Segment Information

6 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

In fiscal 2017, the Company has three reportable segments based on its business activities and organization:

• North America, which is composed of Coach brand sales to North American consumers through stores, including the Internet, and sales to wholesale customers.

• International, which is composed of Coach brand sales to consumers through stores and concession shop-in-shops in Japan, mainland China, Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, Austria, Belgium, the Netherlands and Switzerland. Additionally, International includes Coach brand sales to consumers through the Internet in Japan, mainland China, the United Kingdom and South Korea, as well as sales to wholesale customers and distributors in approximately 55 countries.

• Stuart Weitzman, which includes worldwide sales generated by the Stuart Weitzman brand, primarilythrough department stores in North America and international locations, within numerous independent third party distributors and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe.

The following table summarizes segment performance for the three and six months endedDecember 31, 2016 and December 26, 2015:

	North America		International		Other(1)		Corporate Unallocated(2)			Stuart Weitzman		Total
	(millions)
Three Months Ended December 31, 2016
Net sales	$	744.1	$	448.3	$	11.0	$	—		$	118.3	$	1,321.7
Gross profit	463.0		342.3		9.4		15.5			76.0		906.2
Operating income (loss)	258.2		136.2		9.4		(139.7		)	13.3		277.4
Income (loss) before provision for income taxes	258.2		136.2		9.4		(144.8		)	13.3		272.3
Depreciation and amortization expense(3)	17.5		15.6		—		11.4			3.9		48.4
Additions to long-lived assets	12.8		17.9		—		17.6			5.8		54.1
Three Months Ended December 26, 2015
Net sales	$	731.0	$	437.3	$	11.5	$	—		$	94.0	$	1,273.8
Gross profit	447.3		327.4		9.6		14.3			60.5		859.1
Operating income (loss)	248.2		130.6		6.4		(142.5		)	18.3		261.0
Income (loss) before provision for income taxes	248.2		130.6		6.4		(148.8		)	18.3		254.7
Depreciation and amortization expense(3)	16.3		16.9		—		17.7			5.3		56.2
Additions to long-lived assets	14.9		22.2		—		67.0			1.9		106.0
Six Months Ended December 31, 2016
Net sales	$	1,289.4	$	843.8	$	20.3	$	—		$	205.8	$	2,359.3
Gross profit	804.2		640.4		17.5		31.7			127.1		1,620.9
Operating income (loss)	422.4		249.5		15.5		(262.5		)	18.4		443.3
Income (loss) before provision for income taxes	422.4		249.5		15.5		(273.3		)	18.4		432.5
Depreciation and amortization expense(3)	35.1		34.1		—		26.8			7.7		103.7
Additions to long-lived assets	29.9		43.2		—		33.7			14.9		121.7
Six Months Ended December 26, 2015
Net sales	$	1,292.0	$	806.3	$	24.3	$	—		$	181.5	$	2,304.1
Gross profit	796.2		609.6		18.0		21.6			110.2		1,555.6
Operating income (loss)	419.9		237.8		12.5		(293.8		)	26.0		402.4
Income (loss) before provision for income taxes	419.9		237.8		12.5		(306.8		)	26.0		389.4
Depreciation and amortization expense(3)	32.1		33.7		—		34.8			12.8		113.4
Additions to long-lived assets	36.7		53.6		—		81.6			3.6		175.5

⁽¹⁾  Other, which is not a reportable segment, consists of Coach brand sales and expenses generated in licensing and disposition channels.

⁽²⁾  Corporate unallocated includes certain centrally managed Coach brand inventory-related amounts, advertising, marketing, design, administration and information systems, as well as distribution and consumer service expenses. Furthermore, Operational Efficiency Plan and Transformation Plan charges incurred by the Company as described in Note 4, "Restructuring Activities" and charges associated with contingent earn out payments of the Stuart Weitzman acquisition and other integration-related activities, are also included as unallocated corporate expenses.

⁽³⁾  Depreciation and amortization expense includes $0.5 million and $3.5 million of Operational Efficiency Plan charges for the three and six months endedDecember 31, 2016, respectively, and $3.5 million and $6.3 million of transformation-related charges for the three and six months endedDecember 26, 2015, respectively. These charges are recorded as corporate unallocated expenses.

The following is a summary of all costs not allocated in the determination of segment operating income performance:

	Three Months Ended						Six Months Ended
	December 31, 2016			December 26, 2015			December 31, 2016			December 26, 2015
	(millions)
Inventory-related(1)	$	15.5		$	14.4		$	31.7		$	21.7
Advertising, marketing and design(2)	(66.3		)	(63.2		)	(122.2		)	(126.3		)
Administration and information systems(2)(3)	(74.8		)	(76.9		)	(144.0		)	(157.2		)
Distribution and customer service(2)	(14.1		)	(16.8		)	(28.0		)	(32.0		)
Total corporate unallocated	$	(139.7	)	$	(142.5	)	$	(262.5	)	$	(293.8	)

⁽¹⁾   Inventory-related amounts consist primarily of production variances, which represents the difference between the expected standard cost and actual cost of inventory, and inventory-related reserves which are recorded within cost of sales.

⁽²⁾   Costs recorded within SG&A expenses.

⁽³⁾   During the three and six months endedDecember 31, 2016, Operational Efficiency Plan charges recorded within SG&A expenses were ($3.7) million and $(10.8) million, respectively. Furthermore, during the three and six months endedDecember 31, 2016, ($3.0) million and $(5.4) million of charges related to the Stuart Weitzman contingent earn out payments and other integration-related activities were recorded within corporate unallocated costs, respectively. During the three and six months endedDecember 26, 2015, Transformation Plan costs recorded within SG&A expenses were ($13.9) million and ($26.5) million, respectively. During the three and six months endedDecember 26, 2015, ($6.2) million and ($9.8) million of charges related to the Stuart Weitzman contingent earn out payments and other integration-related activities were recorded within corporate unallocated costs, respectively.