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Transformation and Other Actions
 3 Months Ended
Sep. 26, 2015
Restructuring and Related Activities [Abstract]  
Transformation and Other Actions
Transformation and Other Actions
Transformation Charges
During the fourth quarter of fiscal year ended June 28, 2014 ("fiscal 2014"), the Company announced a multi-year strategic plan to transform the Coach brand and reinvigorate growth. This multi-faceted, multi-year transformation plan (the "Transformation Plan"), which will continue through fiscal 2016, includes key operational and cost measures, including: (i) the investment in capital improvements in stores and wholesale locations to drive comparable sales improvement; (ii) the optimization and streamlining of the Company's organizational model as well as the closure of underperforming stores in North America, and select International stores; (iii) the realignment of inventory levels and mix to reflect the Company's elevated product strategy and consumer preferences; (iv) the investment in incremental advertising costs to elevate consumer perception of the Coach brand, drive sales growth and promote this new strategy, which started in fiscal 2015; and (v) the significant scale-back of promotional cadence in an increased global promotional environment, particularly within the outlet Internet sales site, which began in fiscal 2014.
As of September 26, 2015, the Company expects to incur aggregate pre-tax charges of about $325 million, in total, under the Transformation Plan. During the quarter ended September 26, 2015 the Company incurred transformation-related charges of $12.6 million, ($8.5 million after-tax, or $0.03 per diluted share) primarily due to organizational efficiency costs and accelerated depreciation as a result of store renovations, within North America and select International stores. During the quarter ended September 27, 2014 the Company incurred transformation-related charges of $37.1 million, ($26.7 million after-tax, or $0.10 per diluted share) primarily associated with the Company's North America business, related to corporate severance costs and store-related costs. For the three months ended September 26, 2015 and September 27, 2014, the charges recorded in selling, general and administrative ("SG&A") expenses were $12.6 million, and $33.1 million, respectively. For the three months ended September 27, 2014, the charges recorded in cost of sales were $4.0 million. Total charges incurred under the Transformation Plan to date are $290.0 million.
A summary of charges and related liabilities under the Company's Transformation Plan are as follows (in millions):
 
Inventory-Related Charges(1)
 
Store-Related Costs(2)
 
Organizational Efficiency Costs(3)
 
Other(4)
 
Total
Balance at June 28, 2014
$
15.4

 
$
5.5

 
$
1.0

 
$
0.6

 
$
22.5

Fiscal 2015 charges
3.0

 
80.4

 
47.3

 
15.2

 
145.9

Cash payments
(15.4
)
 
(34.6
)
 
(30.8
)
 
(10.1
)
 
(90.9
)
Non-cash adjustments
(3.0
)
 
(48.8
)
 
(5.5
)
 
(2.4
)
 
(59.7
)
Balance at June 27, 2015
$
—

 
$
2.5

 
$
12.0

 
$
3.3

 
$
17.8

Fiscal 2016 charges
—

 
5.1

 
6.5

 
1.0

 
12.6

Cash payments
—

 
(1.8
)
 
(9.4
)
 
(0.1
)
 
(11.3
)
Non-cash adjustments
—

 
(4.6
)
 
—

 
(0.8
)
 
(5.4
)
Balance at September 26, 2015
$
—


$
1.2

 
$
9.1


$
3.4

 
$
13.7

 
(1) 
Inventory-related charges, recorded within cost of sales, primarily relate to reserves for the donation and destruction of certain on-hand inventory and future non-cancelable inventory purchase commitments. As of September 26, 2015 and June 27, 2015, a reserve of $11.1 million is included within Inventories on the Company's Condensed Consolidated Balance Sheets.
(2) 
Store-related costs, recorded within SG&A expenses, relate to store closure costs which include accelerated depreciation charges associated with store assets that the Company will no longer benefit from as a result of the Transformation Plan, as well as lease termination and store employee severance costs.
(3) 
Organizational efficiency charges, recorded within SG&A expenses, primarily relate to the severance and related costs of corporate employees.
(4) 
Other charges comprise of consulting costs and the write-down of certain assets that will not be placed into service by the Company, which are recorded within SG&A expenses, and certain freight and handling costs incurred related to the destruction of inventory which are recorded within cost of sales.
The remaining balance as of September 26, 2015 and June 27, 2015 is included within Accrued liabilities on the Company's Condensed Consolidated Balance Sheets. The above charges were recorded as corporate unallocated expenses within the Company's Condensed Consolidated Statements of Income. See Note 14, "Segment Information," for further information.
The Company expects to incur additional pre-tax charges in the range of $35 million during fiscal 2016 in connection with the Transformation Plan. These costs will primarily consist of organizational efficiency charges and global store-related costs, including the impact of accelerated depreciation associated with store renovations and closures in North America and select International stores.