false2023Q10001116132July 1http://fasb.org/us-gaap/2022#PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationhttp://fasb.org/us-gaap/2022#PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationhttp://fasb.org/us-gaap/2022#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2022#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesNoncurrent00011161322022-07-032022-10-0100011161322022-10-28xbrli:shares00011161322022-10-01iso4217:USD00011161322022-07-02iso4217:USDxbrli:shares00011161322021-07-042021-10-0200011161322021-07-0300011161322021-10-020001116132srt:MinimumMember2022-07-032022-10-010001116132srt:MaximumMember2022-07-032022-10-010001116132us-gaap:RevenueFromRightsConcentrationRiskMemberus-gaap:SalesRevenueNetMembertpr:LicensingBusinessMember2022-07-032022-10-01xbrli:pure0001116132tpr:CoachMembersrt:NorthAmericaMember2022-07-032022-10-010001116132tpr:GreaterChinaMembertpr:CoachMember2022-07-032022-10-010001116132tpr:OtherAsiaMembertpr:CoachMember2022-07-032022-10-010001116132tpr:OtherCountriesNotIndividuallyDisclosedMembertpr:CoachMember2022-07-032022-10-010001116132tpr:CoachMember2022-07-032022-10-010001116132srt:NorthAmericaMembertpr:KateSpadeCompanyMember2022-07-032022-10-010001116132tpr:GreaterChinaMembertpr:KateSpadeCompanyMember2022-07-032022-10-010001116132tpr:OtherAsiaMembertpr:KateSpadeCompanyMember2022-07-032022-10-010001116132tpr:OtherCountriesNotIndividuallyDisclosedMembertpr:KateSpadeCompanyMember2022-07-032022-10-010001116132tpr:KateSpadeCompanyMember2022-07-032022-10-010001116132tpr:StuartWeitzmanMembersrt:NorthAmericaMember2022-07-032022-10-010001116132tpr:GreaterChinaMembertpr:StuartWeitzmanMember2022-07-032022-10-010001116132tpr:OtherAsiaMembertpr:StuartWeitzmanMember2022-07-032022-10-010001116132tpr:OtherCountriesNotIndividuallyDisclosedMembertpr:StuartWeitzmanMember2022-07-032022-10-010001116132tpr:StuartWeitzmanMember2022-07-032022-10-010001116132srt:NorthAmericaMember2022-07-032022-10-010001116132tpr:GreaterChinaMember2022-07-032022-10-010001116132tpr:OtherAsiaMember2022-07-032022-10-010001116132tpr:OtherCountriesNotIndividuallyDisclosedMember2022-07-032022-10-010001116132tpr:CoachMembersrt:NorthAmericaMember2021-07-042021-10-020001116132tpr:GreaterChinaMembertpr:CoachMember2021-07-042021-10-020001116132tpr:OtherAsiaMembertpr:CoachMember2021-07-042021-10-020001116132tpr:OtherCountriesNotIndividuallyDisclosedMembertpr:CoachMember2021-07-042021-10-020001116132tpr:CoachMember2021-07-042021-10-020001116132srt:NorthAmericaMembertpr:KateSpadeCompanyMember2021-07-042021-10-020001116132tpr:GreaterChinaMembertpr:KateSpadeCompanyMember2021-07-042021-10-020001116132tpr:OtherAsiaMembertpr:KateSpadeCompanyMember2021-07-042021-10-020001116132tpr:OtherCountriesNotIndividuallyDisclosedMembertpr:KateSpadeCompanyMember2021-07-042021-10-020001116132tpr:KateSpadeCompanyMember2021-07-042021-10-020001116132tpr:StuartWeitzmanMembersrt:NorthAmericaMember2021-07-042021-10-020001116132tpr:GreaterChinaMembertpr:StuartWeitzmanMember2021-07-042021-10-020001116132tpr:OtherAsiaMembertpr:StuartWeitzmanMember2021-07-042021-10-020001116132tpr:OtherCountriesNotIndividuallyDisclosedMembertpr:StuartWeitzmanMember2021-07-042021-10-020001116132tpr:StuartWeitzmanMember2021-07-042021-10-020001116132srt:NorthAmericaMember2021-07-042021-10-020001116132tpr:GreaterChinaMember2021-07-042021-10-020001116132tpr:OtherAsiaMember2021-07-042021-10-020001116132tpr:OtherCountriesNotIndividuallyDisclosedMember2021-07-042021-10-020001116132tpr:CoachMember2022-07-020001116132tpr:KateSpadeCompanyMember2022-07-020001116132tpr:StuartWeitzmanMember2022-07-020001116132tpr:CoachMember2022-10-010001116132tpr:KateSpadeCompanyMember2022-10-010001116132tpr:StuartWeitzmanMember2022-10-010001116132us-gaap:CustomerRelationshipsMembersrt:MinimumMember2022-07-032022-10-010001116132us-gaap:CustomerRelationshipsMembersrt:MaximumMember2022-07-032022-10-010001116132us-gaap:CommonStockMember2021-07-030001116132us-gaap:AdditionalPaidInCapitalMember2021-07-030001116132us-gaap:RetainedEarningsMember2021-07-030001116132us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-030001116132us-gaap:RetainedEarningsMember2021-07-042021-10-020001116132us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-042021-10-020001116132us-gaap:CommonStockMember2021-07-042021-10-020001116132us-gaap:AdditionalPaidInCapitalMember2021-07-042021-10-020001116132us-gaap:CommonStockMember2021-10-020001116132us-gaap:AdditionalPaidInCapitalMember2021-10-020001116132us-gaap:RetainedEarningsMember2021-10-020001116132us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-10-020001116132us-gaap:CommonStockMember2022-07-020001116132us-gaap:AdditionalPaidInCapitalMember2022-07-020001116132us-gaap:RetainedEarningsMember2022-07-020001116132us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-020001116132us-gaap:RetainedEarningsMember2022-07-032022-10-010001116132us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-032022-10-010001116132us-gaap:CommonStockMember2022-07-032022-10-010001116132us-gaap:AdditionalPaidInCapitalMember2022-07-032022-10-010001116132us-gaap:CommonStockMember2022-10-010001116132us-gaap:AdditionalPaidInCapitalMember2022-10-010001116132us-gaap:RetainedEarningsMember2022-10-010001116132us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-010001116132us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-07-030001116132us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-07-030001116132us-gaap:AccumulatedTranslationAdjustmentMember2021-07-030001116132us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-07-042021-10-020001116132us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-07-042021-10-020001116132us-gaap:AccumulatedTranslationAdjustmentMember2021-07-042021-10-020001116132us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-10-020001116132us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-10-020001116132us-gaap:AccumulatedTranslationAdjustmentMember2021-10-020001116132us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-07-020001116132us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-07-020001116132us-gaap:AccumulatedTranslationAdjustmentMember2022-07-020001116132us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-07-032022-10-010001116132us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-07-032022-10-010001116132us-gaap:AccumulatedTranslationAdjustmentMember2022-07-032022-10-010001116132us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-10-010001116132us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-10-010001116132us-gaap:AccumulatedTranslationAdjustmentMember2022-10-010001116132us-gaap:GeographicDistributionForeignMember2022-07-032022-10-010001116132tpr:AccumulatedGainLossNetInvestmentHedgeMember2021-10-020001116132srt:MinimumMember2022-10-010001116132srt:MaximumMember2022-10-010001116132us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2022-10-010001116132us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2022-07-020001116132us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:FairValueHedgingMember2022-10-010001116132us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:FairValueHedgingMember2022-07-020001116132us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMember2022-10-010001116132us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMember2022-07-020001116132us-gaap:DesignatedAsHedgingInstrumentMember2022-10-010001116132us-gaap:DesignatedAsHedgingInstrumentMember2022-07-020001116132us-gaap:ForeignExchangeForwardMember2022-07-032022-10-010001116132us-gaap:ForeignExchangeForwardMember2021-07-042021-10-020001116132us-gaap:ForeignExchangeForwardMemberus-gaap:CostOfSalesMember2022-07-032022-10-010001116132us-gaap:ForeignExchangeForwardMemberus-gaap:CostOfSalesMember2021-07-042021-10-020001116132us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMember2022-07-032022-10-010001116132us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CurrencySwapMemberus-gaap:NetInvestmentHedgingMember2021-07-042021-10-020001116132tpr:AcceleratedProgramMember2022-07-032022-10-010001116132tpr:AcceleratedProgramMember2021-07-042021-10-020001116132us-gaap:EmployeeStockOptionMember2022-07-032022-10-010001116132us-gaap:EmployeeStockOptionMember2021-07-042021-10-020001116132tpr:ServiceBasedRestrictedStockUnitsMember2022-07-032022-10-010001116132tpr:ServiceBasedRestrictedStockUnitsMember2022-07-020001116132tpr:ServiceBasedRestrictedStockUnitsMember2022-10-010001116132tpr:ServiceBasedRestrictedStockUnitsMember2021-07-042021-10-020001116132us-gaap:PerformanceSharesMember2022-07-032022-10-010001116132us-gaap:PerformanceSharesMember2022-07-020001116132us-gaap:PerformanceSharesMember2022-10-010001116132us-gaap:PerformanceSharesMember2021-07-042021-10-020001116132tpr:TermLoanMember2022-10-010001116132tpr:TermLoanMember2022-07-020001116132tpr:TermLoanMember2022-10-010001116132tpr:TermLoanMember2022-07-020001116132us-gaap:SeniorNotesMembertpr:SeniorNote3050Member2022-10-010001116132us-gaap:SeniorNotesMembertpr:SeniorNote3050Member2022-07-020001116132tpr:SeniorNote4.125Memberus-gaap:SeniorNotesMember2022-10-010001116132tpr:SeniorNote4.125Memberus-gaap:SeniorNotesMember2022-07-020001116132us-gaap:SeniorNotesMembertpr:SeniorNote4250Member2022-10-010001116132us-gaap:SeniorNotesMembertpr:SeniorNote4250Member2022-07-020001116132tpr:A125BillionRevolvingCreditFacilityAnd5000MillionTermLoanMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-10-010001116132tpr:A125BillionRevolvingCreditFacilityAnd5000MillionTermLoanMemberus-gaap:LineOfCreditMemberus-gaap:SecuredDebtMember2022-10-010001116132tpr:A125BillionRevolvingCreditFacilityAnd5000MillionTermLoanMemberus-gaap:LineOfCreditMember2022-05-110001116132tpr:A125BillionRevolvingCreditFacilityAnd5000MillionTermLoanMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-05-110001116132tpr:A125BillionRevolvingCreditFacilityAnd5000MillionTermLoanMemberus-gaap:LineOfCreditMemberus-gaap:SecuredDebtMember2022-05-110001116132tpr:A125BillionRevolvingCreditFacilityAnd5000MillionTermLoanMemberus-gaap:RevolvingCreditFacilityMember2022-05-110001116132srt:MinimumMembertpr:A125BillionRevolvingCreditFacilityAnd5000MillionTermLoanMemberus-gaap:RevolvingCreditFacilityMember2022-05-112022-05-110001116132tpr:A125BillionRevolvingCreditFacilityAnd5000MillionTermLoanMemberus-gaap:LineOfCreditMemberus-gaap:SecuredDebtMember2022-05-112022-05-110001116132us-gaap:SeniorNotesMembertpr:SeniorNote3000Member2022-10-010001116132us-gaap:SeniorNotesMembertpr:SeniorNote3050Member2021-12-010001116132us-gaap:SeniorNotesMembertpr:SeniorNote3050Member2021-12-012021-12-010001116132us-gaap:SeniorNotesMembertpr:AdjustedTreasuryRateMembertpr:SeniorNote3050Member2021-12-012021-12-010001116132tpr:SeniorNote4.125Memberus-gaap:SeniorNotesMember2021-12-010001116132us-gaap:SeniorNotesMembertpr:SeniorNote4250Member2021-12-010001116132tpr:SeniorNote4125AndSeniorNote4250Memberus-gaap:SeniorNotesMember2021-12-010001116132tpr:SeniorNote4125AndSeniorNote4250Memberus-gaap:SeniorNotesMember2021-10-032022-01-010001116132tpr:SeniorNote4.125Memberus-gaap:SeniorNotesMember2017-06-200001116132tpr:SeniorNote4.125Memberus-gaap:SeniorNotesMember2017-06-202017-06-200001116132tpr:SeniorNote4.125Memberus-gaap:SeniorNotesMembertpr:AdjustedTreasuryRateMember2017-06-200001116132us-gaap:SeniorNotesMembertpr:SeniorNote4250Member2015-03-020001116132us-gaap:SeniorNotesMembertpr:SeniorNote4250Member2015-03-022015-03-020001116132us-gaap:SeniorNotesMembertpr:SeniorNote4250Membertpr:AdjustedTreasuryRateMember2015-03-020001116132us-gaap:SeniorNotesMemberus-gaap:FairValueInputsLevel2Membertpr:SeniorNote3050Member2022-10-010001116132tpr:SeniorNote4.125Memberus-gaap:SeniorNotesMemberus-gaap:FairValueInputsLevel2Member2022-10-010001116132us-gaap:SeniorNotesMembertpr:SeniorNote4250Memberus-gaap:FairValueInputsLevel2Member2022-10-010001116132us-gaap:SeniorNotesMemberus-gaap:FairValueInputsLevel2Membertpr:SeniorNote3050Member2022-07-020001116132tpr:SeniorNote4.125Memberus-gaap:SeniorNotesMemberus-gaap:FairValueInputsLevel2Member2022-07-020001116132us-gaap:SeniorNotesMembertpr:SeniorNote4250Memberus-gaap:FairValueInputsLevel2Member2022-07-020001116132us-gaap:FairValueInputsLevel1Member2022-10-010001116132us-gaap:FairValueInputsLevel1Member2022-07-020001116132us-gaap:FairValueInputsLevel2Member2022-10-010001116132us-gaap:FairValueInputsLevel2Member2022-07-020001116132us-gaap:FairValueInputsLevel1Memberus-gaap:BankTimeDepositsMemberus-gaap:ShortTermInvestmentsMember2022-10-010001116132us-gaap:FairValueInputsLevel1Memberus-gaap:BankTimeDepositsMemberus-gaap:ShortTermInvestmentsMember2022-07-020001116132us-gaap:FairValueInputsLevel2Memberus-gaap:BankTimeDepositsMemberus-gaap:ShortTermInvestmentsMember2022-10-010001116132us-gaap:FairValueInputsLevel2Memberus-gaap:BankTimeDepositsMemberus-gaap:ShortTermInvestmentsMember2022-07-020001116132us-gaap:FairValueInputsLevel1Memberus-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2022-10-010001116132us-gaap:FairValueInputsLevel1Memberus-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2022-07-020001116132us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2022-10-010001116132us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2022-07-020001116132us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2022-10-010001116132us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2022-07-020001116132us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2022-10-010001116132us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2022-07-020001116132us-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMember2022-10-010001116132us-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMember2022-07-020001116132us-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2022-10-010001116132us-gaap:DomesticCorporateDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2022-07-020001116132us-gaap:FairValueInputsLevel1Memberus-gaap:OtherInvestmentsMemberus-gaap:ShortTermInvestmentsMember2022-10-010001116132us-gaap:FairValueInputsLevel1Memberus-gaap:OtherInvestmentsMemberus-gaap:ShortTermInvestmentsMember2022-07-020001116132us-gaap:FairValueInputsLevel2Memberus-gaap:OtherInvestmentsMemberus-gaap:ShortTermInvestmentsMember2022-10-010001116132us-gaap:FairValueInputsLevel2Memberus-gaap:OtherInvestmentsMemberus-gaap:ShortTermInvestmentsMember2022-07-020001116132us-gaap:FairValueInputsLevel1Memberus-gaap:OtherInvestmentsMemberus-gaap:OtherLongTermInvestmentsMember2022-10-010001116132us-gaap:FairValueInputsLevel1Memberus-gaap:OtherInvestmentsMemberus-gaap:OtherLongTermInvestmentsMember2022-07-020001116132us-gaap:FairValueInputsLevel2Memberus-gaap:OtherInvestmentsMemberus-gaap:OtherLongTermInvestmentsMember2022-10-010001116132us-gaap:FairValueInputsLevel2Memberus-gaap:OtherInvestmentsMemberus-gaap:OtherLongTermInvestmentsMember2022-07-020001116132tpr:InventoryrelatedHedgesMemberus-gaap:FairValueInputsLevel1Member2022-10-010001116132tpr:InventoryrelatedHedgesMemberus-gaap:FairValueInputsLevel1Member2022-07-020001116132us-gaap:FairValueInputsLevel2Membertpr:InventoryrelatedHedgesMember2022-10-010001116132us-gaap:FairValueInputsLevel2Membertpr:InventoryrelatedHedgesMember2022-07-020001116132us-gaap:FairValueInputsLevel1Memberus-gaap:NetInvestmentHedgingMember2022-10-010001116132us-gaap:FairValueInputsLevel1Memberus-gaap:NetInvestmentHedgingMember2022-07-020001116132us-gaap:FairValueInputsLevel2Memberus-gaap:NetInvestmentHedgingMember2022-10-010001116132us-gaap:FairValueInputsLevel2Memberus-gaap:NetInvestmentHedgingMember2022-07-020001116132tpr:IntercompanyLoanandPayablesHedgesMemberus-gaap:FairValueInputsLevel1Member2022-10-010001116132tpr:IntercompanyLoanandPayablesHedgesMemberus-gaap:FairValueInputsLevel1Member2022-07-020001116132tpr:IntercompanyLoanandPayablesHedgesMemberus-gaap:FairValueInputsLevel2Member2022-10-010001116132tpr:IntercompanyLoanandPayablesHedgesMemberus-gaap:FairValueInputsLevel2Member2022-07-020001116132us-gaap:CommercialPaperMember2022-10-010001116132us-gaap:CommercialPaperMember2022-07-020001116132us-gaap:USGovernmentAgenciesDebtSecuritiesMember2022-10-010001116132us-gaap:USGovernmentAgenciesDebtSecuritiesMember2022-07-020001116132us-gaap:DomesticCorporateDebtSecuritiesMember2022-10-010001116132us-gaap:DomesticCorporateDebtSecuritiesMember2022-07-0200011161322021-07-042022-07-02tpr:segment0001116132tpr:CoachMemberus-gaap:OperatingSegmentsMember2022-07-032022-10-010001116132us-gaap:OperatingSegmentsMembertpr:KateSpadeCompanyMember2022-07-032022-10-010001116132tpr:StuartWeitzmanMemberus-gaap:OperatingSegmentsMember2022-07-032022-10-010001116132us-gaap:CorporateNonSegmentMember2022-07-032022-10-010001116132tpr:CoachMemberus-gaap:OperatingSegmentsMember2021-07-042021-10-020001116132us-gaap:OperatingSegmentsMembertpr:KateSpadeCompanyMember2021-07-042021-10-020001116132tpr:StuartWeitzmanMemberus-gaap:OperatingSegmentsMember2021-07-042021-10-020001116132us-gaap:CorporateNonSegmentMember2021-07-042021-10-02

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 October 1, 2022
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
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, or a smaller reporting company. See definition 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 7(a)(2)(B) of the Securities 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 28, 2022, the Registrant had 240,961,301 outstanding shares of common stock, which is the Registrant’s only class of common stock.


TAPESTRY, INC.
INDEX
 
  Page Number
PART I – FINANCIAL INFORMATION (unaudited)
   
ITEM 1.Financial Statements: 
 
 
 
 
 
ITEM 2.
ITEM 3.
ITEM 4.
PART II – OTHER INFORMATION
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 6.
 

 


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," "continue," "project," "assumption," "should," "expect," "confidence," "trends," "anticipate," "intend," "estimate," "on track," "well positioned to," "plan," "potential," "position," "believe," "seek," "see," "will," "would," "target," 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 the novel coronavirus ("Covid-19") global pandemic on our business and financial results, including impacts on our supply chain due to temporary closures of our manufacturing partners and shipping and fulfillment constraints; (ii) our ability to successfully execute our multi-year growth agenda; (iii) the impact of economic conditions; (iv) our ability to control costs; (v) 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; (vi) the risk of cyber security threats and privacy or data security breaches; (vii) the effect of existing and new competition in the marketplace; (viii) 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; (ix) the effect of seasonal and quarterly fluctuations on our sales or operating results; (x) our ability to protect against infringement of our trademarks and other proprietary rights; (xi) the impact of legislation, including tax and trade legislation; (xii) our ability to achieve intended benefits, cost savings and synergies from acquisitions; (xiii) the risks associated with potential changes to international trade agreements and the imposition of additional duties on importing our products; (xiv) the impact of pending and potential future legal proceedings; and (xv) the risks associated with climate change and other corporate responsibility issues and (xvi) 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 July 2, 2022. 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

October 1,
2022		July 2,
2022
(millions)
(unaudited)
ASSETS  
Current Assets:  
Cash and cash equivalents$526.5 $789.8 
Short-term investments30.6 163.4 
Trade accounts receivable, less allowances for credit losses of $3.3 and $3.7, respectively
269.6 252.3 
Inventories1,139.8 994.2 
Income tax receivable227.6 217.2 
Prepaid expenses144.7 105.2 
Other current assets48.6 51.7 
Total current assets2,387.4 2,573.8 
Property and equipment, net526.3 544.4 
Operating lease right-of-use assets1,281.6 1,281.6 
Goodwill1,221.3 1,241.5 
Intangible assets1,364.9 1,366.6 
Deferred income taxes45.1 47.9 
Other assets253.4 209.5 
Total assets$7,080.0 $7,265.3 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current Liabilities:  
Accounts payable$510.9 $520.7 
Accrued liabilities489.8 628.2 
Current portion of operating lease liabilities282.7 288.7 
Current debt25.0 31.2 
Total current liabilities1,308.4 1,468.8 
Long-term debt1,653.4 1,659.2 
Long-term operating lease liabilities1,273.3 1,282.3 
Deferred income taxes207.7 221.7 
Long-term income taxes payable84.7 95.3 
Other liabilities297.1 252.5 
Total liabilities4,824.6 4,979.8 
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 - 240.9 million and 241.2 million shares, respectively
2.4 2.4 
Additional paid-in-capital3,589.5 3,620.2 
Retained earnings (accumulated deficit)(1,143.6)(1,166.2)
Accumulated other comprehensive income (loss)(192.9)(170.9)
Total stockholders' equity2,255.4 2,285.5 
Total liabilities and stockholders' equity$7,080.0 $7,265.3 
See accompanying Notes.
1

TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Three Months Ended
October 1,
2022		October 2,
2021
(millions, except per share data)
(unaudited)
Net sales$1,506.5 $1,480.9 
Cost of sales451.9 412.2 
Gross profit1,054.6 1,068.7 
Selling, general and administrative expenses800.3 773.7 
Operating income (loss)254.3 295.0 
Interest expense, net7.4 16.1 
Other expense (income)10.7 2.2 
Income (loss) before provision for income taxes236.2 276.7 
Provision (benefit) for income taxes40.9 49.8 
Net income (loss)$195.3 $226.9 
Net income (loss) per share:  
Basic$0.81 $0.82 
Diluted$0.79 $0.80 
Shares used in computing net income (loss) per share:  
Basic241.5 278.2 
Diluted246.8 285.2 
 
See accompanying Notes.
 
2

TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
 
 Three Months Ended
October 1,
2022		October 2,
2021
(millions)
(unaudited)
Net income (loss)$195.3 $226.9 
Other comprehensive income (loss), net of tax:  
Unrealized gains (losses) on cash flow hedging derivatives, net7.7 (0.4)
Unrealized gains (losses) on available-for-sale investments, net0.5 (0.2)
Foreign currency translation adjustments(30.2)(9.5)
Other comprehensive income (loss), net of tax(22.0)(10.1)
Comprehensive income (loss)$173.3 $216.8 
 
See accompanying Notes.

3

TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months Ended
October 1,
2022		October 2,
2021
(millions)
(unaudited)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES  
Net income (loss)$195.3 $226.9 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:  
Depreciation and amortization43.8 50.8 
Provision for bad debt0.4 5.0 
Share-based compensation15.1 14.9 
Acceleration Program charges— 5.0 
Changes to lease related balances, net(12.8)(10.0)
Deferred income taxes(3.2)(12.4)
Other non-cash charges, net(9.5)1.2 
Changes in operating assets and liabilities:  
Trade accounts receivable(15.8)(40.3)
Inventories(181.9)(84.8)
Accounts payable0.9 (32.7)
Accrued liabilities (134.0)(140.3)
Other liabilities42.9 (10.0)
Other assets(111.6)48.5 
Net cash provided by (used in) operating activities(170.4)21.8 
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES  
Purchases of investments(4.0)(402.9)
Proceeds from maturities and sales of investments136.2 7.9 
Purchases of property and equipment(27.3)(33.4)
Settlement of net investment hedge41.9 — 
Net cash provided by (used in) investing activities146.8 (428.4)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES  
Payment of dividends(72.7)(69.6)
Repurchase of common stock(94.9)(250.0)
Proceeds from share-based awards6.1 3.7 
Repayment of debt(12.5)— 
Taxes paid to net settle share-based awards(51.9)(30.1)
Payments of finance lease liabilities(0.3)(0.2)
Net cash provided by (used in) financing activities(226.2)(346.2)
Effect of exchange rate changes on cash and cash equivalents(13.5)(2.3)
Net (decrease) increase in cash and cash equivalents(263.3)(755.1)
Cash and cash equivalents at beginning of period789.8 2,007.7 
Cash and cash equivalents at end of period$526.5 $1,252.6 
Supplemental information:
Cash paid for income taxes, net$83.0 $21.5 
Cash paid for interest$26.1 $31.4 
Noncash investing activity - property and equipment obligations$10.5 $9.0 

See accompanying Notes.
4
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements
(Unaudited)


1. NATURE OF OPERATIONS
Tapestry, Inc. (the "Company") is a leading New York-based 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 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 segment includes global sales of Coach products to customers through Coach operated stores, including e-commerce sites and concession shop-in-shops, sales to wholesale customers and through independent third party distributors.
The Kate Spade segment includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including e-commerce sites and concession shop-in-shops, sales to wholesale customers and through independent third party distributors.
The Stuart Weitzman segment includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, sales to wholesale customers, through e-commerce sites and through independent third party distributors.
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") and are unaudited. 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 July 2, 2022 ("fiscal 2022") and other filings filed with the SEC.
The results of operations, cash flows and comprehensive income for the three months ended October 1, 2022 are not necessarily indicative of results to be expected for the entire fiscal year, which will end on July 1, 2023 ("fiscal 2023"). 
Fiscal Periods
The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30. Fiscal 2023 will be a 52-week period. Fiscal 2022, ended on July 2, 2022, was also a 52-week period. The first quarter of fiscal 2023 ended on October 1, 2022 and the first quarter of fiscal 2022 ended on October 2, 2021, both of which were 13-week periods.
Covid-19 Pandemic
The ongoing Covid-19 pandemic continues to impact a significant majority of the regions in which we operate, resulting in significant global business disruptions. The widespread impact of Covid-19 resulted in temporary closures of directly operated stores globally, as well as at our wholesale and licensing partners starting in fiscal 2020. Since then, certain directly operated stores and the stores of our wholesale and licensing partners have experienced temporary re-closures or are operating under tighter restrictions in compliance with local government regulation. Covid-19 has also resulted in ongoing supply chain challenges, such as logistic constraints, the temporary closure of certain third-party manufacturers and increased freight costs.
5
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
The global Covid-19 pandemic is continuously evolving and the extent to which this impacts the Company - including unforeseen increased costs to the Company's business - will depend on future developments, which cannot be predicted, including the ultimate duration, severity and continued geographic resurgence of the virus and the success of actions to contain the virus, including variants of the novel strain, or treat its impact, among others. As the full magnitude of the effects on the Company's business is difficult to predict, the Covid-19 pandemic has and may continue to have a material adverse impact on the Company's business, financial condition, results of operations and cash flows for the foreseeable future. The Company 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 provide adequate funds to support our operating, capital, and debt service requirements. There can be no assurance, however, that any such capital will be available to the Company on acceptable terms or at all. The Company could experience other potential adverse impacts as a result of the Covid-19 pandemic, including, but not limited to, further charges from adjustments to the carrying amount of goodwill and other intangible assets, long-lived asset impairment charges, reserves for uncollectible accounts receivable and reserves for the realizability of inventory.
In response to the Covid-19 pandemic, the Company took actions to reinforce its liquidity and financial flexibility. If stores are required to close again for an extended period of time due to a resurgence of increased infections, the Company's liquidity may be negatively impacted.
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 and 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.
3. RECENT ACCOUNTING PRONOUNCEMENTS
Recently Issued Accounting Pronouncements
In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2022-04, "Liabilities—Supplier Finance Programs (Subtopic 405-50)", which is intended to enhance the transparency of supplier finance programs. The ASU requires the buyer in a supplier finance program to disclose sufficient information about the program in order to allow a user of financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2022, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2024. Early adoption is permitted. The Company is currently in the process of evaluating the impact that adopting ASU 2022-04 will have on its condensed consolidated financial statements and notes thereto.
6
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
4. REVENUE
The Company recognizes revenue primarily from sales of the products of its brands through retail and wholesale channels, including e-commerce sites. The Company also generates revenue from royalties related to licensing its trademarks, as well as sales in ancillary 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 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.
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.
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 October 1, 2022.
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.
7
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 October 1, 2022
Coach$669.1 $209.8 $167.9 $72.5 $1,119.3 
Kate Spade254.6 11.0 31.6 24.7 321.9 
Stuart Weitzman42.2 15.1 0.2 7.8 65.3 
Total$965.9 $235.9 $199.7 $105.0 $1,506.5 
Three Months Ended October 2, 2021
Coach$681.7 $242.0 $136.9 $54.3 $1,114.9 
Kate Spade232.2 11.7 26.8 28.8 299.5 
Stuart Weitzman35.7 22.7 0.3 7.8 66.5 
Total$949.6 $276.4 $164.0 $90.9 $1,480.9 
(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 October 1, 2022 and July 2, 2022 was $36.0 million and $41.5 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 October 1, 2022, net sales of $11.5 million were recognized from amounts recorded as deferred revenue as of July 2, 2022. For the three months ended October 2, 2021, net sales of $3.6 million were recognized from amounts recorded as deferred revenue as of July 3, 2021.
8
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
5. 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 July 2, 2022$609.1 $632.4 $— $1,241.5 
Foreign exchange impact(16.1)(4.1)— (20.2)
Balance at October 1, 2022$593.0 $628.3 $— $1,221.3 
(1)    Amount is net of accumulated goodwill impairment charges of $210.7 million as of October 1, 2022 and July 2, 2022.
Intangible Assets
Intangible assets consist of the following:
October 1, 2022July 2, 2022
Gross
Carrying
Amount		Accum.
Amort.		NetGross
Carrying
Amount		Accum.
Amort.		Net
(millions)
Intangible assets subject to amortization:
Customer relationships$100.3 $(45.2)$55.1 $100.3 $(43.5)$56.8 
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 $(45.2)$1,364.9 $1,410.1 $(43.5)$1,366.6 
As of October 1, 2022, the expected amortization expense for intangible assets is as follows:
 Amortization Expense
(millions)
Remainder of fiscal 2023$4.9 
Fiscal 20246.5 
Fiscal 20256.5 
Fiscal 20266.5 
Fiscal 20276.5 
Thereafter24.2 
Total$55.1 
The expected amortization expense above reflects remaining useful lives ranging from approximately 7.6 to 9.8 years for customer relationships.
9
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
6. 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 3, 2021279.5 $2.8 $3,487.0 $(158.5)$(72.0)$3,259.3 
Net income (loss)— — — 226.9 — 226.9 
Other comprehensive income (loss)— — — — (10.1)(10.1)
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes1.6 — (26.4)— — (26.4)
Share-based compensation— — 19.9 — — 19.9 
 Repurchase of common stock(6.1)— — (250.0)— (250.0)
Dividends declared ($0.25 per share)
— — — (69.6)— (69.6)
Balance at October 2, 2021275.0 $2.8 $3,480.5 $(251.2)$(82.1)$3,150.0 
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 2, 2022241.2 $2.4 $3,620.2 $(1,166.2)$(170.9)$2,285.5 
Net income (loss)— — — 195.3 — 195.3 
Other comprehensive income— — — — (22.0)(22.0)
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes2.7 — (45.8)— — (45.8)
Share-based compensation— — 15.1 — — 15.1 
Repurchase of common stock(3.0)— — (100.0)— (100.0)
Dividends declared ($0.30 per share)
— — — (72.7)— (72.7)
Balance at October 1, 2022240.9 $2.4 $3,589.5 $(1,143.6)$(192.9)$2,255.4 
10
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 3, 2021$(0.7)$— $(71.3)$(72.0)
Other comprehensive income (loss) before reclassifications(0.9)(0.2)(9.5)(10.6)
Less: amounts reclassified from accumulated other comprehensive income to earnings(0.5)— — (0.5)
Net current-period other comprehensive income (loss)(0.4)(0.2)(9.5)(10.1)
Balances at October 2, 2021$(1.1)$(0.2)$(80.8)$(82.1)
Balances at July 2, 2022$(2.3)$(0.5)$(168.1)$(170.9)
Other comprehensive income (loss) before reclassifications6.6 0.5 (30.2)(23.1)
Less: amounts reclassified from accumulated other comprehensive income to earnings(1.1)— — (1.1)
Net current-period other comprehensive income (loss)7.7 0.5 (30.2)(22.0)
Balances at October 1, 2022$5.4 $— $(198.3)$(192.9)
(1)    The ending balances of AOCI related to cash flow hedges are net of tax of $0.7 million and $0.5 million as of October 1, 2022 and October 2, 2021, respectively. The amounts reclassified from AOCI are net of tax of $0.4 million and $0.1 million as of October 1, 2022 and October 2, 2021, respectively.
(2)    The ending balances of AOCI related to foreign currency translation adjustments includes a loss of $1.8 million, net of tax of $(22.4) million, as of October 1, 2022, related to changes in the fair values of instruments designated as hedges of the Company's net investment in certain foreign operations. As the Company began entering into net investment hedges in the fourth quarter of Fiscal 2022, there was no balance as of October 2, 2021.
7. LEASES
The Company leases retail space, office space, warehouse facilities, fulfillment centers, storage space, machinery, equipment and certain other items under operating leases. The Company's leases have initial terms ranging from 1 to 20 years and may have renewal or early termination options ranging from 1 to 10 years. These leases may also include rent escalation clauses or lease incentives. In determining the lease term used in the lease right-of-use ("ROU") asset and lease liability calculations, the Company considers various factors such as market conditions and the terms of any renewal or termination options that may exist. When deemed reasonably certain, the renewal and termination options are included in the determination of the lease term and calculation of the lease ROU asset and lease liability. The Company is typically required to make fixed minimum rent payments, variable rent payments primarily based on performance (i.e., percentage-of-sales-based payments), or a combination thereof, directly related to its ROU asset. The Company is also often required, by the lease, to pay for certain other costs including real estate taxes, insurance, common area maintenance fees, and/or certain other costs, which may be fixed or variable, depending upon the terms of the respective lease agreement. To the extent these payments are fixed, the Company has included them in calculating the lease ROU assets and lease liabilities.
The Company calculates lease ROU assets and lease liabilities as the present value of fixed lease payments over the reasonably certain lease term beginning at the commencement date. The Company is required to use the implicit rate to determine the present value of lease payments. As the rate implicit in the Company's leases is not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, including the
11
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Company's credit rating, credit spread and adjustments for the impact of collateral, lease tenors, economic environment and currency.
For operating leases, fixed lease payments are recognized as operating lease cost on a straight-line basis over the lease term. For finance leases and impaired operating leases, the ROU asset is depreciated on a straight-line basis over the remaining lease term, along with recognition of interest expense associated with accretion of the lease liability. For leases with a lease term of 12 months or less ("short-term lease"), any fixed lease payments are recognized on a straight-line basis over such term, and are not recognized on the Condensed Consolidated Balance Sheets. Variable lease cost for both operating and finance leases, if any, is recognized as incurred.
The Company acts as sublessor in certain leasing arrangements, primarily related to a sublease of a portion of the Company's leased headquarters space as well as certain retail locations. Fixed sublease payments received are recognized on a straight-line basis over the sublease term.
ROU assets, along with any other related long-lived assets, are periodically evaluated for impairment.
The following table summarizes the ROU assets and lease liabilities recorded on the Company's Condensed Consolidated Balance Sheets as of October 1, 2022 and July 2, 2022:
October 1,
2022		July 2,
2022		Location Recorded on Balance Sheet
(millions)
Assets:
Operating leases$1,281.6 $1,281.6 Operating lease right-of-use assets
Finance leases 1.7 1.9 Property and equipment, net
Total lease assets$1,283.3 $1,283.5 
Liabilities:
Operating leases:
Current lease liabilities$282.7 $288.7 Current lease liabilities
Long-term lease liabilities1,273.3 1,282.3 Long-term lease liabilities
Total operating lease liabilities$1,556.0 $1,571.0 
Finance leases:
Current lease liabilities$1.1 $1.1 Accrued liabilities
Long-term lease liabilities2.1 2.4 Other liabilities
Total finance lease liabilities $3.2 $3.5 
Total lease liabilities $1,559.2 $1,574.5 
The following table summarizes the composition of net lease costs, primarily recorded within SG&A expenses on the Company's Condensed Consolidated Statements of Operations for the three months ended October 1, 2022 and October 2, 2021:
12
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Three Months Ended
October 1, 2022October 2, 2021
(millions)
Finance lease cost:
Amortization of right-of-use assets$0.3 $0.2 
Interest on lease liabilities(1)
0.1 0.1 
Total finance lease cost0.4 0.3 
Operating lease cost79.3 84.9 
Short-term lease cost7.8 4.5 
Variable lease cost(2)
49.5 43.6 
Less: sublease income(4.9)(4.9)
Total net lease cost$132.1 $128.4 
(1)    Interest on lease liabilities is recorded within Interest expense, net on the Company's Condensed Consolidated Statement of Operations.
(2) Rent concessions negotiated related to Covid-19 are recorded in variable lease expense.
The following table summarizes certain cash flow information related to the Company's leases for the three months ended October 1, 2022 and October 2, 2021:
Three Months Ended
October 1, 2022October 2,
2021
(millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$98.0 $104.5 
Operating cash flows from finance leases0.1 0.1 
Financing cash flows from finance leases0.3 0.2 
Non-cash transactions:
Right-of-use assets obtained in exchange for operating lease liabilities87.0 32.2 
Additionally, the Company had approximately $140.2 million of future payment obligations related to executed lease agreements for which the related lease had not yet commenced as of October 1, 2022. This obligation primarily relates to a lease agreement for a fulfillment center to be located in Las Vegas, Nevada.
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 Sheets. 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 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 derivative instruments that qualify for hedge accounting, the changes in the fair value of these instruments are either (i) offset against the changes in fair value of the hedged assets or liabilities through earnings or (ii) recognized as a component of
13
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows. 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 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). 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).
As a result of the use of derivative instruments, the Company may be exposed to the risk that the counterparties to such contacts 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 Sheets 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. 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 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 2022 to June 2024. Forward foreign currency exchange contracts designated as fair value hedges and associated with intercompany and other contractual obligations are recognized within foreign currency gains (losses) generally in the period in which the related balances being hedged are revalued. The maturity date of most instruments held as of October 1, 2022 are in November 2022, 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. The related gains (losses) are deferred in AOCI until the net investment is sold or liquidated, and current maturity dates range from April 2025 to March 2032.
14
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 October 1, 2022 and July 2, 2022
Notional ValueDerivative AssetsDerivative Liabilities
Designated Derivative Hedging Instruments
Fair ValueFair Value
October 1, 2022July 2, 2022Balance Sheet ClassificationOctober 1, 2022July 2, 2022Balance Sheet ClassificationOctober 1, 2022July 2, 2022
(millions)
FC - Inventory purchases(1)
$293.2 $41.5 Other Current Assets$9.0 $— Accrued Liabilities$3.3 $2.7 
FC - Intercompany liabilities and loans(2)
437.6 274.1 Other Current Assets0.4 0.4 Accrued Liabilities6.5 0.5 
CCS - Net investment hedges(3)
1,200.0 1,200.0 Other Assets70.7 47.8 Other Liabilities87.3 44.0 
Total Hedges$1,930.8 $1,515.6 $80.1 $48.2 $97.1 $47.2 

(1)Represents forward foreign currency exchange contracts ("FC") designated as derivative instruments in cash flow hedging relationships.
(2)Represents forward foreign currency exchange contracts ("FC") designated as derivative instruments in fair value hedging relationships.
(3)Represents cross currency swap contracts ("CCS") designated as derivative instruments in net investment hedging relationships.
15
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 October 1, 2022 and October 2, 2021:
Amount of Gain (Loss) Recognized in OCI on Derivatives
Three Months Ended
October 1, 2022October 2, 2021
(millions)
Cash flow hedges:
Inventory purchases(1)
$6.4 $(1.2)
Cash flow hedges, total$6.4 $(1.2)
Other:
Net investment hedges16.8 — 
Other, total$16.8 $— 
Total hedges$23.2 $(1.2)

Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
Statement of Operations
Classification		Three Months Ended
October 1, 2022October 2, 2021
(millions)
Cash flow hedges:
Inventory purchases(1)
Cost of Sales$(1.5)$(0.6)
Total hedges$(1.5)$(0.6)
For forward foreign currency exchange contracts that are designated as fair value hedges, both the gain (loss) on the derivative as well as the offsetting gain (loss) on the hedged item attributable to the hedged risk are recorded within Other expense (income) on the Company's Condensed Consolidated Statement of Operations.
The Company expects that $0.4 million of net derivative gain included in Accumulated other comprehensive income at October 1, 2022 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 used as a net investment hedges under the spot method. This results in the cross-currency basis spread being excluded from the assessment of hedge effectiveness, and recorded as incurred as a reduction in interest expense in the Company’s consolidated statements of operations. Accordingly, the Company recorded net interest income of $6.4 million and $0.0 million during three months ended October 1, 2022 and October 2, 2021, respectively.
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.
16
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
The following is a reconciliation of the weighted-average shares outstanding and calculation of basic and diluted earnings per share:
 Three Months Ended
October 1,
2022		October 2,
2021
(millions, except per share data)
Net income (loss)$195.3 $226.9 
Weighted-average basic shares 241.5 278.2 
Dilutive securities:  
Effect of dilutive securities5.3 7.0 
Weighted-average diluted shares246.8 285.2 
Net income (loss) per share:  
Basic$0.81 $0.82 
Diluted$0.79 $0.80 
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 October 1, 2022 and October 2, 2021, there were 6.2 million and 5.2 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.
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
October 1,
2022		October 2,
2021
(millions)
Share-based compensation expense(1)
$15.1 $19.9 
Income tax benefit related to share-based compensation expense
3.0 3.8 
(1)    There was no share-based compensation expense under the Acceleration program during three months ended October 1, 2022. During the three months ended October 2, 2021, the company incurred $5.0 million of share-based compensation expense related to its Acceleration Program.
17
TAPESTRY, INC.
 
Notes to Condensed Consolidated Financial Statements (continued)
Stock Options
A summary of stock option activity during the three months ended October 1, 2022 is as follows:
 Number of
Options
Outstanding
(millions)
Outstanding at July 2, 202210.0 
Granted1.1 
Exercised(0.3)
Forfeited or expired(0.8)
Outstanding at October 1, 202210.0 
The weighted-average grant-date fair value of options granted during the three months ended October 1, 2022 and October 2, 2021 was $12.00 and $13.96, 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:
October 1,
2022		October 2,
2021
Expected term (years)4.84.9
Expected volatility48.7 %47.1 %
Risk-free interest rate3.2 %0.7 %
Dividend yield3.4 %2.4 %
Service-based Restricted Stock Unit Awards ("RSUs")
A summary of service-based RSU activity during the three months ended October 1, 2022 is as follows:
 Number of
Non-vested RSUs
(millions)
Non-vested at July 2, 20226.4 
Granted2.3 
Vested(2.3)
Forfeited(0.1)
Non-vested at October 1, 20226.3 
The weighted-average grant-date fair value of share awards granted during the three months ended October 1, 2022 and October 2, 2021 was $35.22 and $42.22, respectively.
18
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 October 1, 2022 is as follows:
 Number of
Non-vested PRSUs
(millions)
Non-vested at July 2, 20221.2 
Granted0.4 
Change due to performance condition achievement0.8 
Vested(1.5)
Forfeited— 
Non-vested at October 1, 20220.9 
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 October 1, 2022 and October 2, 2021 was $35.27 and $42.25, respectively.