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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the Quarterly Period Ended September 28, 2024
or 
☐          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
Commission file number: 1-16153
Tapestry, Inc.
(Exact name of registrant as specified in its charter)
Maryland 52-2242751
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
10 Hudson Yards, New York, NY 10001
(Address of principal executive offices); (Zip Code) 
(212) 946-8400
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on which Registered
Common Stock, par value $.01 per shareTPRNew York Stock Exchange
5.350% Senior Notes due 2025TPR25ANew York Stock Exchange
5.375% Senior Notes due 2027TPR27ANew York Stock Exchange
5.875% Senior Notes due 2031TPR31New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑ Accelerated filer ☐ Non-accelerated filer☐ Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No
On October 25, 2024, the Registrant had 233,035,750 outstanding shares of common stock, which is the Registrant’s only class of common stock.


TAPESTRY, INC.
INDEX


In this Form 10-Q, references to “we,” “our,” “us,” "Tapestry" and the “Company” refer to Tapestry, Inc., including consolidated subsidiaries. References to "Coach," "Kate Spade," "kate spade new york" or "Stuart Weitzman" refer only to the referenced brand.
SPECIAL NOTE ON FORWARD-LOOKING INFORMATION
This document, and the documents incorporated by reference in this document, our press releases and oral statements made from time to time by us or on our behalf, may contain certain "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are based on management's current expectations, that involve risks and uncertainties that could cause our actual results to differ materially from our current expectations. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "may," "can," "if," "continue," "project," "assumption," "should," "expect," "confidence," "goals," "trends," "anticipate," "intend," "estimate," "on track," "future," "well positioned to," "plan," "potential," "position," "deliver," "believe," "seek," "see," "will," "would," "uncertain," "achieve," "strategic," "growth," "target," "forecast," "outlook," "commit," "innovation," "drive," "proposed acquisition," "we can stretch what’s possible," similar expressions, and variations or negatives of these words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Such statements involve risks, uncertainties and assumptions. If such risks or uncertainties materialize or such assumptions prove incorrect, the results of Tapestry, Inc. and its consolidated subsidiaries could differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Tapestry, Inc. assumes no obligation to revise or update any such forward-looking statements for any reason, except as required by law.
Tapestry, Inc.’s actual results could differ materially from the results contemplated by these forward-looking statements and are subject to a number of risks, uncertainties, estimates and assumptions that may cause actual results to differ materially from current expectations due to a number of factors, including, but not limited to: (i) the impact of economic conditions, recession and inflationary measures; (ii) our exposure to international risks, including currency fluctuations and changes in economic or political conditions in the markets where we sell or source our products; (iii) our ability to retain the value of our brands and to respond to changing fashion and retail trends in a timely manner, including our ability to execute on our e-commerce and digital strategies; (iv) our ability to successfully implement the initiatives under our 2025 growth strategy; (v) the effect of existing and new competition in the marketplace; (vi) satisfaction of the conditions precedent to consummation of the proposed acquisition of Capri Holdings Limited ("Capri"), including the ability to secure regulatory approval in the United States on the terms expected, at all or in a timely manner; (vii) our ability to achieve intended benefits, cost savings and synergies from acquisitions, including our proposed acquisition of Capri; (xiii) the outcome of the antitrust lawsuit by the Federal Trade Commission against us and Capri related to the consummation of the proposed acquisition; (ix) our ability to control costs; (x) the effect of seasonal and quarterly fluctuations on our sales or operating results; (xi) the risk of cyber security threats and privacy or data security breaches; (xii) our ability to satisfy our outstanding debt obligations or incur additional indebtedness; (xiii) the risks associated with climate change and other corporate responsibility issues; (xiv) the impact of tax and other legislation; (xv) the risks associated with potential changes to international trade agreements and the imposition of additional duties on importing our products; (xvi) our ability to protect against infringement of our trademarks and other proprietary rights; and (xvii) the impact of pending and potential future legal proceedings and (xviii) such other risk factors as set forth in Part II, Item 1A. "Risk Factors" and elsewhere in this report and in the Company’s Annual Report on Form 10-K for the fiscal year ended June 29, 2024. These factors are not necessarily all of the factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements.
 WHERE YOU CAN FIND MORE INFORMATION
Tapestry's quarterly financial results and other important information are available by calling the Investor Relations Department at (212) 629-2618.
Tapestry maintains its website at www.tapestry.com where investors and other interested parties may obtain, free of charge, press releases and other information as well as gain access to our periodic filings with the SEC.



TAPESTRY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 28,
2024		June 29,
2024
(millions)
(unaudited)
ASSETS  
Current Assets:  
Cash and cash equivalents$6,462.9 $6,142.0 
Short-term investments842.3 1,061.8 
Trade accounts receivable, less allowances for credit losses of $7.1 and $6.9, respectively
279.0 228.2 
Inventories1,030.8 824.8 
Income tax receivable262.8 236.2 
Prepaid expenses175.0 170.9 
Other current assets92.7 139.8 
Total current assets9,145.5 8,803.7 
Property and equipment, net of accumulated depreciation of $1,262.3 and $1,263.3, respectively
513.0 514.7 
Operating lease right-of-use assets1,293.6 1,314.4 
Goodwill1,232.0 1,204.1 
Intangible assets1,352.0 1,353.6 
Deferred income taxes47.0 44.1 
Other assets145.8 161.7 
Total assets$13,728.9 $13,396.3 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current Liabilities:  
Accounts payable$544.0 $452.2 
Accrued liabilities708.6 656.3 
Current portion of operating lease liabilities297.8 299.7 
Current debt303.4 303.4 
Total current liabilities1,853.8 1,711.6 
Long-term debt7,008.3 6,937.2 
Long-term operating lease liabilities1,196.0 1,224.2 
Deferred income taxes247.0 251.3 
Other liabilities441.9 375.1 
Total liabilities10,747.0 10,499.4 
See Note 14 on commitments and contingencies
Stockholders' Equity:  
Preferred stock: (authorized 25.0 million shares; $0.01 par value per share) none issued
— — 
Common stock: (authorized 1.0 billion shares; $0.01 par value per share) issued and outstanding - 233.0 million and 230.2 million shares, respectively
2.3 2.3 
Additional paid-in-capital3,789.0 3,762.7 
Retained earnings (accumulated deficit)(617.0)(722.2)
Accumulated other comprehensive income (loss)(192.4)(145.9)
Total stockholders' equity2,981.9 2,896.9 
Total liabilities and stockholders' equity$13,728.9 $13,396.3 
See accompanying Notes.
1

TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
September 28,
2024		September 30,
2023
(millions, except per share data)
(unaudited)
Net sales$1,507.5 $1,513.2 
Cost of sales372.6 415.5 
Gross profit1,134.9 1,097.7 
Selling, general and administrative expenses882.9 844.5 
Operating income (loss)252.0 253.2 
Interest expense, net30.7 13.3 
Other expense (income)(4.4)1.4 
Income (loss) before provision for income taxes225.7 238.5 
Provision (benefit) for income taxes39.1 43.5 
Net income (loss)$186.6 $195.0 
Net income (loss) per share:  
Basic$0.81 $0.85 
Diluted$0.79 $0.84 
Shares used in computing net income (loss) per share:  
Basic231.5 228.3 
Diluted235.9 232.5 
See accompanying Notes.
2

TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
 Three Months Ended
September 28,
2024		September 30,
2023
(millions)
(unaudited)
Net income (loss)$186.6 $195.0 
Other comprehensive income (loss), net of tax:  
Unrealized gains (losses) on cash flow hedging derivatives, net(47.7)31.3 
Unrealized gains (losses) on available-for-sale investments, net2.4 — 
Foreign currency translation adjustments(1.2)3.3 
Other comprehensive income (loss), net of tax(46.5)34.6 
Comprehensive income (loss)$140.1 $229.6 
See accompanying Notes.
3

TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months Ended
September 28,
2024		September 30,
2023
(millions)
(unaudited)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES  
Net income (loss)$186.6 $195.0 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:  
Depreciation and amortization40.9 44.3 
Provision for bad debt0.3 0.4 
Share-based compensation19.1 19.7 
Amortization of cloud computing arrangements14.0 13.4 
Deferred income taxes12.2 36.6 
Changes to lease related balances, net(10.3)(11.5)
Other non-cash charges, net(20.8)4.5 
Changes in operating assets and liabilities:  
Trade accounts receivable(53.7)(55.6)
Inventories(181.4)(29.8)
Accounts payable92.9 (28.4)
Accrued liabilities 32.0 (62.0)
Other liabilities(0.8)(8.2)
Other assets(11.5)(43.1)
Net cash provided by (used in) operating activities119.5 75.3 
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES  
Purchases of investments(1,479.2)(1.9)
Proceeds from maturities and sales of investments1,694.9 — 
Purchases of property and equipment(25.6)(20.9)
Net cash provided by (used in) investing activities190.1 (22.8)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES  
Payment of dividends(81.4)(80.2)
Payment of debt issuance costs— (31.4)
Proceeds from share-based awards41.7 0.4 
Repayment of debt— (6.3)
Taxes paid to net settle share-based awards(34.5)(31.6)
Payments of finance lease liabilities(0.3)(0.3)
Net cash provided by (used in) financing activities(74.5)(149.4)
Effect of exchange rate changes on cash and cash equivalents85.8 (7.1)
Net (decrease) increase in cash and cash equivalents320.9 (104.0)
Cash and cash equivalents at beginning of period6,142.0 726.1 
Cash and cash equivalents at end of period$6,462.9 $622.1 
Supplemental information:
Cash paid for income taxes, net$64.8 $41.9 
Cash paid for interest$24.0 $27.3 
Noncash investing activity - property and equipment obligations$18.2 $10.2 
See accompanying Notes.
4
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements
(Unaudited)


1. NATURE OF OPERATIONS
Tapestry, Inc. (the "Company") 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 Coach, Kate Spade and Stuart Weitzman segments include global sales of products to customers through our direct-to-consumer ("DTC"), wholesale and licensing businesses.
2. BASIS OF PRESENTATION AND ORGANIZATION
Interim Financial Statements
These unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). In the opinion of management, such condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the condensed consolidated financial position, results of operations, comprehensive income (loss) and cash flows of the Company for the interim periods presented. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP") have been condensed or omitted from this report as is permitted by the SEC's rules and regulations. However, the Company believes that the disclosures provided herein are adequate to prevent the information presented from being misleading. This report should be read in conjunction with the audited consolidated financial statements and notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended June 29, 2024 ("fiscal 2024") and other filings filed with the SEC.
The results of operations, cash flows and comprehensive income for the three months ended September 28, 2024 are not necessarily indicative of results to be expected for the entire fiscal year, which will end on June 28, 2025 ("fiscal 2025"). 
Fiscal Periods
The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30. Fiscal 2025 will be a 52-week period. Fiscal 2024, ended on June 29, 2024, was also a 52-week period. The first quarter of fiscal 2025 ended on September 28, 2024 and the first quarter of fiscal 2024 ended on September 30, 2023, both of which were 13-week periods.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and footnotes thereto. Actual results could differ from estimates in amounts that may be material to the financial statements.
Significant estimates inherent in the preparation of the condensed consolidated financial statements include reserves for the realizability of inventory; asset retirement obligations; customer returns, end-of-season markdowns and operational chargebacks; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes and related uncertain tax positions; accounting for business combinations; the valuation of stock-based compensation awards and related expected forfeiture rates; reserves for restructuring; and reserves for litigation and other contingencies, amongst others.
Principles of Consolidation
These unaudited interim condensed consolidated financial statements include the accounts of the Company and all 100% owned and controlled subsidiaries. All intercompany transactions and balances are eliminated in consolidation.
Share Repurchases
The Company accounts for stock repurchases by allocating the repurchase price to common stock and retained earnings. Under Maryland law, the Company's state of incorporation, there are no treasury shares. All repurchased shares are authorized but unissued shares; these shares may be issued in the future for general corporate and other purposes. The Company may terminate or limit the stock repurchase program at any time. The Company accrues for the shares purchased under the share repurchase plan based on the trade date. Purchases of the Company's common stock are executed through open market purchases, including through purchase agreements under Rule 10b5-1. Excise tax on net share repurchases are recorded in Retained earnings as part of Stockholders' Equity.
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TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Supplier Finance Program
To improve our working capital efficiency, the Company makes available to certain suppliers a voluntary supply chain finance (“SCF”) program that enables our suppliers to sell their receivables from the Company to a global financial institution on a non-recourse basis at a rate that leverages our credit rating. The Company does not have the ability to refinance or modify payment terms to the global financial institution through the SCF program. No guarantees are provided by the Company or any of our subsidiaries under the SCF program. The Company’s payment obligations, including the amounts due and payment terms, which generally do not exceed 90 days, are not impacted by suppliers’ participation in the program. As of September 28, 2024 and June 29, 2024, $396.4 million and $294.9 million, respectively, was related to suppliers eligible to participate in the Company's SCF program and presented within Accounts payable on the Condensed Consolidated Balance Sheets.
Reclassification
A reclassification has been made to the prior period's financial information to conform to the current period's presentation. Amortization expense, related to the Company’s cloud computing arrangements of $13.4 million during the three months ended September 30, 2023 has been reclassified out of Other assets and into Amortization of cloud computing arrangements within the Company’s Condensed Consolidated Statements of Cash Flows.
3. RECENT ACCOUNTING PRONOUNCEMENTS
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The amendments will be effective for the Company's annual reporting periods beginning in fiscal year 2025 and for interim periods beginning in fiscal year 2026, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.
In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company's annual periods beginning in fiscal year 2026, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.
4. REVENUE
The Company recognizes revenue primarily from sales of the products of its brands through our DTC business which includes our retail stores and e-commerce sites, along with our wholesale business. The Company also generates revenue from royalties related to licensing its trademarks, as well as sales in ancillary business channels. In all cases, revenue is recognized upon the transfer of control of the promised products or services to the customer, which may be at a point in time or over time. Control is transferred when the customer obtains the ability to direct the use of and obtain substantially all of the remaining benefits from the products or services. The amount of revenue recognized is the amount of consideration to which the Company expects to be entitled, including estimation of sale terms that may create variability in the consideration. Revenue subject to variability is constrained to an amount which will not result in a significant reversal in future periods when the contingency that creates variability is resolved.
The Company has elected a practical expedient not to disclose the remaining performance obligations that are unsatisfied as of the end of the period related to contracts with an original duration of one year or less or variable consideration related to sales-based royalty arrangements. There are no other contracts with transaction price allocated to remaining performance obligations other than future minimum royalties as discussed above, which are not material.
Other practical expedients elected by the Company include (i) assuming no significant financing component exists for any contract with a duration of one year or less, (ii) accounting for shipping and handling as a fulfillment activity within SG&A expense regardless of the timing of the shipment in relation to the transfer of control and (iii) excluding sales and value added tax from the transaction price.
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TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Direct-to-Consumer
The Company recognizes revenue in its retail stores, including concession shop-in-shops, at the point-of-sale when the customer obtains physical possession of the products. Digital revenue from sales of products ordered through the Company's e-commerce sites is recognized upon delivery and receipt of the shipment by its customers and includes shipping and handling charges paid by customers. Retail and digital revenues are recorded net of estimated returns, which are estimated by developing an expected value based on historical experience. Payment is due at the point of sale.
Gift cards issued by the Company are recorded as a liability until redeemed by the customer, at which point revenue is recognized. The Company also uses historical information to estimate the amount of gift card balances that will never be redeemed and recognizes that amount as revenue over time in proportion to actual customer redemptions if the Company does not have a legal obligation to remit unredeemed gift cards to any jurisdiction as unclaimed property.
Certain of the Company's retail operations use sales incentive programs, such as customer loyalty programs and the issuance of coupons. Loyalty programs provide the customer a material right to acquire additional products and give rise to the Company having a separate performance obligation. Additionally, certain products sold by the Company include an assurance warranty that is not considered a separate performance obligation. These programs are immaterial individually and in the aggregate.
Wholesale
The Company recognizes revenue within the wholesale channel at the time title passes and risk of loss is transferred to customers, which is generally at the point of shipment of products but may occur upon receipt of the shipment by the customer in certain cases. Payment is generally due 30 to 90 days after shipment. Wholesale revenue is recorded net of estimates for returns, discounts, end-of-season markdowns, cooperative advertising allowances and other consideration provided to the customer. Discounts are based on contract terms with the customer, while cooperative advertising allowances and other consideration may be based on contract terms or negotiated on a case-by-case basis. Returns and markdowns generally require approval from the Company and are estimated based on historical trends, current season results and inventory positions at the wholesale locations, current market and economic conditions as well as, in select cases, contractual terms. The Company's historical estimates of these variable amounts have not differed materially from actual results.
Licensing
The Company recognizes licensing revenue over time during the contract period in which licensees are granted access to the Company's trademarks. These arrangements require licensees to pay a sales-based royalty and may include a contractually guaranteed minimum royalty amount. Revenue for contractually guaranteed minimum royalty amounts is recognized ratably over the license year and any excess sales-based royalties are recognized as earned once the minimum royalty threshold is achieved. Payments from the customer are generally due quarterly in an amount based on the licensee's sales of goods bearing the licensed trademarks during the period, which may differ from the amount of revenue recorded during the period thereby generating a contract asset or liability. Contract assets and liabilities and contract costs related to the licensing arrangements are immaterial as the licensing business represents approximately 1% of total net sales in the three months ended September 28, 2024.
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TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Disaggregated Net Sales
The following table disaggregates the Company's net sales into geographies that depict how economic factors may impact the revenues and cash flows for the periods presented. Each geography presented includes net sales related to the Company's directly operated channels, global travel retail business and to wholesale customers, including distributors, in locations within the specified geographic area.
North America
Greater China(1)
Other Asia(2)
Other(3)
Total
(millions)
Three Months Ended September 28, 2024
Coach$689.0 $213.9 $174.4 $93.3 $1,170.6 
Kate Spade219.6 10.5 29.5 23.6 283.2 
Stuart Weitzman39.6 9.7 — 4.4 53.7 
Total$948.2 $234.1 $203.9 $121.3 $1,507.5 
Three Months Ended September 30, 2023
Coach$686.5 $220.3 $175.2 $75.4 $1,157.4 
Kate Spade240.2 10.8 30.6 21.6 303.2 
Stuart Weitzman34.7 13.5 0.4 4.0 52.6 
Total$961.4 $244.6 $206.2 $101.0 $1,513.2 
(1)    Greater China includes mainland China, Taiwan, Hong Kong SAR and Macao SAR.
(2)    Other Asia includes Japan, Malaysia, Australia, New Zealand, South Korea, Singapore, and other countries within Asia.
(3)    Other sales primarily represents sales in Europe, the Middle East and royalties earned from the Company's licensing partners.
Deferred Revenue
Deferred revenue results from cash payments received or receivable from customers prior to the transfer of the promised goods or services, and is generally comprised of unredeemed gift cards, net of breakage which has been recognized. Additional deferred revenue may result from sales-based royalty payments received or receivable which exceed the revenue recognized during the contractual period. The balance of such amounts as of September 28, 2024 and June 29, 2024 was $40.0 million and $45.5 million, respectively, which were primarily recorded within Accrued liabilities on the Company's Condensed Consolidated Balance Sheets and are generally expected to be recognized as revenue within a year. For the three months ended September 28, 2024, net sales of $12.7 million were recognized from amounts recorded as deferred revenue as of June 29, 2024. For the three months ended September 30, 2023, net sales of $14.6 million were recognized from amounts recorded as deferred revenue as of July 1, 2023.
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TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
5. ACQUISITIONS
Capri Holdings Limited Merger Agreement
On August 10, 2023, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among the Company, Sunrise Merger Sub, Inc., a direct wholly owned subsidiary of Tapestry ("Merger Sub"), and Capri Holdings Limited ("Capri"). Under the terms of the Merger Agreement, Tapestry has agreed to acquire any and all of Capri’s ordinary shares (other than (a) Capri’s ordinary Shares that are issued and outstanding immediately prior to the consummation of the acquisition that are owned or held in treasury by the Company or by Capri or any of its direct or indirect subsidiaries and (b) Capri’s ordinary shares that are issued and outstanding immediately prior to the consummation of the acquisition that are held by holders who have properly exercised dissenters’ rights in accordance with, and who have complied with, Section 179 of the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands) in cash at a purchase price of $57.00 per share, without interest, subject to any required tax withholding as provided in the Merger Agreement. The enterprise value is expected to be approximately $8.50 billion (the "Capri Acquisition"). On October 25, 2023, at a special meeting of Capri's shareholders, Capri's shareholders approved the Merger Agreement and the transactions contemplated thereby. The Company has received regulatory approval from all applicable jurisdictions except for the United States. On April 22, 2024, the FTC filed a complaint against the Company and Capri in the United States District Court for the Southern District of New York seeking to enjoin the consummation of the Capri Acquisition. The FTC’s complaint alleges that the Capri Acquisition, if consummated, would violate Section 7 of the Clayton Act and that the Merger Agreement and the Capri Acquisition constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act and should be enjoined. The trial commenced on September 9, 2024, 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 is 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. Refer to Note 16, "Subsequent Events," for further information.
In order to finance the Capri Acquisition, on November 27, 2023, the Company issued $4.50 billion of senior unsecured notes (the "Capri Acquisition USD Senior Notes") and €1.50 billion of Euro-denominated senior unsecured notes (the "Capri Acquisition EUR Senior Notes" and, together with the Capri Acquisition USD Senior Notes, the "Capri Acquisition Senior Notes") which, together with the $1.40 billion of delayed draw unsecured term loan facilities (the "Capri Acquisition Term Loan Facilities") executed on August 30, 2023, complete the expected financing for the Capri Acquisition. Until the close of the transaction, the Company will maintain the proceeds from the issuance of the Capri Acquisition Senior Notes in Cash and cash equivalents and Short-term investments. If (i) the Capri Acquisition has not been completed by February 10, 2025 (or such later date mutually agreed between the Company and Capri) (such date, the “Special Mandatory Redemption End Date”), (ii) prior to the Special Mandatory Redemption End Date, the Merger Agreement is terminated in accordance with its terms or (iii) the Company otherwise notifies the trustee that it will not pursue the consummation of the Capri Acquisition, all of the Capri Acquisition Senior Notes will be redeemed at a redemption price equal to 101% of their principal amount, plus accrued and unpaid interest to, but excluding, the special mandatory redemption date. Refer to Note 13, "Investments," and Note 12, "Fair Value Measurements," for further detail on our cash equivalents and Short-term investments, and Note 11, "Debt," for further information on our existing debt instruments related to the Capri Acquisition.
In conjunction with the Capri Acquisition, the Company incurred $70.8 million and $26.3 million respectively, in pre-tax expenses primarily related to financing-related expenses and professional fees during the three months ended September 28, 2024 and September 30, 2023.
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TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
6. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The change in the carrying amount of the Company’s goodwill by segment is as follows:
 CoachKate Spade
Stuart Weitzman(1)
Total
(millions)
Balance at June 29, 2024$578.0 $626.1 $— $1,204.1 
Foreign exchange impact23.2 4.7 — 27.9 
Balance at September 28, 2024$601.2 $630.8 $— $1,232.0 
(1)    Amount is net of accumulated goodwill impairment charges of $210.7 million as of September 28, 2024 and June 29, 2024.
Intangible Assets
Intangible assets consist of the following:
September 28, 2024June 29, 2024
Gross
Carrying
Amount		Accum.
Amort.		NetGross
Carrying
Amount		Accum.
Amort.		Net
(millions)
Intangible assets subject to amortization:
Customer relationships$100.3 $(58.1)$42.2 $100.3 $(56.5)$43.8 
Total intangible assets subject to amortization100.3 (58.1)42.2 100.3 (56.5)43.8 
Intangible assets not subject to amortization:
Trademarks and trade names1,309.8 — 1,309.8 1,309.8 — 1,309.8 
Total intangible assets$1,410.1 $(58.1)$1,352.0 $1,410.1 $(56.5)$1,353.6 
Amortization expense for the Company’s definite-lived intangible assets was $1.6 million and $1.6 million for the three months ended September 28, 2024 and September 30, 2023, respectively.
As of September 28, 2024, the expected amortization expense for intangible assets is as follows:
 Amortization Expense
(millions)
Remainder of fiscal 2025$4.9 
Fiscal 20266.5 
Fiscal 20276.5 
Fiscal 20286.5 
Fiscal 20296.5 
Fiscal 2030 and thereafter11.3 
Total$42.2 
The expected amortization expense above reflects remaining useful lives ranging from approximately 5.5 to 7.8 years for customer relationships.
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TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
7. STOCKHOLDERS' EQUITY
A reconciliation of stockholders' equity is presented below:
Shares of
Common
Stock		Common StockAdditional
Paid-in-
Capital		Retained Earnings / (Accumulated Deficit)Accumulated
Other
Comprehensive
Income (Loss)		Total
Stockholders'
Equity
(millions, except per share data)
Balance at July 1, 2023227.4 $2.3 $3,682.2 $(1,216.8)$(189.9)$2,277.8 
Net income (loss)— — — 195.0 — 195.0 
Other comprehensive income (loss)— — — — 34.6 34.6 
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes1.8 — (31.2)— — (31.2)
Share-based compensation— — 19.7 — — 19.7 
Dividends declared ($0.35 per share)
— — — (80.2)— (80.2)
Balance at September 30, 2023
229.2 $2.3 $3,670.7 $(1,102.0)$(155.3)$2,415.7 
Shares of
Common
Stock		Common StockAdditional
Paid-in-
Capital		Retained Earnings / (Accumulated Deficit)Accumulated
Other
Comprehensive
Income (Loss)		Total
Stockholders'
Equity
(millions, except per share data)
Balance at June 29, 2024
230.2 $2.3 $3,762.7 $(722.2)$(145.9)$2,896.9 
Net income (loss)— — — 186.6 — 186.6 
Other comprehensive income (loss)— — — — (46.5)(46.5)
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes2.8 — 7.2 — — 7.2 
Share-based compensation— — 19.1 — — 19.1 
Dividends declared ($0.35 per share)
— — — (81.4)— (81.4)
Balance at September 28, 2024
233.0 $2.3 $3,789.0 $(617.0)$(192.4)$2,981.9 
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TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
The components of accumulated other comprehensive income (loss) ("AOCI"), as of the dates indicated, are as follows:
Unrealized Gains (Losses) on Cash
Flow
Hedging Derivatives(1)
Unrealized Gains
(Losses) on Available-
for-Sale Investments
Cumulative
Translation
Adjustment(2)
Total
(millions)
Balances at July 1, 2023$34.9 $— $(224.8)$(189.9)
Other comprehensive income (loss) before reclassifications31.5 — 3.3 34.8 
Less: amounts reclassified from accumulated other comprehensive income to earnings0.2 — — 0.2 
Net current-period other comprehensive income (loss)31.3 — 3.3 34.6 
Balances at September 30, 2023$66.2 $— $(221.5)$(155.3)
Balances at June 29, 2024$57.1 $(0.2)$(202.8)$(145.9)
Other comprehensive income (loss) before reclassifications(35.4)2.9 2.7 (29.8)
Less: amounts reclassified from accumulated other comprehensive income to earnings12.3 0.5 3.9 16.7 
Net current-period other comprehensive income (loss)(47.7)2.4 (1.2)(46.5)
Balances at September 28, 2024$9.4 $2.2 $(204.0)$(192.4)
(1)    The ending balances of AOCI related to cash flow hedges are net of tax of $(0.8) million and $(7.5) million as of September 28, 2024 and September 30, 2023, respectively. The amounts reclassified from AOCI are net of tax of $(0.6) million and $0.6 million as of September 28, 2024 and September 30, 2023, respectively.
(2)    The ending balances of AOCI related to the fair values of instruments designated as hedges of the Company's net investment in certain foreign operations as included in foreign currency translation adjustments are a loss of $56.3 million, net of tax of $11.6 million and a loss of $25.9 million, net of tax of $(5.8) million, as of September 28, 2024 and September 30, 2023, respectively.
8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The majority of the Company’s purchases of finished goods are denominated in U.S. dollars, which limits the Company’s exposure to the transactional effects of foreign currency exchange rate fluctuations. However, the Company is exposed to foreign currency exchange risk related to its sale of U.S. dollar inventory to foreign operating subsidiaries in local currency, as well as risk related to various cross-currency intercompany loans and payables, and translation risk. The Company is also exposed to foreign currency risk related to changes in the U.S. dollar value of its net investment in foreign subsidiaries. The Company uses derivative financial instruments to manage these risks. These derivative transactions are in accordance with the Company’s risk management policies. The Company does not enter into derivative transactions for speculative or trading purposes.
The Company records all derivative contracts at fair value on the Condensed Consolidated Balance Sheet. The fair values of foreign currency derivatives are based on the forward curves of the specific indices upon which settlement is based and include an adjustment for the counterparty's or Company’s credit risk. Judgment is required of management in developing estimates of fair value. The use of different market assumptions or methodologies could affect the estimated fair value.
For cash flow derivative instruments that qualify for hedge accounting, the changes in the fair value of these instruments are recognized as a component of AOCI until the hedged item is recognized in earnings. For derivative instruments that are designated as a net investment hedge, the changes in the fair value of the instruments are recognized as a component of AOCI and, upon discontinuation of the hedge, remain in AOCI until the net investment is sold or liquidated.
Each derivative instrument entered into by the Company that qualifies for hedge accounting is expected to be highly effective at reducing the risk associated with the exposure being hedged. For each derivative that is designated as a hedge, the
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TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Company documents the related risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, as well as how hedge effectiveness will be assessed over the term of the instrument. The extent to which a hedging instrument has been and is expected to remain highly effective in achieving offsetting changes in fair value or cash flows is assessed and documented by the Company on at least a quarterly basis.
If it is determined that a derivative instrument has not been highly effective and will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are recognized in earnings within foreign currency gains (losses) or interest income (expense). Upon discontinuance of hedge accounting, the cumulative change in fair value of cash flow derivatives previously recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the original hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within foreign currency gains (losses) or interest income (expense).
For foreign currency derivative instruments which are not designated as hedges, the changes in fair value of the instruments are recorded through earnings. These changes generally offset the revaluation of certain underlying assets and liabilities.
As a result of the use of derivative instruments, the Company may be exposed to the risk that the counterparties to such contracts will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings, among other factors.
The fair values of the Company’s derivative instruments are recorded on its Condensed Consolidated Balance Sheet on a gross basis. For cash flow reporting purposes, the Company classifies proceeds received or amounts paid upon the settlement of a derivative instrument in the same manner as the related item being hedged, primarily within cash from operating activities.
Hedging Portfolio
The Company enters into forward currency contracts primarily to reduce its risks related to exchange rate fluctuations on foreign currency denominated inventory transactions, as well as various cross-currency intercompany loans and payables. This primarily includes exposure to exchange rate fluctuations in the Japanese Yen, the Chinese Renminbi and the Euro. To the extent its derivative contracts designated as cash flow hedges are highly effective in offsetting changes in the value of the hedged items, the related gains (losses) are initially deferred in AOCI and subsequently recognized in the Condensed Consolidated Statements of Operations as part of the cost of the inventory purchases being hedged within Cost of sales, when the related inventory is sold to a third-party. Current maturity dates range from October 2024 to June 2026. Forward foreign currency exchange contracts which are not designated as hedges of intercompany and other contractual obligations are recognized within Other expense (income) on the Company's Condensed Consolidated Statement of Operations. The maturity date of most instruments held as of September 28, 2024 range from November 2024 to December 2024, and such contracts are typically renewed upon maturity if the related balance has not been settled.
The Company also enters into cross-currency swaps to reduce its risks related to exchange rate fluctuations on net investments in foreign subsidiaries, including our net investment in Euro-denominated subsidiaries, Japanese Yen-denominated subsidiaries and Chinese Renminbi subsidiaries against future volatility in the exchange rates between the United States dollar and their local currencies. The related gains (losses) are deferred in AOCI until the net investment is sold or liquidated, and current maturity dates range from November 2027 to March 2032.
13
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
The following tables provide information related to the Company's derivative instruments recorded on the Company's Condensed Consolidated Balance Sheets as of September 28, 2024 and June 29, 2024:
Notional ValueDerivative AssetsDerivative Liabilities
Fair ValueFair Value
September 28, 2024June 29, 2024Consolidated Balance Sheet ClassificationSeptember 28, 2024June 29, 2024Consolidated Balance Sheet ClassificationSeptember 28, 2024June 29, 2024
(millions)
Designated Derivative Hedging Instruments:
FC - Inventory purchases(1)
$732.1 $764.6 Other Current Assets$14.2 $58.2 Accrued Liabilities$8.7 $2.2 
Net investment hedges(2)
1,590.0 1,450.0 
Other Current Assets & Other Assets(4)
16.4 32.2 
Accrued Liabilities & Other Liabilities(5)
202.5 139.4 
Total designated hedge instruments$2,322.1 $2,214.6 $30.6 $90.4 $211.2 $141.6 
Undesignated Hedging Instruments:
FC - Intercompany liabilities and loans(3)
309.7 348.2 Other Current Assets0.2 0.1 Accrued Liabilities0.5 2.6 
Total Hedges$2,631.8 $2,562.8 $30.8 $90.5 $211.7 $144.2 
(1)Represents forward foreign currency exchange contracts ("FC") designated as derivative instruments in cash flow hedging relationships.
(2)Represents cross currency swap foreign exchange contracts ("CCS") and forward foreign exchange contracts ("FC") designated as derivative instruments in net investment hedging relationships.
(3)Represents forward foreign currency exchange contracts ("FC") not designated as hedges.
(4)As of September 28, 2024, the Company recorded $10.3 million within Other Current Assets and $6.1 million within Other Assets. As of June 29, 2024, the Company recorded $11.6 million within Other Current Assets and $20.6 million within Other Assets.
(5)As of September 28, 2024, the Company recorded $4.9 million within Accrued Liabilities and $197.6 million within Other Liabilities. As of June 29, 2024, the Company recorded $2.2 million within Accrued Liabilities and $137.2 million within Other Liabilities.
14
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)

The following tables provides the pretax impact of gains and losses from the Company's designated derivative instruments on its Condensed Consolidated Financial Statements as of September 28, 2024 and September 30, 2023:
Amount of Gain (Loss) Recognized in OCI on Derivatives
Three Months Ended
September 28, 2024September 30, 2023
(millions)
Cash flow hedges:
Inventory purchases(1)
$(36.7)$19.9 
Interest rates (2)
— 15.6 
Total cash flow hedges$(36.7)$35.5 
Other:
Net investment hedges(3)
(79.9)34.8 
Total other$(79.9)$34.8 
Total hedges$(116.6)$70.3 
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
Statement of Operations
Classification		Three Months Ended
September 28, 2024September 30, 2023
(millions)
Cash flow hedges:
Inventory purchases(1)
Cost of sales$13.4 $3.7 
Interest rates(2)
Other income (expense)(0.5)(4.1)
Total cash flow hedges$12.9 $(0.4)
Other:
Net investment hedges(3)
Interest income (expense)$4.6 $— 
Total other
Total hedges$17.5 $(0.4)
(1)Represents forward foreign currency exchange contracts ("FC") designated as derivative instruments in cash flow hedging relationships.
(2)Represents forward interest rate contracts ("IC") designated as derivative instruments in cash flow hedging relationships.
(3)Represents cross currency swap contracts ("CCS") and forward foreign exchange contracts ("FC") designated as derivative instruments in net investment hedging relationships, for which the difference between changes in fair value and periodic amortization of excluded components is recorded within AOCI.
The Company expects that $12.6 million of net derivative gain related to inventory purchases and interest rates included in Accumulated other comprehensive income at September 28, 2024 will be reclassified into earnings within the next 12 months. This amount will vary due to fluctuations in foreign currency exchange rates.
The Company assesses the cross-currency swaps and forward exchange contracts used as net investment hedges under the spot method. This results in the cross-currency basis spread on the cross-currency swaps and the difference between the spot rate and the forward rate of the forward exchange contract being excluded from the assessment of hedge effectiveness, and recorded as incurred as a reduction in Interest expense, net in the Company’s Condensed Consolidated Statements of Operations. Accordingly, the Company recorded net interest income of $6.1 million and $7.2 million during three months ended September 28, 2024 and September 30, 2023, respectively.
15
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
9. EARNINGS PER SHARE
Basic net income per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted net income per share is calculated similarly but includes potential dilution from the exercise of stock options and restricted stock units and any other potentially dilutive instruments, only in the periods in which such effects are dilutive under the treasury stock method.
The following is a reconciliation of the weighted-average shares outstanding and calculation of basic and diluted earnings per share:
 Three Months Ended
September 28, 2024September 30, 2023
(millions, except per share data)
Net income (loss)$186.6 $195.0 
Weighted-average basic shares 231.5 228.3 
Dilutive securities:  
Effect of dilutive securities4.4 4.2 
Weighted-average diluted shares235.9 232.5 
Net income (loss) per share:  
Basic$0.81 $0.85 
Diluted$0.79 $0.84 
Earnings per share amounts have been calculated based on unrounded numbers. Options to purchase shares of the Company's common stock at an exercise price greater than the average market price of the common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income (loss) per common share. In addition, the Company has outstanding restricted stock unit awards that are issuable only upon the achievement of certain performance goals. Performance-based restricted stock unit awards are included in the computation of diluted shares only to the extent that the underlying performance conditions and any applicable market condition modifiers (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive under the treasury stock method. As of September 28, 2024 and September 30, 2023, there were 2.1 million and 3.7 million, respectively, of additional shares issuable upon exercise of anti-dilutive options and contingent vesting of performance-based restricted stock unit awards, which were excluded from the diluted share calculations.
16
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
10. SHARE-BASED COMPENSATION
The following table shows the share-based compensation expense and the related tax benefits recognized in the Company's Condensed Consolidated Statements of Operations for the periods indicated: 
 Three Months Ended
September 28, 2024September 30, 2023
(millions)
Share-based compensation expense$19.1 $19.7 
Income tax benefit related to share-based compensation expense
3.6 3.7 
Stock Options
A summary of stock option activity during the three months ended September 28, 2024 is as follows:
 Number of
Options
Outstanding
(millions)
Outstanding at June 29, 20248.2 
Granted1.0 
Exercised(0.6)
Forfeited or expired(0.1)
Outstanding at September 28, 20248.5 
The weighted-average grant-date fair value of options granted during the three months ended September 28, 2024 and September 30, 2023 was $12.06 and $10.51, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model and the following weighted-average assumptions:
September 28, 2024September 30, 2023
Expected term (years)4.94.9
Expected volatility40.9 %44.7 %
Risk-free interest rate3.8 %4.5 %
Dividend yield3.5 %4.1 %
Service-based Restricted Stock Unit Awards ("RSUs")
A summary of service-based RSU activity during the three months ended September 28, 2024 is as follows:
 Number of
Non-vested RSUs
(millions)
Non-vested at June 29, 20245.2 
Granted1.8 
Vested(2.1)
Forfeited(0.1)
Non-vested at September 28, 20244.8 
The weighted-average grant-date fair value of share awards granted during the three months ended September 28, 2024 and September 30, 2023 was $40.65 and $33.70, respectively.
17
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Performance-based Restricted Stock Unit Awards ("PRSUs")
A summary of PRSU activity during the three months ended September 28, 2024 is as follows:
 Number of
Non-vested PRSUs
(millions)
Non-vested at June 29, 20241.2 
Granted0.3 
Change due to performance condition achievement— 
Vested(0.3)
Forfeited(0.1)
Non-vested at September 28, 20241.1 
The PRSU awards included in the non-vested amount are based on certain Company-specific financial metrics. The effect of the change due to performance condition on the non-vested amount is recognized at the conclusion of the performance period, which may differ from the date on which the award vests.
The weighted-average grant-date fair value per share of PRSU awards granted during the three months ended September 28, 2024 and September 30, 2023 was $40.66 and $33.64, respectively.
18
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
11. DEBT
The following table summarizes the components of the Company’s outstanding debt:
September 28,
2024		June 29,
2024
(millions)
Current Debt:
4.250% Senior Notes due 2025
$303.4 $303.4 
Total Current Debt$303.4 $303.4 
Long-Term Debt:
USD Senior Notes:
7.050% Senior Notes due 2025
$500.0 $500.0 
7.000% Senior Notes due 2026
750.0 750.0 
4.125% Senior Notes due 2027
396.6 396.6 
7.350% Senior Notes due 2028
1,000.0 1,000.0 
7.700% Senior Notes due 2030
1,000.0 1,000.0 
3.050% Senior Notes due 2032
500.0 500.0 
7.850% Senior Notes due 2033
1,250.0 1,250.0 
EUR Senior Notes:
5.350% EUR Senior Notes due 2025(1)
558.3 535.6 
5.375% EUR Senior Notes due 2027(1)
558.3 535.6 
5.875% EUR Senior Notes due 2031(1)
558.3 535.6 
Total long-term debt7,071.5 7,003.4 
Less: Unamortized discount and debt issuance costs on senior notes(63.2)(66.2)
Total long-term debt, net$7,008.3 $6,937.2 
(1)The carrying amounts of the Capri Acquisition EUR Senior Notes include the impact of changes in the exchange rate of the United States Dollar against the Euro.
During the three months ended September 28, 2024 and September 30, 2023, the Company recognized interest expense related to the outstanding debt of $123.2 million and $22.3 million, respectively.
Capri Holdings Limited Acquisition
In order to finance the Capri Acquisition, on November 27, 2023, the Company issued $4.50 billion Capri Acquisition USD Senior Notes and €1.50 billion Capri Acquisition EUR Senior Notes which, together with the $1.40 billion of delayed draw Capri Acquisition Term Loan Facilities executed on August 30, 2023, complete the expected financing for the Capri Acquisition. Refer to Note 5, "Acquisitions," for further information.
Bridge Facility
In connection with our entry into the Merger Agreement, the Company entered into a commitment letter, dated as of August 10, 2023, with Bank of America, N.A., Morgan Stanley Senior Funding, Inc. and the other commitment parties party thereto, to provide a 364-day senior unsecured bridge loan facility in an aggregate principal amount of up to $8.00 billion (the "Bridge Facility") to fund the purchase price of the Capri Acquisition and to pay related fees and expenses. Upon entering into the Capri Acquisition Term Loan Credit Agreement (as defined below) and, as a result of the commitments thereunder with respect to the Capri Acquisition Term Loan Facilities (as defined below), the Bridge Facility commitments were reduced to $6.60 billion. In November 2023, the Bridge Facility was terminated upon the issuance of approximately $6.10 billion of the Capri Acquisition Senior Notes by the Company. Refer to the "Capri Acquisition USD Senior Notes" and "Capri Acquisition EUR Senior Notes" paragraphs below.
19
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Capri Acquisition Term Loan Facilities
On August 30, 2023, the Company entered into a definitive credit agreement (such agreement, the "Capri Acquisition Term Loan Credit Agreement") whereby Bank of America, N.A, as administrative agent, and the other agents party thereto, and a syndicate of banks and financial institutions have committed to lend the Company, subject to the satisfaction or waiver of the conditions set forth in the Capri Acquisition Term Loan Credit Agreement, the Capri Acquisition Term Loan Facilities consisting of a $1.05 billion unsecured term loan facility maturing three years after the term loans thereunder are borrowed (the “Three-Year Term Loan Facility”) and a $350.0 million term loan facility maturing five years after the term loans thereunder are borrowed (the “Five-Year Term Loan Facility”). The Company plans to use borrowings under the Capri Acquisition Term Loan Facilities to pay a portion of the consideration for the Capri Acquisition and to pay related fees and expenses.
Borrowings under the Capri Acquisition Term Loan Facilities bear interest at a rate per annum equal to, at the Company’s option, either (a) an alternate base rate or (b) a rate based on the forward-looking Secured Overnight Financing Rate ("SOFR") term rate administered by CME Group Benchmark Administration Limited (or any successor administrator) plus, in each case, an applicable margin. The applicable margin will be adjusted by reference to a grid based on the ratio of (a) consolidated debt (with certain customary deductions for unrestricted cash and permitted investments) to (b) consolidated EBITDAR. The applicable margin will initially be (x) in the case of the Three-Year Term Loan Facility, 0.250% for base rate loans and 1.250% for SOFR loans and (y) in the case of the Five-Year Term Loan Facility, 0.375% for base rate loans and 1.375% for SOFR loans. Additionally, the Company will pay a ticking fee of 0.15% on the average daily amount of the unused commitments of the Capri Acquisition Term Loan Facilities. There were no outstanding borrowings on the Capri Acquisition Term Loan Facilities as of September 28, 2024.
$2.00 Billion Revolving Credit Facility
On August 30, 2023, pursuant to that certain Amendment No. 1 to Credit Agreement (the "Amendment"), the Company amended its Existing Credit Agreement (as defined below), originally dated as of May 11, 2022, among the Company, as borrower, certain of our subsidiaries, as guarantors, Bank of America, N.A., as administrative agent, and the financial institutions parties thereto as lenders (the "Existing Credit Agreement", and as amended by the Amendment, the "Amended Credit Agreement"). Under the Amended Credit Agreement, a syndicate of financial institutions and other lenders provided increases to the aggregate commitments to the revolving facility under the Existing Credit Agreement from $1.25 billion to $2.00 billion (the “Revolving Credit Facility”). The Revolving Credit Facility will mature on May 11, 2027.
Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, (i) for borrowings in U.S. Dollars, either (a) an alternate base rate or (b) a rate based on the forward-looking SOFR term rate administered by CME Group Benchmark Administration Limited (or any successor administrator satisfactory to the administrative agent), (ii) for borrowings in Euros, the Euro Interbank Offered Rate, (iii) for borrowings in Pounds Sterling, the Sterling Overnight Index Average Reference Rate and (iv) for borrowings in Japanese Yen, the Tokyo Interbank Offer Rate, plus, in each case, an applicable margin. The applicable margin will be adjusted by reference to a grid (the “Pricing Grid”) based on the ratio of (a) consolidated debt to (b) consolidated EBITDAR. Additionally, the Company will pay facility fees, calculated at a rate per annum determined in accordance with the Pricing Grid, on the full amount of the Revolving Credit Facility, payable quarterly in arrears, and certain fees with respect to letters of credit that are issued. The Revolving Credit Facility may be used to finance the working capital needs, capital expenditures, permitted investments, share purchases, dividends and other general corporate purposes of the Company and its subsidiaries (which may include commercial paper backup). Additionally, up to $250 million of the Revolving Credit Facility will be available on a funds certain basis to fund the purchase price of the Capri Acquisition and to pay related fees and expenses. There were no outstanding borrowings on the Revolving Credit Facility as of September 28, 2024.
Capri Acquisition USD Senior Notes
On November 27, 2023, the Company issued $4.50 billion aggregate principal amount of the Capri Acquisition USD Senior Notes, consisting of $500.0 million aggregate principal amount of 7.050% senior unsecured notes due November 27, 2025 at 99.890% of par (the “7.050% Senior Notes due 2025”), $750.0 million aggregate principal amount of 7.000% senior unsecured notes due November 27, 2026 at 99.803% of par (the “7.000% Senior Notes due 2026”), $1.00 billion aggregate principal amount of 7.350% senior unsecured notes due November 27, 2028 at 99.724% (the “7.350% Senior Notes due 2028”), $1.00 billion aggregate principal amount of 7.700% Senior Notes due November 27, 2030 at 99.712% of par (the “7.700% Senior Notes due 2030”) and $1.25 billion aggregate principal amount of our 7.850% Senior Notes due November 27, 2033 at 99.475% (the “7.850% Senior Notes due 2033”). The Company will pay interest semi-annually on the Capri Acquisition USD Senior Notes on May 27 and November 27 of each year, commencing on May 27, 2024.
20
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
If (i) the Capri Acquisition has not been completed by the Special Mandatory Redemption End Date, (ii) prior to the Special Mandatory Redemption End Date, the Merger Agreement is terminated in accordance with its terms or (iii) the Company otherwise notifies the trustee that it will not pursue the consummation of the Capri Acquisition, all of the Capri Acquisition USD Senior Notes will be redeemed at a redemption price equal to 101% of their principal amount, plus accrued and unpaid interest to, but excluding, the special mandatory redemption date.
Capri Acquisition EUR Senior Notes
On November 27, 2023, the Company issued €1.50 billion aggregate principal amount of Capri Acquisition Senior Notes, consisting of €500.0 million aggregate principal amount of 5.350% senior unsecured notes due November 27, 2025 at 99.878% of par (the “5.350% EUR Senior Notes due 2025”), €500.0 million aggregate principal amount of 5.375% senior unsecured notes due November 27, 2027 at 99.723% of par (the 5.375% EUR Senior Notes due 2027”) and €500.0 million aggregate principal amount of our 5.875% senior unsecured notes due November 27, 2031 at 99.248% of par (the “5.875% EUR Senior Notes due 2031"). The Company will pay interest annually on the Capri Acquisition EUR Senior Notes on November 27 of each year, commencing on November 27, 2024. As of September 28, 2024, the carrying amount for each of the Capri Acquisition EUR Senior Notes was $558.3 million.
If (i) the Capri Acquisition has not been completed by the Special Mandatory Redemption End Date, (ii) prior to the Special Mandatory Redemption End Date, the Merger Agreement is terminated in accordance with its terms or (iii) the Company otherwise notifies the trustee that it will not pursue the consummation of the Capri Acquisition, all of the Capri Acquisition EUR Senior Notes will be redeemed at a redemption price equal to 101% of their principal amount, plus accrued and unpaid interest to, but excluding, the special mandatory redemption date.
Term Loan due 2027
On May 11, 2022, pursuant to the Existing Credit Agreement, the Company entered into an unsecured $500.0 million Term Loan (the “Term Loan due 2027”) with a maturity date on May 11, 2027. The Term Loan due 2027 amortizes in an amount equal to 5.000% per annum, with payments made quarterly. Borrowings under the Term Loan due 2027 bear interest at a rate per annum equal to, at the Company’s option, either (i) an alternate base rate or (ii) a term secured overnight financing rate plus, in each case, an applicable margin. The applicable margin will be adjusted by reference to a pricing grid based on the ratio (a) consolidated debt to (b) consolidated EBITDAR. The Company repaid its outstanding borrowings under the Term Loan due 2027 on May 31, 2024.
2025, 2027, 2032 Senior Notes
In March 2015, the Company issued $600.0 million aggregate principal amount of 4.250% senior unsecured notes due April 1, 2025 at 99.445% of par (the "4.250% Senior Notes due 2025"). In June 2017, the Company issued $600.0 million aggregate principal amount of 4.125% senior unsecured notes due July 15, 2027 at 99.858% of par (the 4.125% Senior Notes due 2027"). In December 2021, the Company completed a cash tender offer for $296.6 million and $203.4 million of the outstanding aggregate principal amount under its 4.250% Senior Notes due 2025 and 4.125% Senior Notes due 2027, respectively. In addition, in December 2021, the Company issued $500.0 million aggregate principal amount of 3.050% senior unsecured notes due March 15, 2032 at 99.705% of par (the "3.050% Senior Notes due 2032").
China Credit Facility
On May 20, 2024, the Company entered into a short-term credit facility (“China Credit Facility”) with Citibank, which may be used to fund general working capital needs, not to exceed 12 months, and is subject to annual renewal. The China Credit Facility provides the Company with a maximum facility amount of up to RMB 250.0 million (approximately $35.7 million), which includes a loan of up to RMB 85.0 million (approximately $12.1 million), a bank guarantee facility of up to RMB 15.0 million (approximately $2.2 million) and Accounts payable financing of up to RMB 150.0 million (approximately $21.4 million). As of September 28, 2024, there were no borrowings, bank guarantees or Accounts Payable financing outstanding under the China Credit Facility.
Debt Covenants
Under the terms of our debt facilities, we must comply with certain restrictions limiting the Company’s ability to among other things: (i) incur certain indebtedness, (ii) create certain liens, (iii) enter into certain sale and leaseback transactions, (iv) make certain investments or payments and (v) merge, or consolidate or transfer, sell or lease all or substantially all of the Company’s assets.
21
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Under the Amended Credit Agreement, we are required to comply on a quarterly basis with a maximum net leverage ratio of 4.00:1.00. After giving effect to the Capri Acquisition, the Company is will be required under the Amended Credit Agreement and the Capri Acquisition Term Loan Credit Agreement to comply on a quarterly basis with a maximum net leverage ratio of (i) from and including the closing date of the Capri Acquisition to but excluding June 28, 2025, 4.75 to 1.00, (ii) from and including June 28, 2025 to but excluding June 27, 2026, 4.50 to 1.00, and (iii) from and including June 27, 2026 and thereafter, 4.00 to 1.00. As of September 28, 2024, we were in compliance with these restrictions and covenants, have met such financial ratios and have met all debt payment obligations.
Fair Value Considerations
The following table shows the estimated fair values of the senior unsecured notes at September 28, 2024 and June 29, 2024 based on external pricing data, including available quoted market prices of the instruments, and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and are classified as Level 2 measurements within the fair value hierarchy:
September 28,
2024		June 29,
2024
(millions)
USD Senior Notes:
4.250% Senior Notes due 2025
$301.6 $300.2 
7.050% Senior Notes due 2025
510.6 508.1 
7.000% Senior Notes due 2026
778.1 770.7 
4.125% Senior Notes due 2027
390.6 378.2 
7.350% Senior Notes due 2028
1,052.8 1,036.5 
7.700% Senior Notes due 2030
1,074.2 1,042.9 
3.050% Senior Notes due 2032
430.0 402.9 
7.850% Senior Notes due 2033
1,358.5 1,311.3 
EUR Senior Notes:
5.350% EUR Senior Notes due 2025(1)
570.3 543.8 
5.375% EUR Senior Notes due 2027(1)
580.2 550.8 
5.875% EUR Senior Notes due 2031(1)
586.0 556.4 
(1)The fair values of the Capri Acquisition EUR Senior Notes include the impact of changes in the exchange rate of the United States Dollar against the Euro.
22
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
12. FAIR VALUE MEASUREMENTS
The Company categorizes its assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. The three levels of the hierarchy are defined as follows:
Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets and inputs other than quoted prices that are observable for substantially the full term of the asset or liability.
Level 3 — Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability. The Company does not have any Level 3 investments.
The following table shows the fair value measurements of the Company’s financial assets and liabilities at September 28, 2024 and June 29, 2024:
 Level 1Level 2
September 28,
2024		June 29,
2024		September 28,
2024		June 29,
2024
(millions)
Assets:    
Cash equivalents(1)
$703.6 $437.4 $— $29.7 
Short-term investments:
Time deposits(2)
— — 0.6 0.6 
Commercial paper(2)
— — 778.0 865.2 
Corporate debt securities - U.S.(2)
— — 45.0 — 
Government securities - U.S.(2)
— 178.2 — — 
Other— — 18.7 17.8 
Long-term investments:
Other— — 1.3 1.3 
Derivative assets:
Inventory-related instruments(3)
— — 14.2 58.2 
Net investment hedges(3)
— — 16.4 32.2 
Intercompany loans and payables(3)
— — 0.2 0.1 
Liabilities:    
Derivative liabilities:
  
Inventory-related instruments(3)
— — 8.7 2.2 
Net investment hedges(3)
— — 202.5 139.4 
Intercompany loans and payables(3)
— — 0.5 2.6 
(1)Cash equivalents generally consists of money market funds and time deposits with maturities of three months or less at the date of purchase. Due to their short-term maturity, management believes that their carrying value approximates fair value.
(2)Short-term investments are recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets.
(3)The fair value of these hedges is primarily based on the forward curves of the specific indices upon which settlement is based and includes an adjustment for the counterparty’s or Company’s credit risk.
Refer to Note 11, "Debt," for the fair value of the Company's outstanding debt instruments.
23
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Non-Financial Assets and Liabilities
The Company’s non-financial instruments, which primarily consist of goodwill, intangible assets, right-of-use assets and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions. There were no impairment charges recorded during the three months ended September 28, 2024 or three months ended September 30, 2023.
13. INVESTMENTS
The following table summarizes the Company’s U.S. dollar-denominated investments, recorded within the Company's Condensed Consolidated Balance Sheets as of September 28, 2024 and June 29, 2024:
September 28, 2024June 29, 2024
Short-term
Long-term(2)
TotalShort-term
Long-term(2)
Total
(millions)
Available-for-sale investments:      
Commercial paper(1)
$778.0 $— $778.0 $865.2 $— $865.2 
Government securities - U.S.(1)
— — — 178.2 — 178.2 
Corporate debt securities - U.S.(1)
45.0 — 45.0 — — — 
Total Available-for-sale investments$823.0 $— $823.0 $1,043.4 $— $1,043.4 
Other:  
Time deposits(1)
0.6 — 0.6 0.6 — 0.6 
Other18.7 1.3 20.0 17.8 1.3 19.1 
Total Investments$842.3 $1.3 $843.6 $1,061.8 $1.3 $1,063.1 
(1)These securities, as of period end, have maturity dates during their respective fiscal years and are recorded at fair value.
(2)Long-term investments are presented within Other assets on the Condensed Consolidated Balance Sheets.
The Company recognized a pre-tax gain of $0.5 million on available-for-sale investments during the three months ended September 28, 2024. This gain is included within Other expense (income) on the Condensed Consolidated Statements of Operations. Additionally, the company has unrealized gains of $2.2 million on available-for-sale investments as of September 28, 2024 included within Comprehensive income (loss) on the Condensed Consolidated Statements of Comprehensive Income (Loss).
There were no material gross realized and unrealized gains or losses on available-for-sale investments for the period ended June 29, 2024.
14. COMMITMENTS AND CONTINGENCIES
Capri Holdings Limited Merger Agreement
On August 10, 2023, the Company entered into a Merger Agreement. Refer to Note 5, "Acquisitions" and Note 16, "Subsequent Events" for further information.
Letters of Credit
The Company had standby letters of credit, surety bonds and bank guarantees totaling $28.4 million and $28.4 million outstanding at September 28, 2024 and June 29, 2024, respectively. The agreements, which expire at various dates through calendar 2039, primarily collateralize the Company's obligation to third parties for duty, leases, insurance claims and materials used in product manufacturing. The Company pays certain fees with respect to these instruments that are issued.
Other
The Company had other contractual cash obligations as of September 28, 2024 related to debt repayments. Refer to Note 11, "Debt," for further information.
24
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
The Company is involved in various routine legal proceedings as both plaintiff and defendant incident to the ordinary course of its business, including proceedings to protect Tapestry's intellectual property rights, litigation instituted by persons alleged to have been injured by advertising claims or upon premises within the Company’s control, contractual disputes, insurance claims and litigation with present or former employees.
Although the Company's litigation can result in large monetary awards, such as when a civil jury is allowed to determine compensatory and/or punitive damages, the Company believes that the outcome of all pending legal proceedings in the aggregate will not have a material effect on the Company's business or condensed consolidated financial statements.
15. SEGMENT INFORMATION
The Company has three reportable segments:
•Coach - Includes global sales primarily of Coach brand products to customers through our DTC, wholesale and licensing businesses.
•Kate Spade - Includes global sales primarily of kate spade new york brand products to customers through our DTC, wholesale and licensing businesses.
•Stuart Weitzman - Includes global sales of Stuart Weitzman brand products primarily through our DTC, wholesale and licensing businesses.
In deciding how to allocate resources and assess performance, the Company's chief operating decision maker regularly evaluates operating profit of these segments. Segment operating profit is the gross profit of the segment less direct expenses of the segment. Total expenditures for additions to long-lived assets are not disclosed as this information is not regularly provided to the chief operating decision maker at the segment level.
In addition to these reportable segments, the Company has certain corporate expenses that are not directly attributable to its brands ("Corporate expenses"); therefore, they are not allocated to its segments. Such costs primarily include certain overhead expenses related to corporate functions as well as certain administration, corporate occupancy, information technology, and depreciation costs.
The following table summarizes net sales of each of the company's segments for the three months ended September 28, 2024 and September 30, 2023:
Three Months Ended
September 28, 2024September 30, 2023
Segment net sales:  
Coach$1,170.6 $1,157.4 
Kate Spade283.2 303.2
Stuart Weitzman53.7 52.6
Total Net sales:$1,507.5 $1,513.2 
The following table summarizes segment operating profit of each of the company's segments and reconciliation to Income (loss) before provision for income taxes for the three months ended September 28, 2024 and September 30, 2023:
Three Months Ended
September 28, 2024September 30, 2023
Segment operating profit:  
Coach$386.6 $371.3 
Kate Spade27.0 26.6
Stuart Weitzman(7.4)(8.6)
Total segment operating profit:$406.2 $389.3 
Corporate expenses(1)
154.2 136.1 
Unallocated other charges, net(2)
26.3 14.7 
Income (loss) before provision for income taxes$225.7 $238.5 
25
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
The following table summarizes depreciation and amortization expense of each of the company's segments for the three months ended September 28, 2024 and September 30, 2023:
Three Months Ended
September 28, 2024September 30, 2023
Depreciation and amortization expense(3):
  
Coach$22.0 $23.0 
Kate Spade7.9 9.8
Stuart Weitzman2.1 2.8
Corporate(1)
8.9