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

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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 third quarter of fiscal 2025 compared to the third quarter of fiscal 2024 and first nine months of fiscal 2025 compared to the first nine 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 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. 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.

Stuart Weitzman Business Divestiture

On February 16, 2025, the Company entered into a Purchase Agreement with Caleres pursuant to which the Company will sell the Stuart Weitzman Business (as defined below). The Purchaser will acquire 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 total cash consideration of $105.0 million (the "Purchase Price"). The Purchase Price will be subject to customary adjustments for cash, indebtedness, net working capital and transaction expenses. The transaction is expected to close in the summer of 2025, subject to customary closing conditions (the "Stuart Weitzman Business Divestiture"). Refer to Note 5, "Acquisitions and Divestitures," for further information.

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 Divestitures" 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

Currency volatility, geopolitical instability and political uncertainty, such as the impact of policies implemented and that may be implemented by the 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.

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. At the time of this report, the long-term impact which the tariffs or other trade policies may have on our business is uncertain as the outcome is dependent on global trade negotiations. As a result of the Company's actions to accelerate inventory purchases and based on current trends of the business, we do not expect a meaningful negative impact to our results of operations in fiscal 2025.

However, there could be a material negative impact to our results of operations in fiscal 2026 and beyond depending on the outcome of trade negotiations. The Company is prepared to take actions to mitigate this negative impact as changes in trade relations, economic and monetary policies are made clear.

The macroeconomic environment remained challenging and volatile during the third quarter of fiscal 2025. Several organizations that monitor the world’s economy, including the International Monetary Fund, continue to forecast growth in the global economy. Some of these organizations have recently revised the forecast downwards since the second quarter of fiscal 2025. The forecast is below the historical growth average and is reflective of the current volatile environment, including escalation of trade tensions, 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 third 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 March 29, 2025, decreased Net sales of $22.5 million, no impact to gross margin and approximately 20 basis point negative impact to operating margin. For the nine months ended March 29, 2025, decreased Net sales of $21.6 million, a positive impact to gross margin of approximately 10 basis points which benefited from the Company's hedging activity and no impact to operating margin.

In response to the current environment, the Company is closely monitoring changes and 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

THIRD QUARTER FISCAL 2025 COMPARED TO THIRD QUARTER FISCAL 2024

The following table summarizes results of operations for the third quarter of fiscal 2025 compared to the third 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
	March 29, 2025				March 30, 2024				Variance
	(millions, except per share data)
	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Net sales	$	1,584.6	100.0	%	$	1,482.4	100.0	%	$	102.2	6.9	%
Gross profit	1,205.8		76.1		1,107.4		74.7		98.4		8.9
SG&A expenses	952.1		60.1		903.1		60.9		49.0		5.4
Operating income (loss)	253.7		16.0		204.3		13.8		49.4		24.2

Interest expense, net	15.4		1.0		32.0		2.2		(16.6)		(52.0)
Other expense (income)	(0.8)		(0.1)		2.8		0.2		(3.6)		NM
Provision (benefit) for income taxes	35.8		2.3		30.1		2.0		5.7		19.0
Net income (loss)	203.3		12.8		139.4		9.4		63.9		45.9
Net income (loss) per share:
Basic	$	0.98			$	0.61			$	0.37	61.5
Diluted	$	0.95			$	0.60			$	0.35	59.8

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 third 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.

During the third quarter of fiscal 2025, we updated the title of the items affecting comparability related to "Acquisition Costs" to "Acquisition and Divestiture Costs" to capture the costs related to the terminated Capri Acquisition as well as the Stuart Weitzman Business Divestiture.

Third Quarter Fiscal 2025 Items


	Three Months Ended March 29, 2025
	Items Affecting Comparability
	GAAP Basis (As Reported)		Acquisition and Divestiture Costs		Organizational Efficiency Costs		Non-GAAP Basis (Excluding Items)
	(millions, except per share data)











Coach	$	420.1	$	—	$	—	$	420.1
Kate Spade	—		—		(2.8)		2.8
Stuart Weitzman	(5.6)		(0.6)		—		(5.0)
Corporate	(160.8)		(18.0)		(2.2)		(140.6)
Operating income (loss)	$	253.7	$	(18.6)	$	(5.0)	$	277.3




Net income (loss)	$	203.3	$	(12.9)	$	(3.6)	$	219.8
Net income (loss) per diluted common share	$	0.95	$	(0.06)	$	(0.02)	$	1.03

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

Acquisition and Divestiture Costs - Total pre-tax charges of $18.6 million primarily due to the loss on business held for sale, store impairment, professional fees and share-based compensation expense related to the Stuart Weitzman Business Divestiture.
Organizational Efficiency Costs - Total pre-tax charges of $5.0 million primarily related to severance costs and technology costs.

These actions taken together negatively impacted operating income by $23.6 million and reduced the provision for income tax by $7.1 million resulting in a net decrease in net income by $16.5 million or $0.08 per diluted share.

Supplemental Segment Data


	Three Months Ended March 29, 2025
	Items Affecting Comparability
	GAAP Basis (As Reported)		Acquisition and Divestiture Costs		Organizational Efficiency Costs		Non-GAAP Basis (Excluding Items)
	(millions)
Coach	$	598.4	$	—	$	—	$	598.4
Kate Spade	163.2		—		2.8		160.4
Stuart Weitzman	29.7		0.6		—		29.1
Corporate	160.8		18.0		2.2		140.6
SG&A expenses	$	952.1	$	18.6	$	5.0	$	928.5

Third Quarter Fiscal 2024 Items


	Three Months Ended March 30, 2024
	Items Affecting Comparability
	GAAP Basis (As Reported)		Acquisition Costs		Non-GAAP Basis (Excluding Items)
	(millions, except per share data)











Coach	$	362.7	$	—	$	362.7
Kate Spade	10.0		—		10.0
Stuart Weitzman	(4.7)		—		(4.7)
Corporate	(163.7)		(35.0)		(128.7)
Operating income (loss)	$	204.3	$	(35.0)	$	239.3




Net income (loss)	$	139.4	$	(50.7)	$	190.1
Net income (loss) per diluted common share	$	0.60	$	(0.21)	$	0.81

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

Acquisition Costs - Total pre-tax charges of $67.9 million attributable to the Capri Acquisition. These charges include:

**◦**SG&A expenses: $35.0 million primarily related to professional fees recorded within Corporate;

**◦**Interest expense, net: $32.9 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 $35.0 million, increased interest expense by $32.9 million and reduced the provision for income tax by $17.2 million resulting in a net decrease in net income by $50.7 million or $0.21 per diluted share.

Supplemental Segment Data


	Three Months Ended March 30, 2024
	Items Affecting Comparability
	GAAP Basis (As Reported)		Acquisition Costs		Non-GAAP Basis (Excluding Items)
	(millions)
Coach	$	528.6	$	—	$	528.6
Kate Spade	173.6		—		173.6
Stuart Weitzman	37.2		—		37.2
Corporate	163.7		35.0		128.7
SG&A expenses	$	903.1	$	35.0	$	868.1

Tapestry, Inc. Summary – Third Quarter of Fiscal 2025

Currency Fluctuation Effects

The change in net sales for the third quarter of fiscal 2025 compared to the third 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
	March 29, 2025		March 30, 2024		Amount		%		Constant Currency Change
	(millions)
Coach	$	1,293.5	$	1,145.6	$	147.9	12.9	%	14.6	%
Kate Spade	244.9		280.7		(35.8)		(12.7)		(11.7)
Stuart Weitzman	46.2		56.1		(9.9)		(17.7)		(17.2)
Total Tapestry	$	1,584.6	$	1,482.4	$	102.2	6.9		8.4

Net sales in the third quarter of fiscal 2025 increased 6.9% or $102.2 million to $1.58 billion. Excluding the impact of foreign currency, net sales increased by 8.4% or $124.7 million.

Coach Net Sales increased 12.9% or $147.9 million to $1.29 billion in the third quarter of fiscal 2025. Excluding the impact of foreign currency, net sales increased 14.6% or $167.2 million. This increase in net sales was primarily due to an increase of $149.8 million in DTC sales as a result of an increase in both e-commerce and store sales globally, mainly driven by North America, Greater China, and Europe. The increase in net sales was also attributed to a $28.2 million increase in wholesale sales, mainly driven by North America and Europe.
Kate Spade Net Sales decreased 12.7% or $35.8 million to $244.9 million in the third quarter of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 11.7% or $32.9 million. This decrease in net sales was due to a decrease of $31.9 million in DTC sales as a result of lower store and to a lesser extent, e-commerce sales.
Stuart Weitzman Net Sales decreased 17.7% or $9.9 million to $46.2 million in the third quarter of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 17.2% or $9.6 million.

Gross Profit


	Three Months Ended
	March 29, 2025				March 30, 2024				Variance
	(millions)
	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Coach	$	1,018.5	78.7	%	$	891.3	77.7	%	$	127.2	14.3	%
Kate Spade	163.2		66.7		183.6		65.4		(20.4)		(11.1)
Stuart Weitzman	24.1		52.2		32.5		58.0		(8.4)		(25.9)
Tapestry	$	1,205.8	76.1		$	1,107.4	74.7		$	98.4	8.9

Gross profit increased 8.9% or $98.4 million to $1.21 billion in the third quarter of fiscal 2025 from $1.11 billion in the third quarter of fiscal 2024. Gross margin increased 140 basis points to 76.1% in the third quarter of fiscal 2025 from 74.7% in the third quarter of fiscal 2024. This increase in Gross margin was primarily attributed to net pricing improvements.

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
	March 29, 2025				March 30, 2024				Variance
	(millions)
	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Coach	$	598.4	46.3	%	$	528.6	46.1	%	$	69.8	13.2	%
Kate Spade(1)	163.2		66.7		173.6		61.8		(10.4)		(6.0)
Stuart Weitzman(2)	29.7		64.3		37.2		66.4		(7.5)		(20.3)
Corporate(3)(4)	160.8		NA		163.7		NA		(2.9)		(1.8)
Tapestry	$	952.1	60.1		$	903.1	60.9		$	49.0	5.4

SG&A expenses increased 5.4% or $49.0 million to $952.1 million in the third quarter of fiscal 2025 as compared to $903.1 million in the third quarter of fiscal 2024. As a percentage of net sales, SG&A expenses decreased to 60.1% during the third quarter of fiscal 2025 from 60.9% during the third quarter of fiscal 2024. Excluding items affecting comparability of $23.6 million in the third quarter of fiscal 2025, SG&A expenses increased 7.0% or $60.4 million to $928.5 million from $868.1 million in the third quarter of fiscal 2024. SG&A as a percentage of net sales remained even at 58.6% in the third quarter of fiscal 2025 as compared to the third quarter of fiscal 2024 primarily due to higher marketing spend and higher compensation costs driven by accrued incentive compensation, offset by leverage of fixed costs on higher net sales.

(1) In the third quarter of fiscal 2025, Kate Spade incurred charges affecting comparability of $2.8 million. Excluding those items affecting comparability, SG&A expenses decreased 7.6% or $13.2 million to $160.4 million in the third quarter of fiscal 2025 as compared to $173.6 million in the third quarter of fiscal 2024. SG&A as a percentage of net sales increased 370 basis points to 65.5% in the third quarter of fiscal 2025 as compared to 61.8% the third quarter of fiscal 2024.

(2) In the third quarter of fiscal 2025, Stuart Weitzman incurred charges affecting comparability of $0.6 million. Excluding those items affecting comparability, SG&A expenses decreased 22.0% or $8.1 million to $29.1 million in the third quarter of fiscal 2025 as compared to $37.2 million in the third quarter of fiscal 2024. SG&A as a percentage of net sales decreased 350 basis points to 62.9% in the third quarter of fiscal 2025 as compared to 66.4% the third quarter of fiscal 2024.

(3) In the third quarter of fiscal 2025, Corporate incurred charges affecting comparability of $20.2 million. Excluding those items affecting comparability, SG&A expenses increased 9.2% or $11.9 million to $140.6 million in the third quarter of fiscal 2025 as compared to $128.7 million in the third quarter of fiscal 2024.

(4) 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
	March 29, 2025				March 30, 2024				Variance
	(millions)
	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Coach	$	420.1	32.4	%	$	362.7	31.6	%	$	57.4	15.8	%
Kate Spade	—		—		10.0		3.6		(10.0)		(99.7)
Stuart Weitzman	(5.6)		(12.1)		(4.7)		(8.4)		(0.9)		(18.0)
Corporate	(160.8)		NA		(163.7)		NA		2.9		1.7
Tapestry	$	253.7	16.0		$	204.3	13.8		$	49.4	24.2

Operating income increased 24.2% or $49.4 million to $253.7 million in the third quarter of fiscal 2025 as compared to $204.3 million in the third quarter of fiscal 2024. Operating margin was 16.0% in the third quarter of fiscal 2025 as compared to 13.8% in the third quarter of fiscal 2024. Excluding items affecting comparability of $23.6 million in the third quarter of fiscal 2025, operating income increased $38.0 million to $277.3 million in the third quarter of fiscal 2025 from $239.3 million in the third quarter of fiscal 2024; and operating margin increased 140 basis points to 17.5% in the third quarter of fiscal 2025 as compared to 16.1% in the third quarter of fiscal 2024. This increase in operating margin was attributable to a 140 basis points increase in gross margin.

Coach Operating Income increased $57.4 million to $420.1 million in the third quarter of fiscal 2025, resulting in an operating margin increase of 80 basis points to 32.4%, as compared to $362.7 million and 31.6%, respectively, in the third quarter of fiscal 2024. This increase in operating margin was primarily attributed to:

**◦**Gross Margin, increased 100 basis points mainly due to net pricing improvements, partially offset by unfavorable geography mix;

**◦**SG&A expenses as a percentage of net sales, increased 20 basis points mainly due to higher marketing spend, partially offset by leverage of fixed costs on higher net sales.

Kate Spade Operating Income decreased $10.0 million to $0.0 million in the third quarter of fiscal 2025. Operating margin was 0.0% in the third quarter of fiscal 2025 as compared to 3.6% in the third quarter of fiscal 2024. Excluding items affecting comparability, operating income decreased $7.2 million to $2.8 million in the third quarter of fiscal 2025 from $10.0 million in the third quarter of fiscal 2024; and operating margin decreased 240 basis points to 1.2% in the third quarter of fiscal 2025 as compared to 3.6% in the third quarter of fiscal 2024. This decrease in operating margin was primarily attributed to:

**◦**Gross Margin, increased 130 basis points mainly due to net pricing improvements;

**◦**SG&A expenses as a percentage of net sales, increased 370 basis points mainly due to deleverage of fixed costs on lower net sales, partially offset by a decrease in distribution costs.

Stuart Weitzman Operating Loss increased $0.9 million to a loss of $5.6 million in the third quarter of fiscal 2025. Operating margin was (12.1)% in the third quarter of fiscal 2025 as compared to (8.4)% in the third quarter of fiscal 2024. Excluding items affecting comparability, operating loss increased $0.3 million to a loss of $5.0 million in the third quarter of fiscal 2025 from a loss of $4.7 million in the third quarter of fiscal 2024; and operating margin decreased 230 basis points to (10.7)% in the third quarter of fiscal 2025 as compared to (8.4)% in the third quarter of fiscal 2024.
Corporate Operating Expenses decreased 1.7% or $2.9 million to $160.8 million in the third quarter of fiscal 2025. Excluding items affecting comparability, Corporate operating expenses increased $11.9 million to $140.6 million from $128.7 million in the third quarter of fiscal 2024. This increase in operating expenses was attributed to an increase in SG&A expenses primarily due to higher compensation costs driven by accrued incentive compensation.

Interest Expense, net

Net interest expense decreased $16.6 million to $15.4 million in the third quarter of fiscal 2025 as compared to $32.0 million in the third quarter of fiscal 2024. Excluding items affecting comparability, net interest expense increased $16.3 million to interest expense of $15.4 million from interest income of $0.9 million in the third quarter of fiscal 2024. This increase in net interest expense was mainly due to an increase in interest expense as a result of the issuance of the 2030 and 2035 Senior Notes and lower interest income, partially offset by a decrease in interest expense as a result of the repayment of the Term Loan due 2027.

Other Expense (Income)

Other income increased $3.6 million to Other income of $0.8 million in the third quarter of fiscal 2025 as compared to Other expense of $2.8 million in the third quarter of fiscal 2024. This increase in Other income was related to an increase in foreign exchange gains.

Provision (Benefit) for Income Taxes

The effective tax rate was 14.9% in the third quarter of fiscal 2025 as compared to 17.7% in the third quarter of fiscal 2024. Excluding items affecting comparability, the effective tax rate was 16.4% in the third quarter of fiscal 2025 as compared to 19.9% in the third quarter of fiscal 2024. This decrease in our effective tax rate was primarily attributable to discrete items recorded during the period, partially offset by geographic mix of earnings.

Net Income (Loss)

Net income increased 45.9% or $63.9 million to $203.3 million in the third quarter of fiscal 2025 as compared to $139.4 million in the third quarter of fiscal 2024. Excluding items affecting comparability, net income increased 15.6% or $29.7 million to $219.8 million in the third quarter of fiscal 2025 from $190.1 million in the third quarter of fiscal 2024.

Net Income (Loss) per Share

Net income per diluted share was $0.95 in the third quarter of fiscal 2025 as compared to net income per diluted share of $0.60 in the third quarter of fiscal 2024. Excluding items affecting comparability, net income per diluted share increased $0.22 to $1.03 in the third quarter of fiscal 2025 from $0.81 in the third quarter of fiscal 2024, primarily due to higher net income and a decrease in shares outstanding.

RESULTS OF OPERATIONS

FIRST NINE MONTHS FISCAL 2025 COMPARED TO FIRST NINE MONTHS FISCAL 2024

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


	Nine Months Ended
	March 29, 2025				March 30, 2024				Variance
	(millions, except per share data)
	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Net sales	$	5,287.5	100.0	%	$	5,080.1	100.0	%	$	207.4	4.1	%
Gross profit	3,973.8		75.2		3,698.3		72.8		275.5		7.5
SG&A expenses	2,975.3		56.3		2,793.2		55.0		182.1		6.5
Operating income (loss)	998.5		18.9		905.1		17.8		93.4		10.3
Loss on extinguishment of debt	120.1		2.3		—		—		120.1		NM
Interest expense, net	70.6		1.3		94.5		1.9		(23.9)		(25.3)
Other expense (income)	(2.3)		—		(0.5)		—		(1.8)		NM
Provision (benefit) for income taxes	109.8		2.1		154.4		3.0		(44.6)		(28.9)
Net income (loss)	700.3		13.2		656.7		12.9		43.6		6.6
Net income (loss) per share:
Basic	$	3.19			$	2.87			$	0.32	11.2
Diluted	$	3.12			$	2.82			$	0.30	10.4

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 nine 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 Nine Months of Fiscal 2025 Items


	Nine Months Ended March 29, 2025
	Items Affecting Comparability
	GAAP Basis (As Reported)		Acquisition and Divestiture Costs		Organizational Efficiency Costs		Non-GAAP Basis (Excluding Items)
	(millions, except per share data)











Coach	$	1,427.6	$	—	$	—	$	1,427.6
Kate Spade	95.0		—		(2.8)		97.8
Stuart Weitzman	(14.0)		(0.6)		—		(13.4)
Corporate	(510.1)		(106.8)		(2.2)		(401.1)
Operating income (loss)	$	998.5	$	(107.4)	$	(5.0)	$	1,110.9




Net income (loss)	$	700.3	$	(207.7)	$	(3.6)	$	911.6
Net income (loss) per diluted common share	$	3.12	$	(0.91)	$	(0.02)	$	4.05

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

Acquisition and Divestiture Costs - Includes costs related to the terminated Capri Acquisition and the Stuart Weitzman Business Divestiture. These charges include:

**◦**Capri Acquisition Costs: Total pre-tax charges of $268.4 million primarily related to:

**▪**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 nine 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;

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

**◦**Stuart Weitzman Business Divestiture Costs: Total pre-tax charges of $18.6 million primarily due to the loss on business held for sale, store impairment, professional fees and share-based compensation expense.

Organizational Efficiency Costs - Total pre-tax charges of $5.0 million primarily related to severance costs and technology costs.

These actions taken together negatively impacted operating income by $112.4 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 $80.7 million resulting in a net increase in net income by $211.3 million or $0.93 per diluted share.

Supplemental Segment Data


	Nine Months Ended March 29, 2025
	Items Affecting Comparability
	GAAP Basis (As Reported)		Acquisition and Divestiture Costs		Organizational Efficiency Costs		Non-GAAP Basis (Excluding Items)
	(millions)
Coach	$	1,825.3	$	—	$	—	$	1,825.3
Kate Spade	531.4		—		2.8		528.6
Stuart Weitzman	108.5		0.6		—		107.9
Corporate	510.1		106.8		2.2		401.1
SG&A expenses	$	2,975.3	$	107.4	$	5.0	$	2,862.9

First Nine Months of Fiscal 2024 Items


	Nine Months Ended March 30, 2024
	Items Affecting Comparability
	GAAP Basis (As Reported)		Acquisition Costs		Non-GAAP Basis (Excluding Items)
	(millions, except per share data)











Coach	$	1,262.3	$	—	$	1,262.3
Kate Spade	108.7		—		108.7
Stuart Weitzman	(11.9)		—		(11.9)
Corporate	(454.0)		(82.9)		(371.1)
Operating income (loss)	$	905.1	$	(82.9)	$	988.0




Net income (loss)	$	656.7	$	(126.4)	$	783.1
Net income (loss) per diluted common share	$	2.82	$	(0.54)	$	3.36

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

Acquisition Costs - Total pre-tax charges of $166.6 million attributable to the Capri Acquisition. These charges include:

**◦**Interest expense, net: $83.7 million of financing related charges, which primarily includes the net impact of the Capri Acquisition Senior Notes and Bridge Facility financing fees;

**◦**SG&A expenses: $82.9 million primarily related to professional fees recorded within Corporate.

These actions taken together negatively impacted operating income by $82.9 million, increased interest expense by $83.7 million and reduced the provision for income tax by $40.2 million resulting in a net decrease in net income by $126.4 million or $0.54 per diluted share.

Supplemental Segment Data


	Nine Months Ended March 30, 2024
	Items Affecting Comparability
	GAAP Basis (As Reported)		Acquisition Costs		Non-GAAP Basis (Excluding Items)
	(millions)
Coach	$	1,644.1	$	—	$	1,644.1
Kate Spade	568.2		—		568.2
Stuart Weitzman	126.9		—		126.9
Corporate	454.0		82.9		371.1
SG&A expenses	$	2,793.2	$	82.9	$	2,710.3

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

Currency Fluctuation Effects

The change in net sales for the first nine months of fiscal 2025 compared to the first nine 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


	Nine Months Ended				Variance
	March 29, 2025		March 30, 2024		Amount		%		Constant Currency Change
	(millions)
Coach	$	4,173.4	$	3,844.9	$	328.5	8.5	%	9.0	%
Kate Spade	944.5		1,044.3		(99.8)		(9.6)		(9.2)
Stuart Weitzman	169.6		190.9		(21.3)		(11.2)		(11.2)
Total Tapestry	$	5,287.5	$	5,080.1	$	207.4	4.1		4.5

Net sales in the first nine months of fiscal 2025 increased 4.1% or $207.4 million to $5.29 billion. Excluding the impact of foreign currency, net sales increased by 4.5% or $229.0 million.

Coach Net Sales increased 8.5% or $328.5 million to $4.17 billion in the first nine months of fiscal 2025. Excluding the impact of foreign currency, net sales increased 9.0% or $346.9 million. This increase in net sales was primarily due to an increase of $317.9 million in DTC sales as a result of 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 $46.7 million increase in wholesale sales, mainly driven by Europe and North America.
Kate Spade Net Sales decreased 9.6% or $99.8 million to $944.5 million in the first nine months of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 9.2% or $96.5 million. This decrease in net sales was due to a decrease of $105.5 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 $8.1 million in wholesale sales.
Stuart Weitzman Net Sales decreased 11.2% or $21.3 million to $169.6 million in the first nine months of fiscal 2025. Excluding the impact of foreign currency, net sales decreased 11.2% or $21.4 million.

Gross Profit


	Nine Months Ended
	March 29, 2025				March 30, 2024				Variance
	(millions)
	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Coach	$	3,252.9	77.9	%	$	2,906.4	75.6	%	$	346.5	11.9	%
Kate Spade	626.4		66.3		676.9		64.8		(50.5)		(7.5)
Stuart Weitzman	94.5		55.7		115.0		60.2		(20.5)		(17.8)
Tapestry	$	3,973.8	75.2		$	3,698.3	72.8		$	275.5	7.5

Gross profit increased 7.5% or $275.5 million to $3.97 billion in the first nine months of fiscal 2025 from $3.70 billion in the first nine months of fiscal 2024. Gross margin increased 240 basis points to 75.2% in the first nine months of fiscal 2025 from 72.8% in the first nine months of fiscal 2024. This increase in Gross margin was primarily attributed to net pricing improvements.

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


	Nine Months Ended
	March 29, 2025				March 30, 2024				Variance
	(millions)
	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Coach	$	1,825.3	43.6	%	$	1,644.1	42.7	%	$	181.2	11.0	%
Kate Spade(1)	531.4		56.3		568.2		54.4		(36.8)		(6.5)
Stuart Weitzman(2)	108.5		64.0		126.9		66.4		(18.4)		(14.5)
Corporate(3)(4)	510.1		NA		454.0		NA		56.1		12.3
Tapestry	$	2,975.3	56.3		$	2,793.2	55.0		$	182.1	6.5

SG&A expenses increased 6.5% or $182.1 million to $2.98 billion in the first nine months of fiscal 2025 as compared to $2.79 billion in the first nine months of fiscal 2024. As a percentage of net sales, SG&A expenses increased to 56.3% during the first nine months of fiscal 2025 from 55.0% during the first nine months of fiscal 2024. Excluding items affecting comparability of $112.4 million in the first nine months of fiscal 2025, SG&A expenses increased 5.6% or $152.6 million to $2.86 billion from $2.71 billion in the first nine months of fiscal 2024. SG&A expenses as a percentage of net sales increased 80 basis points to 54.1% compared to 53.3% in the first nine months of fiscal 2024. This increase in SG&A as a percentage of net sales was primarily due to higher marketing spend and higher compensation costs driven by accrued incentive compensation, partially offset by leverage of fixed costs on higher net sales.

(1) In the first nine months of fiscal 2025, Kate Spade incurred charges affecting comparability of $2.8 million. Excluding those items affecting comparability, SG&A expenses decreased 7.0% or $39.6 million to $528.6 million in the first nine months of fiscal 2025 as compared to $568.2 million in the first nine months of fiscal 2024. SG&A as a percentage of net sales increased 160 basis points to 56.0% in the first nine months of fiscal 2025 as compared to 54.4% in the first nine months of fiscal 2024.

(2) In the first nine months of fiscal 2025, Stuart Weitzman incurred charges affecting comparability of $0.6 million. Excluding those items affecting comparability, SG&A expenses decreased 15.0% or $19 million to $107.9 million in the first nine months of fiscal 2025 as compared to $126.9 million in the first nine months of fiscal 2024. SG&A as a percentage of net sales decreased 280 basis points to 63.6% in the first nine months of fiscal 2025 as compared to 66.4% in the first nine months of fiscal 2024.

(3) In the first nine months of fiscal 2025, Corporate incurred charges affecting comparability of $109.0 million. Excluding those items affecting comparability, SG&A expenses increased 8.1% or $30.0 million to $401.1 million in the first nine months of fiscal 2025 as compared to $371.1 million in the first nine months of fiscal 2024.

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

Operating Income (Loss)


	Nine Months Ended
	March 29, 2025				March 30, 2024				Variance
	(millions)
	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Coach	$	1,427.6	34.3	%	$	1,262.3	32.9	%	$	165.3	13.1	%
Kate Spade	95.0		10.1		108.7		10.4		(13.7)		(12.6)
Stuart Weitzman	(14.0)		(8.2)		(11.9)		(6.2)		(2.1)		(17.7)
Corporate	(510.1)		NA		(454.0)		NA		(56.1)		(12.4)
Tapestry	$	998.5	18.9		$	905.1	17.8		$	93.4	10.3

Operating income increased $93.4 million to $1.00 billion in the first nine months of fiscal 2025 as compared to $905.1 million in the first nine months of fiscal 2024. Operating margin increased to 18.9% in the first nine months of fiscal 2025 as compared to 17.8% in the first nine months of fiscal 2024. Excluding items affecting comparability of $112.4 million in the first nine months of fiscal 2025, operating income increased $122.9 million to $1.11 billion from $988.0 million in the first nine months of fiscal 2024; and operating margin increased 160 basis points to 21.0% in the first nine months of fiscal 2025 as

compared to 19.4% in the first nine months of fiscal 2024. This increase in operating margin was primarily attributed to a 240 basis points increase in gross margin partially offset by an increase of 80 basis points in SG&A as a percentage of sales.

Coach Operating Income increased $165.3 million to $1.43 billion in the first nine months of fiscal 2025, resulting in an operating margin increase of 140 basis points to 34.3%, as compared to $1.26 billion and 32.9%, respectively, in the first nine months of fiscal 2024. This increase in operating margin was primarily attributed to:

**◦**Gross Margin, increased 230 basis points mainly due to net pricing improvements;

**◦**SG&A expenses as a percentage of net sales, increased 90 basis points mainly due to higher marketing spend, partially offset by leverage of fixed costs on higher net sales.

Kate Spade Operating Income decreased $13.7 million to $95.0 million in the first nine months of fiscal 2025. Operating margin was 10.1% in the first nine months of fiscal 2025 as compared to 10.4% in the first nine months of fiscal 2024. Excluding items affecting comparability of $2.8 million, operating income decreased $10.9 million to $97.8 million in the first nine months of fiscal 2025 as compared to $108.7 million in the first nine months of fiscal 2024; and operating margin decreased 10 basis points to 10.3% in the first nine months of fiscal 2025 as compared to 10.4% in the first nine months of fiscal 2024. The slight decrease in operating margin was primarily attributed to:

**◦**Gross Margin, increased 150 basis points mainly due to lower duty expenses, lower freight costs and net pricing improvements;

**◦**SG&A expenses as a percentage of net sales, increased 160 basis points mainly driven by deleverage of fixed costs on lower net sales, partially offset by a decrease in distribution costs.

Stuart Weitzman Operating Loss increased $2.1 million to a loss of $14.0 million in the first nine months of fiscal 2025. Operating margin was (8.2)% in the first nine months of fiscal 2025 as compared to (6.2)% in the first nine months of fiscal 2024. Excluding items affecting comparability of $0.6 million, operating loss increased $1.5 million to a loss of $13.4 million in the first nine months of fiscal 2025 as compared to a loss of $11.9 million in the first nine months of fiscal 2024; and operating margin decreased 170 basis points to (7.9)% in the first nine months of fiscal 2025 as compared to (6.2)% in the first nine months of fiscal 2024.
Corporate Operating Expenses increased 12.4% or $56.1 million to $510.1 million in the first nine months of fiscal 2025. Excluding items affecting comparability, Corporate operating expenses increased $30.0 million to $401.1 million from $371.1 million in the first nine months of fiscal 2024. This increase in operating expenses was attributed to an increase in SG&A expenses primarily due to higher compensation costs driven by accrued incentive compensation and higher professional fees, partially offset by lower occupancy costs.

Loss on Extinguishment of Debt

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

Interest Expense, net

Net Interest expense decreased $23.9 million to $70.6 million in the first nine months of fiscal 2025 as compared to $94.5 million in the first nine months of fiscal 2024. Excluding items affecting comparability, net interest expense decreased $0.4 million to Interest expense of $10.4 million from Interest expense of $10.8 million in the first nine months of fiscal 2024. This decrease in net interest expense was mainly due to a decrease in interest expense as a result of repayment of the Term Loan due 2027 and higher interest income, partially offset by higher interest expense as a result of the issuance of the 2030 and 2035 Senior Notes and the borrowings under the Revolving Credit Facility.

Other Expense (Income)

Other income increased $1.8 million to Other income of $2.3 million in the first nine months of fiscal 2025 as compared to Other income of $0.5 million in the first nine months of fiscal 2024. This increase in Other income was related to an increase in foreign exchange gains.

Provision (Benefit) for Income Taxes

The effective tax rate was 13.6% in the first nine months of fiscal 2025 as compared to 19.0% in the first nine months of fiscal 2024. Excluding items affecting comparability, the effective tax rate was 17.3% in the first nine months of fiscal 2025 as compared to 19.9% in the first nine months of fiscal 2024. This decrease in our effective tax rate was primarily attributable to discrete items recorded during the period, partially offset by geographic mix of earnings.

Net Income (Loss)

Net income increased 6.6% or $43.6 million to $700.3 million in the first nine months of fiscal 2025 as compared to $656.7 million in the first nine months of fiscal 2024. Excluding items affecting comparability, net income increased $128.5 million to $911.6 million in the first nine months of fiscal 2025 from $783.1 million in the first nine months of fiscal 2024.

Net Income (Loss) per Share

Net income per diluted share was $3.12 in the first nine months of fiscal 2025 as compared to net income per diluted share of $2.82 in the first nine months of fiscal 2024. Excluding items affecting comparability, net income per diluted share increased $0.69 to $4.05 in the first nine months of fiscal 2025 from $3.36 in the first nine 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 third quarter and first nine months of fiscal 2025 and fiscal 2024 and the reported Loss on extinguishment of debt in the first nine months of fiscal 2025, reflect certain items affecting comparability, including the impact of Acquisition and Divestiture Costs and Organizational Efficiency Costs. As a supplement to the Company's reported results, these measures 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.

The Company incurred Acquisition and Divestiture Costs which consist of non-recurring acquisition and divestiture costs, primarily financing-related expenses and professional fees from the terminated Capri Acquisition as well as costs related to the Stuart Weitzman Business Divestiture, inclusive of the loss on business held for sale, store impairment, professional fees and share-based compensation expense. The Company also incurred Organizational Efficiency Costs which consist of non-recurring costs, primarily from various initiatives aimed at streamlining the organization and optimizing processes. These costs mainly include one-time severance and technology related charges.

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


	Nine Months Ended
	March 29, 2025		March 30, 2024		Change
	(millions)
Net cash provided by (used in) operating activities	$	769.8	$	999.6	$	(229.8)
Net cash provided by (used in) investing activities	948.2		(486.1)		1,434.3
Net cash provided by (used in) financing activities	(6,808.4)		5,733.6		(12,542.0)
Effect of exchange rate changes on cash and cash equivalents	15.4		1.9		13.5
Net increase (decrease) in cash and cash equivalents	$	(5,075.0)	$	6,249.0	$	(11,324.0)

The Company’s cash and cash equivalents decreased by $5.08 billion in the first nine months of fiscal 2025 as compared to an increase of $6.25 billion in the first nine months of fiscal 2024, as discussed below.

Net cash provided by (used in) operating activities

Net cash provided by operating activities decreased $229.8 million primarily due to changes in operating assets and liabilities of $337.9 million, higher impact of non-cash adjustments of $64.5 million, as well as higher net income of $43.6 million.

The $337.9 million decrease in changes in operating asset and liability balances were primarily driven by the following:

Inventories were a use of cash of $132.7 million in the first nine months of fiscal 2025 compared to a source of cash of $91.6 million in the first nine 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 $68.9 million in the first nine months of fiscal 2025 compared to a source of cash of $94.2 million in the first nine months of fiscal 2024, primarily driven by a decrease in accrued interest due to the repayment of the Capri Acquisition Senior Notes, a decrease in accrued professional fees due to higher spending in the prior year related to the Capri Acquisition, partially offset by an increase in other tax liabilities and an increase in accrued advertising.

Net cash provided by (used in) investing activities

Net cash provided by investing activities in the first nine months of fiscal 2025 was $948.2 million as compared to a use of cash of $486.1 million in the first nine months of fiscal 2024, resulting in a $1.43 billion increase in net cash provided by investing activities.

The $948.2 million of cash provided in the first nine 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 $486.1 million of cash used in the first nine months of fiscal 2024 was primarily due to purchases of investments of $1.13 billion, partially offset by maturities and sales of investments of $702.6 million, primarily related to 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 $6.81 billion in the first nine months of fiscal 2025 as compared to a source of cash of $5.73 billion in the first nine months of fiscal 2024, resulting in a net increase of cash used in financing activities of $12.54 billion.

The $6.81 billion of cash used in the first nine 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 $2.02 billion under the Company's accelerated share repurchase program partially offset by proceeds from the issuance of debt of $2.25 billion.

The $5.73 billion source of cash in the first nine 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 $240.9 million, as well as payment of debt issuance costs of $78.3 million.

Effect of exchange rate changes on cash and cash equivalents

Effect of exchange rate changes on cash and cash equivalents was $15.4 million as compared to $1.9 million in the first nine 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 March 29, 2025 and June 29, 2024:


	March 29, 2025		June 29, 2024		Change
	(millions)
Cash and cash equivalents(1)	$	1,037.7	$	6,142.0	$	(5,104.3)
Short-term investments(1)	19.3		1,061.8		(1,042.5)
Current debt(2)	(319.9)		(303.4)		(16.5)
Long-term debt(2)	(2,377.1)		(6,937.2)		4,560.1
Total, net	$	(1,640.0)	$	(36.8)	$	(1,603.2)

(1) As of March 29, 2025, approximately 38% 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 March 29, 2025:


	Total Availability		Borrowings Outstanding		Remaining Availability
	(millions)
Revolving Credit Facility(1)	$	2,000.0	$	—	$	2,000.0
China Credit Facility(1)(2)	34.4		16.5		17.9
Total	$	2,034.4	$	16.5	$	2,017.9

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

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

We believe that our Revolving Credit Facility is adequately diversified with no undue concentrations in any one financial institution. As of March 29, 2025, 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.

Stuart Weitzman Business Divestiture

On February 16, 2025, the Company entered into a Purchase Agreement pursuant to which the Company will sell the Stuart Weitzman Business for total cash consideration of $105.0 million, subject to customary adjustments. The transaction is expected to close in the summer of 2025, subject to customary closing conditions. Refer to Note 5, "Acquisitions and Divestitures," for further information.

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 nine months ended March 29, 2025, capital expenditures and cloud computing implementation costs were $35.7 million and $104.5 million, respectively. The Company expects total fiscal 2025 capital expenditures and cloud computing cost to be approximately $160 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. The total number of shares purchased by the Company pursuant to the ASR Agreements will be based on the volume-weighted average price ("VWAP") 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 difference between the initially delivered shares and the total number of shares purchased will be settled in four tranches, 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. Repurchased shares of common stock will become authorized but unissued shares.

During the quarter ended March 29, 2025, the Company owed 43,094 shares of common stock related to the settlement of one tranche as a result of the increase in the VWAP of the Company's common stock, which was cash settled for $3.0 million.

As of March 29, 2025 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 March 29, 2025, 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.

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