Tapestry (TPR) 10-K risk factor changes: FY2016 vs FY2015

The successful execution of our multi-year transformation [added: and operational efficiency] initiatives is key to the long-term growth of our business.

Key operational and cost elements in order to fund and execute this plan [removed: include:] [added: included:] (i) the investment in capital improvements in our stores and wholesale locations to drive comparable sales improvement; (ii) the optimization and streamlining of our organizational model as well as the closure of underperforming stores in North America, and select International stores, (iii) the realignment of inventory levels and mix to reflect our elevated product strategy and consumer preferences; (iv) the investment in incremental advertising costs to elevate consumer perception of our [added: Coach] brand, drive sales growth and promote our new strategy; and (v) the significant scale-back of our promotional cadence in an increased global promotional environment, particularly within our outlet Internet sales site.

The Company believes that long-term growth [removed: can] [added: will] be realized through [removed: its] [added: these] transformational efforts over time.

Refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 3, [removed: "Transformation and Other Actions,"] [added: "Restructuring Activities"] for further information regarding [removed: the Transformation Plan.][added: these initiatives.]

If the execution of our [removed: transformation plan falls] [added: plans or strategies fall] short, our business, financial condition and results of operation could be materially adversely affected.

In addition, [removed: many] [added: some] of these markets have different operational characteristics, including but not limited to employment and labor, transportation, logistics, real estate, environmental regulations and local reporting or legal requirements.

Further, such markets will have upfront [removed: short-term] investment costs that may not be accompanied by sufficient revenues to achieve typical or expected operational and financial performance and therefore may be dilutive to [removed: Coach] [added: our brands] in the short-term.

We operate on a global basis, with approximately [removed: 39%] [added: 45%] of our net sales coming from operations outside of [removed: North America.][added: United States.]

| • | compliance with laws relating to foreign operations, including the Foreign Corrupt Practices Act [added: (FCPA)] and the U.K. Bribery Act, which in general concern the bribery of foreign public officials; |

Demand for our products, and consumer spending in the premium [removed: handbag] [added: handbag, footwear] and accessories [removed: market] [added: categories] generally, is significantly impacted by trends in consumer confidence, general business conditions, interest rates, foreign currency exchange rates, the availability of consumer credit, and taxation.

Acquisitions may not be successful in achieving intended benefits, cost savings and synergies and may disrupt current [removed: operations; the acquired Stuart Weitzman business may underperform relative to our expectations; and the Stuart Weitzman acquisition may cause our financial results to differ from our expectations or the expectations of the investment community.][added: operations.]

[removed: Additionally,] [added: Our management team has and will consider growth strategies and expected synergies when considering any acquisition, and] while we continually review potential acquisition opportunities, there can be no assurance that we will be able to identify suitable candidates or consummate these transactions on [removed: favorable terms or at all.][added: acceptable terms.]

| • | assumption of liabilities not identified in due diligence; [added: and] |

| • | the impact on our or an acquired business’ internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002; [removed: and] |

We are required [removed: at least] annually, or as facts and circumstances exist, to test goodwill and other intangible assets [removed: with indefinite lives] to determine if impairment has occurred.

If the testing performed indicates that impairment has occurred, we are required to record a non-cash impairment charge for the difference between the carrying value of the goodwill or other intangible assets [removed: with indefinite lives] and the implied fair value of the goodwill or the fair value of other intangible assets [removed: with indefinite lives] in the period the determination is made.

We determined there was no impairment in fiscal [removed: 2015,] [added: 2016,] fiscal [removed: 2014] [added: 2015] and fiscal [removed: 2013;] [added: 2014;] however, we cannot accurately predict the amount and timing of any impairment of assets.

We may also incur significant costs implementing additional security measures to protect against new or enhanced data security or privacy threats, or to comply with state, federal and international laws governing the unauthorized disclosure of confidential information as well as increased cyber security protection costs such as organizational changes, deploying additional personnel and protection technologies, training employees, and engaging third party experts and consultants and lost revenues resulting from unauthorized use of proprietary information including our [added: intellectual property.]

In addition, we maintain e-commerce sites in the U.S., Canada, [removed: Japan and] [added: U.K., Japan, mainland] China and [added: South Korea and] have plans for additional e-commerce sites in other parts of the world.

We believe that the Coach brand, established [removed: almost] 75 years ago, is regarded as America's preeminent designer, producer, and marketer of fine accessories and gifts for women and men.

Our success also depends in part on our ability to execute on our [added: plans and strategies, including our] Transformation [removed: Plan.][added: Plan and operational efficiency initiatives.]

In order to minimize the impact on earnings of foreign currency rate movements, we hedge our subsidiaries’ U.S. dollar-denominated inventory purchases in Japan and [removed: Canada,] [added: Canada and Euro-denominated inventory purchases in Spain,] as well as the Company's cross currency denominated intercompany loan portfolio.

If, or when, we announce actual results that differ from those that have been predicted by us, outside investment analysts, or others, our stock [added: price could be adversely affected.]

Failure to adequately protect our intellectual property and curb the sale of counterfeit merchandise could injure [removed: the brand] [added: our brands] and negatively affect sales.

| • | unavailability of, or significant [removed: fluctuations,] [added: fluctuations] in the cost [removed: of] [added: of,] raw materials; |

| • | compliance by our independent manufacturers and suppliers with our Global Operating Principles and/or Supplier [removed: Selection Guidelines,] [added: Code of Conduct,] as applicable; |

| • | compliance with U.S. laws regarding the identification and reporting on the use of “conflict minerals” sourced from the Democratic Republic of the Congo in the Company’s [removed: products;] [added: products and the FCPA and U.K. Bribery Act, as applicable;] |

In addition, we require our independent manufacturers and suppliers to operate in compliance with applicable laws and regulations, as well as our Global Operating Principles and/or Supplier [removed: Selection Guidelines;] [added: Code of Conduct;] however, we do not control these manufacturers or suppliers or their labor, environmental or other business practices.

Copies of our Global Business Integrity Program, Global Operating Principles and Supplier [removed: Selection Guidelines] [added: Code of Conduct] are available through our website, www.coach.com.

[added: The] violation of labor, environmental or other laws by an independent manufacturer or supplier, or divergence of an independent manufacturer’s or supplier’s labor practices from those generally accepted as ethical or appropriate in the U.S., could interrupt or otherwise disrupt the shipment of our products, harm our trademarks or damage our reputation.

We also operate distribution centers, through third-parties, in Japan, mainland China, Hong Kong, [added: Macau,] Singapore, Taiwan, Malaysia, The United [removed: States] [added: States, Spain, Canada] and South Korea.

[removed: In some instances, we may be] unable to close an underperforming retail store due to continuous operation clauses in our lease agreements.

Our transformation plan and [removed: its] [added: operational efficiency initiatives and their] attendant [removed: changes regarding] organizational [removed: efficiencies] [added: changes, as well as the impact of Brexit,] may intensify this risk.

The [removed: continued turnover of senior management or the] unexpected loss of one or more of our key personnel or any negative public perception with respect to these individuals could [removed: also] have a material adverse effect on our business, results of operations and financial condition.

Our North American wholesale [removed: business, primarily consisting of the U.S. Wholesale business,] [added: business] comprised approximately [removed: 5%] [added: 4%] of total net sales for fiscal [removed: 2015.][added: 2016.]

Because Coach [added: brand's] products are frequently given as gifts, [removed: Coach has] [added: we have] historically realized, and [removed: expects] [added: expect] to continue to realize, higher sales and operating income in the second quarter of [removed: its] [added: our] fiscal year, which includes the holiday months of November and December.

Poor sales in [removed: Coach’s] [added: the Company's] second fiscal quarter would have a material adverse effect on its full year operating results and result in higher inventories.

In addition, fluctuations in [removed: sales and] [added: net sales,] operating income [added: and operating cash flows of the Company] in any fiscal quarter [removed: are] [added: may be] affected by the timing of [removed: seasonal] wholesale shipments and other events affecting retail [removed: sales.][added: sales, including adverse weather conditions or other macroeconomic events.]

We could experience [removed: cost overruns and] disruptions to our operations in connection with the [removed: construction of, and] relocation [removed: to,] [added: to] our new global corporate headquarters.

The Company [removed: has] entered into various agreements relating to the development of the Company’s new global corporate headquarters in a new office building [removed: to be] located at [removed: the] [added: 10] Hudson Yards [removed: development site] in New York City.

The Company's execution of these key operational and cost measures was concluded during fiscal 2016.

During the fourth quarter of fiscal 2016, we announced a plan to enhance organizational efficiency, update core technology platforms and streamline the Company’s supply chain network.

These initiatives were undertaken as a result of a strategic review of the Company’s corporate structure which focused on creating an agile and scalable business model.

The charges under this plan began in the fourth quarter of fiscal 2016 and we anticipate they will be substantially complete by the end of fiscal year 2017.

There is no assurance these actions will be successful in achieving our intended results.

Actual costs incurred and the timeline of these initiatives may differ from our expectations.

| • | political or economic instability or changing macroeconomic conditions in our major markets, including the impact of (1) the United Kingdom voting to leave the European Union in its referendum on June 23, 2016 and (2) the outcome of the 2016 U.S. Presidential election. On June 23, 2016, the United Kingdom (U.K.) held a referendum in which voters approved an exit from the European Union (E.U.), commonly referred to as “Brexit.” As a result of the referendum, it is expected that the British government will begin negotiating the terms of the U.K.’s future relationship with the E.U. Although it is unknown what those terms will be, it is possible that there will be increased regulatory and legal complexities, including potentially divergent national laws and regulations between the U.K. and E.U. Brexit may also cause disruption and create uncertainty surrounding our business, including affecting our relationship with our existing and future customers, suppliers and employees, which could have an adverse effect on our business, financial results and operations; |

In addition, the success of our retail stores located within malls and shopping centers may be impacted by (1) the location of the store within the mall or shopping center, (2) surrounding tenants or vacancies; (3) increased competition in areas where malls or shopping centers are located; (4) the amount spent on advertising and promotion to attract consumers to the mall; and (5) a shift towards online shopping resulting in a decrease in mall traffic.

Furthermore, the cost of transportation may fluctuate significantly if oil prices show volatility.

One component of our growth strategy is acquisitions, such as our acquisition of Stuart Weitzman Holdings, LLC during fiscal 2015.

The integration process of any newly acquired company may be complex, costly and time-consuming.

The majority of the Company's purchases and sales involving international parties, excluding international consumer sales, are denominated in U.S. dollars.

For example, the announcement of Brexit caused significant volatility in the global stock markets and currency exchange rate fluctuations.

In some instances, we may be

In recent years, we have evolved our senior leadership team and have focused on retaining key roles.

Additionally, certain of our wholesale customers, particularly those located in the U.S., have become highly promotional and have aggressively marked down their merchandise.

Despite our planned reduction in markdown allowances during fiscal 2017, such promotional activity could negatively impact our brands, which could affect our business, results of operations, and financial condition.

Seasonality primarily impacts the Coach brand.

We also may decide not to renew our agreements with our licensing partners.

For example, we do not intend to renew our agreement with our existing footwear licensing partner when it expires in late fiscal 2017, and bring the category in-house.

While we believe we have the infrastructure and systems in place to bring this category in-house, we may face unexpected difficulties or costs in connection with this process.

On August 1, 2016, the Company sold its ownership interest in the building and substantially all of the related tenant improvements for a purchase price of approximately $707 million (net of approximately $77 million due to the developer of Hudson Yards) before transaction costs of $26 million, resulting in a gain of about $30 million, which will be amortized through selling, general and administrative expenses over the lease term of 20 years.

The Company has simultaneously entered into a 20-year lease for the headquarters space, comprised of approximately 694,000 square feet.

Refer to Note 11, "Commitments and Contingencies," and Note 19, "Subsequent Events," for further information.

We began occupying the new building during fiscal 2016, with occupancy in the new global headquarters expected to be complete in the first half of fiscal 2017.

shares.

Furthermore, actual costs incurred under the Transformation Plan may differ from expectations based on our execution of the key operational and cost elements described above.

| | |

| --- | --- |

| • | political or economic instability or changing macroeconomic conditions in our major markets; |

The cost of transportation has been increasing as well and it is likely such cost will fluctuate significantly if oil prices remain volatile.

During fiscal 2015, we acquired Stuart Weitzman Holdings, LLC, a leading designer and manufacturer of women's luxury footwear.

We may have difficulty integrating the Stuart Weitzman business into our operations or otherwise successfully managing the expansion of the Stuart Weitzman business.

intellectual property.

Sales to our international wholesale customers are primarily denominated in U.S. dollars.

price could be adversely affected.

The

In recent years, we have experienced turnover of several senior management roles and we have focused time and resources on recruiting or promoting from within the new members of our current senior management team.

The financing, development and construction of the new building is taking place through a joint venture between the Company and the developers.

Construction of the new building has commenced and occupancy in the new global headquarters is currently expected to take place in fiscal 2016.

During fiscal 2015, the Company invested $139.1 million in the Hudson Yards joint venture, resulting in a total equity method investment of 320.2 million as of June 27, 2015.

The Company expects to invest approximately $210 million in the joint venture over the next two years, with approximately $195 million estimated in fiscal 2016, depending on construction progress.

Outside of the joint venture, the Company is directly investing in aspects of the new corporate headquarters.

The Company has incurred $34.0 million of capital expenditures to date, including $5.9 million in fiscal 2015, and we expect approximately $185 million of additional expenditures over the remaining period of construction.

The Company’s allocable share of the joint venture investments and capital expenditures will be financed by the Company with cash on hand, debt-related borrowings and approximately $130 million of proceeds from the sale of its current headquarters buildings.

In addition, we cannot give any assurance that our developer will complete its obligations in a timely manner or at all or how changes in the overall development of the Hudson Yards project may impact the development of, or value of, the building in which our new global headquarters will be located.

Further, our developer has financing, construction and development obligations to parties other than us, and we cannot give any assurance as to how those obligations may impact the development of the project.

The ownership of real property, such as the new global corporate headquarters, also subjects us to various other risks, including, among others:

| • | the possibility of environmental contamination and the costs associated with correcting any environmental problems; |

| • | the risk of financial loss in excess of amounts covered by insurance, or uninsured risks, such as the loss caused by damage to the new building as a result of fire, floods, or other natural disasters; and |

| • | adverse changes in the value of these properties, due to interest rate changes, changes in the neighborhood in which the property is located, or other factors. |

Coach, Inc. operates in three segments: North [removed: America,] [added: America (Coach brand),] International [added: (Coach brand),] and [removed: Other (which includes the] Stuart [removed: Weitzman brand acquired by the Company in the fourth quarter of fiscal 2015).][added: Weitzman.]

The North America segment includes sales [added: of Coach brand products] to North American customers through Coach-operated stores (including the Internet) and sales to North American wholesale customers.

The International segment includes sales [added: of Coach brand products] to customers through Coach-operated stores [removed: (including the Internet)] and concession shop-in-shops in [removed: Japan and] [added: Japan,] mainland China, [removed: Coach-operated stores and concession shop-in-shops in] Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, [removed: Belgium and] [added: Austria, Belgium,] the [removed: Netherlands, as well as sales to wholesale customers] [added: Netherlands] and [removed: distributors in approximately 45 countries.][added: Switzerland.]

Other, [added: which is not a reportable segment,] consists of sales and expenses generated by the Coach brand in [removed: other ancillary channels, including] licensing and [removed: disposition.][added: disposition channels.]

As the Company's business model is based on multi-channel [added: and brand] global distribution, our success does not depend solely on the performance of a single channel or geographic area.

This [removed: multi-faceted, multi-year transformation plan (the "Transformation Plan") builds] [added: Transformation Plan was built] on the core brand equities of quality and craftsmanship with the aim of evolving our competitive value proposition.

We believe our strategy offers significant growth opportunities in handbags and accessories, as well as in the broader set of lifestyle categories that we have operated in for some time but [removed: are] [added: have historically been] less developed, including footwear and ready-to-wear.

This strategy [removed: has] required an integrated holistic approach, across product, stores and marketing and promotional activities, and entails the roll-out of carefully crafted aspirational marketing campaigns to define the Coach brand and to deliver a fuller and more consistent brand expression.

Key operational and cost measures of the Transformation Plan [removed: include:] [added: included:] (i) the investment in capital improvements in our stores and wholesale locations to drive comparable sales improvement; (ii) the optimization and streamlining of our organizational model as well as the closure of underperforming stores in North America, and select International stores; (iii) the realignment of inventory levels and mix to reflect our elevated product strategy and consumer preferences; (iv) the investment [removed: of approximately $50 million] in incremental advertising costs to elevate consumer perception of our Coach brand, drives sales growth and promote our new strategy, which started in fiscal 2015; and (v) the significant scale-back of our promotional cadence in an increased global promotional environment, particularly within our outlet Internet sales site, which began in fiscal 2014.

The Company's execution of these key operational and cost measures [removed: were on plan through the end of] [added: was concluded during] fiscal [removed: 2015,] [added: 2016,] and we believe that long-term [added: growth will be realized through these transformational efforts over time.]

For further discussion of charges incurred in connection with the Transformation Plan, see [removed: "Items Affecting Comparability,"] [added: "GAAP to Non-GAAP Reconciliation,"] herein.

Global consumer retail traffic [removed: remained] [added: remains] relatively weak and inconsistent, which has led to a more promotional environment in the fragmented retail industry due to increased competition and a desire to offset traffic declines with increased levels of conversion.

[removed: Within the U.S., a prolonged and tough winter season impacted demand during the first half of calendar 2015, however certain] [added: Certain] limited and recent factors within the U.S., including an improvement in the labor [removed: market] and [added: housing markets and] modest growth in overall consumer spending, suggest a potential moderate strengthening in the U.S. economic outlook.

We will continue to monitor these [removed: risks and] 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.

[removed: SUMMARY — FISCAL 2015][added: Summary - Fiscal 2016]

These fiscal 2015 actions taken together increased the Company's [removed: selling, general and administrative ("SG&A")] [added: SG&A] expenses by $160.8 million and cost of sales by $9.7 million, negatively impacting net income by $128.8 million, or $0.47 per diluted share.

[removed: These fiscal 2014 actions] [added: Total Transformation Plan, Operational Efficiency Plan and Acquisition-Related Costs taken together] increased the Company's SG&A expenses by [removed: $49.3] [added: $122.0] million and cost of sales by [removed: $82.2] [added: $1.1] million, negatively impacting net income by [removed: $88.3] [added: $91.2] million, or [removed: $0.31] [added: $0.33] per diluted share.

Excluding the effects of foreign currency, net sales [removed: decreased 10.6%.][added: increased 9.1%.]

SG&A expenses increased [removed: by 5.2%] [added: 4.7% or $107.2 million] to [added: $2.40 billion in fiscal 2016 as compared to] $2.29 billion [removed: during] [added: in] fiscal 2015.

Net income [removed: decreased] [added: increased 14.4%] in fiscal [removed: 2015] [added: 2016] as compared to fiscal [removed: 2014,] [added: 2015, primarily] due to a decrease [added: of $43.1 million] in [added: our provision for income taxes, as well as an increase in] operating income of [removed: $502.1] [added: $35.5] million, partially offset by [removed: a $131.8 million decrease in] [added: the impact of increased interest expense attributable to] our [removed: provision for income taxes.][added: debt.]

Net income per diluted share [removed: decreased] [added: increased 13.6%, to $1.65,] primarily due to [removed: lower] [added: higher] net income.

Excluding [removed: charges under our Transformation Plan and acquisition-related charges] [added: non-GAAP charges, net income per diluted share decreased 38.2% or $1.18 to $1.92] in fiscal 2015 [removed: and charges under our Transformation Plan] [added: from $3.10] in fiscal 2014, [removed: net income and] [added: due to lower] net [removed: income per diluted share decreased 38.9% and 38.2%, respectively.][added: income.]

| | [removed: (dollars in millions,] [added: (millions,] except per share data) | | | | | | | | | | | | | | | | | | | |

| [removed: Selling, general and administrative] [added: SG&A] expenses | 2,290.6 | | | | 54.6 | | | 2,176.9 | | | | 45.3 | | | 113.7 | | | | 5.2 | |

| Interest [removed: (expense)] income, net | (6.4 | | ) | | (0.2 | ) | | 2.2 | | | | — | | | (8.6 | | ) | | NM | |

The reported gross profit, SG&A expenses, operating income, income before provision for income taxes, provision for income taxes, net income and earnings per diluted share in fiscal 2015 and 2014 reflect certain [removed: items which][added: items, including the impact of the Transformation Plan and Acquisition-Related Costs, as noted in the following reconciliation tables.]

Refer to page [removed: 41] [added: 43] for a discussion on the Non-GAAP Measures.

| | GAAP Basis (As Reported) | | | [added: |] Transformation and Other Actions | | | [added: |] Acquisition-Related Costs | | | [removed: Acquisition-Related Purchase Accounting] | [removed: | |] Non-GAAP Basis (Excluding Items) | | |

| | [removed: (dollars in millions,] [added: (millions,] except per share data) | | | | | | | | | | | | | | |

| SG&A expenses | 2,290.6 | | | 140.9 | | | [removed: 17.1] [added: —] | | | [removed: 2.8] [added: 19.9] | | | 2,129.8 | | |

| Operating income | 618.0 | | | (145.9 | | ) | [removed: (17.1] [added: —] | | [removed: )] | [removed: (7.5] [added: (24.6] | | ) | 788.5 | | |

| Income before provision for income taxes | [removed: 611.6] [added: 626.6] | | | [removed: (145.9] | [added: 14.0] | [removed: )] | [removed: (17.1] | [added: 611.6] | [removed: )] | [removed: (7.5] | | [removed: )] [added: 14.6] | [removed: 782.1] | | [added: 15.0] | [added: | | | 2.5 | |]

| Provision for income taxes | 209.2 | | | (38.1 | | ) | [removed: (3.6] [added: —] | | [removed: )] | [removed: —] [added: (3.6] | | [added: )] | 250.9 | | |

| Net income | 402.4 | | | (107.8 | | ) | [removed: (13.5] [added: —] | | [removed: )] | [removed: (7.5] [added: (21.0] | | ) | 531.2 | | |

| Diluted net income per share | 1.45 | | | (0.39 | | ) | [removed: (0.05] [added: —] | | [removed: )] | [removed: (0.03] [added: (0.08] | | ) | 1.92 | | |

| Gross profit | $ | 3,297.0 | | [added: |] $ | (82.2 | ) | [removed: $] | [removed: — | |] $ | — | | [added: |] $ | 3,379.2 | |

| SG&A expenses | 2,176.9 | | | [removed: 49.3] | [removed: |] [added: 49.3] | [removed: —] | | | — | | | [added: |] 2,127.6 | | |

| Operating income | 1,120.1 | | | [added: |] (131.5 | | ) | [removed: —] | [removed: | |] — | | | [added: |] 1,251.6 | | |

| Income before provision for income taxes | [removed: 1,122.3] [added: 611.6] | | | [removed: (131.5] | [added: 14.6] | [removed: )] | [removed: —] | [added: 1,122.3] | | [removed: —] | | [added: 23.4] | [removed: 1,253.8] | | [added: (510.7] | [added: | ) | | (45.5 | ) |]

| Provision for income taxes | 341.0 | | | [added: |] (43.2 | | ) | [removed: —] | [removed: | |] — | | | [added: |] 384.2 | | |

The fiscal year ended July 2, 2016 was a 53-week period, and the fiscal years ended June 27, 2015 and June 28, 2014 were each 52-week periods.

Coach, Inc. acquired Stuart Weitzman, a leader in women's designer footwear, during the fourth quarter of fiscal 2015.

Additionally, International includes sales to consumers through the Internet in Japan, mainland China, the United Kingdom and South Korea, as well as sales to wholesale customers and distributors in approximately 55 countries.

The Stuart Weitzman segment includes worldwide sales generated by the Stuart Weitzman brand, primarily through department stores in North America and international locations, and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe.

We are focused on driving long-term growth and best in class profitability through the following key initiatives:

Drive brand relevance

| • | Transform the Coach brand into a modern luxury brand by continuing to evolve across the key consumer touchpoints of product, stores and marketing. |

| • | Reinvigorate growth and brand relevance through our differentiated positioning, which combines our history of heritage and craftsmanship with Stuart Vevers's modern creative vision. |

| • | Raise brand awareness and increase market share for the Stuart Weitzman brand globally, building upon the company's strong momentum and core brand equities of fusing fashion with fit. |

Grow our business internationally

| • | Continue to increase the Coach brand's penetration internationally, most notably in mainland China and Europe. |

| • | Support the development of the Stuart Weitzman brand, particularly in Asia. |

Harness the power of the digital world

| • | Continue to accelerate the development of our digital programs and capabilities world-wide, reflecting the change in consumer shopping behavior globally. |

Build an infrastructure to support future growth initiatives

| • | Create an agile and scalable business model to support sustainable/future growth for Coach, Inc. |

Transformation Plan

Operational Efficiency Plan

On April 26, 2016, the Company announced a series of operational efficiency initiatives focused on creating an agile and scalable business model (the "Operational Efficiency Plan").

The significant majority of the charges under this plan will be recorded within SG&A expenses, and will be substantially complete by the end of fiscal 2017.

These charges are associated with organizational efficiencies, primarily related to the reduction of corporate staffing levels globally, as well as accelerated depreciation, mainly associated with information systems retirement, technology infrastructure charges related to the initial costs of replacing and updating our core technology platforms, and international supply chain and office location optimization.

Refer to Note 3, "Restructuring Activities," and "GAAP to Non-GAAP Reconciliation" for further information.

While certain developed geographic regions are withstanding these pressures better than others, the level of consumer travel and spending on discretionary items remains constrained due to the economic uncertainty.

Political and economic instability or changing macroeconomic conditions that exist in our major markets, including the impact of (1) the United Kingdom voting to leave the European Union in its referendum on June 23, 2016 and (2) the outcome of the 2016 U.S. Presidential election, have further contributed to this uncertainty.

On June 23, 2016, the United Kingdom (U.K.) held a referendum in which voters approved an exit from the European Union (E.U.), commonly referred to as “Brexit.” As a result of the referendum, it's expected that the British government will begin negotiating the terms of the U.K.’s future relationship with the E.U. Although it is unknown what those terms will be, it is possible that there will be increased regulatory and legal complexities, including potentially divergent national laws and regulations between the U.K. and E.U. Brexit may also cause disruption and create uncertainty surrounding our business, including affecting our relationship with our existing and future customers, suppliers and employees.

Additional macroeconomic events including foreign exchange rate volatility in various parts of the world, recent and evolving impacts of economic and geopolitical events in Hong Kong, Macau and mainland China ("Greater China"), the impact of terrorist acts (particularly in Europe), disease epidemics and a slowdown in emerging market growth (particularly in Asia) have contributed to this uncertainty.

Our results have been negatively impacted by foreign exchange rate fluctuations, and will continue to fluctuate with future volatility.

Certain of our wholesale customers, particularly those located in the U.S., have become highly promotional and have aggressively marked down their merchandise.

Despite our planned reduction in markdown allowances during fiscal 2017, such promotional activity could negatively impact our brands, which could affect our business, results of operations, and financial condition.

Over the next year, we expect to continue investing in the elevation of shop-in-shop environments, and rationalizing the distribution footprint in the North America wholesale channel by closing about 25% of doors from fiscal 2016 year-end levels.

As a result of these factors, several organizations that monitor the world's economy, including the International Monetary Fund, have modestly decreased overall global growth forecasts for the remainder of calendar 2016 and calendar 2017.

Furthermore, refer to Part I, Item 1 - "Business," for additional discussion on our expected store openings and closures within each of our segments.

FISCAL 2016 COMPARED TO FISCAL 2015

| | July 2, 2016 | | | | | | | June 27, 2015 | | | | | | | Variance | | | | | |

| Net sales | $ | 4,491.8 | | | 100.0 | % | | $ | 4,191.6 | | | 100.0 | % | | $ | 300.2 | | | 7.2 | % |

| Gross profit | 3,051.3 | | | | 67.9 | | | 2,908.6 | | | | 69.4 | | | 142.7 | | | | 4.9 | |

| SG&A expenses | 2,397.8 | | | | 53.4 | | | 2,290.6 | | | | 54.6 | | | 107.2 | | | | 4.7 | |

| Operating income | 653.5 | | | | 14.5 | | | 618.0 | | | | 14.7 | | | 35.5 | | | | 5.7 | |

| Interest expense, net | (26.9 | | ) | | (0.6 | ) | | (6.4 | | ) | | (0.2 | ) | | (20.5 | | ) | | NM | |

| Net income | 460.5 | | | | 10.3 | | | 402.4 | | | | 9.6 | | | 58.1 | | | | 14.4 | |

Other also consists of sales and expenses generated by the Stuart Weitzman brand during the final two months of fiscal 2015.

In order to drive growth within our global business, we are focused on four key initiatives, which directly align with the Coach brand Transformation Plan, described below:

| • | Grow our business in North America and worldwide, by transforming from a leading international accessories Company into a global lifestyle brand, anchored in luxury accessories. |

| • | Leverage the global opportunity for Coach by raising brand awareness and building market share in markets where Coach is under-penetrated, most notably in Asia and Europe. We are also developing the brand opportunity as we expand into South America and Central America. |

| • | Focus on the Men’s opportunity for the brand, by drawing on our long heritage in the category. We are capitalizing on this opportunity by opening new standalone and dual gender stores and broadening the men’s assortment in existing stores. |

| • | Harness the growing power of the digital world, by accelerating the development of our digital programs and capabilities in North America and worldwide, reflecting the change in consumer shopping behavior globally. Our intent is to rapidly drive further innovation to engage with customers in this channel. Key elements include www.coach.com, our invitation-only outlet Internet site, our global e-commerce sites, marketing sites and social media. |

growth can be realized through these transformational efforts over time.

Furthermore, as discussed in Note 7, "Acquisitions," the Company acquired luxury designer footwear brand Stuart Weitzman, which we believe will complement our current leadership position in premium handbags and accessories, while immediately adding to the Company's earnings as we continue to make meaningful progress towards our brand transformation.

The acquisition was consummated on May 4, 2015, and the brand contributed $43.0 million in net sales in fiscal 2015, included within our Other segment.

In addition to the risks surrounding the successful execution of our Transformation Plan initiatives, our outlook reflects a certain level of uncertainty surrounding the global economy.

The global economic environment continues to have an impact on consumer confidence, which in turn influences the level of spending on discretionary items.

Macroeconomic and geopolitical events in Greater China and southeast Asia have contributed to volatility in consumer spending within the region.

Furthermore, it is still too early to understand the impact, if any, of MERS (Middle East Respiratory Syndrome) on consumer spending in Asia, including the impact on tourism in the region.

As discussed in Part I, Item 1 - "Business" and as part of our Transformation Plan as described in Note 3, "Transformation and Other Actions," in fiscal 2015, we have reduced the number of retail stores and total square footage within North America, as we continue to optimize our real estate position.

We expect this trend to continue in the next fiscal year with the anticipated closure of approximately 15-20 North America retail stores in fiscal 2016, attributable to our Transformation Plan.

We expect to continue to see modest to no growth in North America outlet store square footage as we continue to optimize our real estate position across channels by expanding our most productive stores to accommodate a broader expression of lifestyle assortment while continuing to assess opportunities to close under-performing stores.

Within our International segment, we are expecting to reflect modest growth in our store count over the next few years, particularly within mainland China and Europe.

Lastly, within Stuart Weitzman, we are expecting modest growth in our real estate position over the next year.

In fiscal 2015, Coach, Inc. reported net sales of $4.19 billion (including $43.0 million attributable to the Stuart Weitzman brand), net income of $402.4 million and net income per diluted share of $1.45.

This compares to net sales of $4.81 billion, net income of $781.3 million, and net income per diluted share of $2.79 in fiscal 2014.

In fiscal 2015, the comparability of our operating results has been affected by $145.9 million of pretax charges ($107.8 million after tax, or $0.39 per diluted share) related to our Transformation Plan, $24.6 million of pretax charges ($21.0 million after tax, or $0.08 per diluted share) related to acquisition charges associated with the Stuart Weitzman brand.

In fiscal 2014, the comparability of our operating results was affected by $131.5 million of pretax charges ($88.3 million after tax or $0.31 per diluted share) related to our Transformation Plan.

Our operating performance for fiscal 2015 reflected a decline in net sales of 12.8%, primarily due to our North America business partially offset by a $43.0 million contribution from the Stuart Weitzman brand.

Our gross profit decreased by 11.8% to $2.91 billion during fiscal 2015 which included the negative impact of charges under our Transformation Plan of $5.0 million and Stuart Weitzman purchase accounting related items of $4.7 million.

Excluding our Transformation Plan and acquisition-related charges in fiscal 2015 and fiscal 2014, gross profit decreased by 13.6%, to $2.92 billion.

Excluding charges under our Transformation Plan and acquisition-related charges in fiscal 2015 and fiscal 2014, SG&A expenses remained fairly consistent.

Items Affecting Comparability

affect the comparability of our results, as noted in the following reconciliation tables.

| • | $17.1 million primarily related to acquisition charges of $14.2 million associated with the Stuart Weitzman brand, and to a lesser extent, charges attributable to the contingent earn out payment of the acquisition; and |

| • | $7.5 million related to the short-term impact of purchase accounting, primarily due to the amortization of the fair value of the inventory step-up and order backlog asset. |

Additional actions under our Transformation Plan will continue into fiscal 2016, with expected incremental charges of around $50 million.

In fiscal 2014, the Company incurred restructuring and transformation related charges of $131.5 million under its Transformation Plan as announced in the fourth quarter of fiscal 2014.

The charges recorded in cost of sales and SG&A expenses were $82.2 million and $49.3 million, respectively.

| Other(1) | 102.1 | | | | 61.5 | | | | 66.0 | | | | 2.4 | | | | 1.3 | | |

Other Net Sales increased 66.0% or $40.6 million to $102.1 million, primarily due to the impact of the Stuart Weitzman acquisition.

Other Gross Profit increased 57.2% or $21.1 million to $58.0 million in fiscal 2015.

This increase is substantially attributable to the acquisition of the Stuart Weitzman brand during the fourth quarter of fiscal 2015.

Excluding items affecting comparability of $9.7 million in fiscal 2015 and $82.2 million in fiscal 2014, corporate unallocated gross profit decreased by $17.4 million from $54.3 million in fiscal 2014 to $36.9 million in fiscal 2015, primarily due to increased inventory reserves and less favorable production variances.

| | | | | Amount | | | | % | | | | | | | |

| Other(1) | | 25.5 | | | | 34.2 | | | | (8.7 | | ) | | (25.4 | ) |

To mitigate such risk, Coach [removed: Japan and] [added: Japan,] Coach Canada [added: and Stuart Weitzman] enter into foreign currency derivative contracts, primarily [removed: zero-cost collar options and] forward foreign currency contracts.

As of [removed: June 27, 2015] [added: July 2, 2016] and June [removed: 28, 2014,] [added: 27, 2015,] zero-cost collar options and forward foreign currency exchange contracts designated as cash flow hedges with a notional amount of [removed: $126.7] [added: $190.1] million and [removed: $90.2] [added: $126.7] million, respectively, were outstanding.

As a result of the above considerations, we do not believe that we are exposed to any undue concentration of counterparty credit risk associated with our derivative contracts as of [removed: June 27, 2015.][added: July 2, 2016.]

The Company is also exposed to [removed: market] [added: transaction] risk from foreign currency exchange rate fluctuations with respect to various cross-currency intercompany loans which are not long term in investment nature.

This primarily includes exposure to exchange rate fluctuations in the Singapore Dollar, the Euro, the British Pound Sterling, the New Taiwan Dollar and the [removed: Malaysian Ringgit.][added: Chinese Renminbi.]

To manage the exchange rate risk related to these loans, the Company primarily enters into forward [removed: exchange and cross-currency swap contracts.][added: exchange.]

As of [removed: June 27, 2015] [added: July 2, 2016] and June [removed: 28, 2014,] [added: 27, 2015,] the total notional values of outstanding forward foreign currency exchange [removed: and cross-currency swap] contracts related to these loans were [removed: $25.8] [added: $75.5] million and [removed: $13.2] [added: $25.8] million, respectively.

The fair value of outstanding foreign currency derivatives included in current assets at [added: July 2, 2016 and] June 27, 2015 [removed: and June 28, 2014] was [removed: $3.4] [added: $0.6] million and [removed: $0.5] [added: $3.4] million, respectively.

The fair value of outstanding foreign currency derivatives included in current liabilities at [added: July 2, 2016 and] June 27, 2015 [removed: and June 28, 2014] was [removed: $0.2] [added: $11.1] million and [removed: $0.9] [added: $0.2] million, respectively.

As of [removed: June 27, 2015,] [added: July 2, 2016,] a 10% devaluation of the U.S. Dollar against the exchange rates for foreign currencies under contract would result in an immaterial impact on derivative contract fair values.

A hypothetical 10% change in the Amended and Restated Credit Agreement interest rate would have resulted in an insignificant change in interest expense in fiscal [removed: 2015.][added: 2016.]

At [removed: June 27, 2015,] [added: July 2, 2016,] the fair value of the 4.250% Senior Notes was approximately [removed: $579.0] [added: $621.6] million.

[added: The primary objective] of our investment activities is the preservation of principal while maximizing interest income and minimizing risk.

On August 3, 2016, the Company prepaid its outstanding borrowings under the Term Loan facility.

Refer to Note 19, "Subsequent Events," for further information.

The primary objective

The Coach brand is one of the most recognized fine accessories brands in both North America and in targeted international [removed: markets, and has a rich heritage of pairing exceptional leathers and materials with innovative design.][added: markets.]

[removed: We offer] [added: The Coach brand offers] premium lifestyle accessories to [removed: a loyal and] [added: an] engaged customer base and [removed: provide] [added: provides] consumers with fresh, compelling and innovative products that are extremely well made, at an attractive price.

In response to our customer’s demands for both fashion and function, [added: the] Coach [added: brand] offers updated styles and multiple product categories which address an increasing share of our customer’s accessory wardrobe.

[removed: Coach presents] [added: We present] a sophisticated, modern and inviting environment to showcase our product assortment and reinforce a consistent brand positioning wherever the consumer may shop.

We utilize a flexible, cost-effective global sourcing model, in which independent manufacturers supply our products, allowing us to [added: efficiently] bring our broad range of products to [removed: market rapidly and efficiently.][added: market.]

We offer a number of key differentiating [removed: elements that set us apart from the competition,] [added: elements,] including:

A Distinctive Brand — The Coach brand represents a blend of classic American style with a distinctive New York spirit, offering a design that is known for a [removed: distinctive] [added: distinguishing] combination of style and function.

Coach [added: brand] offers lifestyle products that are relevant, extremely well made and provide excellent value.

Our long-standing reputation and distinctive image have been consistently developed across an expanding number of products, sales channels and international [removed: markets, including within North America and Japan.][added: markets.]

A Loyal And Involved Consumer — Consumers have [added: maintained] a strong emotional connection with the Coach brand.

Part of our everyday mission is to [added: continue to] cultivate consumer relationships by strengthening this sentiment and brand loyalty.

Our stores showcase [removed: the world of] our products and enhance the shopping experience while reinforcing the image of our brand.

The modern [added: luxury] store design creates a distinctive environment to display our products.

Innovation With A Consumer-Centric Focus — [removed: Coach listens] [added: We listen] to [removed: its consumer] [added: our consumers] through rigorous consumer research and strong consumer orientation.

To truly understand globalization and its related impact, we [removed: also need to] understand the local context in each market, learning about our consumer wherever our products are sold.

The Coach brand [removed: also] works to anticipate the consumer’s changing needs by keeping the product assortment fresh and compelling.

[added: The] Stuart Weitzman [removed: Intermediate LLC] [added: brand] ("Stuart Weitzman") is a [removed: global] leader in [added: women's] designer footwear, and is built upon the concept of crafting a beautifully-constructed shoe, merging fashion and function.

Stuart Weitzman is a leading [added: global] women's premium footwear [removed: brand in North America,] [added: brand,] with a strong opportunity for growth both within North America and international markets.

As of [removed: June 27, 2015,] [added: July 2, 2016,] Stuart Weitzman employed approximately [removed: 500] [added: 700] people globally, including both full and [removed: part time] [added: part-time] employees, but excluding seasonal and temporary employees.

Of these employees, approximately [removed: 300] [added: 400] were [removed: retail] employees in the global retail field.

[added: Coach] owns all of the material worldwide trademark rights [removed: (including the Stuart Weitzman trademark)] used in connection with the production, marketing and distribution of [added: all Coach branded and] Stuart Weitzman [added: branded] products.

In addition, [removed: the Company] [added: Coach] owns [removed: registrations for] [added: several] design patents and [removed: applications for] utility patents for [added: its Coach and] Stuart Weitzman [added: branded] products.

In June 2000, [removed: Coach] [added: the Company] was incorporated in the state of Maryland.

[removed: Coach’s] [added: The Company's] international expansion strategy [removed: is] [added: has been] to enter into joint ventures and distributor relationships to build market presence and capability.

| [removed: n] [added: \-] | Fiscal 2009: Hong Kong, Macau and mainland China (“Greater China”). |

| [removed: n] [added: \-] | Fiscal 2012: Singapore and Taiwan. |

| [removed: n] [added: \-] | Fiscal 2013: Malaysia and South Korea. |

On May 4, 2015, the Company completed the acquisition of [added: Stuart Weitzman, a] luxury [added: women's] footwear [removed: company Stuart Weitzman] [added: company,] to complement its current leadership position in premium handbags and accessories.

In fiscal [removed: 2015,] [added: 2016,] the Company has three reportable segments:

| • | North America, which [removed: includes] [added: is composed of Coach brand] sales to North American consumers through [removed: Coach-branded stores (including] [added: stores, including] the [removed: Internet)] [added: Internet,] and sales to wholesale customers. This segment represented approximately [removed: 59%] [added: 53%] of Coach's total net sales in fiscal [removed: 2015.] [added: 2016.] |

| • | International, which [removed: includes] [added: is composed of Coach brand] sales to consumers through [removed: Coach-branded] stores [removed: (including the Internet)] and concession shop-in-shops in [removed: Japan and] [added: Japan,] mainland China, [removed: Coach-operated stores and concession shop-in-shops in] Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, [removed: Belgium and] [added: Austria, Belgium,] the Netherlands [added: and Switzerland. Additionally, International includes Coach brand sales to consumers through the Internet in Japan, mainland China, the United Kingdom and South Korea,] as well as sales to wholesale customers and distributors in approximately [removed: 45] [added: 55] countries. This segment represented approximately [removed: 39%] [added: 38%] of total net sales in fiscal [removed: 2015.] [added: 2016.] |

[removed: | • |] Other, which [added: is not a reportable segment,] consists of [added: Coach brand] sales and expenses generated [removed: by the Coach brand] in [removed: other ancillary channels, including] licensing and [removed: disposition. Other also consists of sales] [added: disposition channels,] and [removed: expenses generated by the Stuart Weitzman brand during the final two months of fiscal 2015. This segment] represented approximately [removed: 2%] of [added: 1% of] total net sales in fiscal [removed: 2015. |][added: 2016.]

[added: Coach Brand] North America Segment

North American Retail Stores — Coach retail stores are located in [added: both] regional shopping centers and metropolitan areas throughout the [removed: U.S.] [added: U.S., Canada] and [removed: Canada.][added: Puerto Rico.]

Our flagship stores, which offer the broadest assortment of Coach [added: brand] products, are located in high-visibility locations.

In fiscal [removed: 2015,] [added: 2016,] we have reduced the number of retail stores and total square footage, as we continue to optimize our real estate position.

We expect this trend to continue in the next fiscal year with the anticipated [added: net] closure of approximately [removed: 15-20] [added: 10-15] North America retail stores in the fiscal year ending July [removed: 2, 2016] [added: 1, 2017] ("fiscal [removed: 2016"), attributable to our Transformation Plan, as described in Note 3, "Transformation and Other Actions."][added: 2017").]

| | | [added: 7/2/2016 | | |] June 27, 2015 | | | June 28, 2014 | | [removed: | June 29, 2013 | |]

| Retail stores | | [removed: 258] [added: 228] | | | [removed: 332] [added: 258] | | | [removed: 351] [added: 332] | |

| Net decrease vs. prior year | | [removed: (74] [added: (30] | ) | | [removed: (19] [added: (74] | ) | | [removed: (3] [added: (19] | ) |

The Coach brand was established in New York City in 1941, and has a rich heritage of pairing exceptional leathers and materials with innovative design.

Stuart Weitzman products, which substantially consist of footwear, are sold primarily through department stores in North America and international locations, within numerous independent third party distributors and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe.

During the fourth quarter of fiscal 2016, the Company acquired the Stuart Weitzman Canadian retail distributor.

| • | Stuart Weitzman, which includes worldwide sales generated by the Stuart Weitzman brand, primarily through department stores in North America and international locations, within numerous independent third party distributors and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe. This segment represented approximately 8% of total net sales in fiscal 2016. |

The change in the number of North America Coach retail stores and their total and average square footage is shown in the following table:

| | | July 2, 2016 | | | June 27, 2015 | | | June 28, 2014 | |

Over the next year, we expect to continue investing in the elevation of shop-in-shop environments, while also elevating Coach brand’s positioning in the North American wholesale channel by rationalizing the distribution footprint, including the closure of about 25% of doors from fiscal 2016 year-end levels and a reduction in markdown allowances.

As of July 2, 2016 and June 27, 2015, we did not have any customers who individually accounted for more than 10% of the North America segment's total net sales.

As of July 2, 2016 and June 27, 2015, we did not have any customers who individually accounted for more than 10% of the International segment's total net sales.

Stuart Weitzman Segment

| • | As of July 2, 2016, Stuart Weitzman had 75 directly operated stores with a total square footage of 117,820 and an average square footage of 1,571 (including 14 retail stores related to our Canadian retail distributor acquisition in the fourth quarter of fiscal 2016). |

We expect our Stuart Weitzman segment to reflect modest growth in new store count and square footage over the next few years as we grow our business domestically and internationally.

As of July 2, 2016 and June 27, 2015, we did not have any customers who individually accounted for more than 10% of the Stuart Weitzman segment's total net sales.

| | |

| --- | --- |

| (1) | Upon the expiration of the footwear license in June 2017, it is the Company's intention to bring all of the Coach brand women's footwear business in-house. |

| | July 2, 2016 | | | | | | | June 27, 2015 | | | | | | | June 28, 2014 | | | | | |

| Coach brand | $ | 4,147.1 | | | 92 | % | | $ | 4,148.6 | | | 99 | % | | $ | 4,806.2 | | | 100 | % |

| Stuart Weitzman brand(1) | 344.7 | | | | 8 | | | 43.0 | | | | 1 | | | — | | | | — | |

| | |

| --- | --- |

| (1) | The significant majority of sales for the Stuart Weitzman brand is attributable to women's footwear. |

Men’s — Men’s includes bag collections (including business cases, computer bags, messenger-style bags, backpacks and totes), small leather goods (including wallets, card cases and belts), footwear, novelty accessories (including time management and electronic accessories) and ready-to-wear.

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

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| --- | --- |

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| --- | --- |

In fiscal 2016, Coach had informational websites in Mexico, Hong Kong, Korea, Malaysia, Singapore, Taiwan, France, Spain and Saudi Arabia, as well as a global informational website where customers from various other countries are directed.

As a key pillar of the transformation plan, Coach brand has expanded its marketing initiatives to more clearly message the brand's unique modern luxury positioning, rooted in a 75 year history of authenticity and craftsmanship, augmented by Executive Creative Director Stuart Vevers's modern interpretation of American fashion.

During fiscal 2016, Stuart Weitzman had two vendors, both located in Spain, who individually provided over 10% of the brands total units (or approximately 30% in the aggregate).

The system functions as a central repository for our transactional information.

Complementing our current ERP system are several other solutions.

Coach also continues to gain traction in mainland China and other Asian markets, Europe and Latin America.

Stuart Weitzman products, which substantially consist of footwear, are sold primarily through wholesale concepts (including shop-in-shops) as well as through retail concepts (including directly operated stores and e-commerce sites).

The Company

Coach's products are sold in approximately 430 wholesale locations.

| Fragrance | | Estee Lauder(2) | | 2010 | | 2015 |

| (1) | The Luxottica licensing relationship is expected to automatically renew in June 2016 with a new expiration date in calendar year 2020. |

| (2) | The Estee Lauder licensing relationship expired on June 30, 2015. Coach entered into a new licensing agreement with Interparfums in April 2015, expiring in June 2026. |

The following discussion - including "Products," "Design and Merchandising," "Marketing," "Manufacturing," "Distribution," "Information Systems," "Trademarks and Patents," "Seasonality," "Government Regulation," "Competition" and "Employees" - is based on the Coach brand.

Coach brand’s primary product offerings, manufactured by third-party suppliers, include women’s and men’s bags, small leather goods, footwear, business cases, ready-to-wear including outerwear, watches, weekend and travel accessories, scarves, sunwear, fragrance, jewelry, travel bags and other lifestyle products.

| | | | | | | | | | | | | | | | | | | | | |

During fiscal 2015, the Company reevaluated its product categories and determined that small accessory handbags and travel bags, which were previously classified as "Women's Accessories" and "All Other Products," respectively, are viewed by management to be part of its "Women's Handbag" product category.

Prior periods have been adjusted to reflect the current period classification.

Typically, there are three to four collections per quarter and four to seven styles per collection.

Men’s — Men’s bag collections include business cases, computer bags, messenger-style bags and totes.

Men’s small leather goods consist primarily of wallets, card cases and belts.

Novelty accessories include time management and electronic accessories.

Footwear — Jimlar Corporation ("Jimlar") has been Coach brand's footwear licensee since 1999.

Footwear sales are comprised primarily of women’s styles.

These products are primarily women's and contain a fashion assortment in all components of this category.

Sunwear — Luxottica Group SPA (“Luxottica”) has been Coach’s eyewear licensee since 2012.

This collection is a collaborative effort that combines the Coach aesthetic for fashion accessories with the latest fashion directions, primarily in sunglasses.

The Coach watch collection is currently sold in Coach retail stores and on our Internet sales sites, department stores worldwide, and select watch retailers in major global markets.

Fragrance — Upon the expiration of Estée Lauder Companies Inc. (“Estée Lauder”) contract in June 2015, Coach entered into a new licensing agreement with Interparfums, which will expire in June 2026.

Coach offers women's fragrance collections which include eau de perfume spray, eau de toilette spray, purse spray, and body lotion.

Coach also offers men's fragrance collections.

In fiscal 2015, Coach had informational websites in Brazil, Chile, Colombia, Mexico, Panama, Peru, Venezuela, Australia, Hong Kong, Indonesia, Korea, Malaysia, New Zealand, Singapore, Taiwan, Thailand, Vietnam, France, Ireland, Portugal, Spain, United Kingdom, United Arab Emirates, Saudi Arabia, Kuwait and Bahrain.

In fiscal 2014, Coach refreshed its strategy to expand its marketing campaigns to more clearly message its brand and products under an effortless New York style positioning.

These two vendors are geographically dispersed and have multiple locations in different countries.

The system functions as a central repository for Coach's transactional information, resulting in increased efficiencies, improved inventory control and a better understanding of consumer demand.

Complementing its ERP system are several other system solutions, each of which Coach believes is suitable for its needs.

Coach owns all of the material worldwide trademark rights used in connection with the production, marketing and distribution of all of its products.

1941 (the "Heritage Logo").

In addition, several of Coach's products are covered by design patents and a utility patent application.

[removed: Coach] [added: The Company] is involved in various routine legal proceedings as both plaintiff and defendant incident to the ordinary course of its business, including proceedings to protect [removed: Coach’s] [added: Coach Inc.'s] intellectual property rights, litigation instituted by persons alleged to have been injured [added: by advertising claims or] upon premises within [removed: Coach’s control] [added: the Company's control,] and litigation with present or former employees.

As part of Coach’s policing program for its intellectual property rights, from time to time, [removed: Coach] [added: the Company] files lawsuits in the U.S. and abroad alleging acts of trademark counterfeiting, trademark infringement, patent infringement, trade dress infringement, copyright infringement, unfair competition, trademark dilution and/or state or foreign law claims.

These actions often result in seizure of counterfeit merchandise and/or out of [removed: court settlements with defendants.]

Although [removed: Coach’s] [added: the Company's] litigation [removed: with present or former employees] [added: as a defendant] is routine and incidental to the conduct of Coach’s business, as well as for any business [removed: employing significant numbers] of [removed: employees,] [added: its size,] such litigation can result in large monetary awards when a civil jury is allowed to determine compensatory and/or punitive [removed: damages for actions claiming discrimination on the basis of age,][added: damages.]

[removed: Coach] [added: The Company] believes that the outcome of all pending legal proceedings in the aggregate will not have a material effect on [removed: Coach’s] [added: the Company's] business or consolidated financial statements.

court settlements with defendants.

gender, race, religion, disability or other legally protected characteristic or for termination of employment that is wrongful or in violation of implied contracts.

Coach has not entered into any transactions that have been identified by the IRS as abusive or that have a significant tax avoidance purpose.

Accordingly, we have not been required to pay a penalty to the IRS for failing to make disclosures required with respect to certain transactions that have been identified by the IRS as abusive or that have a significant tax avoidance purpose.

For the Fiscal Year Ended [removed: June 27, 2015][added: July 2, 2016]

The aggregate market value of Coach, Inc. common stock held by non-affiliates as of December 26, [removed: 2014] [added: 2015] (the last business day of the most recently completed second fiscal quarter) was approximately [removed: $10.2] [added: $9.1] billion.

On [removed: July 31, 2015,] [added: August 5, 2016,] the Registrant had [removed: 276,627,052] [added: 278,942,860] shares of common stock outstanding.

| Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Stockholders | | Part III, Items 10 – 14 |

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Coach, Inc.’s actual results could differ materially from the results contemplated by these forward-looking statements due to a number of important factors, including those discussed in the sections of this Form 10-K filing entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of [removed: the] [added: our] forward-looking [removed: statements contained in this Form 10-K.][added: statements.]

In this Form 10-K, references to “we,” “our,” [removed: “us”] [added: “us,”] "Coach" and the “Company” refer to Coach, Inc., including consolidated subsidiaries.

The fiscal [added: year ended July 2, 2016 ("fiscal 2016") was a 53-week period, and the fiscal] years ended June 27, 2015 [removed: ("fiscal 2015"), June 28, 2014] (“fiscal [removed: 2014”),] [added: 2015”)] and June [removed: 29, 2013] [added: 28, 2014] (“fiscal [removed: 2013")] [added: 2014")] were each 52-week periods.

10-K 1 coh7022016-10k.htm 10-K

10 Hudson Yards, New York, NY 10001

| [Signatures](#s77026F85B8F4591FA8D2CBA0060CB343) | | [55](#s77026F85B8F4591FA8D2CBA0060CB343) |

10-K 1 coh6272015-10k.htm 10-K

516 West 34th Street, New York, NY 10001

| [Signatures](#s6B090BC4EEE75476A2D90D68FAE7A5FB) | | [52](#s6B090BC4EEE75476A2D90D68FAE7A5FB) |

The following table sets forth the location, use and size of the Company's key distribution, corporate and product development facilities as of [removed: June 27, 2015.][added: July 2, 2016.]

The majority of the properties are leased, with the leases expiring at various times through [removed: 2028,] [added: 2027,] subject to renewal options.

| New York, New York | | Corporate, design, sourcing and product development | | [removed: 429,000(1)] [added: 285,000(1)] | |

| Shanghai, China | | Greater China [added: (including Hong Kong, Macau, and mainland China)] regional management | | 23,000 | |

| Hong Kong | | Coach [removed: Hong Kong] [added: Inc.] regional management | | [removed: 18,100] [added: 20,200] | |

| Fort Lauderdale, Florida | | Stuart Weitzman corporate management | | [removed: 9,400] [added: 12,100] | |

As of [removed: June 27, 2015,] [added: July 2, 2016,] the Company also occupied [removed: 258] [added: 228] Coach retail and 204 Coach outlet leased stores located in North America, [removed: 503] [added: 522] Coach-operated concession shop-in-shops within department stores, Coach retail and outlet stores in our international locations, and [removed: 54] [added: 75] Stuart Weitzman stores globally.

| Alicante, Spain | | Stuart Weitzman regional management, sourcing and quality control | | 13,300 | |

| (1) | Represents a Coach-owned location. As of July 2, 2016, the Company possessed an equity method investment in Hudson Yards related to an entity formed during fiscal 2013 for the purpose of developing a new office tower in Manhattan, the Hudson Yards joint venture, with the Company owning less than 43% of the joint venture. On August 1, 2016, the Company sold its investments, and executed an agreement to lease back approximately 694,000 square feet of office space for a 20-year term. Refer to Note 19, "Subsequent Events," for further information. The property associated with this joint venture is not included in the square footage above. |

| (1) | Includes approximately 285,000 square feet related to Coach-owned buildings. |

Refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 3, "Transformation and Other Actions," for further information regarding the Transformation Plan, and its impact on future store trends.

[removed: Coach’s] [added: Coach Inc.’s] common stock is listed on the New York Stock Exchange and is traded under the symbol “COH.” Coach’s Hong Kong Depositary Receipts have been listed on the Hong Kong Stock Exchange since December 2011 and the issuance from time-to-time of these Hong Kong Depositary Receipts has not been registered under the Securities Act, or with any securities regulatory authority of any state or other jurisdiction of the United States and is being made pursuant to Regulation S of the Securities Act.

The following table sets forth, for the fiscal periods indicated, the high, low and closing prices per share of [removed: Coach’s] [added: the Company's] common stock as reported on the New York Stock Exchange Composite Index.

| Fiscal [removed: 2014] [added: 2016] Quarter ended: | | | | | | | | | | | | | | | |

As of [removed: July 31, 2015,] [added: August 5, 2016,] there were [removed: 3,809] [added: 3,901] holders of record of Coach’s common stock.

The information under the principal heading “Securities Authorized For Issuance Under Equity Compensation Plans” in the Company’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on November [removed: 4, 2015,] [added: 10, 2016,] to be filed with the Securities and Exchange Commission (The “Proxy Statement”), is incorporated herein by reference.

The following graph compares the cumulative total stockholder return (assuming reinvestment of dividends) of the Company's common stock with the cumulative total return of the S&P 500 Stock Index and the [removed: “former peer set” and "revised peer] [added: “peer] set" companies listed below over the five-fiscal-year period ending [removed: June 27, 2015,] [added: July 2, 2016,] the last trading day of Coach’s most recent fiscal year.

The graph assumes that $100 was invested on July [removed: 3, 2010] [added: 2, 2011] at the per share closing price in each of Coach’s common stock, the S&P 500 Stock Index and a peer set index compiled by us tracking the peer group companies listed [removed: above,] [added: below,] and that all dividends were reinvested.

[removed: ][added: ]

| September 26, 2015 | $ | 35.98 | | | $ | 27.62 | | | | | | | $ | 0.3375 | |

| December 26, 2015 | 33.45 | | | | 27.22 | | | | | | | | 0.3375 | | |

| March 26, 2016 | 39.95 | | | | 30.06 | | | | | | | | 0.3375 | | |

| July 2, 2016 | 42.13 | | | | 36.64 | | | | $ | 40.73 | | | 0.3375 | | |

| | | Fiscal 2011 | | Fiscal 2012 | | Fiscal 2013 | | Fiscal 2014 | | Fiscal 2015 | | Fiscal 2016 |

| COH | | $100.00 | | $89.99 | | $89.82 | | $55.77 | | $60.60 | | $71.09 |

| Peer Set | | $100.00 | | $116.59 | | $166.57 | | $213.00 | | $243.61 | | $228.25 |

| S&P 500 | | $100.00 | | $103.94 | | $125.34 | | $156.24 | | $170.88 | | $174.86 |

| September 28, 2013 | $ | 59.58 | | | $ | 51.53 | | | | | | | $ | 0.3375 | |

| December 28, 2013 | 57.95 | | | | 47.89 | | | | | | | | 0.3375 | | |

| March 29, 2014 | 56.72 | | | | 44.31 | | | | | | | | 0.3375 | | |

| June 28, 2014 | 50.86 | | | | 33.60 | | | | $ | 34.47 | | | 0.3375 | | |

The Company's former peer set consisted of:

| | |

| --- | --- |

| • | The Gap, Inc., |

| • | Guess?, Inc., |

| • | L Brands, Inc., |

| • | PVH Corp., |

| • | Ralph Lauren Corporation, |

| • | Tiffany & Co., |

| • | V.F. Corporation, and |

| • | Williams-Sonoma, Inc. |

During fiscal 2015, the Company established a revised peer set consisting of:

Coach management selected the “revised peer set” on an industry/line-of-business basis and believes this updated set of companies represent good faith comparables based on their history, size, and business models in relation to Coach, Inc.

| | | June-10 | | June-11 | | June-12 | | June-13 | | June-14 | | June-15 |

| COH | | $100.00 | | $181.04 | | $168.14 | | $167.80 | | $103.33 | | $113.16 |

| Peer Set | | $100.00 | | $179.00 | | $205.09 | | $303.39 | | $374.33 | | $343.00 |

| Former Peer Set | | $100.00 | | $159.61 | | $171.34 | | $244.34 | | $276.27 | | $290.54 |

| S&P 500 | | $100.00 | | $139.57 | | $144.67 | | $186.60 | | $240.78 | | $258.50 |

Stock Repurchase Program

The Company did not repurchase any shares during the fourth quarter of fiscal 2015.

The existing plan, publicly announced on October 23, 2012, expired in June 2015 with zero remaining availability as of June 27, 2015.

The selected historical financial data presented below as of and for each of the fiscal years in the five-year period ended [removed: June 27, 2015] [added: July 2, 2016] has been derived from Coach’s audited Consolidated Financial Statements.

| | [added: July 2, 2016(2)(5) | | | |] June 27, [removed: 2015(2)(4)] [added: 2015(3)(5)] | | | | June 28, [removed: 2014(3)(4)] [added: 2014(4)(5)] | | | | June 29, [removed: 2013(3)(4)] [added: 2013(4)(5)] | | | | June 30, [removed: 2012(3)(4) | | | | July 2, 2011(4)] [added: 2012(4)(5)] | | |

| Net sales | $ | [removed: 4,191.6] [added: 4,491.8] | | | $ | [removed: 4,806.2] [added: 4,191.6] | | | $ | [removed: 5,075.4] [added: 4,806.2] | | | $ | [removed: 4,763.2] [added: 5,075.4] | | | $ | [removed: 4,158.5] [added: 4,763.2] | |

| Gross profit | [removed: 2,908.6] [added: 3,051.3] | | | | [removed: 3,297.0] [added: 2,908.6] | | | | [removed: 3,698.1] [added: 3,297.0] | | | | [removed: 3,466.1] [added: 3,698.1] | | | | [removed: 3,023.5] [added: 3,466.1] | | |

| Selling, general and administrative ("SG&A") expenses | [removed: 2,290.6] [added: 2,397.8] | | | | [removed: 2,176.9] [added: 2,290.6] | | | | [removed: 2,173.6] [added: 2,176.9] | | | | [removed: 1,954.1] [added: 2,173.6] | | | | [removed: 1,718.6] [added: 1,954.1] | | |

| Operating income | [removed: 618.0] [added: 653.5] | | | | [removed: 1,120.1] [added: 618.0] | | | | [removed: 1,524.5] [added: 1,120.1] | | | | [removed: 1,512.0] [added: 1,524.5] | | | | [removed: 1,304.9] [added: 1,512.0] | | |

| Net income | [removed: 402.4] [added: 460.5] | | | | [removed: 781.3] [added: 402.4] | | | | [removed: 1,034.4] [added: 781.3] | | | | [removed: 1,038.9] [added: 1,034.4] | | | | [removed: 880.8] [added: 1,038.9] | | |

| Per basic share | $ | [removed: 1.46] [added: 1.66] | | | $ | [removed: 2.81] [added: 1.46] | | | $ | [removed: 3.66] [added: 2.81] | | | $ | [removed: 3.60] [added: 3.66] | | | $ | [removed: 2.99] [added: 3.60] | |

| Per diluted share | [removed: 1.45] [added: $] | [added: 1.65] | | | [removed: 2.79] [added: $] | [added: 1.45] | | | [removed: 3.61] [added: $] | [added: 2.79] | | | [removed: 3.53] [added: $] | [added: 3.61] | | | [removed: 2.92] [added: $] | [added: 3.53] | |

| Weighted-average basic shares outstanding | [removed: 275.7] [added: 277.6] | | | | [removed: 277.8] [added: 275.7] | | | | [removed: 282.5] [added: 277.8] | | | | [removed: 288.3] [added: 282.5] | | | | [removed: 294.9] [added: 288.3] | | |

| Weighted-average diluted shares outstanding | [removed: 277.2] [added: 279.3] | | | | [removed: 280.4] [added: 277.2] | | | | [removed: 286.3] [added: 280.4] | | | | [removed: 294.1] [added: 286.3] | | | | [removed: 301.6] [added: 294.1] | | |

| Dividends declared per common share | $ | 1.350 | | | $ | 1.350 | | | $ | [removed: 1.238] [added: 1.350] | | | $ | [removed: 0.975] [added: 1.238] | | | $ | [removed: 0.675] [added: 0.975] | |

| Gross margin | [removed: 69.4] [added: 67.9] | | % | | [removed: 68.6] [added: 69.4] | | % | | [removed: 72.9] [added: 68.6] | | % | | [removed: 72.8] [added: 72.9] | | % | | [removed: 72.7] [added: 72.8] | | % |

| SG&A expenses | [removed: 54.6] [added: 53.4] | | % | | [removed: 45.3] [added: 54.6] | | % | | [removed: 42.8] [added: 45.3] | | % | | [removed: 41.0] [added: 42.8] | | % | | [removed: 41.3] [added: 41.0] | | % |

| Operating margin | [removed: 14.7] [added: 14.5] | | % | | [removed: 23.3] [added: 14.7] | | % | | [removed: 30.0] [added: 23.3] | | % | | [removed: 31.7] [added: 30.0] | | % | | [removed: 31.4] [added: 31.7] | | % |

| Net income | [removed: 9.6] [added: 10.3] | | % | | [removed: 16.3] [added: 9.6] | | % | | [removed: 20.4] [added: 16.3] | | % | | [removed: 21.8] [added: 20.4] | | % | | [removed: 21.2] [added: 21.8] | | % |

| Working capital | $ | [removed: 1,671.8] [added: 1,346.2] | | | $ | [removed: 1,042.1] [added: 1,671.8] | | | $ | [removed: 1,348.4] [added: 1,042.1] | | | $ | [removed: 1,086.4] [added: 1,348.4] | | | $ | [removed: 859.4] [added: 1,086.4] | |

| Total assets | [removed: 4,666.9] [added: 4,892.7] | | | | [removed: 3,663.1] [added: 4,666.9] | | | | [removed: 3,531.9] [added: 3,663.1] | | | | [removed: 3,104.3] [added: 3,531.9] | | | | [removed: 2,635.1] [added: 3,104.3] | | |

| Cash, cash equivalents and investments | [removed: 1,931.8] [added: 1,878.0] | | | | [removed: 1,353.1] [added: 1,931.8] | | | | [removed: 1,332.2] [added: 1,353.1] | | | | [removed: 923.2] [added: 1,332.2] | | | | [removed: 712.8] [added: 923.2] | | |

| Inventory | [removed: 485.1] [added: 459.2] | | | | [removed: 526.2] [added: 485.1] | | | | [removed: 524.7] [added: 526.2] | | | | [removed: 504.5] [added: 524.7] | | | | [removed: 421.8] [added: 504.5] | | |

| Total debt | [removed: 890.4] [added: 876.2] | | | | [removed: 140.5] [added: 890.4] | | | | [removed: 1.0] [added: 140.5] | | | | [removed: 23.4] [added: 1.0] | | | | [removed: 24.2] [added: 23.4] | | |

| Stockholders' equity | [removed: 2,489.9] [added: 2,682.9] | | | | [removed: 2,420.6] [added: 2,489.9] | | | | [removed: 2,409.2] [added: 2,420.6] | | | | [removed: 1,992.9] [added: 2,409.2] | | | | [removed: 1,612.6] [added: 1,992.9] | | |

| | [added: July 2, 2016(2) | | |] June 27, [removed: 2015(2)] [added: 2015(3)] | | | June 28, [removed: 2014(3)] [added: 2014(4)] | | | June 29, [removed: 2013(3)] [added: 2013(4)] | | | June 30, [removed: 2012(3) | | | July 2, 2011] [added: 2012(4)] | |

| North American retail stores | [added: 228 | | |] 258 | | | 332 | | | 351 | | | 354 | | [removed: | 345 | |]

| North American outlet stores | 204 | | | [removed: 207] [added: 204] | | | [removed: 193] [added: 207] | | | [removed: 169] [added: 193] | | | [removed: 143] [added: 169] | |

| Coach International | [added: 522 | | |] 503 | | | 475 | | | 409 | | | 368 | | [removed: | 311 | |]

| Stuart Weitzman stores | [removed: 54] [added: 75] | | | [removed: —] [added: 54] | | | — | | | — | | | — | |

| Total stores open at fiscal year-end | [added: 1,029 | | |] 1,019 | | | 1,014 | | | 953 | | | 891 | | [removed: | 799 | |]

| North American retail stores | [added: 659,376 | | |] 728,833 | | | 910,003 | | | 952,422 | | | 959,099 | | [removed: | 936,277 | |]

| North American outlet stores | [added: 1,232,770 | | |] 1,189,018 | | | 1,132,714 | | | 982,202 | | | 789,699 | | [removed: | 649,094 | |]

| Coach International | [added: 1,086,315 | | |] 1,030,695 | | | 918,995 | | | 768,567 | | | 665,396 | | [removed: | 544,798 | |]

| Stuart Weitzman stores | [removed: 91,101] [added: 117,820] | | | [removed: —] [added: 91,101] | | | — | | | — | | | — | |

| Total store square footage at fiscal year-end | [added: 3,096,281 | | |] 3,039,647 | | | 2,961,712 | | | 2,703,191 | | | 2,414,194 | | [removed: | 2,130,169 | |]

| North American retail stores | [added: 2,892 | | |] 2,825 | | | 2,741 | | | 2,713 | | | 2,709 | | [removed: | 2,714 | |]

| North American outlet stores | [added: 6,043 | | |] 5,829 | | | 5,472 | | | 5,089 | | | 4,673 | | [removed: | 4,539 | |]

| Coach International | [added: 2,081 | | |] 2,049 | | | 1,935 | | | 1,879 | | | 1,808 | | [removed: | 1,752 | |]

| Stuart Weitzman stores | [removed: 1,687] [added: 1,571] | | | [removed: —] [added: 1,687] | | | — | | | — | | | — | |

| (1) | The Company’s fiscal year ends on the Saturday closest to June 30. Fiscal [added: year 2016 was a 53-week year. Fiscal] years 2015, 2014, [removed: 2013, 2012] [added: 2013] and [removed: 2011] [added: 2012] were each 52-week years. |

| [removed: (2)] [added: (3)] | The Company acquired Stuart Weitzman in the fourth quarter of fiscal 2015. |

| [removed: (3)] [added: (4)] | The Company acquired its international businesses from its former distributors as follows: fiscal 2014 — the remaining 50% interest in Europe; fiscal 2013 — Malaysia and South Korea; fiscal 2012 — Singapore and Taiwan. |

| | (millions, except per share data) | | | | | | | | | | | | | | | | | | |

| (2) | The Company acquired the Stuart Weitzman Canada distributor in the fourth quarter of fiscal 2016 (which included the impact of an additional 14 retail stores). |

| | |

| --- | --- |

| As Reported: (GAAP Basis) | $ | 3,051.3 | | | $ | 2,397.8 | | | $ | 653.5 | | | $ | 460.5 | | | $ | 1.65 | |

| Excluding Non-GAAP Charges | 1.1 | | | | (122.0 | | ) | | 123.1 | | | | 91.2 | | | | 0.33 | | |

| Adjusted: (Non-GAAP Basis) | $ | 3,052.4 | | | $ | 2,275.8 | | | $ | 776.6 | | | $ | 551.7 | | | $ | 1.98 | |

| Excluding Non-GAAP Charges | — | | | | (39.2 | | ) | | 39.2 | | | | — | | | | — | | |

| Excluding items affecting comparability | — | | | | (39.2 | | ) | | 39.2 | | | | — | | | | — | | |

| As Reported: (GAAP Basis) | $ | 3,023.5 | | | $ | 1,718.6 | | | $ | 1,304.9 | | | $ | 880.8 | | | $ | 2.92 | |

| Excluding items affecting comparability | — | | | | (25.7 | | ) | | 25.7 | | | | — | | | | — | | |

| Adjusted: (Non-GAAP Basis) | $ | 3,023.5 | | | $ | 1,692.9 | | | $ | 1,330.6 | | | $ | 880.8 | | | $ | 2.92 | |

Based on the evaluation of the Company’s disclosure controls and procedures, as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, the Chief Executive Officer of the Company and the Chief Financial Officer of the Company, have concluded that the Company’s disclosure controls and procedures are effective as of [removed: June 27, 2015.][added: July 2, 2016.]

The Company’s management is responsible for establishing and maintaining adequate internal controls over financial [removed: reporting.][added: reporting as defined in Rule 13a-15(f).]

Management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of [removed: June 27, 2015] [added: July 2, 2016] and concluded that it is effective.

The Company’s independent auditors have issued an audit report on the Company's internal control over financial reporting as [added: of July 2, 2016 as] included elsewhere herein.

As discussed in Note 7 to the consolidated financial statements, the Company acquired Stuart Weitzman during the fourth quarter of the year ended June 27, 2015.

This acquisition, representing approximately 13% of Coach, Inc. total assets and approximately 1% of Coach, Inc. net sales, has been excluded from management’s fiscal 2015 assessment of internal control over financial reporting.

The information required to be included by Item 10 of Form 10-K will be included in the Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Stockholders and such information is incorporated by reference herein.

The information regarding executive and director compensation set forth in the Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Stockholders is incorporated herein by reference.

The information under the headings “Securities Authorized for Issuance Under Equity Compensation Plans” and “Coach Stock Ownership by Certain Beneficial Owners and Management” in the Company’s Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Stockholders is incorporated herein by reference.

The information required to be included by Item 13 of Form 10-K will be included in the Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Stockholders and such information is incorporated by reference herein.

The information required by this item is incorporated herein by reference to the sections entitled “Fees For Audit and Other Services” and “Audit Committee Pre-Approval Policy” in the Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Stockholders.

| Date: August [removed: 14, 2015] [added: 19, 2016] | By: | /s/ Victor Luis |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated below on August [removed: 14, 2015.][added: 19, 2016.]

| [Reports of Independent Registered Public Accounting [removed: Firm](#s450A767742DB5DF4BC6ABC91780535A5)] [added: Firm](#s51BF3DA6E4165FF1860894A53AC119A2)] | [removed: [54](#s450A767742DB5DF4BC6ABC91780535A5)] [added: [57](#s51BF3DA6E4165FF1860894A53AC119A2)] |

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| [Consolidated Statements of [removed: Income](#s900D8FEE3BF15A15B5488E64417ACFDD)] [added: Income](#s23A67BC59B0B52539A6565DE12FA47DD)] | [removed: [57](#s900D8FEE3BF15A15B5488E64417ACFDD)] [added: [60](#s23A67BC59B0B52539A6565DE12FA47DD)] |

| [Consolidated Statements of Comprehensive [removed: Income](#sBE483A51E65D56C9A605D5ED9AC32EE9)] [added: Income](#sCA161F940E9750BF8F13FFB1A703C050)] | [removed: [58](#sBE483A51E65D56C9A605D5ED9AC32EE9)] [added: [61](#sCA161F940E9750BF8F13FFB1A703C050)] |

| [Consolidated Statements of Stockholders’ [removed: Equity](#s8196ED14E154529E9C3635D37D9DF44A)] [added: Equity](#s627A05367E5A5DFF90EC404DD48CDD16)] | [removed: [59](#s8196ED14E154529E9C3635D37D9DF44A)] [added: [62](#s627A05367E5A5DFF90EC404DD48CDD16)] |

| [Consolidated Statements of Cash [removed: Flows](#s5757922D71FD5703AEDB6DD1D0F7AC98)] [added: Flows](#s2C48F6378EC855C6903CC049BFBD3E2B)] | [removed: [60](#s5757922D71FD5703AEDB6DD1D0F7AC98)] [added: [63](#s2C48F6378EC855C6903CC049BFBD3E2B)] |

| [Notes to Consolidated Financial [removed: Statements](#s9C4361997E1A50878B704D1CF5A18F41)] [added: Statements](#sFE80AD9CE90457EA8FD699E97512C00D)] | [removed: [61](#s9C4361997E1A50878B704D1CF5A18F41)] [added: [64](#sFE80AD9CE90457EA8FD699E97512C00D)] |

| [Schedule II — Valuation and Qualifying [removed: Accounts](#s95C2CB9265C45AD48D5C4121DFC3C223)] [added: Accounts](#s46DDE9C2F39B5505BC995BC889F39F8C)] | [removed: [94](#s95C2CB9265C45AD48D5C4121DFC3C223)] [added: [96](#s46DDE9C2F39B5505BC995BC889F39F8C)] |

| [Quarterly Financial [removed: Data](#sF07CC67413BA5D63824E566F1C009CA2)] [added: Data](#s9938B370E4FB55FA83AE517F1DBAC421)] | [removed: [95](#sF07CC67413BA5D63824E566F1C009CA2)] [added: [97](#s9938B370E4FB55FA83AE517F1DBAC421)] |

We have audited the accompanying consolidated balance sheets of Coach, Inc. and subsidiaries (the "Company") as of [removed: June 27, 2015] [added: July 2, 2016] and June [removed: 28, 2014,] [added: 27, 2015,] and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended [removed: June 27, 2015.][added: July 2, 2016.]

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Coach, Inc. and subsidiaries at [removed: June 27, 2015] [added: July 2, 2016] and June [removed: 28, 2014,] [added: 27, 2015,] and the results of their operations and their cash flows for each of the three years in the period ended [removed: June 27, 2015,] [added: July 2, 2016,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of [removed: June 27, 2015,] [added: July 2, 2016,] based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August [removed: 14, 2015] [added: 19, 2016] expressed an unqualified opinion on the Company's internal control over financial reporting.

We have audited the internal control over financial reporting of Coach, Inc. and subsidiaries (the "Company") as of [removed: June 27, 2015,] [added: July 2, 2016,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of [removed: June 27, 2015,] [added: July 2, 2016,] based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended [removed: June 27, 2015] [added: July 2, 2016] of the Company and our report dated August [removed: 14, 2015] [added: 19, 2016] expressed an unqualified opinion on those financial statements and financial statement schedule.

| | [added: July 2, 2016 | | | |] June 27, 2015 | | | | June 28, 2014 | | |

| Cash and cash equivalents | $ | [removed: 1,291.8] [added: 859.0] | | | $ | [removed: 591.9] [added: 1,291.8] | |

| Short-term investments | [removed: 234.0] [added: 460.4] | | | | [removed: 276.7] [added: 234.0] | | |

| Trade accounts receivable, less allowances of [removed: $3.1] [added: $2.2] and [removed: $1.4,] [added: $3.1,] respectively | [removed: 219.5] [added: 245.2] | | | | [removed: 198.6] [added: 219.5] | | |

| Inventories | [removed: 485.1] [added: 459.2] | | | | [removed: 526.2] [added: 485.1] | | |

| Deferred income taxes | [removed: 98.4] [added: —] | | | | [removed: 112.6] [added: 98.4] | | |

| Prepaid expenses | [removed: 73.1] [added: 58.0] | | | | [removed: 45.5] [added: 73.1] | | |

| Other current assets | [removed: 104.6] [added: 91.1] | | | | [removed: 103.7] [added: 104.6] | | |

| Total current assets | [removed: 2,506.5] [added: 2,172.9] | | | | [removed: 1,855.2] [added: 2,506.5] | | |

| Property and equipment, net | [removed: 732.6] [added: 919.5] | | | | [removed: 713.9] [added: 732.6] | | |

| Long-term investments | [removed: 406.0] [added: 558.6] | | | | [removed: 484.5] [added: 406.0] | | |

| Goodwill | [removed: 434.2] [added: 502.4] | | | | [removed: 361.4] [added: 434.2] | | |

| Intangible assets | [removed: 359.9] [added: 346.8] | | | | [removed: 9.8] [added: 359.9] | | |

| Deferred income taxes | [removed: 115.8] [added: 248.8] | | | | [removed: 111.6] [added: 115.8] | | |

| Other assets | [removed: 111.9] [added: 143.7] | | | | [removed: 126.7] [added: 111.9] | | |

| Total assets | $ | [removed: 4,666.9] [added: 4,892.7] | | | $ | [removed: 3,663.1] [added: 4,666.9] | |

| Accounts payable | $ | [removed: 222.8] [added: 186.7] | | | $ | [removed: 153.9] [added: 222.8] | |

| Accrued liabilities | [removed: 600.6] [added: 625.0] | | | | [removed: 518.7] [added: 600.6] | | |

| Current debt | [removed: 11.3] [added: 15.0] | | | | [removed: 140.5] [added: 11.3] | | |

| Total current liabilities | [removed: 834.7] [added: 826.7] | | | | [removed: 813.1] [added: 834.7] | | |

| Long-term debt | [removed: 879.1] [added: 861.2] | | | | [removed: —] [added: 879.1] | | |

| Other liabilities | [removed: 463.2] [added: 521.9] | | | | [removed: 429.4] [added: 463.2] | | |

| Total liabilities | [removed: 2,177.0] [added: 2,209.8] | | | | [removed: 1,242.5] [added: 2,177.0] | | |

| /s/ Annabelle Yu Long | | Director |

| Annabelle Yu Long | | |

August 19, 2016

August 19, 2016

| Net Income | $ | 460.5 | | | $ | 402.4 | | | $ | 781.3 | |

| Other comprehensive income | — | | | — | | | | — | | | | — | | | | 4.8 | | | | 4.8 | | |

| Balance at July 2, 2016 | 278.5 | | | $ | 2.8 | | | $ | 2,857.1 | | | $ | (104.1 | ) | | $ | (72.9 | ) | | $ | 2,682.9 | |

| Net income | $ | 460.5 | | | $ | 402.4 | | | $ | 781.3 | |

| Restructuring activities | 17.7 | | | | 59.7 | | | | 108.2 | | |

Additionally, International includes sales to consumers through the Internet in Japan, mainland China, the United Kingdom and South Korea, as well as sales to wholesale customers and distributors in approximately 55 countries.

The Stuart Weitzman segment includes worldwide sales generated by the Stuart Weitzman brand, primarily through department stores in North America and international locations, within numerous independent third party distributors and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe.

The Company also records sales of Coach brand products generated in licensing and disposition channels.

See Note 19, "Subsequent Events," for further discussion on the Company's Hudson Yards joint venture.

The Company holds inventory that is sold through retail and wholesale distribution channels, including e-commerce sites.

The Company had no material impairment losses in fiscal 2016 and in fiscal 2015.

The Company determined that there was no impairment in fiscal 2016, fiscal 2015 or fiscal 2014.

Revenues are also reduced by an estimate for returns at the time of sale.

See Note 13, "Income Taxes" and "Recently Adopted Accounting Pronouncements" herein for further discussion on the Company's income taxes.

The Stuart Weitzman brand, which was reported within the results of Other during fiscal 2015, is reported as a standalone reportable segment in our fiscal 2016 results.

Recently Adopted Accounting Pronouncements

In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes” ("ASU 2015-17") as part of its simplification initiative.

Under the ASU, all deferred tax assets and liabilities are required to be classified as noncurrent in the balance sheets.

Other than the balance sheet reclassification of current deferred tax assets and liabilities to noncurrent, this standard did not have an effect on the Company's consolidated financial statements.

accounting for business combinations.

Under the ASU, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined.

The ASU also requires acquirers to present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.

The requirements of the new standard are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, with early adoption permitted.

The Company elected to early adopt this guidance during the third quarter of fiscal 2016, with no material effect on the Company's consolidated financial statements or notes thereto.

Refer to Note 7, "Acquisitions," for further discussion.

Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2016, the FASB issued ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting (Topic 718)," which simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows.

Most notably, the Company will be required to recognize all excess tax benefits and shortfalls as income tax expense or benefit in the income statement within the reporting period in which they occur.

The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods, which for the Company is the first quarter of fiscal 2018.

Early adoption is permitted.

The Company is in the process of determining the impact of the adoption of this guidance on its consolidated financial statements or notes thereto.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which is intended to increase transparency and comparability among companies that enter into leasing arrangements.

This ASU requires recognition of lease assets and lease liabilities on the balance sheet for nearly all leases (other than short-term leases), as well as a retrospective recognition and measurement of existing impacted leases.

The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2020.

Early adoption is permitted.

The new standard is required to be applied with a modified retrospective approach to each prior reporting period with various optional practical expedients.

COACH, INC.

| /s/ Gary Loveman | | Director |

| Gary Loveman | | |

August 14, 2015

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Stuart Weitzman Topco LLC and Stuart Weitzman Intermediate LLC (referred to herein as “Stuart Weitzman”), which was acquired on May 4, 2015 and whose financial statements constitute 13% of total assets and 1% of net sales of the consolidated financial statement amounts as of and for the year ended June 27, 2015.

Accordingly, our audit did not include the internal control over financial reporting at Stuart Weitzman.

| Other expense | — | | | | — | | | | (6.4 | | ) |

| Balance at June 30, 2012 | 285.1 | | | $ | 2.9 | | | $ | 2,327.1 | | | $ | (387.5 | ) | | $ | 50.5 | | | $ | 1,993.0 | |

| Other comprehensive loss | — | | | — | | | | — | | | | — | | | | (62.7 | | ) | | (62.7 | | ) |

| Repurchase and retirement of common stock | (7.1 | ) | | (0.1 | | ) | | — | | | | (399.9 | | ) | | — | | | | (400.0 | | ) |

| Transformation and other actions | 59.7 | | | | 108.2 | | | | 25.7 | | |

| Repurchase of common stock | — | | | | (524.9 | | ) | | (400.0 | | ) |

The Other segment also consists of sales generated through the Stuart Weitzman brand during the final two months of fiscal 2015.

Notes to Consolidated Financial Statements (Continued)

the day-to-day operations of the business.

From time to time, the Company may make an investment that requires judgment in determining whether the entity is a VIE.

If it is determined that the entity is a VIE, the Company must assess whether it is the primary beneficiary.

The fair values of these intangible assets are estimated based on management's assessment, considering independent third-party appraisals when necessary.

combination.

Estimates of fair value are primarily determined using discounted cash flows, market comparisons, and recent transactions.

These approaches use significant estimates and assumptions, including projected future cash flows, discount rates, growth rates, and determination of appropriate market comparables.

The Company determined that there was no impairment in fiscal 2015, fiscal 2014 or fiscal 2013 as the fair values of the Company's reporting units significantly exceeded their respective carrying values.

The Company may terminate or limit the stock repurchase program at any time.

The total cumulative amount of common stock repurchase price allocated to retained earnings as of June 27, 2015 and June 28, 2014 was approximately $6.73 billion.

These revenues are recognized net of estimated returns at the time of sale to consumers.

Internet revenue is also reduced by an estimate for returns.

| • | Cross currency swaps - These derivatives relate to intercompany loans, and are recognized within foreign currency gains (losses) generally in the period in which the related payments being hedged are revalued or settled. |

Refer to Note 16, "Segment Information," for a description of a product category classification adjustment made to prior year periods to reflect the current year classification.

Under this new guidance, the Company will be required to present these costs in our consolidated balance sheets as a direct deduction from the related debt liability, rather than the previous classification as a deferred asset within Other assets.

ASU 2015-03 does not change the recognition and measurement requirements for debt issuance costs.

The adoption of ASU 2015-03 has resulted in the reclassification of $6.4 million of unamortized debt issuance costs related to the Company's 4.250% Senior Notes (see Note 11, "Debt") from Other assets to Long-term debt within its consolidated balance sheet as of June 27, 2015.

There was no impact to the prior year Consolidated Financial Statements.

including interim periods within those annual periods.

The Company is currently evaluating this guidance, but does not expect its adoption to have a material effect on its Consolidated Financial Statements.

TRANSFORMATION AND OTHER ACTIONS

As of June 27, 2015, the Company expects to incur aggregate pre-tax charges in the range of $325 million, in total, under the Transformation Plan.

The Company expects to incur additional pre-tax charges of around $50 million during fiscal 2016 in connection with the Transformation Plan.

These costs will primarily consist of global store-related costs, including the impact of accelerated depreciation and lease termination charges associated with store closures in North America and select International stores, and organizational efficiency charges.

Fiscal 2013 Charges

Restructuring and Transformation-Related Charges