into the respective country, with limited progress in negotiations to reduce or remove the tariffs.
Current wording
Currency volatility, geopolitical instability and political uncertainty, such as the potential impact of policies implemented and that may be implemented by the new U.S. Presidential Administration, including, but not limited to, changes to trade agreements, tax legislation or duty rates may also contribute to a worsening of the macroeconomic environment or adversely impact our business. Since fiscal 2019, the U.S. and China have both imposed tariffs on the importation of certain product categories into the respective country, with limited progress in negotiations to reduce or remove the tariffs.
Previous wording
On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law by the Biden Administration, with tax provisions primarily focused on implementing a 15% CAMT on global adjusted financial statement income and a 1% excise tax on share repurchases. The CAMT was effective at the beginning of fiscal 2024 and did not have a material impact on the Company’s effective tax rate.
Current wording
On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, with tax provisions primarily focused on implementing a 15% CAMT on global adjusted financial statement income and a 1% excise tax on share repurchases. The CAMT was effective at the beginning of fiscal 2024 and did not have a material impact on the Company’s effective tax rate.
Previous wording
The following table summarizes results of operations for the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. All percentages shown in the table below and the discussion that follows have been calculated using unrounded numbers.
Current wording
The following table summarizes results of operations for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. All percentages shown in the table below and the discussion that follows have been calculated using unrounded numbers.
Previous wording
The Company’s reported results are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The reported results during the first quarter of fiscal 2025 and fiscal 2024 reflect certain items which affect the comparability of our results, as noted in the following table. Refer to "Non-GAAP Measures" herein for further discussion on the Non-GAAP measures.
Current wording
The Company’s reported results are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The reported results during the second quarter of fiscal 2025 and fiscal 2024 reflect certain items which affect the comparability of our results, as noted in the following table. Refer to "Non-GAAP Measures" herein for further discussion on the Non-GAAP measures.
Previous wording
•Acquisition Costs - Total pre-tax charges of $70.8 million attributable to the Capri Acquisition. These charges include $37.4 million related to financing recorded in interest expense and $33.4 million primarily related to professional fees recorded in SG&A expense within Corporate.
Current wording
•Acquisition Costs - Total pre-tax charges of $72.4 million attributable to the Capri Acquisition. These charges include $44.1 million of financing related charges recorded in Interest expense, net, which primarily includes Bridge Facility financing fees, and the net impact of the Capri Acquisition Senior Notes, and $28.3 million primarily related to professional fees recorded in SG&A expense within Corporate.
Previous wording
The change in net sales for the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 has been presented both including and excluding currency fluctuation effects. All percentages shown in the tables below and the discussion that follows have been calculated using unrounded numbers.
Current wording
The change in net sales for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 has been presented both including and excluding currency fluctuation impacts. All percentages shown in the tables below and the discussion that follows have been calculated using unrounded numbers.
Previous wording
Net sales in the first quarter of fiscal 2025 decreased 0.4% or $5.7 million to $1.51 billion. Excluding the impact of foreign currency, Net sales were even compared to the prior year.
Current wording
Net sales in the second quarter of fiscal 2025 increased 5.3% or $110.9 million to $2.20 billion. Excluding the impact of foreign currency, net sales increased by 5.0% or $104.0 million.
Previous wording
•Stuart Weitzman Net Sales increased 2.1% or $1.1 million to $53.7 million in the first quarter of fiscal 2025. Excluding the impact of foreign currency, Net sales increased 2.0% or $1.0 million.
Current wording
•Stuart Weitzman Net Sales decreased 15.2% or $12.5 million to $69.7 million in the second quarter of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 15.5% or $12.8 million.
Previous wording
(1)In the first quarter of fiscal 2025, Corporate incurred charges affecting comparability of $33.4 million. Excluding those items affecting comparability, SG&A expenses increased 3.6% or $4.3 million to $120.8 million in the first quarter of fiscal 2025 as compared to $116.5 million in the first quarter of fiscal 2024.
Current wording
(1)In the second quarter of fiscal 2025, Corporate incurred charges affecting comparability of $55.4 million. Excluding those items affecting comparability, SG&A expenses increased 11.0% or $13.8 million to $139.7 million in the second quarter of fiscal 2025 as compared to $125.9 million in the second quarter of fiscal 2024.
Previous wording
Operating income decreased $1.2 million to $252.0 million in the first quarter of fiscal 2025 as compared to $253.2 million in the first quarter of fiscal 2024. Operating margin remained even at 16.7% in the first quarter of fiscal 2025 as compared to the first quarter of fiscal 2024. Excluding items affecting comparability of $33.4 million in the first quarter of fiscal 2025, operating income increased $12.6 million to $285.4 million in the first quarter of fiscal 2025 from $272.8 million in the first quarter of fiscal 2024; and operating margin increased 90 basis points to 18.9% in the first quarter of fiscal 2025 as compared to 18.0% in the first quarter of fiscal 2024. This increase in operating margin was primarily attributed to a 280 basis points increase in gross margin partially offset by an increase of 190 basis points in SG&A as a percentage of sales.
Current wording
Operating income increased 10.1% or $45.2 million to $492.8 million in the second quarter of fiscal 2025 as compared to $447.6 million in the second quarter of fiscal 2024. Operating margin was 22.4% in the second quarter of fiscal 2025 as compared to 21.5% in the second quarter of fiscal 2024. Excluding items affecting comparability of $55.4 million in the second quarter of fiscal 2025, operating income increased $72.3 million to $548.2 million in the second quarter of fiscal 2025 from $475.9 million in the second quarter of fiscal 2024; and operating margin increased 210 basis points to 24.9% in the second quarter of fiscal 2025 as compared to 22.8% in the second quarter of fiscal 2024. This increase in operating margin was primarily attributed to a 280 basis points increase in gross margin partially offset by an increase of 70 basis points in SG&A as a percentage of sales.
Previous wording
◦SG&A expenses as a percentage of net sales, increased 60 basis points mainly driven by higher occupancy costs due to one time corporate headquarter relocation, higher marketing spend, partially offset by lower depreciation.
Current wording
◦SG&A expenses as a percentage of net sales, increased 60 basis points mainly due to higher marketing spend, partially offset by leverage of occupancy costs due to higher net sales.
Previous wording
Net interest expense increased $17.4 million to $30.7 million in the first quarter of fiscal 2025 as compared to $13.3 million in the first quarter of fiscal 2024. Excluding items affecting comparability, net interest expense decreased $13.3 million to $(6.7) million from $6.6 million in the first quarter of fiscal 2024. This decrease in Interest expense, net, was due to a decrease in interest expense on the Term Loan due 2027 as a result of repayment in fiscal 2024 and higher interest income.
Current wording
Net interest expense decreased $24.7 million to $24.5 million in the second quarter of fiscal 2025 as compared to $49.2 million in the second quarter of fiscal 2024. Excluding items affecting comparability, net interest expense decreased $3.4 million to $1.7 million from $5.1 million in the second quarter of fiscal 2024. This decrease in net interest expense was mainly due to a decrease in interest expense on the Term Loan due 2027, the favorable impact of the net investment hedges and higher interest income partially offset by higher interest expense on the 2030 and 2035 Senior Notes, Revolving Credit Facility and Term Loan Credit Agreement.
Previous wording
Other income increased $5.8 million to $4.4 million in the first quarter of fiscal 2025 as compared to Other expense of $1.4 million in the first quarter of fiscal 2024. This increase in other income was related to an increase in foreign exchange gains.
Current wording
Other expense (income) increased $7.6 million to Other expense of $2.9 million in the second quarter of fiscal 2025 as compared to Other income of $4.7 million in the second quarter of fiscal 2024. This increase in Other expense was related to an increase in foreign exchange losses.
Previous wording
The effective tax rate was 17.3% in the first quarter of fiscal 2025 as compared to 18.2% in the first quarter of fiscal 2024. Excluding items affecting comparability, the effective tax rate was 18.5% in the first quarter of fiscal 2025 as compared to 18.3% in the first quarter of fiscal 2024.
Current wording
The effective tax rate was 10.1% in the second quarter of fiscal 2025 as compared to 20.0% in the second quarter of fiscal 2024. Excluding items affecting comparability, the effective tax rate was 17.1% in the second quarter of fiscal 2025 as compared to 20.8% in the second quarter of fiscal 2024. This decrease in our effective tax rate was primarily attributable to the excess tax windfall related to the exercise of share-based compensation awards and geographic mix of earnings.
Previous wording
Net income per diluted share was $0.79 in the first quarter of fiscal 2025 as compared to net income per diluted share of $0.84 in the first quarter of fiscal 2024. Excluding items affecting comparability, net income per diluted share increased $0.09 to $1.02 in the first quarter of fiscal 2025 from $0.93 in the first quarter of fiscal 2024, primarily due to higher net income.
Current wording
Net income per diluted share was $1.38 in the second quarter of fiscal 2025 as compared to net income per diluted share of $1.39 in the second quarter of fiscal 2024. Excluding items affecting comparability, net income per diluted share increased $0.37 to $2.00 in the second quarter of fiscal 2025 from $1.63 in the second quarter of fiscal 2024, primarily due to higher net income and a decrease in shares outstanding.
Previous wording
•Acquisition Costs - Total pre-tax charges of $26.3 million attributable to the Capri Acquisition. These charges include $19.6 million primarily related to professional fees recorded in SG&A expense within Corporate and $6.7 million related to financing recorded in interest expense.
Current wording
•Acquisition Costs - Total pre-tax charges of $98.7 million attributable to the Capri Acquisition. These charges include $50.8 million of financing related charges recorded in Interest expense, net, which primarily includes Bridge Facility financing fees, and the net impact of the Capri Acquisition Senior Notes, and $47.9 million primarily related to professional fees recorded in SG&A expense within Corporate.
Previous wording
Tapestry, Inc. Summary – First Quarter of Fiscal 2025
Current wording
Tapestry, Inc. Summary – First Six Months of Fiscal 2025
Previous wording
•Kate Spade Net Sales decreased 6.6% or $20.0 million to $283.2 million in the first quarter of fiscal 2025. Excluding the impact of foreign currency, Net sales decreased 6.3% or $18.9 million. This decrease in Net sales was due to a decrease of $24.4 million in DTC sales as a result of lower store and to a lesser extent, e-commerce sales. The decrease in DTC sales was partially offset by an increase of $4.9 million in wholesale sales.
Current wording
•Kate Spade Net Sales decreased 8.4% or $64.0 million to $699.6 million in the first six months of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 8.3% or $63.6 million. This decrease in net sales was due to a decrease of $73.6 million in DTC sales as a result of lower store and to a lesser extent, e-commerce sales. The decrease in DTC sales was partially offset by an increase of $8.5 million in wholesale sales.
Previous wording
Gross profit increased 3.4% or $37.2 million to $1.13 billion in the first quarter of fiscal 2025 from $1.10 billion in the first quarter of fiscal 2024. Gross margin increased 280 basis points to 75.3% in the first quarter of fiscal 2025 from 72.5% in the first quarter of fiscal 2024. This increase in Gross margin was primarily attributed to net pricing improvements, lower freight costs and favorable currency impacts. Refer to "Current Macroeconomic Conditions and Outlook" for further information.
Current wording
Gross profit increased 6.8% or $177.1 million to $2.77 billion in the first six months of fiscal 2025 from $2.59 billion in the first six months of fiscal 2024. Gross margin increased 280 basis points to 74.8% in the first six months of fiscal 2025 from 72.0% in the first six months of fiscal 2024. This increase in Gross margin was primarily attributed to net pricing improvements and lower freight costs. Refer to "Current Macroeconomic Conditions and Outlook" for further information.
Previous wording
•Stuart Weitzman Operating Loss decreased $1.2 million to a loss of $7.4 million in the first quarter of fiscal 2025, resulting in an operating margin increase of 260 basis points to (13.7)%, as compared to an operating loss of $8.6 million in the first quarter of fiscal 2024 and an operating margin of (16.3)%.
Current wording
•Stuart Weitzman Operating Loss increased $1.2 million to a loss of $8.4 million in the first six months of fiscal 2025, resulting in an operating margin decrease of 150 basis points to (6.8)%, as compared to an operating loss of $7.2 million in the first six months of fiscal 2024 and an operating margin of (5.3)%.
Previous wording
•Corporate Operating Expenses increased 13.3% or $18.1 million to $154.2 million in the first quarter of fiscal 2025. Excluding items affecting comparability, Corporate operating expenses increased $4.3 million to $120.8 million from $116.5 million in the first quarter of fiscal 2024. This increase in operating expenses was attributed to an increase in SG&A expenses primarily due to higher compensation costs and higher professional fees, partially offset by lower occupancy costs.
Current wording
•Corporate Operating Expenses increased 20.3% or $59.0 million to $349.3 million in the first six months of fiscal 2025. Excluding items affecting comparability, Corporate operating expenses increased $18.1 million to $260.5 million from $242.4 million in the first six months of fiscal 2024. This increase in operating expenses was attributed to an increase in SG&A expenses primarily due to higher professional fees, higher compensation costs and higher information technology costs, partially offset by lower occupancy costs.
Previous wording
The Company’s reported results are presented in accordance with GAAP. The reported SG&A expenses, operating income, interest expense, provision for income taxes, net income and earnings per diluted share in the first quarter of fiscal 2025 and fiscal 2024 reflect certain items affecting comparability, including the impact of Acquisition costs. As a supplement to the Company's reported results, these metrics are also reported on a non-GAAP basis to exclude the impact of these items along with a reconciliation to the most directly comparable GAAP measures.
Current wording
The Company’s reported results are presented in accordance with GAAP. The reported SG&A expenses, Operating income, Interest expense, Provision for income taxes, Net income and earnings per diluted share in the second quarter and first six months of fiscal 2025 and fiscal 2024 and the reported Loss on extinguishment of debt in the second quarter and first six months of fiscal 2025, reflect certain items affecting comparability, including the impact of Acquisition costs. As a supplement to the Company's reported results, these metrics are also reported on a non-GAAP basis to exclude the impact of these items along with a reconciliation to the most directly comparable GAAP measures.
Previous wording
The Company’s cash and cash equivalents increased by $320.9 million in the first quarter of fiscal 2025 as compared to a decrease of $104.0 million in the first quarter of fiscal 2024, as discussed below.
Current wording
The Company’s cash and cash equivalents decreased by $5.16 billion in the first six months of fiscal 2025 as compared to an increase of $6.11 billion in the first six months of fiscal 2024, as discussed below.
Previous wording
Net cash provided by operating activities increased $44.2 million primarily due to changes in operating assets and liabilities of $104.6 million, lower impact of non-cash adjustments of $52.0 million, as well as lower net income of $8.4 million.
Current wording
Net cash provided by operating activities decreased $276.3 million primarily due to changes in operating assets and liabilities of $259.3 million, lower net income of $20.3 million, as well as higher impact of non-cash adjustments of $3.3 million.
Previous wording
The $104.6 million increase in changes in operating asset and liability balances were primarily driven by the following:
Current wording
The $259.3 million decrease in changes in operating asset and liability balances were primarily driven by the following:
Previous wording
•Accrued liabilities were a source of cash of $32.0 million in the first quarter of fiscal 2025 compared to a use of cash of $62.0 million in the first quarter of fiscal 2024, primarily driven by an increase in accrued interest due to issuance of the Capri Acquisition Senior Notes, partially offset by accrued incentive compensation.
Current wording
•Accrued liabilities were a use of cash of $11.7 million in the first six months of fiscal 2025 compared to a source of cash of $87.0 million in the first six months of fiscal 2024, primarily driven by a decrease in accrued interest due to the repayment of the Capri Acquisition Senior Notes, partially offset by an increase in accrued advertising.
Previous wording
•Inventories were a use of cash of $181.4 million in the first quarter of fiscal 2025 compared to a use of cash of $29.8 million in the first quarter of fiscal 2024, primarily driven by higher in-transit inventory.
Current wording
•Other liabilities were a source of cash of $8.8 million in the first six months of fiscal 2025 compared to a use of cash of $29.8 million in the first six months of fiscal 2024, primarily driven by the timing of transfer tax payments.
Previous wording
Net cash provided by investing activities in the first quarter of fiscal 2025 was $190.1 million as compared to a use of cash of $22.8 million in the first quarter of fiscal 2024, resulting in a $212.9 million increase in net cash provided by investing activities.
Current wording
Net cash provided by investing activities in the first six months of fiscal 2025 was $979.4 million as compared to a use of cash of $655.0 million in the first six months of fiscal 2024, resulting in a $1.63 billion increase in net cash provided by investing activities.
Previous wording
The $190.1 million of cash provided in the first quarter of fiscal 2025 was primarily due to maturities and sales of investments of $1.7 billion, partially offset by purchases of investments of $1.5 billion, mainly related to the proceeds of the Capri Acquisition Senior Notes.
Current wording
The $979.4 million of cash provided in the first six months of fiscal 2025 was primarily due to proceeds from maturities and sales of investments of $2.92 billion, partially offset by purchases of investments of $1.89 billion, mainly related to the proceeds of the Capri Acquisition Senior Notes.
Previous wording
Net cash used in financing activities was $74.5 million in the first quarter of fiscal 2025 as compared to a use of cash of $149.4 million in the first quarter of fiscal 2024, resulting in a net decrease in use of cash for financing activities of $74.9 million.
Current wording
Net cash used in financing activities was $6.78 billion in the first six months of fiscal 2025 as compared to a source of cash of $5.81 billion in the first six months of fiscal 2024, resulting in a net increase of cash used in financing activities of $12.59 billion.
Previous wording
Effect of exchange rate changes on cash and cash equivalents was $85.8 million as compared to $(7.1) million in the first quarter of fiscal 2024 primarily driven by the impact of changes in the exchange rate of the United States Dollar against the Euro on the Capri Acquisition EUR Senior Notes.
Current wording
Effect of exchange rate changes on cash and cash equivalents was $12.3 million as compared to $51.0 million in the first six months of fiscal 2024, primarily driven by the impact of changes in the exchange rate of the United States Dollar against the Euro on the Capri Acquisition EUR Senior Notes.
Previous wording
(1)As of September 28, 2024, approximately 3.9% of our cash and short-term investments were held outside the United States.
Current wording
(1)As of December 28, 2024, approximately 23% of our cash and short-term investments were held outside the United States.
Previous wording
We believe that our Revolving Credit Facility is adequately diversified with no undue concentrations in any one financial institution. As of September 28, 2024, there were 18 financial institutions participating in the Revolving Credit Facility and 24 financial institutions participating in the Capri Acquisition Term Loan Facilities, with no one participant maintaining a combined maximum commitment percentage in excess of 10%. We have no reason to believe at this time that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the facility in the event we elect to draw funds in the foreseeable future.
Current wording
We believe that our Revolving Credit Facility is adequately diversified with no undue concentrations in any one financial institution. As of December 28, 2024, there were 18 financial institutions participating in the Revolving Credit Facility, with no one participant maintaining a combined maximum commitment percentage in excess of 10%. We have no reason to believe at this time that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the facility in the event we elect to draw funds in the foreseeable future.
Previous wording
During the first quarter of fiscal 2025 capital expenditures and cloud computing implementation costs were $29.6 million. The Company expects total fiscal 2025 capital expenditures and cloud computing cost to be approximately $190 million. Certain cloud computing implementation costs are recognized within Prepaid expenses and Other assets on the Condensed Consolidated Balance Sheets.
Current wording
During the three and six months ended December 28, 2024, capital expenditures and cloud computing implementation costs were $39.2 million and $68.8 million, respectively. The Company expects total fiscal 2025 capital expenditures and cloud computing cost to be approximately $170 million. Certain cloud computing implementation costs are recognized within Prepaid expenses and Other assets on the Condensed Consolidated Balance Sheets.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
•Kate Spade Net Sales decreased 9.6% or $44.0 million to $416.4 million in the second quarter of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 9.7% or $44.7 million. This decrease in net sales was due to a decrease of $49.3 million in DTC sales as a result of lower store and to a lesser extent, e-commerce sales. The decrease in DTC sales was partially offset by a $3.6 million increase in wholesale sales.
Current report — wording carried from elsewhere
The following table summarizes results of operations for the first six months of fiscal 2025 compared to the first six months of fiscal 2024. All percentages shown in the table below and the discussion that follows have been calculated using unrounded numbers.
Current report — wording carried from elsewhere
The Company’s reported results are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The reported results during the first six months of fiscal 2025 and fiscal 2024 reflect certain items which affect the comparability of our results, as noted in the following table. Refer to "Non-GAAP Measures" herein for further discussion on the Non-GAAP measures.
Current report — wording carried from elsewhere
The change in net sales for the first six months of fiscal 2025 compared to the first six months of fiscal 2024 has been presented both including and excluding currency fluctuation impacts. All percentages shown in the tables below and the discussion that follows have been calculated using unrounded numbers.
Current report — wording carried from elsewhere
The Company includes inbound product-related transportation costs from our service providers within Cost of sales. The Company, similar to some companies, includes certain transportation-related costs due to our distribution network in SG&A expenses rather than in Cost of sales; for this reason, our gross margins may not be comparable to that of entities that include all costs related to their distribution network in Cost of sales.
Current report — wording carried from elsewhere
Selling, General and Administrative Expenses ("SG&A")
Current report — wording carried from elsewhere
(2)Corporate expenses, which are included within SG&A expenses discussed above but are not directly attributable to a reportable segment.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous report — wording carried elsewhere
In the first quarter of fiscal 2025, the Company incurred charges as follows:
Previous report — wording carried elsewhere
In the first quarter of fiscal 2024, the Company incurred charges as follows: