Tapestry (TPR) 10-K risk factor changes: FY2017 vs FY2016

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

Key operational and cost elements in order to fund and execute this plan 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 [removed: stores,] [added: 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 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's execution of these key operational and cost measures [removed: was] concluded during fiscal 2016.

[removed: The charges under this plan] began in the fourth quarter of fiscal 2016 and [removed: we anticipate they will be] [added: were] substantially [removed: complete] [added: completed] by the end of fiscal year 2017.

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

We operate on a global basis, with approximately [removed: 45%] [added: 46%] of our net sales [added: from the Coach and Stuart Weitzman brands] coming from operations outside of United States.

| • | political or economic instability or changing macroeconomic conditions in our major markets, including the [added: potential] impact of (1) [added: new policies that may be implemented by] the [removed: United Kingdom voting] [added: U.S. or other jurisdictions, particularly with respect] to [removed: leave the European Union in its referendum on June 23, 2016] [added: tax] and [added: trade policies or] (2) the [removed: outcome of the 2016 U.S. Presidential election. On June 23, 2016, the] United Kingdom [removed: (U.K.) held a referendum in which voters approved an exit from] [added: ("U.K.") voting to leave] the European Union [removed: (E.U.),] [added: ("E.U."),] commonly [removed: referred to] [added: known] as [removed: “Brexit.” As a result] [added: Brexit. On March 29, 2017, the U.K. triggered Article 50] of the [removed: referendum, it is expected that] [added: Lisbon Treaty formally starting negotiations with] the [removed: British government will begin negotiating] [added: E.U. The U.K. has two years to complete these negotiations. Although] the terms of the [removed: U.K.’s] [added: U.K.'s] future relationship with the E.U. [removed: Although it is unknown what those terms will be,] [added: are still unknown,] 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 [removed: employees, which could have an adverse effect on our business, financial results and operations;] [added: employees;] |

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

| • | changes in legal and regulatory requirements, including, but not limited to safeguard measures, anti-dumping duties, cargo restrictions to prevent terrorism, restrictions on the transfer of currency, climate change legislation, product safety regulations or other charges or [removed: restrictions, resulting in the imposition of new or more onerous trade restrictions, tariffs, embargoes, exchange or other government controls; and] [added: restrictions] |

[removed: In addition, the] [added: 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 [removed: center,] [added: 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.

One component of our growth strategy is acquisitions, such as our acquisition of Stuart Weitzman Holdings, LLC during fiscal [removed: 2015.][added: 2015 and our recent acquisition of Kate Spade & Company on July 11, 2017.]

The potential difficulties of integrating the operations of an acquired business, such as Stuart [removed: Weitzman,] [added: Weitzman] and [added: Kate Spade, and] realizing our expectations for an acquisition, including the benefits that may be realized, include, among other things:

Our failure to successfully complete the integration of any acquired business, including Stuart [removed: Weitzman,] [added: Weitzman and/or Kate Spade,] and any adverse consequences associated with future acquisition activities, could have an adverse effect on our business, financial condition and operating results.

We determined there was no impairment in fiscal [removed: 2016,] [added: 2017,] fiscal [removed: 2015] [added: 2016] and fiscal [removed: 2014;] [added: 2015;] however, we cannot accurately predict the amount and timing of any impairment of assets.

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

Additionally, Coach has informational websites in various countries, as described in Item I, "Business." [removed: Lastly, our] [added: Our] e-commerce programs also include an invitation-only Coach outlet flash sale site.

The success of our business depends on our ability to retain the value of [removed: the Coach brand and the Stuart Weitzman brand] [added: our brands] and to respond to changing fashion and retail trends in a timely manner.

We believe that the Coach brand, established [added: over] 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 plans and strategies, including our [removed: Transformation Plan and] operational efficiency [removed: initiatives.][added: initiatives and Transformation Plan.]

| • | 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 products and the [removed: FCPA and] [added: FCPA,] U.K. Bribery [removed: Act,] [added: Act and other global anti-corruption laws,] as applicable; |

We lease [added: the majority of] our [removed: corporate-owned] stores under long-term, non-cancelable leases, which usually have initial terms ranging from five and ten years, [added: often] with renewal [removed: options typically in five year increments.][added: options.]

We believe that the [added: majority of the] leases we enter into in the future will likely be long-term and [removed: non-cancelable and have similar renewal options.][added: non-cancelable.]

If we determine that it is no longer economical to operate a retail store subject to a lease and decide to close it as we have done in the past and will do in the future, we may remain obligated under the applicable lease for, among other things, [removed: payment of the base rent for the balance of the lease term.]

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

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

Our North American wholesale business comprised approximately [removed: 4%] [added: 3%] of total net sales for fiscal [removed: 2016.][added: 2017.]

Despite our [removed: 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.

Further, proposed tax changes that may be enacted in the future could [removed: negatively] impact our current or future tax structure and effective tax rates.

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

[removed: We] [added: The Coach brand] currently [removed: have] [added: has] multi-year agreements with licensing partners for our [removed: footwear,] eyewear, watches and fragrance products.

For example, we [removed: do] [added: did] not [removed: intend to] renew our agreement with our [removed: existing] [added: prior] footwear licensing partner when it [removed: expires] [added: expired] in late fiscal [removed: 2017,] [added: 2017] and [removed: bring] [added: brought] the category in-house.

While we believe we have the infrastructure and systems in place to [added: successfully] bring this category in-house, we may face unexpected difficulties or costs in connection with this [removed: process.][added: process or any future action to bring currently licensed categories in-house.]

[removed: Our] [added: In addition, our] ability to access the credit and capital markets in the future as a source of funding, and the borrowing costs associated with such financing, is dependent upon market conditions and our credit rating and outlook.

The Company's charter permits [added: a majority of] its [added: entire] Board, without stockholder approval, to amend the charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Company has the authority to issue.

In addition, the Company's Board may classify or reclassify any unissued shares of common stock or preferred stock and may set the preferences, rights and other terms of the classified or reclassified [added: shares.]

Although the Company's Board has no intention to do so at the present time, it could establish a [added: class or] series of preferred stock that could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for the Company's common stock or otherwise be in the best interest of the Company's stockholders.

The Company's bylaws [removed: also] provide that nominations of persons for election to the Company's Board and the proposal of business to be considered at [removed: a stockholders] [added: an annual] meeting [added: of stockholders] may be made only in the notice of the meeting, by the Company's Board or by a stockholder who is [added: a stockholder of record as of the record date set by the Company's Board for purposes of determining stockholders] entitled to vote at the [added: meeting, at the time of giving notice and at the time of the] meeting and has complied with the advance notice procedures of the Company's bylaws.

Also, under Maryland law, business combinations, [removed: including] [added: including, in certain circumstances specified in the statute,] issuances of equity securities, between the Company and any person who beneficially [removed: owns] [added: owns, directly or indirectly,] 10% or more of the Company's common stock or an affiliate of such person are prohibited for a five-year period, beginning on the date such person last becomes a 10% stockholder, unless exempted in accordance with the statute.

The charges under this plan

| • | changes to the U.S.'s participation in, withdrawal out of, renegotiation of certain international trade agreements or other major trade related issues including the non-renewal of expiring favorable tariffs granted to developing countries, tariff quotas, trade sanctions, new or onerous trade restrictions, retaliatory tariffs, embargoes and other stringent government controls |

A decline in the volume of traffic to our stores could have a negative impact on our net sales.

Declines in consumer traffic could have a negative impact on our net sales and could materially adversely affect our financial condition and results of operations.

Furthermore, declines in traffic could result in store impairment charges if expected future cash flows of the related asset group do not exceed the carrying value.

The Company has embarked on a multi-year ERP implementation.

The Company began implementation in fiscal 2017 and will continue in fiscal 2018 and fiscal 2019.

payment of the base rent for the balance of the lease term.

U.S. lawmakers are evaluating proposals for substantial changes to U.S. fiscal and tax policies, which could include comprehensive tax reform.

A variety of tax reform proposals that would significantly impact U.S. taxation of corporations are under consideration, including elimination of the interest deduction, taxation of previously unrepatriated foreign earnings and reductions in the U.S. corporate tax rate.

We cannot predict which, if any, of these proposals will be enacted into law or the resulting impact any such enactment will have on our financial results.

However, if new legislation were enacted, it could have a material adverse effect on our financial condition and results of operations.

The Company's results are typically affected by seasonal trends.

We have incurred a substantial amount of indebtedness, which could restrict our ability to engage in additional transactions or incur additional indebtedness.

As of July 1, 2017, our consolidated indebtedness was approximately $1.6 billion.

Subsequent to fiscal year 2017, we borrowed $1.1 billion in term loans.

Together with our cash on hand and cash on hand at Kate Spade, along with the $1.0 billion of Senior Notes and $1.1 billion in term loans, we financed our acquisition of Kate Spade.

We also have $600 million of additional senior unsecured notes outstanding and capacity to borrow up to $900 million of additional indebtedness under our undrawn revolving credit facility, which may be used to finance our working capital needs, capital expenditures, permitted investments, share purchases, dividends and other general corporate purposes.

This substantial level of indebtedness could have important consequences to our business including making it more difficult to satisfy our debt obligations, increasing our vulnerability to general adverse economic and industry conditions, limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and restricting us from pursuing certain business opportunities.

In addition, the terms of our credit facility contain affirmative and negative covenants, including a leverage ratio, as well as limitations on our ability to incur debt, grant liens, engage in mergers and dispose of assets.

These consequences and limitations could reduce the benefits we expect to achieve from the acquisition of Kate Spade or impede our ability to engage in future business opportunities or strategic acquisitions.

Our ability to make payments on and to refinance our debt obligations and to fund planned capital expenditures depends on our ability to generate cash from our operations.

This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

We cannot guarantee that our business will generate sufficient cash flow from our operations or that future borrowings will be available to us in an amount sufficient to enable us to make payments of our debt, fund other liquidity needs and make planned capital expenditures.

| • | the repatriation of foreign cash. |

In some instances, we may be

Seasonality primarily impacts the Coach brand.

Changes in our credit profile or deterioration in market conditions may limit our access to the credit and capital markets and adversely impact our financial results or our business initiatives.

We have maintained and accessed revolving credit facilities and issued debt securities as a source of liquidity, along with cash flows generated from our operations, our available cash and cash equivalents and short-term investments, our non-current investments, and other available financing options.

We remain committed to maintaining a strong financial profile with ample liquidity.

We could experience disruptions to our operations in connection with the relocation to our new global corporate headquarters.

The Company entered into various agreements relating to the development of the Company’s new global corporate headquarters in a new office building located at 10 Hudson Yards in New York City.

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.

Due to the inherent difficulty in estimating costs associated with projects of this scale and nature, certain of the costs associated with this project may be higher than estimated and it may take longer than expected to complete the project.

In addition, the process of moving our headquarters is inherently complex and not part of our day to day operations.

Thus, our move could cause significant disruption to our operations and cause the temporary diversion of management resources, all of which could have a material adverse effect on our business.

shares.

The following discussion of Coach’s financial condition and results of operations should be read together with Coach’s consolidated financial statements and notes [removed: to those statements,] [added: thereto,] included elsewhere in this document.

Unless the context requires otherwise, references to the "Coach brand" do not include the Stuart Weitzman brand and references to the "Stuart Weitzman brand" do not include the Coach [removed: brand.][added: brand and references to the Company, Coach, we, our or us do not include Kate Spade & Company ("Kate Spade").]

The fiscal year ended July [added: 1, 2017 was a 52-week period, the fiscal year ended July] 2, 2016 was a 53-week [removed: period,] [added: period] and the fiscal [removed: years] [added: year] ended June 27, 2015 [removed: and June 28, 2014 were each] [added: was a] 52-week [removed: periods.][added: period.]

Coach, Inc. is a leading New [removed: York design] [added: York-based] house of modern luxury accessories and lifestyle brands.

Coach, Inc. operates in three segments: [removed: North America (Coach brand), International (Coach brand), and Stuart Weitzman.]

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

[added: | • | International -] The International segment includes sales of Coach brand products to customers through Coach-operated stores and concession shop-in-shops in Japan, mainland China, Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, Austria, Belgium, the Netherlands and Switzerland. [added: Additionally, International includes sales to consumers through the Internet in Japan, mainland China, South Korea, the United Kingdom, France, Spain, Germany and Italy, as well as sales to wholesale customers and distributors in approximately 55 countries. |]

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

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

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

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

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

| • | Create an agile and scalable business model to support sustainable/future growth for [added: a multi-brand] Coach, Inc. |

During the fourth quarter of fiscal 2014, Coach, Inc. announced a multi-year strategic plan with the objective of transforming the Coach brand and reinvigorating [removed: growth, which we believe will enable the Company to return to ‘best-in-class’ profitability.][added: growth (the "Transformation Plan").]

Key operational and cost measures of the Transformation Plan 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 [removed: our] [added: the] Coach brand, [removed: drives] [added: drive] 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.

[removed: On April 26,] [added: During the fourth quarter of fiscal] 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 [removed: will be] [added: was] substantially [removed: complete] [added: completed] by the end of fiscal 2017.

Refer to Note 3, "Restructuring [removed: Activities,"] [added: Activities"] and "GAAP to Non-GAAP Reconciliation" for further information.

Political and economic instability or changing macroeconomic conditions that exist in our major [removed: markets,] [added: markets have further contributed to this uncertainty,] including the [added: potential] impact of (1) [added: new policies that may be implemented by] the [added: U.S. presidential administration and government, particularly with respect to tax and trade policies or (2) the] United Kingdom [added: ("U.K.")] voting to leave the European Union [removed: in its referendum on June 23, 2016 and (2)] [added: ("E.U."), commonly known as “Brexit.” On March 29, 2017,] the [removed: outcome] [added: U.K. triggered Article 50] of the [removed: 2016 U.S. Presidential election, have further contributed] [added: Lisbon Treaty formally starting negotiations with the E.U. The U.K. has two years] to [removed: this uncertainty.][added: complete these negotiations.]

[removed: 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] [added: Although] the terms of the [removed: U.K.’s] [added: U.K.'s] future relationship with the E.U. [removed: Although it is unknown what those terms will be,] [added: are still unknown,] 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 [removed: 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 [removed: negatively] impacted by foreign exchange rate fluctuations, and will continue to fluctuate with future volatility.

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

| Interest expense, net | [removed: (26.9] [added: 26.9] | | [removed: )] | | [removed: (0.6] [added: 0.6] | [removed: )] | | [removed: (6.4] [added: 6.4] | | [removed: )] | | [removed: (0.2] [added: 0.2] | [removed: )] | | [removed: (20.5] [added: 20.5] | | [removed: )] | | NM | |

The reported results during fiscal 2016 and 2015 reflect certain items, including the impact of the Transformation Plan, the Operational Efficiency [removed: Plan,] [added: Plan] and Acquisition-Related Costs, as noted in the following tables.

Refer to page [removed: 43] [added: 44] for further discussion on the Non-GAAP Measures.

| | July 2, 2016 | | | | | | | | | | | | | | | [added: | | | |]

| | GAAP Basis (As Reported) | | | [added: |] Transformation and Other Actions | | | [added: |] Operational Efficiency Plan | | | [added: |] Acquisition-Related Costs | | | [added: |] Non-GAAP Basis (Excluding Items) | | |

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

| Gross profit | $ | 3,051.3 | | [added: |] $ | — | | [added: |] $ | — | | [added: |] $ | (1.1 | ) | [added: |] $ | 3,052.4 | |

| SG&A expenses | 2,397.8 | | | [added: |] 44.1 | | | [added: |] 43.9 | | | [added: |] 34.0 | | | [added: |] 2,275.8 | | |

| Operating income | 653.5 | | | [added: |] (44.1 | | ) | [added: |] (43.9 | | ) | [added: |] (35.1 | | ) | [added: |] 776.6 | | |

| Provision for income taxes | 166.1 | | | [added: |] (10.7 | | ) | [added: |] (10.3 | | ) | [added: |] (10.9 | | ) | [added: |] 198.0 | | |

| Net income | 460.5 | | | [added: |] (33.4 | | ) | [added: |] (33.6 | | ) | [added: |] (24.2 | | ) | [added: |] 551.7 | | |

| Diluted net income per share | 1.65 | | | [added: |] (0.12 | | ) | [added: |] (0.12 | | ) | [added: |] (0.09 | | ) | [added: |] 1.98 | | |

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

In fiscal [removed: 2016,] [added: 2016] the Company incurred pre-tax [removed: charges,] [added: charges] as follows:

Fiscal [removed: 2015] [added: 2017] Items

In fiscal [removed: 2015,] [added: 2016,] the Company incurred [added: pre-tax] charges as follows:

| • | Transformation and Other Actions - [removed: $145.9] [added: $44.1] million under our Coach brand Transformation Plan [added: primarily] due to [removed: accelerated depreciation and] [added: organizational efficiency costs,] lease termination charges [added: and accelerated depreciation] as a result of store [removed: updates and closures] [added: renovations] within North America and select International [removed: stores, organizational efficiency charges and charges related to the destruction of inventory;] [added: stores.] |

| • | Through the acquisition of Kate Spade, we created the first New York-based house of modern luxury lifestyle brands, defined by authentic, distinctive products and fashion innovation. |

Recent Developments

Kate Spade Acquisition

On July 11, 2017, the Company completed its acquisition of Kate Spade & Company for $18.50 per share in cash for a total of approximately $2.4 billion.

The combination of Coach, Inc. and Kate Spade & Company creates a leading luxury lifestyle company with a more diverse multi-brand portfolio supported by significant expertise in handbag design, merchandising, supply chain and retail operations as well as solid financial acumen.

Strategic Repositioning of Coach Brand in North America Department Stores

In the beginning of fiscal 2017, the Company implemented a deliberate and strategic decision to elevate the Coach brand's positioning in the channel by limiting participation in promotional events and closing approximately 25% of its wholesale doors during fiscal 2017.

The remaining charges under this plan approximate $10-15 million which will be incurred in fiscal 2018.

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

Declines in traffic could result in store impairment charges if expected future cash flows of the related asset group do not exceed the carrying value.

acts (particularly in Europe), disease epidemics and a slowdown in emerging market growth (particularly in Asia) have contributed to this uncertainty.

Several organizations that monitor the world's economy, including the International Monetary Fund, are projecting slightly accelerated economic strengthening with modest overall global growth for the remainder of calendar 2017 but caution that there is considerable uncertainty surrounding the underlying assumptions of the forecast.

FISCAL 2017 COMPARED TO FISCAL 2016

| | July 1, 2017 | | | | | | | July 2, 2016 | | | | | | | Variance | | | | | |

| Net sales | $ | 4,488.3 | | | 100.0 | % | | $ | 4,491.8 | | | 100.0 | % | | $ | (3.5 | ) | | (0.1 | )% |

| Gross profit | 3,081.1 | | | | 68.6 | | | 3,051.3 | | | | 67.9 | | | 29.8 | | | | 1.0 | |

| SG&A expenses | 2,293.7 | | | | 51.1 | | | 2,397.8 | | | | 53.4 | | | (104.1 | | ) | | (4.3 | ) |

| Operating income | 787.4 | | | | 17.5 | | | 653.5 | | | | 14.5 | | | 133.9 | | | | 20.5 | |

| Interest expense, net | 28.4 | | | | 0.6 | | | 26.9 | | | | 0.6 | | | 1.5 | | | | 5.5 | |

| Income before provision for income taxes | 759.0 | | | | 16.9 | | | 626.6 | | | | 14.0 | | | 132.4 | | | | 21.1 | |

| Provision for income taxes | 168.0 | | | | 3.7 | | | 166.1 | | | | 3.7 | | | 1.9 | | | | 1.2 | |

| Net income | 591.0 | | | | 13.2 | | | 460.5 | | | | 10.3 | | | 130.5 | | | | 28.3 | |

| Basic | $ | 2.11 | | | | | | $ | 1.66 | | | | | | $ | 0.45 | | | 27.0 | % |

| Diluted | $ | 2.09 | | | | | | $ | 1.65 | | | | | | $ | 0.44 | | | 26.7 | % |

The reported results during fiscal 2017 and 2016 reflect the impact of the Operational Efficiency Plan, Stuart Weitzman and Kate Spade Acquisition-Related Costs and the Transformation Plan, as noted in the following tables.

| | July 1, 2017 | | | | | | | | | | | | | | | | | | |

| | GAAP Basis (As Reported) | | | | Operational Efficiency Plan | | | | Stuart Weitzman Acquisition-Related Costs | | | | Kate Spade Acquisition-Related Costs | | | | Non-GAAP Basis (Excluding Items) | | |

| Gross profit | $ | 3,081.1 | | | $ | — | | | $ | (2.9 | ) | | $ | — | | | $ | 3,084.0 | |

| SG&A expenses | 2,293.7 | | | | 24.0 | | | | (9.1 | | ) | | 7.4 | | | | 2,271.4 | | |

| Operating income | 787.4 | | | | (24.0 | | ) | | 6.2 | | | | (7.4 | | ) | | 812.6 | | |

| Income before provision for income taxes | 759.0 | | | | (24.0 | | ) | | 6.2 | | | | (16.9 | | ) | | 793.7 | | |

| Provision for income taxes | 168.0 | | | | (8.3 | | ) | | (1.5 | | ) | | (6.6 | | ) | | 184.4 | | |

| Net income | 591.0 | | | | (15.7 | | ) | | 7.7 | | | | (10.3 | | ) | | 609.3 | | |

| Diluted net income per share | 2.09 | | | | (0.05 | | ) | | 0.03 | | | | (0.04 | | ) | | 2.15 | | |

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

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

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

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

| Income before provision for income taxes | 626.6 | | | | (44.1 | | ) | | (43.9 | | ) | | (35.1 | | ) | | 749.7 | | |

In fiscal 2017 the Company recorded pre-tax adjustments as follows:

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.

This 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 have historically been less developed, including footwear and ready-to-wear.

This strategy 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.

For further discussion of charges incurred in connection with the Transformation Plan, see "GAAP to Non-GAAP Reconciliation," herein.

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.

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

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Refer to the "Executive Overview" herein and Note 3, "Restructuring Activities," for further information regarding these plans.

Additional actions under our Operational Efficiency Plan will continue into fiscal 2017, with expected incremental charges of around $20 million to $35 million (which will primarily relate to the costs of replacing and updating the Company’s core technology platforms, as well as office location and supply chain consolidations).

Furthermore, the Company expects to incur additional aggregate Stuart Weitzman pre-tax Acquisition-Related Costs of around $20 million in fiscal 2017, which will primarily include the impact of contingent payments, and to a lesser extent, office lease termination charges.

Net sales in fiscal 2016 increased 7.2%, primarily due to the inclusion of a full fiscal year impact of the Stuart Weitzman brand, compared to approximately two months in the prior fiscal year, contributing to increased net sales of $301.7 million, as well as increased revenues from the Coach brand International business, partially offset by a decline in the North America business.

Excluding the impact of our non-GAAP charges as described in the "GAAP to Non-GAAP Reconciliation" herein, gross profit increased by 4.6%, to $3.05 billion.

SG&A expenses increased by 4.7% to $2.40 billion in fiscal 2016.

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

Coach excludes new locations from the comparable store base for the first twelve months of operation.

with sales.

Excluding Non-GAAP charges of $4.1 million in fiscal 2015, selling expenses were 36.5% of net sales.

FISCAL 2015 COMPARED TO FISCAL 2014

| | June 27, 2015 | | | | | | | June 28, 2014 | | | | | | | Variance | | | | | |

| Net sales | $ | 4,191.6 | | | 100.0 | % | | $ | 4,806.2 | | | 100.0 | % | | $ | (614.6 | ) | | (12.8 | )% |

| Gross profit | 2,908.6 | | | | 69.4 | | | 3,297.0 | | | | 68.6 | | | (388.4 | | ) | | (11.8 | ) |

| SG&A expenses | 2,290.6 | | | | 54.6 | | | 2,176.9 | | | | 45.3 | | | 113.7 | | | | 5.2 | |

| Operating income | 618.0 | | | | 14.7 | | | 1,120.1 | | | | 23.3 | | | (502.1 | | ) | | (44.8 | ) |

| Interest income, net | (6.4 | | ) | | (0.2 | ) | | 2.2 | | | | — | | | (8.6 | | ) | | NM | |

| Income before provision for income taxes | 611.6 | | | | 14.6 | | | 1,122.3 | | | | 23.4 | | | (510.7 | | ) | | (45.5 | ) |

| Provision for income taxes | 209.2 | | | | 5.0 | | | 341.0 | | | | 7.1 | | | (131.8 | | ) | | (38.7 | ) |

| Net income | 402.4 | | | | 9.6 | | | 781.3 | | | | 16.3 | | | (378.9 | | ) | | (48.5 | ) |

| Basic | $ | 1.46 | | | | | | $ | 2.81 | | | | | | $ | (1.35 | ) | | (48.1 | )% |

| Diluted | $ | 1.45 | | | | | | $ | 2.79 | | | | | | $ | (1.33 | ) | | (47.9 | )% |

| Gross profit | $ | 2,908.6 | | | $ | (5.0 | ) | | $ | (4.7 | ) | | $ | 2,918.3 | |

| SG&A expenses | 2,290.6 | | | | 140.9 | | | | 19.9 | | | | 2,129.8 | | |

| Operating income | 618.0 | | | | (145.9 | | ) | | (24.6 | | ) | | 788.5 | | |

| Provision for income taxes | 209.2 | | | | (38.1 | | ) | | (3.6 | | ) | | 250.9 | | |

| Net income | 402.4 | | | | (107.8 | | ) | | (21.0 | | ) | | 531.2 | | |

| Diluted net income per share | 1.45 | | | | (0.39 | | ) | | (0.08 | | ) | | 1.92 | | |

| | June 28, 2014 | | | | | | | | | | | | | | |

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

As of July [removed: 2, 2016 and June 27, 2015, zero-cost collar options] [added: 1, 2017] and [added: July 2, 2016,] forward [removed: foreign] currency [removed: exchange] contracts designated as cash flow hedges with a notional amount of [removed: $190.1] [added: $146.9] million and $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 July [removed: 2, 2016.][added: 1, 2017.]

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

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

As of July [removed: 2, 2016] [added: 1, 2017] and [removed: June 27, 2015,] [added: July 2, 2016,] the total notional values of outstanding forward foreign currency [removed: exchange] contracts related to these loans were [removed: $75.5] [added: $95.5] million and [removed: $25.8] [added: $75.5] million, respectively.

The fair value of outstanding foreign currency [removed: derivatives] [added: contracts] included in current assets at July [added: 1, 2017 and July] 2, 2016 [removed: and June 27, 2015] was [removed: $0.6] [added: $3.5] million and [removed: $3.4] [added: $0.6] million, respectively.

The fair value of outstanding foreign currency [removed: derivatives] [added: contracts] included in current liabilities at July [added: 1, 2017 and July] 2, 2016 [removed: and June 27, 2015] was [removed: $11.1] [added: $1.7] million and [removed: $0.2] [added: $11.1] million, respectively.

As of July [removed: 2, 2016,] [added: 1, 2017,] 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.

The Company is exposed to interest rate risk in relation to its [removed: Amended and Restated] [added: Revolving] Credit [removed: Agreement, including] [added: Facility and] the Term [removed: Loan,] [added: Loan Facilities (collectively "the Facility") entered into under] the [removed: 4.250%] [added: credit agreement dated May 30, 2017, the 2025] Senior [added: Notes, 2022 Senior Notes, 2027 Senior] Notes [added: (collectively the "Senior Notes")] and investments.

Our exposure to changes in interest rates is primarily attributable to debt outstanding under [removed: our Amended and Restated Credit Agreement, including] the [removed: Term Loan.][added: Facility.]

Borrowings under the [removed: Amended and Restated Credit Agreement] [added: Facility] bear interest at a rate per annum equal to, at Coach’s option, either (a) [removed: a rate based on the rates applicable for deposits in the interbank market for U.S. dollars or the applicable currency in which the loans are made plus] an [removed: applicable margin or (b) an] alternate base rate (which is a rate equal to the greatest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on such day plus ½ of 1% or (iii) the Adjusted LIBO Rate for a one month Interest Period on such day plus [removed: 1%).][added: 1%) or (b) a rate based on the rates applicable for deposits in the interbank market for U.S. dollars or the applicable currency in which the loans are made plus, in each case, an applicable margin.]

A hypothetical 10% change in the [removed: Amended and Restated Credit Agreement] [added: credit agreement] interest rate would have resulted in an [removed: insignificant] [added: immaterial] change in interest expense in fiscal [removed: 2016.][added: 2017.]

[removed: Furthermore, we are also] [added: The Company is] exposed to changes in interest rates related to the fair value of our [removed: $600.0 million 4.250%] Senior Notes.

The applicable margin will be determined by reference to a grid, as defined in the Credit Agreement, based on the ratio of (a) consolidated debt plus 600% of consolidated lease expense to (b) consolidated EBITDAR.

At July 1, 2017, the fair value of the 2025 Senior Notes, 2022 Senior Notes and 2027 Senior Notes was approximately $624 million, $395 million and $596 million, respectively.

The interest rate payable on each series of the Senior Notes will be subject to adjustments from time to time

if either Moody’s or S&P or a substitute rating agency (as defined in the Prospectus Supplement furnished with the SEC on June 7, 2017), downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Senior Notes of such series.

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

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

At July 2, 2016, the fair value of the 4.250% Senior Notes was approximately $621.6 million.

Coach, Inc. [removed: (the "Company")] is a leading New [removed: York design] [added: York-based] house of modern luxury accessories and lifestyle brands.

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

The Coach brand is one of the most recognized fine accessories [added: and modern luxury lifestyle] brands in both North America and in targeted international markets.

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

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

The design team, under Mr. [removed: Stuart Weitzman,] [added: Giovanni Morelli,] is responsible for conceptualizing and directing the design of all products, and works closely with its manufacturing partners, primarily in Spain, to construct a broad mix of footwear styles.

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

In October 2000, Coach was listed on the New York Stock Exchange and sold approximately [removed: 68 million shares of common stock, split adjusted, representing] 19.5% of the then outstanding shares.

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

| • | In [removed: June] [added: fiscal] 2001, Coach Japan was initially formed as a joint venture with Sumitomo Corporation. [removed: On July 1,] [added: In fiscal] 2005, we purchased Sumitomo’s 50% interest in Coach Japan. |

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

In fiscal [removed: 2016,] [added: 2017,] the Company has three reportable segments:

| • | North America, which is composed of Coach brand sales to [removed: North American] consumers through stores, including the Internet, and sales to wholesale [removed: customers.] [added: customers in North America.] This segment represented [removed: approximately 53%] [added: 52.3%] of Coach's total net sales in fiscal [removed: 2016.] [added: 2017.] |

| • | International, which is composed of Coach brand sales to consumers through stores and concession shop-in-shops in Japan, mainland China, Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, Austria, Belgium, the Netherlands and Switzerland. Additionally, International includes Coach brand sales to consumers through the Internet in Japan, mainland China, [added: South Korea,] the United [removed: Kingdom] [added: Kingdom, France, Spain, Germany] and [removed: South Korea,] [added: Italy,] as well as sales to wholesale customers and distributors in approximately 55 countries. This segment represented [removed: approximately 38%] [added: 38.2%] of total net sales in fiscal [removed: 2016.] [added: 2017.] |

| • | Stuart Weitzman, which includes [removed: worldwide] [added: global] sales generated by the Stuart Weitzman brand, primarily [added: within international locations] through [added: independent distributors,] department stores in North America and [removed: international locations,] within [removed: numerous independent third party distributors and within] Stuart Weitzman [added: directly] operated stores [removed: (including the Internet)] [added: and e-commerce] in the United States, [removed: Canada] [added: Europe] and [removed: Europe.] [added: Canada.] This segment represented [removed: approximately 8%] [added: 8.3%] of total net sales in fiscal [removed: 2016.] [added: 2017.] |

Other, which is not a reportable segment, consists of Coach brand sales and expenses generated in [added: other ancillary channels,] licensing and [removed: disposition channels,] [added: disposition,] and represented [removed: approximately of 1%] [added: 1.2%] of total net sales in fiscal [removed: 2016.][added: 2017.]

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

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

In fiscal [removed: 2016,] [added: 2017,] we have reduced the number of retail stores [removed: and] [added: with a modest increase in] total square footage, as we continue to optimize our real estate position.

We expect [removed: this trend] to [removed: continue in the next fiscal year with the anticipated net closure of] [added: close] approximately [removed: 10-15] [added: 10] North America retail stores in the fiscal year ending [removed: July 1, 2017 ("fiscal 2017").][added: June 30, 2018.]

| | | [removed: 7/2/2016] [added: July 1, 2017] | | | [removed: June 27, 2015] [added: July 2, 2016] | | | June [removed: 28, 2014] [added: 27, 2015] | |

| Retail stores | | [removed: 228] [added: 221] | | | [removed: 258] [added: 228] | | | [removed: 332] [added: 258] | |

| Net decrease vs. prior year | | [removed: (30] [added: (7] | ) | | [removed: (74] [added: (30] | ) | | [removed: (19] [added: (74] | ) |

| % decrease vs. prior year | | [removed: (11.6] [added: (3.1] | )% | | [removed: (22.3] [added: (11.6] | )% | | [removed: (5.4] [added: (22.3] | )% |

| Retail square footage | | [removed: 659,376] [added: 664,382] | | | [removed: 728,833] [added: 659,376] | | | [removed: 910,003] [added: 728,833] | |

| Net [removed: decrease] [added: increase (decrease)] vs. prior year | | [removed: (69,457] [added: 5,006] | [removed: )] | | [removed: (181,170] [added: (69,457] | ) | | [removed: (42,419] [added: (181,170] | ) |

| % [removed: decrease] [added: increase (decrease)] vs. prior year | | [removed: (9.5] [added: 0.8] | [removed: )%] [added: %] | | [removed: (19.9] [added: (9.5] | )% | | [removed: (4.5] [added: (19.9] | )% |

| Average square footage | | [removed: 2,892] [added: 3,006] | | | [removed: 2,825] [added: 2,892] | | | [removed: 2,741] [added: 2,825] | |

North [removed: American] [added: America] Outlet Stores — Coach brand's outlet stores serve as an efficient means to sell manufactured-for-outlet product, including outlet exclusives, and to a lesser extent, discontinued retail inventory outside the retail channel.

These stores operate under the Coach brand name and are [removed: geographically] positioned [removed: primarily] in established outlet centers that are generally in close proximity to major markets and Coach branded retail locations.

| | | July [added: 1, 2017 | | | July] 2, 2016 | | | June 27, 2015 | | [removed: | June 28, 2014 | |]

| Outlet stores | | [removed: 204] [added: 198] | | | 204 | | | [removed: 207] [added: 204] | |

| Net [removed: (decrease) increase] [added: decrease] vs. prior year | | [removed: —] [added: (6] | [added: )] | | [removed: (3] [added: —] | [removed: )] | | [removed: 14] [added: (3] | [added: )] |

| % [removed: (decrease) increase] [added: decrease] vs. prior year | | [added: (2.9 | )% | |] — | % | | (1.4 | )% | [removed: | 7.3 | % |]

| Outlet square footage | | [removed: 1,232,770] [added: 1,219,822] | | | [removed: 1,189,018] [added: 1,232,770] | | | [removed: 1,132,714] [added: 1,189,018] | |

| Net [added: (decrease)] increase vs. prior year | | [removed: 43,752] [added: (12,948] | [added: )] | | [removed: 56,304] [added: 43,752] | | | [removed: 150,512] [added: 56,304] | |

| % [added: (decrease)] increase vs. prior year | | [removed: 3.7] [added: (1.1] | [removed: %] [added: )%] | | [removed: 5.0] [added: 3.7] | % | | [removed: 15.3] [added: 5.0] | % |

| Average square footage | | [removed: 6,043] [added: 6,161] | | | [removed: 5,829] [added: 6,043] | | | [removed: 5,472] [added: 5,829] | |

With approximately [removed: 57] [added: 59] million unique visits to www.coach.com in fiscal [removed: 2016,] [added: 2017,] our online store provides a showcase environment where consumers can browse through a selected offering of the latest styles and colors.

Our e-commerce programs also include our invitation-only outlet Internet sales site, where we have considerably reduced the number of promotional events since fiscal [removed: 2014.][added: 2015.]

On July 11, 2017, the Company completed its acquisition of Kate Spade & Company for $18.50 per share in cash for a total of $2.4 billion.

As a result, Kate Spade has become a wholly owned subsidiary of Coach, Inc. The combination of Coach, Inc. and Kate Spade & Company creates a leading luxury lifestyle company with a more diverse multi-brand portfolio supported by significant expertise in handbag design, merchandising, supply chain and retail operations as well as solid financial acumen.

Coach's products are sold in approximately 800 international wholesale locations.

The following table shows the number of Stuart Weitzman directly-operated locations and their total average square footage:

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | |

| | | Fiscal Year Ended | | | | | | | |

| | | July 1, 2017 | | | July 2, 2016(1) | | | June 27, 2015(2) | |

| Stuart Weitzman: | | | | | | | | | |

| Locations: | | 81 | | | 75 | | | 54 | |

| Net increase vs. prior year | | 6 | | | 21 | | | — | |

| % increase vs. prior year | | 8.0 | % | | 38.9 | % | | — | % |

| Square footage: | | 136,752 | | | 117,820 | | | 91,101 | |

| Net increase vs. prior year | | 18,932 | | | 26,719 | | | — | |

| % increase vs. prior year | | 16.1 | % | | 29.3 | % | | — | % |

| Average square footage | | 1,688 | | | 1,571 | | | 1,687 | |

(1) Includes 14 retail stores related to our Canadian retail distributor acquisition in the fourth quarter of fiscal 2016.

(2) The Stuart Weitzman business was acquired by the Company in fiscal 2015.

Other, which is not a reportable segment, consists of sales generated by the Coach brand in other ancillary channels, licensing and disposition.

| | July 1, 2017 | | | | | | | July 2, 2016 | | | | | | | June 27, 2015 | | | | | |

| | (millions) | | | | | | | | | | | | | | | | | | | |

| Coach brand: | | | | | | | | | | | | | | | | | | | | |

Also included in this category are novelty accessories (including address books, time management accessories, sketchbooks, and portfolios), key rings and charms.

The Company operates local distribution centers through third-parties in the United States, Canada and Spain for Stuart Weitzman brand products.

This project is a key area of focus and priority.

goods and limited edition collaborative special projects.

1941 and Designs, SW1, IN OUR SHOES, STUART WEITZMAN, KATE SPADE, kate spade new york, JACK SPADE, KATE SPADE SATURDAY, MARVELLA, MONET (international rights only) and TRIFARI.

The Company's results are typically affected by seasonal trends.

| | |

| --- | --- |

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.

Its most significant wholesale customers include Nordstrom, Saks, Bloomingdales and Neiman Marcus.

| • | 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). |

| • | As of June 27, 2015, Stuart Weitzman had 54 directly operated stores with a total square footage of 91,101 and an average square footage of 1,687. |

| Footwear(1) | | Jimlar Corporation | | 1999 | | 2017 |

Other also consists of Coach brand sales generated in disposition channels.

Women’s Accessories — Women’s accessories include small leather goods and novelty accessories.

Key rings and charms are also included in this category.

No other individual vendor currently provides more than approximately 10% of either brand’s total units.

Updates and upgrades of these systems are made on a periodic basis in order to ensure that we constantly improve our functionality.

Design, COACH and Story Patch Design, COACH and Lozenge Design, COACH and Tag Design, Signature C Design, and Op Art C Design, COACH LEATHERWARE EST.

1941, SW1, IN OUR SHOES, and STUART WEITZMAN.

Seasonality primarily impacts the Coach brand.

Because Coach brand's products are frequently given as gifts, we experience seasonal variations in net sales, operating cash flows and working capital requirements, primarily related to seasonal holiday shopping.

As of July 2, 2016, Stuart Weitzman employed approximately 700 people globally, including both full and part-time employees, but excluding seasonal and temporary employees.

Of these employees, approximately 400 were employees in the global retail field.

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

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.

court settlements with defendants.

For the Fiscal Year Ended July [removed: 2, 2016][added: 1, 2017]

| Title of Each [removed: Class:] [added: Class] | | Name of Each Exchange on which Registered |

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate [removed: Web site,] [added: Website,] if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer”, “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [removed: company”] [added: company,” and "emerging growth company"] in Rule 12b-2 of the Exchange Act.

The aggregate market value of Coach, Inc. common stock held by non-affiliates as of December [removed: 26, 2015] [added: 31, 2016] (the last business day of the most recently completed second fiscal quarter) was approximately [removed: $9.1] [added: $9.7] billion.

On August [removed: 5, 2016,] [added: 4, 2017,] the Registrant had [removed: 278,942,860] [added: 282,584,704] shares of common stock outstanding.

| Proxy Statement for the [removed: 2016] [added: 2017] Annual Meeting of Stockholders | | Part III, Items 10 – 14 |

| [Item [removed: 1.](#s8D2372178BB35A2B820C8D0B1B0893AE)] [added: 1.](#s4E0EE332A0C25766A1AD73D0F8D3628B)] | [removed: [Business](#s8D2372178BB35A2B820C8D0B1B0893AE)] [added: [Business](#s4E0EE332A0C25766A1AD73D0F8D3628B)] | [removed: [2](#s8D2372178BB35A2B820C8D0B1B0893AE)] [added: [2](#s4E0EE332A0C25766A1AD73D0F8D3628B)] |

| [Item [removed: 1A.](#s0C4541127A955E67834E7E6A6E92E170)] [added: 1A.](#s679B616C3C31564582E0E617FB87253F)] | [Risk [removed: Factors](#s0C4541127A955E67834E7E6A6E92E170)] [added: Factors](#s679B616C3C31564582E0E617FB87253F)] | [removed: [12](#s0C4541127A955E67834E7E6A6E92E170)] [added: [12](#s679B616C3C31564582E0E617FB87253F)] |

| [Item [removed: 1B.](#sC840D5531B1B5AD09DD2992FE283F1E3)] [added: 1B.](#s016114BBA94E5F0A9A001FA64ED15397)] | [Unresolved Staff [removed: Comments](#sC840D5531B1B5AD09DD2992FE283F1E3)] [added: Comments](#s016114BBA94E5F0A9A001FA64ED15397)] | [removed: [21](#sC840D5531B1B5AD09DD2992FE283F1E3)] [added: [22](#s016114BBA94E5F0A9A001FA64ED15397)] |

| [Item [removed: 2.](#s35F6F3A0C4915ABDB837D96FCB142C8D)] [added: 2.](#sA742658455375C129F9BD8DAB568E20B)] | [removed: [Properties](#s35F6F3A0C4915ABDB837D96FCB142C8D)] [added: [Properties](#sA742658455375C129F9BD8DAB568E20B)] | [removed: [22](#s35F6F3A0C4915ABDB837D96FCB142C8D)] [added: [23](#sA742658455375C129F9BD8DAB568E20B)] |

| [Item [removed: 3.](#sBE653A26697D5AE1A891A2308974B087)] [added: 3.](#s3E9FA8D53BAD52BFA11B989819EA6B5E)] | [Legal [removed: Proceedings](#sBE653A26697D5AE1A891A2308974B087)] [added: Proceedings](#s3E9FA8D53BAD52BFA11B989819EA6B5E)] | [removed: [22](#sBE653A26697D5AE1A891A2308974B087)] [added: [23](#s3E9FA8D53BAD52BFA11B989819EA6B5E)] |

| [Item [removed: 4.](#s8BCF670685C353CD871B7D70E2ED6AAC)] [added: 4.](#s8DEDCD5C82505A779E98B20C3D609B22)] | [Mine Safety [removed: Disclosures](#s8BCF670685C353CD871B7D70E2ED6AAC)] [added: Disclosures](#s8DEDCD5C82505A779E98B20C3D609B22)] | [removed: [23](#s8BCF670685C353CD871B7D70E2ED6AAC)] [added: [24](#s8DEDCD5C82505A779E98B20C3D609B22)] |

| [Item [removed: 5.](#s5401F2951DC050C483621EC7F5645EC6)] [added: 5.](#sBDEF60FEDADD58EF8F86232C3EC47560)] | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s5401F2951DC050C483621EC7F5645EC6)] [added: Securities](#sBDEF60FEDADD58EF8F86232C3EC47560)] | [removed: [24](#s5401F2951DC050C483621EC7F5645EC6)] [added: [25](#sBDEF60FEDADD58EF8F86232C3EC47560)] |

| [Item [removed: 6.](#s71A423496E3958AA9740CA916E01F19B)] [added: 6.](#s9D7A76B25E545B95AC428B3FBE66EB4E)] | [Selected Financial [removed: Data](#s71A423496E3958AA9740CA916E01F19B)] [added: Data](#s9D7A76B25E545B95AC428B3FBE66EB4E)] | [removed: [26](#s71A423496E3958AA9740CA916E01F19B)] [added: [27](#s9D7A76B25E545B95AC428B3FBE66EB4E)] |

| [Item [removed: 7.](#sFFF65A6EA0E1562B8D99A87032EC174A)] [added: 7.](#s3D5D6DA27BB159FAA4999F724706609B)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sFFF65A6EA0E1562B8D99A87032EC174A)] [added: Operations](#s3D5D6DA27BB159FAA4999F724706609B)] | [removed: [29](#sFFF65A6EA0E1562B8D99A87032EC174A)] [added: [30](#s3D5D6DA27BB159FAA4999F724706609B)] |

| [Item [removed: 7A.](#sBF5D78ECAAB9538492DBDC755B75009D)] [added: 7A.](#s0E814A76C9B2580A917C7D6363401AF0)] | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sBF5D78ECAAB9538492DBDC755B75009D)] [added: Risk](#s0E814A76C9B2580A917C7D6363401AF0)] | [removed: [51](#sBF5D78ECAAB9538492DBDC755B75009D)] [added: [52](#s0E814A76C9B2580A917C7D6363401AF0)] |

| [Item [removed: 8.](#sBFF54BB2D41A537CAE0DB08C11DC4F51)] [added: 8.](#sB8959E7E6C23512EA0B1FB8F26165B38)] | [Financial Statements and Supplementary [removed: Data](#sBFF54BB2D41A537CAE0DB08C11DC4F51)] [added: Data](#sB8959E7E6C23512EA0B1FB8F26165B38)] | [removed: [52](#sBFF54BB2D41A537CAE0DB08C11DC4F51)] [added: [53](#sB8959E7E6C23512EA0B1FB8F26165B38)] |

| [Item [removed: 9.](#sC70955A4B6EF5ADC9F3112EE16EAF75C)] [added: 9.](#s8C6299A731F35E1383AB791F8C4FABA3)] | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sC70955A4B6EF5ADC9F3112EE16EAF75C)] [added: Disclosure](#s8C6299A731F35E1383AB791F8C4FABA3)] | [removed: [52](#sC70955A4B6EF5ADC9F3112EE16EAF75C)] [added: [53](#s8C6299A731F35E1383AB791F8C4FABA3)] |

| [Item [removed: 9A.](#s6B0146CBBB545A4896658AB84F5AFD48)] [added: 9A.](#sBD4DD0961196501E86A9F8D67042C5DD)] | [Controls and [removed: Procedures](#s6B0146CBBB545A4896658AB84F5AFD48)] [added: Procedures](#sBD4DD0961196501E86A9F8D67042C5DD)] | [removed: [52](#s6B0146CBBB545A4896658AB84F5AFD48)] [added: [53](#sBD4DD0961196501E86A9F8D67042C5DD)] |

| [Item [removed: 9B.](#sF597187391EF55348140462981EFE2E7)] [added: 9B.](#s7FB4789925905F9DA4C19ECE9EC1102D)] | [Other [removed: Information](#sF597187391EF55348140462981EFE2E7)] [added: Information](#s7FB4789925905F9DA4C19ECE9EC1102D)] | [removed: [52](#sF597187391EF55348140462981EFE2E7)] [added: [53](#s7FB4789925905F9DA4C19ECE9EC1102D)] |

| [Item [removed: 10.](#sF0361759FD525DA89A4E045FA01CC55A)] [added: 10.](#s977C45BD253855D6B6F309B48E77AAE7)] | [Directors, Executive Officers and Corporate [removed: Governance](#sF0361759FD525DA89A4E045FA01CC55A)] [added: Governance](#s977C45BD253855D6B6F309B48E77AAE7)] | [removed: [53](#sF0361759FD525DA89A4E045FA01CC55A)] [added: [54](#s977C45BD253855D6B6F309B48E77AAE7)] |

| [Item [removed: 11.](#s568591F5BEB8539DB8597BC43340F921)] [added: 11.](#s6A5FFB20C6445E08A9E9E9572110C70D)] | [Executive [removed: Compensation](#s568591F5BEB8539DB8597BC43340F921)] [added: Compensation](#s6A5FFB20C6445E08A9E9E9572110C70D)] | [removed: [53](#s568591F5BEB8539DB8597BC43340F921)] [added: [54](#s6A5FFB20C6445E08A9E9E9572110C70D)] |

| [Item [removed: 12.](#sFE6DCBE0DE095A3D858F3DE3D5494B68)] [added: 12.](#sAE5B7BC7C6CE57089BB8F109C5827630)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sFE6DCBE0DE095A3D858F3DE3D5494B68)] [added: Matters](#sAE5B7BC7C6CE57089BB8F109C5827630)] | [removed: [53](#sFE6DCBE0DE095A3D858F3DE3D5494B68)] [added: [54](#sAE5B7BC7C6CE57089BB8F109C5827630)] |

| [Item [removed: 13.](#sDF7EF7124BA25357974DE0462EF5926D)] [added: 13.](#sAE22C70F605F5714AC3EF4E320112B1B)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#sDF7EF7124BA25357974DE0462EF5926D)] [added: Independence](#sAE22C70F605F5714AC3EF4E320112B1B)] | [removed: [53](#sDF7EF7124BA25357974DE0462EF5926D)] [added: [54](#sAE22C70F605F5714AC3EF4E320112B1B)] |

| [Item [removed: 14.](#sF16D252AB0A1525F9D0A9B4AEFCDAFC1)] [added: 14.](#s1E76A6089DFB572D8406D0C111DB51DF)] | [Principal Accounting Fees and [removed: Services](#sF16D252AB0A1525F9D0A9B4AEFCDAFC1)] [added: Services](#s1E76A6089DFB572D8406D0C111DB51DF)] | [removed: [53](#sF16D252AB0A1525F9D0A9B4AEFCDAFC1)] [added: [54](#s1E76A6089DFB572D8406D0C111DB51DF)] |

| [Item [removed: 15.](#s24AA8020B21457059BCA712581DF672B)] [added: 15.](#sF1A1E418C48F5ABCA8AFAC950341FA5A)] | [Exhibits, Financial Statement [removed: Schedules](#s24AA8020B21457059BCA712581DF672B)] [added: Schedules](#sF1A1E418C48F5ABCA8AFAC950341FA5A)] | [removed: [54](#s24AA8020B21457059BCA712581DF672B)] [added: [55](#sF1A1E418C48F5ABCA8AFAC950341FA5A)] |

This document, and the documents incorporated by reference in this document, [removed: in] our press releases and [removed: in] oral statements made from time to time by us or on our behalf, [added: may] contain certain "forward-looking statements" within the meaning of the [removed: Private] [added: federal securities laws, including Section 27A of the] Securities [removed: Litigation Reform] Act of [removed: 1995,] [added: 1933, as amended,] and [removed: are based on management’s current expectations.][added: Section 21E of the Securities Exchange Act of 1934, as amended.]

Coach, Inc.’s actual results could differ materially from the results contemplated by these forward-looking statements due to a number of [removed: 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 [removed: important] factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements.

In this Form 10-K, references to “we,” “our,” “us,” "Coach" and the “Company” refer to Coach, Inc., including consolidated [removed: subsidiaries.][added: subsidiaries as of July 1, 2017 ("fiscal 2017").]

Unless the context requires otherwise, references to the "Coach brand" do not include the Stuart Weitzman brand and references to the "Stuart Weitzman brand" do not include the Coach [removed: brand.][added: brand and references to the Company, Coach, we, our or us do not include Kate Spade & Company ("Kate Spade").]

The fiscal year ended July [added: 1, 2017 ("fiscal 2017") was a 52-week period, the fiscal year ended July] 2, 2016 [removed: ("fiscal 2016")] [added: (“fiscal 2016”)] was a 53-week [removed: period,] [added: period] and the fiscal [removed: years] [added: year] ended June 27, 2015 (“fiscal [removed: 2015”) and June 28, 2014 (“fiscal 2014") were each] [added: 2015") was a] 52-week [removed: periods.][added: period.]

10-K 1 coh7012017-10k.htm 10-K

| Emerging growth company o | | | | | | |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| [Signatures](#sCFF56A8A91925A628C40DA49C119BECE) | | [56](#sCFF56A8A91925A628C40DA49C119BECE) |

In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "position," "believe," "seek," "see," "will," "would," "target", similar expressions, and variations or negatives of these words.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain.

Such statements involve risks, uncertainties and assumptions.

If such risks or uncertainties materialize or such assumptions prove incorrect, the results of Coach, Inc. and its consolidated subsidiaries could differ materially from those expressed or implied by such forward-looking statements and assumptions.

All statements other than statements of historical fact are statements that could be deemed forward-looking statements.

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

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

These forward-looking statements can be identified by the use of forward-looking terminology such as “believes,” “may,” “will,” “should,” “expect,” “confidence,” “trends,” “intend,” “estimate,” “on track,” “are positioned to,” “on course,” “opportunity,” “continue,” “project,” “guidance,” “target,” “forecast,” “anticipated,” “plan,” “potential,” the negative of these terms or comparable terms.

The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

The following table sets forth the location, use and size of the Company's key distribution, corporate and product development facilities as of July [removed: 2, 2016.][added: 1, 2017.]

The majority of the properties are leased, with the leases expiring at various times through [removed: 2027,] [added: 2036,] subject to renewal options.

| Jacksonville, Florida | | [added: Coach] North America distribution and [removed: consumer] [added: customer] service | | 850,000 | |

| New York, New York | | Corporate, design, sourcing and product development | | [removed: 285,000(1)] [added: 694,000] | |

| Tokyo, Japan | | Coach Japan regional management | | [removed: 32,300] [added: 24,900] | |

| Shanghai, China | | [added: Coach] Greater China (including Hong Kong, Macau, and mainland China) regional management | | [removed: 23,000] [added: 23,400] | |

| Hong [removed: Kong] [added: Kong, China] | | [removed: Coach Inc.] [added: Corporate] regional management | | [removed: 20,200] [added: 20,300] | |

| [added: Seoul,] South Korea | | [removed: Coach] [added: Corporate] South Korea regional management | | [removed: 18,000] [added: 11,700] | |

| Shanghai, China | | Coach Asia [removed: shared service center] [added: regional management] | | 17,700 | |

| Hong [removed: Kong] [added: Kong, China] | | [removed: Corporate] [added: Coach] sourcing and quality control | | [removed: 17,000(2)] [added: 17,000(1)] | |

| Dongguan, China | | [removed: Corporate] [added: Coach] sourcing, quality control and product development | | 16,700 | |

| Alicante, Spain | | Stuart Weitzman regional management, sourcing and quality control | | [removed: 13,300] [added: 13,000] | |

| Ho Chi Minh City, Vietnam | | [removed: Corporate] [added: Coach] sourcing and quality control | | [removed: 10,200] [added: 8,500] | |

| [removed: London] [added: London, U.K.] | | Coach Europe regional management | | [removed: 8,000] [added: 12,400] | |

| [added: Kuala Lumpur,] Malaysia | | Coach Malaysia regional management | | [removed: 3,800] [added: 4,500] | |

| [removed: Singapore] [added: Paris, France] | | Coach [removed: Singapore] [added: Europe] regional management | | [removed: 2,900] [added: 6,900] | |

| Beijing, China | | [added: Coach] Greater China regional management | | 2,800 | |

| Clark, Philippines | | [removed: Corporate] [added: Coach] sourcing and quality control | | 2,400 | |

| [removed: (2)] [added: (1)] | Represents a Coach-owned location. |

As of July [removed: 2, 2016,] [added: 1, 2017,] the Company also occupied [removed: 228] [added: 221] Coach retail and [removed: 204] [added: 198] Coach outlet leased stores located in North America, [removed: 522] [added: 543] Coach-operated concession shop-in-shops within department stores, Coach retail and outlet stores in our international locations, and [removed: 75] [added: 81] Stuart Weitzman stores globally.

These leases expire at various times through [removed: 2036.][added: 2031.]

| Ngee Ann City, Singapore | | Coach Singapore regional management | | 7,600 | |

| New York, New York | | Stuart Weitzman corporate, design, sourcing and product development | | 37,500 | |

| | |

| --- | --- |

| (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. |

[removed: Coach] [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.

| Fiscal [removed: 2015] [added: 2017] Quarter ended: | | | | | | | | | | | | | | | |

As of August [removed: 5, 2016,] [added: 4, 2017,] there were [removed: 3,901] [added: 3,964] 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: 10, 2016,] [added: 9, 2017,] 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 “peer set" companies listed below over the five-fiscal-year period ending July [removed: 2, 2016,] [added: 1, 2017,] the last [removed: trading] day of Coach’s most recent fiscal year.

The graph assumes that $100 was invested on [removed: July 2, 2011] [added: June 30, 2012] at the per share closing price in each of Coach’s common stock, the S&P 500 Stock Index and a peer set index [removed: compiled by us] tracking the peer group companies listed below, and that all dividends were reinvested.

[removed: ][added: ]

| | | Fiscal [removed: 2011 | | Fiscal] 2012 | | Fiscal 2013 | | Fiscal 2014 | | Fiscal 2015 | | Fiscal 2016 | [added: | Fiscal 2017 |]

| October 1, 2016 | $ | 43.71 | | | $ | 34.55 | | | | | | | $ | 0.3375 | |

| December 31, 2016 | 38.86 | | | | 34.07 | | | | | | | | 0.3375 | | |

| April 1, 2017 | 41.70 | | | | 34.33 | | | | | | | | 0.3375 | | |

| July 1, 2017 | 47.76 | | | | 38.47 | | | | $ | 47.34 | | | 0.3375 | | |

| COH | | $100.00 | | $99.80 | | $61.98 | | $67.33 | | $78.99 | | $94.99 |

| Peer Set | | $100.00 | | $142.87 | | $182.70 | | $208.95 | | $195.78 | | $194.52 |

| S&P 500 | | $100.00 | | $120.60 | | $150.32 | | $164.41 | | $168.23 | | $197.92 |

| September 27, 2014 | $ | 37.70 | | | $ | 33.39 | | | | | | | $ | 0.3375 | |

| December 27, 2014 | 37.60 | | | | 32.72 | | | | | | | | 0.3375 | | |

| March 28, 2015 | 43.87 | | | | 35.65 | | | | | | | | 0.3375 | | |

| June 27, 2015 | 43.45 | | | | 34.00 | | | | $ | 36.12 | | | 0.3375 | | |

| 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 |

The selected historical financial data presented below as of and for each of the fiscal years in the five-year period ended July [removed: 2, 2016] [added: 1, 2017] has been derived from Coach’s audited Consolidated Financial Statements.

| | Fiscal Year [removed: Ended(1)] [added: Ended(1)(5)] | | | | | | | | | | | | | | | | | | |

| | July [removed: 2, 2016(2)(5)] [added: 1, 2017] | | | | [removed: June 27, 2015(3)(5)] [added: July 2, 2016(2)] | | | | June [removed: 28, 2014(4)(5)] [added: 27, 2015(3)] | | | | June [removed: 29, 2013(4)(5)] [added: 28, 2014(4)] | | | | June [removed: 30, 2012(4)(5)] [added: 29, 2013(4)] | | |

| Net sales | $ | [removed: 4,491.8] [added: 4,488.3] | | | $ | [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] | |

| Gross profit | [removed: 3,051.3] [added: 3,081.1] | | | | [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] | | |

| Selling, general and administrative ("SG&A") expenses | [removed: 2,397.8] [added: 2,293.7] | | | | [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] | | |

| Operating income | [removed: 653.5] [added: 787.4] | | | | [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] | | |

| Net income | [removed: 460.5] [added: 591.0] | | | | [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] | | |

| Net [removed: income:] [added: income per share:] | | | | | | | | | | | | | | | | | | | |

| [removed: Per basic share] [added: Basic] | $ | [removed: 1.66] [added: 2.11] | | | $ | [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: Per diluted share] [added: Diluted] | $ | [removed: 1.65] [added: 2.09] | | | $ | [removed: 1.45] [added: 1.65] | | | $ | [removed: 2.79] [added: 1.45] | | | $ | [removed: 3.61] [added: 2.79] | | | $ | [removed: 3.53] [added: 3.61] | |

| Weighted-average basic shares outstanding | [removed: 277.6] [added: 280.6] | | | | [removed: 275.7] [added: 277.6] | | | | [removed: 277.8] [added: 275.7] | | | | [removed: 282.5] [added: 277.8] | | | | [removed: 288.3] [added: 282.5] | | |

| Weighted-average diluted shares outstanding | [removed: 279.3] [added: 282.8] | | | | [removed: 277.2] [added: 279.3] | | | | [removed: 280.4] [added: 277.2] | | | | [removed: 286.3] [added: 280.4] | | | | [removed: 294.1] [added: 286.3] | | |

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

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

| SG&A expenses | [removed: 53.4] [added: 51.1] | | % | | [removed: 54.6] [added: 53.4] | | % | | [removed: 45.3] [added: 54.6] | | % | | [removed: 42.8] [added: 45.3] | | % | | [removed: 41.0] [added: 42.8] | | % |

| Operating margin | [removed: 14.5] [added: 17.5] | | % | | [removed: 14.7] [added: 14.5] | | % | | [removed: 23.3] [added: 14.7] | | % | | [removed: 30.0] [added: 23.3] | | % | | [removed: 31.7] [added: 30.0] | | % |

| Net income | [removed: 10.3] [added: 13.2] | | % | | [removed: 9.6] [added: 10.3] | | % | | [removed: 16.3] [added: 9.6] | | % | | [removed: 20.4] [added: 16.3] | | % | | [removed: 21.8] [added: 20.4] | | % |

| Working capital | $ | [removed: 1,346.2] [added: 3,199.5] | | | $ | [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] | |

| Total assets | [removed: 4,892.7] [added: 5,831.6] | | | | [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] | | |

| Cash, cash equivalents and investments | [removed: 1,878.0] [added: 3,158.7] | | | | [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] | | |

| Inventory | [removed: 459.2] [added: 469.7] | | | | [removed: 485.1] [added: 459.2] | | | | [removed: 526.2] [added: 485.1] | | | | [removed: 524.7] [added: 526.2] | | | | [removed: 504.5] [added: 524.7] | | |

| Total debt | [removed: 876.2] [added: 1,579.5] | | | | [removed: 890.4] [added: 876.2] | | | | [removed: 140.5] [added: 890.4] | | | | [removed: 1.0] [added: 140.5] | | | | [removed: 23.4] [added: 1.0] | | |

| Stockholders' equity | [removed: 2,682.9] [added: 3,001.9] | | | | [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] | | |

| | July [added: 1, 2017 | | | July] 2, 2016(2) | | | June 27, 2015(3) | | | June 28, 2014(4) | | | June 29, 2013(4) | | [removed: | June 30, 2012(4) | |]

| [removed: Coach Operated] Store Data: | | | | | | | | | | | | | | |

| North [removed: American] [added: America] retail stores | [added: 221 | | |] 228 | | | 258 | | | 332 | | | 351 | | [removed: | 354 | |]

| North [removed: American] [added: America] outlet stores | [removed: 204] [added: 198] | | | 204 | | | [removed: 207] [added: 204] | | | [removed: 193] [added: 207] | | | [removed: 169] [added: 193] | |

| Coach International | [added: 543 | | |] 522 | | | 503 | | | 475 | | | 409 | | [removed: | 368 | |]

| Stuart Weitzman stores | [removed: 75] [added: 81] | | | [removed: 54] [added: 75] | | | [removed: —] [added: 54] | | | — | | | — | |

| Total stores open at fiscal year-end | [added: 1,043 | | |] 1,029 | | | 1,019 | | | 1,014 | | | 953 | | [removed: | 891 | |]

| North [removed: American] [added: America] retail stores | [added: 664,382 | | |] 659,376 | | | 728,833 | | | 910,003 | | | 952,422 | | [removed: | 959,099 | |]

| North [removed: American] [added: America] outlet stores | [added: 1,219,822 | | |] 1,232,770 | | | 1,189,018 | | | 1,132,714 | | | 982,202 | | [removed: | 789,699 | |]

| Coach International | [added: 1,166,920 | | |] 1,086,315 | | | 1,030,695 | | | 918,995 | | | 768,567 | | [removed: | 665,396 | |]

| Stuart Weitzman stores | [removed: 117,820] [added: 136,752] | | | [removed: 91,101] [added: 117,820] | | | [removed: —] [added: 91,101] | | | — | | | — | |

| Total store square footage at fiscal year-end | [added: 3,187,876 | | |] 3,096,281 | | | 3,039,647 | | | 2,961,712 | | | 2,703,191 | | [removed: | 2,414,194 | |]

| North [removed: American] [added: America] retail stores | [added: 3,006 | | |] 2,892 | | | 2,825 | | | 2,741 | | | 2,713 | | [removed: | 2,709 | |]

| North [removed: American] [added: America] outlet stores | [added: 6,161 | | |] 6,043 | | | 5,829 | | | 5,472 | | | 5,089 | | [removed: | 4,673 | |]

| Coach International | [added: 2,149 | | |] 2,081 | | | 2,049 | | | 1,935 | | | 1,879 | | [removed: | 1,808 | |]

| Stuart Weitzman stores | [removed: 1,571] [added: 1,688] | | | [removed: 1,687] [added: 1,571] | | | [removed: —] [added: 1,687] | | | — | | | — | |

| As Reported: (GAAP Basis) | $ | 3,081.1 | | | $ | 2,293.7 | | | $ | 787.4 | | | $ | 591.0 | | | $ | 2.09 | |

| Excluding Non-GAAP Adjustments | 2.9 | | | | (22.3 | | ) | | 25.2 | | | | 18.3 | | | | 0.06 | | |

| Adjusted: (Non-GAAP Basis) | $ | 3,084.0 | | | $ | 2,271.4 | | | $ | 812.6 | | | $ | 609.3 | | | $ | 2.15 | |

| As Reported: (GAAP Basis) | $ | 3,466.1 | | | $ | 1,954.1 | | | $ | 1,512.0 | | | $ | 1,038.9 | | | $ | 3.53 | |

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

| Adjusted: (Non-GAAP Basis) | $ | 3,466.1 | | | $ | 1,914.9 | | | $ | 1,551.2 | | | $ | 1,038.9 | | | $ | 3.53 | |

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 July [removed: 2, 2016.][added: 1, 2017.]

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 July [removed: 2, 2016] [added: 1, 2017] 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 of July [removed: 2, 2016] [added: 1, 2017] as included elsewhere herein.

The information required to be included by Item 10 of Form 10-K will be included in the Proxy Statement for the [removed: 2016] [added: 2017] 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: 2016] [added: 2017] 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: 2016] [added: 2017] 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: 2016] [added: 2017] 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: 2016] [added: 2017] Annual Meeting of Stockholders.

| Date: August [removed: 19, 2016] [added: 18, 2017] | 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: 19, 2016.][added: 18, 2017.]

| /s/ [removed: Jane Nielsen] [added: Kevin Wills] | | Chief Financial Officer |

| [Reports of Independent Registered Public Accounting [removed: Firm](#s51BF3DA6E4165FF1860894A53AC119A2)] [added: Firm](#s829DE3698DC659D389EEF8F516DAE881)] | [removed: [57](#s51BF3DA6E4165FF1860894A53AC119A2)] [added: [58](#s829DE3698DC659D389EEF8F516DAE881)] |

| [Consolidated Balance [removed: Sheets](#sDEA3B739B71C5BAEA37B5CC9B5F0E13E)] [added: Sheets](#s88332BF3AD8055419243D5E4B0A6304F)] | [removed: [59](#sDEA3B739B71C5BAEA37B5CC9B5F0E13E)] [added: [60](#s88332BF3AD8055419243D5E4B0A6304F)] |

| [Consolidated Statements of [removed: Income](#s23A67BC59B0B52539A6565DE12FA47DD)] [added: Income](#s8BD0F6E3CE6755EBBB7569AC8382E12E)] | [removed: [60](#s23A67BC59B0B52539A6565DE12FA47DD)] [added: [61](#s8BD0F6E3CE6755EBBB7569AC8382E12E)] |

| [Consolidated Statements of Comprehensive [removed: Income](#sCA161F940E9750BF8F13FFB1A703C050)] [added: Income](#s2DCDF556455054B498FED8DE0E5E7B14)] | [removed: [61](#sCA161F940E9750BF8F13FFB1A703C050)] [added: [62](#s2DCDF556455054B498FED8DE0E5E7B14)] |

| [Consolidated Statements of Stockholders’ [removed: Equity](#s627A05367E5A5DFF90EC404DD48CDD16)] [added: Equity](#s8AAEE81FC3B857D8A7B280CBA3C2E1A6)] | [removed: [62](#s627A05367E5A5DFF90EC404DD48CDD16)] [added: [63](#s8AAEE81FC3B857D8A7B280CBA3C2E1A6)] |

| [Consolidated Statements of Cash [removed: Flows](#s2C48F6378EC855C6903CC049BFBD3E2B)] [added: Flows](#sDF325585DC2F50EEADA75162A9D037D6)] | [removed: [63](#s2C48F6378EC855C6903CC049BFBD3E2B)] [added: [64](#sDF325585DC2F50EEADA75162A9D037D6)] |

| [Notes to Consolidated Financial [removed: Statements](#sFE80AD9CE90457EA8FD699E97512C00D)] [added: Statements](#s87EE586F0E03527F81DA68D605BBC811)] | [removed: [64](#sFE80AD9CE90457EA8FD699E97512C00D)] [added: [65](#s87EE586F0E03527F81DA68D605BBC811)] |

| [Schedule II — Valuation and Qualifying [removed: Accounts](#s46DDE9C2F39B5505BC995BC889F39F8C)] [added: Accounts](#sAB81F8ECD72B5F418BF3669BC8CC514A)] | [removed: [96](#s46DDE9C2F39B5505BC995BC889F39F8C)] [added: [94](#sAB81F8ECD72B5F418BF3669BC8CC514A)] |

| [Quarterly Financial [removed: Data](#s9938B370E4FB55FA83AE517F1DBAC421)] [added: Data](#sDFE5BF42B85256EAA91F559E6FF5F8A1)] | [removed: [97](#s9938B370E4FB55FA83AE517F1DBAC421)] [added: [95](#sDFE5BF42B85256EAA91F559E6FF5F8A1)] |

We have audited the accompanying consolidated balance sheets of Coach, Inc. and subsidiaries (the "Company") as of July [removed: 2, 2016] [added: 1, 2017] and [removed: June 27, 2015,] [added: July 2, 2016,] and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended July [removed: 2, 2016.][added: 1, 2017.]

Our audits also included the financial statement [removed: schedule] [added: Schedule II] listed in the Index to the Consolidated Financial Statements.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Coach, Inc. and subsidiaries at July [removed: 2, 2016] [added: 1, 2017] and [removed: June 27, 2015,] [added: July 2, 2016,] and the results of their operations and their cash flows for each of the three years in the period ended July [removed: 2, 2016,] [added: 1, 2017,] 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 July [removed: 2, 2016,] [added: 1, 2017,] 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: 19, 2016] [added: 18, 2017] 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 July [removed: 2, 2016,] [added: 1, 2017,] 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 July [removed: 2, 2016,] [added: 1, 2017,] 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 [removed: schedule] [added: Schedule II] as of and for the year ended July [removed: 2, 2016] [added: 1, 2017] of the Company and our report dated August [removed: 19, 2016] [added: 18, 2017] expressed an unqualified opinion on those financial statements and financial statement schedule.

| | July [added: 1, 2017 | | | | July] 2, 2016 | | | | June 27, 2015 | | |

| Cash and cash equivalents | $ | [removed: 859.0] [added: 2,672.9] | | | $ | [removed: 1,291.8] [added: 859.0] | |

| Short-term investments | [removed: 460.4] [added: 410.7] | | | | [removed: 234.0] [added: 460.4] | | |

| Trade accounts receivable, less allowances of [removed: $2.2] [added: $1.9] and [removed: $3.1,] [added: $2.2,] respectively | [removed: 245.2] [added: 268.0] | | | | [removed: 219.5] [added: 245.2] | | |

| Inventories | [removed: 459.2] [added: 469.7] | | | | [removed: 485.1] [added: 459.2] | | |

| Deferred income taxes | [removed: —] [added: 170.5] | | | | [removed: 98.4] [added: 248.8] | | |

| Prepaid expenses | [removed: 58.0] [added: 58.6] | | | | [removed: 73.1] [added: 58.0] | | |

| Other current assets | [removed: 91.1] [added: 31.9] | | | | [removed: 104.6] [added: 77.5] | | |

| Total current assets | [removed: 2,172.9] [added: 3,953.3] | | | | [removed: 2,506.5] [added: 2,172.9] | | |

| Property and equipment, net | [removed: 919.5] [added: 691.4] | | | | [removed: 732.6] [added: 919.5] | | |

| Long-term investments | [removed: 558.6] [added: 75.1] | | | | [removed: 406.0] [added: 558.6] | | |

| Goodwill | [removed: 502.4] [added: 480.5] | | | | [removed: 434.2] [added: 502.4] | | |

| Intangible assets | [removed: 346.8] [added: 340.8] | | | | [removed: 359.9] [added: 346.8] | | |

| Deferred income taxes [added: – noncurrent asset] | [removed: 248.8] [added: 170.5] | | | | [removed: 115.8] [added: 248.8] | | |

| Other assets | [removed: 143.7] [added: 120.0] | | | | [removed: 111.9] [added: 143.7] | | |

| Total assets | $ | [removed: 4,892.7] [added: 5,831.6] | | | $ | [removed: 4,666.9] [added: 4,892.7] | |

| Accounts payable | $ | [removed: 186.7] [added: 194.6] | | | $ | [removed: 222.8] [added: 186.7] | |

| Accrued liabilities | [removed: 625.0] [added: 559.2] | | | | [removed: 600.6] [added: 625.0] | | |

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

| Total current liabilities | [removed: 826.7] [added: 753.8] | | | | [removed: 834.7] [added: 826.7] | | |

| Long-term debt | [removed: 861.2] [added: 1,579.5] | | | | [removed: 879.1] [added: 861.2] | | |

| Kevin Wills | | (Principal Financial Officer) |

| /s/ Melinda Brown | | Corporate Controller |

| Melinda Brown | | (Principal Accounting Officer) |

August 18, 2017

August 18, 2017

| | July 1, 2017 | | | | July 2, 2016 | | |

| Income tax receivable | 41.5 | | | | 13.6 | | |

| Net Income | $ | 591.0 | | | $ | 460.5 | | | $ | 402.4 | |

| Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes | 1.9 | | | — | | | | 16.4 | | | | — | | | | — | | | | 16.4 | | |

| Other comprehensive loss | — | | | — | | | | — | | | | — | | | | (14.0 | | ) | | (14.0 | | ) |

| Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes | 3.4 | | | — | | | | 48.9 | | | | — | | | | — | | | | 48.9 | | |

| Balance at July 1, 2017 | 281.9 | | | $ | 2.8 | | | $ | 2,978.3 | | | $ | 107.7 | | | $ | (86.9 | ) | | $ | 3,001.9 | |

| Net income | $ | 591.0 | | | $ | 460.5 | | | $ | 402.4 | |

| Other assets | 48.0 | | | | (6.3 | | ) | | 17.8 | | |

| Hudson Yards sale of investments, net of expenses | 680.6 | | | | — | | | | — | | |

| Sale of former headquarters, net of expenses | 126.0 | | | | — | | | | — | | |

The Company recorded $14.2 million of impairment charges in fiscal 2017 and no material impairment charges in fiscal 2016.

The impairment charge recognized is limited to the amount of goodwill allocated to that reporting unit.

Certain reclassifications on the Consolidated Balance Sheet have been made to the prior period's financial information in order to conform to the current period's presentation.

In January 2017, the Financial Accounting Standards Board ("FASB") issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which simplifies the subsequent measurement of goodwill by eliminating the second step from the quantitative goodwill impairment test.

Under this guidance, annual or interim goodwill impairment testing will be performed by comparing the fair value of a reporting unit with its carrying amount.

Therefore, the impact on the consolidated financial statements will be dependent upon future events which are unpredictable.

The Company will adopt this standard in the first quarter of fiscal 2018.

The Company expects the guidance will result in a significant increase to long-term assets and long-term liabilities on its consolidated balance sheets and does not expect it to have a material impact on the consolidated statements of income.

The model will supersede most existing revenue recognition guidance, and also requires enhanced revenue-related disclosures.

The FASB has also issued several related ASUs which provide additional implementation guidance and clarify the requirements of the model.

The Company is currently in the process of evaluating the impact that adopting ASU 2014-09 will have on its consolidated financial statements and notes thereto.

The Company currently has a cross-functional implementation team in place that is performing a comprehensive evaluation of the impact.

The Company’s evaluation efforts to date have included a review of current

accounting policies and processes, as well as typical terms in contracts with customers, to identify potential differences upon the adoption of the new standard.

Based on these efforts, the Company currently anticipates that the performance obligations underlying its core revenue streams (i.e., its retail and wholesale businesses), and the timing of revenue recognition thereof, will remain substantially unchanged.

The Company is in the process of evaluating the impact of the new standard on ancillary sources of revenue, such as its licensing business, which represented approximately 1% of total net sales in fiscal 2017.

The Company is currently assessing whether the timing of recognizing contractually guaranteed minimum royalty amounts will change.

The Company has not yet determined whether the guidance will be adopted using the full retrospective restatement of all prior periods presented, or using the modified retrospective basis with a cumulative adjustment to opening retained earnings in the year of initial adoption.

During fiscal years 2017 and 2016, the Company incurred Operational Efficiency Plan related charges within SG&A expenses of $24.0 million and $43.9 million, respectively, primarily due to organizational efficiency costs, technology infrastructure costs and to a lesser extent, network optimization costs.

Total cumulative charges incurred under the Operational Efficiency Plan to date are $67.9 million.

The remaining charges under this plan approximate $10\-15 million and will be incurred in fiscal 2018.

| Fiscal 2017 charges | 15.6 | | | | 8.0 | | | | 0.4 | | | | 24.0 | | |

| Cash payments | (23.3 | | ) | | (7.7 | | ) | | (3.0 | | ) | | (34.0 | | ) |

| Balance at July 1, 2017 | $ | 6.6 | | | $ | 0.3 | | | $ | — | | | $ | 6.9 | |

| | |