Item 16. FORM 10-K SUMMARY

207K characters. Original on sec.gov · Markdown

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 13, 2026			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 13, 2026.


Signature						Title

/s/ Joanne C. Crevoiserat						Chief Executive Officer, and Director
Joanne C. Crevoiserat						(Principal Executive Officer)

/s/ Scott A. Roe						Chief Financial Officer & Chief Operating 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/ 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/ Matt Madrigal						Director
Matt Madrigal

/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)			62
Consolidated Financial Statements:
Consolidated Balance Sheets			65
Consolidated Statements of Operations			66
Consolidated Statements of Comprehensive Income			67
Consolidated Statements of Stockholders’ Equity			68
Consolidated Statements of Cash Flows			69
Notes to Consolidated Financial Statements			70
Financial Statement Schedules:
Schedule II — Valuation and Qualifying Accounts			106

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 27, 2026 and June 28, 2025, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended June 27, 2026, 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 27, 2026 and June 28, 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 27, 2026, 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 27, 2026, 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 13, 2026, 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 indefinite-lived brand intangible - 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. As of the year ended June 27, 2026, the Kate Spade goodwill and indefinite-lived brand intangible assets had carrying amounts of $381.9 million and $699.1 million, respectively.

Given the significant judgments made by management to estimate the fair value of the Kate Spade operations used in both 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, and market multiples 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 forecasts, discount rates, and market multiples used by management to estimate the fair values of the Kate Spade reporting unit and indefinite-lived brand intangible asset included the following, among others:

We tested the effectiveness of management’s controls over Kate Spade’s goodwill and indefinite-lived brand intangible asset impairment evaluations, including controls over the forecasts of future Kate Spade revenue and profit margin, the selection of the discount rate and market multiples.
We evaluated management’s ability to accurately project the forecasts by performing a retrospective review of actual results to management’s historical forecasts.
We evaluated the reasonableness of management’s projected forecasts by:

◦Comparing the forecasts to information included in the Company’s communications to the Board of Directors, industry reports, and analyst reports for the Company and certain of its peer companies;

◦Comparing the forecasts to historical financial results;

◦Evaluating the impact of changes in the regulatory environment on management’s forecasts;

◦Conducting inquiries with management; and

◦Evaluating whether the forecasts were consistent with evidence obtained in other areas of the audit.

With the assistance of our fair value specialists, we evaluated the reasonableness of the valuation approaches for the Kate Spade reporting unit and the Kate Spade indefinite-lived brand intangible asset:

◦Testing the inputs underlying the determination of the discount rate and testing the mathematical accuracy of the calculation;

◦Developing a range of independent estimates and comparing those to the discount rate selected by management;

◦Evaluating the reasonableness of the selected methodology to value the Kate Spade indefinite-lived brand intangible;

◦Evaluating the reasonableness of the selected guideline public companies as well as benchmarking the selected multiples against these guideline public companies;

◦Testing the source information underlying the determination of the market multiples;

◦Evaluating the acceptability of the weighting applied to value indications from different valuation techniques; and

◦Evaluating the implied equity premium and the market value of equity

/s/ Deloitte & Touche LLP

New York, New York

August 13, 2026

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 27, 2026, 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 27, 2026, 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 27, 2026, of the Company and our report dated August 13, 2026, 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 13, 2026

TAPESTRY, INC.

CONSOLIDATED BALANCE SHEETS


	June 27, 2026		June 28, 2025
	(millions)
ASSETS
Current Assets:
Cash and cash equivalents	$	974.7	$	1,100.0
Short-term investments	177.3		19.6
Trade accounts receivable, less allowances for credit losses of $6.1 and $5.7, respectively	237.1		239.3
Inventories	826.2		860.7
Income tax receivable	269.3		277.3
Prepaid expenses	155.2		133.8
Other current assets	242.5		98.5
Assets held for sale	—		176.4
Total current assets	2,882.3		2,905.6
Property and equipment, net of accumulated depreciation of $1,264.2 and $1,215.0, respectively	502.1		489.5
Operating lease right-of-use assets	1,417.2		1,331.0

Goodwill	957.7		983.3
Intangible assets	716.5		719.6
Deferred income taxes	35.7		33.8
Other assets	180.2		117.7
Total assets	$	6,691.7	$	6,580.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	582.3	$	456.1
Accrued liabilities	754.9		736.9
Current portion of operating lease liabilities	307.8		299.0
Current debt	—		16.7
Liabilities held for sale	—		48.2
Total current liabilities	1,645.0		1,556.9
Long-term debt	2,379.0		2,377.9
Long-term operating lease liabilities	1,266.2		1,205.6
Deferred income taxes	172.8		79.8

Other liabilities	536.6		502.5
Total liabilities	5,999.6		5,722.7

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 – 200.4 million and 208.1 million shares, respectively	2.0		2.1
Additional paid-in-capital	4,118.4		3,673.7
Retained earnings (accumulated deficit)	(3,209.7)		(2,556.8)
Accumulated other comprehensive income (loss)	(218.6)		(261.2)
Total stockholders’ equity	692.1		857.8
Total liabilities and stockholders’ equity	$	6,691.7	$	6,580.5

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


	Fiscal Year Ended
	June 27, 2026		June 28, 2025		June 29, 2024
	(millions, except per share data)
Net sales	$	8,004.2	$	7,010.7	$	6,671.2
Cost of sales	1,775.2		1,721.8		1,781.7
Gross profit	6,229.0		5,288.9		4,889.5
Other selling, general and administrative expenses	4,314.6		4,019.1		3,749.4
Impairment of goodwill and intangible assets	—		854.8		—
Operating income (loss)	1,914.4		415.0		1,140.1
Loss on extinguishment of debt	—		120.1		—
Interest expense, net	55.2		85.4		125.0
Other expense (income)	(1.4)		(6.6)		3.2
Income (loss) before provision for income taxes	1,860.6		216.1		1,011.9
Provision (benefit) for income taxes	332.9		32.9		195.9
Net income (loss)	$	1,527.7	$	183.2	$	816.0
Net income (loss) per share:
Basic	$	7.49	$	0.84	$	3.56
Diluted	$	7.27	$	0.82	$	3.50
Shares used in computing net income (loss) per share:
Basic	204.0		216.8		229.2
Diluted	210.2		222.5		233.2

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	Fiscal Year Ended
	June 27, 2026		June 28, 2025		June 29, 2024
	(millions)
Net income (loss)	$	1,527.7	$	183.2	$	816.0
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on cash flow hedging derivatives, net	17.8		(57.2)		22.2
Unrealized gains (losses) on available-for-sale investments, net	—		0.2		(0.2)

Foreign currency translation adjustments	24.9		(58.3)		22.0
Other	(0.1)		—		—
Other comprehensive income (loss), net of tax	42.6		(115.3)		44.0
Comprehensive income (loss)	$	1,570.3	$	67.9	$	860.0

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 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 share-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
Net income (loss)	—	—		—		183.2		—		183.2
Other comprehensive income (loss)	—	—		—		—		(115.3)		(115.3)
Shares issued, pursuant to share-based compensation arrangements, net of shares withheld for taxes	6.3	—		119.6		—		—		119.6
Share-based compensation	—	—		91.4		—		—		91.4
Repurchase of common stock, including excise tax	(28.4)	(0.2)		(300.0)		(1,718.5)		—		(2,018.7)
Dividends declared ($1.40 per share)	—	—		—		(299.3)		—		(299.3)
Balance at June 28, 2025	208.1	2.1		3,673.7		(2,556.8)		(261.2)		857.8
Net income (loss)	—	—		—		1,527.7		—		1,527.7
Other comprehensive income (loss)	—	—		—		—		42.6		42.6
Shares issued, pursuant to share-based compensation arrangements, net of shares withheld for taxes	3.8	—		37.3		—				37.3
Share-based compensation	—	—		107.4		—		—		107.4
Repurchase of common stock, including excise tax	(11.5)	(0.1)		300.0		(1,854.5)		—		(1,554.6)
Dividends declared ($1.60 per share)	—	—		—		(326.1)		—		(326.1)
Balance at June 27, 2026	200.4	$	2.0	$	4,118.4	$	(3,209.7)	$	(218.6)	$	692.1

See accompanying Notes.

TAPESTRY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Fiscal Year Ended
	June 27, 2026		June 28, 2025		June 29, 2024
	(millions)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income (loss)	$	1,527.7	$	183.2	$	816.0
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	160.8		162.9		174.0
Amortization of cloud computing arrangements	56.4		62.0		55.0
Impairment charges	—		854.8		—
Provision for bad debt	6.1		3.6		4.3
Loss on extinguishment of debt	—		120.1		—
Share-based compensation	104.5		87.3		85.9

Deferred income taxes	50.8		(139.8)		2.5
Changes to lease related balances, net	(19.3)		(35.0)		(42.6)
Other non-cash charges, net	(27.7)		(43.2)		(7.4)
Changes in operating assets and liabilities:
Trade accounts receivable	(12.0)		8.8		(37.3)
Inventories	35.4		(108.2)		85.8
Accounts payable	131.6		(15.0)		49.1
Accrued liabilities	29.9		56.0		91.6
Other liabilities	75.8		3.9		(21.2)
Other assets	(141.5)		15.2		(0.1)
Net cash provided by (used in) operating activities	1,978.5		1,216.6		1,255.6
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Purchases of investments	(163.0)		(1,886.4)		(2,713.0)
Proceeds from maturities and sales of investments	1.6		2,923.1		1,676.3
Purchases of property and equipment	(166.0)		(122.7)		(108.9)
Proceeds from sale of business, net of cash divested	109.1		—		—
Settlement of net investment hedge	—		—		103.7
Net cash provided by (used in) investing activities	(218.3)		914.0		(1,041.9)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
Payment of dividends	(326.1)		(299.3)		(321.4)
Repurchase of common stock	(1,554.6)		(1,718.7)		—
Share repurchase not yet settled	—		(300.0)		—
Proceeds from issuance of debt, net of discount	—		2,248.1		6,089.5
Payment of debt issuance costs	(0.5)		(13.4)		(78.3)
Payment of debt extinguishment costs	—		(63.5)		—
Repayment of debt	—		(7,163.3)		(468.8)
Proceeds from share-based awards	118.9		156.1		27.3
Taxes paid to net settle share-based awards	(81.6)		(36.5)		(32.7)
Proceeds from revolving credit facility	—		1,016.5		—
Repayment of revolving credit facility	(17.0)		(1,000.0)		—
Other financing activities	—		(1.2)		(1.2)
Net cash provided by (used in) financing activities	(1,860.9)		(7,175.2)		5,214.4
Effect of exchange rate changes on cash and cash equivalents	(24.6)		26.3		(12.2)
Net increase (decrease) in cash and cash equivalents, including cash classified within assets held for sale	(125.3)		(5,018.3)		5,415.9
Less: net increase (decrease) in cash classified within current assets held for sale	—		(23.7)		—
Net increase (decrease) in cash and cash equivalents	(125.3)		(5,042.0)		5,415.9
Cash and cash equivalents at beginning of year	1,100.0		6,142.0		726.1
Cash and cash equivalents at end of year	$	974.7	$	1,100.0	$	6,142.0
Supplemental information:
Cash paid for income taxes, net	$	200.7	$	189.5	$	200.1
Cash paid for interest	$	241.6	$	394.9	$	262.8
Non-cash investing activity – property and equipment obligations	$	35.2	$	25.7	$	15.1

See accompanying Notes.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

1. NATURE OF OPERATIONS

Tapestry, Inc. (the "Company") is a global house of iconic accessories and lifestyle brands uniting the magic of Coach and kate spade new york. Together, we stretch what’s possible – advancing brands further than they could go alone, expanding their reach to new geographies and generations. Inspired by our consumers, we create experiences and products that build lasting brand love and elevate everyday life.

The Coach and Kate Spade segments include global sales of products to customers through our direct-to-consumer ("DTC"), wholesale and licensing businesses. On August 4, 2025, the Company completed the previously announced sale of the Stuart Weitzman Business (defined below). Refer to Note 5, "Acquisitions and Divestitures," for further information.

2. BASIS OF PRESENTATION AND ORGANIZATION

Fiscal Year

The Company utilizes a 52-53 week fiscal year ending 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 27, 2026 (“fiscal 2026”) was a 52-week period. The fiscal year ended June 28, 2025 (“fiscal 2025”) was a 52-week period and the fiscal year ended June 29, 2024 (“fiscal 2024”) was a 52-week period. The fiscal year ending July 3, 2027 (“fiscal 2027”) will be a 53-week period.

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.

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.

Share Repurchases

The Company accounts for stock repurchases by allocating the repurchase price to Common stock and Retained earnings (accumulated deficit). Under Maryland law, the Company's state of incorporation, there are no treasury shares. All repurchased shares are authorized but unissued shares; 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 accounts for the shares purchased under the share repurchase plan based on the trade date. Purchases of the Company's common stock may be executed through open market purchases including through purchase agreements under Rule 10b5-1, in privately negotiated transactions or in other transactions, including accelerated share repurchase programs. Excise tax on net share repurchases is recorded in Retained earnings (accumulated deficit) as part of Stockholders' Equity.

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.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

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.

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.

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.

Held for Sale

Assets and liabilities to be disposed of by sale ("disposal groups") are reclassified into assets and liabilities held for sale on the Company's Consolidated Balance Sheets. This reclassification occurs when all the held for sale criteria have been met. Disposal groups are measured at the lower of carrying value or fair value less costs to sell. Assets held for sale are not depreciated or amortized. The Company assesses the recoverability of its disposal groups each reporting period it remains classified as held for sale and if its carrying value exceeds its fair value, less an estimated cost to sell, a loss on the remeasurement is recorded for the excess. Refer to Note 5, "Acquisitions and Divestitures," for further information.

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 forty years and building improvements are depreciated over ten to forty 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 $7.8 million and $8.8 million of impairment charges within SG&A expense in the Consolidated Statement of Operations in fiscal 2026 and fiscal 2025, respectively.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

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 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 2026. In fiscal 2025, the Company recorded a goodwill impairment charge of $244.1 million related to the Kate Spade reporting unit and an intangible impairment charge of $610.7 million related to the Kate Spade indefinite-lived brand intangible asset within Impairment of goodwill and intangible assets in the Consolidated Statement of Operations.

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 27, 2026 and June 28, 2025, $318.4 million and $272.8 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 27, 2026		June 28, 2025
	(millions)
Obligations outstanding, beginning of year	$	272.8	$	294.9
Invoices added during the year	1,412.9		1,455.2
Invoices settled during the year	(1,367.3)		(1,477.3)
Obligations outstanding, end of year	$	318.4	$	272.8

TAPESTRY, INC.

Notes to Consolidated Financial Statements

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 2026 and fiscal 2025, the Company had asset retirement obligations of $65.0 million and $58.4 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 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.

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.

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.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

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.

Other 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, loss on remeasurement of the business held for sale and software expenses.

Shipping and Handling

Shipping and handling costs for delivery of products to consumers were $209.6 million, $222.0 million and $221.1 million in fiscal 2026, fiscal 2025 and fiscal 2024, 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 2026, fiscal 2025 and fiscal 2024, advertising expenses for the Company totaled $962.5 million, $744.5 million and $616.8 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.

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.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

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 Company is exposed to foreign currency exchange risk related to its sale of inventory, cross-currency intercompany loans and payables, and the remeasurement and translation of foreign operations. The Company is also exposed to interest rate risk related to changes in the fair value of the Company's fixed-rate debt. The Company uses derivative financial instruments to manage these risks. These derivative transactions are in accordance with the Company’s risk management policies. 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. 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 on a gross basis. 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 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.

Cash Flow Hedges

The Company enters into forward foreign currency exchange contracts primarily to reduce its risks related to exchange rate fluctuations on foreign currency denominated inventory transactions. This primarily includes exposure to exchange rate fluctuations in Chinese Renminbi, Japanese Yen, Canadian Dollar and Euro. The derivative instrument gains (losses) are initially deferred in accumulated other comprehensive income ("AOCI") and subsequently recognized in the Consolidated Statements of Operations within Cost of sales, when the related inventory is sold to a third-party.

If it is determined that a derivative instrument has not been highly effective or will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are recognized in earnings. Upon discontinuance of hedge accounting, amounts previously recorded in AOCI are recognized in earnings when the related hedged

TAPESTRY, INC.

Notes to Consolidated Financial Statements

item affects earnings, unless it is probable that the forecasted transaction will not occur, in which case the accumulated amount is immediately recognized in earnings.

For cash flow reporting purposes, the Company classifies proceeds received or amounts paid upon the settlement of the cash flow hedging instruments in the same manner as the related item being hedged, primarily within cash from operating activities.

Net Investment Hedges

The Company enters into cross-currency swaps and forward foreign currency exchange contracts to reduce its risks related to exchange rate fluctuations on net investments in foreign subsidiaries, including our Euro, Japanese Yen and Chinese Renminbi denominated subsidiaries, against future volatility in the exchange rates between the United States dollar and their local currencies. The related gains (losses) are deferred within cumulative translation adjustment (“CTA”) in AOCI until the net investment is sold or liquidated, and current maturity dates range from September 2029 to November 2038.

The Company assesses net investment hedges under the spot method, resulting in cross-currency basis spread on swaps and the spot to forward rate difference on forward exchanges being excluded from the assessment of hedge effectiveness. The portion of change in fair value attributable to excluded components is recorded in AOCI and amortized to earnings within Interest expense, net.

Upon termination of derivative instruments that are designated as a net investment hedge, the changes in the fair value of the instruments recognized as a component within AOCI remain in CTA until the net investment is sold or liquidated. If it is determined that a derivative instrument has not been highly effective or will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are recognized in earnings.

For cash flow reporting purposes, proceeds received or amounts paid upon the settlement of a net investment hedge are included within cash from investing activities, unless the derivative instrument includes an other-than-insignificant financing element, for which these cash flows are primarily classified within cash from financing activities.

Fair Value Hedges

The Company enters into cross-currency swaps to reduce its risks related to foreign exchange rate fluctuations associated with certain cross-currency intercompany loans. Changes in the fair value of the cross-currency swaps designated as fair value hedges are recognized within Other expense (income) on the Company's Consolidated Statement of Operations, which generally offset the adjustment to the carrying amount of the hedged item. The portion of the change in the fair value of designated cross-currency swap contracts attributable to the excluded component is recorded in AOCI and amortized to earnings within Other expense (income). If it is determined that a derivative instrument has not been highly effective or will continue not to be highly effective in hedging the designated exposure, any amounts associated with excluded components in AOCI would be reclassified into earnings immediately.

The Company also enters into interest rate contracts to reduce exposure to changes in the fair value of certain fixed‑rate debt resulting from fluctuations in benchmark interest rates. The gains and losses on the interest rate contracts designated as fair value hedges are recognized in the Consolidated Statements of Operations as Interest expense, net and are generally offset by corresponding changes in the fair value of the hedged liabilities. If it is determined that a derivative instrument has not been highly effective or will continue not to be highly effective in hedging the designated exposure, the hedged asset or liability is no longer adjusted for changes in fair value and any basis adjustment is amortized to earnings over the remaining term of the hedged item, unless the hedged item is derecognized, in which case the basis adjustment is recognized in earnings immediately. Additionally, any amounts associated with excluded components in AOCI are reclassified into earnings in the same manner.

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.

Undesignated Hedges

The Company also enters into forward foreign currency exchange contracts, which are not designated as hedges, to reduce its risks related to exchange rate fluctuations associated with certain cross-currency intercompany loans and payables. The changes in the fair value of these instruments are recorded through earnings within Other expense (income) on the Company's Consolidated Statement of Operations, which offset the revaluation of the hedged underlying assets and liabilities.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

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 Stockholders’ Equity within AOCI.

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.

Changes in Laws and Regulations

During the second half of fiscal 2025, the U.S. Government announced tariffs on imports from select countries. The majority of the Company's products sold in the U.S. are imported from countries in which these tariffs were announced. Additionally, during the first quarter of fiscal 2026, the President of the United States issued an executive order removing the de minimis exemption for low value shipments imported into the U.S. for all countries beginning August 29, 2025.

On February 20, 2026, the U.S. Supreme Court ruled that tariffs collected under the International Emergency Economic Powers Act ("IEEPA") were invalid. The U.S. Court of International Trade subsequently ordered refunds for qualifying customs entries, including applicable interest. U.S. Customs and Border Protection established a phased administrative process for submitting refund claims for certain IEEPA tariffs. During the fourth quarter of fiscal 2026, the Company received cash refunds related to the previously paid IEEPA tariffs of $2.1 million, of which $2.0 million was recognized as a reduction to Cost of sales and $0.1 million as a reduction to Selling, general and administrative expenses. In addition, as of June 27, 2026, the Company applied the loss recovery model and determined that the receipt of the remaining refunds of the previously paid IEEPA tariffs was probable. The Company estimates the amount of the probable refund to be $114.7 million, of which $96.2 million was recognized as a reduction to Cost of sales, $9.5 million was recorded as Accrued liabilities and $9.0 million was applied as a reduction to tariffs that remained in Inventory. The tariff refund receivable was recorded within Other current assets on the Consolidated Balance Sheets as of June 27, 2026.

Recently Adopted Accounting Pronouncements

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 adopted ASU 2023-09 for fiscal year 2026 and applied its provisions on a prospective basis. Other than the enhanced disclosure requirements, ASU 2023-09 did not have an impact on the Company's consolidated financial statements. Refer to Note 15, "Income Taxes", for additional information.

Recently Issued Accounting Pronouncements

In November 2025, the FASB issued ASU No. 2025-09, "Derivatives and Hedging (Topic 815): Hedge Accounting Improvements," which includes amendments intended to more closely align hedge accounting with the economics of an entity's risk management activities. The amendments will be effective for the Company's annual reporting periods beginning in fiscal year 2028 and for interim periods within fiscal year 2028. Early adoption is permitted and the amendments should be applied prospectively. The Company is currently evaluating the ASU to determine its impact on its consolidated financial statements and notes thereto.

In September 2025, the FASB issued ASU No. 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software", which modernizes the accounting for the costs of software developed for internal use and clarifies related disclosure requirements. The amendments remove all references to software development stages, requiring companies to start capitalizing software costs when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The amendments will be effective for the Company's annual reporting periods beginning in fiscal year 2029 and for interim periods within fiscal year 2029. Early adoption is permitted. The amendments may be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on its consolidated financial statements and notes thereto.

In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which is intended to improve

TAPESTRY, INC.

Notes to Consolidated Financial Statements

the disclosures about expenses and address requests from investors for more detailed information about the types of costs and expenses included in certain expense captions presented on the income statement. The amendments will be effective for the Company's annual reporting periods beginning in fiscal year 2028 and for interim periods beginning in fiscal year 2029, with early adoption permitted. The amendments may be applied retrospectively to all prior periods presented in the financial statements or prospectively upon adoption. 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 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 above, 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 taxes from the transaction price.

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.

Wholesale

The Company recognizes revenue within the wholesale channel 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

TAPESTRY, INC.

Notes to Consolidated Financial Statements

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 27, 2026.

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 2026
Coach	$	4,205.4	$	1,359.7	$	790.0	$	559.6	$	6,914.7
Kate Spade	828.7		36.9		117.3		92.0		1,074.9
Stuart Weitzman	9.4		2.1		—		3.1		14.6
Total	$	5,043.5	$	1,398.7	$	907.3	$	654.7	$	8,004.2
Fiscal 2025
Coach	$	3,429.6	$	970.2	$	769.6	$	429.1	$	5,598.5
Kate Spade	933.3		43.7		125.1		95.0		1,197.1
Stuart Weitzman	153.6		45.8		0.4		15.3		215.1
Total	$	4,516.5	$	1,059.7	$	895.1	$	539.4	$	7,010.7
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

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

(2) Other Asia includes Japan, Australia, Malaysia, South Korea, Singapore, and other countries primarily 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 27, 2026 and June 28, 2025 was $35.1 million and $38.0 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 27, 2026, net sales of $10.9 million were recognized from amounts recorded as deferred revenue as of June 28, 2025. For the fiscal year ended June 28, 2025, net sales of $24.2 million were recognized from amounts recorded as deferred revenue as of June 29, 2024.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

5. ACQUISITIONS AND DIVESTITURES

Stuart Weitzman Business Divestiture

On February 16, 2025, the Company entered into a sale and purchase agreement (the “Purchase Agreement”) with Caleres, Inc. (the “Purchaser”) to sell the Stuart Weitzman Business (as defined below). The sale was completed on August 4, 2025 (the "Stuart Weitzman Business Divestiture"). The Purchaser acquired certain assets and liabilities of the Company's global business of designing, manufacturing, promotion, marketing, production, distribution, sales and licensing of Stuart Weitzman branded products (the "Stuart Weitzman Business") for a final aggregate purchase price of $109.1 million, which included customary adjustments for net working capital and indebtedness.

As of June 28, 2025, the Company determined that certain assets and liabilities related to the Company's Stuart Weitzman Business should be classified as held for sale. The Stuart Weitzman Business Divestiture did not represent a strategic shift that will have a major effect on the Company's operations and financial results and therefore does not qualify for presentation as a discontinued operation. The Stuart Weitzman Business Divestiture resulted in a final total pre-tax loss of $22.0 million, which represented the amount of the carrying value of the net assets over the amount of consideration received, less costs to sell. Of the final total pre-tax loss, $3.4 million was recorded during the fiscal year ended June 27, 2026 and $18.6 million was recorded during the fiscal year ended June 28, 2025.

During the fiscal year ended June 27, 2026, the Company incurred total pre-tax charges of $10.9 million primarily due to professional fees and severance costs, partially offset by income from the transition services agreement. These items were recorded in SG&A expenses mainly within the Corporate segment on the Company's Consolidated Statements of Operations.

Capri Holdings Limited Acquisition

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" and, together with us and Merger Sub, the "Parties"), pursuant to which, among other things, Merger Sub would merge with and into Capri (the "Merger") with Capri surviving the Merger and continuing as a wholly owned subsidiary of the Company ("the Capri Acquisition"). On April 22, 2024, the FTC filed a complaint against the Company and Capri in the United States District Court for the Southern District of New York seeking to enjoin the consummation of the Capri Acquisition, and on October 24, 2024, the Court issued its Opinion and Order granting the FTC's request for a preliminary injunction of the Merger, pending an administrative trial on the merits which was scheduled to begin on December 9, 2024. On November 13, 2024, the Parties entered into a Termination Agreement (the “Termination Agreement”), pursuant to which the Parties agreed to terminate the Merger Agreement, including all schedules and exhibits thereto and all ancillary agreements contemplated thereby or entered pursuant thereto, effective immediately. Pursuant to the Termination Agreement, the Company agreed to reimburse Capri for its expenses in an amount equal to $45.1 million in cash on November 14, 2024.

In order to finance the Capri Acquisition, on November 27, 2023, the Company issued $4.50 billion of senior unsecured notes and €1.50 billion of Euro-denominated senior unsecured notes (the "Capri Acquisition Senior Notes") which, together with the $1.40 billion of delayed draw unsecured term loan facilities (the "Capri Acquisition Term Loan Facilities") executed on August 30, 2023, completed the expected financing for the Capri Acquisition. On November 25, 2024, due to the termination of the Merger Agreement and pursuant to the terms of the indenture governing the Capri Acquisition Senior Notes, as supplemented, the Company redeemed all outstanding Capri Acquisition Senior Notes at a redemption price of 101% of the aggregate principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption. In addition, the Capri Acquisition Term Loan Facilities were terminated concurrently with the execution of the Termination Agreement on November 13, 2024. Refer to Note 12, "Debt," for further information on our debt instruments related to the Capri Acquisition.

There were no expenses incurred during the fiscal year ended June 27, 2026 in conjunction with the Capri Acquisition.

During the fiscal year ended June 28, 2025, the Company incurred $268.4 million in pre-tax expenses primarily related to Loss on extinguishment of debt as a result of the redemption of the Capri Acquisition Senior Notes recorded within Loss on extinguishment of debt on the Consolidated Statement of Operations, financing-related expenses recorded within Interest expense, net on the Consolidated Statement of Operations, expense reimbursement payment made to Capri recorded within SG&A expenses on the Consolidated Statement of Operations and professional fees recorded within SG&A expenses on the Consolidated Statement of Operations.

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)		Other(3)		Total
	(millions)
Balances at June 29, 2024	$	57.1	$	(0.2)	$	(202.8)	$	—	$	(145.9)
Other comprehensive income (loss) before reclassifications	(17.6)		2.8		(41.5)		—		(56.3)
Less: amounts reclassified from accumulated other comprehensive income to earnings	39.6		2.6		16.8		—		59.0
Net current-period other comprehensive income (loss)	(57.2)		0.2		(58.3)		—		(115.3)
Balances at June 28, 2025	$	(0.1)	$	—	$	(261.1)	$	—	$	(261.2)
Other comprehensive income (loss) before reclassifications	37.8		—		39.9		(0.1)		77.6
Less: amounts reclassified from accumulated other comprehensive income to earnings	20.0		—		15.0		—		35.0
Net current-period other comprehensive income (loss)	17.8		—		24.9		(0.1)		42.6
Balances at June 27, 2026	$	17.7	$	—	$	(236.2)	$	(0.1)	$	(218.6)

(1) The ending balances of AOCI related to cash flow hedges are net of tax of $(2.0) million and $0.7 million as of June 27, 2026 and June 28, 2025, respectively. The amounts reclassified from AOCI are net of tax of $(1.1) million and $(1.9) million as of June 27, 2026 and June 28, 2025, respectively.

(2) The ending balances of AOCI related to the fair values of instruments designated as hedges of the Company's net investment in certain foreign operations as included in foreign currency translation adjustments are a loss of $61.2 million, net of tax of $5.0 million as of June 27, 2026. The ending balance as of June 28, 2025 is a loss of $114.4 million, net of tax of $28.0 million.

(3) The ending balance of AOCI relates to excluded components of derivative instruments designated as fair value hedges. The ending balance as of June 27, 2026 is a loss of $0.1 million, net of tax of $0.0 million.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

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 27, 2026(1)		June 28, 2025(1)		June 29, 2024
	(millions)
Share-based compensation expense	$	107.4	$	91.4	$	85.9
Income tax benefit related to share-based compensation expense	22.9		18.7		17.5

(1)During fiscal years ended June 27, 2026 and June 28, 2025, the Company incurred $0.4 million and $2.7 million, respectively, of share-based compensation expense related to the modification of award terms in connection with the sale of the Stuart Weitzman Business as well as $2.5 million and $1.4 million, respectively, of share-based compensation expense related to its Organizational Efficiency Costs.

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 ten 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 27, 2026 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 June 28, 2025	5.2	$	33.97
Granted	0.2	99.91
Exercised	(1.6)	32.60
Forfeited or expired	—	38.93
Outstanding at June 27, 2026	3.8	38.29		6.2	$	406.1
Vested and expected to vest at June 27, 2026	3.8	38.25		6.2	404.1
Exercisable at June 27, 2026	2.1	32.63		5.0	241.5

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 27, 2026		June 28, 2025		June 29, 2024
Expected term (years)	5.0		4.9		5.0
Expected volatility	41.5	%	40.9	%	44.8	%
Risk-free interest rate	3.9	%	3.8	%	4.5	%
Dividend yield	1.4	%	3.4	%	4.2	%

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

TAPESTRY, INC.

Notes to Consolidated Financial Statements

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 2026, fiscal 2025 and fiscal 2024 was $36.74, $12.11 and $10.35, respectively. The total intrinsic value of options exercised during fiscal 2026, fiscal 2025 and fiscal 2024 was $153.5 million, $106.9 million and $11.1 million, respectively. The total cash received from option exercises was $51.7 million, $121.3 million and $23.0 million in fiscal 2026, fiscal 2025 and fiscal 2024, respectively, and the cash tax benefit realized for the tax deductions from these option exercises was $17.3 million, $18.4 million and $2.0 million, respectively.

At June 27, 2026, $15.4 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.

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

A summary of service-based RSU activity during the year ended June 27, 2026 is as follows:


	Number of Non-vested RSUs	Weighted- Average Grant- Date Fair Value per RSU
	(millions)
Non-vested at June 28, 2025	4.5	$	37.62
Granted	0.9	102.89

Vested	(1.8)	37.59
Forfeited	(0.3)	44.75
Non-vested at June 27, 2026	3.3	54.32

At June 27, 2026, $105.1 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 2026, fiscal 2025 and fiscal 2024 was $102.89, $42.39 and $34.19, respectively. The total fair value of shares vested during fiscal 2026, fiscal 2025 and fiscal 2024 was $183.4 million, $92.6 million and $95.3 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 27, 2026 is as follows:


	Number of Non-vested PRSUs	Weighted- Average Grant- Date Fair Value per PRSU
	(millions)
Non-vested at June 28, 2025	1.1	$	36.34
Granted	0.3	112.38
Change due to performance condition achievement	0.1	41.56
Vested	(0.5)	35.41
Forfeited	—	45.45
Non-vested at June 27, 2026	1.0	$	59.78

At June 27, 2026, $31.6 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 2026, fiscal 2025 and fiscal 2024 was $112.38, $47.73 and $33.99, respectively. The total fair value of awards that vested during fiscal 2026, fiscal 2025 and fiscal 2024 was $46.1 million, $13.4 million and $0.0 million, respectively.

TAPESTRY, INC.

Notes to Consolidated Financial Statements

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 PRSUs is based on the price of the Company's common stock on the date of grant.

In fiscal 2026, fiscal 2025 and fiscal 2024, the cash tax benefit realized for the tax deductions from all RSUs (service and performance-based) was $35.1 million, $16.7 million and $15.3 million, respectively.

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 0.1 million, 0.1 million and 0.2 million shares to employees in fiscal 2026, fiscal 2025 and fiscal 2024, 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 27, 2026		June 28, 2025		June 29, 2024
Expected term (years)	0.5		0.5		0.5
Expected volatility	37.0	%	35.7	%	32.5	%
Risk-free interest rate	4.0	%	4.9	%	5.4	%
Dividend yield	1.6	%	2.7	%	3.9	%

The weighted-average fair value of the purchase rights granted during fiscal 2026, fiscal 2025 and fiscal 2024 was $24.15, $13.48 and $8.45, 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 27, 2026 and June 28, 2025:


	June 27, 2026						June 28, 2025
	Short-term		Long-term(2)		Total		Short-term		Long-term(2)		Total
	(millions)
Available-for-sale investments:
Commercial paper(1)	$	66.2	$	—	$	66.2	$	—	$	—	$	—
Government securities – U.S.(1)	18.2		—		18.2		—		—		—
Corporate debt securities – U.S.(1)	65.0		—		65.0		—		—		—


Total Available-for-sale investments	$	149.4	$	—	$	149.4	$	—	$	—	$	—





Other:

Other	27.9		—		27.9		19.6		1.4		21.0
Total Investments	$	177.3	$	—	$	177.3	$	19.6	$	1.4	$	21.0

(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.

The Company recognized a pre-tax gain of $0.0 million and $2.6 million on available-for-sale investments during the fiscal years ended June 27, 2026 and June 28, 2025, respectively. These gains are included within Other expense (income) on the Consolidated Statements of Operations. Additionally, the Company had no material unrealized gains or losses on available-for-sale investments as of June 27, 2026 and June 28, 2025 included within Comprehensive income (loss) on the Consolidated Statements of Comprehensive Income (Loss).

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 one to twenty years and may have renewal or early termination options ranging from one to ten 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.

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.

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 years ended June 27, 2026 and June 28, 2025:


	Fiscal Year Ended
	June 27, 2026		June 28, 2025
	(millions)
Finance lease cost:
Amortization of right-of-use assets	$	—	$	1.2
Interest on lease liabilities(1)	—		0.1
Total finance lease cost	—		1.3
Operating lease cost	378.0		360.6
Short-term lease cost	15.4		22.8
Variable lease cost	232.1		204.8
Operating lease right-of-use impairment	0.8		3.0
Less: sublease income	(14.7)		(16.4)
Total net lease cost	$	611.6	$	576.1

(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 27, 2026 and June 28, 2025:


	Fiscal Year Ended
	June 27, 2026		June 28, 2025
	(millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	423.2	$	414.8
Operating cash flows from finance leases	—		0.1
Financing cash flows from finance leases	—		1.2
Non-cash transactions:
Right-of-use assets obtained in exchange for operating lease liabilities	413.8		327.7

The following table provides a maturity analysis of the Company's operating lease liabilities recorded on the Consolidated Balance Sheets as of June 27, 2026:


	June 27, 2026

	(millions)
Fiscal 2027	$	365.5
Fiscal 2028	306.8
Fiscal 2029	243.1
Fiscal 2030	197.5
Fiscal 2031	145.9
Fiscal 2032 and thereafter	588.6
Total operating lease payments	1,847.4
Less: imputed interest	(273.4)
Total operating lease liabilities	$	1,574.0

The future minimum fixed sublease receipts under non-cancelable operating lease agreements as of June 27, 2026 are as follows:


	June 27, 2026
	(millions)
Fiscal 2027	$	14.8
Fiscal 2028	14.8
Fiscal 2029	15.3
Fiscal 2030	16.0
Fiscal 2031	16.0
Fiscal 2032 and thereafter	80.2
Total sublease income	$	157.1

The following table summarizes the weighted-average remaining lease terms and weighted-average discount rates related to the Company's operating leases recorded on the Consolidated Balance Sheets as of June 27, 2026 and June 28, 2025:


	June 27, 2026		June 28, 2025
Operating leases:
Weighted average remaining lease term (years)	7.4		7.4
Weighted average discount rate	4.4	%	4.4	%

Additionally, the Company had approximately $189.8 million of future payment obligations related to executed lease agreements for which the related lease had not yet commenced as of June 27, 2026.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

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 27, 2026 and June 28, 2025:


	Notional Value				Derivative Assets				Derivative Liabilities
					Fair Value				Fair Value
	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
	(millions)
Designated as cash flow hedges
Foreign exchange risk(1)	$	868.8	$	735.0	$	31.1	$	6.5	$	8.9	$	7.9
Designated as net investment hedges
Foreign exchange risk(3)	1,819.6		1,690.0		71.1		15.6		221.1		263.0
Designated as fair value hedges
Foreign exchange risk(2)	103.8		—		—		—		2.4		—
Interest rate risk(2)	375.0		—		1.4		—		3.1		—
Undesignated hedges
Foreign exchange risk(1)	118.3		157.0		0.1		0.3		—		0.1
Total	$	3,285.5	$	2,582.0	$	103.7	$	22.4	$	235.5	$	271.0

(1)In Other Current Assets and Accrued Liabilities.

(2)In Other Assets and Other Liabilities.

(3)As of June 27, 2026, the Company recorded $7.1 million within Other Current Assets, $64.0 million within Other Assets, $2.1 million within Accrued Liabilities and $219.0 million within Other Liabilities. As of June 28, 2025, the Company recorded $15.6 million within Other Current Assets, $0.0 million within Other Assets, $6.9 million within Accrued Liabilities and $256.1 million within Other Liabilities.

The following tables provide 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 27, 2026, June 28, 2025 and June 29, 2024:


	Amount of Gain (Loss) Recognized in OCI on Derivatives
	Fiscal Year Ended
	June 27, 2026		June 28, 2025		June 29, 2024
	(millions)
Designated as cash flow hedges
Foreign exchange risk	$	41.6	$	(19.1)	$	59.6
Interest rate risk	—		—		(10.4)
Designated as net investment hedges
Foreign exchange risk	94.7		(141.3)		74.3
Designated as fair value hedges
Foreign exchange risk	(0.1)		—		—
Total	$	136.2	$	(160.4)	$	123.5

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)


	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
	Statement of Operations Classification		Fiscal Year Ended
		June 27, 2026			June 28, 2025			June 29, 2024
			(millions)
Designated as cash flow hedges
Foreign exchange risk	Cost of Sales		$	21.1		$	42.4		$	36.7
Interest rate risk	Other income (expense)		—			(0.9)			(9.5)
Designated as net investment hedges
Foreign exchange risk	Interest income (expense)		18.5			17.7			2.8
Total hedges			$	39.6		$	59.2		$	30.0


	Amount of Net Gain (Loss) Recognized in Income
	Statement of Operations Classification		Fiscal Year Ended
		June 27, 2026			June 28, 2025			June 29, 2024
			(millions)
Designated as fair value hedges
Foreign exchange risk
Derivative designated as hedging instrument	Other income (expense)		$	(2.3)		$	—		$	—
Amount excluded from hedge effectiveness	Other income (expense)		—			—			—
Interest rate risk
Hedged Item	Interest income (expense)		(1.7)			—			—
Derivative designated as hedging instrument	Interest income (expense)		1.7			—			—
Amount excluded from hedge effectiveness	Interest income (expense)		0.2			—			—
Designated as net investment hedges
Foreign exchange risk
Amount excluded from hedge effectiveness(1)	Interest income (expense)		31.0			28.9			28.7
Total hedges			$	28.9		$	28.9		$	28.7

(1)Includes $18.5 million, $17.7 million and $2.8 million of interest income attributable to excluded components recorded in AOCI and reclassified into income during fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

The Company expects that $16.3 million of net derivative gain related to inventory purchases included in AOCI at June 27, 2026 will be reclassified into earnings within the next 12 months. This amount will vary due to fluctuations in foreign currency exchange rates.

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 inputs used in pricing the asset or liability. The Company does not have any Level 3 investments.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table shows the fair value measurements of the Company’s financial assets and liabilities at June 27, 2026 and June 28, 2025:


	Level 1				Level 2
	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
	(millions)
Assets:
Cash equivalents(1)	$	106.8	$	225.9	$	—	$	—
Short-term investments:

Commercial paper(2)	—		—		66.2		—
Government securities - U.S.(2)	18.2		—		—		—
Corporate debt securities - U.S.(2)	—		—		65.0		—

Other	—		—		27.9		19.6
Long-term investments:




Other	—		—		—		1.4
Derivative Assets:
Inventory-related instruments(3)	—		—		31.1		6.5
Net investment hedges(3)	—		—		71.1		15.6
Intercompany loans and payables(3)	—		—		0.1		0.3
Interest rate hedge instruments(3)	—		—		1.4		—

Liabilities:

Derivative liabilities:
Inventory-related instruments(3)	$	—	$	—	$	8.9	$	7.9
Net investment hedges(3)	—		—		221.1		263.0
Intercompany loans and payables(3)	—		—		2.4		0.1
Interest rate hedge instruments(3)	—		—		3.1		—

(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 derivative instruments 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.

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. The Company determines the fair values of these assets based on Level 3 measurements. Inputs to these fair value measurements included estimates of the amounts and the timing of future discounted cash flows based on historical experience, current trends, market conditions and performance expectations.

The Company did not record goodwill or brand intangible asset impairment charges during the fiscal year ended June 27, 2026. During the fiscal year ended June 28, 2025, the Company recorded an impairment of $610.7 million to the Kate Spade indefinite-lived brand intangible and an impairment of $244.1 million to goodwill pertaining to the Kate Spade reporting unit. Refer to Note 14, "Goodwill and Other Intangible Assets" for further information.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

During the fiscal year ended June 27, 2026, the Company recorded $7.0 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 28, 2025, the Company recorded $5.8 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 27, 2026, the Company recorded $0.8 million of 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 June 28, 2025, the Company recorded $3.0 million of impairment charges to reduce the carrying amount of certain operating lease right-of-use assets to their estimated fair values.

12. DEBT

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


	June 27, 2026		June 28, 2025
	(millions)
Current Debt:
China Credit Facility(1)	$	—	$	16.7
Total Current Debt	$	—	$	16.7

Long-Term Debt:
4.125% Senior Notes due 2027	396.6		396.6
5.100% Senior Notes due 2030	750.0		750.0
3.050% Senior Notes due 2032	500.0		500.0
5.500% Senior Notes due 2035	750.0		750.0
Total long-term debt	2,396.6		2,396.6
Less: Unamortized discount and debt issuance costs on senior notes	(15.9)		(18.7)
Less: Fair value basis adjustment(2)	(1.7)		—
Total long-term debt, net	$	2,379.0	$	2,377.9

(1)The amount outstanding under the China Credit Facility includes the impact of changes in the exchange rate of the United States Dollar against the Renminbi.

(2)Basis adjustment relates to the fair value hedge on a portion of the 5.500% Senior Notes due 2035. Refer to Note 10, "Derivative Instruments and Hedging Activities," for further information.

During fiscal 2026, 2025 and 2024 the Company recognized interest expense related to outstanding debt of $119.3 million, $271.2 million and $369.6 million, respectively.

During fiscal 2026 and fiscal 2024 there was no Loss on extinguishment of debt recognized by the Company. During fiscal 2025 the Company recognized Loss on extinguishment of debt of $120.1 million, primarily related to redemption premiums, as well as unamortized debt issuance costs and discounts, as a result of the redemption of the Capri Acquisition Senior Notes in the second quarter of fiscal 2025.

$2.00 Billion Revolving Credit Facility

On May 22, 2025, the Company entered into a definitive agreement to refinance and replace the Company's unsecured revolving facility dated May 11, 2022 ( the "Existing Revolving Credit Facility") with a new revolving credit facility (the "Amended Revolving Credit Facility"), among the Company, as borrower, Bank of America, N.A., as administrative agent (the “Administrative Agent”), and a syndicate of banks and financial institutions (collectively, the “Lenders”). Under the Amended Revolving Credit Facility, the Lenders have made available to the Company a $2.00 billion unsecured revolving credit facility, including sub-facilities for letters of credit, with a maturity date of May 22, 2030.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Borrowings under the Amended 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 term secured overnight financing rate, (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 (subject to reduction for certain debt incurred in connection with a pending acquisition or for debt being discharged, satisfied or defeased), to (b) consolidated EBITDAR (the “Gross Leverage Ratio”). 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 Amended Revolving Credit Facility, payable quarterly in arrears, and certain fees with respect to letters of credit that are issued.

Borrowings under the Amended 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 back-up). During the second quarter of fiscal 2025, the Company executed $1.00 billion of borrowings under the Existing Revolving Credit Facility used to partially fund the share repurchases under the ASR Agreements and for general corporate purposes. Subsequently, on December 11, 2024, the Company issued $1.50 billion of senior unsecured notes (as defined below, the 2030 and 2035 Senior Notes) and the net proceeds were used in part to repay the borrowings under the Existing Revolving Credit Facility on December 11, 2024. There were no outstanding borrowings on the Amended Revolving Credit Facility as of June 27, 2026.

Term Loan Credit Agreement

During the second quarter of fiscal 2025, the Company entered into a $750.0 million senior unsecured term loan facility pursuant to the Term Loan Credit Agreement (the “Term Loan Credit Agreement”) with Bank of America, N.A., as administrative agent, and the lenders party thereto, and appointed BofA Securities, Inc. and Morgan Stanley Senior Lending, Inc. as joint lead arrangers and joint bookrunners. Borrowings under the Term Loan Credit Agreement were used to partially fund the share repurchases under the ASR Agreements, and for general corporate purposes. Borrowings under the Term Loan Credit Agreement bear interest at a rate per annum equal to, at the Company's option, (i) an alternate base rate or (ii) 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). On November 26, 2024, the Company drew down in full the $750.0 million loan principal under the Term Loan Credit Agreement. The loan was due to mature six months after the date the loan was funded. Subsequently, the Company repaid the borrowings in two tranches with $250.0 million repaid on December 5, 2024 and $500.0 million repaid on December 11, 2024.

Senior Notes

On December 11, 2024, the Company issued $1.50 billion of senior unsecured notes, consisting of $750.0 million aggregate principal amount of 5.100% senior unsecured notes due March 11, 2030 at 99.876% of par (the “5.100% Senior Notes due 2030”) and $750.0 million aggregate principal amount of 5.500% senior unsecured notes due March 11, 2035 at 99.864% of par (the “5.500% Senior Notes due 2035”, together with the 5.100% Senior Notes due 2030, the "2030 and 2035 Senior Notes"). The Company will pay interest semi-annually on the 2030 and 2035 Senior Notes on March 11 and September 11 of each year, commencing on September 11, 2025.

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"). On April 1, 2025, the Company completed the redemption of $303.4 million remaining principal of the 4.250% Senior Notes due 2025.

Commercial Paper Program

On July 24, 2025, the Company entered into a commercial paper borrowing program (the "Commercial Paper Program") that provides for the issuance of up to $2.00 billion of unsecured commercial paper notes with maturities up to 365 days. Borrowings under the Commercial Paper Program are supported by the Amended Revolving Credit Facility and may be used to support the Company's general corporate needs. The aggregate amount of borrowings outstanding under the Commercial Paper Program and Amended Revolving Credit Facility will not exceed $2.00 billion. As of June 27, 2026, the Company had no borrowings outstanding under the Commercial Paper Program.

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 $37 million), which includes a loan of up to RMB 85.0 million (approximately $13 million), a bank guarantee facility of up to RMB 15.0 million (approximately $2 million) and accounts payable financing of up to RMB 150.0 million (approximately $22 million). Borrowings under the China Credit Facility bear interest at rates based on the People’s Bank of China Loan Prime Rate plus an applicable margin, as determined at the time of each drawdown. As of June 27, 2026, the Company had no borrowings outstanding under the China Credit Facility.

Capri Holdings Limited Acquisition Related Debt Transactions

On November 27, 2023, in order to finance the Capri Acquisition, the Company issued $4.50 billion of senior unsecured notes and €1.50 billion of Euro-denominated senior unsecured notes (the "Capri Acquisition Senior Notes") which, together with the $1.40 billion of delayed draw unsecured term loan facilities (the "Capri Acquisition Term Loan Facilities") executed on August 30, 2023, completed the expected financing for the Capri Acquisition.

On November 13, 2024, the Parties entered into a Termination Agreement, pursuant to which it was agreed that the Merger Agreement was terminated, effective immediately. On November 25, 2024, due to the termination of the Merger Agreement and pursuant to the terms of the Indenture, the Company redeemed all outstanding Capri Acquisition Senior Notes at a redemption price of 101% of the aggregate principal amount, plus accrued and unpaid interest to, but excluding, the date of redemption. In addition, the Capri Acquisition Term Loan Credit Agreement was terminated concurrently with the execution of the Termination Agreement on November 13, 2024. Refer to Note 5, "Acquisitions and Divestitures," for further information.

As a result of the redemption prior to their scheduled maturities, the Company was subject to redemption premiums of $61.2 million paid on the Capri Acquisition Senior Notes. Additionally, the Company recognized $55.0 million of unamortized debt issuance costs and discounts in connection with the redemption of the Capri Acquisition Senior Notes. These redemption premiums, as well as unamortized debt issuance costs and discounts, were recorded as a Loss on extinguishment of debt during the second quarter of fiscal 2025.

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 Revolving Credit Facility, we are required to comply on a quarterly basis with a maximum net leverage ratio of 4.00:1.00, which may be increased to 4.50:1.00 following the consummation of a material acquisition, subject to certain limitations set forth in the Amended Revolving Credit Facility. As of June 27, 2026, we were in compliance with these restrictions and covenants, met the required financial ratios and satisfied all debt-payment obligations.

Fair Value Considerations

The following table shows the estimated fair values of the senior unsecured notes at June 27, 2026 and June 28, 2025 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 27, 2026		June 28, 2025
	(millions)
4.125% Senior Notes due 2027	$	394.9	$	393.0
5.100% Senior Notes due 2030	757.4		756.8
3.050% Senior Notes due 2032	454.2		443.2
5.500% Senior Notes due 2035	757.7		748.2

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Debt Maturities

As of June 27, 2026, the debt maturities for the next five fiscal years and thereafter are as follows:


	Principal
	(millions)
Fiscal Year
2027	$	—
2028	396.6
2029	—
2030	750.0
2031	—
2032 and thereafter	1,250.0
Total	$	2,396.6

13. COMMITMENTS AND CONTINGENCIES

Letters of Credit

The Company had standby letters of credit, surety bonds and bank guarantees totaling $38.1 million and $26.5 million outstanding at June 27, 2026 and June 28, 2025, respectively. The agreements, which expire at various dates through calendar 2039, primarily collateralize the Company’s obligations to third parties for duties, leases, insurance claims and materials used in product manufacturing. The Company pays certain fees with respect to letters of credit that are issued.

Other

The Company had other contractual cash obligations as of June 27, 2026, including $768.2 million related to inventory purchase obligations, $45.2 million related to capital expenditure and cloud computing implementation commitments, $268.8 million of other purchase obligations, $2.40 billion of debt repayments and $640.4 million of interest payments on 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, contract disputes, insurance claims and litigation, including wage and hour 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. There have been no material developments with respect to any previously reported proceedings.

Following the previously disclosed termination of the proposed Merger Agreement, dated August 10, 2023, by and among the Company, Merger Sub and Capri, pursuant to which, among other things, Merger Sub would merge with and into Capri (the "Merger") with Capri surviving the Merger and continuing as a wholly owned subsidiary of the Company ("the Capri Acquisition"), two separate putative securities class actions were filed on December 23, 2024 and January 28, 2025, by plaintiff shareholders in the United States District Court for the District of Delaware against Capri and certain of its officers and against Tapestry and certain of its officers, alleging that during the respective class periods (between August 10, 2023 and October 24, 2024), Capri and Tapestry misrepresented and failed to disclose adverse facts about Capri’s business, operations, market dynamics, and the prospects for approval of the Capri Acquisition, which were known to defendants or recklessly disregarded by them. The complaints, which each allege violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, seek unspecified compensatory damages, costs and expenses, and equitable relief. On July 14, 2025, the Company moved to dismiss the complaint. On March 31, 2026, the United States District Court for the District of Delaware dismissed the complaint and claims without prejudice, and on April 30, 2026, the plaintiff shareholders filed an amendment. On June 15, 2026, the Company moved to dismiss the amended complaint. The Company intends to vigorously defend itself in these matters.

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 Company determined there was no impairment in fiscal 2026 based on the annual assessment and no events occurring that would more likely than not reduce the fair value below its carrying amount.

During the fourth quarter of fiscal 2025, the Company performed its annual goodwill and indefinite-lived intangible assets impairment analysis. The assessment concluded that the fair values of the Kate Spade reporting unit and indefinite-lived brand intangible asset did not exceed their respective carrying values due to a reduction in both current and future expected cash flows, which includes an estimated impact of cost increases due to changes in tariff and trade policies. Accordingly, during the three months ended June 28, 2025, the Company recorded a goodwill impairment charge of $244.1 million related to the Kate Spade reporting unit. The Company also recorded an impairment charge of $610.7 million related to the Kate Spade indefinite-lived brand intangible asset. The goodwill and brand intangible asset impairment charges were recorded within Impairment of goodwill and intangible assets on the Company's Consolidated Statement of Operations.

The estimated fair values 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.

Goodwill

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


	Coach		Kate Spade		Total
	(millions)
Balance at June 29, 2024	$	578.0	$	626.1	$	1,204.1
Impairment charges	—		(244.1)		(244.1)

Foreign exchange impact	19.5		3.8		23.3
Balance at June 28, 2025	597.5		385.8		983.3


Foreign exchange impact	(21.7)		(3.9)		(25.6)
Balance at June 27, 2026	$	575.8	$	381.9	$	957.7

Intangible Assets

Intangible assets consist of the following:


	June 27, 2026						June 28, 2025
	Gross Carrying Amount		Accum. Amort.		Net		Gross Carrying Amount		Accum. Amort.		Net
	(millions)
Intangible assets subject to amortization:
Customer relationships	$	45.6	$	(28.2)	$	17.4	$	45.6	$	(25.1)	$	20.5

Total intangible assets subject to amortization	45.6		(28.2)		17.4		45.6		(25.1)		20.5
Intangible assets not subject to amortization:
Trademarks and trade names(1)	699.1		—		699.1		699.1		—		699.1
Total intangible assets	$	744.7	$	(28.2)	$	716.5	$	744.7	$	(25.1)	$	719.6

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

(1) Amount is net of accumulated impairment charges of $610.7 million as of June 27, 2026 and June 28, 2025 for Kate Spade indefinite-lived brand intangible asset.

Amortization expense for the Company’s definite-lived intangible assets was $3.1 million and $5.2 million for fiscal 2026 and fiscal 2025, respectively.

As of June 27, 2026, the expected amortization expense for intangible assets is as follows:


	Amortization Expense
	(millions)
Fiscal Year
Fiscal 2027	$	3.0
Fiscal 2028	3.0
Fiscal 2029	3.0
Fiscal 2030	3.0
Fiscal 2031	3.0
Fiscal 2032	2.4
Total	$	17.4

The expected amortization expense above reflects a remaining useful life of approximately 6.0 years for customer relationships.

15. INCOME TAXES

Taxes on Income

The United States and foreign income before provision for income taxes are as follows:


	Fiscal Years Ended
	June 27, 2026		June 28, 2025		June 29, 2024
	(millions)
United States (1)	$	877.5	$	(655.8)	$	139.0
Foreign	983.1		871.9		872.9
Total income before provision for income taxes	$	1,860.6	$	216.1	$	1,011.9

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

Current and deferred tax provision (benefit) are as follows:


	Fiscal Year Ended
	June 27, 2026				June 28, 2025				June 29, 2024
	Current		Deferred		Current		Deferred		Current		Deferred
	(millions)
Federal	$	121.6	$	44.2	$	60.6	$	(144.1)	$	71.0	$	14.2
Foreign	129.8		(2.1)		88.8		16.3		103.5		(14.6)
State	30.7		8.7		23.3		(12.0)		18.9		2.9
Total current and deferred tax provision (benefit)	$	282.1	$	50.8	$	172.7	$	(139.8)	$	193.4	$	2.5

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Tax Rate Reconciliation

The following table reconciles the provision for income taxes computed by applying the U.S. statutory rate to income before taxes to the actual provision for fiscal 2026. Refer to Note 3, "Significant Accounting Policies," for information regarding the Company's prospective adoption of ASU 2023-09.


	Fiscal Year Ended
	June 27, 2026
	Amount		Percentage
	(millions)

Tax expense at U.S. statutory rate	390.7		21.0	%

State and local income taxes (1)	33.4		1.8

Effect of cross-border tax laws (2)
GILTI (3)	84.2		4.5
U.S. tax on branch income or loss	36.7		2.0
Other	(2.2)		(0.1)
Tax credits
Foreign tax credits	(111.3)		(6.0)
Other	(2.0)		(0.1)
Non-taxable or non-deductible items
Share-based compensation	(22.0)		(1.2)
Other	1.5		0.1
Foreign tax effects
Singapore
Effect of rates different than U.S. statutory rate	(124.6)		(6.7)
Qualified Domestic Minimum Top-up Tax ("QDMTT")	42.4		2.3
Other	7.3		0.4
Other foreign jurisdictions	(1.9)		(0.1)
Changes in unrecognized tax benefits	12.1		0.6
Other adjustments	(11.4)		(0.6)
Taxes at effective worldwide rates	$	332.9	17.9	%

(1)For the year ended June 27, 2026, state and local taxes primarily relate to California, New York City, New York, Florida, and Illinois.

(2)Excludes the impact of foreign tax credits.

(3)This item represents Global Intangible Low-Taxed Income ("GILTI").

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

In accordance with the disclosure requirements in effect prior to the adoption of ASU 2023-09, the provisions for income taxes computed by applying the U.S. statutory rate to income before taxes were reconciled to the actual provisions as follows:


	Fiscal Years Ended
	June 28, 2025				June 29, 2024
	Amount		Percentage		Amount		Percentage
	(millions)





Tax expense at U.S. statutory rate	$	45.3	21.0	%	$	212.5	21.0	%
State taxes, net of federal benefit	5.5		2.5		18.1		1.8
Effects of foreign operations(1)	19.8		9.2		20.5		2.0
Effects of tax credits, acquisition costs and reorganization costs	(95.5)		(44.2)		(64.6)		(6.4)
Effects of impairment(2)	51.3		23.7		—		—
Share-based compensation	(7.8)		(3.6)		2.3		0.2

Other, net	14.3		6.6		7.1		0.8
Taxes at effective worldwide rates	$	32.9	15.2	%	$	195.9	19.4	%

(1)This includes the tax related to GILTI. The Company has elected to account for the tax associated with GILTI as a period cost and, accordingly, has not recorded deferred taxes associated with GILTI.

(2)This item represents the effective tax-rate impact of the Kate Spade goodwill impairment activity recorded in the U.S. in fiscal 2025.

Cash Paid for Taxes

In connection with the Company’s prospective adoption of ASU 2023-09, cash paid for income taxes, net of refunds, was disaggregated as follows:


	Fiscal Year Ended
	June 27, 2026
	(millions)
U.S. Federal	$	84.6
U.S. State and local	30.3
Foreign
Singapore	38.4
China	12.4
Japan	12.3
Other	22.7
Cash paid for income taxes, net of refunds	$	200.7

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Deferred Taxes

The components of deferred tax assets and liabilities were:


	June 27, 2026		June 28, 2025
	(millions)
Share-based compensation	$	17.3	$	17.4
Reserves not deductible until paid	59.4		44.4

Employee benefits	33.6		41.9
Net operating loss	27.0		29.2
Prepaid expenses	0.5		—

Inventory	15.4		16.4
Lease liability	326.6		332.1
Other	—		66.9
Gross deferred tax assets	479.8		548.3
Valuation allowance	12.0		17.6
Deferred tax assets after valuation allowance	$	467.8	$	530.7

Goodwill	48.9		55.5
Other intangibles	178.0		163.4
Property and equipment	19.2		15.2
Foreign investments	50.8		38.7
Right-of-use assets	300.7		302.7
Prepaid expenses	—		1.2
Other	7.3		—
Gross deferred tax liabilities	604.9		576.7
Net deferred tax (liabilities) assets	$	(137.1)	$	(46.0)

Consolidated Balance Sheets Classification

Deferred income taxes – non-current asset	35.7		33.8

Deferred income taxes – non-current liability	(172.8)		(79.8)
Net deferred tax (liabilities) assets	$	(137.1)	$	(46.0)

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

Unrecognized Tax Benefits

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.

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


	June 27, 2026		June 28, 2025		June 29, 2024
	(millions)
Balance at beginning of fiscal year	$	110.7	$	115.8	$	91.8
Gross increase due to tax positions related to prior periods	4.4		15.9		20.5
Gross decrease due to tax positions related to prior periods	(2.6)		(15.5)		(0.9)
Gross increase due to tax positions related to current period	5.1		4.5		6.5
Decrease due to lapse of statutes of limitation	(0.4)		(2.4)		(2.1)
Decrease due to settlements with taxing authorities	(1.5)		(7.6)		—

Balance at end of fiscal year	$	115.7	$	110.7	$	115.8

Of the $115.7 million ending gross unrecognized tax benefit balance as of June 27, 2026, $112.4 million relates to items which, if recognized, would impact the effective tax rate. Of the $110.7 million ending gross unrecognized tax benefit balance as of June 28, 2025, $107.1 million relates to items which, if recognized, would impact the effective tax rate. As of June 27, 2026 and June 28, 2025, gross interest and penalties payable was $34.3 million and $26.9 million, respectively, which are included in Other liabilities. During fiscal 2026, fiscal 2025 and fiscal 2024, the Company recognized gross interest and penalty expense of $7.5 million, $7.1 million and $9.5 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 through the present are open to examination in the U.S. federal jurisdiction, fiscal years 2018 through the present in select state jurisdictions and fiscal years 2019 through the present in select foreign jurisdictions. The Company is currently under U.S. federal audit for fiscal years 2018 through 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, on 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 27, 2026, the Company had the following tax loss carryforwards available: U.S. state tax loss carryforwards of $374.0 million and tax loss carryforwards of various foreign jurisdictions of $31.4 million. As of June 28, 2025, the Company had the following tax loss carryforwards available: U.S. state tax loss carryforwards of $370.0 million and tax loss carryforwards of various foreign jurisdictions of $38.3 million. The state net operating loss carryforwards generally start to expire in fiscal 2027. The majority of the foreign net operating loss carryforwards may 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 $12.0 million as of June 27, 2026 and $17.6 million as of June 28, 2025.

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 27, 2026 and June 28, 2025 was $795.1 million and $1.33 billion, respectively. The Company intends to distribute $686.2 million of earnings that were previously subject to U.S. federal tax and has recorded a deferred tax liability of $1.9 million during fiscal 2026 for U.S. state taxes and foreign withholding taxes related to the future distribution. Based on the Company's current analysis, there is a further unrecognized deferred tax liability of approximately $4 million to $6 million on the remaining unremitted earnings.

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 $13.6 million, $13.1 million and $12.7 million in fiscal 2026, fiscal 2025 and fiscal 2024, respectively.

17. SEGMENT INFORMATION

The Company has two 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.

On August 4, 2025, the Company completed the sale of the Stuart Weitzman business and, as a result, determined it had two reportable segments on a prospective basis. Refer to Note 5, "Acquisitions and Divestitures," for further information.

The Company's chief operating decision maker ("CODM"), who is its Chief Executive Officer, regularly evaluates operating profit of these segments compared to management's expectations in deciding how to allocate resources and assess performance. Segment operating profit is the gross profit of the segment less direct expenses of the segment. Total expenditures for additions to long-lived assets and assets by segment are not provided to the CODM as such information is not utilized for purposes of assessing performance or allocating resources, and therefore has not been disclosed.

In addition to these reportable segments, the Company has certain corporate expenses that are not directly attributable to its brands ("Unallocated corporate expenses"); 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.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table summarizes net sales, significant expenses and operating profit (loss) of each of the Company's segments and reconciliation to the Company's Income (loss) before provision for income taxes for fiscal 2026, fiscal 2025 and fiscal 2024:


	Coach		Kate Spade		Stuart Weitzman(1)		Total
	(millions)
Fiscal 2026
Net sales	$	6,914.7	$	1,074.9	$	14.6	$	8,004.2
Cost of sales(2)	1,402.5		365.8		6.9		1,775.2
Selling, general and administrative expenses(2)	2,971.0		719.1		8.7		3,698.8
Total segment operating profit (loss):	$	2,541.2	$	(10.0)	$	(1.0)	$	2,530.2
Unallocated corporate expenses(3)							615.8
Unallocated other charges, net(4)							53.8
Income (loss) before provision for income taxes							$	1,860.6
Fiscal 2025
Net sales	$	5,598.5	$	1,197.1	$	215.1	$	7,010.7
Cost of sales(2)	1,226.0		399.1		96.7		1,721.8
Selling, general and administrative expenses(2)	2,497.2		1,567.2		133.8		4,198.2
Total segment operating profit (loss):	$	1,875.3	$	(769.2)	$	(15.4)	$	1,090.7
Unallocated corporate expenses(3)							675.7
Unallocated other charges, net(4)							198.9
Income (loss) before provision for income taxes							$	216.1
Fiscal 2024
Net sales	$	5,095.3	$	1,334.4	$	241.5	$	6,671.2
Cost of sales(2)	1,219.9		463.2		98.6		1,781.7
Selling, general and administrative expenses(2)	2,224.3		738.6		164.1		3,127.0
Total segment operating profit (loss):	$	1,651.1	$	132.6	$	(21.2)	$	1,762.5
Unallocated corporate expenses(3)							622.4
Unallocated other charges, net(4)							128.2
Income (loss) before provision for income taxes							$	1,011.9

(1) During fiscal 2026, Stuart Weitzman Net sales, Cost of sales and Selling, general and administrative expenses represent results for the period prior to the sale on August 4, 2025.

(2) Significant expense categories that are regularly provided to the CODM, or easily computable from information that is regularly provided to the CODM. SG&A expenses include Other selling, general and administrative expenses and Impairment of goodwill and intangible assets on the Company's Consolidated Statement of Operations.

(3) Unallocated corporate expenses represent certain corporate expenses that are not directly attributable to a segment.

(4) Includes Loss on extinguishment of debt, Interest expense, net and Other expense (income).

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 2026, fiscal 2025, and fiscal 2024:


	Fiscal Year Ended
	June 27, 2026(3)		June 28, 2025(3)		June 29, 2024
	(millions)
Depreciation and amortization expense(1):
Coach	$	97.3	$	91.2	$	88.0
Kate Spade	33.4		34.1		41.6
Stuart Weitzman	0.3		6.1		10.6
Total segment depreciation and amortization expense:	131.0		131.4		140.2
Unallocated corporate(2)	41.2		36.0		33.8
Total Depreciation and amortization expense:	$	172.2	$	167.4	$	174.0

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

(2) Unallocated corporate, which is not a reportable segment, represents certain depreciation and amortization costs that are not directly attributable to a segment.

(3) For the fiscal year ended June 27, 2026, depreciation and amortization expense includes $1.4 million of costs related to the Company's distribution network optimization efforts recorded within the Kate Spade segment, $0.9 million of impairment charges in connection with the sale of the Stuart Weitzman Business recorded within Unallocated corporate and $9.1 million of costs related to the Company's organizational efficiency efforts, of which $5.6 million was recorded within Unallocated corporate and $3.5 million was recorded within the Kate Spade segment.

For the fiscal year ended June 28, 2025, depreciation and amortization expense includes $2.7 million of impairment charges in connection with the sale of the Stuart Weitzman Business of which $2.1 million was recorded within Unallocated corporate and $0.6 million was recorded within the Stuart Weitzman segment and $1.8 million of costs related to the Company's organizational efficiency efforts, recorded within Unallocated corporate. Refer to Note 5, "Acquisitions and Divestitures," for further information.

There were no impairment charges in fiscal 2026 or fiscal 2024 for brand intangible assets and goodwill. Impairment charges in fiscal 2025 include $854.8 million of brand intangible and goodwill impairment charges for the Kate Spade reportable segment. Refer to Note 14, "Goodwill and Other Intangible Assets," for further information.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

The following table disaggregates Net sales for each of the Company's product categories by segment in fiscal 2026, fiscal 2025, and fiscal 2024:


	Fiscal Year Ended
	June 27, 2026				June 28, 2025				June 29, 2024
	Amount		% of Total segment net sales		Amount		% of Total segment net sales		Amount		% of Total segment net sales
	(millions)
Coach
Handbags	$	4,016.3	58.1	%	$	3,223.3	57.6	%	$	2,889.9	56.7	%
Accessories	1,991.8		28.8		1,539.5		27.5		1,407.9		27.6
Footwear	408.5		5.9		342.5		6.1		326.0		6.4
Other	498.1		7.2		493.2		8.8		471.5		9.3
Total Coach	$	6,914.7	100.0	%	$	5,598.5	100.0	%	$	5,095.3	100.0	%

Kate Spade
Handbags	$	594.9	55.3	%	$	623.0	52.1	%	$	721.0	54.0	%
Accessories	241.1		22.4		269.8		22.5		307.0		23.0
Footwear	48.1		4.5		55.2		4.6		57.4		4.3
Other	190.8		17.8		249.1		20.8		249.0		18.7
Total Kate Spade	$	1,074.9	100.0	%	$	1,197.1	100.0	%	$	1,334.4	100.0	%

Stuart Weitzman(1)	$	14.6	100.0	%	$	215.1	100.0	%	$	241.5	100.0	%

Tapestry
Handbags	$	4,611.2	57.6	%	$	3,846.3	54.9	%	$	3,610.9	54.1	%
Accessories	2,232.9		27.9		1,809.3		25.8		1,714.9		25.7
Footwear(1)	471.2		5.9		612.8		8.7		624.9		9.4
Other	688.9		8.6		742.3		10.6		720.5		10.8
Total Tapestry	$	8,004.2	100.0	%	$	7,010.7	100.0	%	$	6,671.2	100.0	%

(1)All Stuart Weitzman net sales are included within the Tapestry Footwear category. For the year ended June 27, 2026, Stuart Weitzman net sales were for the period prior to the sale on August 4, 2025. Refer to Note 5, "Acquisitions and Divestitures," for further information.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

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 2026
Net sales(1)	$	4,697.4	$	1,398.7	$	465.7	$	1,442.4	$	8,004.2
Long-lived assets	1,525.5		149.1		113.9		310.9		2,099.4
Fiscal 2025
Net sales(1)	$	4,208.1	$	1,059.7	$	514.8	$	1,228.1	$	7,010.7
Long-lived assets	1,431.7		142.3		105.1		257.7		1,936.8
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

(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, Taiwan, Hong Kong SAR, and Macao SAR.

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

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 27, 2026		June 28, 2025		June 29, 2024
	(millions, except per share data)
Net income (loss)	$	1,527.7	$	183.2	$	816.0

Weighted-average basic shares	204.0		216.8		229.2
Dilutive securities:
Effect of dilutive securities	6.2		5.7		4.0
Weighted-average diluted shares	210.2		222.5		233.2

Net income (loss) per share:
Basic	$	7.49	$	0.84	$	3.56
Diluted	$	7.27	$	0.82	$	3.50

At June 27, 2026 and June 28, 2025, there were no options to purchase shares of common stock outstanding but not included in the computation of diluted earnings per share with an exercise price greater than the average market price of the common shares.

TAPESTRY, INC.

Notes to Consolidated Financial Statements (Continued)

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.

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 27, 2026, June 28, 2025 and June 29, 2024, there were approximately 0.6 million, 0.7 million and 0.8 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. SUPPLEMENTAL BALANCE SHEET INFORMATION

The components of certain balance sheet accounts are as follows:


	June 27, 2026		June 28, 2025
	(millions)




Property and equipment
Land and building	$	8.1	$	8.1
Machinery and equipment	50.6		53.0
Software and computer equipment	542.5		564.1
Furniture and fixtures	302.8		288.1
Leasehold improvements	793.6		750.4
Construction in progress	68.7		40.8
Less: accumulated depreciation	(1,264.2)		(1,215.0)
Total property and equipment, net	$	502.1	$	489.5
Accrued liabilities
Payroll and employee benefits	$	238.1	$	224.4



Accrued freight	85.1		38.3
Accrued marketing	47.9		84.1
Other accrued liabilities	383.8		390.1
Total accrued liabilities	$	754.9	$	736.9
Other liabilities

Gross unrecognized tax benefit	115.7		110.7
Long-term derivative liabilities	224.5		256.1
Other	196.4		135.7
Total other liabilities	$	536.6	$	502.5

TAPESTRY, INC.

Schedule II — Valuation and Qualifying Accounts

For the Fiscal Years Ended June 27, 2026, June 28, 2025 and June 29, 2024


	Balance at Beginning of Year		Additions Charged to Costs and Expenses		Write-offs/ Allowances Taken		Other(1)		Balance at End of Year
	(millions)
Fiscal 2026
Allowance for credit losses	$	6.7	$	6.1	$	(5.7)	$	(1.0)	$	6.1
Allowance for returns	15.7		13.4		(6.6)		(7.4)		15.1
Allowance for markdowns	12.2		13.7		(11.3)		(4.2)		10.4
Valuation allowance	17.6		—		(5.6)		—		12.0
Total	$	52.2	$	33.2	$	(29.2)	$	(12.6)	$	43.6
Fiscal 2025
Allowance for credit losses(2)	$	6.9	$	3.6	$	(3.8)	$	—	$	6.7
Allowance for returns(2)	11.2		17.3		(12.8)		—		15.7
Allowance for markdowns(2)	9.6		17.4		(14.8)		—		12.2
Valuation allowance	32.1		—		(14.5)		—		17.6
Total	$	59.8	$	38.3	$	(45.9)	$	—	$	52.2
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

(1) Other represents balances related to the Stuart Weitzman Business which was sold on August 4, 2025. Refer to Note 5, "Acquisitions and Divestitures," for additional information.

(2) Fiscal 2025 balances at end of year for Allowance for credit losses, Allowance for returns and Allowance for markdowns include balances for the Stuart Weitzman Business of $1.0 million, $7.4 million, and $4.2 million, respectively, which are presented in the Consolidated Balance Sheet as Assets held for sale as of June 28, 2025. Refer to Note 5, "Acquisitions and Divestitures," for further information.

Previous: Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES