TAPESTRY, INC.

Previous wording

The following discussion of the Company's financial condition and results of operations should be read together with the Company's condensed consolidated financial statements and notes to those financial statements included elsewhere in this document. When used herein, the terms "the Company," "Tapestry," "we," "us" and "our" refer to Tapestry, Inc., including consolidated subsidiaries. References to "Coach," "Stuart Weitzman," "Kate Spade" or "kate spade new york" refer only to the referenced brand.

Current wording

The following discussion of the Company's financial condition and results of operations should be read together with the Company's condensed consolidated financial statements and notes to those financial statements included elsewhere in this document. When used herein, the terms "the Company," "Tapestry," "we," "us" and "our" refer to Tapestry, Inc., including consolidated subsidiaries. References to "Coach," "Kate Spade" or "kate spade new york" refer only to the referenced brand.

Previous wording

•Results of Operations. An analysis of our results of operations in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025.

Current wording

•Results of Operations. An analysis of our results of operations in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025 and the first six months of fiscal 2026 compared to the first six months of fiscal 2025.

Previous wording

On February 16, 2025, the Company entered into a sale and purchase agreement (the “Purchase Agreement”) with Caleres, Inc. (the “Purchaser”) to sell the Stuart Weitzman Business (as defined below). The Purchaser acquired certain assets and liabilities of the Company's global business of designing, manufacturing, promotion, marketing, production, distribution, sales and licensing of Stuart Weitzman branded products (the "Stuart Weitzman Business") for total cash consideration of $105.0 million (the "Purchase Price"). The Purchase Price was subject to customary adjustments for cash, indebtedness, net working capital and transaction expenses. The sale was completed on August 4, 2025 (the "Stuart Weitzman Business Divestiture"). Refer to Note 5, "Acquisitions and Divestitures" for further information.

Current wording

On February 16, 2025, the Company entered into a sale and purchase agreement (the “Purchase Agreement”) with Caleres, Inc. (the “Purchaser”) to sell the Stuart Weitzman Business (as defined below). The sale was completed on August 4, 2025 (the "Stuart Weitzman Business Divestiture"). The Purchaser acquired certain assets and liabilities of the Company's global business of designing, manufacturing, promotion, marketing, production, distribution, sales and licensing of Stuart Weitzman branded products (the "Stuart Weitzman Business") for total cash consideration of $105.0 million (the "Purchase Price"). The Purchase Price is subject to customary adjustments for cash, indebtedness, net working capital and transaction expenses. Effective in the first quarter of fiscal 2026, following the Stuart Weitzman Business Divestiture, the Company's reportable segments are Coach and Kate Spade. Refer to Note 5, "Acquisitions and Divestitures" for further information.

Previous wording

During the second half of fiscal 2025, the U.S. Government announced tariffs on imports from select countries. The majority of the Company's products sold in the U.S. are imported from countries in which these tariffs were announced. Additionally, during the first quarter of fiscal 2026, the President of the United States issued an executive order removing the de minimis exemption for low value shipments imported into the U.S. for all countries beginning August 29, 2025. As a result of these changes in the tariff landscape, including the de minimis removal, during the first quarter of fiscal 2026 the Company's gross margin was negatively impacted by approximately 70 basis points. The Company continues to expect to take actions to mitigate the negative impacts of these incremental costs during the remainder of the fiscal year and beyond.

Current wording

During the second half of fiscal 2025, the U.S. Government announced tariffs on imports from select countries. The majority of the Company's products sold in the U.S. are imported from countries in which these tariffs were announced. Additionally, during the first quarter of fiscal 2026, the President of the United States issued an executive order removing the de minimis exemption for low value shipments imported into the U.S. for all countries beginning August 29, 2025. As a result of these changes in the tariff landscape, including the de minimis removal, for the three and six months ended December 27, 2025, the Company's gross margin was negatively impacted by approximately 190 basis points and 140 basis points, respectively. The Company continues to take actions to mitigate the negative impacts of these incremental costs during the remainder of the fiscal year and beyond.

Previous wording

During the first quarter of fiscal 2026, 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 mostly unchanged since the fourth quarter of fiscal 2025. The forecast is below the historical growth average and is reflective of the current volatile environment, including escalation of trade tensions, 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 2026, the macroeconomic environment remained challenging and volatile. While certain organizations that monitor the global economy, including the International Monetary Fund, continue to forecast growth, these projections remain subject to uncertainty and have fluctuated in recent periods. The forecast is reflective of the current volatile environment, including the continuation of trade tensions, 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 2026, 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, an increase in Net sales of $10.6 million and a negative impact to gross margin and operating margin of approximately 60 basis points and 50 basis points, respectively.

Current wording

In the second quarter of fiscal 2026, 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 27, 2025, increased Net sales of $0.9 million, with no impact to either gross margin or operating margin. For the six months ended December 27, 2025, fluctuations in foreign currency exchange rates resulted in increased Net sales of $11.4 million and a negative impact to gross margin and operating margin of approximately 20 basis points and 20 basis points, respectively.

Previous wording

On December 12, 2022, the E.U. member states also reached an agreement to implement the Organization for Economic Co-operation and Development’s (“OECD”) reform of international taxation known as Pillar Two Global Anti-Base Erosion Rules (“GloBE”), which broadly mirrors the Inflation Reduction Act by imposing a 15% global minimum tax on multinational companies, which was effective on January 1, 2025. Based on the countries in which we do business, these changes did not have a material impact in fiscal 2025. Other countries are also implementing similar legislation with effective dates starting in fiscal 2026, known as Qualifying Domestic Minimum Top-Up Tax ("QDMTT"). On June 26, 2025, the U.S. Treasury reached an agreement with the other G7 countries regarding the application of GloBE rules to U.S. parented multinational enterprises ("U.S. MNEs"). Most notably, the agreement includes a full exclusion for U.S. MNEs from the Undertaxed Profits Rule and Income Inclusion Rule, which are two of the three taxing mechanisms under GloBE. Given that the third mechanism, QDMTT is still in force, it is unclear what impact if any the OECD agreement will have on the Company. Based on current legislation, QDMTT will have a negative impact on the Company's effective tax rate in fiscal 2026 and beyond.

Current wording

On December 12, 2022, the E.U. member states reached an agreement to implement the Organization for Economic Co-operation and Development’s (“OECD”) reform of international taxation known as Pillar Two Global Anti-Base Erosion Rules (“GloBE”), which broadly mirrors the Inflation Reduction Act by imposing a 15% global minimum tax on multinational companies. These rules subject multinational companies to three possible tax mechanisms individually known as the Income Inclusion Rule (“IIR”), the Undertaxed Profits Rule (“UTPR”) and the Qualified Domestic Minimum Top-up Tax (“QDMTT”). The rules became effective on January 1, 2025. Based on the countries in which we do business, these rule changes started to negatively impact the Company's effective tax rate beginning in fiscal 2026. On January 5, 2026, the OECD published additional guidance regarding the application of GloBE rules to U.S. parented multinational enterprises ("U.S. MNEs"). Most notably, the agreement excludes U.S. MNEs from the UTPR and IIR; however, QDMTT is still in force based on current legislation and will continue to have a negative impact on the Company's effective tax rate in fiscal 2026 and beyond.

Previous wording

The following table summarizes results of operations for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. 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 2026 compared to the second quarter of fiscal 2025. 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 2026 and fiscal 2025 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 2026 and fiscal 2025 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 $197.6 million attributable to the Capri Acquisition. These charges include:

Previous wording

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.

Current wording

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.

Previous wording

The change in Net sales for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 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 2026 compared to the second quarter of fiscal 2025 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.

Previous wording

Net sales in the first quarter of fiscal 2026 increased 13.1% or $197.1 million to $1.70 billion. Excluding the impact of the Stuart Weitzman Business and foreign currency, net sales increased by 15.5% or $225.6 million.

Current wording

Net sales in the second quarter of fiscal 2026 increased 14.0% or $307.0 million to $2.50 billion. Excluding the impact of the Stuart Weitzman Business and foreign currency, net sales increased by 17.7% or $375.8 million.

Previous wording

•Coach Net sales increased 22.1% or $259.2 million to $1.43 billion in the first quarter of fiscal 2026. Excluding the impact of foreign currency, Net sales increased 21.3% or $249.9 million. This increase in Net sales was primarily due to an increase of $222.7 million in DTC sales as a result of an increase in both store sales and e-commerce, mainly driven by North America, Greater China and Europe.

Current wording

•Coach Net sales increased 25.3% or $433.1 million to $2.14 billion in the second quarter of fiscal 2026. Excluding the impact of foreign currency, Net sales increased 25.3% or $432.3 million. This increase in Net sales was primarily due to an increase of $373.6 million in DTC sales, mainly driven by North America, Greater China and Europe.

Previous wording

•Kate Spade Net sales decreased 8.1% or $23.0 million to $260.2 million in the first quarter of fiscal 2026. Excluding the impact of foreign currency, Net sales decreased 8.6% or $24.3 million. This decrease in Net sales was primarily due to a decrease of $28.1 million in DTC sales as a result of lower store and e-commerce sales.

Current wording

•Kate Spade Net sales decreased 13.6% or $56.4 million to $360.0 million in the second quarter of fiscal 2026. Excluding the impact of foreign currency, Net sales decreased 13.6% or $56.5 million. This decrease in Net sales was primarily due to a decrease of $54.0 million in DTC sales.

Previous wording

•Kate Spade Operating Income decreased $21.4 million to $5.6 million in the first quarter of fiscal 2026. Operating margin decreased to 2.1% in the first quarter of fiscal 2026 as compared to 9.6% in the first quarter of fiscal 2025. Excluding items affecting comparability, operating income decreased $21.2 million to $5.8 million in the first quarter of fiscal 2026 from $27.0 million in the first quarter of fiscal 2025; and operating margin decreased approximately 740 basis points to 2.2% in the first quarter of fiscal 2026 as compared to 9.6% in the first quarter of fiscal 2025. This decrease in operating margin was primarily attributed to:

Current wording

•Kate Spade Operating Income decreased $51.7 million to $16.3 million in the second quarter of fiscal 2026. Operating margin decreased to 4.5% in the second quarter of fiscal 2026 as compared to 16.4% in the second quarter of fiscal 2025. Excluding items affecting comparability, operating income decreased $51.4 million to $16.6 million in the second quarter of fiscal 2026 from $68.0 million in the second quarter of fiscal 2025; and operating margin decreased approximately 1,180 basis points to 4.6% in the second quarter of fiscal 2026 as compared to 16.4% in the second quarter of fiscal 2025. This decrease in operating margin was primarily attributed to:

Previous wording

◦Gross margin, decreased 290 basis points mainly due to the impact of higher tariffs and unfavorable channel mix, partially offset by net pricing improvements;

Current wording

◦Gross margin, decreased 470 basis points mainly due to the impact of higher tariffs and unfavorable channel mix, partially offset by net pricing improvements;

Previous wording

◦SG&A expenses as a percentage of net sales, increased approximately 460 basis points mainly driven by higher marketing spend.

Current wording

◦SG&A expenses as a percentage of net sales, increased approximately 710 basis points mainly driven by higher marketing spend and deleverage of fixed costs on lower net sales.

Previous wording

Net interest expense decreased $17.9 million to $12.8 million in the first quarter of fiscal 2026 as compared to $30.7 million in the first quarter of fiscal 2025. Excluding items affecting comparability, net interest expense increased $19.6 million to $12.9 million from interest income of $6.7 million in the first quarter of fiscal 2025. This increase in Interest expense, net, was mainly due to an increase in interest expense as a result of the issuance of the 2030 and 2035 Senior Notes.

Current wording

Net interest expense decreased $7.1 million to $17.4 million in the second quarter of fiscal 2026 as compared to $24.5 million in the second quarter of fiscal 2025. Excluding items affecting comparability, net interest expense increased $15.7 million to $17.4 million from interest expense of $1.7 million in the second quarter of fiscal 2025. This increase in Interest expense, net, was mainly due to an increase in interest expense as a result of the issuance of the 2030 and 2035 Senior Notes and lower interest income.

Previous wording

Other income decreased $1.1 million to $3.3 million in the first quarter of fiscal 2026 as compared to Other income of $4.4 million in the first quarter of fiscal 2025. Excluding items affecting comparability, Other income decreased $1.0 million to $3.4 million as compared to Other income of $4.4 million in the first quarter of fiscal 2025. This decrease in other income was related to a decrease in foreign exchange gains.

Current wording

Other expense decreased $1.0 million to $1.9 million in the second quarter of fiscal 2026 as compared to Other expense of $2.9 million in the second quarter of fiscal 2025. This decrease in other expense was related to a decrease in foreign exchange losses.

Previous wording

Net income per diluted share was $1.28 in the first quarter of fiscal 2026 as compared to net income per diluted share of $0.79 in the first quarter of fiscal 2025. Excluding items affecting comparability, net income per diluted share increased $0.36 to $1.38 in the first quarter of fiscal 2026 from $1.02 in the first quarter of fiscal 2025, primarily due to higher net income and a decrease in shares outstanding.

Current wording

Net income per diluted share was $2.68 in the second quarter of fiscal 2026 as compared to net income per diluted share of $1.38 in the second quarter of fiscal 2025. Excluding items affecting comparability, net income per diluted share increased $0.69 to $2.69 in the second quarter of fiscal 2026 from $2.00 in the second quarter of fiscal 2025, primarily due to higher net income and a decrease in shares outstanding.

Previous wording

The Company made certain changes to the composition of segment information effective in the first quarter of fiscal 2026 as a result of the sale of Stuart Weitzman on August 4, 2025. As of the first quarter of fiscal 2026, the Company's reportable segments are Coach and Kate Spade. For the first quarter of fiscal 2026, prior to the completion of the sale on August 4, 2025, Stuart Weitzman Net sales were $14.6 million, Gross profit was $7.7 million and SG&A expenses were $8.7 million resulting in an Operating loss of $1.0 million. These results were considered as Items Affecting Comparability in the three months ended September 27, 2025. For the first quarter of fiscal 2025, Stuart Weitzman Net sales were $53.7 million, Gross profit was $29.2 million and SG&A expenses were $36.6 million resulting in an Operating loss of $7.4 million. These results were not considered as Items Affecting Comparability in the three months ended September 28, 2024.

Current wording

Effective in the first quarter of fiscal 2026, following the Stuart Weitzman Business Divestiture on August 4, 2025, the Company's reportable segments are Coach and Kate Spade. For the first six months of fiscal 2026, prior to the completion of the sale on August 4, 2025, Stuart Weitzman Net sales were $14.6 million, Gross profit was $7.7 million and SG&A expenses were $8.7 million resulting in an Operating loss of $1.0 million. These results were considered as items affecting comparability in the first six months of fiscal 2026. For the first six months of fiscal 2025, Stuart Weitzman Net sales were $123.4 million, Gross profit was $70.4 million and SG&A expenses were $78.8 million resulting in an Operating loss of $8.4 million. These results were not considered as items affecting comparability in the first six months of fiscal 2025.

Previous wording

•Acquisition and Divestiture - Total pre-tax charges of $14.7 million related to the Stuart Weitzman divestiture primarily due to professional fees, severance costs as well as the Stuart Weitzman Operating loss for the period.

Current wording

•Acquisition and Divestiture - Total pre-tax charges of $13.9 million related to the Stuart Weitzman Business Divestiture primarily due to professional fees and severance costs, partially offset by income from the TSA.

Previous wording

•Organizational Efficiency Costs - Total pre-tax charges of $11.0 million primarily related to technology costs and severance costs.

Current wording

•Organizational Efficiency Costs - Total pre-tax charges of $15.2 million primarily related to technology costs and severance costs.

Previous wording

These actions taken together negatively impacted operating income by $25.7 million and reduced the provision for income tax by $3.4 million resulting in a net decrease in net income by $22.3 million or $0.10 per diluted share.

Current wording

These actions taken together negatively impacted operating income by $29.1 million and reduced the provision for income tax by $3.4 million resulting in a net decrease in net income by $25.7 million or $0.12 per diluted share.

Previous wording

Tapestry, Inc. Summary – First Quarter of Fiscal 2026

Current wording

Tapestry, Inc. Summary – First Six Months of Fiscal 2026

Previous wording

The Company made certain changes to the composition of segment information effective in the first quarter of fiscal 2026 as a result of the sale of Stuart Weitzman on August 4, 2025. As of the first quarter of fiscal 2026, the Company's reportable segments are Coach and Kate Spade. For the first quarter of fiscal 2026, prior to the completion of the sale on August 4, 2025, Stuart Weitzman Net sales were $14.6 million, Gross profit was $7.7 million and SG&A expenses were $8.7 million resulting in an Operating loss of $1.0 million. These results were considered as Items Affecting Comparability in the three months ended September 27, 2025. For the first quarter of fiscal 2025, Stuart Weitzman Net sales were $53.7 million, Gross profit was $29.2 million and SG&A expenses were $36.6 million resulting in an Operating loss of $7.4 million. These results were not considered as Items Affecting Comparability in the three months ended September 28, 2024.

Current wording

Effective in the first quarter of fiscal 2026, following the Stuart Weitzman Business Divestiture on August 4, 2025, the Company's reportable segments are Coach and Kate Spade. For the first six months of fiscal 2026, prior to the completion of the sale on August 4, 2025, Stuart Weitzman Net sales were $14.6 million, Gross profit was $7.7 million and SG&A expenses were $8.7 million resulting in an Operating loss of $1.0 million. These results were considered as items affecting comparability in the first six months of fiscal 2026. For the first six months of fiscal 2025, Stuart Weitzman Net sales were $123.4 million, Gross profit was $70.4 million and SG&A expenses were $78.8 million resulting in an Operating loss of $8.4 million. These results were not considered as items affecting comparability in the first six months of fiscal 2025.

Previous wording

Gross profit increased 14.6% or $165.6 million to $1.30 billion in the first quarter of fiscal 2026 from $1.13 billion in the first quarter of fiscal 2025. Gross margin increased 100 basis points to 76.3% in the first quarter of fiscal 2026 from 75.3% in the first quarter of fiscal 2025. Excluding items affecting comparability, Gross margin increased 120 basis points to 76.5% in the first quarter of fiscal 2026 from 75.3% in the first quarter of fiscal 2025, which includes a 70 basis point benefit from the divestiture of Stuart Weitzman. The remaining 50 basis point increase in Gross margin was primarily attributed to net pricing improvements, partially offset by the impact of higher tariffs and unfavorable currency impacts. Refer to "Current Macroeconomic Conditions and Outlook" for further information.

Current wording

Gross profit increased 15.2% or $420.9 million to $3.19 billion in the first six months of fiscal 2026 from $2.77 billion in the first six months of fiscal 2025. Gross margin increased 100 basis points to 75.8% in the first six months of fiscal 2026 from 74.8% in the first six months of fiscal 2025. Excluding items affecting comparability, gross margin increased 110 basis points to 75.9% in the first six months of fiscal 2026 from 74.8% in the first six months of fiscal 2025, which includes a 60 basis point benefit from the divestiture of Stuart Weitzman. The remaining 50 basis point increase in gross margin was primarily attributed to net pricing improvements, partially offset by the impact of higher tariffs. Refer to "Current Macroeconomic Conditions and Outlook" for further information.

Previous wording

Operating income increased $76.2 million to $328.2 million in the first quarter of fiscal 2026 as compared to $252.0 million in the first quarter of fiscal 2025. Operating margin increased to 19.3% in the first quarter of fiscal 2026 as compared to 16.7% in the first quarter of fiscal 2025. Excluding items affecting comparability, operating income increased $68.5 million to $353.9 million in the first quarter of fiscal 2026 from $285.4 million in the first quarter of fiscal 2025. Operating margin increased 200 basis points to 20.9% in the first quarter of fiscal 2026 as compared to 18.9% in the first quarter of fiscal 2025, which includes a 110 basis point benefit from the divestiture of Stuart Weitzman. The remaining 90 basis point increase in operating margin was primarily attributed to a 50 basis point increase in Gross margin and a 40 basis point decrease in SG&A as a percentage of sales.

Current wording

$240.1 million to $1.07 billion in the first six months of fiscal 2026 from $833.6 million in the first six months of fiscal 2025. Operating margin increased 310 basis points to 25.6% in the first six months of fiscal 2026 as compared to 22.5% in the first six months of fiscal 2025, which includes a 100 basis point benefit from the divestiture of Stuart Weitzman. The remaining increase in operating margin was primarily attributed to a 50 basis point increase in gross margin and a 160 basis point decrease in SG&A as a percentage of sales.

Previous wording

◦Gross margin, increased 50 basis points mainly due to net pricing improvements, partially offset by unfavorable currency impacts and the impact of higher tariffs;

Current wording

◦Gross margin, increased approximately 60 basis points mainly due to net pricing improvements, partially offset by the impact of higher tariffs and unfavorable currency impacts;

Previous wording

•Corporate Operating Expenses increased 6.3% or $9.6 million to $163.8 million in the first quarter of fiscal 2026. Excluding items affecting comparability, Corporate operating expenses increased $19.7 million to $140.5 million from $120.8 million in the first quarter of fiscal 2025. This increase in operating expenses was primarily attributed to higher professional fees and higher compensation costs.

Current wording

•Corporate Operating Expenses decreased 11.2% or $39.1 million to $310.2 million in the first six months of fiscal 2026. Excluding items affecting comparability, Corporate operating expenses increased $23.3 million to $283.8 million from $260.5 million in the first six months of fiscal 2025. This increase in operating expenses was primarily attributed to higher compensation costs and higher professional fees, partially offset by lower occupancy costs.

Previous wording

The effective tax rate was 13.8% in the first quarter of fiscal 2026 as compared to 17.3% in the first quarter of fiscal 2025. Excluding items affecting comparability, the effective tax rate was 13.7% in the first quarter of fiscal 2026 as compared to 18.5% in the first quarter of fiscal 2025. The decrease in effective tax rate was primarily attributable to the excess tax windfall related to share-based compensation awards partially offset by the geographical mix of earnings.

Current wording

The effective tax rate was 17.7% in the first six months of fiscal 2026 as compared to 13.0% in the first six months of fiscal 2025. Excluding items affecting comparability, the effective tax rate was 17.5% in the first six months of fiscal 2026 as compared to 17.6% in the first six months of fiscal 2025. The decrease in effective tax rate was primarily attributable to the impact of discrete items compared to the prior year period, primarily offset by the impact of Pillar Two.

Previous wording

The Company’s reported results are presented in accordance with GAAP. The reported SG&A expenses, operating income, interest expense, other expense (income), provision for income taxes, net income and earnings per diluted share in the first quarter of fiscal 2026 and fiscal 2025 reflect certain items affecting comparability, including the impact of the Acquisition and Divestiture and Organizational Efficiency Costs. As a supplement to the Company's reported results, these measures 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, other expense (income), provision for income taxes, net income and earnings per diluted share in the second quarter and first six months of fiscal 2026 and fiscal 2025 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 the Acquisition and Divestiture and Organizational Efficiency Costs. As a supplement to the Company's reported results, these measures 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 incurred Acquisition and Divestiture items which consist of non-recurring costs, related to the Stuart Weitzman Business Divestiture, inclusive of professional fees, one-time severance costs, compensation costs and operating net loss. The Company also incurred Organizational Efficiency Costs which consist of non-recurring costs, primarily from various initiatives aimed at streamlining the organization and optimizing processes. These costs mainly include one-time technology and severance related charges.

Current wording

The Company incurred Acquisition and Divestiture items which consist of non-recurring costs, related to the Stuart Weitzman Business Divestiture, inclusive of professional fees, one-time severance costs, compensation costs, operating net loss and TSA income. The Company also incurred Organizational Efficiency Costs which consist of non-recurring costs, primarily from various initiatives aimed at streamlining the organization and optimizing processes. These costs mainly include one-time technology and severance related charges.

Previous wording

The Company’s cash and cash equivalents decreased by $380.5 million in the first quarter of fiscal 2026 as compared to an increase of $320.9 million in the first quarter of fiscal 2025, as discussed below.

Current wording

The Company’s cash and cash equivalents decreased by $46.7 million in the first six months of fiscal 2026 as compared to a decrease of $5.16 billion in the first six months of fiscal 2025, as discussed below.

Previous wording

Net cash provided by operating activities decreased $6.9 million primarily due to changes in operating assets and liabilities of $169.4 million, higher impact of non-cash adjustments of $74.3 million, as well as higher net income of $88.2 million.

Current wording

Net cash provided by operating activities increased $568.2 million primarily due to higher net income of $339.1 million, changes in operating assets and liabilities of $225.2 million, as well as higher impact of non-cash adjustments of $3.9 million.

Previous wording

The $169.4 million decrease in changes in operating asset and liability balances were primarily driven by the following:

Current wording

The $225.2 million increase in changes in operating asset and liability balances were primarily driven by the following:

Previous wording

•Accrued liabilities were a use of cash of $71.1 million in the first quarter of fiscal 2026 compared to a source of cash of $32.0 million in the first quarter of fiscal 2025, primarily driven by a decrease in accrued interest due to repayment of the Capri Acquisition Senior Notes, partially offset by an increase in accrued duty driven by higher tariffs.

Current wording

•Accrued liabilities were a source of cash of $63.5 million in the first six months of fiscal 2026 compared to a use of cash of $11.7 million in the first six months of fiscal 2025, primarily driven by an increase in accrued duty due to higher tariffs, increase in senior notes accrued interest due to timing of payments, partially offset by a decrease in other tax liabilities and higher Annual Incentive Plan payments compared to the prior year.

Previous wording

•Accounts payable were a source of cash of $33.8 million in the first quarter of fiscal 2026 compared to a source of cash of $92.9 million in the first quarter of fiscal 2025, primarily driven by lower in-transit inventory and receipts.

Current wording

•Accounts payable were a source of cash of $109.4 million in the first six months of fiscal 2026 compared to a source of cash of $61.4 million in the first six months of fiscal 2025, primarily driven by an increase in marketing spend, timing of information technology payments and lower spending in the prior year for professional fees.

Previous wording

Net cash provided by investing activities in the first quarter of fiscal 2026 was $69.3 million as compared to a source of cash of $190.1 million in the first quarter of fiscal 2025, resulting in a $120.8 million decrease in net cash provided by investing activities.

Current wording

Net cash provided by investing activities in the first six months of fiscal 2026 was $25.9 million as compared to a source of cash of $979.4 million in the first six months of fiscal 2025, resulting in a $953.5 million decrease in net cash provided by investing activities.