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 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 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

•Global Economic Conditions and Industry Trends. This section includes a discussion on global economic conditions and industry trends that affect comparability that are important in understanding results of operations and financial conditions, and in anticipating future trends.

Current wording

•Global Economic Conditions and Industry Trends. This section includes a discussion on global economic conditions and industry trends that affect comparability that are important in understanding results of operations and financial condition, and in anticipating future trends.

Previous wording

In the first quarter of fiscal 2023, the Company introduced the 2025 growth strategy, future speed, designed to amplify and extend the competitive advantages of its brands, with a focus on four strategic priorities:

Current wording

In the first quarter of fiscal 2026, the Company introduced its 2028 growth strategy (“Amplify”), which focuses on four key pillars:

Previous wording

•Fueling Fashion Innovation & Product Excellence: The Company aims to drive sustained growth in core handbags and small leathergoods, while accelerating gains in footwear and lifestyle products.

Current wording

•Fueling Fashion Innovation & Product Excellence: The Company aims to lead with handbags and leathergoods with targeted lifestyle expansion in footwear.

Previous wording

On February 16, 2025, the Company entered into a Purchase Agreement with Caleres 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"), 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," and Note 21, "Subsequent Events," 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 a final aggregate purchase price of $109.1 million, which included customary adjustments for net working capital and indebtedness. 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

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, complete 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.

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 and €1.50 billion of Euro-denominated senior unsecured 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 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, 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. 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 redeemed all outstanding Capri Acquisition Senior Notes at a redemption price of 101% of the aggregate principal amount of such Capri Acquisition Senior Notes, plus accrued and unpaid interest to, but excluding, the date of redemption. In addition, the Capri Acquisition Term Loan Facilities were terminated concurrently with the execution of the Termination Agreement on November 13, 2024. Refer to Note 5, "Acquisitions and Divestitures" for further information.

Previous wording

The macroeconomic environment remained challenging and volatile during fiscal 2025. Several organizations that monitor the world’s economy, including the International Monetary Fund, continue to forecast growth in the global economy. Some of these organizations have recently revised the forecast slightly upwards since the third 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, 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 fiscal 2026, the macroeconomic environment remained challenging and volatile. While certain organizations that monitor the global economy continue to forecast growth, these projections remain subject to uncertainty and have fluctuated in recent periods. Recent forecasts reflect the current volatile environment, including the continuation of trade tensions, financial market volatility, inflationary pressure and the negative economic impacts of geopolitical instability in certain regions of the world.

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. As a result of the Company's actions to accelerate inventory purchases and based on current trends of the business, we did not experience a meaningful negative impact to our results of operations in fiscal 2025.

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, during fiscal 2026 the Company's gross margin was negatively impacted by approximately 130 basis points on an adjusted basis.

Previous wording

In fiscal 2025, the U.S. Dollar has continued to fluctuate as compared to foreign currencies in regions where we conduct our business. During fiscal 2025, this trend has resulted in impacts to our business including, but not limited to, decreased Net sales of $13.4 million, no impact to gross margin and approximately 20 basis point negative impact to operating margin.

Current wording

In fiscal 2026, the U.S. Dollar continued to fluctuate as compared to foreign currencies in regions where we conduct our business. During fiscal 2026, this trend has resulted in impacts to our business including, but not limited to, increased Net sales of $58.7 million, and a negative impact of approximately 10 basis points to both gross margin and operating margin.

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 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 this agreement will have on the Company. Unless U.S. MNEs are likewise excluded from QDMTT, the Company believes QDMTT would have a negative impact on its 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. Based on the jurisdictions in which we operate and our current assessment of the applicable rules, we do not expect these developments to result in a material increase to the Company's effective tax rate in fiscal 2027 compared to fiscal 2026.

Previous wording

We will continue to monitor the below trends and evaluate and adjust our operating strategies and cost management opportunities to mitigate the related impact on our results of operations, while remaining focused on the long-term growth of our business and protecting the value of our brands.

Current wording

We continue to monitor these global economic conditions and industry trends in order to evaluate and adjust our operating strategies and cost management opportunities to mitigate the related impact on our results of operations, while remaining focused on the long-term growth of our business and protecting the value of our brands. For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, see Part I, Item 1A. "Risk Factors."

Previous wording

These actions taken together negatively impacted Operating income by $109.9 million, increased Interest expense, net by $116.7 million and reduced the Provision for income taxes by $42.4 million, resulting in a net decrease in Net income by $184.2 million, or $0.79 per diluted share.

Current wording

These actions taken together positively impacted operating income by $48.6 million and increased the provision for income tax by $2.9 million resulting in a net increase in net income by $45.7 million or $0.22 per diluted share.

Previous wording

Net sales in fiscal 2025 increased 5.1% or $339.5 million to $7.01 billion. Excluding the impact of foreign currency, net sales increased by 5.3% or $352.9 million.

Current wording

Net sales in fiscal 2026 increased 14.2% or $993.5 million to $8.00 billion. Excluding the impact of the Stuart Weitzman Business and foreign currency, net sales increased by 16.7% or $1.14 billion.

Previous wording

•Coach Net Sales increased 9.9% or $503.2 million to $5.60 billion in fiscal 2025. Excluding the impact of foreign currency, net sales increased 10.1% or $514.5 million. This increase in net sales was primarily due to an increase of $445.0 million in DTC sales as a result of an increase in both e-commerce and store sales, mainly driven by North America, Europe and Greater China. The increase in net sales was also attributed to a $89.4 million increase in wholesale sales, mainly driven by North America and Greater China.

Current wording

•Coach Net Sales increased 23.5% or $1.32 billion to $6.91 billion in fiscal 2026. Excluding the impact of foreign currency, net sales increased 22.5% or $1.26 billion. This increase in net sales was primarily due to an increase of $1.09 billion in DTC sales, mainly driven by North America, Greater China, and Europe.

Previous wording

•Kate Spade Net Sales decreased 10.3% or $137.3 million to $1.20 billion in fiscal 2025. Excluding the impact of foreign currency, net sales decreased 10.1% or $135.2 million. This decrease in net sales was due to a decrease of $148.7 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 $10.2 million in wholesale sales.

Current wording

•Kate Spade Net Sales decreased 10.2% or $122.2 million to $1.07 billion in fiscal 2026. Excluding the impact of foreign currency, net sales decreased 10.5% or $126.2 million. This decrease in net sales was primarily due to a decrease of $120.3 million in DTC sales.

Previous wording

(1)In fiscal 2025, Kate Spade incurred charges affecting comparability of $860.5 million. Excluding those items affecting comparability, SG&A expenses decreased 4.3% or $31.9 million to $706.7 million in fiscal 2025 as compared to $738.6 million in fiscal 2024. SG&A as a percentage of net sales increased 380 basis points to 59.1% in fiscal 2025 as compared to 55.3% in fiscal 2024.

Current wording

(2)Excluding items affecting comparability, SG&A expenses decreased 0.4% or $2.6 million to $704.1 million in fiscal 2026 as compared to $706.7 million in fiscal 2025. SG&A as a percentage of net sales increased approximately 640 basis points to 65.5% in fiscal 2026 as compared to 59.1% in fiscal 2025.

Previous wording

(3)In fiscal 2025, Corporate incurred charges affecting comparability of $122.6 million. Excluding those items affecting comparability, SG&A expenses increased 7.9% or $40.6 million to $553.1 million in fiscal 2025 as compared to $512.5 million in fiscal 2024.

Current wording

(3)Excluding items affecting comparability, SG&A expenses increased 5.5% or $30.4 million to $583.5 million in fiscal 2026 as compared to $553.1 million in fiscal 2025.

Previous wording

◦Gross Margin, increased 200 basis points mainly due to net pricing improvements;

Current wording

◦Gross Margin, increased 70 basis points mainly due to net pricing improvements, partially offset by the impact of higher tariffs;

Previous wording

◦SG&A expenses as a percentage of net sales, increased 90 basis points mainly due to higher marketing spend, partially offset by leverage of fixed costs on higher net sales.

Current wording

◦SG&A expenses as a percentage of net sales, decreased approximately 170 basis points mainly due to leverage of fixed costs on higher net sales and lower distribution costs, partially offset by higher marketing spend.

Previous wording

•Kate Spade Operating Loss increased $901.8 million to a loss of $769.2 million in fiscal 2025, resulting in an operating margin of (64.3)%, as compared to income of $132.6 million and 9.9%, respectively in fiscal 2024. Excluding items affecting comparability, operating income decreased $41.3 million to $91.3 million in fiscal 2025 from $132.6 million in fiscal 2024; and operating margin decreased 230 basis points to 7.6% in fiscal 2025 as compared to 9.9% in fiscal 2024. This decrease in operating margin was primarily attributed to:

Current wording

•Kate Spade Operating Loss decreased $759.2 million to a loss of $10.0 million in fiscal 2026. Operating margin increased to (0.9)% in fiscal 2026 as compared to (64.3)% in fiscal 2025. Excluding items affecting comparability, operating income decreased $118.5 million to a loss of $27.2 million in fiscal 2026 from income of $91.3 million in fiscal 2025; and operating margin decreased to (2.5)% in fiscal 2026 as compared to 7.6% in fiscal 2025. This decrease in operating margin was primarily attributed to:

Previous wording

◦SG&A expenses as a percentage of net sales, increased 380 basis points mainly driven by higher marketing spend, deleverage of fixed costs on lower net sales, partially offset by a decrease in distribution costs.

Current wording

◦SG&A expenses as a percentage of net sales, increased approximately 640 basis points mainly driven by higher marketing spend and deleverage of fixed costs on lower net sales.

Previous wording

•Corporate Operating Expenses increased 8.6% or $53.3 million to $675.7 million in fiscal 2025. Excluding items affecting comparability, Corporate operating expenses increased $40.6 million to $553.1 million from $512.5 million in fiscal 2024. This increase in operating expenses was due to higher compensation costs driven by accrued incentive compensation and higher professional fees, partially offset by lower occupancy costs.

Current wording

•Corporate Operating Expenses decreased 8.9% or $59.9 million to $615.8 million in fiscal 2026. Excluding items affecting comparability, Corporate operating expenses increased $30.4 million to $583.5 million from $553.1 million in fiscal 2025. This increase in operating expenses was primarily due to higher compensation costs.

Previous wording

Loss on extinguishment of debt increased $120.1 million in fiscal 2025 to $120.1 million as compared to $0.0 million in fiscal 2024. Excluding items affecting comparability, Loss on extinguishment of debt was $0.7 million in fiscal 2025 as compared to $0.0 million in fiscal 2024.

Current wording

Loss on extinguishment of debt decreased $120.1 million to $0.0 million in fiscal 2026 as compared to $120.1 million in fiscal 2025. Excluding items affecting comparability, Loss on extinguishment of debt decreased $0.7 million to $0.0 million in fiscal 2026 as compared to $0.7 million in fiscal 2025.

Previous wording

Interest expense, net, decreased $39.6 million to $85.4 million in fiscal 2025 as compared to $125.0 million in fiscal 2024. Excluding items affecting comparability, Interest expense, net, increased $16.9 million to $25.2 million from $8.3 million in fiscal 2024. This increase in net interest expense was mainly due to an increase in interest expense as a result of the issuance of the 2030 and 2035 Senior Notes and borrowings under the Existing Revolving Credit Facility, partially offset by a decrease in interest expense as a result of the repayment of the Term Loan due 2027.

Current wording

Interest expense, net decreased $30.2 million to $55.2 million in fiscal 2026 as compared to $85.4 million in fiscal 2025. Excluding items affecting comparability, Interest expense, net increased $30.1 million to $55.3 million from $25.2 million in fiscal 2025. This increase in Interest expense, net was mainly due to an increase in bond interest expense as a result of the issuance of the 2030 and 2035 Senior Notes during fiscal 2025 and lower interest income.

Previous wording

Other income increased $9.8 million to Other income of $6.6 million in fiscal 2025 as compared to Other expense of $3.2 million in fiscal 2024. This increase in Other income was related to an increase in foreign exchange gains.

Current wording

Other income decreased $5.2 million to $1.4 million in fiscal 2026 as compared to $6.6 million in fiscal 2025. Excluding items affecting comparability, Other income decreased $5.1 million to $1.5 million in fiscal 2026 as compared to $6.6 million in fiscal 2025. This decrease in Other income was related to a decrease in foreign exchange gains.

Previous wording

The effective tax rate was 15.2% in fiscal 2025 as compared to 19.4% in fiscal 2024. Excluding items affecting comparability, the effective tax rate was 17.8% in fiscal 2025 as compared to 19.2% in fiscal 2024. The decrease in effective tax rate was primarily driven by discrete items recognized in the period, partially offset by geographic mix of earnings.

Current wording

The effective tax rate was 17.9% in fiscal 2026 as compared to 15.2% in fiscal 2025. Excluding items affecting comparability, the effective tax rate was 18.2% in fiscal 2026 as compared to 17.8% in fiscal 2025. The increase in effective tax rate was primarily driven by the impact of Pillar Two, partially offset by the lower impact of permanent items due to higher pre-tax income.

Previous wording

Net income decreased 77.6% or $632.8 million to $183.2 million in fiscal 2025 as compared to a net income of $816.0 million in fiscal 2024. Excluding items affecting comparability, net income increased 13.4% or $134.0 million to $1.13 billion in fiscal 2025 from $1.00 billion in fiscal 2024.

Current wording

Net income increased $1.34 billion to $1.53 billion in fiscal 2026 as compared to $183.2 million in fiscal 2025. Excluding items affecting comparability, net income increased 30.7% or $347.8 million to $1.48 billion in fiscal 2026 from $1.13 billion in fiscal 2025.

Previous wording

Net income per diluted share was $0.82 in fiscal 2025 as compared to net income per diluted share of $3.50 in fiscal 2024. Excluding items affecting comparability, net income per diluted share increased $0.81 to $5.10 in fiscal 2025 from $4.29 in fiscal 2024. This change was primarily due to higher net income and a decrease in shares outstanding.

Current wording

Net income per diluted share was $7.27 in fiscal 2026 as compared to net income per diluted share of $0.82 in fiscal 2025. Excluding items affecting comparability, net income per diluted share increased $1.95 to $7.05 in fiscal 2026 from $5.10 in fiscal 2025. This increase was primarily due to higher net income and a decrease in shares outstanding.

Previous wording

The comparison of fiscal 2024 to 2023 has been omitted from this Form 10-K, but can be referenced in our Form 10-K for the fiscal year ended June 29, 2024, filed on August 15, 2024 within Part II. Item 7. "Management's Discussion and Analysis of Financial Conditions and Results of Operations".

Current wording

The comparison of fiscal 2025 to fiscal 2024 has been omitted from this Form 10-K, but can be referenced in our Form 10-K for the fiscal year ended June 28, 2025, filed on August 14, 2025, within Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Previous wording

These non-GAAP performance measures were used by management to conduct and evaluate its business during its regular review of operating results for the periods affected. Management and the Company’s Board utilized these non-GAAP measures to make decisions about the uses of Company resources, analyze performance between periods, develop internal projections and measure management performance. The Company’s internal management reporting excluded these items. In addition, the human resources committee of the Company’s Board uses these non-GAAP measures when setting and assessing achievement of incentive compensation goals.

Current wording

These non-GAAP performance measures were used by management to conduct and evaluate its business during its regular review of operating results for the periods affected. Management and the Company’s Board utilized these non-GAAP measures to make decisions about the uses of Company resources, analyze performance between periods, develop internal projections and measure management performance. The Company’s internal management reporting excluded these items. In addition, the HR Committee of the Company’s Board uses these non-GAAP measures when setting and assessing achievement of incentive compensation goals.

Previous wording

The Company incurred Acquisition and Divestiture Costs which consist of non-recurring acquisition and divestiture costs, primarily financing-related expenses and professional fees from the terminated Capri Acquisition as well as costs related to the Stuart Weitzman Business Divestiture, inclusive of the loss on business held for sale, professional fees, share-based compensation expense and store impairment. 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 severance and technology related charges. Impairment charges incurred by the Company consist of non-recurring impairment costs related to Kate Spade indefinite-lived brand intangible assets and goodwill.

Current wording

•Organizational Efficiency Costs - 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 $5.02 billion in fiscal 2025 compared to an increase of $5.42 billion in fiscal 2024, as discussed below.

Current wording

The Company’s cash and cash equivalents decreased by $125.3 million in fiscal 2026 compared to a decrease of $5.02 billion in fiscal 2025, as discussed below.

Previous wording

Net cash provided by operating activities decreased $39.0 million primarily due to lower net income of $632.8 million and changes in operating assets and liabilities of $207.2 million partially offset by a higher impact of non-cash adjustments of $801.0 million primarily related to the impairment of goodwill and intangible assets.

Current wording

Net cash provided by operating activities increased $761.9 million primarily due to higher net income of $1.34 billion and changes in operating assets and liabilities of $158.5 million partially offset by a lower impact of non-cash adjustments of $741.1 million primarily related to the impairment of goodwill and intangible assets in the prior year.

Previous wording

The $207.2 million decrease in changes in operating asset and liability balances was primarily driven by the following:

Current wording

The $158.5 million increase in changes in operating asset and liability balances was primarily driven by the following:

Previous wording

•Accounts payable were a use of cash of $15.0 million in fiscal 2025 as compared to a source of cash of $49.1 million in fiscal 2024, primarily driven by a decrease in professional fees due to higher spending in the prior year related to the Capri Acquisition and timing of other payments, partially offset by an increase in advertising.

Current wording

•Accounts payable were a source of cash of $131.6 million in fiscal 2026 as compared to a use of cash of $15.0 million in fiscal 2025, primarily driven by an increase in marketing spend and timing of payments compared to the prior year, and lower inventory receipts in the prior year for Kate Spade due to timing.

Previous wording

•Inventories were a use of cash of $108.2 million in fiscal 2025 compared to a source of cash of $85.8 million in fiscal 2024, primarily driven by increased inventory purchases for Coach to support continued sales growth and pull forward of inventory receipts.

Current wording

•Inventories were a source of cash of $35.4 million in fiscal 2026 compared to a use of cash of $108.2 million in fiscal 2025, primarily driven by increased inventory purchases for Coach in the prior year to support sales growth and the strategic decision to pull forward receipts.

Previous wording

Net cash provided by investing activities was $914.0 million in fiscal 2025 compared to a use of cash of $1.04 billion in fiscal 2024, resulting in a $1.96 billion increase in net cash provided by investing activities.

Current wording

Net cash used in investing activities was $218.3 million in fiscal 2026 compared to a source of cash of $914.0 million in fiscal 2025, resulting in a $1.13 billion decrease in net cash provided by investing activities.

Previous wording

Net cash used in financing activities was $7.18 billion in fiscal 2025 as compared to a source of cash of $5.21 billion in fiscal 2024, resulting in a $12.39 billion increase in net cash used in financing activities.

Current wording

Net cash used in financing activities was $1.86 billion in fiscal 2026 as compared to a use of cash of $7.18 billion in fiscal 2025, resulting in a $5.31 billion decrease in net cash used in financing activities.

Previous wording

Effect of exchange rate changes on cash and cash equivalents was an increase of $26.3 million as compared to a decrease of $12.2 million in fiscal 2024.

Current wording

Effect of exchange rate changes on cash and cash equivalents was a decrease of $24.6 million as compared to an increase of $26.3 million in fiscal 2025.

Previous wording

The comparison of fiscal 2024 to 2023 has been omitted from this Form 10-K, but can be referenced in our Form 10-K for the fiscal year ended June 29, 2024, filed on August 15, 2024 within Part II. Item 7. "Management's Discussion and Analysis of Financial Conditions and Results of Operations".

Current wording

The comparison of fiscal 2025 to fiscal 2024 has been omitted from this Form 10-K, but can be referenced in our Form 10-K for the fiscal year ended June 28, 2025, filed on August 14, 2025, within Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations."