Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the Company's financial condition and results of operations should be read together with the Company's condensed consolidated financial statements and notes to those financial statements included elsewhere in this document. When used herein, the terms "the Company," "Tapestry," "we," "us" and "our" refer to Tapestry, Inc., including consolidated subsidiaries. References to "Coach," "Stuart Weitzman," "Kate Spade" or "kate spade new york" refer only to the referenced brand.

INTRODUCTION

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided as a supplement to the accompanying consolidated financial statements and notes thereto to help provide an understanding of our results of operations, financial condition, and liquidity. MD&A is organized as follows:

• Overview. This section provides a general description of the business and brands as well as the Company’s growth strategy.

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

• Results of operations*.* An analysis of our results of operations in the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 and first six months of fiscal 2025 compared to the first six months of fiscal 2024.

• Non-GAAP Measures. This section includes non-GAAP measures that are useful to investors and others in evaluating the Company’s ongoing operating and financial results in a manner that is consistent with management's evaluation of business performance and understanding how such results compare with the Company’s historical performance.

• Financial Condition. This section includes a discussion on liquidity and capital resources including an analysis of changes in cash flow as well as working capital and capital expenditures.

• Critical Accounting Policies and Estimates. This section includes any material changes or updates to critical accounting policies or estimates since the Annual Report on Form 10-K for fiscal 2024.

OVERVIEW

Tapestry, Inc. is a house of iconic accessories and lifestyle brands. Our global house of brands unites the magic of Coach, kate spade new york and Stuart Weitzman. Each of our brands are unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across business channels and geographies. We use our collective strengths to move our customers and empower our communities, to make the fashion industry more sustainable and to build a company that’s equitable, inclusive and diverse. Individually, our brands are iconic. Together, we can stretch what’s possible.

The Company has three reportable segments:

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

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

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

Each of our brands is unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across business channels and geographies. Our success does not depend solely on the performance of a single business channel, geographic area or brand.

Capri Holdings Limited Acquisition

On August 10, 2023, the Company entered into the Merger Agreement by and among the Company, Sunrise Merger Sub, Inc., a direct wholly owned subsidiary of Tapestry, and Capri. In order to finance the Capri Acquisition, on November 27, 2023, the Company issued $4.50 billion of U.S. dollar-denominated senior unsecured notes (the "Capri Acquisition USD Senior Notes") and €1.50 billion of Euro-denominated senior unsecured notes (the "Capri Acquisition EUR Senior Notes" and, together with the Capri Acquisition USD Senior Notes, the "Capri Acquisition Senior Notes") which, together with the $1.40 billion of delayed draw unsecured term loan facilities (the "Capri Acquisition Term Loan Facilities") executed on August 30, 2023, completed the expected financing for the Capri Acquisition. On April 22, 2024, the FTC filed a complaint against the Company and Capri in the United States District Court for the Southern District of New York seeking to enjoin the consummation of the Capri Acquisition, and on October 24, 2024, the Court issued its Opinion and Order granting the FTC's request for a preliminary injunction of the Merger, pending an administrative trial on the merits which was scheduled to begin on December 9, 2024. On October 28, 2024, the Company and Capri filed a Notice of Appeal with respect to the October 24, 2024 Opinion and Order. On November 6, 2024, the United States Court of Appeals for the Second Circuit entered an order setting an expedited briefing schedule for the appeal of the decision of the United States District Court of the Southern District of New York granting the preliminary injunction of the merger. On November 13, 2024, the Parties entered into a Termination Agreement (the “Termination Agreement”), pursuant to which the Parties agreed to terminate the Merger Agreement, including all schedules and exhibits thereto and all ancillary agreements contemplated thereby or entered pursuant thereto (the “Termination Date”), effective immediately. Pursuant to the Termination Agreement, the Company agreed to reimburse Capri for its expenses in an amount equal to $45.1 million in cash on November 14, 2024. The Parties also agreed to release each other from claims, demands, damages, actions, causes of action and liability relating to or arising out of the Merger Agreement and the transactions contemplated therein or thereby. Following termination of the Merger Agreement, the Parties and the FTC filed a stipulation withdrawing the appeal to the United States Court of Appeals for the Second Circuit on November 19, 2024 and the Second Circuit dismissed the appeal on November 20, 2024. The Parties and the FTC also filed a Joint Motion to dismiss the complaint in the administrative trial on November 15, 2024 and the FTC dismissed the complaint on December 4, 2024. On November 25, 2024, due to the termination of the Merger Agreement and pursuant to the terms of the indenture governing the Capri Acquisition Senior Notes, as supplemented, the Company redeemed all outstanding Capri Acquisition Senior Notes at a redemption price of 101% of the aggregate principal amount of such Capri Acquisition Senior Notes, plus accrued and unpaid interest to, but excluding, the date of redemption. In addition, the Capri Acquisition Term Loan Facilities were terminated concurrently with the execution of the Termination Agreement on November 13, 2024. Refer to Note 5, "Acquisitions" and Note 11, "Debt" for further information.

2025 Growth Strategy

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

• Building Lasting Customer Relationships: The Company’s brands aim to leverage Tapestry’s transformed business model to drive customer lifetime value through a combination of increased customer acquisition, retention and reactivation.

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

• Delivering Compelling Omni-Channel Experiences: The Company aims to extend its omni-channel leadership to meet the customer wherever they shop, delivering growth online and in stores.

• Powering Global Growth: The Company aims to support balanced growth across regions, prioritizing North America and China, its largest markets, while capitalizing on opportunities in under-penetrated geographies such as Southeast Asia and Europe.

GLOBAL ECONOMIC CONDITIONS AND INDUSTRY TRENDS

The environment in which we operate is subject to a number of different factors driving global consumer spending. Consumer preferences, macroeconomic conditions, foreign currency fluctuations and geopolitical events continue to impact overall levels of consumer travel and spending on discretionary items, with inconsistent patterns across business channels and geographies.

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

For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, see Part I, Item 1A. "Risk Factors" herein and as disclosed in our Annual Report on Form 10-K for the year ended June 29, 2024.

Current Macroeconomic Conditions and Outlook

During the second quarter of fiscal 2025, the macroeconomic environment remained challenging and volatile. Several organizations that monitor the world’s economy, including the International Monetary Fund, continue to forecast growth in the global economy, and remains unchanged since the first quarter of fiscal 2025. The forecast is below the historical growth average and is reflective of the current volatile environment, including tighter monetary and fiscal policies which have continued to moderate inflation, financial market volatility and the negative economic impacts of geopolitical instability in certain regions of the world.

In the second quarter of fiscal 2025, the U.S. Dollar continued to fluctuate as compared to foreign currencies in regions where we conduct our business. This trend has resulted in impacts to our business including, but not limited to, for the three months ended December 28, 2024, increased Net sales of $6.9 million, with no impact to either gross margin or operating margin. For the six months ended December 28, 2024, increased Net sales of $0.8 million, a positive impact to gross margin of approximately 20 basis points which benefited from the Company's hedging activity and approximately 10 basis point positive impact to operating margin.

Currency volatility, geopolitical instability and political uncertainty, such as the potential impact of policies implemented and that may be implemented by the new U.S. Presidential Administration, including, but not limited to, changes to trade agreements, tax legislation or duty rates may also contribute to a worsening of the macroeconomic environment or adversely impact our business. Since fiscal 2019, the U.S. and China have both imposed tariffs on the importation of certain product categories into the respective country, with limited progress in negotiations to reduce or remove the tariffs.

During fiscal 2024, certain geopolitical events have impacted trade routes in the Red Sea which have modestly increased inventory in-transit times and costs. The Company has taken actions to minimize any potential disruptions and at this time, does not anticipate material impact to our business or operating results. We will continue to closely monitor the situation.

In response to the current environment, the Company continues to take strategic actions considering near-term exigencies and remains committed to maintaining the health of the brands and business.

Tax Legislation

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, with tax provisions primarily focused on implementing a 15% CAMT on global adjusted financial statement income and a 1% excise tax on share repurchases. The CAMT was effective at the beginning of fiscal 2024 and did not have a material impact on the Company’s effective tax rate.

On December 12, 2022, the E.U. member states also reached an agreement to implement the OECD’s reform of international taxation known as GloBE, which broadly mirrors the Inflation Reduction Act by imposing a 15% global minimum tax on multinational companies. Based on the countries in which we do business that have enacted legislation effective January 1, 2025, we do not expect the impact of these changes to be material for fiscal 2025. A number of other countries are also implementing similar legislation with effective dates starting in 2026. As a result, we do expect a modest negative impact on the Company’s effective tax rate, however, this could change as other countries enact similar legislation and further guidance is released. We continue to closely monitor regulatory developments to assess potential impacts.

Seasonality

The Company's results are typically affected by seasonal trends. During the first fiscal quarter, we typically build inventory for the winter and holiday season. In the second fiscal quarter, working capital requirements are reduced substantially as we generate higher net sales and operating income, especially during the holiday season.

Fluctuations in net sales, operating income and operating cash flows of the Company in any fiscal quarter may be affected by the timing of wholesale shipments and other events affecting retail sales, including weather and macroeconomic events.

RESULTS OF OPERATIONS

SECOND QUARTER FISCAL 2025 COMPARED TO SECOND QUARTER FISCAL 2024

The following table summarizes results of operations for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024. All percentages shown in the table below and the discussion that follows have been calculated using unrounded numbers.

			Three Months Ended
			December 28, 2024												December 30, 2023												Variance
			(millions, except per share data)
			Amount						% of Net Sales						Amount						% of Net Sales						Amount						%
Net sales			$	2,195.4					100.0		%				$	2,084.5					100.0		%				$	110.9					5.3		%
Gross profit			1,633.1						74.4						1,493.2						71.6						139.9						9.4
SG&A expenses			1,140.3						51.9						1,045.6						50.2						94.7						9.1
Operating income (loss)			492.8						22.4						447.6						21.5						45.2						10.1
Loss on extinguishment of debt			120.1						5.5						—						—						120.1						NM
Interest expense, net			24.5						1.1						49.2						2.4						(24.7)						(50.1)
Other expense (income)			2.9						0.1						(4.7)						(0.2)						7.6						NM
Provision (benefit) for income taxes			34.9						1.6						80.8						3.9						(45.9)						(56.7)
Net income (loss)			310.4						14.1						322.3						15.5						(11.9)						(3.7)
Net income (loss) per share:
Basic			$	1.41											$	1.41											$	—					0.4
Diluted			$	1.38											$	1.39											$	(0.01)					(0.8)

NM - Not meaningful

GAAP to Non-GAAP Reconciliation

The Company’s reported results are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The reported results during the second quarter of fiscal 2025 and fiscal 2024 reflect certain items which affect the comparability of our results, as noted in the following table. Refer to "Non-GAAP Measures" herein for further discussion on the Non-GAAP measures.

Second Quarter Fiscal 2025 Items

			Three Months Ended December 28, 2024
			Items Affecting Comparability
			GAAP Basis (As Reported)						Acquisition Costs						Non-GAAP Basis (Excluding Items)
			(millions, except per share data)
Coach			$	620.9					$	—					$	620.9
Kate Spade			68.0						—						68.0
Stuart Weitzman			(1.0)						—						(1.0)
Corporate			(195.1)						(55.4)						(139.7)
Operating income (loss)			$	492.8					$	(55.4)					$	548.2
Net income (loss)			$	310.4					$	(139.8)					$	450.2
Net income (loss) per diluted common share			$	1.38					$	(0.62)					$	2.00

In the second quarter of fiscal 2025, the Company incurred charges as follows:

*•*Acquisition Costs - Total pre-tax charges of $197.6 million attributable to the Capri Acquisition. These charges include:

◦Loss on extinguishment of debt - $119.4 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 due to the termination of the Capri Acquisition agreement;

◦SG&A expenses: $55.4 million primarily related to expense reimbursement payment made to Capri and professional fees recorded within Corporate;

*◦*Interest expense, net: $22.8 million of financing related charges which primarily includes the net impact of the Capri Acquisition Senior Notes.

These actions taken together negatively impacted operating income by $55.4 million, increased Loss on extinguishment of debt by $119.4 million, increased interest expense by $22.8 million and reduced the provision for income tax by $57.8 million resulting in a net decrease in net income by $139.8 million or $0.62 per diluted share.

Supplemental Segment Data

			Three Months Ended December 28, 2024
			Items Affecting Comparability
			GAAP Basis (As Reported)						Acquisition Costs						Non-GAAP Basis (Excluding Items)
			(millions)
Coach			$	697.4					$	—					$	697.4
Kate Spade			205.6						—						205.6
Stuart Weitzman			42.2						—						42.2
Corporate			195.1						55.4						139.7
SG&A expenses			$	1,140.3					$	55.4					$	1,084.9

Second Quarter Fiscal 2024 Items

			Three Months Ended December 30, 2023
			Items Affecting Comparability
			GAAP Basis (As Reported)						Acquisition Costs						Non-GAAP Basis (Excluding Items)
			(millions, except per share data)
Coach			$	528.3					$	—					$	528.3
Kate Spade			72.1						—						72.1
Stuart Weitzman			1.4						—						1.4
Corporate			(154.2)						(28.3)						(125.9)
Operating income (loss)			$	447.6					$	(28.3)					$	475.9
Net income (loss)			$	322.3					$	(54.4)					$	376.7
Net income (loss) per diluted common share			$	1.39					$	(0.24)					$	1.63

In the second quarter of fiscal 2024, the Company incurred charges as follows:

• Acquisition Costs - Total pre-tax charges of $72.4 million attributable to the Capri Acquisition. These charges include $44.1 million of financing related charges recorded in Interest expense, net, which primarily includes Bridge Facility financing fees, and the net impact of the Capri Acquisition Senior Notes, and $28.3 million primarily related to professional fees recorded in SG&A expense within Corporate.

These actions taken together negatively impacted operating income by $28.3 million, increased interest expense by $44.1 million and reduced the provision for income tax by $18.0 million resulting in a net decrease in net income by $54.4 million or $0.24 per diluted share.

Supplemental Segment Data

			Three Months Ended December 30, 2023
			Items Affecting Comparability
			GAAP Basis (As Reported)						Acquisition Costs						Non-GAAP Basis (Excluding Items)
			(millions)
Coach			$	619.2					$	—					$	619.2
Kate Spade			222.3						—						222.3
Stuart Weitzman			49.9						—						49.9
Corporate			154.2						28.3						125.9
SG&A expenses			$	1,045.6					$	28.3					$	1,017.3

Tapestry, Inc. Summary – Second Quarter of Fiscal 2025

Currency Fluctuation Effects

The change in net sales for the second quarter of fiscal 2025 compared to the second quarter of fiscal 2024 has been presented both including and excluding currency fluctuation impacts. All percentages shown in the tables below and the discussion that follows have been calculated using unrounded numbers.

Net Sales

			Three Months Ended												Variance
			December 28, 2024						December 30, 2023						Amount						%						Constant Currency Change
			(millions)
Coach			$	1,709.3					$	1,541.9					$	167.4					10.9		%				10.5		%
Kate Spade			416.4						460.4						(44.0)						(9.6)						(9.7)
Stuart Weitzman			69.7						82.2						(12.5)						(15.2)						(15.5)
Total Tapestry			$	2,195.4					$	2,084.5					$	110.9					5.3						5.0

Net sales in the second quarter of fiscal 2025 increased 5.3% or $110.9 million to $2.20 billion. Excluding the impact of foreign currency, net sales increased by 5.0% or $104.0 million.

• Coach Net Sales increased 10.9% or $167.4 million to $1.71 billion in the second quarter of fiscal 2025. Excluding the impact of foreign currency, net sales increased 10.5% or $161.5 million. This increase in net sales was primarily due to an increase of $135.3 million in DTC sales driven by an increase in both e-commerce and store sales globally, mainly driven by North America, Europe and Greater China. The increase in net sales was also attributed to a $30.3 million increase in wholesale sales, mainly driven by North America and Europe.

*•*Kate Spade Net Sales decreased 9.6% or $44.0 million to $416.4 million in the second quarter of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 9.7% or $44.7 million. This decrease in net sales was due to a decrease of $49.3 million in DTC sales as a result of lower store and to a lesser extent, e-commerce sales. The decrease in DTC sales was partially offset by a $3.6 million increase in wholesale sales.

• Stuart Weitzman Net Sales decreased 15.2% or $12.5 million to $69.7 million in the second quarter of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 15.5% or $12.8 million.

Gross Profit

			Three Months Ended
			December 28, 2024												December 30, 2023												Variance
			(millions)
			Amount						% of Net Sales						Amount						% of Net Sales						Amount						%
Coach			$	1,318.3					77.1		%				$	1,147.5					74.4		%				$	170.8					14.9		%
Kate Spade			273.6						65.7						294.4						63.9						(20.8)						(7.1)
Stuart Weitzman			41.2						59.1						51.3						62.4						(10.1)						(19.7)
Tapestry			$	1,633.1					74.4						$	1,493.2					71.6						$	139.9					9.4

Gross profit increased 9.4% or $139.9 million to $1.63 billion in the second quarter of fiscal 2025 from $1.49 billion in the second quarter of fiscal 2024. Gross margin increased 280 basis points to 74.4% in the second quarter of fiscal 2025 from 71.6% in the second quarter of fiscal 2024. This increase in Gross margin was primarily attributed to net pricing improvements. Refer to "Current Macroeconomic Conditions and Outlook" for further information.

The Company includes inbound product-related transportation costs from our service providers within Cost of sales. The Company, similar to some companies, includes certain transportation-related costs due to our distribution network in SG&A expenses rather than in Cost of sales; for this reason, our gross margins may not be comparable to that of entities that include all costs related to their distribution network in Cost of sales.

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

			Three Months Ended
			December 28, 2024												December 30, 2023												Variance
			(millions)
			Amount						% of Net Sales						Amount						% of Net Sales						Amount						%
Coach			$	697.4					40.8		%				$	619.2					40.2		%				$	78.2					12.6		%
Kate Spade			205.6						49.3						222.3						48.2						(16.7)						(7.6)
Stuart Weitzman			42.2						60.6						49.9						60.7						(7.7)						(15.3)
Corporate**(1)(2)**			195.1						NA						154.2						NA						40.9						26.5
Tapestry			$	1,140.3					51.9						$	1,045.6					50.2						$	94.7					9.1

SG&A expenses increased 9.1% or $94.7 million to $1.14 billion in the second quarter of fiscal 2025 as compared to $1.05 billion in the second quarter of fiscal 2024. As a percentage of net sales, SG&A expenses increased to 51.9% during the second quarter of fiscal 2025 from 50.2% during the second quarter of fiscal 2024. Excluding items affecting comparability of $55.4 million in the second quarter of fiscal 2025, SG&A expenses increased 6.6% or $67.6 million to $1.08 billion from $1.02 billion in the second quarter of fiscal 2024. SG&A as a percentage of net sales increased 70 basis points to 49.4% as compared to 48.7% during the second quarter of fiscal 2024. This increase in SG&A as a percentage of net sales was primarily due to higher marketing spend.

(1)In the second quarter of fiscal 2025, Corporate incurred charges affecting comparability of $55.4 million. Excluding those items affecting comparability, SG&A expenses increased 11.0% or $13.8 million to $139.7 million in the second quarter of fiscal 2025 as compared to $125.9 million in the second quarter of fiscal 2024.

(2)Corporate expenses, which are included within SG&A expenses discussed above but are not directly attributable to a reportable segment.

Operating Income (Loss)

			Three Months Ended
			December 28, 2024												December 30, 2023												Variance
			(millions)
			Amount						% of Net Sales						Amount						% of Net Sales						Amount						%
Coach			$	620.9					36.4		%				$	528.3					34.3		%				$	92.6					17.5		%
Kate Spade			68.0						16.4						72.1						15.7						(4.1)						(5.6)
Stuart Weitzman			(1.0)						(1.5)						1.4						1.7						(2.4)						NM
Corporate			(195.1)						NA						(154.2)						NA						(40.9)						(26.5)
Tapestry			$	492.8					22.4						$	447.6					21.5						$	45.2					10.1

Operating income increased 10.1% or $45.2 million to $492.8 million in the second quarter of fiscal 2025 as compared to $447.6 million in the second quarter of fiscal 2024. Operating margin was 22.4% in the second quarter of fiscal 2025 as compared to 21.5% in the second quarter of fiscal 2024. Excluding items affecting comparability of $55.4 million in the second quarter of fiscal 2025, operating income increased $72.3 million to $548.2 million in the second quarter of fiscal 2025 from $475.9 million in the second quarter of fiscal 2024; and operating margin increased 210 basis points to 24.9% in the second quarter of fiscal 2025 as compared to 22.8% in the second quarter of fiscal 2024. This increase in operating margin was primarily attributed to a 280 basis points increase in gross margin partially offset by an increase of 70 basis points in SG&A as a percentage of sales.

• Coach Operating Income increased $92.6 million to $620.9 million in the second quarter of fiscal 2025, resulting in an operating margin increase of 210 basis points to 36.4%, as compared to $528.3 million and 34.3%, respectively, in the second quarter of fiscal 2024. This increase in operating margin was primarily attributed to:

◦Gross Margin, increased 270 basis points mainly due to net pricing improvements;

◦SG&A expenses as a percentage of net sales, increased 60 basis points mainly due to higher marketing spend, partially offset by leverage of occupancy costs due to higher net sales.

• Kate Spade Operating Income decreased $4.1 million to $68.0 million in the second quarter of fiscal 2025 and operating margin increased 70 basis points to 16.4%, as compared to $72.1 million and operating margin of 15.7% in the second quarter of fiscal 2024. This increase in operating margin was primarily attributed to:

◦Gross Margin, increased 180 basis points mainly due to net pricing improvements and lower duty expenses;

◦SG&A expenses as a percentage of net sales, increased 110 basis points mainly due to deleverage of marketing spend and compensation costs due to lower net sales.

• Stuart Weitzman Operating Income decreased $2.4 million to an operating loss of $(1.0) million in the second quarter of fiscal 2025, resulting in an operating margin decrease of 320 basis points to (1.5)%, as compared to operating income of $1.4 million and operating margin of 1.7% in the second quarter of fiscal 2024.

• Corporate Operating Expenses increased 26.5% or $40.9 million to $195.1 million in the second quarter of fiscal 2025. Excluding items affecting comparability, Corporate operating expenses increased $13.8 million to $139.7 million from $125.9 million in the second quarter of fiscal 2024. This increase in operating expenses was attributed to an increase in SG&A expenses primarily due to higher professional fees and increased compensation costs.

Loss on Extinguishment of Debt

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

Interest Expense, net

Net interest expense decreased $24.7 million to $24.5 million in the second quarter of fiscal 2025 as compared to $49.2 million in the second quarter of fiscal 2024. Excluding items affecting comparability, net interest expense decreased $3.4 million to $1.7 million from $5.1 million in the second quarter of fiscal 2024. This decrease in net interest expense was mainly due to a decrease in interest expense on the Term Loan due 2027, the favorable impact of the net investment hedges and higher interest income partially offset by higher interest expense on the 2030 and 2035 Senior Notes, Revolving Credit Facility and Term Loan Credit Agreement.

Other Expense (Income)

Other expense (income) increased $7.6 million to Other expense of $2.9 million in the second quarter of fiscal 2025 as compared to Other income of $4.7 million in the second quarter of fiscal 2024. This increase in Other expense was related to an increase in foreign exchange losses.

Provision (Benefit) for Income Taxes

The effective tax rate was 10.1% in the second quarter of fiscal 2025 as compared to 20.0% in the second quarter of fiscal 2024. Excluding items affecting comparability, the effective tax rate was 17.1% in the second quarter of fiscal 2025 as compared to 20.8% in the second quarter of fiscal 2024. This decrease in our effective tax rate was primarily attributable to the excess tax windfall related to the exercise of share-based compensation awards and geographic mix of earnings.

Net Income (Loss)

Net income decreased 3.7% or $11.9 million to $310.4 million in the second quarter of fiscal 2025 as compared to $322.3 million in the second quarter of fiscal 2024. Excluding items affecting comparability, net income increased 19.5% or $73.5 million to $450.2 million in the second quarter of fiscal 2025 from $376.7 million in the second quarter of fiscal 2024.

Net Income (Loss) per Share

Net income per diluted share was $1.38 in the second quarter of fiscal 2025 as compared to net income per diluted share of $1.39 in the second quarter of fiscal 2024. Excluding items affecting comparability, net income per diluted share increased $0.37 to $2.00 in the second quarter of fiscal 2025 from $1.63 in the second quarter of fiscal 2024, primarily due to higher net income and a decrease in shares outstanding.

RESULTS OF OPERATIONS

FIRST SIX MONTHS FISCAL 2025 COMPARED TO FIRST SIX MONTHS FISCAL 2024

The following table summarizes results of operations for the first six months of fiscal 2025 compared to the first six months of fiscal 2024. All percentages shown in the table below and the discussion that follows have been calculated using unrounded numbers.

			Six Months Ended
			December 28, 2024												December 30, 2023												Variance
			(millions, except per share data)
			Amount						% of Net Sales						Amount						% of Net Sales						Amount						%
Net sales			$	3,702.9					100.0		%				$	3,597.7					100.0		%				$	105.2					2.9		%
Gross profit			2,768.0						74.8						2,590.9						72.0						177.1						6.8
SG&A expenses			2,023.2						54.6						1,890.1						52.5						133.1						7.0
Operating income (loss)			744.8						20.1						700.8						19.5						44.0						6.3
Loss on extinguishment of debt			120.1						3.2						—						—						120.1						NM
Interest expense, net			55.2						1.5						62.5						1.7						(7.3)						(11.6)
Other expense (income)			(1.5)						—						(3.3)						(0.1)						1.8						52.8
Provision (benefit) for income taxes			74.0						2.0						124.3						3.5						(50.3)						(40.4)
Net income (loss)			497.0						13.4						517.3						14.4						(20.3)						(3.9)
Net income (loss) per share:
Basic			$	2.21											$	2.26											$	(0.05)					(2.2)
Diluted			$	2.17											$	2.23											$	(0.06)					(2.8)

NM - Not meaningful

GAAP to Non-GAAP Reconciliation

The Company’s reported results are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The reported results during the first six months of fiscal 2025 and fiscal 2024 reflect certain items which affect the comparability of our results, as noted in the following table. Refer to "Non-GAAP Measures" herein for further discussion on the Non-GAAP measures.

First Six Months of Fiscal 2025 Items

			Six Months Ended December 28, 2024
			Items Affecting Comparability
			GAAP Basis (As Reported)						Acquisition Costs						Non-GAAP Basis (Excluding Items)
			(millions, except per share data)
Coach			$	1,007.5					$	—					$	1,007.5
Kate Spade			95.0						—						95.0
Stuart Weitzman			(8.4)						—						(8.4)
Corporate			(349.3)						(88.8)						(260.5)
Operating income (loss)			$	744.8					$	(88.8)					$	833.6
Net income (loss)			$	497.0					$	(194.8)					$	691.8
Net income (loss) per diluted common share			$	2.17					$	(0.85)					$	3.02

In the first six months of fiscal 2025, the Company incurred charges as follows:

• Acquisition Costs - Total pre-tax charges of $268.4 million attributable to the Capri Acquisition. These charges include:

◦Loss on extinguishment of debt - $119.4 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 first six months of fiscal 2025 due to the termination of the Capri Acquisition agreement;

◦SG&A expenses: $88.8 million primarily related to expense reimbursement payment made to Capri and professional fees recorded within Corporate;

*◦*Interest expense, net: $60.2 million of financing related charges which primarily includes the net impact of the Capri Acquisition Senior Notes.

These actions taken together negatively impacted operating income by $88.8 million, increased Loss on extinguishment of debt by $119.4 million, increased interest expense by $60.2 million and reduced the provision for income tax by $73.6 million resulting in a net decrease in net income by $194.8 million or $0.85 per diluted share.

Supplemental Segment Data

			Six Months Ended December 28, 2024
			Items Affecting Comparability
			GAAP Basis (As Reported)						Acquisition Costs						Non-GAAP Basis (Excluding Items)
			(millions)
Coach			$	1,226.9					$	—					$	1,226.9
Kate Spade			368.2						—						368.2
Stuart Weitzman			78.8						—						78.8
Corporate			349.3						88.8						260.5
SG&A expenses			$	2,023.2					$	88.8					$	1,934.4

First Six Months of Fiscal 2024 Items

			Six Months Ended December 30, 2023
			Items Affecting Comparability
			GAAP Basis (As Reported)						Acquisition Costs						Non-GAAP Basis (Excluding Items)
			(millions, except per share data)
Coach			$	899.6					$	—					$	899.6
Kate Spade			98.7						—						98.7
Stuart Weitzman			(7.2)						—						(7.2)
Corporate			(290.3)						(47.9)						(242.4)
Operating income (loss)			$	700.8					$	(47.9)					$	748.7
Net income (loss)			$	517.3					$	(75.7)					$	593.0
Net income (loss) per diluted common share			$	2.23					$	(0.33)					$	2.56

In the first six months of fiscal 2024, the Company incurred charges as follows:

*•*Acquisition Costs - Total pre-tax charges of $98.7 million attributable to the Capri Acquisition. These charges include $50.8 million of financing related charges recorded in Interest expense, net, which primarily includes Bridge Facility financing fees, and the net impact of the Capri Acquisition Senior Notes, and $47.9 million primarily related to professional fees recorded in SG&A expense within Corporate.

These actions taken together negatively impacted operating income by $47.9 million, increased interest expense by $50.8 million and reduced the provision for income tax by $23.0 million resulting in a net decrease in net income by $75.7 million or $0.33 per diluted share.

Supplemental Segment Data

			Six Months Ended December 30, 2023
			Items Affecting Comparability
			GAAP Basis (As Reported)						Acquisition Costs						Non-GAAP Basis (Excluding Items)
			(millions)
Coach			$	1,115.5					$	—					$	1,115.5
Kate Spade			394.6						—						394.6
Stuart Weitzman			89.7						—						89.7
Corporate			290.3						47.9						242.4
SG&A expenses			$	1,890.1					$	47.9					$	1,842.2

Tapestry, Inc. Summary – First Six Months of Fiscal 2025

Currency Fluctuation Effects

The change in net sales for the first six months of fiscal 2025 compared to the first six months of fiscal 2024 has been presented both including and excluding currency fluctuation impacts. All percentages shown in the tables below and the discussion that follows have been calculated using unrounded numbers.

Net Sales

			Six Months Ended												Variance
			December 28, 2024						December 30, 2023						Amount						%						Constant Currency Change
			(millions)
Coach			$	2,879.9					$	2,699.3					$	180.6					6.7		%				6.7		%
Kate Spade			699.6						763.6						(64.0)						(8.4)						(8.3)
Stuart Weitzman			123.4						134.8						(11.4)						(8.5)						(8.7)
Total Tapestry			$	3,702.9					$	3,597.7					$	105.2					2.9						2.9

Net sales in the first six months of fiscal 2025 increased 2.9% or $105.2 million to $3.70 billion. Excluding the impact of foreign currency, net sales increased by 2.9% or $104.4 million.

• Coach Net Sales increased 6.7% or $180.6 million to $2.88 billion in the first six months of fiscal 2025. Excluding the impact of foreign currency, net sales increased 6.7% or $179.7 million. This increase in net sales was primarily due to an increase of $168.1 million in DTC sales driven by an increase in both e-commerce and store sales, mainly driven by North America and Europe. The increase in net sales was also attributed to a $18.5 million increase in wholesale sales, mainly driven by Europe and Greater China.

*•*Kate Spade Net Sales decreased 8.4% or $64.0 million to $699.6 million in the first six months of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 8.3% or $63.6 million. This decrease in net sales was due to a decrease of $73.6 million in DTC sales as a result of lower store and to a lesser extent, e-commerce sales. The decrease in DTC sales was partially offset by an increase of $8.5 million in wholesale sales.

*•*Stuart Weitzman Net Sales decreased 8.5% or $11.4 million to $123.4 million in the first six months of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 8.7% or $11.7 million.

Gross Profit

			Six Months Ended
			December 28, 2024												December 30, 2023												Variance
			(millions)
			Amount						% of Net Sales						Amount						% of Net Sales						Amount						%
Coach			$	2,234.4					77.6		%				$	2,015.1					74.7		%				$	219.3					10.9		%
Kate Spade			463.2						66.2						493.3						64.6						(30.1)						(6.1)
Stuart Weitzman			70.4						57.0						82.5						61.2						(12.1)						(14.7)
Tapestry			$	2,768.0					74.8						$	2,590.9					72.0						$	177.1					6.8

Gross profit increased 6.8% or $177.1 million to $2.77 billion in the first six months of fiscal 2025 from $2.59 billion in the first six months of fiscal 2024. Gross margin increased 280 basis points to 74.8% in the first six months of fiscal 2025 from 72.0% in the first six months of fiscal 2024. This increase in Gross margin was primarily attributed to net pricing improvements and lower freight costs. Refer to "Current Macroeconomic Conditions and Outlook" for further information.

The Company includes inbound product-related transportation costs from our service providers within Cost of sales. The Company, similar to some companies, includes certain transportation-related costs due to our distribution network in SG&A expenses rather than in Cost of sales; for this reason, our gross margins may not be comparable to that of entities that include all costs related to their distribution network in Cost of sales.

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

			Six Months Ended
			December 28, 2024												December 30, 2023												Variance
			(millions)
			Amount						% of Net Sales						Amount						% of Net Sales						Amount						%
Coach			$	1,226.9					42.5		%				$	1,115.5					41.3		%				$	111.4					10.0		%
Kate Spade			368.2						52.5						394.6						51.6						(26.4)						(6.7)
Stuart Weitzman			78.8						63.8						89.7						66.5						(10.9)						(12.1)
Corporate**(1)(2)**			349.3						NA						290.3						NA						59.0						20.3
Tapestry			$	2,023.2					54.6						$	1,890.1					52.5						$	133.1					7.0

SG&A expenses increased 7.0% or $133.1 million to $2.02 billion in the first six months of fiscal 2025 as compared to $1.89 billion in the first six months of fiscal 2024. As a percentage of net sales, SG&A expenses increased to 54.6% during the first six months of fiscal 2025 from 52.5% during the first six months of fiscal 2024. Excluding items affecting comparability of $88.8 million in the first six months of fiscal 2025, SG&A expenses increased 5.0% or $92.2 million to $1.93 billion from $1.84 billion in the first six months of fiscal 2024. SG&A expenses as a percentage of net sales increased 110 basis points to 52.3% compared to 51.2% in the first six months of fiscal 2024. This increase in SG&A as a percentage of net sales was primarily due to higher marketing spend.

(1)In the first six months of fiscal 2025, Corporate incurred charges affecting comparability of $88.8 million. Excluding those items affecting comparability, SG&A expenses increased 7.5% or $18.1 million to $260.5 million in the first six months of fiscal 2025 as compared to $242.4 million in the first six months of fiscal 2024.

(2)Corporate expenses, which are included within SG&A expenses discussed above but are not directly attributable to a reportable segment.

Operating Income (Loss)

			Six Months Ended
			December 28, 2024												December 30, 2023												Variance
			(millions)
			Amount						% of Net Sales						Amount						% of Net Sales						Amount						%
Coach			$	1,007.5					35.0		%				$	899.6					33.3		%				$	107.9					12.0		%
Kate Spade			95.0						13.6						98.7						12.9						(3.7)						(3.7)
Stuart Weitzman			(8.4)						(6.8)						(7.2)						(5.3)						(1.2)						(17.4)
Corporate			(349.3)						NA						(290.3)						NA						(59.0)						(20.3)
Tapestry			$	744.8					20.1						$	700.8					19.5						$	44.0					6.3

Operating income increased $44.0 million to $744.8 million in the first six months of fiscal 2025 as compared to $700.8 million in the first six months of fiscal 2024. Operating margin increased to 20.1% in the first six months of fiscal 2025 as compared to 19.5% in the first six months of fiscal 2024. Excluding items affecting comparability of $88.8 million in the first six months of fiscal 2025, operating income increased $84.9 million to $833.6 million from $748.7 million in the first six months of fiscal 2024; and operating margin increased 170 basis points to 22.5% in the first six months of fiscal 2025 as compared to 20.8% in the first six months of fiscal 2024. This increase in operating margin was primarily attributed to a 280 basis points increase in gross margin partially offset by an increase of 110 basis points in SG&A as a percentage of sales.

• Coach Operating Income increased $107.9 million to $1.01 billion in the first six months of fiscal 2025, resulting in an operating margin increase of 170 basis points to 35.0%, as compared to $899.6 million and 33.3%, respectively, in the first six months of fiscal 2024. This increase in operating margin was primarily attributed to:

◦Gross Margin, increased 290 basis points mainly due to net pricing improvements;

◦SG&A expenses as a percentage of net sales, increased 120 basis points mainly due to higher marketing spend and an increase in distribution costs.

• Kate Spade Operating Income decreased $3.7 million to $95.0 million in the first six months of fiscal 2025, resulting in an operating margin increase of 70 basis points to 13.6%, as compared to $98.7 million and 12.9%, respectively, in the first six months of fiscal 2024. This decrease in operating margin was primarily attributed to:

◦Gross Margin, increased 160 basis points mainly due to lower duty expenses and lower freight costs;

◦SG&A expenses as a percentage of net sales, increased 90 basis points mainly due to deleverage of marketing spend and compensation costs due to lower net sales.

• Stuart Weitzman Operating Loss increased $1.2 million to a loss of $8.4 million in the first six months of fiscal 2025, resulting in an operating margin decrease of 150 basis points to (6.8)%, as compared to an operating loss of $7.2 million in the first six months of fiscal 2024 and an operating margin of (5.3)%.

• Corporate Operating Expenses increased 20.3% or $59.0 million to $349.3 million in the first six months of fiscal 2025. Excluding items affecting comparability, Corporate operating expenses increased $18.1 million to $260.5 million from $242.4 million in the first six months of fiscal 2024. This increase in operating expenses was attributed to an increase in SG&A expenses primarily due to higher professional fees, higher compensation costs and higher information technology costs, partially offset by lower occupancy costs.

Loss on Extinguishment of Debt

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

Interest Expense, net

Net Interest expense decreased $7.3 million to $55.2 million in the first six months of fiscal 2025 as compared to $62.5 million in the first six months of fiscal 2024. Excluding items affecting comparability, net interest expense decreased $16.7 million to Interest income of $5.0 million from Interest expense of $11.7 million in the first six months of fiscal 2024. This decrease in net interest expense was mainly due to a decrease in interest expense on the Term Loan due 2027 and higher interest income partially offset by higher interest expense on the 2030 and 2035 Senior Notes, Revolving Credit Facility and Term Loan Credit Agreement.

Other Expense (Income)

Other expense (income) decreased $1.8 million to Other income of $1.5 million in the first six months of fiscal 2025 as compared to Other income of $3.3 million in the first six months of fiscal 2024. This decrease in Other income was related to a decrease in foreign exchange gains.

Provision (Benefit) for Income Taxes

The effective tax rate was 13.0% in the first six months of fiscal 2025 as compared to 19.4% in the first six months of fiscal 2024. Excluding items affecting comparability, the effective tax rate was 17.6% in the first six months of fiscal 2025 as compared to 19.9% in the first six months of fiscal 2024. This decrease in our effective tax rate was primarily attributable to the geographic mix of earnings and excess tax windfall related to the exercise of share-based compensation awards.

Net Income (Loss)

Net income decreased 3.9% or $20.3 million to $497.0 million in the first six months of fiscal 2025 as compared to $517.3 million in the first six months of fiscal 2024. Excluding items affecting comparability, net income increased $98.8 million to $691.8 million in the first six months of fiscal 2025 from $593.0 million in the first six months of fiscal 2024.

Net Income (Loss) per Share

Net income per diluted share was $2.17 in the first six months of fiscal 2025 as compared to net income per diluted share of $2.23 in the first six months of fiscal 2024. Excluding items affecting comparability, net income per diluted share increased $0.46 to $3.02 in the first six months of fiscal 2025 from $2.56 in the first six months of fiscal 2024, primarily due to higher net income and a decrease in shares outstanding.

NON-GAAP MEASURES

The Company’s reported results are presented in accordance with GAAP. The reported SG&A expenses, Operating income, Interest expense, Provision for income taxes, Net income and earnings per diluted share in the second quarter and first six months of fiscal 2025 and fiscal 2024 and the reported Loss on extinguishment of debt in the second quarter and first six months of fiscal 2025, reflect certain items affecting comparability, including the impact of Acquisition costs. As a supplement to the Company's reported results, these metrics are also reported on a non-GAAP basis to exclude the impact of these items along with a reconciliation to the most directly comparable GAAP measures.

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

The Company operates on a global basis and reports financial results in U.S. dollars in accordance with GAAP. Fluctuations in foreign currency exchange rates can affect the amounts reported by the Company in U.S. dollars with respect to its foreign revenues and profit. Accordingly, certain material increases and decreases in operating results for the Company and its segments have been presented both including and excluding currency fluctuation effects. These effects occur from translating foreign-denominated amounts into U.S. dollars and comparing to the same period in the prior fiscal year. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. The Company calculates constant currency revenue results by translating current period revenue in local currency using the prior year period's currency conversion rate.

We believe these non-GAAP measures are useful to investors and others in evaluating the Company’s ongoing operating and financial results in a manner that is consistent with management's evaluation of business performance and understanding how such results compare with the Company’s historical performance. Additionally, we believe presenting certain increases and decreases in constant currency provides a framework for assessing the performance of the Company's business outside the United States and helps investors and analysts understand the effect of significant year-over-year currency fluctuations. We believe excluding these items assists investors and others in developing expectations of future performance.

By providing the non-GAAP measures, as a supplement to GAAP information, we believe we are enhancing investors’ understanding of our business and our results of operations. The non-GAAP financial measures are limited in their usefulness and should be considered in addition to, and not in lieu of, GAAP financial measures. Further, these non-GAAP measures may be unique to the Company, as they may be different from non-GAAP measures used by other companies.

For a detailed discussion on these non-GAAP measures, see the GAAP to Non-GAAP Reconciliation discussions above in this Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations."

FINANCIAL CONDITION

Cash Flows

						Six Months Ended
						December 28, 2024						December 30, 2023						Change
						(millions)
Net cash provided by (used in) operating activities						$	625.5					$	901.8					$	(276.3)
Net cash provided by (used in) investing activities						979.4						(655.0)						1,634.4
Net cash provided by (used in) financing activities						(6,775.8)						5,809.2						(12,585.0)
Effect of exchange rate changes on cash and cash equivalents						12.3						51.0						(38.7)
Net increase (decrease) in cash and cash equivalents						$	(5,158.6)					$	6,107.0					$	(11,265.6)

The Company’s cash and cash equivalents decreased by $5.16 billion in the first six months of fiscal 2025 as compared to an increase of $6.11 billion in the first six months of fiscal 2024, as discussed below.

Net cash provided by (used in) operating activities

Net cash provided by operating activities decreased $276.3 million primarily due to changes in operating assets and liabilities of $259.3 million, lower net income of $20.3 million, as well as higher impact of non-cash adjustments of $3.3 million.

The $259.3 million decrease in changes in operating asset and liability balances were primarily driven by the following:

• Inventories were a use of cash of $116.7 million in the first six months of fiscal 2025 compared to a source of cash of $103.8 million in the first six months of fiscal 2024, primarily driven by increased inventory purchases for Coach to support continued sales growth.

• Accrued liabilities were a use of cash of $11.7 million in the first six months of fiscal 2025 compared to a source of cash of $87.0 million in the first six months of fiscal 2024, primarily driven by a decrease in accrued interest due to the repayment of the Capri Acquisition Senior Notes, partially offset by an increase in accrued advertising.

• Other liabilities were a source of cash of $8.8 million in the first six months of fiscal 2025 compared to a use of cash of $29.8 million in the first six months of fiscal 2024, primarily driven by the timing of transfer tax payments.

Net cash provided by (used in) investing activities

Net cash provided by investing activities in the first six months of fiscal 2025 was $979.4 million as compared to a use of cash of $655.0 million in the first six months of fiscal 2024, resulting in a $1.63 billion increase in net cash provided by investing activities.

The $979.4 million of cash provided in the first six months of fiscal 2025 was primarily due to proceeds from maturities and sales of investments of $2.92 billion, partially offset by purchases of investments of $1.89 billion, mainly related to the proceeds of the Capri Acquisition Senior Notes.

The $655.0 million of cash used in the first six months of fiscal 2024 was primarily due to purchases of investments of $611.3 million, from the proceeds of the senior unsecured notes issued to fund the Capri Acquisition.

Net cash provided by (used in) financing activities

Net cash used in financing activities was $6.78 billion in the first six months of fiscal 2025 as compared to a source of cash of $5.81 billion in the first six months of fiscal 2024, resulting in a net increase of cash used in financing activities of $12.59 billion.

The $6.78 billion of cash used in the first six months of fiscal 2025 was primarily due to the repayment of debt of $6.86 billion, which mainly included the Capri Acquisition Senior Notes, use of cash of $2.01 billion under the Company's accelerated share repurchase program partially offset by proceeds from the issuance of debt of $2.25 billion.

The $5.81 billion source of cash in the first six months of fiscal 2024 was primarily due to proceeds from the issuance of senior unsecured notes to fund the Capri Acquisition of $6.09 billion, partially offset by dividend payments of $160.4 million, as well as payment of debt issuance costs of $78.2 million.

Effect of exchange rate changes on cash and cash equivalents

Effect of exchange rate changes on cash and cash equivalents was $12.3 million as compared to $51.0 million in the first six months of fiscal 2024, primarily driven by the impact of changes in the exchange rate of the United States Dollar against the Euro on the Capri Acquisition EUR Senior Notes.

Financial Condition

The following table presents our financial condition as of December 28, 2024 and June 29, 2024:

			December 28, 2024						June 29, 2024						Change
			(millions)
Cash and cash equivalents**(1)**			$	983.4					$	6,142.0					$	(5,158.6)
Short-term investments**(1)**			19.6						1,061.8						(1,042.2)
Current debt**(2)**			(303.4)						(303.4)						—
Long-term debt**(2)**			(2,377.4)						(6,937.2)						4,559.8
Total, net			$	(1,677.8)					$	(36.8)					$	(1,641.0)

(1) As of December 28, 2024, approximately 23% of our cash and short-term investments were held outside the United States.

(2) Refer to Note 11, "Debt" for discussion of the carrying values of our debt.

Sources of Liquidity

Our primary sources of liquidity are the cash flows generated from our operations, our cash and cash equivalents and short-term investments, availability under our credit facilities and other available financing options.

The following table presents the total availability, borrowings outstanding and remaining availability under our credit facilities as of December 28, 2024:

			Total Availability						Borrowings Outstanding						Remaining Availability
			(millions)
Revolving Facility**(1)**			$	2,000.0					$	—					$	2,000.0
China Credit Facility**(1)(2)**			34.0						—						34.0
Total			$	2,034.0					$	—					$	2,034.0

(1) Refer to Note 11, "Debt" for further information on these instruments.

(2) The carrying amounts of the China Credit Facility include the impact of changes in the exchange rate of the United States Dollar against the RMB.

We believe that our Revolving Credit Facility is adequately diversified with no undue concentrations in any one financial institution. As of December 28, 2024, there were 18 financial institutions participating in the Revolving Credit Facility, with no one participant maintaining a combined maximum commitment percentage in excess of 10%. We have no reason to believe at this time that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the facility in the event we elect to draw funds in the foreseeable future.

We have the ability to draw on our credit facilities or access other sources of financing options available to us in the credit and capital markets for, among other things, acquisition or integration-related costs, our restructuring initiatives, settlement of a material contingency, or a material adverse business or macroeconomic development, as well as for other general corporate business purposes.

Management believes that cash flows from operations, access to the credit and capital markets and our credit lines, on-hand cash and cash equivalents and our investments will provide adequate funds to support our operating, capital and debt service requirements for fiscal 2025 and beyond. There can be no assurance that any such capital will be available to the Company on acceptable terms or at all. Our ability to fund working capital needs, planned capital expenditures and scheduled debt payments, as well as to comply with all of the financial covenants under our debt agreements, depends on future operating performance and cash flow. This future operating performance and cash flow are subject to prevailing economic conditions, and to financial, business and other factors, some of which are beyond the Company's control.

Reference should be made to our most recent Annual Report on Form 10-K and other filings with the SEC for additional information regarding liquidity and capital resources.

Supply Chain Finance

To improve our working capital efficiency, we make 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. We do 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. Refer to Note 2, "Basis of Presentation and Organization," for additional information.

Capital Expenditures

During the three and six months ended December 28, 2024, capital expenditures and cloud computing implementation costs were $39.2 million and $68.8 million, respectively. The Company expects total fiscal 2025 capital expenditures and cloud computing cost to be approximately $170 million. Certain cloud computing implementation costs are recognized within Prepaid expenses and Other assets on the Condensed Consolidated Balance Sheets.

Share Repurchase Program

On November 13, 2024, the Board of Directors of the Company (the "Board") authorized the Company to repurchase up to $2.00 billion of outstanding shares of its common stock (the "2025 Share Repurchase Program"). Under the 2025 Share Repurchase Program, the Company may repurchase shares on the open market, in privately negotiated transactions or in other transactions, including accelerated share repurchase programs. On November 21, 2024, the Company entered into accelerated share repurchase agreements (the “ASR Agreements”) with Bank of America, N.A. and Morgan Stanley & Co. LLC (the “Dealers”) to repurchase an aggregate of up to $2.00 billion of the Company’s shares of common stock. The $2.00 billion authorized for purchases under the 2025 Share Repurchase Program is supplemental to the $800.0 million remaining in authorized purchases under the share repurchase program authorized by the Board in May 2022 (the "2022 Share Repurchase Program").

Under the ASR Agreements, the Company paid $2.00 billion to the Dealers and received an initial delivery of 28,363,766 shares of the Company's common stock on November 26, 2024 at a price of $56.41 per share, representing approximately 80 percent of the aggregate purchase price. The total number of shares purchased by the Company pursuant to the ASR Agreements will be based on the volume-weighted average price of the Company's common stock on specified dates during the term of each of the ASR Agreements, less a discount, and subject to adjustments pursuant to the terms and conditions of the ASR Agreements. The final settlement of the transactions under the ASR Agreements is expected to occur no later than the first quarter of fiscal 2026. The ASR agreements are accounted for as a share purchase transaction and forward stock purchase agreement indexed to our common stock. The shares received under the ASR agreements reduced the number of ordinary shares outstanding as of December 28, 2024 by 28,363,766 shares initially purchased. Repurchased shares of common stock will become authorized but unissued shares. As of December 28, 2024 the Company had $800.0 million of additional shares available to be repurchased as authorized under the 2022 Share Repurchase Program and no remaining availability to repurchase shares under the 2025 Share Repurchase Program.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's significant accounting policies are described in Note 3 to the audited consolidated financial statements in our Annual Report on Form 10-K for fiscal 2024. Our discussion of results of operations and financial condition relies on our condensed consolidated financial statements that are prepared based on certain critical accounting policies that require management to make judgments and estimates which are subject to varying degrees of uncertainty. While we believe that these accounting policies are based on sound measurement criteria, actual future events can and often do result in outcomes that can be materially different from these estimates or forecasts.

For a complete discussion of our critical accounting policies and estimates, see the "Critical Accounting Policies and Estimates" section of the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal 2024. As of December 28, 2024, there have been no material changes to any of the critical accounting policies.

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. In all fiscal years, the fair values of our Coach brand reporting units significantly exceeded their respective carrying values. The fair values of the Kate Spade brand reporting unit and indefinite-lived brand as of the fiscal 2024 testing date exceeded their carrying values by approximately 20% and 55%, respectively. Several factors could impact the Kate Spade brand's ability to achieve expected future cash flows, including the optimization of the store fleet productivity, the success of international expansion strategies, the impact of promotional activity, continued economic volatility and potential operational challenges related to macroeconomic factors, the reception of new collections in all channels, and other initiatives aimed at increasing profitability of the business. Given the relatively small excess of fair value over carrying value as noted above, if profitability trends decline during fiscal 2025 from those that are expected, it is possible that an interim test, or our annual impairment test, could result in an impairment of those assets.