Tapestry Q1 FY2027 net income rises 31% to $360M
Tapestry declared $0.4625 per share in dividends, compared with $0.40 per share in the prior-year quarter.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Form Type
10-Q
Tapestry, Inc. (TPR) reported first-quarter fiscal 2027 net sales of $1.894 billion, up 11.1% from $1.705 billion a year earlier. Operating income increased 29.3% to $424 million and net income increased 31.0% to $360 million. Diluted earnings per share were $1.76, compared with $1.28.
Coach net sales increased 16.1% to $1.661 billion, while Kate Spade net sales declined 10.4% to $233 million; Kate Spade's operating result shifted from $6 million income to a $20 million loss. Consolidated operating margin was 22.4%, versus 19.3%. A $13 million benefit to operating income was recognized from tariff refunds and related interest during the quarter.
Operating cash flow was $197 million, compared with $113 million a year earlier. Tapestry repurchased $600 million of common stock and had $1.29 billion remaining under its $3.00 billion 2026 Share Repurchase Program authorization as of September 26, 2026. Cash and cash equivalents were $599 million on September 26, 2026, versus $975 million on June 27, 2026.
4 points · 0 major0 major · 2 points
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNet sales rose 11.1% to $1.894 billion in first-quarter fiscal 2027.
- Moderate pointNet income increased 31.0% to $360 million in first-quarter fiscal 2027.
- Moderate pointOperating cash flow increased to $197 million from $113 million.
- Minor pointDeclared dividend per share was $0.4625, compared with $0.40 a year earlier.
Negative
- Moderate pointKate Spade net sales declined 10.4% to $233 million.
- Moderate pointKate Spade reported a $20 million operating loss, versus $6 million income.
Filing Explained
Current debt includes a note due July fifteenth, twenty twenty-seven.
The unaudited quarterly report shows current debt, comprising commercial paper and notes due in 2027. These are outstanding borrowings, including a note maturity in 2027.
The
During the quarter, Tapestry repurchased shares and issued shares under share-based compensation, net of shares withheld for taxes; outstanding shares fell.
The company says it has no treasury shares under Maryland law: repurchased shares become authorized but unissued and may be issued again, so the reported decline in outstanding shares is not assured to persist.
Key Figures
Net sales: $1.894 billion
Operating income: $424 million
Net income: $360 million
+5 more
8 metrics
Net sales
$1.894 billion
Three months ended September 26, 2026; up 11.1% from $1.705 billion in the prior-year quarter.
Operating income
$424 million
Three months ended September 26, 2026; up 29.3% from $328 million.
Net income
$360 million
Three months ended September 26, 2026; up 31.0% from $275 million.
Net income per diluted share
$1.76 per share
Three months ended September 26, 2026; compared with $1.28 per share.
Net cash provided by operating activities
$197 million
Three months ended September 26, 2026; compared with $113 million.
Kate Spade net sales
$233 million
Three months ended September 26, 2026; down 10.4% from $260 million.
Kate Spade operating result
$20 million loss
Three months ended September 26, 2026; compared with $6 million income.
Dividends declared per share
$0.4625 per share
Three months ended September 26, 2026; compared with $0.40 per share in the prior-year quarter.
Key Terms
Non-GAAP measures, Constant currency, supply chain finance, cash flow hedges, +1 more
5 terms
Non-GAAP measures financial
"The Company presents certain non-GAAP measures"
Financial results that companies present using formulas or adjustments different from standard accounting rules (GAAP) to highlight what management considers the business’s ongoing performance. Investors care because these figures can make trends or profitability look clearer—like showing a car’s fuel efficiency after removing unusual trips—but they can also hide one‑time costs or aggressive assumptions, so comparing them with GAAP numbers helps judge reliability.
Constant currency financial
"Constant currency information compares results between periods"
Constant currency is a way of measuring financial results that removes the effects of changes in currency exchange rates. It allows for a clearer comparison of a company's performance over time by showing what the numbers would look like if exchange rates had stayed the same. This helps investors understand whether growth comes from actual business improvements or just currency fluctuations.
supply chain finance financial
"voluntary supply chain finance (“SCF”) program"
Supply chain finance is a set of financing arrangements that let suppliers get paid earlier while the buyer pays later, using a bank or platform to bridge the timing gap. Think of it like a short-term, approved loan that speeds cash to suppliers based on the buyer’s credit rather than the supplier’s credit. Investors care because it affects companies’ cash flow, working capital needs, supplier stability and hidden credit exposure, all of which can influence profitability and risk.
cash flow hedges technical
"Designated as cash flow hedges"
A cash flow hedge is an accounting label companies use when they enter financial contracts—like currency or interest-rate agreements—to protect expected future cash payments or receipts from unpredictable moves. For investors, it signals that the company is trying to smooth out future cash variability (think of locking in a price to avoid surprises), which can reduce reported profit swings but also means the company has exposure to derivative instruments and their associated risks.
Weighted-average diluted shares financial
"Weighted-average diluted shares"
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much were TPR's sales in the first quarter of fiscal 2027?
TPR reported net sales of $1.894 billion for the three months ended September 26, 2026, up 11.1% from $1.705 billion in the comparable period. Coach sales were $1.661 billion and Kate Spade sales were $233 million.
How much profit did TPR report in the first quarter of fiscal 2027?
Tapestry reported net income of $360 million, compared with $275 million a year earlier. Operating income was $424 million, versus $328 million, and diluted earnings per share were $1.76, compared with $1.28.
AI-generated analysis. How Rhea-AI works. Not financial advice.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the Quarterly Period Ended September 26, 2026
or
Commission file number: 1-16153
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(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 Class | Trading Symbol | Name of Each Exchange on which Registered | ||||||||||||
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.
| ☑ | 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 23, 2026, the Registrant had 196,516,496 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: | |||||||
Condensed Consolidated Balance Sheets | 1 | |||||||
Condensed Consolidated Statements of Operations | 2 | |||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) | 3 | |||||||
Condensed Consolidated Statements of Cash Flows | 4 | |||||||
Notes to Condensed Consolidated Financial Statements | 5 | |||||||
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 | ||||||
| ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk | 37 | ||||||
| ITEM 4. | Controls and Procedures | 37 | ||||||
| PART II – OTHER INFORMATION | ||||||||
| ITEM 1. | Legal Proceedings | 38 | ||||||
| ITEM 1A. | Risk Factors | 38 | ||||||
| ITEM 2. | Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities | 38 | ||||||
| ITEM 5. | Other Information | 38 | ||||||
| ITEM 6. | Exhibits | 38 | ||||||
SIGNATURES | 39 | |||||||
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” or “Kate Spade New York” 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," "could," "if," "continue," "projection," "assumption," "should," "expect," "goal," “target,” "trend," "anticipate," "intend," "estimate," "future," "plan," "potential," "position," "build," "fuel," "deliver," "ignite," "aim," "believe," "seek," "will," "would," "uncertain," "achieve," "growth," "forecast," "outlook," "commit," "innovation," "drive," "leverage," "generate," “lead,” “sustain,” “accelerate,” “advancing,” “expanding,” “create,” “elevate,” “prioritize,” “momentum,” “monitor,” “mitigate,” “optimization,” “foreseeable,” “future-proof,” "Amplify," “2028 growth strategy,” "we stretch what’s possible," similar expressions, and variations or negatives of these words. They include, without limitation, statements regarding future anticipated capital expenditures. 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) the impact of international trade disputes and the risks associated with potential changes to international trade and policy agreements, including the imposition or threat of imposition of new or increased tariffs or retaliatory tariffs implemented by countries where our manufacturers are located as well as the imposition of additional duties on the products we import; (iii) 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; (iv) our ability to anticipate consumer preferences, retain the value of our brands and respond to changing fashion and retail trends in a timely manner, including our ability to execute on our e-commerce and digital strategies; (v) the impact of tax and other legislation; (vi) the ability to successfully implement the initiatives under our Amplify strategy; (vii) the effect of existing and new competition in the marketplace; (viii) our ability to successfully identify and implement any sales, acquisitions or strategic transactions on attractive terms or at all; (ix) our ability to achieve intended benefits, cost savings and synergies from acquisitions; (x) our ability to control costs; (xi) the effect of seasonal and quarterly fluctuations on our sales or operating results; (xii) the risks associated with cyber security threats, privacy or data security breaches, and the development, use, governance and regulation of artificial intelligence technologies; (xiii) our ability to satisfy our outstanding debt obligations or incur additional indebtedness; (xiv) the risks associated with climate change and other corporate responsibility issues; (xv) our ability to protect against infringement of our trademarks and other proprietary rights; (xvi) the impact of pending and potential future legal proceedings and (xvii) 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 27, 2026. 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 26, 2026 | June 27, 2026 | ||||||||||
| (millions) | |||||||||||
| (unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current Assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
Trade accounts receivable, less allowances for credit losses of $ | |||||||||||
| Inventories | |||||||||||
| Income tax receivable | |||||||||||
| Prepaid expenses | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
Property and equipment, net of accumulated depreciation of $ | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Goodwill | |||||||||||
| Intangible assets | |||||||||||
| Deferred income taxes | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current Liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Current debt | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Deferred income taxes | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| See Note 14 on commitments and contingencies | |||||||||||
| Stockholders' Equity: | |||||||||||
Preferred stock: (authorized | |||||||||||
Common stock: (authorized | |||||||||||
| Additional paid-in-capital | |||||||||||
| Retained earnings (accumulated deficit) | ( | ( | |||||||||
| Accumulated other comprehensive income (loss) | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying Notes.
1
TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended | ||||||||||||||||||||||||||
| September 26, 2026 | September 27, 2025 | |||||||||||||||||||||||||
| (millions, except per share data) | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| Net sales | $ | $ | ||||||||||||||||||||||||
| Cost of sales | ||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||||
| Operating income (loss) | ||||||||||||||||||||||||||
| Interest expense, net | ||||||||||||||||||||||||||
| Other expense (income) | ( | |||||||||||||||||||||||||
| Income (loss) before provision for income taxes | ||||||||||||||||||||||||||
| Provision (benefit) for income taxes | ||||||||||||||||||||||||||
| Net income (loss) | $ | $ | ||||||||||||||||||||||||
| Net income (loss) per share: | ||||||||||||||||||||||||||
| Basic | $ | $ | ||||||||||||||||||||||||
| Diluted | $ | $ | ||||||||||||||||||||||||
| Shares used in computing net income (loss) per share: | ||||||||||||||||||||||||||
| Basic | ||||||||||||||||||||||||||
| Diluted | ||||||||||||||||||||||||||
See accompanying Notes.
2
TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
| Three Months Ended | ||||||||||||||||||||||||||
| September 26, 2026 | September 27, 2025 | |||||||||||||||||||||||||
| (millions) | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| Net income (loss) | $ | $ | ||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax: | ||||||||||||||||||||||||||
| Unrealized gains (losses) on cash flow hedging derivatives, net | ( | |||||||||||||||||||||||||
| Foreign currency translation adjustments | ( | |||||||||||||||||||||||||
| Other | ||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | ( | |||||||||||||||||||||||||
| Comprehensive income (loss) | $ | $ | ||||||||||||||||||||||||
See accompanying Notes.
3
TAPESTRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended | |||||||||||
| September 26, 2026 | September 27, 2025 | ||||||||||
| (millions) | |||||||||||
| (unaudited) | |||||||||||
| CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES | |||||||||||
| Net income (loss) | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of cloud computing arrangements | |||||||||||
| Provision for bad debt | |||||||||||
| Share-based compensation | |||||||||||
| Deferred income taxes | |||||||||||
| Changes to lease related balances, net | ( | ||||||||||
| Other non-cash charges, net | ( | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Trade accounts receivable | ( | ( | |||||||||
| Inventories | ( | ( | |||||||||
| Accounts payable | |||||||||||
| Accrued liabilities | ( | ( | |||||||||
| Other liabilities | ( | ||||||||||
| Other assets | ( | ||||||||||
| Net cash provided by (used in) operating activities | |||||||||||
| CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES | |||||||||||
| Purchases of investments | ( | ( | |||||||||
| Proceeds from maturities and sales of investments | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Proceeds from sale of business, net of cash divested | |||||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES | |||||||||||
| Payment of dividends | ( | ( | |||||||||
| Repurchase of common stock | ( | ( | |||||||||
| Payment of debt issuance costs | ( | ||||||||||
| Proceeds from/(Repayments of) commercial paper, net | |||||||||||
| Proceeds from share-based awards | |||||||||||
| Taxes paid to net settle share-based awards | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
| Supplemental information: | |||||||||||
| Cash paid for income taxes, net | $ | $ | |||||||||
| Cash paid for interest | $ | $ | |||||||||
| Noncash investing activity - property and equipment obligations | $ | $ | |||||||||
See accompanying Notes.
4
TAPESTRY, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. NATURE OF OPERATIONS
Tapestry, Inc. (the "Company") is a global house of iconic accessories and lifestyle brands uniting the magic of Coach and Kate Spade New York. Together, we stretch what’s possible – advancing brands further than they could go alone, expanding their reach to new geographies and generations. Inspired by our consumers, we create experiences and products that build lasting brand love and elevate everyday life.
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 27, 2026 ("fiscal 2026") and other filings with the SEC.
In the first quarter of fiscal 2027, the Company changed the presentation in the condensed consolidated financial statements and related disclosures to whole millions from the historical presentation of tenths of millions and, as a result, any necessary rounding adjustments have been made to prior year disclosed amounts.
The results of operations, cash flows and comprehensive income for the three months ended September 26, 2026 are not necessarily indicative of results to be expected for the entire fiscal year, which will end on July 3, 2027 ("fiscal 2027").
Fiscal Periods
The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to June 30. Fiscal 2027 will end on July 3, 2027 and will be a 53-week year. Fiscal 2026, which ended on June 27, 2026, was a 52-week year. The first quarter of fiscal 2027, which ended on September 26, 2026 and the first quarter of fiscal 2026, which ended on September 27, 2025, were both 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 share-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.
Additionally, GAAP requires the consolidation of all entities for which a company has a controlling voting interest and all variable interest entities (“VIEs”) for which a company is deemed to be the primary beneficiary. An entity is generally a VIE if it meets any of the following criteria: (i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of
5
TAPESTRY, INC.
Notes to Condensed Consolidated Financial Statements (continued)
Share Repurchases
The Company accounts for stock repurchases by allocating the repurchase price to Common stock and Retained earnings (accumulated deficit). 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 accounts for the shares purchased under the share repurchase plan based on the trade date. Purchases of the Company's common stock may be executed through open market purchases including through purchase agreements under Rule 10b5-1, in privately negotiated transactions or in other transactions, including accelerated share repurchase programs. Excise tax on net share repurchases is recorded in Retained earnings (accumulated deficit) as part of Stockholders' Equity.
Supplier Finance Program
3. RECENT ACCOUNTING PRONOUNCEMENTS
Recently Issued Accounting Pronouncements
In November 2025, the FASB issued ASU No. 2025-09, "Derivatives and Hedging (Topic 815): Hedge Accounting Improvements," which includes amendments intended to more closely align hedge accounting with the economics of an entity's risk management activities. The amendments will be effective for the Company's annual reporting periods beginning in fiscal year 2028 and for interim periods within fiscal year 2028. Early adoption is permitted and the amendments should be applied prospectively. The Company is currently evaluating the ASU to determine its impact on its condensed consolidated financial statements and notes thereto.
In September 2025, the FASB issued ASU No. 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software", which modernizes the accounting for the costs of software developed for internal use and clarifies related disclosure requirements. The amendments remove all references to software development stages, requiring companies to start capitalizing software costs when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The amendments will be effective for the Company's annual reporting periods beginning in fiscal year 2029 and for interim periods within fiscal year 2029. Early adoption is permitted. The amendments may be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on its condensed consolidated financial statements and notes thereto.
In November 2024, the FASB issued ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which is intended to improve the disclosures about expenses and address requests from investors for more detailed information about the types of costs and expenses included in certain expense captions presented on the income statement. The amendments will be effective for the Company's annual reporting periods beginning in fiscal year 2028 and for interim periods beginning in fiscal year 2029, with early adoption permitted. The amendments may be applied retrospectively to all prior periods presented in the financial statements or prospectively upon adoption. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures.
6
TAPESTRY, INC.
Notes to Condensed Consolidated Financial Statements (continued)
4. REVENUE
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 26, 2026 | |||||||||||||||||||||||||||||
| Coach | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Kate Spade | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Three Months Ended September 27, 2025 | |||||||||||||||||||||||||||||
| Coach | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Kate Spade | |||||||||||||||||||||||||||||
| Stuart Weitzman | |||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
(1) Greater China includes mainland China, Taiwan, Hong Kong SAR and Macao SAR.
(2) Other Asia includes Japan, Australia, South Korea, Malaysia, Singapore, and other countries primarily within Asia.
(3) Other sales primarily represents sales in Europe and the Middle East as well as 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 26, 2026 and June 27, 2026 was $43 million and $35 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 26, 2026, net sales of $4 million were recognized from amounts recorded as deferred revenue as of June 27, 2026. For the three months ended September 27, 2025, net sales of $2 million were recognized from amounts recorded as deferred revenue as of June 28, 2025.
5. ACQUISITIONS AND DIVESTITURES
Stuart Weitzman Business Divestiture
7
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:
| Coach | Kate Spade(1) | Total | |||||||||||||||||||||
| (millions) | |||||||||||||||||||||||
| Balance at June 27, 2026 | $ | $ | $ | ||||||||||||||||||||
| Foreign exchange impact | |||||||||||||||||||||||
| Balance at September 26, 2026 | $ | $ | $ | ||||||||||||||||||||
(1) Amount is net of accumulated impairment charges of $244
Intangible Assets
Intangible assets consist of the following:
| September 26, 2026 | June 27, 2026 | ||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accum. Amort. | Net | Gross Carrying Amount | Accum. Amort. | Net | ||||||||||||||||||||||||||||||
| (millions) | |||||||||||||||||||||||||||||||||||
| Intangible assets subject to amortization: | |||||||||||||||||||||||||||||||||||
| Customer relationships | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Total intangible assets subject to amortization | ( | ( | |||||||||||||||||||||||||||||||||
| Intangible assets not subject to amortization: | |||||||||||||||||||||||||||||||||||
Trademarks and trade names(1) | — | — | |||||||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
(1) Amount is net of accumulated impairment charges of $611
8
TAPESTRY, INC.
Notes to Condensed Consolidated Financial Statements (continued)
7. STOCKHOLDERS' EQUITY
Stock Repurchase Program
2026 Share Repurchase Program
On September 10, 2025, the Company announced that the Board authorized the Company to repurchase up to $3.00 billion of its outstanding common stock (the "2026 Share Repurchase Program"). During the three months ended September 26, 2026, the Company repurchased $600 million of common stock. As of September 26, 2026, the Company had $1.29 billion of remaining repurchase authorization under the 2026 Share Repurchase Program.
A reconciliation of stockholders' equity is presented below:
| Shares of Common Stock | Common Stock | Additional Paid-in- Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||
| (millions, except per share data) | |||||||||||||||||||||||||||||||||||
| Balance at June 28, 2025 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | |||||||||||||||||||||||||||||||
| Shares issued, pursuant to share-based compensation arrangements, net of shares withheld for taxes | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Repurchase of common stock including excise tax | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Balance at September 27, 2025 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Shares of Common Stock | Common Stock | Additional Paid-in- Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | ||||||||||||||||||||||||||||||
| (millions, except per share data) | |||||||||||||||||||||||||||||||||||
| Balance at June 27, 2026 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | |||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
| Shares issued, pursuant to share-based compensation arrangements, net of shares withheld for taxes | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Repurchase of common stock, including excise tax | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Balance at September 26, 2026 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
9
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) | Cumulative Translation Adjustment(2) | Other(3) | Total | ||||||||||||||||||||||||||
| (millions) | |||||||||||||||||||||||||||||
| Balances at June 28, 2025 | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | |||||||||||||||||||||||||||||
| Less: amounts reclassified from accumulated other comprehensive income to earnings | |||||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | |||||||||||||||||||||||||||||
| Balances at September 27, 2025 | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
| Balances at June 27, 2026 | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||||||||
| Less: amounts reclassified from accumulated other comprehensive income to earnings | |||||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||||||||
| Balances at September 26, 2026 | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
(1) The ending balances of AOCI related to cash flow hedges are net of tax of $(1 ) million and $(1 ) million as of September 26, 2026 and September 27, 2025, respectively. The amounts reclassified from AOCI are net of tax of less than $1
(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 $81 million, net of tax of $12 million as of September 26, 2026. The ending balance as of September 27, 2025 is a loss of $80 million, net of tax of $15 million.
(3) The ending balance of AOCI relates to excluded components of derivative instruments designated as fair value hedges. The ending balance as of September 26, 2026 is a gain of $1 million, net of tax of less than $1 million.
8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to foreign currency exchange risk related to its sale of inventory, cross-currency intercompany loans and payables, and the remeasurement and translation of foreign operations. The Company is also exposed to interest rate risk related to changes in the fair value of the Company's fixed-rate debt. The Company uses derivative financial instruments to manage these risks. These derivative transactions are in accordance with the Company’s risk management policies. 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. 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 on a gross basis. 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 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.
10
TAPESTRY, INC.
Notes to Condensed Consolidated Financial Statements (continued)
Cash Flow Hedges
The Company enters into forward foreign currency exchange contracts primarily to reduce its risks related to exchange rate fluctuations on foreign currency denominated inventory transactions. This primarily includes exposure to exchange rate fluctuations in Chinese Renminbi, Japanese Yen, Canadian Dollar and Euro. The derivative instrument gains (losses) are initially deferred in accumulated other comprehensive income ("AOCI") and subsequently recognized in the Condensed Consolidated Statements of Operations within Cost of sales, when the related inventory is sold to a third party.
If it is determined that a derivative instrument has not been highly effective or will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are recognized in earnings. Upon discontinuance of hedge accounting, amounts previously recorded in AOCI are recognized in earnings when the related hedged item affects earnings, unless it is probable that the forecasted transaction will not occur, in which case the accumulated amount is immediately recognized in earnings.
For cash flow reporting purposes, the Company classifies proceeds received or amounts paid upon the settlement of the cash flow hedging instruments in the same manner as the related item being hedged, primarily within cash from operating activities.
The Company expects that $11 million of net derivative gain related to inventory purchases included in AOCI at September 26, 2026 will be reclassified into earnings within the next 12 months. This amount will vary due to fluctuations in foreign currency exchange rates.
Net Investment Hedges
The Company enters into cross-currency swaps and forward foreign currency exchange contracts to reduce its risks related to exchange rate fluctuations on net investments in foreign subsidiaries, including our Euro, Japanese Yen and Chinese Renminbi denominated subsidiaries, against future volatility in the exchange rates between the United States dollar and their local currencies. The related gains (losses) are deferred within cumulative translation adjustment (“CTA”) in AOCI until the net investment is sold or liquidated, and current maturity dates range from March 2035 to November 2039.
The Company assesses net investment hedges under the spot method, resulting in cross-currency basis spread on swaps and the spot to forward rate difference on forward exchanges being excluded from the assessment of hedge effectiveness. The portion of change in fair value attributable to excluded components is recorded in AOCI and amortized to earnings within Interest expense, net.
Upon termination of derivative instruments that are designated as a net investment hedge, the changes in the fair value of the instruments recognized as a component within AOCI remain in CTA until the net investment is sold or liquidated. If it is determined that a derivative instrument has not been highly effective or will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are recognized in earnings.
For cash flow reporting purposes, proceeds received or amounts paid upon the settlement of a net investment hedge are included within cash from investing activities, unless the derivative instrument includes an other-than-insignificant financing element, for which these cash flows are primarily classified within cash from financing activities.
Fair Value Hedges
The Company enters into cross-currency swaps to reduce its risks related to foreign exchange rate fluctuations associated with certain cross-currency intercompany loans. Changes in the fair value of the cross-currency swaps designated as fair value hedges are recognized within Other expense (income) on the Company's Condensed Consolidated Statement of Operations, which generally offset the adjustment to the carrying amount of the hedged item. The portion of the change in the fair value of designated cross-currency swap contracts attributable to the excluded component is recorded in AOCI and amortized to earnings within Other expense (income). If it is determined that a derivative instrument has not been highly effective or will continue not to be highly effective in hedging the designated exposure, any amounts associated with excluded components in AOCI would be reclassified into earnings immediately.
The Company also enters into interest rate contracts to reduce exposure to changes in the fair value of certain fixed‑rate debt resulting from fluctuations in benchmark interest rates. The gains and losses on the interest rate contracts designated as fair value hedges are recognized in the Condensed Consolidated Statements of Operations as Interest expense, net and are generally offset by corresponding changes in the fair value of the hedged liabilities. If it is determined that a derivative instrument has not been highly effective or will continue not to be highly effective in hedging the designated exposure, the hedged asset or liability is no longer adjusted for changes in fair value and any basis adjustment is amortized to earnings over the remaining term of the
11
TAPESTRY, INC.
Notes to Condensed Consolidated Financial Statements (continued)
hedged item, unless the hedged item is derecognized, in which case the basis adjustment is recognized in earnings immediately. Additionally, any amounts associated with excluded components in AOCI are reclassified into earnings in the same manner.
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.
Undesignated Hedges
The Company also enters into forward foreign currency exchange contracts, which are not designated as hedges, to reduce its risks related to exchange rate fluctuations associated with certain cross-currency intercompany loans and payables. The changes in the fair value of these instruments are recorded through earnings within Other expense (income) on the Company's Condensed Consolidated Statement of Operations, which offset the revaluation of the hedged underlying assets and liabilities.
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.
The following tables provide information related to the Company's derivative instruments recorded on the Company's Condensed Consolidated Balance Sheets as of September 26, 2026 and June 27, 2026:
| Notional Value | Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||||||||
| Fair Value | Fair Value | ||||||||||||||||||||||||||||||||||
| September 26, 2026 | June 27, 2026 | September 26, 2026 | June 27, 2026 | September 26, 2026 | June 27, 2026 | ||||||||||||||||||||||||||||||
| (millions) | |||||||||||||||||||||||||||||||||||
| Designated as cash flow hedges | |||||||||||||||||||||||||||||||||||
Foreign exchange risk(1) | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Designated as net investment hedges | |||||||||||||||||||||||||||||||||||
Foreign exchange risk(3) | |||||||||||||||||||||||||||||||||||
| Designated as fair value hedges | |||||||||||||||||||||||||||||||||||
Foreign exchange risk(2) | |||||||||||||||||||||||||||||||||||
Interest rate risk(2) | |||||||||||||||||||||||||||||||||||
| Undesignated hedges | |||||||||||||||||||||||||||||||||||
Foreign exchange risk(1) | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
(1)In Other Current Assets and Accrued Liabilities.
(2)In Other Assets and Other Liabilities.
(3)As of September 26, 2026, the Company recorded $9 million within Other Current Assets, $20 million within Other Assets, $1 million within Accrued Liabilities and $197 million within Other Liabilities. As of June 27, 2026, the Company recorded $7 million within Other Current Assets, $64 million within Other Assets, $2 million within Accrued Liabilities and $219 million within Other Liabilities.
12
TAPESTRY, INC.
Notes to Condensed Consolidated Financial Statements (continued)
The following tables provide the pretax impact of gains and losses from the Company's designated derivative instruments on its Condensed Consolidated Financial Statements as of September 26, 2026 and September 27, 2025:
| Amount of Gain (Loss) Recognized in OCI on Derivatives | |||||||||||
| Three Months Ended | |||||||||||
| September 26, 2026 | September 27, 2025 | ||||||||||
| (millions) | |||||||||||
| Designated as cash flow hedges | |||||||||||
| Foreign exchange risk | $ | ( | $ | ||||||||
| Designated as net investment hedges | |||||||||||
| Foreign exchange risk | ( | ||||||||||
| Designated as fair value hedges | |||||||||||
| Foreign exchange risk | |||||||||||
| Total | $ | ( | $ | ||||||||
| Amount of Gain (Loss) Reclassified from Accumulated OCI into Income | |||||||||||||||||
| Statement of Operations Classification | Three Months Ended | ||||||||||||||||
| September 26, 2026 | September 27, 2025 | ||||||||||||||||
| (millions) | |||||||||||||||||
| Designated as cash flow hedges | |||||||||||||||||
Foreign exchange risk | Cost of Sales | $ | $ | ||||||||||||||
| Designated as net investment hedges | |||||||||||||||||
| Foreign exchange risk | Interest income (expense) | ||||||||||||||||
| Total hedges | $ | $ | |||||||||||||||
| Amount of Net Gain (Loss) Recognized in Income | |||||||||||||||||
| Three Months Ended | |||||||||||||||||
| Statement of Operations Classification | September 26, 2026 | September 27, 2025 | |||||||||||||||
| (millions) | |||||||||||||||||
| Designated as fair value hedges | |||||||||||||||||
Foreign exchange risk | |||||||||||||||||
| Derivative designated as hedging instrument | Other income (expense) | $ | $ | ||||||||||||||
| Amount excluded from hedge effectiveness | Other income (expense) | ||||||||||||||||
| Interest rate risk | |||||||||||||||||
| Hedged Item | Interest income (expense) | ||||||||||||||||
| Derivative designated as hedging instrument | Interest income (expense) | ( | |||||||||||||||
| Amount excluded from hedge effectiveness | Interest income (expense) | ||||||||||||||||
| Designated as net investment hedges | |||||||||||||||||
| Foreign exchange risk | |||||||||||||||||
Amount excluded from hedge effectiveness(1) | Interest income (expense) | ||||||||||||||||
| Total hedges | $ | $ | |||||||||||||||
(1)Includes $7 million and $4 million, respectively, attributable to excluded components recorded in AOCI and reclassified into income during the three months ended September 26, 2026 and September 27, 2025.
13
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 26, 2026 | September 27, 2025 | ||||||||||||||||||||||
| (millions, except per share data) | |||||||||||||||||||||||
| Net income (loss) | $ | $ | |||||||||||||||||||||
| Weighted-average basic shares | |||||||||||||||||||||||
| Dilutive securities: | |||||||||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||||||||
| Weighted-average diluted shares | |||||||||||||||||||||||
| Net income (loss) per share: | |||||||||||||||||||||||
| Basic | $ | $ | |||||||||||||||||||||
| Diluted | $ | $ | |||||||||||||||||||||
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 26, 2026 and September 27, 2025, there were 0.5 million and 0.6 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.
14
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 26, 2026 | September 27, 2025(1) | ||||||||||||||||||||||
| (millions) | |||||||||||||||||||||||
| Share-based compensation expense | $ | $ | |||||||||||||||||||||
| Income tax benefit related to share-based compensation expense | |||||||||||||||||||||||
(1)During the three months ended September 27, 2025, the Company incurred $1 million of share-based compensation expense related to the modification of award terms in connection with the sale of the Stuart Weitzman Business and $1 million of share-based compensation expense related to its Organizational Efficiency Costs.
Stock Options
A summary of stock option activity during the three months ended September 26, 2026 is as follows:
| Number of Options Outstanding | |||||||||||
| (millions) | |||||||||||
| Outstanding at June 27, 2026 | |||||||||||
| Granted | |||||||||||
| Exercised | ( | ||||||||||
| Forfeited or expired | |||||||||||
| Outstanding at September 26, 2026 | |||||||||||
The weighted-average grant-date fair value of options granted during the three months ended September 26, 2026 and September 27, 2025 was $47.77 and $36.74 , 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 26, 2026 | September 27, 2025 | ||||||||||
| Expected term (years) | |||||||||||
| Expected volatility | % | % | |||||||||
| Risk-free interest rate | % | % | |||||||||
| Dividend yield | % | % | |||||||||
Service-based Restricted Stock Unit Awards ("RSUs")
A summary of service-based RSU activity during the three months ended September 26, 2026 is as follows:
| Number of Non-vested RSUs | |||||||||||
| (millions) | |||||||||||
| Non-vested at June 27, 2026 | |||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Non-vested at September 26, 2026 | |||||||||||
The weighted-average grant-date fair value of share awards granted during the three months ended September 26, 2026 and September 27, 2025 was $128.88 and $99.83 , respectively.
15
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 26, 2026 is as follows:
| Number of Non-vested PRSUs | |||||||||||
| (millions) | |||||||||||
| Non-vested at June 27, 2026 | |||||||||||
| Granted | |||||||||||
| Change due to performance condition achievement | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | |||||||||||
| Non-vested at September 26, 2026 | |||||||||||
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 26, 2026 and September 27, 2025 was $145.88 and $111.74 , respectively.
11. DEBT
The following table summarizes the components of the Company’s outstanding debt:
| September 26, 2026 | June 27, 2026 | ||||||||||
| (millions) | |||||||||||
| Current Debt: | |||||||||||
| Commercial Paper Borrowings | $ | $ | |||||||||
| — | |||||||||||
| Total Current Debt | $ | $ | |||||||||
| Long-Term Debt: | |||||||||||
| $ | — | $ | |||||||||
| Total long-term debt | $ | $ | |||||||||
| Less: Unamortized discount and debt issuance costs on senior notes | ( | ( | |||||||||
Less: Fair value basis adjustment(1) | ( | ( | |||||||||
| Total long-term debt, net | $ | $ | |||||||||
During the three months ended September 26, 2026 and September 27, 2025, the Company recognized interest expense on outstanding debt of $29 million and $30 million, respectively.
16
TAPESTRY, INC.
Notes to Condensed Consolidated Financial Statements (continued)
$2.00 Billion Revolving Credit Facility
On May 22, 2025, the Company entered into a definitive agreement to refinance and replace the Company's unsecured revolving facility dated May 11, 2022 (the "Existing Revolving Credit Facility") with a new revolving credit facility (the "Amended Revolving Credit Facility"), among the Company, as borrower, Bank of America, N.A., as administrative agent (the “Administrative Agent”), and a syndicate of banks and financial institutions (collectively, the “Lenders”). Under the Amended Revolving Credit Facility, the Lenders have made available to the Company a $2.00 billion unsecured revolving credit facility, including sub-facilities for letters of credit, with a maturity date of May 22, 2030.
Borrowings under the Amended 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 term secured overnight financing rate, (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 (subject to reduction for certain debt incurred in connection with a pending acquisition or for debt being discharged, satisfied or defeased), to (b) consolidated EBITDAR (the “Gross Leverage Ratio”). 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 Amended Revolving Credit Facility, payable quarterly in arrears, and certain fees with respect to letters of credit that are issued.
Borrowings under the Amended 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 back-up). There were no outstanding borrowings on the Amended Revolving Credit Facility as of September 26, 2026.
Senior Notes
On December 11, 2024, the Company issued $1.50 billion of senior unsecured notes, consisting of $750 million aggregate principal amount of 5.100 % senior unsecured notes due March 11, 2030 at 99.876 % of par (the “5.100 % Senior Notes due 2030”) and $750 million aggregate principal amount of 5.500 % senior unsecured notes due March 11, 2035 at 99.864 % of par (the “5.500 % Senior Notes due 2035”, together with the 5.100 % Senior Notes due 2030, the "2030 and 2035 Senior Notes"). The Company pays interest semi-annually on the 2030 and 2035 Senior Notes on March 11 and September 11 of each year, which commenced on September 11, 2025.
In June 2017, the Company issued $600 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 $203 million of the outstanding aggregate principal amount under its 4.125 % Senior Notes due 2027. In addition, in December 2021, the Company issued $500 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").
Commercial Paper Program
On July 24, 2025, the Company entered into a commercial paper borrowing program (the "Commercial Paper Program") that provides for the issuance of up to $2.00 billion of unsecured commercial paper notes with maturities up to 365 days. Borrowings under the Commercial Paper Program are supported by the Amended Revolving Credit Facility and may be used to support the Company's general corporate needs. The aggregate amount of borrowings outstanding under the Commercial Paper Program and Amended Revolving Credit Facility will not exceed $2.00 billion. During the three months ended September 26, 2026, the Company issued notes under the Commercial Paper Program with original maturities less than three months. As of September 26, 2026, the Company had $200 million of borrowings outstanding under the Commercial Paper Program with a weighted average interest rate of 4.221 %.
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 million (approximately $37 million), which includes a loan of up to RMB 85 million (approximately $13 million), a bank guarantee facility of up to RMB 15 million (approximately $2 million) and accounts payable financing of up to RMB 150 million (approximately $22 million). Borrowings under the China Credit Facility bear interest at rates based on the People’s Bank of China Loan Prime Rate plus an applicable margin, as determined at the time of each drawdown. As of September 26, 2026, the Company had no borrowings outstanding under the China Credit Facility.
17
TAPESTRY, INC.
Notes to Condensed Consolidated Financial Statements (continued)
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.
Under the Amended Revolving Credit Facility, we are required to comply on a quarterly basis with a maximum net leverage ratio of 4.00 :1.00, which may be increased to 4.50 :1.00 following the consummation of a material acquisition, subject to certain limitations set forth in the Amended Revolving Credit Facility. As of September 26, 2026, 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 26, 2026 and June 27, 2026 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 26, 2026 | June 27, 2026 | ||||||||||
| (millions) | |||||||||||
| $ | $ | ||||||||||
18
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 inputs 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 26, 2026 and June 27, 2026:
| Level 1 | Level 2 | ||||||||||||||||||||||||||||||||||
| September 26, 2026 | June 27, 2026 | September 26, 2026 | June 27, 2026 | ||||||||||||||||||||||||||||||||
| (millions) | |||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
Cash equivalents(1) | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||||||||||||||
Commercial paper(2) | |||||||||||||||||||||||||||||||||||
Government securities - U.S.(2) | |||||||||||||||||||||||||||||||||||
Corporate debt securities - U.S.(2) | |||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
Derivative assets: | |||||||||||||||||||||||||||||||||||
Inventory-related instruments(3) | |||||||||||||||||||||||||||||||||||
Net investment hedges(3) | |||||||||||||||||||||||||||||||||||
Intercompany loans and payables(3) | |||||||||||||||||||||||||||||||||||
Interest rate hedge instruments(3) | |||||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||
Derivative liabilities: | |||||||||||||||||||||||||||||||||||
Inventory-related instruments(3) | |||||||||||||||||||||||||||||||||||
Net investment hedges(3) | |||||||||||||||||||||||||||||||||||
Intercompany loans and payables(3) | |||||||||||||||||||||||||||||||||||
Interest rate hedge instruments(3) | |||||||||||||||||||||||||||||||||||
(1)Cash equivalents generally consist 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 derivative instruments 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.
19
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. The Company determines the fair values of these assets based on Level 3 measurements. Inputs to these fair value measurements included estimates of the amounts and the timing of future discounted cash flows based on historical experience, current trends, market conditions and performance expectations.
There were no
13. INCOME TAXES
14. COMMITMENTS AND CONTINGENCIES
Letters of Credit
The Company had standby letters of credit, surety bonds and bank guarantees totaling $40 million and $38 million outstanding at September 26, 2026 and June 27, 2026, respectively. The agreements, which expire at various dates through calendar 2039, primarily collateralize the Company's obligation to third parties for duties, 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 26, 2026 related to debt repayments. Refer to Note 11, "Debt," for further information.
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, contract disputes, insurance claims and litigation, including wage and hour 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 consolidated financial statements. There have been no material developments with respect to any previously reported proceedings.
Following the previously disclosed termination of the proposed Merger Agreement, dated August 10, 2023, by and among the Company, Merger Sub and Capri, pursuant to which, among other things, Merger Sub would merge with and into Capri (the "Merger") with Capri surviving the Merger and continuing as a wholly owned subsidiary of the Company ("the Capri Acquisition") two
20
TAPESTRY, INC.
Notes to Condensed Consolidated Financial Statements (continued)
15. SEGMENT INFORMATION
The Company has two 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.
The Company's chief operating decision maker ("CODM"), who is its Chief Executive Officer, regularly evaluates operating profit of these segments compared to management's expectations in deciding how to allocate resources and assess performance. Segment operating profit is the gross profit of the segment less direct expenses of the segment. Total expenditures for additions to long-lived assets and assets by segment are not provided to the CODM as such information is not utilized for purposes of assessing performance or allocating resources, and therefore has not been disclosed.
In addition to these reportable segments, the Company has certain corporate expenses that are not directly attributable to its brands ("Unallocated 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, significant expenses and operating profit (loss) of each of the Company's segments and reconciliation to the Company's Income (loss) before provision for income taxes for the three months ended September 26, 2026 and September 27, 2025:
| Coach | Kate Spade | Stuart Weitzman(1) | Total | ||||||||||||||||||||
| (millions) | |||||||||||||||||||||||
| Three Months Ended September 26, 2026 | |||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
Cost of sales(2) | |||||||||||||||||||||||
Selling, general and administrative expenses(2) | |||||||||||||||||||||||
| Total segment operating profit (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
Unallocated corporate expenses(3) | |||||||||||||||||||||||
Unallocated other charges, net(4) | |||||||||||||||||||||||
| Income (loss) before provision for income taxes | $ | ||||||||||||||||||||||
| Three Months Ended September 27, 2025 | |||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
Cost of sales(2) | |||||||||||||||||||||||
Selling, general and administrative expenses(2) | |||||||||||||||||||||||
| Total segment operating profit (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
Unallocated corporate expenses(3) | |||||||||||||||||||||||
Unallocated other charges, net(4) | |||||||||||||||||||||||
| Income (loss) before provision for income taxes | $ | ||||||||||||||||||||||
(1) During the three months ended September 27, 2025, Stuart Weitzman Net sales, Cost of sales and Selling, general and administrative expenses represent results for the period prior to the sale on August 4, 2025. As a result of the sale, the Company determined it had two reportable segments on a prospective basis. Refer to Note 5, "Acquisitions and Divestitures," for further information.
(2) Significant expense categories that are regularly provided to the CODM, or easily computable from information that is regularly provided to the CODM.
(3) Unallocated corporate expenses represent certain corporate expenses that are not directly attributable to a segment.
(4) Includes Interest expense, net and Other expense (income).
21
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 26, 2026 and September 27, 2025:
| Three Months Ended | |||||||||||||||||||||||
September 26, 2026 | September 27, 2025(3) | ||||||||||||||||||||||
| (millions) | |||||||||||||||||||||||
Depreciation and amortization expense(1): | |||||||||||||||||||||||
| Coach | $ | $ | |||||||||||||||||||||
| Kate Spade | |||||||||||||||||||||||
| Total segment depreciation and amortization expense | |||||||||||||||||||||||
Unallocated corporate(2) | |||||||||||||||||||||||
| Total Depreciation and amortization expense | $ | $ | |||||||||||||||||||||
(1) Depreciation and amortization expense for the segments includes an allocation of expense related to assets which support multiple segments.
(2) Unallocated corporate, which is not a reportable segment, represents certain depreciation and amortization costs that are not directly attributable to a segment.
22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's financial condition and results of operations should be read together with the Company's condensed consolidated financial statements and notes to those financial statements included elsewhere in this document. When used herein, the terms "the Company," "Tapestry," "we," "us" and "our" refer to Tapestry, Inc., including consolidated subsidiaries. References to "Coach," "Kate Spade" or "Kate Spade New York" refer only to the referenced brand.
INTRODUCTION
Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided as a supplement to the accompanying consolidated financial statements and notes thereto to help provide an understanding of our results of operations, financial condition and liquidity. MD&A is organized as follows:
•Overview. This section provides a general description of the business and brands as well as the Company’s growth strategy.
•Global Economic Conditions and Industry Trends. This section includes a discussion of global economic conditions and industry trends that affect comparability that are important in understanding results of operations and financial condition, and in anticipating future trends.
•Results of Operations. An analysis of our results of operations in the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026.
•Non-GAAP Measures. This section includes non-GAAP measures that are useful to investors and others in evaluating the Company’s ongoing operating and financial results in a manner that is consistent with management's evaluation of business performance and understanding how such results compare with the Company’s historical performance.
•Financial Condition. This section includes a discussion on liquidity and capital resources including an analysis of changes in cash flow as well as working capital and capital expenditures.
•Critical Accounting Policies and Estimates. This section includes any material changes or updates to critical accounting policies or estimates since the Annual Report on Form 10-K for fiscal 2026.
OVERVIEW
Tapestry, Inc. is a global house of iconic accessories and lifestyle brands uniting the magic of Coach and Kate Spade New York. Together, we stretch what’s possible – advancing brands further than they could go alone, expanding their reach to new geographies and generations. Inspired by our consumers, we create experiences and products that build lasting brand love and elevate everyday life.
The Company has two reportable segments:
•Coach - Includes global sales of primarily 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.
2028 Growth Strategy
In the first quarter of fiscal 2026, the Company introduced its 2028 growth strategy (“Amplify”), which focuses on four key pillars:
•Build Emotional Connections with Consumers: The Company aims to drive new customer acquisition, with a focus on Gen Z consumers entering the market to build brand love and lifetime value.
•Fuel Fashion Innovation & Product Excellence: The Company aims to lead with handbags and leathergoods with targeted lifestyle expansion in footwear.
•Deliver Compelling Experiences to Drive Global Growth: The Company aims to sustain growth in North America and accelerate momentum in international markets, prioritizing Greater China and Europe.
•Ignite the Power of Our People: The Company aims to future-proof growth by continuing to develop a consumer-obsessed culture that is agile and always looking forward.
23
GLOBAL ECONOMIC CONDITIONS AND INDUSTRY TRENDS
Current Trends and Outlook
The environment in which we operate is subject to a number of different factors driving global consumer spending. Consumer preferences, macroeconomic conditions, foreign currency fluctuations and geopolitical events continue to impact overall levels of consumer travel and spending on discretionary items, with inconsistent patterns across business channels and geographies.
During the first quarter of fiscal 2027, the macroeconomic environment remained challenging and volatile. While certain organizations that monitor the global economy continue to forecast growth, these projections remain subject to uncertainty. Continued trade tensions, financial market volatility, elevated interest rates, inflationary pressure and ongoing geopolitical instability continue to pose risks to economic growth and consumer spending.
Import Tariffs
During the second half of fiscal 2025, the U.S. Government announced tariffs on imports from select countries. The majority of the Company's products sold in the U.S. are imported from countries in which these tariffs were announced. Additionally, during the first quarter of fiscal 2026, the President of the United States issued an executive order removing the de minimis exemption for low value shipments imported into the U.S. for all countries beginning August 29, 2025.
On February 20, 2026, the U.S. Supreme Court ruled that tariffs collected under the International Emergency Economic Powers Act ("IEEPA") were invalid. The U.S. Court of International Trade ("CIT") subsequently ordered refunds for qualifying customs entries, including applicable interest. U.S. Customs and Border Protection ("CBP") established a phased administrative process for submitting refund claims for certain IEEPA tariffs. The Company paid approximately $117 million in IEEPA tariffs. During the fourth quarter of fiscal 2026, the Company received cash refunds related to the previously paid IEEPA tariffs of $2 million which was recognized as a reduction to Cost of sales. In addition, as of June 27, 2026, the Company applied the loss recovery model and determined that the receipt of the remaining refunds of the previously paid but not received IEEPA tariffs was probable. The Company estimated the amount of the probable refund to be $115 million, of which $96 million was recognized as a reduction to Cost of sales, $10 million was recorded as Accrued liabilities and $9 million was applied as a reduction to tariffs that remained in Inventory. During the first quarter of fiscal 2027, the Company collected substantially all the cash related to the tariff refund. The Company also received $4 million of related interest which was recorded as a reduction to Selling, general and administrative expenses and recognized $9 million as a reduction of Cost of sales related to tariffs included in Inventory as of June 27, 2026. Collectively, these items resulted in a $13 million benefit to Operating income during the first quarter of fiscal 2027.
Following the Supreme Court's decision, the U.S. Administration announced a 10% global tariff under Section 122 of the Trade Act of 1974 which became effective February 24, 2026, for a period of up to 150 days, which expired on July 24, 2026. On May 7, 2026, the CIT ruled the Section 122 tariffs were invalid. The government has appealed the ruling and the Company is awaiting a decision from the U.S. Court of Appeals. On July 23, 2026, the U.S. Administration announced the final remedy in the Section 301 investigations relating to forced labor practices, imposing new tariff rates ranging from 10% to 12.5% on most imports from certain countries, effective upon the expiration of the temporary Section 122 tariffs. The outlook for future trade policy remains uncertain. The Company continues to monitor these developments, assess their potential impact on its business and implement mitigation strategies where possible.
Conflict in the Middle East
The conflict in the Middle East, which began during the third quarter of fiscal 2026, has contributed to heightened geopolitical uncertainty, including impacts to global supply chains and energy prices. The Company does not have directly operated stores in the Middle East and has a minimal distributor business, which represented less than 1% of the Company’s total Net sales for fiscal 2026. While the Company has not experienced a material impact to its operations or financial results to date, the Company continues to closely monitor developments and their potential macroeconomic effects on its business, including from global supply chain disruptions, increased transportation and energy costs, and changes in consumer sentiment and spending in the Middle East and other geographies across the globe.
Foreign Exchange Impact
In the first quarter of fiscal 2027, the U.S. Dollar continued to fluctuate as compared to foreign currencies in regions where we conduct our business. This trend has resulted in impacts to our business including, but not limited to, for the three months ended September 26, 2026, increased Net sales by $1 million and positively impacted gross margin and operating margin by approximately 20 basis points and 10 basis points, respectively.
24
Seasonality
The Company's results are typically affected by seasonal trends. During the first fiscal quarter, we typically build inventory for the winter and holiday season. In the second fiscal quarter, working capital requirements are reduced substantially as we generate higher net sales and operating income, especially during the holiday season. Fluctuations in net sales, operating income and operating cash flows of the Company in any fiscal quarter may be affected by the timing of wholesale shipments and other events affecting retail sales, including weather and macroeconomic events.
We continue to monitor these global economic conditions and industry trends in order to evaluate and adjust our operating strategies and cost management opportunities to mitigate the related impact on our results of operations, while remaining focused on the long-term growth of our business and protecting the value of our brands. For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, see Part II, Item 1A. "Risk Factors" herein and as disclosed in our Annual Report on Form 10-K for the year ended June 27, 2026.
25
RESULTS OF OPERATIONS
FIRST QUARTER FISCAL 2027 COMPARED TO FIRST QUARTER FISCAL 2026
The following table summarizes results of operations for the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026. All percentages shown in the table below and the discussion that follows have been calculated using unrounded numbers.
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 26, 2026 | September 27, 2025 | Variance | |||||||||||||||||||||||||||||||||
| (millions, except per share data) | |||||||||||||||||||||||||||||||||||
| Amount | % of Net sales | Amount | % of Net sales | Amount | % | ||||||||||||||||||||||||||||||
| Net sales | $ | 1,894 | 100.0 | % | $ | 1,705 | 100.0 | % | $ | 189 | 11.1 | % | |||||||||||||||||||||||
| Gross profit | 1,488 | 78.6 | 1,301 | 76.3 | 187 | 14.4 | |||||||||||||||||||||||||||||
| SG&A expenses | 1,064 | 56.2 | 973 | 57.0 | 91 | 9.4 | |||||||||||||||||||||||||||||
| Operating income (loss) | 424 | 22.4 | 328 | 19.3 | 96 | 29.3 | |||||||||||||||||||||||||||||
| Interest expense, net | 13 | 0.7 | 13 | 0.8 | — | (0.9) | |||||||||||||||||||||||||||||
| Other expense (income) | — | — | (4) | (0.2) | 4 | NM | |||||||||||||||||||||||||||||
| Income (loss) before provision for income taxes | 411 | 21.7 | 319 | 18.7 | 92 | 29.1 | |||||||||||||||||||||||||||||
| Provision (benefit) for income taxes | 51 | 2.7 | 44 | 2.6 | 7 | 17.0 | |||||||||||||||||||||||||||||
| Net income (loss) | 360 | 19.0 | 275 | 16.1 | 85 | 31.0 | |||||||||||||||||||||||||||||
| Net income (loss) per share: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 1.81 | $ | 1.32 | $ | 0.49 | 36.5 | ||||||||||||||||||||||||||||
| Diluted | $ | 1.76 | $ | 1.28 | $ | 0.48 | 38.0 | ||||||||||||||||||||||||||||
NM - Not meaningful
26
GAAP to Non-GAAP Reconciliation
The Company’s reported results are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The reported results during the first quarter of fiscal 2027 and fiscal 2026 reflect certain items which affect the comparability of our results, as noted in the following table. Refer to "Non-GAAP Measures" herein for further discussion on the Non-GAAP measures.
First Quarter Fiscal 2027 Items
| Three Months Ended September 26, 2026 | |||||||||||||||||
| Items Affecting Comparability | |||||||||||||||||
| GAAP Basis (As Reported) | Distribution Network Optimization Costs | Non-GAAP Basis (Excluding Items) | |||||||||||||||
| (millions, except per share data) | |||||||||||||||||
| Coach | $ | 590 | $ | — | $ | 590 | |||||||||||
| Kate Spade | (20) | (14) | (6) | ||||||||||||||
| Corporate | (146) | (1) | (145) | ||||||||||||||
| Operating income (loss) | $ | 424 | $ | (15) | $ | 439 | |||||||||||
| Net income (loss) | $ | 360 | $ | (11) | $ | 371 | |||||||||||
| Net income (loss) per diluted common share | $ | 1.76 | $ | (0.06) | $ | 1.82 | |||||||||||
In the first quarter of fiscal 2027, the Company incurred charges as follows:
•Distribution Network Optimization Costs - Total pre-tax charges of $15 million primarily related to costs to transition from our Ohio fulfillment center to a third-party facility in Pennsylvania.
These actions negatively impacted operating income by $15 million and reduced the provision for income tax by $4 million resulting in a net decrease in net income of $11 million or $0.06 per diluted share.
Supplemental Segment Data
| Three Months Ended September 26, 2026 | |||||||||||||||||
| Items Affecting Comparability | |||||||||||||||||
| GAAP Basis (As Reported) | Distribution Network Optimization Costs | Non-GAAP Basis (Excluding Items) | |||||||||||||||
| (millions) | |||||||||||||||||
| Coach | $ | 1,336 | $ | — | $ | 1,336 | |||||||||||
| Kate Spade | 152 | (2) | 154 | ||||||||||||||
| Gross Profit | $ | 1,488 | $ | (2) | $ | 1,490 | |||||||||||
| Coach | $ | 746 | $ | — | $ | 746 | |||||||||||
| Kate Spade | 172 | 12 | 160 | ||||||||||||||
| Corporate | 146 | 1 | 145 | ||||||||||||||
| SG&A expenses | $ | 1,064 | $ | 13 | $ | 1,051 | |||||||||||
27
First Quarter Fiscal 2026 Items
| Three Months Ended September 27, 2025 | |||||||||||||||||||||||
| Items Affecting Comparability | |||||||||||||||||||||||
| GAAP Basis (As Reported) | Acquisition and Divestiture Costs | Organizational Efficiency Costs | Non-GAAP Basis (Excluding Items) | ||||||||||||||||||||
| (millions, except per share data) | |||||||||||||||||||||||
| Coach | $ | 487 | $ | — | $ | (1) | $ | 488 | |||||||||||||||
| Kate Spade | 6 | — | — | 6 | |||||||||||||||||||
| Stuart Weitzman | (1) | (1) | — | — | |||||||||||||||||||
| Corporate | (164) | (14) | (10) | (140) | |||||||||||||||||||
| Operating income (loss) | $ | 328 | $ | (15) | $ | (11) | $ | 354 | |||||||||||||||
| Net income (loss) | $ | 275 | $ | (13) | $ | (9) | $ | 297 | |||||||||||||||
| Net income (loss) per diluted common share | $ | 1.28 | $ | (0.06) | $ | (0.04) | $ | 1.38 | |||||||||||||||
In the first quarter of fiscal 2026, the Company incurred charges as follows:
•Acquisition and Divestiture Costs - Total pre-tax charges of $15 million related to the Stuart Weitzman divestiture primarily due to professional fees, severance costs as well as the Stuart Weitzman Operating loss for the period.
•Organizational Efficiency Costs - Total pre-tax charges of $11 million primarily related to technology costs and severance costs.
These actions taken together negatively impacted operating income by $26 million and reduced the provision for income tax by $4 million resulting in a net decrease in net income by $22 million or $0.10 per diluted share.
Supplemental Segment Data
| Three Months Ended September 27, 2025 | |||||||||||||||||||||||
| Items Affecting Comparability | |||||||||||||||||||||||
| GAAP Basis (As Reported) | Acquisition and Divestiture Costs | Organizational Efficiency Costs | Non-GAAP Basis (Excluding Items) | ||||||||||||||||||||
| (millions) | |||||||||||||||||||||||
| Coach | $ | 639 | $ | — | $ | 1 | $ | 638 | |||||||||||||||
| Kate Spade | 161 | — | — | 161 | |||||||||||||||||||
| Stuart Weitzman | 9 | 9 | — | — | |||||||||||||||||||
| Corporate | 164 | 14 | 10 | 140 | |||||||||||||||||||
| SG&A expenses | $ | 973 | $ | 23 | $ | 11 | $ | 939 | |||||||||||||||
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Tapestry, Inc. Summary – First Quarter of Fiscal 2027
Currency Fluctuation Effects
The change in Net sales for the first quarter of fiscal 2027 compared to the first quarter of fiscal 2026 has been presented both including and excluding currency fluctuation effects. All percentages shown in the tables below and the discussion that follows have been calculated using unrounded numbers.
Stuart Weitzman Business Divestiture
Effective in the first quarter of fiscal 2026, following the Stuart Weitzman Business Divestiture on August 4, 2025, the Company's reportable segments are Coach and Kate Spade. For the first quarter of fiscal 2026, prior to the completion of the sale on August 4, 2025, Stuart Weitzman Net sales were $15 million, Gross profit was $8 million and SG&A expenses were $9 million resulting in an Operating loss of $1 million. These results were considered as Items Affecting Comparability in the three months ended September 27, 2025.
Net Sales
| Three Months Ended | Variance | ||||||||||||||||||||||||||||
| September 26, 2026 | September 27, 2025 | Amount | % | Constant Currency Change | |||||||||||||||||||||||||
| (millions) | |||||||||||||||||||||||||||||
| Coach | $ | 1,661 | $ | 1,430 | $ | 231 | 16.1 | % | 16.0 | % | |||||||||||||||||||
| Kate Spade | 233 | 260 | (27) | (10.4) | (9.9) | ||||||||||||||||||||||||
| Stuart Weitzman | — | 15 | (15) | NM | NM | ||||||||||||||||||||||||
| Total Tapestry | $ | 1,894 | $ | 1,705 | $ | 189 | 11.1 | 11.0 | |||||||||||||||||||||
Net sales in the first quarter of fiscal 2027 increased 11.1% or $189 million to $1.89 billion. Excluding the impact of the Stuart Weitzman Business and foreign currency, net sales increased by 12.0% or $203 million.
•Coach Net sales increased 16.1% or $231 million to $1.66 billion in the first quarter of fiscal 2027. Excluding the impact of foreign currency, Net sales increased 16.0% or $229 million. This increase in Net sales was primarily due to an increase of $144 million in DTC sales, mainly driven by North America, Greater China and Europe. The increase in net sales was also attributed to an $84 million increase in wholesale sales, mainly driven by international wholesale sales.
•Kate Spade Net sales decreased 10.4% or $27 million to $233 million in the first quarter of fiscal 2027. Excluding the impact of foreign currency, Net sales decreased 9.9% or $26 million. This decrease in Net sales was primarily due to a decrease of $17 million in DTC sales. The decrease in net sales was also attributed to a $9 million decrease in wholesale sales.
Gross Profit
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 26, 2026 | September 27, 2025 | Variance | |||||||||||||||||||||||||||||||||
| (millions) | |||||||||||||||||||||||||||||||||||
| Amount | % of Net sales | Amount | % of Net sales | Amount | % | ||||||||||||||||||||||||||||||
| Coach | $ | 1,336 | 80.5 | % | $ | 1,126 | 78.8 | % | $ | 210 | 18.7 | % | |||||||||||||||||||||||
Kate Spade(1) | 152 | 65.1 | 167 | 64.1 | (15) | (9.0) | |||||||||||||||||||||||||||||
| Stuart Weitzman | — | — | 8 | 52.3 | (8) | NM | |||||||||||||||||||||||||||||
| Total Tapestry | $ | 1,488 | 78.6 | $ | 1,301 | 76.3 | $ | 187 | 14.4 | ||||||||||||||||||||||||||
Gross profit increased 14.4% or $187 million to $1.49 billion in the first quarter of fiscal 2027 from $1.30 billion in the first quarter of fiscal 2026. Gross margin increased to 78.6% in the first quarter of fiscal 2027 from 76.3% in the first quarter of fiscal 2026. Excluding items affecting comparability, Gross margin increased 220 basis points to 78.7% in the first quarter of fiscal 2027 from 76.5% in the first quarter of fiscal 2026. The increase in Gross margin was primarily attributed to net pricing improvements, favorable net tariff impacts and favorable brand mix. Refer to "Global Economic Conditions and Industry Trends" for further information.
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The Company includes inbound product-related transportation costs from our service providers within Cost of sales. The Company, similar to some companies, includes certain transportation-related costs due to our distribution network in SG&A expenses rather than in Cost of sales; for this reason, our gross margins may not be comparable to those of entities that include all costs related to their distribution network in Cost of sales.
(1)Excluding items affecting comparability, Gross profit decreased 7.8% or $13 million to $154 million in the first quarter of fiscal 2027 as compared to $167 million in the first quarter of fiscal 2026. Gross margin increased 190 basis points to 66.0% in the first quarter of fiscal 2027 as compared to 64.1% in the first quarter of fiscal 2026.
Selling, General and Administrative Expenses ("SG&A")
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 26, 2026 | September 27, 2025 | Variance | |||||||||||||||||||||||||||||||||
| (millions) | |||||||||||||||||||||||||||||||||||
| Amount | % of Net sales | Amount | % of Net sales | Amount | % | ||||||||||||||||||||||||||||||
Coach(1) | $ | 746 | 45.0 | % | $ | 639 | 44.7 | % | $ | 107 | 16.9 | % | |||||||||||||||||||||||
Kate Spade(2) | 172 | 73.8 | 161 | 61.9 | 11 | 6.8 | |||||||||||||||||||||||||||||
| Stuart Weitzman | — | — | 9 | 59.3 | (9) | NM | |||||||||||||||||||||||||||||
Corporate(3)(4) | 146 | NA | 164 | NA | (18) | (11.5) | |||||||||||||||||||||||||||||
| Total Tapestry | $ | 1,064 | 56.2 | $ | 973 | 57.0 | $ | 91 | 9.4 | ||||||||||||||||||||||||||
SG&A expenses increased 9.4% or $91 million to $1.06 billion in the first quarter of fiscal 2027 as compared to $973 million in the first quarter of fiscal 2026. As a percentage of net sales, SG&A expenses decreased to 56.2% during the first quarter of fiscal 2027 from 57.0% during the first quarter of fiscal 2026. Excluding items affecting comparability in the first quarter of fiscal 2027, SG&A expenses increased 12.0% or $112 million to $1.05 billion from $939 million in the first quarter of fiscal 2026. SG&A as a percentage of net sales decreased 10 basis points to 55.5% compared to 55.6% during the first quarter of fiscal 2026. The decrease in SG&A as a percentage of net sales was primarily due to leverage of fixed costs on higher net sales and lower professional fees, partially offset by higher marketing spend and higher occupancy costs.
(1)Excluding items affecting comparability, SG&A expenses increased 17.1% or $108 million to $746 million in the first quarter of fiscal 2027 as compared to $638 million in the first quarter of fiscal 2026. SG&A as a percentage of net sales increased 40 basis points to 45.0% in the first quarter of fiscal 2027 as compared to 44.6% in the first quarter of fiscal 2026.
(2)Excluding items affecting comparability, SG&A expenses decreased 0.6% or $1 million to $160 million in the first quarter of fiscal 2027 as compared to $161 million in the first quarter of fiscal 2026. SG&A as a percentage of net sales increased 680 basis points to 68.7% in the first quarter of fiscal 2027 as compared to 61.9% in the first quarter of fiscal 2026.
(3)Excluding items affecting comparability, SG&A expenses increased 3.0% or $5 million to $145 million in the first quarter of fiscal 2027 as compared to $140 million in the first quarter of fiscal 2026.
(4)Corporate expenses, which are included within SG&A expenses discussed above, but are not directly attributable to a reportable segment.
Operating Income (Loss)
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 26, 2026 | September 27, 2025 | Variance | |||||||||||||||||||||||||||||||||
| (millions) | |||||||||||||||||||||||||||||||||||
| Amount | % of Net Sales | Amount | % of Net Sales | Amount | % | ||||||||||||||||||||||||||||||
| Coach | $ | 590 | 35.5 | % | $ | 487 | 34.1 | % | $ | 103 | 21.0 | % | |||||||||||||||||||||||
| Kate Spade | (20) | (8.7) | 6 | 2.1 | (26) | NM | |||||||||||||||||||||||||||||
| Stuart Weitzman | — | — | (1) | (7.0) | 1 | NM | |||||||||||||||||||||||||||||
| Corporate | (146) | NA | (164) | NA | 18 | 11.5 | |||||||||||||||||||||||||||||
| Total Tapestry | $ | 424 | 22.4 | $ | 328 | 19.3 | $ | 96 | 29.3 | ||||||||||||||||||||||||||
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Operating income increased $96 million to $424 million in the first quarter of fiscal 2027 as compared to $328 million in the first quarter of fiscal 2026. Operating margin increased to 22.4% in the first quarter of fiscal 2027 as compared to 19.3% in the first quarter of fiscal 2026. Excluding items affecting comparability, operating income increased $85 million to $439 million in the first quarter of fiscal 2027 from $354 million in the first quarter of fiscal 2026. Operating margin increased approximately 230 basis points to 23.2% in the first quarter of fiscal 2027 as compared to 20.9% in the first quarter of fiscal 2026. The increase in operating margin was primarily attributed to a 220 basis point increase in Gross margin and a 10 basis point decrease in SG&A as a percentage of sales.
•Coach Operating Income increased $103 million to $590 million in the first quarter of fiscal 2027. Operating margin increased to 35.5% in the first quarter of fiscal 2027 as compared to 34.1% in the first quarter of fiscal 2026. Excluding items affecting comparability, operating income increased $102 million to $590 million in the first quarter of fiscal 2027 from $488 million in the first quarter of fiscal 2026; and operating margin increased 130 basis points to 35.5% in the first quarter of fiscal 2027 as compared to 34.2% in the first quarter of fiscal 2026. This increase in operating margin was primarily attributed to:
◦Gross margin, increased 170 basis points mainly due to net pricing improvements and favorable net tariff impacts;
◦SG&A expenses as a percentage of net sales, increased 40 basis points mainly due to higher marketing spend, higher occupancy costs, partially offset by leverage of fixed costs on higher net sales.
•Kate Spade Operating Loss increased $26 million to a loss of $20 million in the first quarter of fiscal 2027. Operating margin decreased to (8.7)% in the first quarter of fiscal 2027 as compared to 2.1% in the first quarter of fiscal 2026. Excluding items affecting comparability, operating loss increased $12 million to a loss of $6 million in the first quarter of fiscal 2027 from Operating income of $6 million in the first quarter of fiscal 2026; and operating margin decreased 490 basis points to (2.7)% in the first quarter of fiscal 2027 as compared to 2.2% in the first quarter of fiscal 2026. This decrease in operating margin was primarily attributed to:
◦Gross margin, increased 190 basis points mainly due to favorable net tariff impacts and net pricing improvements;
◦SG&A expenses as a percentage of net sales, increased 680 basis points mainly driven by higher marketing spend and deleverage of fixed costs on lower net sales.
•Corporate Operating Expenses decreased 11.5% or $18 million to $146 million in the first quarter of fiscal 2027. Excluding items affecting comparability, Corporate operating expenses as a percentage of net sales decreased 70 basis points to 7.6% in the first quarter of fiscal 2027 as compared to 8.3% in the first quarter of fiscal 2026; and operating expenses increased $5 million to $145 million from $140 million in the first quarter of fiscal 2026. The increase in operating expenses was primarily due to higher compensation costs, partially offset by lower professional fees.
Interest Expense, net
Net interest expense remained even at $13 million in the first quarter of fiscal 2027 and the first quarter of fiscal 2026.
Other Expense (Income)
Other income decreased $4 million to other expense of less than $1 million in the first quarter of fiscal 2027 as compared to Other income of $4 million in the first quarter of fiscal 2026. This decrease in other income was related to a decrease in foreign exchange gains.
Provision (Benefit) for Income Taxes
The effective tax rate was 12.5% in the first quarter of fiscal 2027 as compared to 13.8% in the first quarter of fiscal 2026. Excluding items affecting comparability, the effective tax rate was 12.7% in the first quarter of fiscal 2027 as compared to 13.7% in the first quarter of fiscal 2026. The decrease in effective tax rate was primarily attributable to the geographical mix of earnings.
Net Income (Loss)
Net income increased 31.0% or $85 million to $360 million in the first quarter of fiscal 2027 as compared to $275 million in the first quarter of fiscal 2026. Excluding items affecting comparability, net income increased $74 million to $371 million in the first quarter of fiscal 2027 from $297 million in the first quarter of fiscal 2026.
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Net Income (Loss) per Share
Net income per diluted share was $1.76 in the first quarter of fiscal 2027 as compared to net income per diluted share of $1.28 in the first quarter of fiscal 2026. Excluding items affecting comparability, net income per diluted share increased $0.44 to $1.82 in the first quarter of fiscal 2027 from $1.38 in the first quarter of fiscal 2026, primarily due to higher net income.
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NON-GAAP MEASURES
The Company’s reported results are presented in accordance with GAAP. The Company presents certain non-GAAP measures, including segment operating income (loss), segment SG&A expenses, segment gross profit, SG&A expense ratio, operating margin, Operating Income (loss), Provision for income taxes, Net income (loss) and Net Income (loss) per diluted common share, which exclude items affecting comparability.
These non-GAAP performance measures were used by management to conduct and evaluate its business during its regular review of operating results for the periods affected. Management and the Company’s Board utilized these non-GAAP measures to make decisions about the uses of Company resources, analyze performance between periods, develop internal projections and measure management performance. The Company’s internal management reporting excluded these items. In addition, the HR Committee of the Company’s Board uses these non-GAAP measures when setting and assessing achievement of incentive compensation goals.
Items affecting comparability in the current or comparable periods, as applicable, include:
•Distribution Network Optimization Costs - The Company incurred Distribution Network Optimization Costs which consist of non-recurring costs, primarily related to optimizing its distribution centers. These costs mainly relate to the transition from our Ohio fulfillment center to a third-party facility in Pennsylvania.
•Acquisition and Divestiture Costs - The Company incurred Acquisition and Divestiture items which consist of non-recurring costs related to the Stuart Weitzman Business Divestiture, inclusive of professional fees, one-time severance costs, compensation costs, operating net loss and TSA income.
•Organizational Efficiency Costs - The Company also incurred Organizational Efficiency Costs which consist of non-recurring costs, primarily from various initiatives aimed at streamlining the organization and optimizing processes. These costs mainly include one-time technology and severance related charges.
The Company operates on a global basis and reports financial results in U.S. dollars in accordance with GAAP. Fluctuations in foreign currency exchange rates can affect the amounts reported by the Company in U.S. dollars with respect to its foreign revenues and profit. Accordingly, certain material increases and decreases in operating results for the Company and its segments have been presented both including and excluding currency fluctuation effects. These effects occur from translating foreign-denominated amounts into U.S. dollars and comparing to the same period in the prior fiscal year. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. The Company calculates constant currency revenue results by translating current period revenue in local currency using the prior year period's currency conversion rate.
We believe these non-GAAP measures are useful to investors and others in evaluating the Company’s ongoing operating and financial results in a manner that is consistent with management's evaluation of business performance and understanding how such results compare with the Company’s historical performance. Additionally, we believe presenting certain increases and decreases in constant currency provides a framework for assessing the performance of the Company's business outside the United States and helps investors and analysts understand the effect of significant year-over-year currency fluctuations. We believe excluding these items assists investors and others in developing expectations of future performance.
By providing the non-GAAP measures, as a supplement to GAAP information, we believe we are enhancing investors’ understanding of our business and our results of operations. The non-GAAP financial measures are limited in their usefulness and should be considered in addition to, and not in lieu of, GAAP financial measures. Further, these non-GAAP measures may be unique to the Company, as they may be different from non-GAAP measures used by other companies.
For a detailed discussion on these non-GAAP measures, see the GAAP to Non-GAAP Reconciliation discussions above in this Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations."
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FINANCIAL CONDITION
Cash Flows
| Three Months Ended | |||||||||||||||||
| September 26, 2026 | September 27, 2025 | Change | |||||||||||||||
| (millions) | |||||||||||||||||
| Net cash provided by (used in) operating activities | $ | 197 | $ | 113 | $ | 84 | |||||||||||
| Net cash provided by (used in) investing activities | (53) | 69 | (122) | ||||||||||||||
| Net cash provided by (used in) financing activities | (526) | (551) | 25 | ||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 6 | (12) | 18 | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents | $ | (376) | $ | (381) | $ | 5 | |||||||||||
The Company’s cash and cash equivalents decreased by $376 million in the first quarter of fiscal 2027 as compared to a decrease of $381 million in the first quarter of fiscal 2026, as discussed below.
Net cash provided by (used in) operating activities
Net cash provided by operating activities increased $84 million primarily due to higher net income of $85 million, changes in operating assets and liabilities of $38 million, partially offset by lower impact of non-cash adjustments of $39 million.
The $38 million increase in changes in operating asset and liability balances were primarily driven by the following:
•Other assets was a source of cash of $110 million in the first quarter of fiscal 2027 compared to a use of cash of $54 million in the first quarter of fiscal 2026, primarily driven by collection in the current year of IEEPA and tax refunds.
•Inventory was a use of cash of $222 million in the first quarter of fiscal 2027 compared to a use of cash of $161 million in the first quarter of fiscal 2026, primarily driven by increased inventory purchases for Coach to support sales growth.
•Accounts receivable were a use of cash of $106 million in the first quarter of fiscal 2027 compared to a use of cash of $46 million in the first quarter of fiscal 2026, primarily driven by an increase in wholesale sales at Coach.
Net cash provided by (used in) investing activities
Net cash used in investing activities in the first quarter of fiscal 2027 was $53 million as compared to a source of cash of $69 million in the first quarter of fiscal 2026, resulting in a $122 million decrease in net cash provided by investing activities.
The $53 million use of cash in the first quarter of fiscal 2027 was primarily due to purchases of property and equipment of $48 million and purchases of investments of $21 million, partially offset by proceeds from maturities and sales of investments of $16 million.
The $69 million source of cash in the first quarter of fiscal 2026 was primarily due to proceeds from the divestiture of the Stuart Weitzman business of $109 million, partially offset by purchases of property and equipment of $32 million.
Net cash provided by (used in) financing activities
Net cash used in financing activities was $526 million in the first quarter of fiscal 2027 as compared to a use of cash of $551 million in the first quarter of fiscal 2026, resulting in a net decrease in use of cash for financing activities of $25 million.
The $526 million of cash used in the first quarter of fiscal 2027 was primarily due to repurchase of common stock of $603 million.
The $551 million of cash used in the first quarter of fiscal 2026 was primarily due to repurchase of common stock of $698 million, partially offset by proceeds from commercial paper, net of $240 million.
Effect of exchange rate changes on cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents was $6 million in the first quarter of fiscal 2027 as compared to $(12) million in the first quarter of fiscal 2026.
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Working Capital and Capital Expenditures
The following table presents our financial condition as of September 26, 2026 and June 27, 2026:
| September 26, 2026 | June 27, 2026 | Change | |||||||||||||||
| (millions) | |||||||||||||||||
Cash and cash equivalents(1) | $ | 599 | $ | 975 | $ | (376) | |||||||||||
Short-term investments(1) | 183 | 177 | 6 | ||||||||||||||
Current debt(2) | (597) | — | (597) | ||||||||||||||
Long-term debt(2) | (1,960) | (2,379) | 419 | ||||||||||||||
| Total | $ | (1,775) | $ | (1,227) | $ | (548) | |||||||||||
(1) As of September 26, 2026, approximately 67% of our cash and short-term investments were held outside the United States.
(2) Refer to Note 11, "Debt" for discussion of the carrying values of our debt.
Sources of Liquidity
Our primary sources of liquidity are the cash flows generated from our operations, our cash and cash equivalents and short-term investments, availability under our credit facilities, and other available financing options.
The following table presents the total availability, borrowings outstanding and remaining availability under our credit facilities as of September 26, 2026:
| Total Availability | Borrowings Outstanding | Remaining Availability | |||||||||||||||
| (millions) | |||||||||||||||||
Amended Revolving Credit Facility and Commercial Paper Program(1)(2) | $ | 2,000 | $ | 200 | $ | 1,800 | |||||||||||
China Credit Facility(1)(3) | 37 | — | 37 | ||||||||||||||
(1) Refer to Note 11, "Debt" for further information on these instruments.
(2) Borrowings under the Commercial Paper Program are supported by the Amended Revolving Credit Facility. Accordingly, aggregate borrowings outstanding under the Commercial Paper Program and the Amended Revolving Credit Facility will not exceed $2.00 billion.
(3) The carrying amounts of the China Credit Facility include the impact of changes in the exchange rate of the United States Dollar against the Renminbi.
We believe that our Amended Revolving Credit Facility is adequately diversified with no undue concentrations in any one financial institution. As of September 26, 2026, there were 18 financial institutions participating in the Amended Revolving Credit Facility, with no one participant maintaining a combined maximum commitment percentage in excess of 10%. We have no reason to believe at this time that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the facility in the event we elect to draw funds in the foreseeable future.
We have the ability to draw on our credit facilities or access other financing options available to us in the credit and capital markets for, among other things, acquisition or integration-related costs, our restructuring initiatives, settlement of a material contingency, or a material adverse business or macroeconomic development, as well as for other general corporate business purposes.
Management believes that existing cash balances, cash flows from operations, existing credit facilities, our commercial paper program, and access to capital markets will provide sufficient liquidity to meet our debt obligations, including any repayment of debt or refinancing of debt, working capital needs, planned capital expenditures, other contractual obligations and payment of anticipated quarterly dividends for at least the next twelve months and the foreseeable future thereafter.
Reference should be made to our most recent Annual Report on Form 10-K and other filings with the SEC for additional information regarding liquidity and capital resources.
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Commercial Paper Program
On July 24, 2025, the Company entered into a commercial paper borrowing program (the "Commercial Paper Program") that provides for the issuance of up to $2.00 billion of unsecured commercial paper notes with maturities up to 365 days. Borrowings under the Commercial Paper Program are supported by the Amended Revolving Credit Facility and may be used to support the Company's general corporate needs. The aggregate amount of borrowings outstanding under the Commercial Paper Program and Amended Revolving Credit Facility will not exceed $2.00 billion. During the three months ended September 26, 2026, the Company issued notes under the Commercial Paper Program with original maturities less than three months. As of September 26, 2026, the Company had $200 million of borrowings outstanding under the Commercial Paper Program with a weighted average interest rate of 4.221%.
IEEPA Tariff Refund
On February 20, 2026, the U.S. Supreme Court ruled that tariffs collected under the IEEPA were invalid. The CIT subsequently ordered refunds for qualifying customs entries, including applicable interest. CBP established a phased administrative process for submitting refund claims for certain IEEPA tariffs.
During the fourth quarter of fiscal 2026, the Company received cash refunds related to the previously paid IEEPA tariffs of $2 million which was recognized as a reduction to Cost of sales. In addition, as of June 27, 2026, the Company applied the loss recovery model and determined that the receipt of the remaining refunds of the previously paid IEEPA tariffs was probable. The Company estimated the amount of the probable refund to be $115 million, of which $96 million was recognized as a reduction to Cost of sales, $10 million was recorded as Accrued liabilities and $9 million was applied as a reduction to tariffs that remained in Inventory. During the first quarter of fiscal 2027, the Company collected substantially all the cash related to the tariff refund.
Supply Chain Finance
To improve our working capital efficiency, we make available to certain suppliers a voluntary supply chain finance (“SCF”) program that enables our suppliers to sell their receivables from the Company to a global financial institution on a non-recourse basis at a rate that leverages our credit rating. We do not have the ability to refinance or modify payment terms to the global financial institution through the SCF program. No guarantees are provided by the Company or any of our subsidiaries under the SCF program. Refer to Note 2, "Basis of Presentation and Organization," for additional information.
Capital Expenditures
During the three months ended September 26, 2026, capital expenditures and cloud computing implementation costs were $55 million. The Company expects total fiscal 2027 capital expenditures and cloud computing costs to be approximately $300 million. Certain cloud computing implementation costs are recognized within Prepaid expenses and Other assets on the Condensed Consolidated Balance Sheets.
Stock Repurchase Plan
2026 Share Repurchase Program
On September 10, 2025, the Company announced that the Board authorized the Company to repurchase up to $3.00 billion of its outstanding common stock (the "2026 Share Repurchase Program"). During the three months ended September 26, 2026, the Company repurchased $600 million of common stock. As of September 26, 2026, the Company had $1.29 billion of remaining repurchase authorization under the 2026 Share Repurchase Program.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company's significant accounting policies are described in Note 3 to the audited consolidated financial statements in our Annual Report on Form 10-K for fiscal 2026. Our discussion of results of operations and financial condition relies on our condensed consolidated financial statements that are prepared based on certain critical accounting policies that require management to make judgments and estimates which are subject to varying degrees of uncertainty. While we believe that these accounting policies are based on sound measurement criteria, actual future events can and often do result in outcomes that can be materially different from these estimates or forecasts.
For a complete discussion of our critical accounting policies and estimates, see the "Critical Accounting Policies and Estimates" section of the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for fiscal 2026. As of September 26, 2026, there have been no material changes to any of the critical accounting policies.
The Company performs its annual impairment assessment of goodwill as well as brand intangibles at the beginning of the fourth quarter of each fiscal year. In all fiscal years, the fair values of our Coach brand reporting units significantly exceeded their respective carrying values. The fair values of the Kate Spade brand reporting unit and indefinite-lived brand intangible asset as of the fiscal 2026 testing date exceeded their respective carrying values by approximately 30%. Several factors could impact the Kate Spade brand's ability to achieve expected future cash flows, including the optimization of the store fleet productivity, the success of international expansion strategies, the impact of promotional activity, continued economic volatility and potential operational challenges related to the macroeconomic factors, the reception of new collections in all business channels and other initiatives aimed at increasing profitability of the business. If profitability trends decline during fiscal 2027 from those that are expected, it is possible that an interim test, or our annual impairment test, could result in an impairment of these assets.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes to the Company's market risk or the way the Company manages these exposures as set forth in Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" in the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2026. Refer to Note 8, "Derivative Instruments and Hedging Activities," and Note 11, "Debt," included in Part I of this Form 10-Q for additional information.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We have evaluated under the supervision and with the participation of management, including our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of the end of the fiscal quarter covered by this quarterly report. Based on that evaluation, our principal executive and principal financial officers have concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of the fiscal quarter-end covered by this quarterly report on Form 10-Q.
Changes in Internal Control over Financial Reporting
There were no changes in the Company's internal control over financial reporting during the first quarter of fiscal 2027 that were identified in connection with management's evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See discussion of legal proceedings in Note 14, "Commitments and Contingencies," in the accompanying condensed consolidated financial statements.
ITEM 1A. RISK FACTORS
Refer to Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 27, 2026 for a description of certain significant risks and uncertainties to which our business, financial condition and results of operations are subject.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES
The following table provides information regarding the Company's purchases of shares of common stock during the first quarter of fiscal 2027 related to the Company's share repurchase program:
| Fiscal Period | Total Number of Shares Repurchased | Average Price per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(1) | |||||||||||||||||||
| (in millions, except share data and per share data) | |||||||||||||||||||||||
| June 28, 2026 - August 1, 2026 | 1,043,715 | $ | 143.72 | 1,043,715 | $ | 1,739 | |||||||||||||||||
| August 2, 2026 - August 29, 2026 | 1,533,437 | 136.95 | 1,533,437 | 1,529 | |||||||||||||||||||
| August 30, 2026 - September 26, 2026 | 2,040,528 | 117.62 | 2,040,528 | 1,289 | |||||||||||||||||||
| Total | 4,617,680 | 4,617,680 | |||||||||||||||||||||
(1) On September 10, 2025, the Company announced that the Board authorized the Company to repurchase up to $3.00 billion of its outstanding common stock (the "2026 Share Repurchase Program"). Purchases of the Company's common stock under this program were executed through open market purchases, including through purchase agreements under Rule 10b5-1.
ITEM 5. OTHER INFORMATION
During the quarter ended September 26, 2026, there was no adoption termination
ITEM 6. EXHIBITS
| 31.1* | Rule 13(a)-14(a)/15(d)-14(a) Certification of the Company's Chief Executive Officer | ||||
| 31.2* | Rule 13(a)-14(a)/15(d)-14(a) Certification of the Company's Chief Financial Officer | ||||
| 32.1** | Section 1350 Certification of the Company's Chief Executive Officer | ||||
| 32.2** | Section 1350 Certification of the Company's Chief Financial Officer | ||||
| 101.INS* | Inline XBRL Instance Document | ||||
| Note: the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | ||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase | ||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase | ||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase | ||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase | ||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
* Filed Herewith
** Furnished Herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TAPESTRY, INC. | ||||||||
| (Registrant) | ||||||||
| By: | /s/ Manesh B. Dadlani | |||||||
| Name: | Manesh B. Dadlani | |||||||
| Title: | Corporate Controller | |||||||
| (Principal Accounting Officer) | ||||||||
Dated: November 5, 2026
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