Item 16. FORM 10-K SUMMARY

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TAPESTRY, INC.

Date: August 15, 2024			By:			/s/ Joanne C. Crevoiserat
						Name: Joanne C. Crevoiserat Title: Chief Executive Officer, and Director

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 15, 2024.

Signature						Title
/s/ Joanne C. Crevoiserat						Chief Executive Officer, and Director
Joanne C. Crevoiserat						(Principal Executive Officer)
/s/ Scott A. Roe						Chief Operating Officer and Chief Financial Officer
Scott A. Roe						(Principal Financial Officer)
/s/ Manesh B. Dadlani						Corporate Controller
Manesh B. Dadlani						(Principal Accounting Officer)
/s/ Anne Gates						Independent Chair, Board of Directors
Anne Gates
/s/ John P. Bilbrey						Director
John P. Bilbrey
/s/ Darrell Cavens						Director
Darrell Cavens
/s/ David Elkins						Director
David Elkins
/s/ Johanna W. Faber						Director
Johanna W. Faber
/s/ Thomas R. Greco						Director
Thomas R. Greco
/s/ Kevin Hourican						Director
Kevin Hourican
/s/ Alan Lau						Director
Alan Lau
/s/ Pam Lifford						Director
Pam Lifford
/s/ Annabelle Yu Long						Director
Annabelle Yu Long

TAPESTRY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

			Page Number
Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 34)			60
Consolidated Financial Statements:
Consolidated Balance Sheets			63
Consolidated Statements of Operations			64
Consolidated Statements of Comprehensive Income			65
Consolidated Statements of Stockholders’ Equity			66
Consolidated Statements of Cash Flows			67
Notes to Consolidated Financial Statements			68
Financial Statement Schedules:
Schedule II — Valuation and Qualifying Accounts			104

All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Tapestry, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Tapestry, Inc. and subsidiaries (the "Company") as of June 29, 2024 and July 1, 2023, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended June 29, 2024, and the related notes and the financial statement Schedule II listed in the Index to the Consolidated Financial Statements (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 29, 2024 and July 1, 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 29, 2024, 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) (PCAOB), the Company's internal control over financial reporting as of June 29, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 15, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill and Other Intangible Assets - Kate Spade - Refer to Notes 3 and 14 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill and indefinite-lived brand intangible assets for impairment involves the comparison of carrying value to their respective fair values. The determination of the fair values requires management to make significant estimates and assumptions related to forecasts of future cash flows and growth rates, as well as discount rates. Changes in these assumptions could have a significant impact on either the fair values, the amount of any impairment charge, or both.

The fair values of the Kate Spade brand reporting unit and indefinite-lived brand, which are included in the Company's goodwill and intangible asset balances, respectively, as of the fiscal 2024 testing date exceeded their respective carrying values by approximately 20% and 55%, respectively. Several factors could impact the Kate Spade brand's ability to achieve expected future cash flows, including the optimization of the store fleet productivity, the success of international expansion strategies, the impact of promotional activity, continued economic volatility and potential operational challenges related to the macroeconomic factors, the reception of new collections in all channels, and other initiatives aimed at increasing profitability of the business.

Given the significant judgments made by management to estimate the fair value of the Kate Spade operations used in both the brand's goodwill and indefinite-lived brand intangible fair value analyses and the difference between their fair values and carrying values, performing auditing procedures to evaluate the reasonableness of management’s judgments regarding the business and valuation assumptions utilized in the valuation model, particularly the forecasts of future cash flows and growth rates and the selection of the discount rate, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the projected future cash flows and growth rates and discount rates included the following:

• We tested the effectiveness of management’s controls over its Kate Spade goodwill and indefinite-lived brand intangible asset impairment evaluations, including controls over the forecasts of future Kate Spade revenue and profit margin, and the selection of the discount rate.

• We evaluated management’s ability to accurately forecast by comparing Kate Spade actual revenue and profit margin results to historical projections.

• We evaluated management’s Kate Spade revenue and profit margin projections over the projection period by comparing them with (1) internal communications to management and the Board of Directors, (2) peer companies, and (3) industry and market conditions.

• With the assistance of our fair value specialists, we evaluated the Kate Spade market approach, including evaluating the reasonableness of the selected guideline public companies and the resulting market multiples calculations, as well as benchmarking the selected multiples against these guideline public companies.

• We used the assistance of our fair value specialists to assess the acceptability of the weighting applied to value indications from different valuation techniques for Kate Spade.

• We used the assistance of our fair value specialists to assess the acceptability of the implied equity premium for Kate Spade. With respect to the market value of equity, we tested the calculations used in developing the respective market value of equity.

• We used the assistance of our fair value specialists in evaluating the Kate Spade fair value methodology and the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations. Specific to the discount rate, we considered the inputs and calculations, and we developed a range of independent estimates and compared those to the respective discount rates selected by management.

/s/ DELOITTE & TOUCHE LLP

New York, New York

August 15, 2024

We have served as the Company's auditor since 2002.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Tapestry, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Tapestry, Inc. and subsidiaries (the “Company”) as of June 29, 2024 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 29, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended June 29, 2024, of the Company and our report dated August 15, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

New York, New York

August 15, 2024

TAPESTRY, INC.

CONSOLIDATED BALANCE SHEETS

			June 29, 2024						July 1, 2023
			(millions)
ASSETS
Current Assets:
Cash and cash equivalents			$	6,142.0					$	726.1
Short-term investments			1,061.8						15.4
Trade accounts receivable, less allowances for credit losses of $6.9 and $5.8, respectively			228.2						211.5
Inventories			824.8						919.5
Income tax receivable			236.2						231.1
Prepaid expenses			170.9						126.3
Other current assets			139.8						133.6
Total current assets			8,803.7						2,363.5
Property and equipment, net			514.7						564.5
Operating lease right-of-use assets			1,314.4						1,378.7
Goodwill			1,204.1						1,227.5
Intangible assets			1,353.6						1,360.1
Deferred income taxes			44.1						40.4
Other assets			161.7						182.1
Total assets			$	13,396.3					$	7,116.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable			$	452.2					$	416.9
Accrued liabilities			656.3						547.1
Current portion of operating lease liabilities			299.7						297.5
Current debt			303.4						25.0
Total current liabilities			1,711.6						1,286.5
Long-term debt			6,937.2						1,635.8
Long-term operating lease liabilities			1,224.2						1,333.7
Deferred income taxes			251.3						240.0
Long-term income taxes payable			—						43.5
Other liabilities			375.1						299.5
Total liabilities			10,499.4						4,839.0
See Note 13 on commitments and contingencies
Stockholders’ Equity:
Preferred stock: (authorized 25.0 million shares; $0.01 par value) none issued			—						—
Common stock: (authorized 1.00 billion shares; $0.01 par value) issued and outstanding – 230.2 million and 227.4 million shares, respectively			2.3						2.3
Additional paid-in-capital			3,762.7						3,682.2
Retained earnings (accumulated deficit)			(722.2)						(1,216.8)
Accumulated other comprehensive income (loss)			(145.9)						(189.9)
Total stockholders’ equity			2,896.9						2,277.8
Total liabilities and stockholders’ equity			$	13,396.3					$	7,116.8

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

			Fiscal Year Ended
			June 29, 2024						July 1, 2023						July 2, 2022
			(millions, except per share data)
Net sales			$	6,671.2					$	6,660.9					$	6,684.5
Cost of sales			1,781.7						1,946.0						2,034.1
Gross profit			4,889.5						4,714.9						4,650.4
Selling, general and administrative expenses			3,749.4						3,542.5						3,474.6
Operating income (loss)			1,140.1						1,172.4						1,175.8
Loss on extinguishment of debt			—						—						53.7
Interest expense, net			125.0						27.6						58.7
Other expense (income)			3.2						1.7						16.4
Income (loss) before provision for income taxes			1,011.9						1,143.1						1,047.0
Provision for income taxes			195.9						207.1						190.7
Net income (loss)			$	816.0					$	936.0					$	856.3
Net income (loss) per share:
Basic			$	3.56					$	3.96					$	3.24
Diluted			$	3.50					$	3.88					$	3.17
Shares used in computing net income (loss) per share:
Basic			229.2						236.4						264.3
Diluted			233.2						241.3						270.1

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

			Fiscal Year Ended
			June 29, 2024						July 1, 2023						July 2, 2022
			(millions)
Net income (loss)			$	816.0					$	936.0					$	856.3
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on cash flow hedging derivatives, net			22.2						37.2						(1.6)
Unrealized gains (losses) on available-for-sale investments, net			(0.2)						0.5						(0.5)
Foreign currency translation adjustments			22.0						(56.7)						(96.8)
Other comprehensive income (loss), net of tax			44.0						(19.0)						(98.9)
Comprehensive income (loss)			$	860.0					$	917.0					$	757.4

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

			Shares of Common Stock												Common Stock						Additional Paid-in-Capital						Retained Earnings / (Accumulated Deficit)						Accumulated Other Comprehensive Income (Loss)						Total Stockholders' Equity
			(millions, except per share data)
Balance at July 3, 2021			279.5												$	2.8					$	3,487.0					$	(158.5)					$	(72.0)					$	3,259.3
Net income (loss)			—												—						—						856.3						—						856.3
Other comprehensive income (loss)			—												—						—						—						(98.9)						(98.9)
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes			3.7												—						43.8						—						—						43.8
Share-based compensation			—												—						89.4						—						—						89.4
Repurchase of common stock			(42.0)												(0.4)						—						(1,599.6)						—						(1,600.0)
Dividends declared ($1.00 per share)			—												—						—						(264.4)						—						(264.4)
Balance at July 2, 2022			241.2												2.4						3,620.2						(1,166.2)						(170.9)						2,285.5
Net income (loss)			—												—						—						936.0						—						936.0
Other comprehensive income (loss)			—												—						—						—						(19.0)						(19.0)
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes			4.0												0.1						(16.8)						—						—						(16.7)
Share-based compensation			—												—						78.8						—						—						78.8
Repurchase of common stock, including excise tax			(17.8)												(0.2)						—						(703.3)						—						(703.5)
Dividends declared ($1.20 per share)			—												—						—						(283.3)						—						(283.3)
Balance at July 1, 2023			227.4												2.3						3,682.2						(1,216.8)						(189.9)						2,277.8
Net income (loss)			—												—						—						816.0						—						816.0
Other comprehensive income (loss)			—												—						—						—						44.0						44.0
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes			2.8												—						(5.4)						—												(5.4)
Share-based compensation			—												—						85.9						—						—						85.9
Repurchase of common stock, including excise tax			—												—						—						—						—						—
Dividends declared ($1.40 per share)			—												—						—						(321.4)						—						(321.4)
Balance at June 29, 2024			230.2												$	2.3					$	3,762.7					$	(722.2)					$	(145.9)					$	2,896.9

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Fiscal Year Ended
			June 29, 2024						July 1, 2023						July 2, 2022
			(millions)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income (loss)			$	816.0					$	936.0					$	856.3
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			174.0						182.2						195.3
Provision for bad debt			4.3						5.7						19.9
Loss on extinguishment of debt			—						—						53.7
Share-based compensation			85.9						78.8						72.2
Amortization of cloud computing arrangements			55.0						42.0						10.7
Acceleration program charges			—						—						14.8
Deferred income taxes			2.5						41.2						29.9
Changes to lease related balances, net			(42.6)						(36.0)						(53.4)
Other non-cash charges, net			(7.4)						(15.8)						31.3
Changes in operating assets and liabilities:
Trade accounts receivable			(37.3)						44.1						(96.0)
Inventories			85.8						49.9						(311.7)
Accounts payable			49.1						(98.1)						86.4
Accrued liabilities			91.6						(93.0)						(16.1)
Other liabilities			(21.2)						(61.1)						(9.2)
Other assets			(0.1)						(100.7)						(30.9)
Net cash provided by (used in) operating activities			1,255.6						975.2						853.2
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Purchases of investments			(2,713.0)						(6.7)						(540.4)
Proceeds from maturities and sales of investments			1,676.3						154.7						380.7
Purchases of property and equipment			(108.9)						(184.2)						(93.9)
Settlement of net investment hedge			103.7						41.9						—
Net cash provided by (used in) investing activities			(1,041.9)						5.7						(253.6)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
Payment of dividends			(321.4)						(283.3)						(264.4)
Repurchase of common stock			—						(703.5)						(1,600.0)
Proceeds from issuance of debt, net of discount			6,089.5						—						998.5
Payment of debt issuance costs			(78.3)						—						(4.6)
Payment of debt extinguishment costs			—						—						(50.7)
Proceeds from share-based awards			27.3						38.8						74.7
Repayment of debt			(468.8)						(31.2)						(900.0)
Taxes paid to net settle share-based awards			(32.7)						(55.6)						(30.6)
Other financing activity			(1.2)						(1.1)						(1.0)
Net cash provided by (used in) financing activities			5,214.4						(1,035.9)						(1,778.1)
Effect of exchange rate changes on cash and cash equivalents			(12.2)						(8.7)						(39.4)
Net (decrease) increase in cash and cash equivalents			5,415.9						(63.7)						(1,217.9)
Cash and cash equivalents at beginning of year			726.1						789.8						2,007.7
Cash and cash equivalents at end of year			$	6,142.0					$	726.1					$	789.8
Supplemental information:
Cash paid for income taxes, net			$	200.1					$	231.9					$	179.7
Cash paid for interest			$	262.8					$	82.6					$	67.8
Non-cash investing activity – property and equipment obligations			$	15.1					$	11.0					$	6.7

See accompanying Notes.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

1. NATURE OF OPERATIONS

Tapestry, Inc. (the "Company") is a leading New York-based house of iconic accessories and lifestyle brands. Our global house of brands unites the magic of Coach, kate spade new york, and Stuart Weitzman. Each of our brands are unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across business channels and geographies. We use our collective strengths to move our customers and empower our communities, to make the fashion industry more sustainable and to build a company that’s equitable, inclusive and diverse. Individually, our brands are iconic. Together, we can stretch what’s possible. The Company operates in three reportable segments: Coach, Kate Spade and Stuart Weitzman. See Note 17, "Segment Information," for additional information.

2. BASIS OF PRESENTATION AND ORGANIZATION

Fiscal Year

The Company’s fiscal year ends on the Saturday closest to June 30. Unless otherwise stated, references to years in the financial statements relate to fiscal years. The fiscal year ended June 29, 2024 (“fiscal 2024”) was a 52-week period. The fiscal year ended July 1, 2023 (“fiscal 2023”) was a 52-week period and the fiscal year ended July 2, 2022 (“fiscal 2022”) was a 52-week period. The fiscal year ending June 28, 2025 (“fiscal 2025”) will be a 52-week period.

Covid-19 Pandemic

The Covid-19 pandemic has resulted in varying degrees of business disruption for the Company since it began in fiscal 2020 and has impacted all regions around the world, resulting in restrictions and shutdowns implemented by national, state, and local authorities. Such disruptions persisted into the beginning of fiscal 2023, and the Company's results in Greater China were adversely impacted as a result of the Covid-19 pandemic. Towards the end of the first half of fiscal 2023, certain government restrictions were lifted in the region and business trends improved. During fiscal 2024, the Covid-19 pandemic did not materially impact our business or operating results. We continue to monitor the latest developments regarding the Covid-19 pandemic and potential impacts on our business, operating results and outlook.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Actual results could differ from estimates in amounts that may be material to the financial statements.

Significant estimates inherent in the preparation of the consolidated financial statements include reserves for the realizability of inventory; asset retirement obligations; customer returns, end-of-season markdowns and operational chargebacks; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes and related uncertain tax positions; accounting for business combinations; the valuation of stock-based compensation awards and related expected forfeiture rates; reserves for restructuring; and reserves for litigation and other contingencies, amongst others.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all 100% owned and controlled subsidiaries. All intercompany transactions and balances are eliminated in consolidation.

Share Repurchases

The Company accounts for stock repurchases by allocating the repurchase price to common stock and retained earnings. Under Maryland law, the Company's state of incorporation, there are no treasury shares. All repurchased shares are authorized but unissued shares and these shares may be issued in the future for general corporate and other purposes. The Company may terminate or limit the stock repurchase program at any time. The Company accrues for the shares purchased under the share repurchase plan based on the trade date. Purchases of the Company's common stock are executed through open market purchases, including through purchase agreements under Rule 10b5-1. Effective January 1, 2023, the Company is subject to a 1% excise tax on net share repurchases as part of the Inflation Reduction Act of 2022, which is recorded in Retained earnings as part of Stockholders' Equity.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

Supplier Finance Program

To improve our working capital efficiency, the Company makes available to certain suppliers a voluntary supply chain finance (“SCF”) program that enables our suppliers to sell their receivables from the Company to a global financial institution on a non-recourse basis at a rate that leverages our credit rating. The Company does not have the ability to refinance or modify payment terms to the global financial institution through the SCF program. No guarantees are provided by the Company or any of our subsidiaries under the SCF program. The Company’s payment obligations, including the amounts due and payment terms, which generally do not exceed 90 days, are not impacted by suppliers’ participation in the program. As of June 29, 2024 and July 1, 2023, $294.9 million and $305.4 million, respectively, was related to suppliers eligible to participate in the Company's SCF program. A rollforward of the outstanding obligations confirmed as valid under the SCF program, which are presented within Accounts payable on the Consolidated Balance Sheets, is presented below:

			June 29, 2024						July 1, 2023
			(millions)
Obligations outstanding, beginning of year			$	305.4					$	393.2
Invoices added during the year			1,349.8						1,397.5
Invoices settled during the year			(1,360.3)						(1,485.3)
Obligations outstanding, end of year			$	294.9					$	305.4

3. SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

Cash and cash equivalents consist of cash balances and highly liquid investments with a maturity of three months or less at the date of purchase.

Investments

Short-term investments consist primarily of high-credit quality U.S. and non-U.S. issued corporate debt securities and U.S. Treasuries and government agency securities with original maturities greater than three months and with maturities within one year of balance sheet date, classified as available-for-sale. Long-term investments typically consist of high-credit quality U.S. and non-U.S. issued corporate debt securities, U.S. Treasuries and government agency securities, classified as available-for-sale, and recorded at fair value, with unrealized gains and losses recorded in other comprehensive income. Dividend and interest income are recognized when earned.

Additionally, GAAP requires the consolidation of all entities for which a Company has a controlling voting interest and all variable interest entities (“VIEs”) for which a Company is deemed to be the primary beneficiary. An entity is generally a VIE if it meets any of the following criteria: (i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity or receive the expected returns of the entity and substantially all of the entity’s activities involve or are conducted on behalf of the investor with disproportionately few voting rights.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of Cash and cash equivalents, investments and accounts receivable. The Company places its cash investments with high-credit quality financial institutions and generally invests primarily in corporate debt securities, money market instruments, U.S. government and agency debt securities, commercial paper and bank deposits placed with major banks and financial institutions. Accounts receivable is generally diversified due to the number of entities comprising the Company's customer base and their dispersion across many geographical regions. The Company believes no significant concentration of credit risk exists with respect to these investments and accounts receivable.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

Inventories

The Company holds inventory that is sold through retail, including e-commerce, and wholesale distribution channels. Substantially all of the Company's inventories are comprised of finished goods and are reported at the lower of cost or net realizable value. Inventory costs include material, conversion costs, freight and duties and are primarily determined on a weighted-average cost basis. The Company reserves for inventory, including slow-moving and aged inventory, based on current product demand, expected future demand and historical experience. A decrease in product demand due to changing customer tastes, buying patterns or increased competition could impact the Company's evaluation of its inventory and additional reserves might be required.

Property and Equipment, Net

Property and equipment, net is stated at cost less accumulated depreciation including the impact of long-lived asset impairment and disposals. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Buildings are depreciated over 40 years and building improvements are depreciated over ten to 40 years. Machinery and equipment are depreciated over lives of five to seven years, furniture and fixtures are depreciated over lives of three to ten years and software and computer equipment is generally depreciated over lives of three to seven years. Implementation costs eligible for capitalization related to cloud computing arrangements that are a service contract are recorded within Prepaid expenses and Other assets in the Consolidated Balance Sheets and amortized as Selling, general and administrative ("SG&A") expense in the Consolidated Statement of Operations over the term of the associated hosting arrangement. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease terms. Maintenance and repair costs are charged to earnings as incurred while expenditures for major renewals and improvements are capitalized.

Valuation of Long-Lived Assets

Long-lived assets, such as Property and equipment and Operating lease right-of-use ("ROU") assets are evaluated for impairment whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the related asset group and its eventual disposition. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than its carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. The Company recorded $6.3 million and $7.2 million of impairment charges within SG&A expense in the Consolidated Statement of Operations in fiscal 2024 and fiscal 2023, respectively.

In determining future cash flows, the Company takes various factors into account, including the effects of macroeconomic trends such as consumer spending, in-store capital investments, promotional cadence, the level of advertising and changes in merchandising strategy. Since the determination of future cash flows is an estimate of future performance, there may be future impairments in the event that future cash flows do not meet expectations.

Goodwill and Other Intangible Assets

Upon acquisition, the Company estimates and records the fair value of purchased intangible assets, which primarily consists of brands, customer relationships, right-of-use assets and order backlog. Goodwill and certain other intangible assets deemed to have indefinite useful lives, including brand intangible assets, are not amortized, but are assessed for impairment at least annually. Finite-lived intangible assets are amortized over their respective estimated useful lives and, along with other long-lived assets as noted above, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Estimates of fair value for finite-lived and indefinite-lived intangible assets are primarily determined using discounted cash flows and the multi-period excess earnings method, respectively, with consideration of market comparisons when appropriate. This approach uses significant estimates and assumptions, including projected future cash flows, discount rates and growth rates.

The Company generally performs its annual goodwill and indefinite-lived intangible assets impairment analysis using a quantitative approach. The quantitative goodwill impairment test identifies the existence of potential impairment by comparing the fair value of each reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess. The impairment charge recognized is limited to the amount of goodwill allocated to that reporting unit.

Determination of the fair value of a reporting unit and intangible asset is based on management's assessment, considering independent third-party appraisals when necessary. Furthermore, this determination is judgmental in nature and often involves

TAPESTRY, INC.

Notes to Consolidated Financial Statements

the use of significant estimates and assumptions, which may include projected future cash flows, discount rates, growth rates and determination of appropriate market comparables and recent transactions. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge.

The Company performs its annual impairment assessment of goodwill as well as brand intangibles during the fourth quarter of each fiscal year or if an event occurs that would more likely than not reduce the fair value below its carrying amount. The Company determined that there was no impairment in fiscal 2024 or fiscal 2023.

Operating Leases

The Company leases retail space, office space, warehouse facilities, fulfillment centers, storage space, machinery, equipment and certain other items under operating leases. These leases may also include rent escalation clauses or lease incentives in the form of construction allowances and rent reduction. In determining the lease term used in the lease right-of-use ("ROU") asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance (i.e., percentage-of-sales-based payments), or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.

The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. Per the guidance, the use of the implicit rate to determine the present value of lease payments is required. As the rate implicit in the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the Company's credit rating, credit spread and adjustments for the impact of collateral, lease tenors, economic environment and currency.

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term and are not recognized on the Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred.

Asset retirement obligations represent legal obligations associated with the retirement of a tangible long-lived asset. The Company’s asset retirement obligations are primarily associated with leasehold improvements in which the Company is contractually obligated to remove at the end of a lease to comply with the lease agreement. When such an obligation exists, the Company recognizes an asset retirement obligation at the inception of a lease at its estimated fair value. The asset retirement obligation is recorded in current liabilities or non-current liabilities (based on the expected timing of payment of the related costs) and is subsequently adjusted for any changes in estimates. The associated estimated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over its useful life. As of the end of fiscal 2024 and fiscal 2023, the Company had asset retirement obligations of $57.7 million and $53.7 million, respectively, primarily classified within Other non-current liabilities in the Company's Consolidated Balance Sheets.

Revenue Recognition

Revenue is recognized when the Company satisfies its performance obligations by transferring control of promised products or services to its customers, which may be at a point of time or over time. Control is transferred when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized is the amount of consideration to which the Company expects to be entitled, including estimation of sale terms that may create variability in the consideration. Revenue subject to variability is constrained to an amount which will not result in a significant reversal in future periods when the contingency that creates variability is resolved.

Retail store and concession shop-in-shop revenues are recognized at the point-of-sale, when the customer obtains physical possession of the products. Digital revenue from sales of products ordered through the Company’s e-commerce sites is recognized upon delivery and receipt of the shipment by its customers and includes shipping and handling charges paid by customers. Retail and digital revenues are recorded net of estimated returns, which are estimated by developing an expected value based on historical experience. Payment is due at the point of sale.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

The Company recognizes revenue within the wholesale business at the time title passes and risk of loss is transferred to customers, which is generally at the point of shipment of products but may occur upon receipt of the shipment by the customer in certain cases. Wholesale revenue is recorded net of estimates for returns, discounts, end-of-season markdowns, cooperative advertising allowances and other consideration provided to the customer. The Company's historical estimates of these variable amounts have not differed materially from actual results.

The Company recognizes licensing revenue over time during the contract period in which licensees are granted access to the Company's trademarks. These arrangements require licensees to pay a sales-based royalty and may include a contractually guaranteed minimum royalty amount. Revenue for contractually guaranteed minimum royalty amounts is recognized ratably over the license year and any excess sales-based royalties are recognized as earned once the minimum royalty threshold is achieved.

Gift cards issued by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. The Company also uses historical information to estimate the amount of gift card balances that will never be redeemed and recognizes that amount as revenue over time in proportion to actual customer redemptions if the Company does not have a legal obligation to remit unredeemed gift cards to any jurisdiction as unclaimed property.

The Company accounts for sales taxes and other related taxes on a net basis, excluding such taxes from revenue.

Refer to Note 4, "Revenue," for additional information.

Cost of Sales

Cost of sales consists of inventory costs and other related costs such as reserves for inventory realizability and shrinkage, damages and replacements.

Selling, General and Administrative ("SG&A") Expenses

Selling expenses include store employee compensation, occupancy costs, depreciation, supply costs, wholesale and retail account administration compensation globally. These expenses are affected by the number of stores open during any fiscal period and store performance, as compensation and rent expenses can vary with sales. Advertising, marketing and design expenses include employee compensation, media space and production, advertising agency fees, new product design costs, public relations and market research expenses. Distribution and customer service expenses include warehousing, order fulfillment, shipping and handling, customer service, employee compensation and bag repair costs. SG&A expenses also include compensation costs for corporate functions, including the executive, finance, human resources, legal and information systems departments, as well as corporate headquarters occupancy costs, consulting fees and software expenses.

Shipping and Handling

Shipping and handling costs for delivery of products to consumers were $221.1 million, $217.0 million and $230.8 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively, and are included in SG&A expenses. The Company includes inbound product-related transportation costs from manufacturers within Cost of sales. The balance of the Company's transportation-related costs related to its distribution network is included in SG&A expenses rather than in Cost of sales.

Advertising

Advertising costs include expenses related to direct marketing activities, such as digital and other media and production costs. In fiscal 2024, fiscal 2023 and fiscal 2022, advertising expenses for the Company totaled $616.8 million, $570.7 million and $551.6 million, respectively, and are included in SG&A expenses. Advertising costs are generally expensed when the advertising first appears.

Share-Based Compensation

The Company recognizes the cost of equity awards to employees and the non-employee Directors based on the grant-date fair value of those awards. The grant-date fair values of share unit awards are based on the fair value of the Company's common stock on the date of grant. The grant-date fair value of stock option awards is determined using the Black-Scholes option pricing model and involves several assumptions, including the expected term of the option, expected volatility and dividend yield. The expected term of options represents the period of time that the options granted are expected to be outstanding and is based on historical experience. Expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on the Company's stock. Dividend yield is based on the current expected annual dividend per share and the Company’s stock price. Changes in the assumptions used to determine the Black-Scholes value could result in significant changes in the Black-Scholes value.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

The Company recognizes share-based compensation net of estimated forfeitures and revises the estimates in subsequent periods if actual forfeitures differ from the estimates. The Company estimates the forfeiture rate based on historical experience as well as expected future behavior.

The Company grants performance-based share awards to key executives, the vesting of which is subject to the executive’s continuing employment and the Company's or individual's achievement of certain performance goals. On a quarterly basis, the Company assesses actual performance versus the predetermined performance goals and adjusts the share-based compensation expense to reflect the relative performance achievement. Actual distributed shares are calculated upon conclusion of the service and performance periods and include dividend equivalent shares. If the performance-based award incorporates a market condition, the grant-date fair value of such award is determined using a pricing model, such as a Monte Carlo Simulation.

Income Taxes

The Company’s effective tax rate is based on pre-tax income, statutory tax rates, tax laws and regulations and tax planning strategies available in the various jurisdictions in which the Company operates. The Company classifies interest and penalties on uncertain tax positions in the Provision for income taxes. The Company records net deferred tax assets to the extent it believes that it is more likely than not that these assets will be realized. In making such determination, the Company considers all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent and expected future results of operation. The Company reduces deferred tax assets by a valuation allowance if, based upon the weight of available evidence, it is more likely than not that some amount of deferred tax assets is not expected to be realized. The Company is not permanently reinvested with respect to earnings of a limited number of foreign entities and has recorded the tax consequences of remitting earnings from these entities. The Company is permanently reinvested with respect to all other earnings.

The Company recognizes the impact of tax positions in the financial statements if those positions will more likely than not be sustained on audit, based on the technical merits of the position. Although the Company believes that the estimates and assumptions used are reasonable and legally supportable, the final determination of tax audits could be different than that which is reflected in historical tax provisions and recorded assets and liabilities. Tax authorities periodically audit the Company’s income tax returns, these tax authorities may take a contrary position that could result in a significant impact on the Company's results of operations. Significant management judgment is required in determining the effective tax rate, in evaluating tax positions and in determining the net realizable value of deferred tax assets.

Refer to Note 15, "Income Taxes," herein for further discussion on the Company's income taxes.

Derivative Instruments

The majority of the Company’s purchases of finished goods are denominated in U.S. dollars, which limits the Company’s exposure to the transactional effects of foreign currency exchange rate fluctuations. However, the Company is exposed to foreign currency exchange risk related to its sale of U.S. dollar inventory to foreign operating subsidiaries in local currency, as well as risk related to various cross-currency intercompany loans and payables, and translation risk. The Company is also exposed to foreign currency risk related to changes in the U.S. dollar value of its net investment in foreign subsidiaries and interest rate risk attributed to changes in the benchmark interest rates on the Company's debt obligations, including future issuances. The Company uses derivative financial instruments to manage these risks. These derivative transactions are in accordance with the Company’s risk management policies. The Company does not enter into derivative transactions for speculative or trading purposes.

The Company records all derivative contracts at fair value on the Consolidated Balance Sheets. The fair values of foreign currency derivatives and interest rate derivatives are based on the forward curves of the specific indices upon which settlement is based and include an adjustment for the counterparty's or Company’s credit risk. Judgment is required of management in developing estimates of fair value. The use of different market assumptions or methodologies could affect the estimated fair value.

For cash flow derivative instruments that qualify for hedge accounting, the changes in the fair value of these instruments are recognized as a component of Accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings. For derivative instruments that are designated as a net investment hedge, the changes in the fair value of the instruments are recognized as a component of AOCI and, upon discontinuation of the hedge, remain in AOCI until the net investment is sold or liquidated.

Each derivative instrument entered into by the Company that qualifies for hedge accounting is expected to be highly effective at reducing the risk associated with the exposure being hedged. For each derivative that is designated as a hedge, the

TAPESTRY, INC.

Notes to Consolidated Financial Statements

Company documents the related risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, as well as how hedge effectiveness will be assessed over the term of the instrument. The extent to which a hedging instrument has been and is expected to remain highly effective in achieving offsetting changes in fair value or cash flows is assessed and documented by the Company on at least a quarterly basis.

If it is determined that a derivative instrument has not been highly effective and will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are recognized in earnings within foreign currency gains (losses) or interest income (expense). Upon discontinuance of hedge accounting, the cumulative change in fair value of cash flow derivatives previously recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the original hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within foreign currency gains (losses) or interest income (expense).

For foreign currency derivative instruments which are not designated as hedges, the changes in fair value of the instruments are recorded through earnings. These changes generally offset the revaluation of certain underlying assets and liabilities.

As a result of the use of derivative instruments, the Company may be exposed to the risk that the counterparties to such contracts will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings, among other factors.

The fair values of the Company’s derivative instruments are recorded on its Consolidated Balance Sheets on a gross basis. For cash flow reporting purposes, the Company classifies proceeds received or amounts paid upon the settlement of a derivative instrument in the same manner as the related item being hedged, primarily within cash from operating activities.

Hedging Portfolio

The Company enters into forward currency contracts primarily to reduce its risks related to exchange rate fluctuations on foreign currency denominated inventory transactions, as well as various cross-currency intercompany loans and payables. This primarily includes exposure to exchange rate fluctuations in the Japanese Yen, the Chinese Renminbi and the Euro. To the extent its derivative contracts designated as cash flow hedges are highly effective in offsetting changes in the value of the hedged items, the related gains (losses) are initially deferred in AOCI and subsequently recognized in the Consolidated Statements of Operations as part of the cost of the inventory purchases being hedged within Cost of sales, when the related inventory is sold to a third-party. Current maturity dates range from July 2024 to March 2026. Forward foreign currency exchange contracts which are not designated as hedges of intercompany and other contractual obligations are recognized within Other expense (income) on the Company's Consolidated Statement of Operations. The maturity date of most instruments held as of June 29, 2024 are in August 2024, and such contracts are typically renewed upon maturity if the related balance has not been settled.

During fiscal 2024, the Company also entered into interest rate derivative contracts to reduce its risks related to changes in the benchmark interest rates on its debt obligations. Any premiums related to these instruments were excluded from the Company's measurement of hedge effectiveness and were amortized over the period between the hedge execution and the contract maturity. The related gains (losses) were initially deferred in AOCI and are subsequently recognized in the Consolidated Statements of Operations as interest income (expense) in the same periods during which the hedged interest payments associated with the Company’s borrowings are recorded in earnings. As of June 29, 2024, there were no interest rate derivative contracts outstanding.

The Company also enters into cross-currency swaps to reduce its risks related to exchange rate fluctuations on net investments in foreign subsidiaries, including our net investment in Euro-denominated subsidiaries and Japanese Yen-denominated subsidiaries against future volatility in the exchange rates between the United States dollar and their local currencies. The related gains (losses) are deferred in AOCI until the net investment is sold or liquidated, and current maturity dates range from November 2027 to March 2032.

Foreign Currency

The functional currency of the Company's foreign operations is generally the applicable local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the weighted-average exchange rates for the period. The resulting translation adjustments are included in the Consolidated Statements of Comprehensive Income as a component of Other comprehensive income (loss) (“OCI”) and in the Consolidated Statements of Equity within AOCI.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

The Company recognizes gains and losses on transactions that are denominated in a currency other than the respective entity's functional currency in earnings. Foreign currency transaction gains and losses also include amounts realized on the settlement of certain intercompany loans with foreign subsidiaries.

Reclassification

A reclassification has been made to the prior period's financial information to conform to the current period's presentation. Amortization expense, related to the Company’s cloud computing arrangements of $42.0 million in Fiscal 2023 and $10.7 million in Fiscal 2022, respectively, have been reclassified out of Other assets and into Amortization of cloud computing arrangements within the Company’s Consolidated Statements of Cash Flows.

Recently Adopted Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2022-04, "Liabilities—Supplier Finance Programs (Subtopic 405-50)", which is intended to enhance the transparency of supplier finance programs. The ASU requires the buyer in a supplier finance program to disclose sufficient information about the program in order to allow a user of financial statements to understand the program's nature, activity during the period, changes from period to period and potential magnitude. The Company adopted ASU 2022-04 as of the beginning of fiscal 2024. The adoption of ASU 2022-04 did not have an impact on the Company's consolidated financial statements other than the new disclosure requirements. Refer to Note 2, "Basis of Presentation and Organization", for additional information.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The amendments will be effective for the Company's annual reporting periods beginning in fiscal year 2025 and for interim periods beginning in fiscal year 2026, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company's annual periods beginning in fiscal year 2026, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.

4. REVENUE

The Company recognizes revenue primarily from sales of the products of its brands through our Direct-to-consumer ("DTC") business which includes our retail stores and e-commerce sites, along with our wholesale business. The Company also generates revenue from royalties related to licensing its trademarks, as well as sales in ancillary business channels. In all cases, revenue is recognized upon the transfer of control of the promised products or services to the customer, which may be at a point in time or over time. Control is transferred when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized is the amount of consideration to which the Company expects to be entitled, including estimation of sale terms that may create variability in the consideration. Revenue subject to variability is constrained to an amount which will not result in a significant reversal in future periods when the contingency that creates variability is resolved.

The Company has elected a practical expedient not to disclose the remaining performance obligations that are unsatisfied as of the end of the period related to contracts with an original duration of one year or less or variable consideration related to sales-based royalty arrangements. There are no other contracts with transaction price allocated to remaining performance obligations other than future minimum royalties as discussed below, which are not material.

Other practical expedients elected by the Company include (i) assuming no significant financing component exists for any contract with a duration of one year or less, (ii) accounting for shipping and handling as a fulfillment activity within SG&A expense regardless of the timing of the shipment in relation to the transfer of control and (iii) excluding sales and value added tax from the transaction price.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

Direct-to-Consumer

The Company recognizes revenue in its retail stores, including concession shop-in-shops, at the point-of-sale when the customer obtains physical possession of the products. Digital revenue from sales of products ordered through the Company's e-commerce sites is recognized upon delivery and receipt of the shipment by its customers and includes shipping and handling charges paid by customers. Retail and digital revenues are recorded net of estimated returns, which are estimated by developing an expected value based on historical experience. Payment is due at the point of sale.

Gift cards issued by the Company are recorded as a liability until redeemed by the customer, at which point revenue is recognized. The Company also uses historical information to estimate the amount of gift card balances that will never be redeemed and recognizes that amount as revenue over time in proportion to actual customer redemptions if the Company does not have a legal obligation to remit unredeemed gift cards to any jurisdiction as unclaimed property.

Certain of the Company's retail operations use sales incentive programs, such as customer loyalty programs and the issuance of coupons. Loyalty programs provide the customer a material right to acquire additional products and give rise to the Company having a separate performance obligation. Additionally, certain products sold by the Company include an assurance warranty that is not considered a separate performance obligation. These programs are immaterial individually and in the aggregate.

Wholesale

The Company recognizes revenue within the wholesale business at the time title passes and risk of loss is transferred to customers, which is generally at the point of shipment of products but may occur upon receipt of the shipment by the customer in certain cases. Payment is generally due 30 to 90 days after shipment. Wholesale revenue is recorded net of estimates for returns, discounts, end-of-season markdowns, cooperative advertising allowances and other consideration provided to the customer. Discounts are based on contract terms with the customer, while cooperative advertising allowances and other consideration may be based on contract terms or negotiated on a case-by-case basis. Returns and markdowns generally require approval from the Company and are estimated based on historical trends, current season results and inventory positions at the wholesale locations, current market and economic conditions as well as, in select cases, contractual terms. The Company's historical estimates of these variable amounts have not differed materially from actual results.

Licensing

The Company recognizes licensing revenue over time during the contract period in which licensees are granted access to the Company's trademarks. These arrangements require licensees to pay a sales-based royalty and may include a contractually guaranteed minimum royalty amount. Revenue for contractually guaranteed minimum royalty amounts is recognized ratably over the license year and any excess sales-based royalties are recognized as earned once the minimum royalty threshold is achieved. Payments from the customer are generally due quarterly in an amount based on the licensee's sales of goods bearing the licensed trademarks during the period, which may differ from the amount of revenue recorded during the period thereby generating a contract asset or liability. Contract assets and liabilities and contract costs related to the licensing arrangements are immaterial as the licensing business represents approximately 1% of total net sales in the fiscal year ended June 29, 2024.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

Disaggregated Net Sales

The following table disaggregates the Company's net sales into geographies that depict how economic factors may impact the revenues and cash flows for the periods presented. Each geography presented includes net sales related to the Company's directly operated business channels, global travel retail business and to wholesale customers, including distributors, in locations within the specified geographic area.

			North America						Greater China**(1)**						Other Asia**(2)**						Other**(3)**						Total
			(millions)
Fiscal 2024
Coach			$	3,078.7					$	902.1					$	771.4					$	343.1					$	5,095.3
Kate Spade			1,074.4						45.3						130.1						84.6						1,334.4
Stuart Weitzman			160.9						65.2						1.4						14.0						241.5
Total			$	4,314.0					$	1,012.6					$	902.9					$	441.7					$	6,671.2
Fiscal 2023
Coach			$	3,037.5					$	896.7					$	752.9					$	273.3					$	4,960.4
Kate Spade			1,142.8						47.9						140.4						87.8						1,418.9
Stuart Weitzman			180.0						71.2						1.8						28.6						281.6
Total			$	4,360.3					$	1,015.8					$	895.1					$	389.7					$	6,660.9
Fiscal 2022
Coach			$	3,102.8					$	892.2					$	691.3					$	235.0					$	4,921.3
Kate Spade			1,156.7						41.7						139.0						108.1						1,445.5
Stuart Weitzman			189.9						92.7						0.4						34.7						317.7
Total			$	4,449.4					$	1,026.6					$	830.7					$	377.8					$	6,684.5

(1) Greater China includes mainland China, Hong Kong SAR and Macao SAR, and Taiwan.

(2) Other Asia includes Japan, Malaysia, Australia, New Zealand, South Korea, Singapore, and other countries within Asia.

(3) Other sales primarily represents sales in Europe and the Middle East as well as royalties earned from the Company's licensing partners.

Deferred Revenue

Deferred revenue results from cash payments received or receivable from customers prior to the transfer of the promised goods or services and is primarily related to unredeemed gift cards, net of breakage, which have been recognized. Additional deferred revenue may result from sales-based royalty payments received or receivable which exceed the revenue recognized during the contractual period. The balance of such amounts as of June 29, 2024 and July 1, 2023 was $45.5 million and $43.0 million, respectively, which were primarily recorded within Accrued liabilities on the Company's Consolidated Balance Sheets and are generally expected to be recognized as revenue within a year. For the fiscal year ended June 29, 2024, net sales of $27.7 million were recognized from amounts recorded as deferred revenue as of July 1, 2023. For the fiscal year ended July 1, 2023, net sales of $23.5 million were recognized from amounts recorded as deferred revenue as of July 2, 2022.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

5. ACQUISITIONS

On August 10, 2023, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among the Company, Sunrise Merger Sub, Inc., a direct wholly owned subsidiary of Tapestry ("Merger Sub"), and Capri Holdings Limited ("Capri"). Under the terms of the Merger Agreement, Tapestry has agreed to acquire any and all of Capri’s ordinary shares (other than (a) Capri’s ordinary Shares that are issued and outstanding immediately prior to the consummation of the acquisition that are owned or held in treasury by the Company or by Capri or any of its direct or indirect subsidiaries and (b) Capri’s ordinary shares that are issued and outstanding immediately prior to the consummation of the acquisition that are held by holders who have properly exercised dissenters’ rights in accordance with, and who have complied with, Section 179 of the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands) in cash at a purchase price of $57.00 per share, without interest, subject to any required tax withholding as provided in the Merger Agreement. The enterprise value is expected to be approximately $8.50 billion and the transaction is expected to close during calendar year 2024 (the "Capri Acquisition"). On October 25, 2023, at a special meeting of Capri's shareholders, Capri's shareholders approved the Merger Agreement and the transactions contemplated thereby. The Company has received regulatory approval from all applicable jurisdictions except for the United States. On April 22, 2024, the FTC filed a complaint against the Company and Capri in the United States District Court for the Southern District of New York seeking to enjoin the consummation of the Capri Acquisition. The FTC’s complaint alleges that the Capri Acquisition, if consummated, would violate Section 7 of the Clayton Act and that the Merger Agreement and the Capri Acquisition constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act and should be enjoined. The Company believes the FTC’s claims are without merit and intends to defend the lawsuit vigorously.

In order to finance the Capri Acquisition, on November 27, 2023, the Company issued $4.50 billion of senior unsecured notes (the "Capri Acquisition USD Senior Notes") and €1.50 billion of Euro-denominated senior unsecured notes (the "Capri Acquisition EUR Senior Notes" and, together with the Capri Acquisition USD Senior Notes, the "Capri Acquisition Senior Notes") which, together with the $1.40 billion of delayed draw unsecured term loan facilities (the "Capri Acquisition Term Loan Facilities") executed on August 30, 2023, complete the expected financing for the Capri Acquisition. Until the close of the transaction, the Company will maintain the proceeds from the issuance of the Capri Acquisition Senior Notes in Cash and cash equivalents and Short-term investments. Refer to Note 8, "Investments," and Note 11, "Fair Value Measurements," for further detail on our cash equivalents and Short-term investments, and Note 12, "Debt," for further information on our existing debt instruments related to the acquisition.

In conjunction with the Capri Acquisition, in fiscal 2024, the Company incurred $226.6 million in pre-tax expenses, primarily related to financing-related expenses and professional fees.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

6. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The components of Accumulated other comprehensive income (loss), as of the dates indicated, are as follows:

			Unrealized Gains (Losses) on Cash Flow Hedging Derivatives**(1)**						Unrealized Gains (Losses) on Available-for-Sale Investments									Cumulative Translation Adjustment**(2)**						Total
			(millions)
Balances at July 2, 2022			$	(2.3)					$	(0.5)								$	(168.1)					$	(170.9)
Other comprehensive income (loss) before reclassifications			32.0						0.5									(56.7)						(24.2)
Less: amounts reclassified from accumulated other comprehensive income to earnings			(5.2)						—									—						(5.2)
Net current-period other comprehensive income (loss)			37.2						0.5									(56.7)						(19.0)
Balances at July 1, 2023			$	34.9					$	—								$	(224.8)					$	(189.9)
Other comprehensive income (loss) before reclassifications			49.2						0.1									22.0						71.3
Less: amounts reclassified from accumulated other comprehensive income to earnings			27.0						0.3									—						27.3
Net current-period other comprehensive income (loss)			22.2						(0.2)									22.0						44.0
Balances at June 29, 2024			$	57.1					$	(0.2)								$	(202.8)					$	(145.9)

(1) The ending balances of AOCI related to cash flow hedges are net of tax of $(2.7) million and $(2.9) million as of June 29, 2024 and July 1, 2023, respectively. The amounts reclassified from AOCI are net of tax of $(0.2) million and $1.1 million as of June 29, 2024 and July 1, 2023, respectively.

(2) The ending balances of AOCI related to foreign currency translation adjustments includes a gain of $9.9 million, net of tax of $(6.7) million, and a loss of $55.7 million, net of tax of $(0.8) million, as of June 29, 2024 and July 1, 2023, respectively, related to changes in the fair values of instruments designated as hedges of the Company's net investment in certain foreign operations.

7. SHARE-BASED COMPENSATION

The Company maintains several share-based compensation plans which are more fully described below. The following table shows the total compensation cost charged against income for these plans and the related tax benefits recognized in the Consolidated Statements of Operations:

			June 29, 2024						July 1, 2023						July 2, 2022
			(millions)
Share-based compensation expense(1)			$	85.9					$	78.8					$	89.4
Income tax benefit related to share-based compensation expense			17.5						12.9						15.2

(1) There was no share-based compensation expense under the Acceleration program during fiscal years ended June 29, 2024 and July 1, 2023. During the fiscal year ended July 2, 2022, the Company incurred $17.2 million of share-based compensation expense related to Acceleration Program.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

Stock-Based Plans

The Company maintains the Amended and Restated Tapestry, Inc. 2018 Stock Incentive Plan to award stock options and shares to certain members of management and the outside members of its Board of Directors (“Board”). The Company maintains the 2010 Stock Incentive Plan for awards granted prior to the establishment of the 2018 Stock Incentive Plan. These plans were approved by the Company's stockholders. The exercise price of each stock option equals 100% of the market price of the Company's stock on the date of grant and generally has a maximum term of 10 years. Stock options and service-based share awards that are granted as part of the annual compensation process generally vest ratably over four years. Stock option and share awards are subject to forfeiture until completion of the vesting period, which ranges from one to four years. The Company issues new shares upon the exercise of stock options or vesting of share awards.

Stock Options

A summary of stock option activity during the fiscal year ended June 29, 2024 is as follows:

			Number of Options Outstanding						Weighted- Average Exercise Price per Option						Weighted- Average Remaining Contractual Term (in years)						Aggregate Intrinsic Value
			(millions)																		(millions)
Outstanding at July 1, 2023			8.7						$	34.02
Granted			1.3						33.36
Exercised			(0.9)						29.11
Forfeited or expired			(0.9)						50.25
Outstanding at June 29, 2024			8.2						32.59						5.6						$	87.0
Vested and expected to vest at June 29, 2024			8.2						32.60						5.6						86.6
Exercisable at June 29, 2024			5.7						32.32						4.4						62.6

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model and the following weighted-average assumptions:

			June 29, 2024						July 1, 2023						July 2, 2022
Expected term (years)			5.0						4.9						5.0
Expected volatility			44.8		%				48.6		%				46.9		%
Risk-free interest rate			4.5		%				3.3		%				0.8		%
Dividend yield			4.2		%				3.4		%				2.4		%

The expected term of options represents the period of time that the options granted are expected to be outstanding and is based on historical experience. Expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on the Company's stock. The risk-free interest rate is based on the zero-coupon U.S. Treasury issue as of the date of the grant. Dividend yield is based on the expected annual dividend per share and the Company’s stock price as of the grant date.

The weighted-average grant-date fair value of options granted during fiscal 2024, fiscal 2023 and fiscal 2022 was $10.35, $12.04 and $13.94, respectively. The total intrinsic value of options exercised during fiscal 2024, fiscal 2023 and fiscal 2022 was $11.1 million, $19.5 million and $17.5 million, respectively. The total cash received from option exercises was $23.0 million, $34.9 million and $71.3 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively, and the cash tax benefit realized for the tax deductions from these option exercises was $2.0 million, $3.9 million and $3.7 million, respectively.

At June 29, 2024, $18.9 million of total unrecognized compensation cost related to non-vested stock option awards is expected to be recognized over a weighted-average period of 1.3 years.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

Service-based Restricted Stock Unit Awards (“RSUs”)

A summary of service-based RSU activity during the year ended June 29, 2024 is as follows:

			Number of Non-vested RSUs						Weighted- Average Grant- Date Fair Value per RSU
			(millions)
Non-vested at July 1, 2023			5.9						$	28.69
Granted			2.5						34.19
Vested			(2.8)						24.59
Forfeited			(0.4)						32.79
Non-vested at June 29, 2024			5.2						32.96

At June 29, 2024, $95.9 million of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 1.3 years.

The weighted-average grant-date fair value of share awards granted during fiscal 2024, fiscal 2023 and fiscal 2022 was $34.19, $35.53 and $41.70, respectively. The total fair value of shares vested during fiscal 2024, fiscal 2023 and fiscal 2022 was $95.3 million, $88.0 million and $92.5 million, respectively.

Performance-based Restricted Stock Unit Awards (“PRSU”)

The Company grants PRSUs to key executives, the vesting of which is subject to the executive’s continuing employment and the Company's achievement of certain performance goals. A summary of PRSU activity during the fiscal year ended June 29, 2024 is as follows:

			Number of Non-vested PRSUs						Weighted- Average Grant- Date Fair Value per PRSU
			(millions)
Non-vested at July 1, 2023			0.7						$	38.27
Granted			0.5						33.99
Change due to performance condition achievement			0.1						41.24
Vested			—						—
Forfeited			(0.1)						36.00
Non-vested at June 29, 2024			1.2						$	36.74

At June 29, 2024, 16.6 million of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 1.0 year.

The weighted-average grant-date fair value per share of PRSU awards granted during fiscal 2024, fiscal 2023 and fiscal 2022 was $33.99, $35.46 and $41.86, respectively. The total fair value of awards that vested during fiscal 2024, fiscal 2023 and fiscal 2022 was $0.0 million, $60.4 million and $0.0 million, respectively.

PRSUs are subject to a two-year and three-year cliff vesting contingent on the employee's continuing employment and the Company's achievement of the performance goals established at the beginning of the performance period. The fair value of the PRSU's is based on the price of the Company's common stock on the date of grant.

In fiscal 2024, fiscal 2023 and fiscal 2022, the cash tax benefit realized for the tax deductions from all RSUs (service and performance-based) was $15.3 million, $29.5 million and $17.4 million, respectively.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

Employee Stock Purchase Plan

Under the 2001 Employee Stock Purchase Plan, eligible employees are permitted to purchase a limited number of Company common shares at 85% of market value. Under this plan, the Company sold 0.2 million, 0.1 million and 0.1 million shares to employees in fiscal 2024, fiscal 2023 and fiscal 2022, respectively. Compensation expense is calculated for the fair value of employees’ purchase rights using the Black-Scholes model and the following weighted-average assumptions:

			Fiscal Year Ended
			June 29, 2024						July 1, 2023						July 2, 2022
Expected term (years)			0.5						0.5						0.5
Expected volatility			32.5		%				38.2		%				38.2		%
Risk-free interest rate			5.4		%				3.3		%				0.1		%
Dividend yield			3.9		%				3.1		%				1.5		%

The weighted-average fair value of the purchase rights granted during fiscal 2024, fiscal 2023 and fiscal 2022 was $8.45, $9.30 and $10.71, respectively. The Company issues new shares for employee stock purchases.

8. INVESTMENTS

The following table summarizes the Company’s primarily U.S. dollar-denominated investments, recorded within the Consolidated Balance Sheets as of June 29, 2024 and July 1, 2023:

			June 29, 2024																		July 1, 2023
			Short-term						Long-term**(2)**						Total						Short-term						Long-term(2)						Total
			(millions)
Available-for-sale investments:
Commercial paper(1)			$	865.2					$	—					$	865.2					$	—					$	—					$	—
Government securities – U.S.(1)			178.2						—						178.2						—						—						—
Total Available-for-sale investments			$	1,043.4					$	—					$	1,043.4					$	—					$	—					$	—
Other:
Time deposits(1)			0.6						—						0.6						0.6						—						0.6
Other			17.8						1.3						19.1						14.8						1.3						16.1
Total Investments			$	1,061.8					$	1.3					$	1,063.1					$	15.4					$	1.3					$	16.7

(1)These securities, as of period end, have maturity dates during their respective following fiscal years and are recorded at fair value.

(2)Long-term investments are presented within Other assets on the Consolidated Balance Sheets.

There were no material gross realized and unrealized gains or losses on available-for-sale investments as of the periods ended June 29, 2024 and July 1, 2023.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

9. LEASES

The Company leases retail space, office space, warehouse facilities, fulfillment centers, storage space, machinery, equipment and certain other items under operating leases. The Company's leases have initial terms ranging from 1 to 20 years and may have renewal or early termination options ranging from 1 to 10 years. These leases may also include rent escalation clauses or lease incentives. In determining the lease term used in the lease ROU asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance (i.e., percentage-of-sales-based payments), or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.

The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. The Company is required to use the implicit rate to determine the present value of lease payments. As the rate implicit in the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the Company's credit rating, credit spread and adjustments for the impact of collateral, lease tenors, economic environment and currency.

For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term and are not recognized on the Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred.

The Company acts as sublessor in certain leasing arrangements, primarily related to a sublease of a portion of the Company's leased headquarters space as well as certain retail locations. Fixed sublease payments received are recognized on a straight-line basis over the sublease term.

ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the ROU assets and lease liabilities recorded on the Company's Consolidated Balance Sheets as of June 29, 2024 and July 1, 2023:

			June 29, 2024						July 1, 2023						Location Recorded on the Consolidated Balance Sheets
			(millions)
Assets:
Operating leases			$	1,314.4					$	1,378.7					Operating lease right-of-use assets
Finance leases			0.6						1.2						Property and equipment, net
Total lease assets			$	1,315.0					$	1,379.9
Liabilities:
Operating leases:
Current lease liabilities			$	299.7					$	297.5					Current portion of operating lease liabilities
Long-term lease liabilities			1,224.2						1,333.7						Long-term operating lease liabilities
Total operating lease liabilities			$	1,523.9					$	1,631.2
Finance leases:
Current lease liabilities			$	1.2					$	1.2					Accrued liabilities
Long-term lease liabilities			—						1.2						Other liabilities
Total finance lease liabilities			$	1.2					$	2.4
Total lease liabilities			$	1,525.1					$	1,633.6

The following table summarizes the composition of net lease costs, primarily recorded within SG&A expenses on the Company's Consolidated Statement of Operations for the fiscal year ended June 29, 2024 and July 1, 2023:

			Fiscal Year Ended
			June 29, 2024						July 1, 2023
			(millions)
Finance lease cost:
Amortization of right-of-use assets			$	1.2					$	1.1
Interest on lease liabilities(1)			0.2						0.3
Total finance lease cost			1.4						1.4
Operating lease cost			360.7						323.1
Short-term lease cost			19.5						29.8
Variable lease cost			205.3						209.6
Operating lease right-of-use impairment			—						1.3
Less: sublease income			(17.8)						(18.1)
Total net lease cost			$	569.1					$	547.1

(1) Interest on lease liabilities is recorded within Interest expense, net on the Company's Consolidated Statement of Operations.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes certain cash flow information related to the Company's leases for the fiscal year ended June 29, 2024 and July 1, 2023:

			Fiscal Year Ended
			June 29, 2024						July 1, 2023
			(millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	420.4					$	387.8
Operating cash flows from finance leases			0.2						0.3
Financing cash flows from finance leases			1.2						1.1
Non-cash transactions:
Right-of-use assets obtained in exchange for operating lease liabilities			246.2						390.7
Right-of-use assets obtained in exchange for finance lease liabilities			—						—

The following table provides a maturity analysis of the Company's lease liabilities recorded on the Consolidated Balance Sheets as of June 29, 2024:

			June 29, 2024
			Operating Leases						Finance Leases						Total
			(millions)
Fiscal 2025			$	374.5					$	1.3					$	375.8
Fiscal 2026			306.7						—						306.7
Fiscal 2027			250.6						—						250.6
Fiscal 2028			171.4						—						171.4
Fiscal 2029			120.3						—						120.3
Fiscal 2030 and thereafter			601.0						—						601.0
Total lease payments			1,824.5						1.3						1,825.8
Less: imputed interest			(300.6)						(0.1)						(300.7)
Total lease liabilities			$	1,523.9					$	1.2					$	1,525.1

The future minimum fixed sublease receipts under non-cancelable operating lease agreements as of June 29, 2024 are as follows:

			June 29, 2024
			(millions)
Fiscal 2025			$	17.3
Fiscal 2026			14.8
Fiscal 2027			14.8
Fiscal 2028			14.8
Fiscal 2029			15.3
Fiscal 2030 and thereafter			112.2
Total sublease income			$	189.2

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's operating leases and finance leases recorded on the Consolidated Balance Sheets as of June 29, 2024 and July 1, 2023:

			June 29, 2024						July 1, 2023
Weighted average remaining lease term (years):
Operating leases			7.8						8.3
Finance leases			0.9						1.9
Weighted average discount rate:
Operating leases			4.4		%				4.2		%
Finance leases			11.3		%				11.3		%

Additionally, the Company had approximately $53.2 million of future payment obligations related to executed lease agreements for which the related lease had not yet commenced as of June 29, 2024.

10. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The following tables provide information related to the Company's derivative instruments recorded on the Company's Consolidated Balance Sheets as of June 29, 2024 and July 1, 2023:

			Notional Value												Derivative Assets																		Derivative Liabilities
																					Fair Value																		Fair Value
June 29, 2024						July 1, 2023						Consolidated Balance Sheet Classification						June 29, 2024						July 1, 2023						Consolidated Balance Sheet Classification						June 29, 2024						July 1, 2023
			(millions)
Designated Derivative Hedging Instruments:
FC - Inventory purchases(1)			$	764.6					$	842.3					Other Current Assets						$	58.2					$	38.6					Accrued Liabilities						$	2.2					$	0.1
Net investment hedges(2)			1,450.0						1,200.0						Other Current Assets & Other Assets(4)						32.2						13.1						Accrued Liabilities & Other Liabilities(5)						139.4						90.5
Total designated hedge instruments			$	2,214.6					$	2,042.3											$	90.4					$	51.7											$	141.6					$	90.6
Undesignated hedging instruments:
FC - Intercompany liabilities and loans(3)			348.2						272.3						Other Current Assets						0.1						0.4						Accrued Liabilities						2.6						0.2
Total Hedges			$	2,562.8					$	2,314.6											$	90.5					$	52.1											$	144.2					$	90.8

(1)Represents forward foreign currency exchange contracts ("FC") designated as derivative instruments in cash flow hedging relationships.

(2)Represents cross currency swap foreign exchange contracts ("CCS") and forward foreign exchange contracts ("FC") designated as derivative instruments in net investment hedging relationships.

(3)Represents forward foreign currency exchange contracts ("FC") not designated as hedges.

(4)As of June 29, 2024, the Company recorded $11.6 million within Other Current Assets and $20.6 million within Other Assets. As of July 1, 2023, the Company recorded $13.1 million within Other Assets.

(5)As of June 29, 2024, the Company recorded $2.2 million within Accrued Liabilities and $137.2 million within Other Liabilities. As of July 1, 2023, the Company recorded $90.5 million within Other Liabilities.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following tables provides the pretax impact of gains and losses from the Company's designated derivative instruments on its Consolidated Financial Statements for the fiscal years ended June 29, 2024, July 1, 2023 and July 2, 2022:

						Amount of Gain (Loss) Recognized in OCI on Derivatives
						Fiscal Year Ended
						June 29, 2024						July 1, 2023						July 2, 2022
						(millions)
Cash flow hedges:
Inventory purchases(1)						$	59.6					$	34.7					$	(5.6)
Interest rates(2)						(10.4)						—						—
Total cash flow hedges						$	49.2					$	34.7					$	(5.6)
Other:
Net investment hedges(3)						74.3						(58.7)						3.8
Total other						74.3						(58.7)						3.8
Total hedges						$	123.5					$	(24.0)					$	(1.8)

						Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
						Statement of Operations Classification						Fiscal Year Ended
						June 29, 2024						July 1, 2023						July 2, 2022
												(millions)
Cash flow hedges:
Inventory purchases(1)						Cost of Sales						$	36.7					$	(6.3)					$	(3.4)
Interest rates(2)						Other income (expense)						(9.5)						—						—
Total cash flow hedges												$	27.2					$	(6.3)					$	(3.4)
Other:
Net investment hedges(3)						Interest income (expense)						2.8						—						—
Total other												2.8						0.0						0.0
Total hedges												$	30.0					$	(6.3)					$	(3.4)

(1)Represents forward foreign currency exchange contracts ("FC") designated as derivative instruments in cash flow hedging relationships.

(2)Represents forward interest rate contracts ("IC") designated as derivative instruments in cash flow hedging relationships.

(3)Represents cross currency swap contracts ("CCS") and forward foreign exchange contracts ("FC") designated as derivative instruments in net investment hedging relationships, for which the difference between changes in fair value and periodic amortization of excluded components is recorded within AOCI.

The Company expects that $49.8 million of net derivative gain related to inventory purchases and interest rates included in Accumulated other comprehensive income at June 29, 2024 will be reclassified into earnings within the next 12 months. This amount will vary due to fluctuations in foreign currency exchange rates and benchmark interest rates.

The Company assesses the cross-currency swaps and forward exchange contracts used as net investment hedges under the spot method. This results in the cross-currency basis spread on the cross-currency swaps and the difference between the spot rate and the forward rate of the forward exchange contract being excluded from the assessment of hedge effectiveness, and recorded as incurred as a reduction in interest expense in the Company’s Consolidated Statements of Operations. Accordingly, the Company recorded net interest income of $28.7 million and $28.5 million during fiscal 2024 and fiscal 2023, respectively.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

11. FAIR VALUE MEASUREMENTS

The Company categorizes its assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. The three levels of the hierarchy are defined as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for substantially the full term of the asset or liability.

Level 3 — Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability. The Company does not have any Level 3 investments.

The following table shows the fair value measurements of the Company’s financial assets and liabilities at June 29, 2024 and July 1, 2023:

			Level 1												Level 2
			June 29, 2024						July 1, 2023						June 29, 2024						July 1, 2023
			(millions)
Assets:
Cash equivalents(1)			$	437.4					$	155.7					$	29.7					$	11.9
Short-term investments:
Time deposits(2)			—						—						0.6						0.6
Commercial paper(2)			—						—						865.2						—
Government securities - U.S.(2)			178.2						—						—						—
Other			—						—						17.8						14.8
Long-term investments:
Other			—						—						1.3						1.3
Derivative Assets:
Inventory-related instruments(3)			—						—						58.2						38.6
Net investment hedges(3)			—						—						32.2						13.1
Intercompany loans and payables(3)			—						—						0.1						0.4
Liabilities:
Derivative liabilities:
Inventory-related instruments(3)			$	—					$	—					$	2.2					$	0.1
Net investment hedges(3)			—						—						139.4						90.5
Intercompany loans and payables(3)			—						—						2.6						0.2

(1)Cash equivalents generally consists of money market funds and time deposits with maturities of three months or less at the date of purchase. Due to their short-term maturity, management believes that their carrying value approximates fair value.

(2)Short-term investments are recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets.

(3)The fair value of these hedges is primarily based on the forward curves of the specific indices upon which settlement is based and includes an adjustment for the counterparty’s or Company’s credit risk.

Refer to Note 12, "Debt," for the fair value of the Company's outstanding debt instruments.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Non-Financial Assets and Liabilities

The Company’s non-financial instruments, which primarily consist of goodwill, intangible assets, right-of-use assets and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions.

During the fiscal year ended June 29, 2024, the Company recorded $6.3 million of impairment charges to reduce the carrying amount of certain store assets within property and equipment, net to their estimated fair values. During the fiscal year ended July 1, 2023, the Company recorded $5.9 million of impairment charges to reduce the carrying amount of certain store assets within property and equipment, net to their estimated fair values.

During the fiscal year ended June 29, 2024, the Company did not have any impairment charges to reduce the carrying amount of certain operating lease right-of-use assets to their estimated fair values. During the fiscal year ended July 1, 2023, the Company recorded $1.3 million of impairment charges to reduce the carrying amount of certain operating lease right-of-use assets to their estimated fair values.

The fair value of store assets were determined based on Level 3 measurements. Inputs to these fair value measurements included estimates of the amounts and the timing of the stores' net future discounted cash flows based on historical experience, current trends and market conditions.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

12. DEBT

The following table summarizes the components of the Company’s outstanding debt:

			June 29, 2024						July 1, 2023
			(millions)
Current Debt:
Term Loan due 2027			$	—					$	25.0
4.250% Senior Notes due 2025			303.4						—
Total Current Debt			$	303.4					$	25.0
Long-Term Debt:
Term Loan due 2027			$	—					$	443.8
USD Senior Notes:
4.250% Senior Notes due 2025			—						303.4
7.050% Senior Notes due 2025			500.0						—
7.000% Senior Notes due 2026			750.0						—
4.125% Senior Notes due 2027			396.6						396.6
7.350% Senior Notes due 2028			1,000.0						—
7.700% Senior Notes due 2030			1,000.0						—
3.050% Senior Notes due 2032			500.0						500.0
7.850% Senior Notes due 2033			1,250.0						—
EUR Senior Notes:
5.350% EUR Senior Notes due 2025(1)			535.6						—
5.375% EUR Senior Notes due 2027(1)			535.6						—
5.875% EUR Senior Notes due 2031(1)			535.6						—
Total long-term debt			7,003.4						1,643.8
Less: Unamortized discount and debt issuance costs on senior notes			(66.2)						(8.0)
Total long-term debt, net			$	6,937.2					$	1,635.8

(1)The carrying amounts of the Capri Acquisition EUR Senior Notes (as defined above) include the impact of changes in the exchange rate of the United States Dollar against the Euro.

During fiscal 2024, 2023 and 2022 the Company recognized interest expense related to the outstanding debt of $369.6 million, $72.8 million and $68.8 million, respectively. During fiscal 2024, interest expense was inclusive of $28.5 million related to Bridge Facility (as defined below) financing fees.

Capri Holdings Limited Acquisition

In order to finance the Capri Acquisition, on November 27, 2023, the Company issued $4.50 billion Capri Acquisition USD Senior Notes and €1.50 billion Capri Acquisition EUR Senior Notes which, together with the $1.40 billion of delayed draw Capri Acquisition Term Loan Facilities executed on August 30, 2023, complete the expected financing for the Capri Acquisition. Refer to Note 5, "Acquisitions," for further information.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Bridge Facility

In connection with our entry into the Merger Agreement, the Company entered into a commitment letter, dated as of August 10, 2023, with Bank of America, N.A., Morgan Stanley Senior Funding, Inc. and the other commitment parties party thereto, to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to $8.00 billion (the "Bridge Facility") to fund the purchase price of the Capri Acquisition and to pay related fees and expenses. Upon entering into the Capri Acquisition Term Loan Credit Agreement (as defined below) and, as a result of the commitments thereunder with respect to the Capri Acquisition Term Loan Facilities (as defined below), the Bridge Facility commitments were reduced to $6.60 billion. In November 2023, the Bridge Facility was terminated upon the issuance of approximately $6.10 billion of the Capri Acquisition Senior Notes by the Company. Refer to the "Capri Acquisition USD Senior Notes" and "Capri Acquisition EUR Senior Notes" paragraphs below.

Capri Acquisition Term Loan Facilities

On August 30, 2023, the Company entered into a definitive credit agreement (such agreement, the "Capri Acquisition Term Loan Credit Agreement") whereby Bank of America, N.A, as administrative agent, and the other agents party thereto, and a syndicate of banks and financial institutions have committed to lend the Company, subject to the satisfaction or waiver of the conditions set forth in the Capri Acquisition Term Loan Credit Agreement, the Capri Acquisition Term Loan Facilities consisting of a $1.05 billion unsecured term loan facility maturing three years after the term loans thereunder are borrowed (the “Three-Year Term Loan Facility”) and a $350.0 million term loan facility maturing five years after the term loans thereunder are borrowed (the “Five-Year Term Loan Facility”). The Company plans to use borrowings under the Capri Acquisition Term Loan Facilities to pay a portion of the consideration for the Capri Acquisition and to pay related fees and expenses.

Borrowings under the Capri Acquisition Term Loan Facilities bear interest at a rate per annum equal to, at the Company’s option, either (a) an alternate base rate or (b) a rate based on the forward-looking Secured Overnight Financing Rate ("SOFR") term rate administered by CME Group Benchmark Administration Limited (or any successor administrator) plus, in each case, an applicable margin. The applicable margin will be adjusted by reference to a grid based on the ratio of (a) consolidated debt (with certain customary deductions for unrestricted cash and permitted investments) to (b) consolidated EBITDAR. The applicable margin will initially be (x) in the case of the Three-Year Term Loan Facility, 0.250% for base rate loans and 1.250% for SOFR loans and (y) in the case of the Five-Year Term Loan Facility, 0.375% for base rate loans and 1.375% for SOFR loans. Additionally, the Company will pay a ticking fee of 0.15% on the average daily amount of the unused commitments of the Capri Acquisition Term Loan Facilities. There were no outstanding borrowings on the Capri Acquisition Term Loan Facilities as of June 29, 2024.

$2.00 Billion Revolving Credit Facility

On August 30, 2023, pursuant to that certain Amendment No. 1 to Credit Agreement (the "Amendment"), the Company amended its Existing Credit Agreement (as defined below), originally dated as of May 11, 2022, among the Company, as borrower, certain of our subsidiaries, as guarantors, Bank of America, N.A., as administrative agent, and the financial institutions parties thereto as lenders (the "Existing Credit Agreement", and as amended by the Amendment, the "Amended Credit Agreement"). Under the Amended Credit Agreement, a syndicate of financial institutions and other lenders provided increases to the aggregate commitments to the revolving facility under the Existing Credit Agreement from $1.25 billion to $2.00 billion (the “Revolving Credit Facility”). The Revolving Credit Facility will mature on May 11, 2027.

Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, (i) for borrowings in U.S. Dollars, either (a) an alternate base rate or (b) a rate based on the forward-looking SOFR term rate administered by CME Group Benchmark Administration Limited (or any successor administrator satisfactory to the administrative agent), (ii) for borrowings in Euros, the Euro Interbank Offered Rate, (iii) for borrowings in Pounds Sterling, the Sterling Overnight Index Average Reference Rate and (iv) for borrowings in Japanese Yen, the Tokyo Interbank Offer Rate, plus, in each case, an applicable margin. The applicable margin will be adjusted by reference to a grid (the “Pricing Grid”) based on the ratio of (a) consolidated debt to (b) consolidated EBITDAR. Additionally, the Company will pay facility fees, calculated at a rate per annum determined in accordance with the Pricing Grid, on the full amount of the Revolving Credit Facility, payable quarterly in arrears, and certain fees with respect to letters of credit that are issued. The Revolving Credit Facility may be used to finance the working capital needs, capital expenditures, permitted investments, share purchases, dividends and other general corporate purposes of the Company and its subsidiaries (which may include commercial paper backup). Additionally, up to $250 million of the Revolving Credit Facility will be available on a funds certain basis to fund the purchase price of the Capri Acquisition and to pay related fees and expenses. There were no outstanding borrowings on the Revolving Credit Facility as of June 29, 2024.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Capri Acquisition USD Senior Notes

On November 27, 2023, the Company issued $4.50 billion aggregate principal amount of the Capri Acquisition USD Senior Notes, consisting of $500.0 million aggregate principal amount of 7.050% senior unsecured notes due November 27, 2025 at 99.890% of par (the “7.050% Senior Notes due 2025”), $750.0 million aggregate principal amount of 7.000% senior unsecured notes due November 27, 2026 at 99.803% of par (the “7.000% Senior Notes due 2026”), $1.00 billion aggregate principal amount of 7.350% senior unsecured notes due November 27, 2028 at 99.724% (the “7.350% Senior Notes due 2028”), $1.00 billion aggregate principal amount of 7.700% Senior Notes due November 27, 2030 at 99.712% of par (the “7.700% Senior Notes due 2030”) and $1.25 billion aggregate principal amount of our 7.850% Senior Notes due November 27, 2033 at 99.475% (the “7.850% Senior Notes due 2033”). The Company will pay interest semi-annually on the Capri Acquisition USD Senior Notes on May 27 and November 27 of each year, commencing on May 27, 2024.

If (i) the Capri Acquisition has not been completed by February 10, 2025 (or such later date mutually agreed between the Company and Capri) (such date, the “special mandatory redemption end date”), (ii) prior to the special mandatory redemption end date, the Merger Agreement is terminated in accordance with its terms or (iii) the Company otherwise notifies the trustee that it will not pursue the consummation of the Capri Acquisition, all of the Capri Acquisition USD Senior Notes will be redeemed at a redemption price equal to 101% of their principal amount, plus accrued and unpaid interest to, but excluding, the special mandatory redemption date.

Capri Acquisition EUR Senior Notes

On November 27, 2023, the Company issued €1.50 billion aggregate principal amount of Capri Acquisition Senior Notes, consisting of €500.0 million aggregate principal amount of 5.350% senior unsecured notes due November 27, 2025 at 99.878% of par (the “5.350% EUR Senior Notes due 2025”), €500.0 million aggregate principal amount of 5.375% senior unsecured notes due November 27, 2027 at 99.723% of par (the 5.375% EUR Senior Notes due 2027”) and €500.0 million aggregate principal amount of our 5.875% senior unsecured notes due November 27, 2031 at 99.248% of par (the “5.875% EUR Senior Notes due 2031"). The Company will pay interest annually on the Capri Acquisition EUR Senior Notes on November 27 of each year, commencing on November 27, 2024. As of June 29, 2024, the carrying amount for each of the Capri Acquisition EUR Senior Notes was $535.6 million.

If (i) the Capri Acquisition has not been completed by the special mandatory redemption end date, (ii) prior to the special mandatory redemption end date, the Merger Agreement is terminated in accordance with its terms or (iii) the Company otherwise notifies the trustee that it will not pursue the consummation of the Capri Acquisition, all of the Capri Acquisition EUR Senior Notes will be redeemed at a redemption price equal to 101% of their principal amount, plus accrued and unpaid interest to, but excluding, the special mandatory redemption date.

Term Loan due 2027

On May 11, 2022, pursuant to the Existing Credit Agreement, the Company entered into an unsecured $500.0 million Term Loan (the “Term Loan due 2027”) with a maturity date on May 11, 2027. The Term Loan due 2027 amortizes in an amount equal to 5.000% per annum, with payments made quarterly. Borrowings under the Term Loan due 2027 bear interest at a rate per annum equal to, at the Company’s option, either (i) an alternate base rate or (ii) a term secured overnight financing rate plus, in each case, an applicable margin. The applicable margin will be adjusted by reference to a pricing grid based on the ratio (a) consolidated debt to (b) consolidated EBITDAR. The Company repaid its outstanding borrowings under the Term Loan due 2027 on May 31, 2024.

2025, 2027, 2032 Senior Notes

In March 2015, the Company issued $600.0 million aggregate principal amount of 4.250% senior unsecured notes due April 1, 2025 at 99.445% of par (the "4.250% Senior Notes due 2025"). In June 2017, the Company issued $600.0 million aggregate principal amount of 4.125% senior unsecured notes due July 15, 2027 at 99.858% of par (the 4.125% Senior Notes due 2027"). In December 2021, the Company completed a cash tender offer for $296.6 million and $203.4 million of the outstanding aggregate principal amount under its 4.250% Senior Notes due 2025 and 4.125% Senior Notes due 2027, respectively. In addition, in December 2021, the Company issued $500.0 million aggregate principal amount of 3.050% senior unsecured notes due March 15, 2032 at 99.705% of par (the "3.050% Senior Notes due 2032").

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

China Credit Facility

On May 20, 2024, the Company entered into a short-term credit facility (“China Credit Facility”) with Citibank, which may be used to fund general working capital needs, not to exceed 12 months, and is subject to annual renewal. The China Credit Facility provides the Company with a maximum facility amount of up to RMB 250.0 million (approximately $34.4 million), which includes a loan of up to RMB 85.0 million (approximately $11.7 million), a bank guarantee facility of up to RMB 15.0 million (approximately $2.1 million) and Accounts payable financing of up to RMB 150.0 million (approximately $20.6 million). As of June 29, 2024, there were no borrowings, bank guarantees or Accounts Payable financing outstanding under the China Credit Facility.

Debt Covenants

Under the terms of our debt facilities, we must comply with certain restrictions limiting the Company’s ability to among other things: (i) incur certain indebtedness, (ii) create certain liens, (iii) enter into certain sale and leaseback transactions, (iv) make certain investments or payments and (v) merge, or consolidate or transfer, sell or lease all or substantially all of the Company’s assets.

Under the Amended Credit Agreement, we are required to comply on a quarterly basis with a maximum net leverage ratio of 4.00:1.00. After giving effect to the Capri Acquisition, the Company is will be required under the Amended Credit Agreement and the Capri Acquisition Term Loan Credit Agreement to comply on a quarterly basis with a maximum net leverage ratio of (i) from and including the closing date of the Capri Acquisition to but excluding June 28, 2025, 4.75 to 1.00, (ii) from and including June 28, 2025 to but excluding June 27, 2026, 4.50 to 1.00, and (iii) from and including June 27, 2026 and thereafter, 4.00 to 1.00. As of June 29, 2024, we were in compliance with these restrictions and covenants, have met such financial ratios and have met all debt payment obligations.

Fair Value Considerations

The following table shows the estimated fair values of the senior unsecured notes at June 29, 2024 and July 1, 2023 based on external pricing data, including available quoted market prices of the instruments, and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and are classified as Level 2 measurements within the fair value hierarchy:

			June 29, 2024						July 1, 2023
			(millions)
USD Senior Notes:
4.250% Senior Notes due 2025			$	300.2					$	295.1
7.050% Senior Notes due 2025			508.1						—
7.000% Senior Notes due 2026			770.7						—
4.125% Senior Notes due 2027			378.2						371.7
7.350% Senior Notes due 2028			1,036.5						—
7.700% Senior Notes due 2030			1,042.9						—
3.050% Senior Notes due 2032			402.9						399.5
7.850% Senior Notes due 2033			1,311.3						—
EUR Senior Notes:
5.350% EUR Senior Notes due 2025(1)			543.8						—
5.375% EUR Senior Notes due 2027(1)			550.8						—
5.875% EUR Senior Notes due 2031(1)			556.4						—

(1)The fair values of the Capri Acquisition EUR Senior Notes include the impact of changes in the exchange rate of the United States Dollar against the Euro.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Debt Maturities

As of June 29, 2024 the debt maturities for the next five fiscal years and thereafter are as follows:

			Principal**(1)**
			(millions)
Fiscal Year
2025			$	303.4
2026			1,035.6
2027			750.0
2028			932.2
2029			1,000.0
2030 and thereafter			3,285.6
Total			$	7,306.8

(1)The principal amounts of the Capri Acquisition EUR Senior Notes include the impact of changes in the exchange rate of the United States Dollar against the Euro as of June 29, 2024.

13. COMMITMENTS AND CONTINGENCIES

Capri Holdings Limited Acquisition

On August 10, 2023, the Company entered into a Merger Agreement. Refer to Note 5, "Acquisitions" for further information.

Letters of Credit

The Company had standby letters of credit, surety bonds and bank guarantees totaling $28.4 million and $37.1 million outstanding at June 29, 2024 and July 1, 2023, respectively. The agreements, which expire at various dates through calendar 2039, primarily collateralize the Company’s obligation to third parties for duty, leases, insurance claims and materials used in product manufacturing. The Company pays certain fees with respect to letters of credit that are issued.

Tax Legislation

The Tax Legislation requires the Company to pay a one-time tax, or Transition Tax, on previously unremitted earnings of certain non-U.S. subsidiaries. The Company expects to pay approximately $14.9 million related to the remaining obligation on the Transition Tax. Refer to Note 15, "Income Taxes," for more information related to the impact of the Tax Legislation.

Other

The Company had other contractual cash obligations as of June 29, 2024, including $485.4 million related to inventory purchase obligations, $14.8 million related to capital expenditure and cloud computing implementation commitments, $253.5 million of other purchase obligations, $7.31 billion of debt repayments, $1.3 million of finance lease obligations and $2.56 billion of interest payments on the outstanding debt. Refer to Note 9, "Leases," for a summary of the Company's future minimum rental payments under non-cancelable leases.

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

Although the Company's litigation can result in large monetary awards, such as when a civil jury is allowed to determine compensatory and/or punitive damages, the Company believes that the outcome of all pending legal proceedings in the aggregate will not have a material effect on the Company's business or consolidated financial statements.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

14. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company performs its annual impairment assessment of goodwill as well as brand intangibles at the beginning of the fourth quarter of each fiscal year or if an event occurs that would more likely than not reduce the fair value below its carrying amount.

The estimated fair value of the Company’s reporting units are based on a weighted average of the income and market approaches. The income approach is based on estimated discounted future cash flows, while the market approach is based on earnings multiples of selected guideline companies. The approach, which qualifies as Level 3 in the fair value hierarchy, incorporated a number of significant assumptions and judgments, including, but not limited to, estimated future cash flows, discount rates, income tax rates, terminal growth rates and valuation multiples derived from comparable publicly traded companies. The Company determined there was no impairment in fiscal 2024 and fiscal 2023 based on the annual assessment and no events occurring that would more likely than not reduce the fair value below its carrying amount.

Goodwill

The change in the carrying amount of the Company’s Goodwill by segment is as follows:

			Coach						Kate Spade						Stuart Weitzman (1)						Total
			(millions)
Balance at July 2, 2022			$	609.1					$	632.4					$	—					$	1,241.5
Foreign exchange impact			(11.6)						(2.4)						—						(14.0)
Balance at July 1, 2023			597.5						630.0						—						1,227.5
Foreign exchange impact			(19.5)						(3.9)						—						(23.4)
Balance at June 29, 2024			$	578.0					$	626.1					$	—					$	1,204.1

(1) Amount is net of accumulated goodwill impairment charges of $210.7 million as of June 29, 2024, July 1, 2023 and July 2, 2022.

Intangible Assets

Intangible assets consist of the following:

			Fiscal Year Ended
			June 29, 2024																		July 1, 2023
			Gross Carrying Amount						Accum. Amort.						Net						Gross Carrying Amount						Accum. Amort.						Net
			(millions)
Intangible assets subject to amortization:
Customer relationships			$	100.3					$	(56.5)					$	43.8					$	100.3					$	(50.0)					$	50.3
Total intangible assets subject to amortization			100.3						(56.5)						43.8						100.3						(50.0)						50.3
Intangible assets not subject to amortization:
Trademarks and trade names			1,309.8						—						1,309.8						1,309.8						—						1,309.8
Total intangible assets			$	1,410.1					$	(56.5)					$	1,353.6					$	1,410.1					$	(50.0)					$	1,360.1

Amortization expense for the Company’s definite-lived intangible assets was $6.5 million and $6.5 million for fiscal 2024 and fiscal 2023, respectively.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

As of June 29, 2024, the expected amortization expense for intangible assets is as follows:

			Amortization Expense
			(millions)
Fiscal Year
Fiscal 2025			$	6.5
Fiscal 2026			6.5
Fiscal 2027			6.5
Fiscal 2028			6.5
Fiscal 2029			6.5
Fiscal 2030 and thereafter			11.3
Total			$	43.8

The expected future amortization expense above reflects remaining useful lives ranging from approximately 5.8 to 8.0 for customer relationships.

15. INCOME TAXES

The provisions for income taxes, computed by applying the U.S. statutory rate to income before taxes, as reconciled to the actual provisions were:

			Fiscal Year Ended
			June 29, 2024												July 1, 2023												July 2, 2022
			Amount						Percentage						Amount						Percentage						Amount						Percentage
			(millions)
Income before provision for income taxes:
United States(1)			$	139.0					13.7		%				$	421.5					36.9		%				$	392.0					37.4		%
Foreign			872.9						86.3						721.6						63.1						655.0						62.6
Total income before provision for income taxes			$	1,011.9					100.0		%				$	1,143.1					100.0		%				$	1,047.0					100.0		%
Tax expense at U.S. statutory rate			$	212.5					21.0		%				$	240.0					21.0		%				$	219.9					21.0		%
State taxes, net of federal benefit			18.1						1.8						23.2						2.0						15.8						1.5
Effects of foreign operations(2)			20.5						2.0						4.3						0.4						(3.5)						(0.3)
Effects of tax credits, acquisition costs and reorganization costs			(64.6)						(6.4)						(61.3)						(5.4)						(49.8)						(4.8)
Other, net			9.4						1.0						0.9						0.1						8.3						0.8
Taxes at effective worldwide rates			$	195.9					19.4		%				$	207.1					18.1		%				$	190.7					18.2		%

(1)The United States jurisdiction includes foreign pre-tax earnings allocated to the Company from its interest in a foreign partnership.

(2)This includes the tax related to the Global Intangible Low-Taxed Income ("GILTI"). The Company has elected to account for the tax associated with GILTI as a period cost, and accordingly, the Company has not recorded deferred taxes associated with GILTI.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Current and deferred tax provision (benefit) was:

			Fiscal Year Ended
			June 29, 2024												July 1, 2023												July 2, 2022
			Current						Deferred						Current						Deferred						Current						Deferred
			(millions)
Federal			$	71.0					$	14.2					$	111.6					$	24.7					$	104.0					$	13.9
Foreign			103.5						(14.6)						48.0						3.6						46.6						11.2
State			18.9						2.9						6.3						12.9						10.7						4.3
Total current and deferred tax provision (benefit)			$	193.4					$	2.5					$	165.9					$	41.2					$	161.3					$	29.4

The components of deferred tax assets and liabilities were:

			June 29, 2024						July 1, 2023
			(millions)
Share-based compensation			$	20.6					$	21.8
Reserves not deductible until paid			46.7						45.9
Employee benefits			30.1						23.1
Net operating loss			45.5						47.7
Other			44.8						67.2
Inventory			17.6						23.4
Lease liability			316.2						348.6
Gross deferred tax assets			521.5						577.7
Valuation allowance			32.1						34.3
Deferred tax assets after valuation allowance			$	489.4					$	543.4
Goodwill			48.6						64.4
Other intangibles			308.6						306.0
Property and equipment			15.1						24.8
Foreign investments			43.3						44.8
Right-of-use			279.3						302.1
Prepaid expenses			1.7						0.9
Gross deferred tax liabilities			696.6						743.0
Net deferred tax (liabilities) assets			$	(207.2)					$	(199.6)
Consolidated Balance Sheets Classification
Deferred income taxes – non-current asset			44.1						40.4
Deferred income taxes – non-current liability			(251.3)						(240.0)
Net deferred tax (liabilities) assets			$	(207.2)					$	(199.6)

Significant judgment is required in determining the worldwide provision for income taxes, and there are many transactions for which the ultimate tax outcome is uncertain. It is the Company’s policy to establish provisions for taxes that may become payable in future years, including those due to an examination by tax authorities. The Company establishes the provisions based upon management’s assessment of exposure associated with uncertain tax positions. The provisions are analyzed at least quarterly and adjusted as appropriate based on new information or circumstances in accordance with the requirements of ASC 740.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:

			June 29, 2024						July 1, 2023						July 2, 2022
			(millions)
Balance at beginning of fiscal year			$	91.8					$	96.1					$	111.4
Gross increase due to tax positions related to prior periods			20.5						4.3						1.6
Gross decrease due to tax positions related to prior periods			(0.9)						(7.7)						(11.7)
Gross increase due to tax positions related to current period			6.5						5.2						7.4
Decrease due to lapse of statutes of limitations			(2.1)						(6.1)						(10.9)
Decrease due to settlements with taxing authorities			—						—						(1.7)
Balance at end of fiscal year			$	115.8					$	91.8					$	96.1

Of the $115.8 million ending gross unrecognized tax benefit balance as of June 29, 2024, $112.1 million relates to items which, if recognized, would impact the effective tax rate. Of the $91.8 million ending gross unrecognized tax benefit balance as of July 1, 2023, $87.1 million relates to items which, if recognized, would impact the effective tax rate. As of June 29, 2024 and July 1, 2023, gross interest and penalties payable was $19.7 million and $10.3 million, respectively, which are included in Other liabilities. During fiscal 2024, fiscal 2023 and fiscal 2022, the Company recognized gross interest and penalty expense of $9.5 million, gross interest and penalty expense of $2.3 million and gross interest and penalty income of $1.5 million, respectively.

The Company files income tax returns in the U.S. federal jurisdiction, as well as various state and foreign jurisdictions. Tax examinations are currently in progress in select foreign and state jurisdictions that are extending the years open under the statutes of limitation. Fiscal years 2018 to present are open to examination in the U.S. federal jurisdiction, fiscal 2018 to present in select state jurisdictions and fiscal 2017 to present in select foreign jurisdictions. The Company is currently under U.S. federal audit for fiscal 2018 to 2020. The IRS is examining carryback claims to fiscal 2014 through fiscal 2020 as part of Joint Committee procedures for tax refund claims. The Company anticipates that one or more of these audits may be finalized and certain statutes of limitation may expire in the foreseeable future. However, based on the status of these examinations and the average time typically incurred in finalizing audits with the relevant tax authorities, the Company cannot reasonably estimate the impact these audits may have in the next 12 months, if any, to previously recorded uncertain tax positions. The Company accrues for certain known and reasonably anticipated income tax obligations after assessing the likely outcome based on the weight of available evidence. Although the Company believes that the estimates and assumptions used are reasonable and legally supportable, the final determination of tax audits could be different than that which is reflected in historical income tax provisions and recorded assets and liabilities. With respect to all jurisdictions, the Company has made adequate provision for all income tax uncertainties.

As of June 29, 2024, the Company had the following tax loss carryforwards available: U.S. state tax loss carryforwards of $534.5 million and tax loss carryforwards of various foreign jurisdictions of $78.7 million. As of July 1, 2023, the Company had the following tax loss carryforwards available: U.S. state tax loss carryforwards of $547.2 million and tax loss carryforwards of various foreign jurisdictions of $80.6 million. The state net operating loss carryforwards generally start to expire in fiscal 2025. The majority of the foreign net operating loss can be carried forward indefinitely. Deferred tax assets, including the deferred tax assets recognized on these net operating losses, have been reduced by a valuation allowance of $32.1 million as of June 29, 2024 and $34.3 million as of July 1, 2023.

The Company is not permanently reinvested with respect to the earnings of a limited number of foreign entities and has recorded the tax consequences of remitting earnings from these entities. The Company is permanently reinvested with respect to all other earnings. The total estimated amount of unremitted earnings of foreign subsidiaries as of June 29, 2024 and July 1, 2023 was $750.0 million and $835.1 million, respectively. The Company intends to distribute $525.8 million of earnings that were previously subject to U.S. Federal Tax and has recorded a deferred tax liability of $1.3 million during fiscal 2024 for U.S. state taxes and foreign withholding taxes related to the future distribution. Based on the Company's current analysis, there is further unrecognized deferred tax liability of approximately $3 million to $5 million on the remaining unremitted earnings.

Transition Tax

The Company is required to pay a one-time Transition Tax on previously unremitted earnings of certain non-U.S. subsidiaries. The Company has elected to pay the Transition Tax in installments. The remaining Transition Tax payable is $14.9 million and is payable in fiscal 2025.

16. DEFINED CONTRIBUTION PLAN

The Company maintains the Tapestry, Inc. 401(k) Savings Plan, which is a defined contribution plan. Employees who meet certain eligibility requirements and are not part of a collective bargaining agreement may participate in this program. The annual expense incurred by the Company for this defined contribution plan was $12.7 million, $13.4 million and $11.8 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively.

17. SEGMENT INFORMATION

The Company has three reportable segments:

• Coach - Includes global sales primarily of Coach brand products to customers through our DTC, wholesale and licensing businesses.

• Kate Spade - Includes global sales primarily of kate spade new york brand products to customers through our DTC, wholesale and licensing businesses.

• Stuart Weitzman - Includes global sales of Stuart Weitzman brand products primarily through our DTC and wholesale businesses.

In deciding how to allocate resources and assess performance, the Company's chief operating decision maker regularly evaluates operating profit of these segments. Segment operating profit is the gross profit of the segment less direct expenses of the segment. Total expenditures for additions to long-lived assets are not disclosed as this information is not regularly provided to the chief operating decision maker at the segment level.

In addition to these reportable segments, the Company has certain corporate costs that are not directly attributable to its brands; therefore, they are not allocated to its segments. Such costs primarily include certain overhead expenses related to corporate functions as well as certain administration, corporate occupancy, information technology, and depreciation costs.

The following table summarizes net sales of each of the company's segments for fiscal 2024, fiscal 2023, and fiscal 2022:

			Fiscal Year Ended
			June 29, 2024						July 1, 2023						July 2, 2022
			(millions)
Segment net sales:
Coach			$	5,095.3					$	4,960.4					$	4,921.3
Kate Spade			1,334.4						1,418.9						1,445.5
Stuart Weitzman			241.5						281.6						317.7
Total Net sales:			$	6,671.2					$	6,660.9					$	6,684.5

The following table summarizes segment operating profit of each of the company's segments and reconciliation to Income (loss) before provision for income taxes for fiscal 2024, fiscal 2023, and fiscal 2022:

			Fiscal Year Ended
			June 29, 2024						July 1, 2023						July 2, 2022
			(millions)
Segment operating profit (loss):
Coach			$	1,651.1					$	1,529.9					$	1,473.9
Kate Spade			132.6						115.0						157.4
Stuart Weitzman			(21.2)						(6.7)						1.8
Total segment operating profit (loss):			$	1,762.5					$	1,638.2					$	1,633.1
Unallocated corporate expenses(1)			622.4						465.8						457.3
Loss on extinguishment of debt			—						—						53.7
Unallocated other charges, net(2)			128.2						29.3						75.1
Income (loss) before provision for income taxes			$	1,011.9					$	1,143.1					$	1,047.0

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes depreciation and amortization expense of each of the company's segments for fiscal 2024, fiscal 2023, and fiscal 2022:

			Fiscal Year Ended
			June 29, 2024						July 1, 2023						July 2, 2022
			(millions)
Depreciation and amortization expense**(3)****:**
Coach			$	88.0					$	94.7					$	110.1
Kate Spade			41.6						44.2						48.5
Stuart Weitzman			10.6						10.5						10.3
Unallocated corporate(1)			33.8						32.8						26.4
Total Depreciation and amortization expense:			$	174.0					$	182.2					$	195.3

(1) Corporate, which is not a reportable segment, represents certain costs that are not directly attributable to a segment.

(2) Includes Interest expense, net and Other expense (income).

(3) Depreciation and amortization expense for the segments includes an allocation of expense related to assets which support multiple segments.

The following table summarizes total assets of each of the company's segments for fiscal 2024, fiscal 2023, and fiscal 2022:

			Fiscal Year Ended
			June 29, 2024						July 1, 2023						July 2, 2022
			(millions)
Segment total assets:
Coach			$	2,238.4					$	2,272.3					$	2,392.2
Kate Spade			2,469.2						2,597.3						2,641.3
Stuart Weitzman			232.6						235.8						269.3
Corporate			8,456.1						2,011.4						1,962.5
Total Assets:			$	13,396.3					$	7,116.8					$	7,265.3

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table disaggregates Net sales for each of our product categories by segment in fiscal 2024, fiscal 2023, and fiscal 2022.

			Fiscal Year Ended
			June 29, 2024												July 1, 2023												July 2, 2022
			Amount						% of total net sales						Amount						% of total net sales						Amount						% of total net sales
			(millions)
Coach
Women's Handbags			$	2,495.7					37.5		%				$	2,450.7					36.8		%				$	2,574.8					38.5		%
Women's Accessories			1,079.6						16.2						1,024.8						15.4						942.5						14.1
Men's			983.9						14.7						947.1						14.2						904.8						13.5
Other Products			536.1						8.0						537.8						8.1						499.2						7.5
Total Coach			$	5,095.3					76.4		%				$	4,960.4					74.5		%				$	4,921.3					73.6		%
Kate Spade
Women's Handbags			$	721.0					10.9		%				$	779.6					11.7		%				$	819.5					12.2		%
Women's Accessories			316.8						4.7						306.9						4.6						307.0						4.6
Other Products			296.6						4.4						332.4						5.0						319.0						4.8
Total Kate Spade			$	1,334.4					20.0		%				$	1,418.9					21.3		%				$	1,445.5					21.6		%
Stuart Weitzman(1)			$	241.5					3.6		%				$	281.6					4.2		%				$	317.7					4.8		%
Total Net sales			$	6,671.2					100.0		%				$	6,660.9					100.0		%				$	6,684.5					100.0		%

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

Geographic Area Information

Geographic revenue information is based on the location of our customer sale. Geographic long-lived asset information is based on the physical location of the assets at the end of each fiscal year and includes property and equipment, net, right of use assets and other assets.

			United States						Greater China**(2)**						Japan						Other**(3)**						Total
			(millions)
Fiscal 2024
Net sales(1)			$	3,949.7					$	1,012.6					$	554.4					$	1,154.5					$	6,671.2
Long-lived assets			1,533.7						151.8						94.0						210.0						1,989.5
Fiscal 2023
Net sales(1)			$	4,040.2					$	1,015.8					$	569.0					$	1,035.9					$	6,660.9
Long-lived assets			1,662.5						160.3						87.7						213.5						2,124.0
Fiscal 2022
Net sales(1)			$	4,174.3					$	1,026.6					$	578.8					$	904.8					$	6,684.5
Long-lived assets			1,578.9						131.0						94.0						231.6						2,035.5

(1)Includes net sales from our global travel retail business in locations within the specified geographic area.

(2)Greater China includes sales in mainland China, Hong Kong SAR and Macao SAR, and Taiwan.

(3)Other includes sales in Europe, Canada, Malaysia, Australia and New Zealand, South Korea, Singapore and other countries in Asia as well as royalties earned from the Company's licensing partners.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

18. EARNINGS PER SHARE

Basic net income per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted net income per share is calculated similarly but includes potential dilution from the exercise of stock options and restricted stock units and any other potentially dilutive instruments, only in the periods in which such effects are dilutive under the treasury stock method.

The following is a reconciliation of the weighted-average shares outstanding and calculation of basic and diluted earnings per share:

			Fiscal Year Ended
			June 29, 2024						July 1, 2023						July 2, 2022
			(millions, except per share data)
Net income (loss)			$	816.0					$	936.0					$	856.3
Weighted-average basic shares			229.2						236.4						264.3
Dilutive securities:
Effect of dilutive securities			4.0						4.9						5.8
Weighted-average diluted shares			233.2						241.3						270.1
Net income (loss) per share:
Basic			$	3.56					$	3.96					$	3.24
Diluted			$	3.50					$	3.88					$	3.17

At June 29, 2024, options to purchase 1.3 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $41.82 to $51.38, were greater than the average market price of the common shares.

At July 1, 2023, options to purchase 2.1 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $41.65 to $56.39, were greater than the average market price of the common shares.

At July 2, 2022, options to purchase 5.4 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $33.46 to $58.54, were greater than the average market price of the common shares.

Earnings per share amounts have been calculated based on unrounded numbers. Options to purchase shares of the Company's common stock at an exercise price greater than the average market price of the common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income (loss) per common share. In addition, the Company has outstanding restricted stock unit awards that are issuable only upon the achievement of certain performance goals. Performance-based restricted stock unit awards are included in the computation of diluted shares only to the extent that the underlying performance conditions (and any applicable market condition modifiers) (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive under the treasury stock method. As of June 29, 2024, July 1, 2023 and July 2, 2022, there were approximately 0.8 million, 2.7 million and 6.9 million, respectively, of additional shares issuable upon exercise of anti-dilutive options and contingent vesting of performance-based restricted stock unit awards, which were excluded from the diluted share calculations.

19. RELATED PARTIES

The Stuart Weitzman brand owns approximately 50% of a factory located in Spain, which is involved in the production of Stuart Weitzman inventory. Payments to this factory represented $12.3 million and $15.2 million in fiscal 2024 and fiscal 2023, respectively. Amounts payable to this factory were not material at June 29, 2024 or July 1, 2023.

20. SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of certain balance sheet accounts are as follows:

			June 29, 2024						July 1, 2023
			(millions)
Property and equipment
Land and building			$	8.1					$	8.0
Machinery and equipment			69.1						67.2
Software and computer equipment			642.8						627.6
Furniture and fixtures			295.4						306.5
Leasehold improvements			720.4						778.5
Construction in progress			42.2						14.3
Less: accumulated depreciation			(1,263.3)						(1,237.6)
Total property and equipment, net			$	514.7					$	564.5
Accrued liabilities
Payroll and employee benefits			$	171.3					$	131.9
Accrued rent			17.5						18.4
Accrued interest			104.7						38.9
Accrued income taxes			49.7						41.8
Accrued freight			51.5						52.1
Operating expenses			261.6						264.0
Total accrued liabilities			$	656.3					$	547.1
Other liabilities
Deferred lease obligation			$	32.2					$	40.2
Gross unrecognized tax benefit			115.8						91.8
Other			227.1						167.5
Total other liabilities			$	375.1					$	299.5

TAPESTRY, INC.

Schedule II — Valuation and Qualifying Accounts

For the Fiscal Years Ended June 29, 2024, July 1, 2023 and July 2, 2022

			Balance at Beginning of Year						Additions Charged to Costs and Expenses						Write-offs/ Allowances Taken						Balance at End of Year
			(millions)
Fiscal 2024
Allowance for credit losses			$	5.8					$	4.3					$	(3.2)					$	6.9
Allowance for returns			15.3						10.4						(14.5)						11.2
Allowance for markdowns			11.3						14.9						(16.6)						9.6
Valuation allowance			34.3						—						(2.2)						32.1
Total			$	66.7					$	29.6					$	(36.5)					$	59.8
Fiscal 2023
Allowance for credit losses			$	3.7					$	5.7					$	(3.6)					$	5.8
Allowance for returns			11.2						14.2						(10.1)						15.3
Allowance for markdowns			11.6						17.6						(17.9)						11.3
Valuation allowance			51.6						—						(17.3)						34.3
Total			$	78.1					$	37.5					$	(48.9)					$	66.7
Fiscal 2022
Allowance for credit losses			$	4.2					$	19.9					$	(20.4)					$	3.7
Allowance for returns			18.7						8.8						(16.3)						11.2
Allowance for markdowns			11.4						13.6						(13.4)						11.6
Valuation allowance			65.9						—						(14.3)						51.6
Total			$	100.2					$	42.3					$	(64.4)					$	78.1