AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · 3/4 · Protected brand assets, Coach's substantial sales growth and successive quarterly net pricing improvements jointly demonstrate a current intangible-asset advantage. Kate Spade's weakness limits its breadth; margins alone do not drive this grade.
durability · 2/4 · Legal protection and pricing resilience support persistence, but the operating window is limited and Kate Spade's impairment demonstrates that protected brands can lose economic value. Management's structural-strength assertion does not establish exceptional durability.
customer dependency · — · The passages establish brand demand but do not demonstrate customer dependence, repeat purchasing or material switching friction. Aggregate sales cannot resolve this criterion.
erosion resilience · 2/4 · Coach offset tariff pressure through net pricing improvements in successive quarters. Kate Spade experienced realized sales contraction, margin deterioration and impairment, making portfolio resilience mixed rather than uniformly weak or strong.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 3/4 · Successive quarterly disclosures report realized Coach net pricing improvements alongside strong annual sales growth. Kate Spade also reported higher average unit retail and reduced promotions, although falling sales constrain the interpretation. Pure price effects and elasticity are not quantified.
retention · — · Neither sales growth nor higher average unit retail identifies repeat demand. The supplied passages lack customer-level purchasing, engagement or renewal evidence sufficient to assess retention.
margin resilience · 2/4 · Coach demonstrated pricing offsets to tariffs, and annual adjusted operating income increased. Kate Spade's margins deteriorated. The annual reconciliation also removes a tariff refund and distinguishes incentive-plan adjustments, preventing all reported improvement from being attributed to pricing.
contractual freedom · 2/4 · Controlled DTC access represented 86% of fiscal 2025 sales, supporting substantial control over selling terms. Wholesale discounts can be contractual or negotiated, while markdowns generally require company approval. This demonstrates meaningful but qualified discretion; detailed current retail pricing restrictions are absent.
Predictability92
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 5.83
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 4.10
Financial strength90
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 95.40
- netDebtEbitGrade
- 85.15
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 80.17
- Debt / FCF (x)
- 1.32
- Net debt / operating income (x)
- 0.74
- Interest coverage (x)
- 16.05
- Current ratio (x)
- 1.75
Capital allocation100
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 44.66
- 3-year average dilution (%)
- -4.79
- 3-year average SBC / revenue (%)
- 1.28
- cashConversionGrade
- 100.00
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Fiscal 2026 operating cash flow of $1.98 billion substantially exceeded $166 million of capital expenditure. Against this, cash repurchases and dividends together exceeded cash flow after capital expenditure, the terminated acquisition incurred $268.4 million of fiscal 2025 expenses, and earlier repurchases were partly debt-funded. Substantial documented commitments and Kate Spade impairment further temper the assessment.
incentive alignment · 3/4 · Actual ownership compliance at the December 31, 2025 measurement date, stricter qualifying-equity rules, a higher CEO ownership requirement, multiyear vesting, capped payouts and clawback policies support demonstrated alignment. These disclosures do not establish that incentives eliminate risk or that the later ownership rules were satisfied at that earlier measurement date.
execution · 3/4 · Strong consolidated cash generation, Coach sales growth and higher adjusted operating income demonstrate execution through operating outcomes, assessed indirectly rather than through customer retention. Kate Spade's contraction and loss, and the terminated acquisition costs, prevent an exceptional grade.
governance · 2/4 · An independent chair, independent committees, annual elections and proxy access support accountability. Charter provisions requiring a two-thirds vote to remove directors and reserving vacancy appointments to the board weaken shareholder control. A failed uncontested election requires a resignation tender, but acceptance remains discretionary; nominee independence is not treated as a completed future election.
Evidence
INTELLECTUAL PROPERTY Tapestry owns COACH and KATE SPADE brand intellectual property, as well as all of the material trademark, design and patent-rights related to the production, marketing, distribution and sale of these brands' products in the United States and other countries in which our products are principally sold.
Business / Intellectual Property · Filed 13/08/2026
FY25 NET SALES (IN MILLIONS) FY26 NET SALES (IN MILLIONS) % CHANGE CONSTANT CURRENCY % CHANGE Coach $ 5,598.5 $ 6,914.7 24% 23% Kate Spade 1,197.1 1,074.9 (10)% (11)% Stuart Weitzman 215.1 14.6 (93)% (93)% Total Tapestry $ 7,010.7 $ 8,004.2 14% 13% Total Tapestry Pro Forma(3) $ 6,795.6 $ 7,989.6 18% 17% (1)See pages 44, 42 and 41 of the Company's Form 10-K for fiscal years 2026, 2025 and 2024, respectively, for a detailed description of certain items excluded from the non-GAAP financial measures presented in the 10-K for fiscal years 2026, 2025 and 2024.
Appendix A / Fiscal 2025–2026 net sales by brand · Filed 25/09/2026
◦Gross margin, increased 80 basis points mainly due to net pricing improvements, partially offset by the impact of higher tariffs;
MD&A / Second-quarter fiscal 2026 Coach gross-margin drivers · Filed 05/02/2026
This increase in operating margin was primarily attributed to: ◦Gross margin, remained even mainly due to net pricing improvements, offset by the impact of higher tariffs; ◦SG&A expenses as a percentage of net sales, decreased approximately 260 basis points mainly due to leverage of fixed costs on higher net sales, partially offset by higher marketing spend.
MD&A / Third-quarter fiscal 2026 Coach operating-margin drivers · Filed 07/05/2026
40 Operating Income (Loss) Fiscal Year Ended June 27, 2026 June 28, 2025 Variance (millions) Amount % of Net Sales Amount % of Net Sales Amount % Coach $ 2,541.2 36.8 % $ 1,875.3 33.5 % $ 665.9 35.5 % Kate Spade (10.0) (0.9) (769.2) (64.3) 759.2 98.7 Stuart Weitzman (1.0) (7.0) (15.4) (7.1) 14.4 93.4 Corporate (615.8) NA (675.7) NA 59.9 8.9 Tapestry $ 1,914.4 23.9 $ 415.0 5.9 $ 1,499.4 NM Operating income increased $1.50 billion to $1.91 billion during fiscal 2026 as compared to $415.0 million in fiscal 2025.
MD&A / Fiscal 2026 and 2025 segment operating results · Filed 13/08/2026
•Impairment - Total pre-tax charges of $854.8 million primarily due to impairment charges on the indefinite-lived brand intangible asset and goodwill for Kate Spade.
MD&A / Fiscal 2025 Kate Spade impairment · Filed 14/08/2025
This decrease in operating margin was primarily attributed to: ◦Gross margin, decreased 410 basis points mainly due to the impact of higher tariffs and unfavorable channel mix, partially offset by net pricing improvements; ◦SG&A expenses as a percentage of net sales, increased 650 basis points mainly driven by higher marketing spend and deleverage of fixed costs on lower net sales.
MD&A / Third-quarter fiscal 2026 Kate Spade margin drivers · Filed 07/05/2026
Competition is based on a number of factors, including, without limitation, the following: •our competitors may develop new products or product categories that are more popular with our customers; •anticipating and responding in a timely fashion to changing consumer demands and shopping preferences, including the ever-increasing shift to digital brand engagement, social media communications, and online and cross-channel shopping; •maintaining strong brand recognition, loyalty, and a reputation for quality, including through digital brand engagement and online and social media presence; •recruiting and retaining key talent; •developing and producing innovative, high-quality products in sizes, colors, and styles that appeal to a diverse group of consumers; •competitively pricing our products and creating an acceptable value proposition for consumers, including price increases to mitigate inflationary pressures while simultaneously balancing the risk of lower consumer demand in response to any such price increases; •providing strong and effective marketing support in several diverse demographic markets, including through digital and social media platforms in order to stay better connected to consumers; •providing attractive, reliable, secure, and user-friendly digital commerce sites; •sourcing sustainable raw materials at cost-effective prices; •ensuring product availability and optimizing supply chain efficiencies with third-party suppliers and retailers; •protecting our trademarks and design patents; •identifying and adapting to changes in technology, including the successful utilization of data analytics, artificial intelligence (“AI”), and machine learning, and competing with AI-enabled shopping tools to help find products, compare prices, and make purchase decisions; •the ability to withstand prolonged periods of adverse economic conditions or business disruptions.
Risk factors / Competitive factors and consumer pricing sensitivity · Filed 13/08/2026
In fiscal year 2026, we remained disciplined in executing that strategy, making choices that strengthened the quality of the business, including improved handbag performance, with a more focused assortment, reduced promotions, and higher average unit retail (AUR).
Stockholder letter / Kate Spade assortment, promotions and average unit retail · Filed 25/09/2026
Our DTC business consists of channels that provide us with immediate, controlled access to consumers.
Business / Direct-to-consumer channel control · Filed 14/08/2025
DTC revenues were approximately 86% of total net sales in fiscal 2025.
Business / Fiscal 2025 direct-to-consumer revenue share · Filed 14/08/2025
Discounts are based on contract terms with the customer, while cooperative advertising allowances and other consideration may be based on contract terms or negotiated on a case-by-case basis.
Revenue recognition / Wholesale contractual discounts and negotiated allowances · Filed 07/05/2026
Returns and markdowns generally require approval from the Company and are estimated based on historical trends, current season results and inventory positions at the wholesale locations, current market and economic conditions as well as, in select cases, contractual terms.
Revenue recognition / Approval and estimation of wholesale returns and markdowns · Filed 07/05/2026
68 TAPESTRY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Fiscal Year Ended June 27, 2026 June 28, 2025 June 29, 2024 (millions) CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES Net income (loss) $ 1,527.7 $ 183.2 $ 816.0 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 160.8 162.9 174.0 Amortization of cloud computing arrangements 56.4 62.0 55.0 Impairment charges — 854.8 — Provision for bad debt 6.1 3.6 4.3 Loss on extinguishment of debt — 120.1 — Share-based compensation 104.5 87.3 85.9 Deferred income taxes 50.8 (139.8) 2.5 Changes to lease related balances, net (19.3) (35.0) (42.6) Other non-cash charges, net (27.7) (43.2) (7.4) Changes in operating assets and liabilities: Trade accounts receivable (12.0) 8.8 (37.3) Inventories 35.4 (108.2) 85.8 Accounts payable 131.6 (15.0) 49.1 Accrued liabilities 29.9 56.0 91.6 Other liabilities 75.8 3.9 (21.2) Other assets (141.5) 15.2 (0.1) Net cash provided by (used in) operating activities 1,978.5 1,216.6 1,255.6 CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES Purchases of investments (163.0) (1,886.4) (2,713.0) Proceeds from maturities and sales of investments 1.6 2,923.1 1,676.3 Purchases of property and equipment (166.0) (122.7) (108.9) Proceeds from sale of business, net of cash divested 109.1 — — Settlement of net investment hedge — — 103.7 Net cash provided by (used in) investing activities (218.3) 914.0 (1,041.9) CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES Payment of dividends (326.1) (299.3) (321.4) Repurchase of common stock (1,554.6) (1,718.7) — Share repurchase not yet settled — (300.0) — Proceeds from issuance of debt, net of discount — 2,248.1 6,089.5 Payment of debt issuance costs (0.5) (13.4) (78.3) Payment of debt extinguishment costs — (63.5) — Repayment of debt — (7,163.3) (468.8) Proceeds from share-based awards 118.9 156.1 27.3 Taxes paid to net settle share-based awards (81.6) (36.5) (32.7) Proceeds from revolving credit facility — 1,016.5 — Repayment of revolving credit facility (17.0) (1,000.0) — Other financing activities — (1.2) (1.2) Net cash provided by (used in) financing activities (1,860.9) (7,175.2) 5,214.4 Effect of exchange rate changes on cash and cash equivalents (24.6) 26.3 (12.2) Net increase (decrease) in cash and cash equivalents, including cash classified within assets held for sale (125.3) (5,018.3) 5,415.9 Less: net increase (decrease) in cash classified within current assets held for sale — (23.7) — Net increase (decrease) in cash and cash equivalents (125.3) (5,042.0) 5,415.9 Cash and cash equivalents at beginning of year 1,100.0 6,142.0 726.1 Cash and cash equivalents at end of year $ 974.7 $ 1,100.0 $ 6,142.0 Supplemental information: Cash paid for income taxes, net $ 200.7 $ 189.5 $ 200.1 Cash paid for interest $ 241.6 $ 394.9 $ 262.8 Non-cash investing activity – property and equipment obligations $ 35.2 $ 25.7 $ 15.1 See accompanying Notes.
Consolidated statements of cash flows / Fiscal 2024–2026 · Filed 13/08/2026
During the fiscal year ended June 28, 2025, the Company incurred $268.4 million in pre-tax expenses primarily related to Loss on extinguishment of debt as a result of the redemption of the Capri Acquisition Senior Notes recorded within Loss on extinguishment of debt on the Consolidated Statement of Operations, financing-related expenses recorded within Interest expense, net on the Consolidated Statement of Operations, expense reimbursement payment made to Capri recorded within SG&A expenses on the Consolidated Statement of Operations and professional fees recorded within SG&A expenses on the Consolidated Statement of Operations.
Notes / Fiscal 2025 terminated acquisition expenses · Filed 13/08/2026
During the second quarter of fiscal 2025, the Company executed $1.00 billion of borrowings under the Existing Revolving Credit Facility used to partially fund the share repurchases under the ASR Agreements and for general corporate purposes.
Debt / Revolver funding of accelerated share repurchases · Filed 07/05/2026
Contractual and Other Obligations Firm Commitments As of June 27, 2026, the Company's contractual obligations are as follows: Total Fiscal 2027 Fiscal 2028 – 2029 Fiscal 2030 – 2031 Fiscal 2032 and Beyond (millions) Capital expenditure & cloud computing implementation commitments $ 45.2 $ 45.2 $ — $ — $ — Inventory purchase obligations 768.2 768.2 — — Operating lease obligations 2,037.2 368.8 583.8 382.2 702.4 Debt repayment 2,396.6 — 396.6 750.0 1,250.0 Interest on outstanding debt(1) 640.4 111.1 197.7 151.3 180.3 Other 268.8 107.6 134.3 22.6 4.3 Total $ 6,156.4 $ 1,400.9 $ 1,312.4 $ 1,306.1 $ 2,137.0 (1) Interest on outstanding debt includes fixed interest expenses for unsecured notes.
MD&A / Contractual and other obligations at June 27, 2026 · Filed 13/08/2026
As of the last measurement date (December 31, 2025), all NEOs owned the required number of shares.
Executive compensation / Ownership compliance at December 31, 2025 · Filed 25/09/2026
Among other changes, stock options no longer count toward satisfaction of the ownership requirements, and credit for unvested equity is limited to RSUs and PRSUs for which the applicable performance period has been completed.
Compensation discussion / Revised ownership qualification rules · Filed 25/09/2026
We also increased the CEO’s stock ownership requirement from 5x to 6x base salary.
Compensation discussion / CEO ownership requirement · Filed 25/09/2026
Some of the key factors supporting the HR Committee’s conclusion that our programs do not drive inappropriate or excessive risk include capped payouts on all of our incentive plans, use of multiple, counter-balancing financial performance criteria in our AIP and Long-Term Incentive Plan, executive and independent director stock ownership and anti-hedging policies, a market-competitive weight on each component of pay, multiple-year vesting for LTI, a variety of performance metrics for PRSUs and incentive compensation clawback policies.
Executive compensation / Incentive caps, vesting and clawback policies · Filed 25/09/2026
COACH NET SALES (IN MILLIONS) OPERATING INCOME (IN MILLIONS) GROSS MARGIN NET SALES (IN MILLIONS) OPERATING INCOME (IN MILLIONS) GROSS MARGIN As Reported: (GAAP Basis) $ 8,004.2 $ 1,914.4 77.8% $ 6,914.7 $ 2,541.2 79.7% Acquisition and Divestiture (14.6) 10.9 (0.1)% N/A N/A N/A Organizational Efficiency N/A 29.0 N/A N/A 1.3 N/A IEEPA Tariff Refund N/A (98.3) (1.1)% N/A (66.0) (0.9)% Distribution Network Optimization N/A 9.8 N/A N/A N/A N/A Adjusted: (Non-GAAP basis as reported in Form 10-K)(1) $ 7,989.6 $ 1,865.8 76.6% $ 6,914.7 $ 2,476.5 78.8% Foreign Currency Adjustments (58.7) (22.4) (0.1)% (54.7) (23.2) -% Add Back AIP $ in Operating Income 0.0 169.3 -% 0.0 72.3 -% Exclude Tariff Impact 0.0 (83.5) (0.8)% 0.0 (66.3) (0.8)% Exclude Brand Mix Impact from Gross Margin 0.0 0.0 (0.4)% 0.0 0.0 -% Adjusted: (Non-GAAP Basis for AIP results measurement) $ 7,930.9 $ 1,929.2 75.3% $ 6,860.0 $ 2,459.3 78.0% 82 Tapestry 2026 Proxy Statement Appendix A: Reconciliation of GAAP and Non-GAAP Financial Measures ADJUSTMENTS FOR FISCAL YEAR 2025 FINANCIAL HIGHLIGHTS AND FISCAL YEAR 2025 ANNUAL INCENTIVE PLAN TAPESTRY, INC.
Appendix A / Fiscal 2026 GAAP and adjusted operating results · Filed 25/09/2026
COACH NET SALES (IN MILLIONS) OPERATING INCOME (IN MILLIONS) GROSS MARGIN NET SALES (IN MILLIONS) OPERATING INCOME (IN MILLIONS) GROSS MARGIN As Reported: (GAAP Basis) $ 7,010.7 $ 415.0 75.4% $ 5,598.5 $ 1,875.3 78.1% Acquisition and Divestiture N/A 112.5 N/A N/A N/A N/A Organizational Efficiency N/A 17.2 N/A N/A 0.8 N/A Impairment N/A 854.8 N/A N/A N/A N/A Adjusted: (Non-GAAP basis as reported in Form 10-K)(1) $ 7,010.7 $ 1,399.5 75.4% $ 5,598.5 $ 1,876.1 78.1% Add Back AIP $ in Operating Income 0.0 160.5 -% — 65.4 -% Exclude Net Sales of Stuart Weitzman Business(2) (215.1) — —% — — -% Adjusted: (Non-GAAP Basis for AIP results measurement) $ 6,795.6 1,560.0 75.4% $ 5,598.5 $ 1,941.5 78.1% ADJUSTMENTS FOR FISCAL YEAR 2024-2026 PRSUs TAPESTRY, INC.
Appendix A / Fiscal 2025 GAAP and adjusted operating results · Filed 25/09/2026
CORPORATE GOVERNANCE HIGHLIGHTS ENGAGED AND INDEPENDENT BOARD FOCUSED ON CONTINUOUS EVALUATION AND REFRESHMENT •10 of 11 director nominees are independent •Independent Chair of the Board and Board Committees comprised solely of independent directors •Demonstrated commitment to Board refreshment and rigorous director selection criteria •Annual election of all directors •Annual Board, Committee and director assessments, as well as annual CEO evaluation •Regular executive sessions of independent directors COMMITMENT TO STOCKHOLDER RIGHTS •Bylaws contain proxy access provision •Bylaws may be amended by stockholders representing a majority of outstanding shares entitled to vote •Active year-round stakeholder engagement •Majority vote standard for uncontested director elections •Annual “Say on Pay” advisory vote DEMONSTRATED CORPORATE GOVERNANCE AND COMPENSATION BEST PRACTICES •Longstanding corporate responsibility commitments, with strong Board oversight and measurable short and long-term goals •Directors have a broad range of key skills and experience •Active Board oversight of risk management, including cybersecurity •Code of Conduct for ethical business policies and conduct •Stock ownership guidelines for directors and executives and clawback for incentive awards •Prohibition on political expenditures 2 Tapestry 2026 Proxy Statement Proxy Summary FISCAL YEAR 2026 HIGHLIGHTS & AWARDS Achieved goal of continuing to source 99% of our leather from Gold- and Silver-rated Leather Working Group tanneries Achieved our goal of 100% renewable energy across our own operations globally by 2025 Our employees completed over 43,000 volunteer hours, bringing us to over 348,000 hours since our program launch, and moving us closer toward our 500,000 hour 2030 target Through the Coach Foundation’s Dream It Real program, we have funded over 8,000 scholarships to date, advancing our goal of awarding 10,000 scholarships globally by 2030 to support the next generation Recognized for leading workplace practices with over 50 awards in FY26 Forbes America's Best Workplaces for Women Forbes America's Best Employers for Company Culture U.S.
Proxy summary / Governance practices and director nominees · Filed 25/09/2026
The Company’s charter further provides that a director may be removed only by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors.
Charter provisions / Director removal voting threshold · Filed 13/08/2026
The Company’s charter provides that, except as may be provided by our Board in setting the terms of any class or series of preferred stock, any vacancy on our Board may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum.
Charter provisions / Board authority to fill vacancies · Filed 13/08/2026
Under our Corporate Governance Principles, a director nominee, running uncontested, who does not receive a majority of the votes cast, is required to tender his or her resignation for consideration by the GN Committee.
Voting procedures / Resignation requirement after failed uncontested election · Filed 25/09/2026
The GN Committee will recommend to the Board whether to accept or reject the resignation.
Voting procedures / Board discretion over director resignation · Filed 25/09/2026
We are confident that our strengths are structural, and that our innovation, creativity, and brand-building capabilities will deliver significant value for our customers, employees, and shareholders for years to come.
Proxy statement / Management assertion of structural strengths · Filed 25/09/2026
During the year, we secured our first AI patent, building on our previously patented Data Fabric technology.
Stockholder letter / AI and Data Fabric patents · Filed 25/09/2026
