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Tapestry, Inc.

Tapestry, Inc.TPR财报

NYSE · 可选消费 · 服装、配饰及奢侈品

Tapestry, Inc. is a leading American multinational luxury fashion holding company. It owns three iconic lifestyle brands: Coach, Kate Spade New York, and Stuart Weitzman, offering premium handbags, apparel, footwear, accessories, and fragrances to global consumers via physical retail stores and e-commerce platforms.

What changed in Tapestry, Inc.'s 10-K — 2021 vs 2022

Top changes in Tapestry, Inc.'s 2022 10-K

444 paragraphs added · 437 removed · 328 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

93 edited+18 added−15 removed36 unchanged
Other Products — These products primarily include women's footwear, eyewear (such as sunglasses), jewelry (including bracelets, necklaces, rings and earrings), fragrances, watches, certain women's seasonal lifestyle apparel collections, including outerwear, ready-to-wear and cold weather accessories, such as gloves, scarves and hats.
Other Products — These products primarily include women's footwear, eyewear (such as sunglasses), jewelry (including bracelets, necklaces, rings and earrings), women's fragrances, watches, certain women's seasonal lifestyle apparel collections, including outerwear, ready-to-wear and cold weather accessories, such as gloves, scarves and hats.
SEASONALITY The Company's results are typically affected by seasonal trends. During the first fiscal quarter, we 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.
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 adverse weather conditions or other macroeconomic events, such as Covid-19.
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 macroeconomic events, such as Covid-19, or adverse weather conditions.
Also included in this category are novelty accessories (including address books, time management accessories, travel accessories, sketchbooks and portfolios), key rings and charms. Men’s — Men’s includes bag collections (including business cases, computer bags, messenger-style bags, backpacks and totes), small leather goods (including wallets, card cases, travel organizers and belts), footwear, watches, sunglasses, novelty accessories and ready-to-wear items.
Also included in this category are novelty accessories (including address books, time management accessories, travel accessories, sketchbooks and portfolios), key rings and charms. Men’s — Men’s includes bag collections (including business cases, computer bags, messenger-style bags, backpacks and totes), small leather goods (including wallets, card cases, travel organizers and belts), footwear, watches, fragrances, sunglasses, novelty accessories and ready-to-wear items.
As our focus extends beyond the performance of our employees, but on the performance of our Company as a whole, we have mechanisms in place to facilitate comprehensive upward feedback through robust cross-functional feedback tools and a cadence of regular pulse surveys that inform on how we can continue to strive for excellence in our work culture.
As our focus extends beyond the performance of our employees to the performance of our Company as a whole, we have mechanisms in place to facilitate comprehensive upward feedback through robust cross-functional feedback tools and a cadence of regular pulse surveys that inform on how we can continue to strive for excellence in our work culture.
The content on this website and the content in our Corporate Responsibility Reports are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. HUMAN CAPITAL At Tapestry, being true to yourself is core to who we are.
The content on this website and the content in our Corporate Responsibility Reports are not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. 12 HUMAN CAPITAL At Tapestry, being true to yourself is core to who we are.
We provide our employees with supplemental resources to achieve wellness such as access to our Employee Assistance Program, regular employee programming and subscriptions to Headspace, a smartphone application dedicated to meditation and mindfulness. At Tapestry, we believe in encouraging and empowering our employees to take part in building a welcoming and inclusive community.
We provide our employees with supplemental resources to achieve wellness such as access to our Employee Assistance Program, regular employee programming and subscriptions to Headspace, a smartphone application dedicated to meditation and mindfulness. 14 At Tapestry, we believe in encouraging and empowering our employees to take part in building a welcoming and inclusive community.
CORPORATE RESPONSIBILITY As a people-centered and purpose led Company, Tapestry’s corporate responsibility framework, Our Social Fabric, unites teams across the Company’s business to work to meet our 2025 Corporate Responsibility Goals and a shared objective: to create the modern luxury company of the future that balances true fashion authority with meaningful, positive change.
CORPORATE RESPONSIBILITY As a people-centered and purpose led Company, Tapestry’s corporate responsibility framework, Our Social Fabric, unites teams across the Company’s business to work to meet our 2025 Corporate Responsibility Goals ("2025 Goals") and a shared objective: to create the accessible luxury company of the future that balances true fashion authority with meaningful, positive change.
ITEM 1. BUSINESS Founded in 1941, Coach, Inc., the predecessor to Tapestry, Inc. (the "Company"), was incorporated in the state of Maryland in 2000. During fiscal 2015, the Company acquired Stuart Weitzman Holdings LLC, a luxury women's footwear company. During the first quarter of fiscal 2018, the Company acquired Kate Spade & Company, a lifestyle accessories and ready-to-wear company.
ITEM 1. BUSINESS Founded in 1941, Coach, Inc., the predecessor to Tapestry, Inc. (the "Company"), was incorporated in the state of Maryland in 2000. During fiscal 2015, the Company acquired Stuart Weitzman Holdings LLC, a luxury women's footwear company. During fiscal 2018, the Company acquired Kate Spade & Company, a lifestyle accessories and ready-to-wear company.
The guiding principle of the Company’s multi-year growth agenda under the Acceleration Program is to better meet the needs of each of its brands' unique customers by: • Sharpening our Focus on the Consumer: Operating with a clearly defined purpose and strategy for each brand and an unwavering focus on the consumer at the core of everything we do • Leveraging Data and Leading with a Digital-First Mindset: Building significant data and analytics capabilities to drive decision-making and increase efficiency; Offering immersive customer experiences across our e-commerce and social channels to meet the needs of consumers who are increasingly utilizing digital platforms to engage with brands; Rethinking the role of stores with an intent to optimize our fleet • Transforming into a Leaner and More Responsive Organization: Moving with greater agility, simplifying internal processes and empowering teams to act quickly to meet the rapidly changing needs of the consumer.
The guiding principle under the Acceleration Program is to better meet the needs of each of its brands' unique customers by: • Sharpening our Focus on the Consumer: Operating with a clearly defined purpose and strategy for each brand and an unwavering focus on the consumer at the core of everything we do. • Leveraging Data and Leading with a Digital-First Mindset: Building significant data and analytics capabilities to drive decision-making and increase efficiency; Offering immersive customer experiences across our e-commerce and social channels to meet the needs of consumers who are increasingly utilizing digital platforms to engage with brands; Rethinking the role of stores with an intent to optimize our fleet. • Transforming into a Leaner and More Responsive Organization: Moving with greater agility, simplifying internal processes and empowering teams to act quickly to meet the rapidly changing needs of the consumer.
Later in fiscal 2018, the Company changed its name to Tapestry, Inc. Tapestry, Inc. is a leading New York-based house of modern luxury accessories and lifestyle brands. Our global house of brands unites the magic of Coach, kate spade new york and Stuart Weitzman.
Later in fiscal 2018, the Company changed its name to Tapestry, Inc. Tapestry, Inc. is a leading New York-based house of accessible luxury accessories and lifestyle brands. Our global house of brands unites the magic of Coach, kate spade new york and Stuart Weitzman.
The Company has included the Chief Executive Officer (“CEO”) and Chief Financial Officer certifications regarding its public disclosure required by Section 302 of the Sarbanes-Oxley Act of 2002 as Exhibit 31.1 to this Form 10-K. 16
The Company has included the Chief Executive Officer (“CEO”) and Chief Financial Officer certifications regarding its public disclosure required by Section 302 of the Sarbanes-Oxley Act of 2002 as Exhibit 31.1 to this Form 10-K. 15
We feel hosting bold conversations like these about our values provides an opportunity for us to be inspired, discover ideas, and ignite personal passions. Tapestry is committed to the support of underrepresented groups through our corporate efforts. We are a member of the CEO Action for Diversity and Inclusion, the largest business coalition committed to advancing Diversity and Inclusion.
We feel hosting bold conversations about our values provides an opportunity for us to be inspired, discover ideas, and ignite personal passions. 13 Tapestry is committed to the support of underrepresented groups through our corporate efforts. We are a member of the CEO Action for Diversity and Inclusion, the largest business coalition committed to advancing Diversity and Inclusion.
We provide all employees supplemental time-off to perform community service through nonprofits of their personal choice and through team and Company sponsored volunteering events. In our commitment to supporting our communities, we have three foundations designated to provide monetary support to nonprofit organizations across communities that we are a part of.
We provide all employees with supplemental time-off to perform community service through nonprofits of their personal choice and through team and Company sponsored volunteering events. In our commitment to supporting our communities, we have three foundations which provide monetary support to nonprofit organizations across communities that we are a part of.
All over the world, the Coach name is synonymous with effortless New York style. Stores — Coach operates freestanding flagship, retail and outlet stores as well as concession shop-in-shop locations. These stores are located in regional shopping centers, metropolitan areas throughout the world and established outlet centers.
All over the world, the Coach name is synonymous with effortless New York style. Stores — Coach operates freestanding retail stores, including flagships, and outlet stores as well as concession shop-in-shop locations. These stores are located in regional shopping centers, metropolitan areas throughout the world and established outlet centers.
Coach Coach is a leading design house of modern luxury accessories and lifestyle collections, with a long-standing reputation built on quality craftsmanship. Defined by a free-spirited, all-American attitude, the brand approaches design with a modern vision, reimagining luxury for today with an authenticity and innovation that is uniquely Coach.
Coach Founded in 1941, Coach is a leading design house of accessible luxury accessories and lifestyle collections, with a long-standing reputation built on quality craftsmanship. Defined by a free-spirited, all-American attitude, the brand approaches design with a modern vision, reimagining luxury for today with an authenticity and innovation that is uniquely Coach.
Our development programs serve to enable individual and team success through targeted initiatives and resources, offering a wide-ranging curriculum focused on professional and leadership development for leaders, managers, and individual contributors, including through our Common Thread people management program, Emerging Leaders High-Potential Program and Leader Transition Acceleration Program, in addition to other trainings and education facilitated through the Company for all employees.
Our development programs enable individual and team success through targeted initiatives and resources, offering a wide-ranging curriculum focused on professional and leadership development for leaders, managers, and individual contributors, including through our Common Thread people management program, Emerging Leaders High-Potential Program, Leader Transition Acceleration Program, and third-party learning platforms in addition to other trainings and education facilitated through the Company for all employees.
While the ongoing pandemic continues to present challenges, such as the supply chain related pressures facing the industry, store closures and other additional actions necessary to protect our stakeholders, the Company has been adapting to the current environment by remaining flexible in the short-term while continuing to focus on its long-term strategy and multi-year growth agenda.
While the ongoing pandemic continues to present challenges, such as the supply chain related pressures facing the industry, increased freight costs, temporary closures and other additional necessary actions to protect our stakeholders, the Company has been adapting to the current environment by remaining flexible in the short-term while continuing to focus on its long-term strategy and multi-year growth agenda.
Our Social Fabric focuses on three pillars: Our People, Our Planet and Our Communities. • Our People: ◦ We aim to bolster Tapestry’s purpose and culture by embedding equity, inclusion and diversity throughout our organization, holding our leaders accountable for our equity, inclusion and diversity ("EI&D") goals and attracting and retaining talent with a compelling and fulfilling employee experience. 12 ◦ We have set 2025 goals focused on building diversity in our leadership team, reducing differences in our employee survey results based on gender and ethnicity, focusing on progression and establishing core wellness standards to enable our employees to manage their work and personal lives. ◦ Beginning in fiscal year 2022, we will tie 10% of leadership annual incentive compensation to EI&D goals on a global level. • Our Planet: ◦ We aim to sustain and restore our planet through continuous innovation in solutions that improve biodiversity and reduce our impact on climate change with a focus on renewable energy, increased use of environmentally preferred materials and production methods, and circular business models that design out waste and pollution, keep products in use, and restore natural systems. ◦ We have set 2025 goals focused on measurably reducing our greenhouse gas emissions; tracing and mapping our raw materials, environmentally responsible sourcing of leather, increasing the recycled content of our packaging, reducing waste in our corporate and distribution centers and water across our company and supply chain.
Our Social Fabric focuses on three pillars: Our People, Our Planet and Our Communities. • Our People: ◦ We aim to bolster Tapestry’s purpose and culture by embedding equity, inclusion and diversity throughout our organization, holding our leaders accountable for our equity, inclusion and diversity ("EI&D") goals and attracting and retaining talent with a compelling and fulfilling employee experience. ◦ We have set 2025 goals focused on building diversity in our leadership team, reducing differences in our employee survey results based on gender and ethnicity, focusing on progression and establishing core wellness standards to enable our employees to manage their work and personal lives. ◦ We tie 10% of leadership annual incentive compensation to EI&D goals on a global level. • Our Planet: ◦ We aim to sustain and restore our planet through continuous innovation in solutions that improve biodiversity and reduce our impact on climate change with a focus on renewable energy, increased use of environmentally preferred materials and production methods, and circular business models that design out waste and pollution, keep products in use, and restore natural systems. ◦ We have set 2025 goals focused on utilizing 100% renewable energy in our own operations; tracing and mapping our raw materials, environmentally responsible sourcing of leather, increasing the recycled content of our packaging, reducing waste in our corporate and distribution centers and water across our company and supply chain.
This segment represented 4.9% of total net sales in fiscal 2021. 2 Corporate, which is not a reportable segment, represents certain costs that are not directly attributable to a brand. These costs primarily include administrative and information systems expense.
This segment represented 4.8% of total net sales in fiscal 2022. 2 Corporate, which is not a reportable segment, represents certain costs that are not directly attributable to a brand. These costs primarily include administrative and information systems expense.
To do so, we engaged medical professionals to consult on our health and safety protocols through facilitation of Covid-19 education webinars for our employees on topics ranging from pandemic safety, vaccine education and mental wellness. We have also provided our employees with additional paid time off to receive their Covid-19 vaccine and recover from any resulting side effects.
To do so, we engaged medical professionals to consult on our health and safety protocols and provide Covid-19 education webinars for our employees on topics ranging from pandemic safety, vaccine education and mental wellness. We have also provided our employees with additional paid time off to receive their Covid-19 vaccine, booster and to recover from any resulting side effects.
Our key licensing relationships and their calendar year expirations as of July 3, 2021 are as follows: Brand Category Partner Expiration Coach Jewelry Centric 2022 Coach Tech Accessories Incipio 2023 Coach Watches Movado 2025 Coach Eyewear Luxottica 2026 Coach Fragrance Interparfums 2026 Kate Spade Tech Accessories Incipio 2021 Kate Spade Tableware and Housewares Lenox 2022 Kate Spade Fashion Bedding HTA 2023 Kate Spade Watches Fossil 2025 Kate Spade Eyewear Safilo 2026 Kate Spade Stationery and Gift Lifeguard Press 2026 Products made under license are, in most cases, sold through stores and wholesale channels and, with the Company's approval, the licensees have the right to distribute products selectively through other venues, which provide additional, yet controlled, exposure of our brands.
Our key licensing relationships and their calendar year expirations as of July 2, 2022 are as follows: Brand Category Partner Calendar Year Expiration Coach Tech Accessories Vinci 2023 Coach Jewelry and Soft Accessories Centric 2024 Coach Watches Movado 2025 Coach Eyewear Luxottica 2026 Coach Fragrance Interparfums 2026 Kate Spade Tableware and Housewares Lenox 2022 Kate Spade Fashion Bedding HTA 2023 Kate Spade Tech Accessories Vinci 2025 Kate Spade Watches Fossil 2025 Kate Spade Sleepwear Komar 2025 Kate Spade Eyewear Safilo 2026 Kate Spade Stationery and Gift Lifeguard Press 2026 Kate Spade Fragrance Interparfums 2030 Products made under license are, in most cases, sold through stores and wholesale channels and, with the Company's approval, the licensees have the right to distribute products selectively through other venues, which provide additional, yet controlled, exposure of our brands.
As of July 3, 2021 and June 27, 2020, Coach did not have any customers who individually accounted for more than 10% of the segment's total net sales. Kate Spade Since its launch in 1993 with a collection of six essential handbags, kate spade new york has always stood for color, wit, optimism and femininity.
As of July 2, 2022 and July 3, 2021, Coach did not have any customers who individually accounted for more than 10% of the segment's total net sales. 4 Kate Spade Since its launch in 1993 with a collection of six essential handbags, kate spade new york has always stood for color, wit, optimism and femininity.
During fiscal 2021, manufacturers of Coach products were primarily located in Vietnam, Cambodia and the Philippines and no individual vendor provided 10% or more of the brand's total purchases. During fiscal 2021, Kate Spade products were manufactured primarily in Vietnam, Cambodia and mainland China.
During fiscal 2022, manufacturers of Coach products were primarily located in Vietnam, Cambodia, the Philippines and Indonesia and no individual vendor provided 10% or more of the brand's total purchases. During fiscal 2022, Kate Spade products were manufactured primarily in Vietnam, Cambodia, Indonesia and China.
This segment represented 21.1% of total net sales in fiscal 2021. • Stuart Weitzman includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, including e-commerce sites, sales to wholesale customers and through independent third party distributors.
This segment represented 21.6% of total net sales in fiscal 2022. • Stuart Weitzman includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, sales to wholesale customers, through e-commerce sites and through independent third party distributors.
This segment represented 74.0% of total net sales in fiscal 2021. • Kate Spade includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including e-commerce sites, sales to wholesale customers, through concession shop-in-shops and through independent third party distributors.
This segment represented 73.6% of total net sales in fiscal 2022. • Kate Spade includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including e-commerce sites and concession shop-in-shops, sales to wholesale customers and through independent third party distributors.
When each of us brings our individuality to our collective ambition, our creativity is unleashed. This global house of brands was built by unconventional entrepreneurs and unexpected solutions, so when we say we believe in dreams, we mean we believe in making them happen.
When each of us brings our individuality to our collective ambition, our creativity is unleashed. This global house of brands was built by unconventional entrepreneurs and unexpected solutions, so when we say we believe in dreams, we mean we believe in making them happen. Where differences intersect, new thinking emerges.
Approximately 2,200 of our employees, including nearly all of our store managers, received an annual long term equity award in 2021, which supports alignment of employee interests with those of our stockholders, rewards employees for enhancing stock holder value and supports retention of key employees.
Approximately 2,000 of our employees, including nearly all of our store managers, received an annual long term equity award in 2022, which align employee interests with those of our stockholders, rewards employees for enhancing stock holder value and supports retention of key employees.
The Company’s corporate responsibility strategy, including oversight, management and identification of risks, is ultimately governed by Board of Directors and driven by an Environmental, Social and Corporate Governance ("ESG") Task Force, which is comprised of senior leaders and cross-functional members from major business functions.
The Company’s corporate responsibility strategy, including oversight, management and identification of risks, is ultimately governed by Board of Directors and overseen by an Environmental, Social and Corporate Governance ("ESG") Steering Committee, which is comprised of members of our executive leadership team, and driven by an ESG Task Force, which is comprised of senior leaders and cross-functional members from major business functions.
For Kate Spade, we have e-commerce sites in the U.S., Canada, mainland China, Japan and several throughout Europe. Additionally, we continue to leverage various third-party digital platforms to sell our products to customers. Wholesale — As of July 3, 2021, Kate Spade brand's products are sold in approximately 900 wholesale and distributor locations, primarily in the U.S, Canada and Europe.
For Kate Spade, we have e-commerce sites in the U.S., Canada, mainland China, Japan and several throughout Europe. Additionally, we continue to leverage various third-party digital platforms to sell our products to customers. Wholesale — As of July 2, 2022, Kate Spade's products are sold in approximately 1,000 wholesale and distributor locations, primarily in the U.S, Canada and Europe.
As of July 3, 2021 and June 27, 2020, Kate Spade did not have any customers who individually accounted for more than 10% of the segment's total net sales. 6 Stuart Weitzman Stuart Weitzman is a leading accessories brand that is synonymous with strength in femininity.
As of July 2, 2022 and July 3, 2021, Kate Spade did not have any customers who individually accounted for more than 10% of the segment's total net sales. Stuart Weitzman Founded in 1986, Stuart Weitzman is a leading accessories brand that is synonymous with strength in femininity.
Women’s Handbags — Women’s handbag collections feature classically inspired as well as fashion designs. These collections are designed to meet the fashion and functional requirements of our broad and diverse consumer base. Women’s Accessories — Women’s accessories include small leather goods which complement our handbags, including wallets, money pieces, wristlets and cosmetic cases.
These collections are designed to meet the fashion and functional requirements of our broad and diverse consumer base. Women’s Accessories — Women’s accessories include small leather goods which complement our handbags, including wallets, money pieces, wristlets and cosmetic cases.
Total expenses attributable to the Company's marketing-related activities in fiscal 2021 were $395.2 million, or approximately 7% of net sales, compared to $238.0 million in fiscal 2020, or approximately 5% of net sales. Our wide range of marketing activities utilize a variety of media, including print, digital, social and out-of-home.
Total expenses attributable to the Company's marketing-related activities in fiscal 2022 were $551.6 million, or approximately 8% of net sales, compared to $395.2 million in fiscal 2021, or approximately 7% of net sales. Our wide range of marketing activities utilize a variety of media, including digital, social, print and out-of-home.
As of July 3, 2021 and June 27, 2020, Stuart Weitzman did not have any customers who individually accounted for more than 10% of the segment's total net sales. Refer to Note 18, "Segment Information," for further information about the Company's segments.
As of July 2, 2022 and July 3, 2021, Stuart Weitzman did not have any customers who individually accounted for more than 10% of the segment's total net sales. 7 Refer to Note 17, "Segment Information," for further information about the Company's segments.
It also owns brand-specific trademarks such as COACH and Horse & Carriage Design, COACH and Story Patch Design, COACH and Lozenge Design, COACH and Tag Design, Signature C Design for the COACH brand; kate spade new york and Spade Design, live colorfully and Walk on Air for the kate spade new york brand; and the stacked Stuart Weitzman Logo for the Stuart Weitzman brand.
It also owns brand-specific trademarks such as COACH and Horse & Carriage Design, COACH and Story Patch Design, COACH and Lozenge Design, COACH and Tag Design, Signature C Design for the COACH brand; kate spade new york and Spade Design, and spade flower monogram for the kate spade new york brand; and the stacked Stuart Weitzman Logo for the Stuart Weitzman brand.
The Company maintains an internal global trade, customs and product compliance organization to help manage its import/export and regulatory affairs activity. COMPETITION The global premium women's and men's handbag, accessories and footwear categories are highly competitive. The Company competes primarily with European and American luxury and accessible luxury brands as well as private label retailers.
The Company maintains an internal global trade, customs and product compliance organization to help manage its import/export and regulatory affairs activity. COMPETITION The product categories in which we operate are highly competitive. The Company competes primarily with European and American luxury and accessible luxury brands as well as private label retailers.
These independent manufacturers each or in aggregate support a broad mix of product types, materials and a seasonal influx of new, fashion-oriented styles, which allows us to meet shifts in marketplace demand and changes in consumer preferences.
These independent manufacturers each or in aggregate support a broad mix of product types, materials and a seasonal influx of new, fashion-oriented styles, which allows us to meet shifts in marketplace demand and changes in consumer preferences. We have longstanding relationships with purveyors of fine leathers and hardware.
FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS Refer to Note 5, "Revenue," and Note 18, "Segment Information," presented in the Notes to the Consolidated Financial Statements for geographic information. 15 AVAILABLE INFORMATION Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on our investor website, located at www.tapestry.com/investors under the caption “SEC Filings,” as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission.
AVAILABLE INFORMATION Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge on our investor website, located at www.tapestry.com/investors under the caption “SEC Filings,” as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission.
Additionally, the Company operates a direct import business in many countries worldwide. As a result, the Company is subject to stringent government regulations and restrictions with respect to its cross-border activity either by the various customs and border protection agencies or by other government agencies which control the quality and safety of the Company’s products.
As a result, the Company is subject to stringent government regulations and restrictions with respect to its cross-border activity either by the various customs and border protection agencies or by other government 11 agencies which control the quality and safety of the Company’s products.
The Company has established an Inclusion Council, led by a diverse team of passionate employees, as well as several employee resource groups (“ERGs”) and task forces, connecting our employees to communities with the support of their colleagues and encouraging cultural awareness. Additionally, we believe educating the constituents of our Company is crucial in achieving EI&D.
The Company has established an Inclusion Council, led by a diverse team of passionate employees, as well as several employee resource groups (“ERGs”) and task forces, connecting our employees to communities with the support of their colleagues and encouraging cultural awareness.
Tapestry's primary compensation principle is to "pay for performance." Tapestry's practice is to pay a competitive base salary and to provide employees with the opportunity to earn an annual bonus tied to Tapestry's and its brands' financial performance.
We strive to pay each employee fairly and competitively across our brands. Tapestry's primary compensation principle is to "pay for performance." Tapestry's practice is to pay a competitive base salary and to provide employees with the opportunity to earn an annual bonus tied to Tapestry's and its brands' financial performance.
Although our products are manufactured by independent manufacturers, we maintain a strong level of oversight in the selection of the raw materials that are used in all of our products. Compliance with quality control standards is monitored through on-site quality inspections at independent manufacturing facilities.
Although our products are manufactured by independent manufacturers, we maintain a strong level of oversight in the selection of the raw materials and compliance with quality control standards is monitored through on-site quality inspections at independent manufacturing facilities. We maintain strong oversight of the supply chain process for each of our brands from design through manufacturing.
To support employees in achieving their career and financial goals, the Company also provides access to learning opportunities on personal finances as well as physical and mental wellness through various platforms as available based on location.
The Company also offers retirement benefits for its employees, which are managed in accordance with local jurisdictions. To support employees in achieving their career and financial goals, the Company also provides access to learning opportunities on personal finances as well as physical and mental wellness through various platforms as available based on location.
In July 2021, Tapestry announced that it is committing to a $15 U.S. minimum wage for hourly employees effective September 5, 2021. 14 Our benefits package is designed to be competitive and comprehensive, which varies by location and jurisdiction.
In the first quarter of fiscal 2022, Tapestry announced that it is committing to a $15 U.S. minimum wage for hourly employees. Our benefits package is designed to be competitive and comprehensive, which varies by location and jurisdiction.
The product category teams, each comprised of design, merchandising, product development and sourcing specialists help each brand execute design concepts that are consistent with the brand's strategic direction. 9 Our design and merchandising teams also work in close collaboration with all of our licensing partners to ensure that the licensed products are conceptualized and designed to address the intended market opportunity and convey the distinctive perspective and lifestyle associated with our brands.
Our design and merchandising teams also work in close collaboration with all of our licensing partners to ensure that the licensed products are conceptualized and designed to address the intended market opportunity and convey the distinctive perspective and lifestyle associated with our brands.
As of July 3, 2021, Coach's products are sold in over approximately 1,700 wholesale and distributor locations globally. Coach has developed relationships with a select group of distributors who sell Coach products through travel retail locations and in certain international countries where Coach does not have directly operated retail locations.
Coach has developed relationships with a select group of distributors who sell Coach products through travel retail locations and in certain international countries where Coach does not have directly operated retail locations.
This broad-based, global manufacturing strategy is designed to optimize the mix of cost, lead times and construction capabilities. We have and may continue to experience disruptions at third-party manufacturing facilities across certain geographies. Refer to "Executive Overview" in Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for additional information.
We have and may continue to experience disruptions at third-party manufacturing facilities across certain geographies due to Covid-19. Refer to "Executive Overview" in Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" for additional information.
We have also committed to procure 100% renewable energy in the Company’s stores, offices and fulfillment centers by 2025. • Our Communities: ◦ We aim to support and empower the communities where our employees live and work, and provide the resources and investment needed to strengthen the regions where we operate, through volunteer efforts, philanthropic initiatives, product donations, and social impact programming. ◦ We have set 2025 goals focused on volunteerism programs, philanthropic initiatives and supply chain empowerment programs.
We have also committed to setting science-based emissions reduction targets in line with Science Based Targets initiative (SBTi's) criteria and 1.5⁰C. • Our Communities: ◦ We aim to support and empower the communities where our employees live and work, and provide the resources and investment needed to strengthen the regions where we operate, through volunteer efforts, philanthropic initiatives, product donations, and social impact programming. ◦ We have set 2025 goals focused on volunteerism programs, philanthropic initiatives and supply chain empowerment programs.
The Board approves long-term sustainability goals, strategic moves or major plans of action and receives updates at least annually. During fiscal 2021, the Governance and Nominations Committee of the Board received quarterly updates on sustainability strategy.
The Board approves long-term sustainability goals, strategic moves or major plans of action and receives updates at least annually. Tapestry's Governance and Nominations Committee of the Board receives quarterly updates on sustainability strategy, including climate-related topics, progress towards the 2025 goals and other ESG related initiatives.
For Stuart Weitzman, we have e-commerce sites in the U.S, Canada and mainland China. Additionally, we continue to leverage a third-party digital platform to sell our products to customers. Wholesale — Stuart Weitzman brand products are primarily sold through approximately 900 wholesale and distributor locations globally, which include multi-brand boutiques.
Additionally, we continue to leverage a third-party digital platform to sell our products to customers. Wholesale — Stuart Weitzman products are primarily sold through approximately 900 wholesale and distributor locations globally, which include multi-brand boutiques. The wholesale business for Stuart Weitzman comprised approximately 34% of total segment net sales for fiscal 2022.
The licensing agreements generally give our brands the right to terminate the license if specified sales targets are not achieved. 8 PRODUCTS The following table shows net sales for each of our product categories by segment: Fiscal Year Ended July 3, 2021 June 27, 2020 June 29, 2019 (millions) Amount % of total net sales Amount % of total net sales Amount % of total net sales Coach Women's Handbags $ 2,302.3 40 % $ 1,852.0 37 % $ 2,261.3 38 % Men's 769.3 13 688.0 14 862.0 14 Women's Accessories 776.7 14 645.4 13 766.5 13 Other Products 404.8 7 340.3 7 381.1 6 Total Coach $ 4,253.1 74 % $ 3,525.7 71 % $ 4,270.9 71 % Kate Spade Women's Handbags $ 681.5 12 % $ 648.9 13 % $ 763.7 13 % Other Products 269.3 5 260.0 5 315.2 5 Women's Accessories 259.2 4 240.6 5 287.9 5 Total Kate Spade $ 1,210.0 21 % $ 1,149.5 23 % $ 1,366.8 23 % Stuart Weitzman (1) $ 283.2 5 % $ 286.2 6 % $ 389.4 6 % Total Net sales $ 5,746.3 100 % $ 4,961.4 100 % $ 6,027.1 100 % (1) The significant majority of sales for Stuart Weitzman is attributable to women's footwear.
PRODUCTS The following table shows net sales for each of our product categories by segment: Fiscal Year Ended July 2, 2022 July 3, 2021 June 27, 2020 (millions) Amount % of total net sales Amount % of total net sales Amount % of total net sales Coach Women's Handbags $ 2,574.8 38 % $ 2,302.3 40 % $ 1,852.0 37 % Women's Accessories 942.5 14 776.7 14 645.4 13 Men's 904.8 14 769.3 13 688.0 14 Other Products 499.2 7 404.8 7 340.3 7 Total Coach $ 4,921.3 73 % $ 4,253.1 74 % $ 3,525.7 71 % Kate Spade Women's Handbags $ 819.5 12 % $ 681.5 12 % $ 648.9 13 % Other Products 319.0 5 269.3 5 260.0 5 Women's Accessories 307.0 5 259.2 4 240.6 5 Total Kate Spade $ 1,445.5 22 % $ 1,210.0 21 % $ 1,149.5 23 % Stuart Weitzman (1) $ 317.7 5 % $ 283.2 5 % $ 286.2 6 % Total Net sales $ 6,684.5 100 % $ 5,746.3 100 % $ 4,961.4 100 % (1) The significant majority of sales for Stuart Weitzman is attributable to women's footwear. 8 Women’s Handbags — Women’s handbag collections feature classically inspired as well as fashion designs.
Coach flagship stores, which offer the fullest expression of the Coach brand, are located in tourist-heavy, densely populated cities globally. Retail stores carry an assortment of products depending on their size, location and customer preferences. Coach outlet stores serve as an efficient means to sell manufactured-for-outlet product and discontinued retail inventory outside the retail channel.
Kate Spade operates a limited number of flagship locations which offer the fullest expression of the Kate Spade brand and are located in key strategic markets including tourist-heavy, densely populated cities globally. Kate Spade outlet stores serve as an efficient means to sell manufactured-for-outlet product and discontinued retail inventory outside the retail channel.
The full Board of Directors and the HR Committee receive at least quarterly updates on the Company’s talent development strategies and other applicable areas of human capital management. 13 Unlocking the power of our people is a key strategic focus area for the Company, supported by significant engagement from the Company’s senior leadership on talent development and human capital management, as reflected in the key programs and focus areas described below.
Unlocking the power of our people is a key strategic focus area for the Company, supported by significant engagement from the Company’s senior leadership on talent development and human capital management, as reflected in the key programs and focus areas described below. Employees As of July 2, 2022, the Company employed approximately 18,100 employees globally.
Our licensing partners generally pay royalties on their net sales of our branded products. Such royalties currently comprise approximately 1% of Tapestry's total net sales.
Our licensing partners generally pay royalties on their net sales of our branded products. Such royalties currently comprise approximately 1% of Tapestry's total net sales. The licensing agreements generally give our brands the right to terminate the license if specified sales targets are not achieved.
Through these outlet stores, we target value-oriented customers in established outlet centers that are close to major markets. 3 The following table shows the number of Coach directly-operated locations and their total and average square footage: Coach North America International Total Store Count Fiscal 2021 354 585 939 Net change vs. prior year (21) 2 (19) % change vs. prior year (5.6) % 0.3 % (2.0) % Fiscal 2020 375 583 958 Net change vs. prior year (16) (12) (28) % change vs. prior year (4.1) % (2.0) % (2.8) % Fiscal 2019 391 595 986 Net change vs. prior year (11) 10 (1) % change vs. prior year (2.7) % 1.7 % (0.1) % Square Footage Fiscal 2021 1,774,244 1,392,707 3,166,951 Net change vs. prior year 15,576 107,378 122,954 % change vs. prior year 0.9 % 8.4 % 4.0 % Fiscal 2020 1,758,668 1,285,329 3,043,997 Net change vs. prior year (43,742) (19,289) (63,031) % change vs. prior year (2.4) % (1.5) % (2.0) % Fiscal 2019 1,802,410 1,304,618 3,107,028 Net change vs. prior year (33,133) 48,093 14,960 % change vs. prior year (1.8) % 3.8 % 0.5 % Average Square Footage Fiscal 2021 5,012 2,381 3,373 Fiscal 2020 4,690 2,205 3,177 Fiscal 2019 4,610 2,193 3,151 In fiscal 2022, we expect minimal change in overall store count with increases in store locations and square footage in Greater China and Japan, mostly offset by a reduction in store count in North America.
Through these outlet stores, we target value-oriented customers in established outlet centers that are close to major markets. 3 The following table shows the number of Coach directly-operated locations and their total and average square footage: Coach North America International Total Store Count Fiscal 2022 343 602 945 Net change vs. prior year (11) 17 6 % change vs. prior year (3.1) % 2.9 % 0.6 % Fiscal 2021 354 585 939 Net change vs. prior year (21) 2 (19) % change vs. prior year (5.6) % 0.3 % (2.0) % Fiscal 2020 375 583 958 Net change vs. prior year (16) (12) (28) % change vs. prior year (4.1) % (2.0) % (2.8) % Square Footage Fiscal 2022 1,659,813 1,358,981 3,018,794 Net change vs. prior year (34,903) 62,978 28,075 % change vs. prior year (2.1) % 4.9 % 0.9 % Fiscal 2021 1,694,716 1,296,003 2,990,719 Net change vs. prior year (63,952) 10,674 (53,278) % change vs. prior year (3.6) % 0.8 % (1.8) % Fiscal 2020 1,758,668 1,285,329 3,043,997 Net change vs. prior year (43,742) (19,289) (63,031) % change vs. prior year (2.4) % (1.5) % (2.0) % Average Square Footage Fiscal 2022 4,839 2,257 3,194 Fiscal 2021 4,787 2,215 3,185 Fiscal 2020 4,690 2,205 3,177 In fiscal 2023, we expect minimal change in overall store count with a reduction in store count primarily in North America and Japan, partially offset by increases in store locations and square footage in Greater China.
In fiscal 2022, we expect a modest increase in store count and square footage in mainland China and a slight reduction in store count and square footage in North America. 7 Digital — We view our digital platform as an instrument to deliver Stuart Weitzman brand products to customers directly with the benefit of added accessibility as consumers can purchase Stuart Weitzman brand products wherever they choose.
Digital — We view our digital platform as an instrument to deliver Stuart Weitzman products to customers directly with the benefit of added accessibility as consumers can purchase Stuart Weitzman brand products wherever they choose. For Stuart Weitzman, we have e-commerce sites in the U.S, Canada and mainland China.
In July 2021, the Company entered into a lease agreement for a facility to be located in Las Vegas, Nevada. This facility is expected to become a multi-brand fulfillment center that is intended to increase capacity and continue to enhance fulfillment capabilities. INFORMATION SYSTEMS The Company’s information systems are integral in supporting the Company’s long-term strategies.
These facilities utilize automated warehouse management systems that interface to our Enterprise Resource Planning ("ERP") system. In fiscal 2022, the Company entered into a lease agreement for a facility to be located in Las Vegas, Nevada. This facility is expected to become a multi-brand fulfillment center that is intended to increase capacity and continue to enhance fulfillment capabilities.
Additionally, we maintain network security and cyber liability insurance in order to provide a level of financial protection in the event of certain covered cyber losses and data breaches. 11 TRADEMARKS AND PATENTS Tapestry owns all of the material trademark rights around the world used in connection with the production, marketing, distribution and sale of all branded products for Coach, Stuart Weitzman and Kate Spade.
TRADEMARKS AND PATENTS Tapestry owns all of the material trademark rights around the world used in connection with the production, marketing, distribution and sale of all branded products for Coach, Stuart Weitzman and Kate Spade.
Individually, our brands are iconic. Together, we can stretch what’s possible. OUR STRATEGY Acceleration Program The Company has implemented a strategic growth plan after undergoing a review of its business under its multi-year growth agenda (the "Acceleration Program").
Individually, our brands are iconic. Together, we can stretch what’s possible. OUR STRATEGY In fiscal 2020, the Company announced and embarked on a strategic multi-year growth plan (the "Acceleration Program").
In response, the Company took strategic actions to reinforce its liquidity and financial flexibility, as well as to comply with local regulations to protect employees and customers.
Covid-19 Impact The outbreak of Covid-19 has continued to impact a significant majority of the regions in which we operate, resulting in significant global business disruptions. In response, the Company took strategic actions to reinforce its liquidity and financial flexibility, as well as to comply with local regulations to protect employees and customers.
We maintain strong oversight of the supply chain process for each of our brands from design through manufacturing. We are able to do this by maintaining sourcing management offices in Vietnam, mainland China, the Philippines, Cambodia and Spain that work closely with our independent manufacturers.
We are able to do this by maintaining sourcing management offices in Vietnam, mainland China, the Philippines, Cambodia and Spain that work closely with our independent manufacturers. This broad-based, global manufacturing strategy is designed to optimize the mix of cost, lead times and construction capabilities.
Retail stores carry an assortment of products depending on their size, location and customer preferences. Through outlet stores, we target value-oriented customers in established outlet centers that are close to major markets.
Through these outlet stores, we target value-oriented customers in established outlet centers that are close to major markets.
Maintaining a competitive program helps us attract, motivate and retain the key talent we need to achieve outstanding business and financial results. To accomplish this goal, we strive to appropriately align our total compensation with the pay, benefits and rewards offered by companies that compete with us for talent in the marketplace.
To accomplish this goal, we strive to appropriately align our total compensation with the pay, benefits and rewards offered by companies that compete with us for talent in the marketplace. Our Total Compensation Program includes cash pay, annual and long term incentives, benefits and other special programs that our employees value.
Our overachieving Equity, Inclusion and Diversity strategy is grounded in our purpose and values and will be a core element to unlocking the power of our people. There are four pillars under this strategy: • Talent. Attract, retain and reward top diverse talent and enable them to thrive, personally and professionally in our global community. • Culture.
Our goal is to create a culture that is equitable, inclusive and diverse - where all of our employees, customers and stakeholders thrive. Our EI&D strategy is grounded in our purpose and values and will be a core element to unlocking the power of our people. There are four pillars under this strategy: • Talent.
Our focus on fostering an equitable work environment has led to recognition from Forbes on the list of “Best Employers for Diversity” and Human Rights Campaign’s list of “Best Place to Work for LGBTQ Equality” in 2020. The Company is dedicated to building a workforce with leadership teams better reflecting our general corporate population in North America.
Our focus on fostering an equitable work environment has led to continued recognition from Forbes on the list of “Best Employers for Diversity” and Human Rights Campaign’s list of “Best Place to Work for LGBTQ Equality”. Additionally, we have been certified as a "Great Place to Work" for 2022.
Employees As of July 3, 2021, the Company employed approximately 16,400 globally. Of these employees, approximately 13,100 employees worked in retail locations, of which 4,300 were part-time employees. This total excludes seasonal and temporary employees that the Company employs, particularly during the second quarter due to the holiday season.
Of these employees, approximately 14,400 employees worked in retail locations, of which 5,500 were part-time employees. This total excludes seasonal and temporary employees that the Company employs, particularly during the second quarter due to the holiday season. The Company believes that its relations with its employees are good, and has never encountered a strike or work stoppage.
We have established a global multi-year Equity, Inclusion and Diversity learning road map, including bespoke inclusion and unconscious bias training programs to accommodate our dynamic employee population.
We have established a global multi-year EI&D learning road map, including bespoke inclusion and unconscious bias training programs to accommodate our dynamic employee population. In fiscal 2022 the Company launched Inclusion Works, a peer learning online platform with a group-centered experience, bite-size content, and actionable learning.
For Coach, we have e-commerce sites in the U.S., Canada, Japan, mainland China, several throughout Europe, Australia and several throughout the rest of Asia. Additionally, we continue to leverage various third-party digital platforms to sell our products to customers. 4 Wholesale — We work closely with our wholesale partners to ensure a clear and consistent product presentation.
Additionally, we continue to leverage various third-party digital platforms to sell our products to customers. Wholesale — We work closely with our wholesale partners to ensure a clear and consistent product presentation. We enhance our presentation of proprietary Coach brand fixtures within the department store environment in select locations.
The following table shows the number of Stuart Weitzman directly-operated locations and their total and average square footage: Stuart Weitzman North America International (1) Total Store Count Fiscal 2021 48 56 104 Net change vs. prior year (10) (17) (27) % change vs. prior year (17.2) % (23.3) % (20.6) % Fiscal 2020 58 73 131 Net change vs. prior year (13) (3) (16) % change vs. prior year (18.3) % (3.9) % (10.9) % Fiscal 2019 71 76 147 Net change vs. prior year 3 41 44 % change vs. prior year 4.4 % 117.1 % 42.7 % Square Footage Fiscal 2021 88,394 80,450 168,844 Net change vs. prior year (14,390) (8,732) (23,122) % change vs. prior year (14.0) % (9.8) % (12.0) % Fiscal 2020 102,784 89,182 191,966 Net change vs. prior year (22,552) (1,118) (23,670) % change vs. prior year (18.0) % (1.2) % (11.0) % Fiscal 2019 125,336 90,300 215,636 Net change vs. prior year 7,467 42,802 50,269 % change vs. prior year 6.3 % 90.1 % 30.4 % Average Square Footage Fiscal 2021 1,842 1,437 1,624 Fiscal 2020 1,772 1,222 1,465 Fiscal 2019 1,765 1,188 1,467 (1) Fiscal 2019 includes the addition of 18 stores acquired as a result of the distributor acquisitions in Southern China and Australia.
Through outlet stores, we target value-oriented customers in established outlet centers that are close to major markets. 6 The following table shows the number of Stuart Weitzman directly-operated locations and their total and average square footage: Stuart Weitzman North America International Total Store Count Fiscal 2022 39 61 100 Net change vs. prior year (9) 5 (4) % change vs. prior year (18.8) % 8.9 % (3.8) % Fiscal 2021 (1) 48 56 104 Net change vs. prior year (10) (17) (27) % change vs. prior year (17.2) % (23.3) % (20.6) % Fiscal 2020 58 73 131 Net change vs. prior year (13) (3) (16) % change vs. prior year (18.3) % (3.9) % (10.9) % Square Footage Fiscal 2022 74,836 84,070 158,906 Net change vs. prior year (13,558) 3,620 (9,938) % change vs. prior year (15.3) % 4.5 % (5.9) % Fiscal 2021 (1) 88,394 80,450 168,844 Net change vs. prior year (14,390) (8,732) (23,122) % change vs. prior year (14.0) % (9.8) % (12.0) % Fiscal 2020 102,784 89,182 191,966 Net change vs. prior year (22,552) (1,118) (23,670) % change vs. prior year (18.0) % (1.2) % (11.0) % Average Square Footage Fiscal 2022 1,919 1,378 1,589 Fiscal 2021 (1) 1,842 1,437 1,624 Fiscal 2020 1,772 1,222 1,465 (1) During fiscal 2021, we exited certain regions previously operated in to optimize our fleet under the Acceleration Program.
We know that having a diverse range of perspectives, backgrounds and experiences makes us more innovative and successful and it brings us closer to our consumer. Our goal is to create a culture that is equitable, inclusive and diverse - where all of our employees, customers and stakeholders thrive.
Equity, Inclusion and Diversity Our company name Tapestry, represents the diversity of our brands and the diversity of our people. We know that having a diverse range of perspectives, backgrounds and experiences makes us more innovative and successful and it brings us closer to our consumer.
Our benefits, along with competitive pay, includes medical benefits and paid sick leave, in accordance with local policies and regulations, for directly hired full-time and part-time employees. The Company also offers retirement benefits for its employees, which are managed in accordance with local jurisdictions.
Our benefits, along with competitive pay, includes medical benefits and paid wellness days and parental leave, in accordance with local policies and regulations, for directly hired full-time and part-time employees. In fiscal 2022 we transitioned from sick days to wellness days to better reflect the purpose of this paid time off.
Before partnering with a new vendor, the Company evaluates each facility by conducting a quality and business practice standards audit. Periodic evaluations of existing, previously approved facilities are conducted on a recurring basis. We believe that our manufacturing partners are in material compliance with the Company’s integrity standards.
Suppliers that fail to meet our standards are not approved until an acceptable report is provided. Periodic evaluations of existing, previously approved facilities are conducted on a recurring basis. We believe that our manufacturing partners are in material compliance with the Company’s integrity standards.
Digital — We view our digital platforms as instruments to deliver Coach brand products to customers directly, with the benefit of added accessibility, so that consumers can purchase Coach brand products wherever they choose. Consumers also have the ability to place e-commerce orders through point-of-sale mobile devices located within our retail stores.
Digital — We view our digital platforms as instruments to deliver Coach products to customers directly, with the benefit of added accessibility, so that consumers can purchase Coach products wherever they choose. For Coach, we have e-commerce sites in the U.S., Canada, Japan, mainland China, several throughout Europe, Australia and several throughout the rest of Asia.
The wholesale business for Stuart Weitzman brand comprised approximately 29% of total segment net sales for fiscal 2021. Stuart Weitzman has developed relationships with a select group of distributors who sell Stuart Weitzman products through travel retail locations and in certain international countries where Stuart Weitzman does not have directly operated retail locations.
We continue to closely monitor inventories held by our wholesale customers in an effort to optimize inventory levels across wholesale doors. Stuart Weitzman has developed relationships with a select group of distributors who sell Stuart Weitzman products through travel retail locations and in certain international countries where Stuart Weitzman does not have directly operated retail locations.
The Company monitors the representation of women and ethnic minorities at different levels throughout the company, and discloses this information in our website at www.tapestry.com/responsibility/our-people. Total Rewards Tapestry is dedicated to being a place where our employees love to work, where they feel recognized and rewarded for all that they do.
The Company is dedicated to building a workforce with leadership teams better reflecting our general corporate population in North America. The Company monitors the representation of women and ethnic minorities at different levels throughout the company, and discloses this information in our website at www.tapestry.com/responsibility/our-people.
The Company has several regional informational websites for locations where we have not established an e-commerce presence. The Company utilizes and continues to explore digital technologies such as social media websites as a cost effective consumer communication opportunity to increase on-line and store sales, acquire new customers and build brand awareness.
The Company utilizes and continues to explore digital technologies such as social media websites as a cost effective consumer communication opportunity to increase on-line and store sales, acquire new customers and build brand awareness. 9 MANUFACTURING Tapestry carefully balances its commitments to a limited number of “better brand” partners that have demonstrated integrity, quality and reliable delivery.
Stores — Kate Spade operates freestanding flagship, specialty retail and outlet stores as well as concession shop-in-shops. These stores are located in regional shopping centers, metropolitan areas throughout the world and established outlet centers. Kate Spade flagship locations, which offer the fullest expression of the Kate Spade brand, are located in key strategic markets including tourist-heavy, densely populated cities globally.
Stores — Kate Spade operates freestanding retail stores, including flagships, and outlet stores as well as concession shop-in-shops. These stores are located in regional shopping centers and metropolitan areas throughout the world as well as established outlet centers. Kate Spade retail stores carry an assortment of products depending on their size, location and customer preferences.
This allows for accurate storage and order processing, and allows us to provide excellent service to our customers. Our products are primarily shipped to retail stores and wholesale customers, while some facilities also ship direct to consumer orders in markets where we have an e-commerce presence.
Our facilities use bar code scanning warehouse management systems, where our fulfillment center employees use handheld scanners to read product bar codes. This allows for accurate storage and order processing, and allows us to provide excellent service to our customers. Our products are primarily shipped to retail stores, wholesale customers and e-commerce customers.
We enhance our presentation through the creation of shop-in-shops with proprietary Coach brand fixtures within the department store environment. We custom tailor our assortments through wholesale product planning and allocation processes to match the attributes of our department store consumers in each local market.
We custom tailor our assortments through wholesale product planning and allocation processes to match the attributes of our department store consumers in each local market. We continue to closely monitor inventories held by our wholesale customers in an effort to optimize inventory levels across wholesale doors.
Kate Spade had one vendor, located in Vietnam, who individually provided over 10% of the brand's total purchases. The level of products manufactured in each country is expected to change for Coach and Kate Spade during fiscal 2022 as the brands continue to further diversify their supply chains globally. 10 Stuart Weitzman products were primarily manufactured in Spain.
Kate Spade had one vendor, located in Indonesia, who individually provided over 10% of the brand's total purchases (or approximately 11%). Stuart Weitzman products were primarily manufactured in Spain. During fiscal 2022, Stuart Weitzman had four vendors, all located in Spain, who individually provided over 10% of the brand's total units (or approximately 44% in the aggregate).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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We have resumed providing guidance for fiscal year 2022 and while we generally expect to provide updates to our financial guidance when we report our results each fiscal quarter, we do not have any responsibility to provide guidance going forward or to update any of our forward-looking statements at such times or otherwise.
We resumed providing guidance for fiscal year 2022 and while we generally expect to provide updates to our financial guidance when we report our results each fiscal quarter, we do not have any responsibility to provide guidance going forward or to update any of our forward-looking statements at such times or otherwise.
The Company's bylaws provide that nominations of persons for election to the Company's Board and the proposal of business to be considered at an annual meeting of stockholders may be made only in the notice of the meeting, by the Company's Board or by a stockholder who is a stockholder of record as of the record date set by the Company's Board for purposes of determining stockholders entitled to vote at the meeting, at the time of giving of notice by the stockholder pursuant to the Company's bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and has complied with the advance notice procedures of the Company's bylaws.
The Company's bylaws provide that nominations of persons for election to the Company's Board and the proposal of business to be considered at an annual meeting of stockholders may be made only in the notice of the meeting, by the Company's Board or by a stockholder who is a stockholder of record as of the record date set by the Company's Board for purposes of determining stockholders entitled to vote at the meeting, at the time of the giving of the notice by the stockholder pursuant to the Company's bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and has complied with the advance notice procedures of the Company's bylaws.
Furthermore, reduced discretionary spending may result in an excess of inventory throughout the industry, which could lead to increased pressure on our gross margin in the near term if the Company has to increase promotional activity above its normal levels to sell through its existing product. 17 • Social distancing measures and general consumer behaviors due to the Covid-19 pandemic may continue to impact mall and store traffic even as stores return to normal operations, which may have a further negative impact on our business.
Furthermore, reduced discretionary spending may result in an excess of inventory throughout the industry, which could lead to increased pressure on our gross margin in the near term if the Company has to increase promotional activity above its normal levels to sell through its existing product. • Social distancing measures and general consumer behaviors due to the Covid-19 pandemic may continue to impact mall and store traffic even as stores return to normal operations, which may have a further negative impact on our business.
As a Company engaged in sourcing on a global scale, we are subject to the risks inherent in such activities, including, but not limited to: • continued disruptions or delays in shipments whether due to port congestion, logistics carrier disruption, other shipping capacity constraints or other factors, which has and may continue to result in significantly increased inbound freight costs; • loss or disruption of key manufacturing or fulfillment sites or extended closure of such sites due to the Covid-19 pandemic or other unexpected factors; • imposition of additional duties, taxes and other charges or restrictions on imports or exports; • unavailability, or significant fluctuations in the cost, of raw materials; • compliance by us and our independent manufacturers and suppliers with labor laws and other foreign governmental regulations; • increases in the cost of labor, fuel (including volatility in the price of oil), travel and transportation; • compliance with our Global Business Integrity Program; • compliance by our independent manufacturers and suppliers with our Supplier Code of Conduct, social auditing procedures and requirements and other applicable compliance policies; • compliance with applicable laws and regulations, including U.S. laws regarding the identification and reporting on the use of “conflict minerals” sourced from the Democratic Republic of the Congo in the Company’s products, other laws and regulations regarding the sourcing of materials in the Company’s products, the FCPA, U.K.
As a Company engaged in sourcing on a global scale, we are subject to the risks inherent in such activities, including, but not limited to: • continued disruptions or delays in shipments whether due to port congestion, logistics carrier disruption, other shipping capacity constraints or other factors, which has and may continue to result in significantly increased inbound freight costs and increased in-transit times; • loss or disruption of key manufacturing or fulfillment sites or extended closure of such sites due to the Covid-19 pandemic or other unexpected factors; • imposition of additional duties, taxes and other charges or restrictions on imports or exports; • unavailability, or significant fluctuations in the cost, of raw materials; • compliance by us and our independent manufacturers and suppliers with labor laws and other foreign governmental regulations; • increases in the cost of labor, fuel (including volatility in the price of oil), travel and transportation; • compliance with our Global Business Integrity Program; • compliance by our independent manufacturers and suppliers with our Supplier Code of Conduct, social auditing procedures and requirements and other applicable compliance policies; • compliance with applicable laws and regulations, including U.S. laws regarding the identification and reporting on the use of “conflict minerals” sourced from the Democratic Republic of the Congo in the Company’s products, other laws and regulations regarding the sourcing of materials in the Company’s products, the FCPA, U.K.
Furthermore, failure of the computer systems due to inadequate system capacity, computer viruses, human error, changes in programming, security and personal data breaches, system upgrades or migration of these services, as well as employee and consumer privacy concerns and new global government regulations, individually or in accumulation, could have a material effect on our business, financial condition or results of operations and cash flow.
Furthermore, failure of our computer systems due to inadequate system capacity, computer viruses, human error, changes in programming, security and personal data breaches, system upgrades or migration of these services, as well as employee and consumer privacy concerns and new global government regulations, individually or in accumulation, could have a material effect on our business, financial condition or results of operations and cash flow.
Historically, competition for talent in these positions has been intense and turnover is generally high, both of which have been exacerbated by the Covid-19 pandemic. If we are unable to attract and retain such employees with the necessary skills and experience, we may not achieve our objectives and our results of operations could be adversely impacted.
Historically, competition for talent in these positions has been intense and turnover is generally high, both of which have been exacerbated by the ongoing Covid-19 pandemic. If we are unable to attract and retain such employees with the necessary skills and experience, we may not achieve our objectives and our results of operations could be adversely impacted.
The violation of labor, environmental or other laws by an independent manufacturer or supplier, or divergence of an independent manufacturer’s or supplier’s labor 19 practices from those generally accepted as ethical or appropriate in the U.S., could interrupt or otherwise disrupt the shipment of our products, harm our trademarks or damage our reputation.
The violation of labor, environmental or other laws by an independent manufacturer or supplier, or divergence of an independent manufacturer’s or supplier’s labor practices from those generally accepted as ethical or appropriate in the U.S., could interrupt or otherwise disrupt the shipment of our products, harm our trademarks or damage our reputation.
If we do not anticipate and respond promptly to changing customer preferences 22 and fashion trends in the design, production, and styling of our products, as well as create compelling marketing campaigns that appeal to our customers, our sales and results of operations may be negatively impacted.
If we do not anticipate and respond promptly to changing customer preferences and fashion trends in the design, production, and styling of our products, as well as create compelling marketing campaigns that appeal to our customers, our sales and results of operations may be negatively impacted.
The occurrence of any of these events could materially adversely affect our business, financial condition and results of operations. Our business may be materially impacted if our distribution and fulfillment centers face significant interruptions and operations. We are dependent on a limited number of fulfillment and sourcing centers.
The occurrence of any of these events could materially adversely affect our business, financial condition and results of operations. 18 Our business may be materially impacted if our distribution and fulfillment centers face significant interruptions and operations. We are dependent on a limited number of fulfillment and sourcing centers.
We also store all designs, goods specifications, projected sales and distribution plans for our finished products digitally. We have enterprise class and industry comparable security measures in place to protect both our physical facilities and digital systems from attacks.
We also store all designs, goods specifications, projected sales and distribution plans for our finished products 24 digitally. We have enterprise class and industry comparable security measures in place to protect both our physical facilities and digital systems from attacks.
Furthermore, our efforts to enforce our intellectual property rights are often met with defenses and counterclaims attacking the validity and enforceability of our intellectual property rights. Unplanned increases in legal fees and other costs associated with defending our intellectual property rights could result in higher operating expenses.
Furthermore, our efforts to enforce our intellectual property rights are often met with defenses and counterclaims attacking the validity and enforceability of our intellectual property rights. Unplanned increases in legal and investigative fees and other costs associated with defending our intellectual property rights could result in higher operating expenses.
Our results can be impacted by a number of macroeconomic factors, including but not limited to consumer confidence and spending levels, tax rates, unemployment, consumer credit availability, raw materials costs, pandemics (such as the ongoing Covid-19 pandemic) and natural disasters, fuel and energy costs (including oil prices), global factory production, supply chain activity, commercial real estate market conditions, credit market conditions and the level of customer traffic in malls and shopping centers.
Our results can be impacted by a number of macroeconomic factors, including but not limited to: consumer confidence and spending levels, tax rates, levels of unemployment, consumer credit availability, raw materials costs, pandemics (such as the ongoing Covid-19 pandemic) and natural disasters, fuel and energy costs (including oil prices), global factory production, supply chain operations, commercial real estate market conditions, credit market conditions and the level of customer traffic in malls and shopping centers.
This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, including the financial impact of the Covid-19 pandemic on 27 our business.
This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, including the financial impact of the Covid-19 pandemic on our business.
The potential difficulties of integrating the operations of an acquired business and realizing our expectations for an acquisition, including the benefits that may be realized, include, among other things: • failure of the business to perform as planned following the acquisition or achieve anticipated revenue or profitability targets; • delays, unexpected costs or difficulties in completing the integration of acquired companies or assets; • higher than expected costs, lower than expected cost savings or synergies and/or a need to allocate resources to manage unexpected operating difficulties; • difficulties assimilating the operations and personnel of acquired companies into our operations; • diversion of the attention and resources of management or other disruptions to current operations; • the impact on our or an acquired business’ internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002; • unanticipated changes in applicable laws and regulations; 21 • unanticipated changes in the combined business due to potential divestitures or other requirements imposed by antitrust regulators; • retaining key customers, suppliers and employees; • retaining and obtaining required regulatory approvals, licenses and permits; • operating risks inherent in the acquired business and our business; • consumers’ failure to accept product offerings by us or our licensees; • assumption of liabilities not identified in due diligence; and • other unanticipated issues, expenses and liabilities.
The potential difficulties of integrating the operations of an acquired business and realizing our expectations for an acquisition, including the benefits that may be realized, include, among other things: • failure of the business to perform as planned following the acquisition or achieve anticipated revenue or profitability targets; • delays, unexpected costs or difficulties in completing the integration of acquired companies or assets; • higher than expected costs, lower than expected cost savings or synergies and/or a need to allocate resources to manage unexpected operating difficulties; • difficulties assimilating the operations and personnel of acquired companies into our operations; • diversion of the attention and resources of management or other disruptions to current operations; • the impact on our or an acquired business’ internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002; • unanticipated changes in applicable laws and regulations; • unanticipated changes in the combined business due to potential divestitures or other requirements imposed by antitrust regulators; • retaining key customers, suppliers and employees; • retaining and obtaining required regulatory approvals, licenses and permits; • operating risks inherent in the acquired business and our business; • lower than anticipated demand for product offerings by us or our licensees; • assumption of liabilities not identified in due diligence; and • other unanticipated issues, expenses and liabilities.
Refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 7, "Restructuring Activities," for further information regarding the Acceleration Program.
Refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 5, "Restructuring Activities," for further information regarding the Acceleration Program.
Further, expanding in certain markets may have upfront investment costs that may not be accompanied by sufficient 20 revenues to achieve typical or expected operational and financial performance and therefore may be dilutive to our brands in the short-term. We may also have to compete for talent in international regions as we expand our omni-channel presence.
Further, expanding in certain markets may have upfront investment costs that may not be accompanied by sufficient 19 revenues to achieve typical or expected operational and financial performance and therefore may be dilutive to our brands in the short-term. We may also have to compete for talent in international regions as we expand our omni-channel presence.
Tapestry, Inc. is a New York-based house of modern luxury lifestyle brands. Our global house of brands unites the magic of Coach, kate spade new york and Stuart Weitzman. Each of our brands are unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across channels and geographies.
Tapestry, Inc. is a New York-based house of accessible luxury lifestyle brands. Our global house of brands unites the magic of Coach, kate spade new york and Stuart Weitzman. Each of our brands are unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across channels and geographies.
Customs and Border Patrol; • inability to engage new independent manufacturers that meet the Company’s cost-effective sourcing model; • product quality issues; • political unrest, including protests and other civil disruption; • public health crises, such as pandemic and epidemic diseases, and other unforeseen outbreaks; • natural disasters or other extreme weather events, whether as a result of climate change or otherwise; • acts of war or terrorism and other external factors over which we have no control.
Customs and Border Patrol; • inability to engage new independent manufacturers that meet the Company’s cost-effective sourcing model; • product quality issues; • political unrest, including the ongoing crisis in Ukraine, protests and other civil disruption; • public health crises, such as pandemic and epidemic diseases, and other unforeseen outbreaks; • natural disasters or other extreme weather events, whether as a result of climate change or otherwise; • acts of war or terrorism and other external factors over which we have no control.
Despite these efforts, however, we may be vulnerable to targeted or random personal data or security breaches, acts of vandalism, computer malware, misplaced or lost data, programming and/or human errors, or other similar events.
Despite these efforts, however, we may be vulnerable to targeted or random cyber-attacks, personal data or security breaches, acts of vandalism, computer malware, misplaced or lost data, programming and/or human errors, or other similar events.
We may also experience loss of revenues resulting from unauthorized use of proprietary information including our intellectual property. Lastly, we could face sizable fines, significant breach containment and notification costs to supervisory 25 authorities and the affected data subjects, and increased litigation as a result of cyber security or personal data breaches.
We may also experience loss of revenues resulting from unauthorized use of proprietary information including our intellectual property. Lastly, we could face sizable fines, significant breach containment and notification costs to supervisory authorities and the affected data subjects, and increased litigation and customer claims, as a result of cyber security or personal data breaches.
Furthermore, declines in traffic beyond our current exceptions could result in additional impairment charges if expected future cash flows of the related asset group do not exceed the carrying value. • We continue to sell products through our stores and through our e-commerce sites.
Furthermore, declines in traffic beyond our current expectations could result in additional impairment charges if expected future cash flows of the related asset group do not exceed the carrying value. 16 • We continue to sell products through our stores and through our e-commerce sites.
In spite of our efforts, counterfeiting still occurs and if we are unsuccessful in challenging a third-party’s rights related to trademark, copyright, or patent this could adversely affect our future sales, financial condition, and results of operations. We are aggressive in pursuing entities involved in the trafficking and sale of counterfeit merchandise through legal action or other appropriate measures.
Despite our efforts, counterfeiting still occurs and if we are unsuccessful in challenging a third-party’s rights related to trademark, copyright, or patent this could adversely affect our future sales, financial condition, and results of operations. We pursue entities involved in the trafficking and sale of counterfeit merchandise through legal action or other appropriate measures.
The risks associated with our own products also apply to our licensed products as well as unique problems that our licensing partners may experience, including risks associated with each licensing partner’s ability to obtain capital, manage its labor relations, maintain relationships with its suppliers, manage its credit and bankruptcy risks, and maintain customer relationships.
The risks associated with our own products also apply to our licensed products, as do unique risks stemming from problems that our licensing partners may experience, including risks associated with each licensing partner’s ability to obtain capital, manage its labor relations, maintain relationships with its suppliers, manage its credit and bankruptcy risks, and maintain customer relationships.
We have been incurring and expect that we will continue to incur significant costs implementing additional security measures to protect against new or enhanced data security or privacy threats, or to comply with current and new international, federal and state laws governing the unauthorized disclosure of confidential and personal information which are continuously being enacted and proposed such as the General Data Protection Regulation (GDPR) in the E.U. and the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA), the Virginia Consumer Data Protection Act (VCDPA) and Colorado Privacy Act (CPA) in the U.S.A., as well as increased cyber security and privacy protection costs such as organizational changes, Covid-19 employee and visitor health checks deploying additional personnel and protection technologies, training employees, engaging third party experts and consultants.
We have been incurring and expect that we will continue to incur significant costs implementing additional security measures to protect against new or enhanced data security or privacy threats, or to comply with current and new international, federal and state laws governing the unauthorized disclosure or exfiltration of confidential and personal information which are continuously being enacted and proposed such as the General Data Protection Regulation (GDPR) in the E.U. the UK GDPR, the American Data Privacy and Protection Act, the California Consumer Privacy Act (CCPA), the California Privacy Rights Act (CPRA), the Virginia Consumer Data Protection Act (VCDPA), the Colorado Privacy Act (CPA) and the Utah Consumer Privacy Act, and the Connecticut Data Privacy Act (CTDPA) in the U.S.A., as well as increased cyber security and privacy protection costs such as organizational changes, Covid-19 employee and visitor health checks, copies of vaccination cards, deploying additional personnel and protection technologies, training employees, engaging outside counsel, third party experts and consultants.
In addition, the Company's Board may classify or reclassify any unissued shares of common stock or preferred stock and may set the preferences, rights and other terms of the classified or reclassified shares.
In addition, the Company's Board may classify or reclassify any unissued shares of common stock or preferred stock and may set the preferences, rights and other terms of the classified or reclassified shares without stockholder approval.
While geographic diversity helps to reduce the Company’s exposure to risks in any one country, we are subject to risks associated with international operations, including, but not limited to: • political or economic instability or changing macroeconomic conditions in our major markets, including the potential impact of (1) new policies that may be implemented by the U.S. or other jurisdictions, particularly with respect to tax and trade policies or (2) impacts from the United Kingdom (“U.K.”) leaving the European Union (“E.U.”), commonly known as Brexit and the agreement between the U.K. and the E.U. and countries outside the E.U. with respect to, amongst other things, tariffs; • public health crises, such as pandemics and epidemic diseases (including the ongoing Covid-19 pandemic); • changes to the U.S.'s participation in, withdrawal out of, renegotiation of certain international trade agreements or other major trade related issues including the non-renewal of expiring favorable tariffs granted to developing countries, tariff quotas, and retaliatory tariffs, trade sanctions, new or onerous trade restrictions, embargoes and other stringent government controls; • changes in exchange rates for foreign currencies, which may adversely affect the retail prices of our products, result in decreased international consumer demand, or increase our supply costs in those markets, with a corresponding negative impact on our gross margin rates; • compliance with laws relating to foreign operations, including the Foreign Corrupt Practices Act (FCPA) and the U.K.
While geographic diversity helps to reduce the Company’s exposure to risks in any one country, we are subject to risks associated with international operations, including, but not limited to: • political or economic instability or changing macroeconomic conditions in our major markets, including the potential impact of (1) new policies that may be implemented by the U.S. or other jurisdictions, particularly with respect to tax and trade policies or (2) sanctions and related activities by the United States, European Union (“E.U.”) and others; • public health crises, such as pandemics and epidemic diseases (including the ongoing Covid-19 pandemic); • changes to the U.S.'s participation in, withdrawal out of, renegotiation of certain international trade agreements or other major trade related issues including the non-renewal of expiring favorable tariffs granted to developing countries, tariff quotas, and retaliatory tariffs, trade sanctions, new or onerous trade restrictions, embargoes and other stringent government controls; • changes in exchange rates for foreign currencies, which may adversely affect the retail prices of our products, result in decreased international consumer demand, or increase our supply costs in those markets, with a corresponding negative impact on our gross margin rates; • compliance with laws relating to foreign operations, including the Foreign Corrupt Practices Act (FCPA) and the U.K.
We rely heavily on various information and other business systems to manage our operations, including management of our supply chain, point-of-sale processing in our brands’ stores, our online businesses associated with each brand and various other processes. We are continually evaluating and implementing upgrades and changes to our systems.
We rely heavily on various information and other business systems to manage our operations, including management of our supply chain, point-of-sale processing in our brands’ stores, our online businesses associated with each brand and various other processes. We are continually evaluating and implementing upgrades and changes to our systems. In addition, from time to time, we implement new systems.
While we maintain significant control over the products produced for us by our licensing partners, any of the foregoing risks, or the inability of any of our licensing partners to execute on the expected design and quality of the licensed products or otherwise exercise operational and financial control over its business, may result in loss of revenue and competitive harm to our operations in the product categories where we have entered into such licensing arrangements.
While we maintain significant control over the products produced for us by our licensing partners, any of the foregoing risks, or the inability of any of our licensing partners to execute on the expected design and quality of the licensed products or otherwise exercise operational and financial control over its business, may result in loss of revenue and competitive harm to our operations in the licensed product categories.
Subsequent to the 2021 fiscal year-end, the Company entered into a lease agreement for a multi-brand fulfillment facility to be built in Las Vegas, Nevada in order to increase capacity and improve fulfillment capabilities as the Company continues to focus on expanding its digital and e-commerce business.
Additionally in fiscal year 2022, the Company entered into a lease agreement for a multi-brand fulfillment facility to be built in Las Vegas, Nevada in order to increase capacity and improve fulfillment capabilities as the Company continues to focus on expanding its digital and e-commerce business.
Finally, many countries’ laws do not protect intellectual property rights to the same degree as U.S. laws. Risks Related to our Indebtedness We have incurred a substantial amount of indebtedness, which could restrict our ability to engage in additional transactions or incur additional indebtedness. As of July 3, 2021, our consolidated indebtedness was approximately $1.6 billion.
Finally, many countries’ laws do not protect intellectual property rights to the same degree as U.S. laws. Risks Related to our Indebtedness We have incurred a substantial amount of indebtedness, which could restrict our ability to engage in additional transactions or incur additional indebtedness. As of July 2, 2022, our consolidated indebtedness was approximately $1.70 billion.
However, there is no assurance that we will be able to implement such efforts in accordance with our plans, that such efforts will result in the intended or otherwise desirable outcomes or that such efforts, even if successfully implemented, will be effective in achieving long-term growth or increased profitability.
However, there is no assurance that we will be able to sustain such efforts in accordance with our plans, that such 20 efforts will result in the intended or otherwise desirable outcomes or that such efforts, even if successfully sustained, will be effective in achieving long-term growth or increased profitability.
Because our fulfillment centers include automated and computer controlled equipment, they are susceptible to risks including power interruptions, hardware and system failures, software viruses, and security breaches. We maintain a fulfillment center in Jacksonville, Florida, operated by Tapestry.
Because our fulfillment centers include automated and computer controlled equipment, they are susceptible to risks including power interruptions, hardware and system failures, software viruses, and security breaches. In North America we maintain fulfillment centers in Jacksonville, Florida, and Westchester, Ohio, operated by Tapestry.
Poor sales in the Company's second fiscal quarter would have a material adverse effect on its full year operating results and result in higher inventories.
Business underperformance in the Company's second fiscal quarter would have a material adverse effect on its full year operating results and result in higher inventories.
Labor costs at many of our manufacturers have been increasing significantly and, as the middle class in developing countries continues to grow, it is unlikely that such cost pressure will abate. Furthermore, the cost of transportation may fluctuate significantly if oil prices show volatility.
Labor costs at many of our manufacturers have been increasing significantly and, as the middle class in developing countries continues to 21 grow, it is unlikely that such cost pressure will abate. Furthermore, the cost of transportation has fluctuated and may continue to fluctuate significantly if oil prices continue to rise.
A key strategy of our Acceleration Program is to Leverage Data and Lead with a Digital-First Mindset, including offering satisfying customer experiences across our e-commerce and social channels and meeting the needs of our customers who are engaging with our brands digitally.
We have incorporated key strategies of our Acceleration Program, one of which is to Leverage Data and Lead with a Digital-First Mindset, including offering satisfying customer experiences across our e-commerce and social channels and meeting the needs of our customers who are engaging with our brands digitally.
Some store locations have, however, experienced temporary re-closures or operated under tighter restrictions in compliance with local government regulation during the course of fiscal year 2021 and into the beginning of fiscal year 2022. Many of the Company’s wholesale partners also experienced closure of their stores or operating restrictions during the fiscal year, as required by government orders.
However, some store locations have experienced temporary re-closures or operated under tighter restrictions in compliance with local government regulations. Many of the Company’s wholesale partners also experienced closure of their stores or operating restrictions during the fiscal year, as required by government orders.
Additionally, certain of our wholesale customers, particularly those located in the U.S., have become highly promotional and have aggressively marked down their merchandise, which could negatively impact our brands or could affect our business, results of operations, and financial condition.
Additionally, certain of our wholesale customers, particularly those located in the U.S., have in the past been highly promotional and have aggressively marked down their merchandise and may do so again in the future, which could negatively impact our brands or could affect our business, results of operations, and financial condition.
The global Covid-19 pandemic is continuously evolving and the extent to which the pandemic ultimately impacts our results and our business - including unforeseen increased costs to our business - will depend on future developments, which are highly uncertain and cannot be predicted, including the ultimate duration, severity and sustained geographic resurgence of the virus, including the emergence of new variants and strains of the virus, and the success of actions to contain the virus and its variants, or treat its impact, such as the availability and acceptance of vaccines, among others.
The impact of the ongoing Covid-19 pandemic on our business will depend on future developments, which are highly uncertain and cannot be predicted, including the ultimate duration, severity and sustained geographic resurgence of the virus, including the emergence of new variants and strains of the virus, and the success of actions to contain the virus and its variants, or treat its impact, such as the availability and acceptance of vaccines, among others.
In addition, the terms of our credit facility contain affirmative and negative covenants, including a leverage ratio, as well as limitations on our ability to incur debt, grant liens, engage in mergers and dispose of assets.
In addition, the terms of our $1.25 Billion Revolving Credit Facility contain affirmative and negative covenants, including a maximum net leverage ratio of 4.0 to 1.0, as well as limitations on our ability to incur debt, grant liens, engage in mergers and dispose of assets.
We operate on a global basis, with approximately 41.4% of our net sales coming from operations outside of United States as of the end of fiscal year 2021.
We operate on a global basis, with approximately 37.6% of our net sales coming from operations outside of United States as of the end of fiscal year 2022.
Further, while we believe that we could replace our existing licensing partners if required, our inability to do so for any period of time could adversely affect our revenues and harm our business. We also may decide not to renew our agreements with our licensing partners and bring certain categories in-house.
Further, while we believe that we 23 could replace our existing licensing partners if required, any delay in doing so could adversely affect our revenues and harm our business. We also may decide not to renew our agreements with our licensing partners and bring certain categories in-house.
On March 26, 2020, the Company announced that, due to the impact of the Covid-19 pandemic, Tapestry’s quarterly dividend, beginning in the fourth quarter of fiscal year 2020, along with the stock repurchase program would be suspended.
On March 26, 2020, the Company announced that, due to the impact of the Covid-19 pandemic, Tapestry’s quarterly dividend, beginning in the fourth quarter of fiscal year 2020, along with the stock repurchase program would be suspended. In the first quarter of fiscal 2022, the Company’s Board of Directors approved the reinstatement of the Company's Shareholder Return Program.
A failure to compete effectively could adversely affect our growth and profitability. Our business may be subject to increased costs due to excess inventories and a decline in profitability as a result of increasing pressure on margins if we misjudge the demand for our products.
A failure to compete effectively or to keep pace with rapidly changing consumer preferences and technology and product trends could adversely affect our growth and profitability. Our business may be subject to increased costs due to excess inventories and a decline in profitability as a result of increasing pressure on margins if we misjudge the demand for our products.
If we misjudge the market for our products or demand for our products are impacted by an unforeseen factor, such as the Covid-19 pandemic, we may be faced with significant excess inventories for some products and missed opportunities for other products.
If we misjudge the market for our products or demand for our products are impacted by other factors, such as inflationary pressures, political instability or the ongoing Covid-19 pandemic, we may be faced with significant excess inventories for some products and missed opportunities for other products.
We may not be able to keep up with demand for our products because we have and may continue to experience delays in or increased costs for the shipment or delivery of our products due to capacity constraints, shipping delays or port congestion. The successful execution of our Acceleration Program is key to the long-term success of our business.
We may not be able to keep up with demand for our products because we have and may continue to experience delays in or increased costs for the shipment or delivery of our products due to capacity constraints, shipping delays or port congestion.
If we are unable to pay quarterly dividends or conduct stock repurchases at intended levels, our reputation and stock price may be negatively impacted.
Refer to “ If we are unable to pay quarterly dividends or conduct stock repurchases at intended levels, our reputation and stock price may be negatively impacted. ” for additional discussion of our quarterly dividend. If we are unable to pay quarterly dividends or conduct stock repurchases at intended levels, our reputation and stock price may be negatively impacted.
If that occurs, we may be forced to rely on donation, markdowns, promotional sales or destruction, to dispose of excess, slow-moving inventory, which may negatively impact our gross margin, overall profitability and efficacy of our brands. Increases in our costs, such as raw materials, labor or freight could negatively impact our gross margin.
We have in the past been, and may in the future be, forced to rely on donation, markdowns, promotional sales or other write-offs, to dispose of excess, slow-moving inventory, which may negatively impact our gross margin, overall profitability and efficacy of our brands. Increases in our costs, such as raw materials, labor or freight could negatively impact our gross margin.
Bribery Act, and other global anti-corruption laws, which in general concern the bribery of foreign public officials, and other regulations and requirements; 18 • changes in tourist shopping patterns, particularly that of the Chinese consumer and as a result of the Covid-19 pandemic; • natural and other disasters; • political, civil and social unrest, such as the recent protests in Hong Kong SAR, China and in the United States; and • changes in legal and regulatory requirements, including, but not limited to safeguard measures, anti-dumping duties, cargo restrictions to prevent terrorism, restrictions on the transfer of currency, climate change and other environmental legislation, product safety regulations or other charges or restrictions.
Bribery Act, and other global anti-corruption laws, which in general concern the bribery of foreign public officials, and other regulations and requirements; • changes in tourist shopping patterns, particularly that of the Chinese consumer and as a result of the Covid-19 pandemic; • natural and other disasters; • political, civil and social unrest, such as the ongoing crisis in Ukraine; and • changes in legal and regulatory requirements, including, but not limited to safeguard measures, anti-dumping duties, cargo restrictions to prevent terrorism, restrictions on the transfer of currency, climate change and other environmental legislation, product safety regulations or other charges or restrictions. 17 Our business is subject to the risks inherent in global sourcing activities.
The shift towards digital engagement became increasingly important during the Covid-19 pandemic, with increased use of social media platforms by our brand representatives, influencers and our employees.
The shift towards digital engagement has become increasingly important, with increased use of social media platforms by our brand representatives, influencers and our employees.
Provisions in the Company's charter, bylaws and Maryland law may delay or prevent an acquisition of the Company by a third party. 28 The Company's charter, bylaws and Maryland law contain provisions that could make it more difficult for a third party to acquire the Company without the consent of our Board.
The Company's charter, bylaws and Maryland law contain provisions that could make it more difficult for a third party to acquire the Company without the consent of our Board.
Unfavorable economic conditions, as well as travel restrictions and potential changes in consumer behavior resulting from the Covid-19 pandemic, may also reduce consumers’ willingness and ability to travel to major cities and vacation destinations in which our stores are located. Fluctuations in our tax obligations and effective tax rate may result in volatility of our financial results and stock price.
Unfavorable economic conditions, as well as travel restrictions and potential changes in consumer behavior resulting from the Covid-19 pandemic, may also reduce consumers’ willingness and ability to travel to major cities and vacation destinations in which our stores are located.
We also operate fulfillment centers, through third-parties, in Japan, parts of Greater China (Hong Kong SAR, Macao SAR and Taiwan), Singapore, Malaysia, the U.S., Spain, Italy, the U.K., Canada, Australia and South Korea.
We also utilize local fulfillment centers, through third-parties, in Japan, parts of Greater China (mainland China, Hong Kong SAR, Macao SAR and Taiwan), South Korea, Singapore, Malaysia, Spain, the U.K., Canada, Australia, and starting in fiscal 2023 in Mexico.
Likewise, our obligation to continue making lease payments in respect of leases for closed retail spaces could have a material adverse effect on our business, financial condition and results of operations.
Our inability to secure desirable retail space or favorable lease terms could impact our ability to grow. Likewise, our obligation to continue making lease payments in respect of leases for closed retail spaces could have a material adverse effect on our business, financial condition and results of operations.
Any material disruptions in our e-commerce presence or information technology systems and applications could have a material adverse effect on our business, financial condition and results of operations. Economic conditions could materially adversely affect our financial condition, results of operations and consumer purchases of luxury items.
Any material disruptions in our e-commerce presence or information technology systems and applications could have a material adverse effect on our business, financial condition and results of operations.
The risks associated with climate change and other environmental impacts and increased focus by stakeholders on corporate responsibility issues, including those associated with climate change, could negatively affect our business and operations.
Risks Related to Environmental, Social, and Governance Issues The risks associated with climate change and other environmental impacts and increased focus by stakeholders on climate change, could negatively affect our business and operations.
The guiding principle of this multi-year growth agenda is to better meet the needs of each of its brands' unique customers by (i) Sharpening our Focus on the Customer (ii) Leveraging Data and Leading with a Digital-First Mindset and (iii) Transforming into a Leaner and More Responsive Organization.
The Company’s Acceleration Program focused on how to better meet the needs of each of its brands' unique customers by (i) Sharpening our Focus on the Customer (ii) Leveraging Data and Leading with a Digital-First Mindset and (iii) Transforming into a Leaner and More Responsive Organization.
This disruption to our supply chain may result in inventory not being available in a timely manner and/or during the appropriate season, and higher inbound freight costs, all of which could have a material adverse impact on our financial results. • The potential economic effects of the pandemic, including a possible recession, increased unemployment and decreased consumer credit availability, may result in lower consumer confidence and decreased disposable income and discretionary spending levels, which may lead to reduced sales of our products.
This disruption to our supply chain has resulted and may continue to result in inventory not being available in a timely manner and/or during the appropriate season, and freight and other logistics costs, including increased carrier rates for ocean and air shipments, as the supply chain disruptions have caused us to increase our use of air freight with greater frequency than in the past, all of which could have a material adverse impact on our financial results. • The potential economic effects of the pandemic, including a possible recession or inflationary pressures, increased unemployment and decreased consumer credit availability, may result in lower consumer confidence and decreased disposable income and discretionary spending levels, which may lead to reduced sales of our products.
Our business is susceptible to risks associated with climate change, including through disruption to our supply chain, potentially impacting the production and distribution of our products and availability and pricing of raw materials.
Our business is susceptible to risks associated with climate change, including through disruption to our supply chain, potentially impacting the production and distribution of our products including availability and pricing of raw materials, as well as shipping disruptions and/or higher freight costs. Climate change can lead to physical and transition risks impacting our business.
Generally, our leases are “net” leases, which require us to pay our proportionate share of the cost of insurance, taxes, maintenance and utilities. We generally cannot cancel these leases at our option.
We believe that the majority of the leases we enter into in the future will likely be non-cancelable. Generally, our leases are “net” leases, which require us to pay our proportionate share of the cost of insurance, taxes, maintenance and utilities. We generally cannot cancel these leases at our option.
The Company believes the successful execution of these priorities will fuel desire for the Coach, Kate Spade and Stuart Weitzman brands, driving accelerated revenue growth, higher gross margins and substantial operating leverage across Tapestry’s portfolio.
The Company does not expect to incur further expenses related to the Acceleration Program in Fiscal 2023. The Company believes the successful incorporation of these priorities will fuel desire for the Coach, Kate Spade and Stuart Weitzman brands, driving accelerated revenue growth, higher gross margins and substantial operating leverage across Tapestry’s portfolio.
Risks Related to our Business and our Industry The Covid-19 pandemic and resulting adverse economic conditions are and may continue to have a material adverse impact on our business, financial condition, results of operations and cash flows.
Risks Related to Macroeconomic Conditions The Covid-19 pandemic and resulting adverse economic conditions may continue to have a material adverse impact on our business, financial condition, results of operations and cash flows. The ongoing Covid-19 pandemic continues to impact a significant majority of the regions in which we operate, resulting in significant global business disruptions.
In addition, as each of our leases expire, we may be unable to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close retail stores in desirable locations. Our inability to secure desirable retail space or favorable lease terms could impact our ability to grow.
In some instances, we may be unable to close an underperforming retail store due to continuous operation clauses in our lease agreements. In addition, as each of our leases expire, we may be unable to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close retail stores in desirable locations.
Our ability to pay dividends and conduct stock repurchases will depend on our ability to generate sufficient cash flows from operations in the future. This ability may be subject to certain economic, financial, competitive and other factors that are beyond our control. Our Board of Directors (“Board”) may, at its discretion, decrease or entirely discontinue these programs at any time.
This ability may be subject to certain economic, financial, competitive and other factors that are beyond our control. Our Board of Directors (“Board”) may, at its discretion, decrease or entirely discontinue these programs at any time.
The Company embarked on a multi-year ERP implementation in fiscal 2017, which was completed in fiscal 2020. Implementing new systems carries substantial risk, including failure to operate as designed, failure to properly integrate with other systems, potential loss of confidential and personal information, cost overruns, implementation delays and disruption of operations.
Implementing new systems carries substantial risk, including failure to operate as designed, failure to properly integrate with other systems, potential loss of confidential and personal information, cost overruns, implementation delays and disruption of operations.
To support our growth in mainland China and Europe, we established fulfillment centers in mainland China and the Netherlands, owned and operated by a third-party, allowing us to better manage the logistics in these regions while reducing costs.
Globally we utilize fulfillment centers in mainland China, the Netherlands, the U.K. and Spain, owned and operated by third-parties, allowing us to better manage the logistics in these regions while reducing costs.
Any failure to pay dividends or conduct stock repurchases, or conduct either program at expected levels, after we have announced our intention to do so may negatively impact our reputation, investor confidence in us and negatively impact our stock price.
Any failure to pay dividends or conduct stock repurchases, or conduct either program at expected levels, after we have announced our intention to do so may negatively impact our reputation, investor confidence in us and negatively impact our stock price. 28 Provisions in the Company's charter, bylaws and Maryland law may delay or prevent an acquisition of the Company by a third party.
The Covid-19 pandemic has severely impacted and will likely continue to impact many of these factors. Demand for our products, and consumer spending in the premium handbag, footwear and accessories categories generally, is significantly impacted by trends in consumer confidence, general business conditions, interest rates, foreign currency exchange rates, the availability of consumer credit, and taxation.
Demand for our products, and consumer spending in the premium handbag, footwear and accessories categories generally, is significantly impacted by trends in consumer confidence, general economic and business conditions, high levels of unemployment, periods of inflation, health pandemics (such as the ongoing Covid-19 pandemic), interest rates, foreign currency exchange rates, the availability of consumer credit, and taxation.
Our ability to create new products and to sustain existing products is affected by whether we can successfully anticipate and respond to consumer preferences and fashion trends. The failure to develop and launch successful new products or to rationalize our assortment appropriately could hinder the growth of our business.
Our ability to create new products and to sustain existing products is affected by whether we can successfully anticipate and respond to consumer preferences and fashion trends.
Further, recent or future changes in our executive leadership team may have an adverse effect on our ability to implement or to achieve favorable results under the Acceleration Program and/or result in further changes to our strategy.
Further, potential changes in our executive leadership team may have an adverse effect on our ability to implement or to achieve favorable results under the Acceleration Program and/or result in further changes to our strategy. If our incorporation of the initiatives under our Acceleration Program falls short, our business, financial condition and results of operation could be materially adversely affected.
This may impact our ability to manage the profitability of our store locations, or cause impairments of our lease right of use assets if market values decline, any of which could have a material adverse effect on our financial condition or results of operations. 24 Risks Related to Global Economic Conditions and Legal and Regulatory Matters We face risks associated with potential changes to international trade agreements and the imposition of additional duties on importing our products.
This may impact our ability to manage the profitability of our store locations, or cause impairments of our lease right of use assets if market values decline, any of which could have a material adverse effect on our financial condition or results of operations.
We may face unexpected difficulties or costs in connection with any action to bring currently licensed categories in-house. 23 A delay, disruption in, failure of, or inability to upgrade our information technology systems precisely and efficiently could materially adversely affect our business, financial condition or results of operations and cash flow.
Risks Related to Information Security and Technology A delay, disruption in, failure of, or inability to upgrade our information technology systems precisely and efficiently could materially adversely affect our business, financial condition or results of operations and cash flow.
Acquisitions may not be successful in achieving intended benefits, cost savings and synergies and may disrupt current operations. One component of our growth strategy historically has been acquisitions.
Acquisitions may not be successful in achieving intended benefits, cost savings and synergies and may disrupt current operations. One component of our growth strategy historically has been acquisitions. Acquisitions are not currently contemplated in the Company's capital allocation priorities, however, our management team may in the future evaluate and consider other strategic investments or acquisitions.
We are subject to income taxes in many jurisdictions. We record tax expense based on our estimates of taxable income and required reserves for uncertain tax positions in multiple tax jurisdictions. At any one time, multiple tax years are subject to audit by various taxing jurisdictions.
Fluctuations in our tax obligations and effective tax rate may result in volatility of our financial results and stock price. We are subject to income taxes in many jurisdictions. We record tax expense based on our estimates of taxable income and required reserves for uncertain tax positions in multiple tax jurisdictions.
Travel restrictions, closures or disruptions of business and facilities, including manufacturing facilities and raw material providers, unavailability of vaccines for our international employees or workers in our supply chain, or social, economic, political or labor instability in the affected areas may impact the operations of our raw material suppliers or manufacturing partners.
Our business may continue to be adversely impacted by several factors, including, but not limited to: • We source and manufacture our products on a global scale and we have and may continue to experience material temporary or long-term disruption in our supply chain, given the global reach of the Covid-19 pandemic. • Travel restrictions, closures or disruptions of business and facilities, including manufacturing facilities and raw material providers, unavailability of vaccines for our international employees or workers in our supply chain, or social, economic, political or labor instability in the affected areas may impact the operations of our raw material suppliers or manufacturing partners.
Additionally, our ability to provide timely delivery of e-commerce purchases is dependent on the capacity and operations of our owned and third party operated fulfillment facilities. See “ Our business is subject to the risks inherent in global sourcing activities” for additional risks related to our distribution and fulfillment networks.
See “ Our business is subject to the risks inherent in global sourcing activities” for additional risks related to our distribution and fulfillment networks.
We lease the majority of our stores under non-cancelable leases, many of which have historically had initial terms ranging from five and ten years, often with renewal options. We believe that the majority of the leases we enter into in the future will likely be non-cancelable.
If we close a leased retail space, we remain obligated under the applicable lease. We do not own any of our retail store locations. We lease the majority of our stores under non-cancelable leases, many of which have historically had initial terms ranging from five and ten years, often with renewal options.
The integration process of any newly acquired company may be complex, costly and time-consuming.
These involve various inherent risks and the benefits, cost savings and synergies sought may not be realized. 22 The integration process of any newly acquired company may be complex, costly and time-consuming.
Should the value of goodwill or other intangible assets become impaired, there could be a material adverse effect on our financial condition and results of operations. Significant competition in our industry could adversely affect our business. We face intense competition in the product lines and markets in which we operate.
We cannot accurately predict the amount and timing of any potential future impairment of assets. Should the value of goodwill or other intangible assets become impaired, there could be a material adverse effect on our financial condition and results of operations.
In addition, our effective tax rate in a given financial statement period may be materially impacted by changes in the mix and level of earnings. Further, proposed tax changes that may be enacted in the future could impact our current or future tax structure and effective tax rates.
As a result, we expect that throughout the year there could be ongoing variability in our quarterly effective tax rates as events occur and exposures are evaluated. In addition, our effective tax rate in a given financial statement period may be materially impacted by changes in the mix and level of earnings.
The market price of our securities could be adversely affected if our cash dividend rate or common stock repurchase activity differs from investors’ expectations. Refer to “ If we are unable to pay quarterly dividends or conduct stock repurchases at intended levels, our reputation and stock price may be negatively impacted. ” for additional discussion of our quarterly dividend.
Investors may have an expectation that we will continue to pay our quarterly dividend at a certain time and at certain levels and / or repurchase shares available under our common stock repurchase program. The market price of our securities could be adversely affected if our cash dividend rate or common stock repurchase activity differs from investors’ expectations.

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Item 2. Properties

Properties — owned and leased real estate

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These leases expire at various times through fiscal 2033. The Company considers these properties to be in generally good condition, and believes that its facilities are adequate for its operations and provide sufficient capacity to meet its anticipated requirements. Refer to Item 1. "Business," for further information.
These leases expire at various times through fiscal 2034. The Company considers these properties to be in generally good condition, and believes that its facilities are adequate for its operations and provide sufficient capacity to meet its anticipated requirements. Refer to Item 1. "Business," for further information. ITEM 3.
ITEM 2. PROPERTIES The following table sets forth the location, use and size of the Company's key fulfillment, corporate and product development facilities as of July 3, 2021. The majority of the properties are leased, with the leases expiring at various times through fiscal 2037, subject to renewal options.
ITEM 2. PROPERTIES The following table sets forth the location, use and size of the Company's key fulfillment, corporate and product development facilities as of July 2, 2022. The majority of the properties are leased, with the leases expiring at various times through fiscal 2037, subject to renewal options.
Location Use Approximate Square Footage Jacksonville, Florida Coach North America fulfillment and customer service 1,050,000 Westchester, Ohio Kate Spade North America fulfillment 601,000 New York, New York Corporate, design, sourcing and product development 546,000 Chiba, Japan Japan regional fulfillment 244,000 Shanghai, China Asia regional fulfillment 179,000 New York, New York Kate Spade corporate management 135,000 North Bergen, New Jersey Corporate office and customer service 106,000 Tokyo, Japan Corporate and regional management 24,900 Shanghai, China Coach Greater China regional management 23,000 Elda, Spain Stuart Weitzman regional management, sourcing and quality control 19,000 Seoul, South Korea Corporate regional management 18,000 Hong Kong SAR, China Coach sourcing and quality control 17,000 Dongguan, China Corporate sourcing, quality control and product development 16,700 London, England International regional management 16,500 Singapore Coach Singapore regional management, sourcing and quality control 12,600 Ho Chi Minh City, Vietnam Coach sourcing and quality control 12,600 Tokyo, Japan Kate Spade Japan regional management 11,000 Shanghai, China Asia regional management 10,200 Montreal, Canada Stuart Weitzman Canada regional management and fulfillment 9,100 In addition to the above properties, the Company occupies leased retail and outlet store locations located in North America and internationally for each of our brands.
Location Use Approximate Square Footage Jacksonville, Florida Coach North America fulfillment and customer service 1,050,000 Westchester, Ohio Kate Spade North America fulfillment 601,000 New York, New York Corporate, design, sourcing and product development 546,000 Chiba, Japan Japan regional fulfillment 278,000 Shanghai, China Asia regional fulfillment 179,000 New York, New York Kate Spade corporate management 135,000 North Bergen, New Jersey Corporate office and customer service 106,000 Tokyo, Japan Corporate and regional management 24,900 Shanghai, China Coach Greater China regional management 23,000 Elda, Spain Stuart Weitzman regional management, sourcing and quality control 19,000 Seoul, South Korea Corporate regional management 18,000 Dongguan, China Corporate sourcing, quality control and product development 17,000 London, England International regional management 16,500 Ho Chi Minh City, Vietnam Coach sourcing and quality control 12,600 Shanghai, China Asia regional management 10,200 Singapore Coach Singapore regional management, sourcing and quality control 8,700 Hong Kong SAR, China Coach sourcing and quality control 8,500 In addition to the above properties, the Company occupies leased retail and outlet store locations located in North America and internationally for each of our brands.
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LEGAL PROCEEDINGS Information regarding legal proceedings is set forth in Note 13, Commitments and Contingencies, of the "Notes to Consolidated Financial Statements" and is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 30 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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The information under the principal heading “Securities Authorized For Issuance Under Equity Compensation Plans” in the Company’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on November 3, 2021, to be filed with the Securities and Exchange Commission (the “Proxy Statement”), is incorporated herein by reference.
The information under the principal heading “Securities Authorized For Issuance Under Equity Compensation Plans” in the Company’s definitive Proxy Statement for the Annual Meeting of Stockholders to be held on November 15, 2022, to be filed with the Securities and Exchange Commission (the “Proxy Statement”), is incorporated herein by reference.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market and Dividend Information Tapestry, Inc.’s common stock is listed on the New York Stock Exchange and is traded under the symbol “TPR.” As of August 6, 2021, there were 2,039 holders of record of Tapestry’s common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market and Dividend Information Tapestry, Inc.’s common stock is listed on the New York Stock Exchange and is traded under the symbol “TPR.” As of August 5, 2022, there were 1,971 holders of record of Tapestry’s common stock.
Performance Graph The following graph compares the cumulative total stockholder return (assuming reinvestment of dividends) of the Company's common stock with the cumulative total return of the Standard & Poor's ("S&P") 500 Stock Index and the “peer set" companies listed below over the five-fiscal-year period ending July 3, 2021, the last day of Tapestry’s most recent fiscal year.
Performance Graph The following graph compares the cumulative total stockholder return (assuming reinvestment of dividends) of the Company's common stock with the cumulative total return of the Standard & Poor's ("S&P") 500 Stock Index and the S&P 500 Apparel, Accessories & Luxury Goods Index over the five-fiscal-year period ending July 2, 2022, the last day of Tapestry’s most recent fiscal year.
The graph assumes that $100 was invested on July 2, 2016 at the per share closing price in each of Tapestry’s common stock, the S&P 500 Stock Index and a peer set index tracking the peer group companies listed below, and that all dividends were reinvested.
The graph assumes that $100 was invested on July 1, 2017 at the per share closing price in each of Tapestry’s common stock, the S&P 500 Stock Index and the S&P 500 Apparel, Accessories & Luxury Goods Index, and that all dividends were reinvested.
The stock performance shown in the graph is not intended to forecast or be indicative of future performance. • L Brands, Inc. • PVH Corp., • Ralph Lauren Corporation, • V.F.
The stock performance shown in the graph is not intended to forecast or be indicative of future performance. During fiscal 2022, the Company moved to using the S&P 500 Apparel, Accessories & Luxury Goods Index. The Company's old peer group consisted of: • L Brands, Inc.
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Corporation, • Estee Lauder, Inc., • Capri Holdings Limited 31 Fiscal 2016 Fiscal 2017 Fiscal 2018 Fiscal 2019 Fiscal 2020 Fiscal 2021 TPR $100.00 $120.21 $122.24 $86.15 $35.57 $120.90 Peer Set $100.00 $95.69 $132.10 $141.16 $114.90 $217.56 S&P 500 $100.00 $117.64 $134.56 $148.57 $154.99 $227.79 Stock Repurchase Program The Company did not repurchase any shares of common stock during the fourth quarter of fiscal 2021.
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(subsequent to August 2, 2021, Bath and Body Works, Inc.) • PVH Corp. • Ralph Lauren Corporation • V.F.
Removed
As of July 3, 2021, the Company had $600 million availability remaining in the stock repurchase program. The Company may terminate or limit the share repurchase program at any time. The Company is restricted from engaging in share buybacks during the Covenant Relief Period under Amendment No.1 to its Credit Facility. 32 ITEM 6.
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Corporation • Estee Lauder, Inc. • Capri Holdings Limited Tapestry management selected the S&P 500 Apparel, Accessories & Luxury Goods Index on an industry/line-of-business basis and believes this updated index represents good faith comparables based on their history, size, and business models in relation to Tapestry, Inc. 31 Fiscal 2017 Fiscal 2018 Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 TPR $100.00 $101.68 $71.66 $29.59 $100.57 $74.54 S&P 500 Apparel, Accessories & Luxury Goods $100.00 $128.77 $113.77 $62.77 $120.39 $70.14 Former Set $100.00 $138.05 $147.52 $120.08 $227.37 $162.44 S&P 500 $100.00 $114.37 $126.29 $131.74 $193.63 $172.67 Stock Repurchase Program The Company's share repurchases during the fourth quarter of fiscal 2022 were as follows: 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) April 3, 2022 - May 7, 2022 — $ — — $ — May 8, 2022 - June 4, 2022 6,429,521 32.69 6,429,521 1,640.0 June 5, 2022 - July 2, 2022 4,254,968 32.90 4,254,968 1,500.0 Total 10,684,489 10,684,489 (1) On November 11, 2021, the Company announced the Board of Directors authorized a common stock repurchase program to repurchase up to $1.00 billion of its outstanding common stock (the "2021 Share Repurchase Program").
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SELECTED FINANCIAL DATA Not applicable as the Company has adopted certain provisions within the amendments to Regulation S-K, including the elimination of Item 301. 33
Added
On May 12, 2022, the Company announced that its Board of Directors authorized the additional repurchase of up to $1.50 billion of its outstanding common stock (the "2022 Share Repurchase Program"). This authorization is incremental to the Company's existing authorization. Purchases of the Company's common stock were executed through open market purchases, including through purchase agreements under Rule 10b5-1.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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The Company has three reportable segments: • Coach - Includes global sales of Coach products to customers through Coach operated stores, including e-commerce sites and concession shop-in-shops, and sales to wholesale customers and through independent third party distributors. • Kate Spade - Includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including e-commerce sites, sales to wholesale customers, through concession shop-in-shops and through independent third party distributors. • Stuart Weitzman - Includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, including e-commerce sites, sales to wholesale customers and through numerous independent third party distributors.
The Company has three reportable segments: • Coach - Includes global sales of Coach products to customers through Coach operated stores, including e-commerce sites and concession shop-in-shops, and sales to wholesale customers and through independent third party distributors. • Kate Spade - Includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including e-commerce sites and concession shop-in-shops, sales to wholesale customers and through independent third party distributors. • Stuart Weitzman - Includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, including e-commerce sites, sales to wholesale customers and through numerous independent third party distributors.
In considering the excess of the fair value over its carrying value for all Coach and Kate Spade reporting unit and indefinite-lived brand intangibles, management did not perform an interim assessment for these reporting units. Further, the Company determined there was no impairment during the fiscal 2020 annual impairment assessment.
In considering the excess of the fair value over its carrying value for all Coach and Kate Spade reporting unit and indefinite-lived brand intangibles, management did not perform an interim assessment for these reporting units in fiscal 2020. Further, the Company determined there was no impairment during the fiscal 2020 annual impairment assessment.
These letters of credit expire at various dates through 2028. We do not maintain any other off-balance sheet arrangements, transactions, obligations, or other relationships with unconsolidated entities that would be expected to have a material current or future effect on our consolidated financial statements.
These letters of credit expire at various dates through calendar 2028. We do not maintain any other off-balance sheet arrangements, transactions, obligations, or other relationships with unconsolidated entities that would be expected to have a material current or future effect on our consolidated financial statements.
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 adverse weather conditions or other macroeconomic events, including pandemics such as Covid-19.
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 macroeconomic events, such as Covid-19, or adverse weather conditions.
A hypothetical 10% change in our stock-based compensation expense would not have a material impact to our fiscal 2021 net income. Income Taxes The Company’s effective tax rate is based on pre-tax income, statutory tax rates, tax laws and regulations, and tax planning strategies available in the various jurisdictions in which the Company operates.
A hypothetical 10% change in our stock-based compensation expense would not have a material impact to our fiscal 2022 net income. Income Taxes The Company’s effective tax rate is based on pre-tax income, statutory tax rates, tax laws and regulations, and tax planning strategies available in the various jurisdictions in which the Company operates.
Given the relatively small excess of fair value over carrying value as noted above, if profitability trends decline during fiscal 2022 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.
Given the relatively small excess of fair value over carrying value as noted above, if profitability trends decline during fiscal 2023 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.
Acceleration Program The guiding principle of the Company’s multi-year growth agenda under the Acceleration Program is to better meet the needs of each of its brands' unique customers by: • Sharpening our Focus on the Consumer: Operating with a clearly defined purpose and strategy for each brand and an unwavering focus on the consumer at the core of everything we do • Leveraging Data and Leading with a Digital-First Mindset: Building significant data and analytics capabilities to drive decision-making and increase efficiency; Offering immersive customer experiences across our e-commerce and social channels to meet the needs of consumers who are increasingly utilizing digital platforms to engage with brands; Rethinking the role of stores with an intent to optimize our fleet • Transforming into a Leaner and More Responsive Organization: Moving with greater agility, simplifying internal processes and empowering teams to act quickly to meet the rapidly changing needs of the consumer.
The guiding principle under the Acceleration Program is to better meet the needs of each of its brands' unique customers by: • Sharpening our Focus on the Consumer: Operating with a clearly defined purpose and strategy for each brand and an unwavering focus on the consumer at the core of everything we do. • Leveraging Data and Leading with a Digital-First Mindset: Building significant data and analytics capabilities to drive decision-making and increase efficiency; Offering immersive customer experiences across our e-commerce and social channels to meet the needs of consumers who are increasingly utilizing digital platforms to engage with brands; Rethinking the role of stores with an intent to optimize our fleet. • Transforming into a Leaner and More Responsive Organization: Moving with greater agility, simplifying internal processes and empowering teams to act quickly to meet the rapidly changing needs of the consumer.
Management believes that cash flows from operations, access to the credit and capital markets and our credit lines, on-hand cash and cash equivalents and our investments will provide adequate funds to support our operating, capital, and debt service requirements for fiscal 2021 and beyond.
Management believes that cash flows from operations, access to the credit and capital markets and our credit lines, on-hand cash and cash equivalents and our investments will provide adequate funds to support our operating, capital, and debt service requirements for fiscal 2023 and beyond.
The Company determined that there was no impairment in fiscal 2021 or fiscal 2019. During the third quarter of fiscal 2020, profitability trends continued to decline from those that were expected for the Stuart Weitzman brand.
The Company determined that there was no impairment in fiscal 2022 or fiscal 2021. During the third quarter of fiscal 2020, profitability trends continued to decline from those that were expected for the Stuart Weitzman brand.
Refer to Note 14, "Commitments and Contingencies," for further information. 52 CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect our results of operations, financial condition and cash flows as well as the disclosure of contingent assets and liabilities as of the date of the Company's financial statements.
Refer to Note 13, "Commitments and Contingencies," for further information. 48 CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect our results of operations, financial condition and cash flows as well as the disclosure of contingent assets and liabilities as of the date of the Company's financial statements.
Impairments During fiscal 2021, the Company recorded $45.8 million of impairment charges related to lease right-of-use assets, which were primarily driven by the continued impacts of Covid-19. Refer to Note 12, "Fair Value Measurements" for further information.
During fiscal 2021, the Company recorded $45.8 million of impairment charges related to lease right-of-use assets, which were primarily driven by the continued impacts of Covid-19. Refer to Note 11, "Fair Value Measurements" for further information.
The indentures for the 2025 Senior Notes, 2022 Senior Notes and 2027 Senior Notes contain certain covenants limiting the Company's ability to: (i) create certain liens, (ii) enter into certain sale and leaseback transactions and (iii) merge, or consolidate or transfer, sell or lease all or substantially all of the Company's assets.
Furthermore, the indentures for the 2032 Senior Notes, 2027 Senior Notes, and 2025 Senior Notes contain certain covenants limiting the Company’s ability to: (i) create certain liens, (ii) enter into certain sale and leaseback transactions and (iii) merge, or consolidate or transfer, sell or lease all or substantially all of the Company’s assets.
Summary - Fiscal 2021 Currency Fluctuation Effects The change in net sales and gross margin in fiscal 2021 compared to fiscal 2020 has been presented both including and excluding currency fluctuation effects.
Summary - Fiscal 2022 Currency Fluctuation Effects The change in net sales and gross margin in fiscal 2022 compared to fiscal 2021 has been presented both including and excluding currency fluctuation effects.
Refer to the "Executive Overview" herein and Note 7, "Restructuring Activities," for further information. • Impairment - Total adjustments are primarily due to impairment charges on lease ROU assets, as well as a reversal of raw material reserves which was established in fiscal 2020 as a result of the projected impact of Covid-19.
Refer to the "Executive Overview" herein and Note 5, "Restructuring Activities," for further information. • Impairment - Total adjustments are primarily due to impairment charges on lease right-of use ("ROU") assets, as well as a reversal of raw material reserves which was established in fiscal 2020 as a result of the projected impact of Covid-19.
Comparable store sales are not adjusted for store expansions. Due to extensive full and partial store closures resulting from the Covid-19 pandemic, comparable store sales are not reported for fiscal year ended July 3, 2021 as the Company does not believe this metric is currently meaningful to the readers of its financial statements for this period.
Comparable store sales are not adjusted for store expansions. Due to extensive full and partial store closures resulting from the Covid-19 pandemic, comparable store sales are not reported for fiscal year ended July 2, 2022 as the Company does not believe this metric is currently meaningful to the readers of its financial statements for this period.
The reported results during fiscal 2021 and fiscal 2020 reflect certain items which affect the comparability of our results, as noted in the following tables.
The reported results during fiscal 2022 and fiscal 2021 reflect certain items which affect the comparability of our results, as noted in the following tables.
The following discussion is presented excluding the favorable impact of the 53rd week to net sales of $21.7 million and the impact of foreign currency.
The following discussion is presented excluding the favorable impact of the 53rd week to fiscal 2021 net sales of $21.7 million and the impact of foreign currency.
At July 3, 2021, a 10% change in the allowances for estimated uncollectible accounts, markdowns and returns would not have resulted in a material change in the Company's reserves and net sales. Inventories The Company holds inventory that is sold through retail and wholesale distribution channels, including e-commerce sites.
At July 2, 2022, a 10% change in the allowances for estimated uncollectible accounts, markdowns and returns would not have resulted in a material change in the Company's reserves and net sales. Inventories The Company holds inventory that is sold through retail and wholesale distribution channels, including e-commerce sites.
Refer to Note 16, “Income Taxes,” for further information. Recent Accounting Pronouncements Refer to Note 3, "Significant Accounting Policies," to the accompanying audited consolidated financial statements for a description of certain recently adopted, issued or proposed accounting standards which may impact our consolidated financial statements in future reporting periods. 55
Refer to Note 15, “Income Taxes,” for further information. Recent Accounting Pronouncements Refer to Note 3, "Significant Accounting Policies," to the accompanying audited consolidated financial statements for a description of certain recently adopted, issued or proposed accounting standards which may impact our consolidated financial statements in future reporting periods. 51
Net Sales The Company has provided comparisons to certain fiscal year 2019 results, which the Company believes is useful to investors and others in evaluating the Company’s results, due to the significant impact of the Covid-19 pandemic on the Company’s operations and financial results, notably in the second half of fiscal year 2020.
Net Sales The Company has provided comparisons to certain fiscal year 2019 results, which the Company believes is useful to investors and others in evaluating the Company’s results, due to the significant impact of the Covid-19 pandemic on the Company’s operations and financial results, starting in fiscal year 2020.
For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, refer to Part I, Item 1A - "Risk Factors". 38 FISCAL 2021 COMPARED TO FISCAL 2020 The following table summarizes results of operations for fiscal 2021 compared to fiscal 2020.
For a detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations, refer to Part I, Item 1A - "Risk Factors". 35 FISCAL 2022 COMPARED TO FISCAL 2021 The following table summarizes results of operations for fiscal 2022 compared to fiscal 2021.
The virus has impacted regions all around the world, resulting in restrictions and shutdowns implemented by national, state, and local authorities. These requirements have resulted in closures of our directly operated stores and locations of our wholesale partners globally, causing a significant reduction in sales starting in the third quarter of fiscal 2020.
The virus has impacted all regions around the world, resulting in restrictions and shutdowns implemented by national, state, and local authorities. These requirements resulted in closures of our directly operated stores globally, as well as our wholesale and licensing partners, causing a significant reduction in sales starting in the third quarter of fiscal 2020.
Several factors could impact the Kate Spade brand's ability to achieve expected future cash flows, including continued economic volatility and potential operational challenges related to the Covid-19 pandemic, the reception of new collections in all channels, the success of international expansion strategies, the optimization of the store fleet productivity, the impact of promotional activity in department stores, and other initiatives aimed at increasing profitability of the business.
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 channels, and other initiatives aimed at increasing profitability of the business.
Based on the annual assessment in fiscal 2021, 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 as of the fiscal 2021 testing date exceeded their carrying values by approximately 41% and 77%, respectively.
Based on the annual assessment in fiscal 2022, 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 as of the fiscal 2022 testing date exceeded their carrying values by approximately 50% and 90%, respectively.
As of 50 July 3, 2021, no known events of default have occurred. Refer to Note 13, "Debt," for further information on our existing debt instruments. We believe that our Revolving Credit Facility is adequately diversified with no undue concentrations in any one financial institution.
As of July 2, 2022, no known events of default have occurred. Refer to Note 12, "Debt," for further information on our existing debt instruments. We believe that our Revolving Credit Facility is adequately diversified with no undue concentrations in any one financial institution.
Off-Balance Sheet Arrangements In addition to the commitments included in the table above, we have outstanding letters of credit, surety bonds and bank guarantees of $40.5 million as of July 3, 2021, primarily serving to collateralize our obligation to third parties for duty, leases, insurance claims and materials used in product manufacturing.
Off-Balance Sheet Arrangements In addition to the commitments included in the table above, we have outstanding letters of credit, surety bonds and bank guarantees of $37.8 million as of July 2, 2022, primarily serving to collateralize our obligation to third parties for duty, leases, insurance claims and materials used in product manufacturing.
EXECUTIVE OVERVIEW The fiscal year ended July 3, 2021 was a 53-week period, June 27, 2020 and June 29, 2019 were each 52-week periods. Tapestry, Inc. is a leading New York-based house of modern luxury accessories and lifestyle brands. Our global house of brands unites the magic of Coach, kate spade new york and Stuart Weitzman.
EXECUTIVE OVERVIEW The fiscal year ended July 2, 2022 was a 52-week period, July 3, 2021 was a 53-week period, and June 27, 2020 was a 52-week period. Tapestry, Inc. is a leading New York-based house of accessible luxury accessories and lifestyle brands. Our global house of brands unites the magic of Coach, kate spade new york and Stuart Weitzman.
Acceleration Program The Company has implemented a strategic growth plan after undergoing a review of its business under the Acceleration Program and expects to incur certain costs reflecting: (i) actions to streamline the Company's organization; (ii) select store closures as the Company optimizes its fleet (including store closure costs incurred as the Company exits certain regions in which it currently operates); and (iii) professional fees and share-based compensation costs incurred as a result of the development and execution of the Company's comprehensive strategic initiatives aimed at increasing profitability.
Acceleration Program Starting in fiscal 2020, the Company embarked on a strategic growth plan after undergoing a review of its business under the Acceleration Program, resulting in certain costs to date reflecting: (i) actions to streamline the Company's organization; (ii) select store closures as the Company optimizes its fleet (including store closure costs incurred as the Company exits certain regions in which it currently operates); and (iii) professional fees and compensation costs incurred as a result of the development and execution of the Company's comprehensive strategic initiatives aimed at increasing profitability.
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.
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.
Refer to "Non-GAAP Measures" herein for further discussion on the Non-GAAP measures. 39 Fiscal 2021 Items Fiscal Year Ended July 3, 2021 Items affecting comparability GAAP Basis (As Reported) CARES Act Tax Impact Impairment Acceleration Program Non-GAAP Basis (Excluding Items) (millions, except per share data) Coach 3,149.0 — 8.1 — 3,140.9 Kate Spade 768.4 — — — 768.4 Stuart Weitzman 164.5 — — — 164.5 Gross profit (1) $ 4,081.9 $ — $ 8.1 $ — $ 4,073.8 Coach 1,836.9 — 20.4 21.9 1,794.6 Kate Spade 659.9 — 19.3 4.4 636.2 Stuart Weitzman 173.1 — 6.1 (2.5) 169.5 Corporate 444.0 — — 65.8 378.2 SG&A expenses $ 3,113.9 $ — $ 45.8 $ 89.6 $ 2,978.5 Coach 1,312.1 — (12.3) (21.9) 1,346.3 Kate Spade 108.5 — (19.3) (4.4) 132.2 Stuart Weitzman (8.6) — (6.1) 2.5 (5.0) Corporate (444.0) — — (65.8) (378.2) Operating income (loss) $ 968.0 $ — $ (37.7) $ (89.6) $ 1,095.3 Provision for income taxes 63.1 (95.0) (7.8) (17.6) 183.5 Net income (loss) $ 834.2 $ 95.0 $ (29.9) $ (72.0) $ 841.1 Net income (loss) per diluted common share $ 2.95 $ 0.31 $ (0.10) $ (0.23) $ 2.97 (1) Adjustments within Gross profit are recorded within Cost of sales.
These actions taken together increased the Company's SG&A expenses by $42.8 million, increased Loss on extinguishment of debt by $53.7 million and decreased Provision for income taxes by $16.3 million, negatively impacting net income by $80.2 million, or $0.30 per diluted share. 37 Fiscal 2021 Items Fiscal Year Ended July 3, 2021 Items affecting comparability GAAP Basis (As Reported) CARES Act Tax Impact Impairment Acceleration Program Non-GAAP Basis (Excluding Items) (millions, except per share data) Coach 3,149.0 — 8.1 — 3,140.9 Kate Spade 768.4 — — — 768.4 Stuart Weitzman 164.5 — — — 164.5 Gross profit (1) $ 4,081.9 $ — $ 8.1 $ — $ 4,073.8 Coach 1,836.9 — 20.4 21.9 1,794.6 Kate Spade 659.9 — 19.3 4.4 636.2 Stuart Weitzman 173.1 — 6.1 (2.5) 169.5 Corporate 444.0 — — 65.8 378.2 SG&A expenses $ 3,113.9 $ — $ 45.8 $ 89.6 $ 2,978.5 Coach 1,312.1 — (12.3) (21.9) 1,346.3 Kate Spade 108.5 — (19.3) (4.4) 132.2 Stuart Weitzman (8.6) — (6.1) 2.5 (5.0) Corporate (444.0) — — (65.8) (378.2) Operating income (loss) $ 968.0 $ — $ (37.7) $ (89.6) $ 1,095.3 Provision for income taxes 63.1 (95.0) (7.8) (17.6) 183.5 Net income (loss) $ 834.2 $ 95.0 $ (29.9) $ (72.0) $ 841.1 Net income (loss) per diluted common share $ 2.95 $ 0.31 $ (0.10) $ (0.23) $ 2.97 (1) Adjustments within Gross profit are recorded within Cost of sales.
See Note 16, "Income Taxes" for more information.
See Note 15, "Income Taxes" for more information.
This increase in operating income includes the favorable impact of the 53rd week in fiscal 2021 of $28.6 million and is due to an increase in gross profit, partially offset by higher SG&A expenses. • Kate Spade Operating Income increased $207.8 million to an operating income of $108.5 million in fiscal 2021, resulting in an operating margin of 9.0% as compared to an operating loss of $99.3 million and operating margin of (8.6)% in fiscal 2020.
This increase in operating income is due to an increase in gross profit, partially offset by higher SG&A expenses and the favorable impact of the 53rd week in fiscal 2021 of $28.6 million. • Kate Spade Operating Income increased $48.9 million to $157.4 million in fiscal 2022, resulting in an operating margin of 10.9%, as compared to 108.5 million and 9.0%, respectively in fiscal 2021.
As of July 3, 2021, there were 12 financial institutions participating in the Revolving Credit Facility, with no one participant maintaining a combined maximum commitment percentage in excess of 14%.
As of July 2, 2022, there were 14 financial institutions participating in the Revolving Credit Facility and Term Loans, with no one participant maintaining a combined maximum commitment percentage in excess of 14%.
The above table also excludes amounts included in current liabilities in the Consolidated Balance Sheet at July 3, 2021 as these items will be paid within one year and certain long-term liabilities not requiring cash payments.
Besides the firm commitments noted above, the above table excludes other amounts included in current liabilities in the Consolidated Balance Sheet at July 2, 2022 as these items will be paid within one year and certain long-term liabilities not requiring cash payments.
As a percentage of net sales, SG&A expenses decreased to 43.2% in fiscal 2021 as compared to 51.7% in fiscal 2020. Excluding items affecting comparability of $42.3 million and $135.7 million in fiscal 2021 and fiscal 2020, respectively, SG&A expenses increased 6.4% or $108.1 million to $1.79 billion in fiscal 2021 from $1.69 billion in fiscal 2020.
As a percentage of net sales, SG&A expenses decreased to 42.3% in fiscal 2022 as compared to 43.2% in fiscal 2021. Excluding items affecting comparability of $6.7 million and $42.3 million in fiscal 2022 and fiscal 2021, respectively, SG&A expenses increased 15.5% or $278.6 million to $2.07 billion in fiscal 2022 from $1.79 billion in fiscal 2021.
SG&A expenses as a percentage of sales decreased to 42.2% in fiscal 2021 from 47.8% in fiscal 2020.
SG&A expenses as a percentage of sales decreased to 42.1% in fiscal 2022 from 42.2% in fiscal 2021.
Excluding items affecting comparability, net income increased $569.9 million to $841.1 million in fiscal 2021 from $271.2 million in fiscal 2020. This increase was primarily due to higher operating income, partially offset by an increase in the provision for income taxes.
Excluding items affecting comparability, net income increased $95.4 million to $936.5 million in fiscal 2022 from $841.1 million in fiscal 2021. This increase was primarily due to higher operating income, partially offset by an increase in the provision for income taxes.
As a percentage of net sales, SG&A expenses decreased to 54.5% during fiscal 2021 as compared to 68.0% in fiscal 2020.
As a percentage of net sales, SG&A expenses decreased to 52.2% during fiscal 2022 as compared to 54.5% in fiscal 2021.
The reported gross profit, SG&A expenses, operating income, provision for income taxes, net income and earnings per diluted share reflect certain items, including the impact of the CARES Act Tax Impact in fiscal 2021, Impairment costs and Acceleration Program costs in fiscal 2021 and 2020, and ERP Implementation and Organization-related and Integration charges in fiscal 2020.
The reported Gross profit, SG&A expenses, Operating income, Provision for income taxes, Net income and Earnings per diluted share in fiscal 2022 and fiscal 2021 and the reported Loss on extinguishment of debt in fiscal 2022 reflect certain items, including the impact of Debt Extinguishment costs in fiscal 2022, Acceleration Program costs in fiscal 2022 and 2021, and the CARES Act Tax Impact and Impairment costs in fiscal 2021.
Excluding items affecting comparability, Coach operating income increased $559.2 million to $1.35 billion from $787.1 million in fiscal 2020; and operating margin was 31.7% in fiscal 2021 as compared to 22.3% in fiscal 2020.
Excluding items affecting comparability, Coach operating income increased $134.3 million to $1.48 billion from $1.35 billion in fiscal 2021; and operating margin was 30.1% in fiscal 2022 as compared to 31.7% in fiscal 2021.
As a percentage of net sales, SG&A expenses decreased to 54.2% during fiscal 2021 as compared to 76.4% during fiscal 2020.
As a percentage of net sales, SG&A expenses decreased to 52.0% during fiscal 2022 as compared to 54.2% during fiscal 2021.
Excluding items affecting comparability of $3.6 million in fiscal 2021 and $542.3 million in fiscal 2020, SG&A expenses decreased 24.3% or $54.4 million to $169.5 million in fiscal 2021 from $223.9 million in fiscal 2020; and SG&A expenses as a percentage of net sales decreased to 59.9% in fiscal 2021 from 78.2% in fiscal 2020.
Excluding items affecting comparability of $3.6 million in fiscal 2022 and $3.6 million in fiscal 2021, SG&A expenses increased 5.7% or $9.7 million to $179.2 million in fiscal 2022 from $169.5 million in fiscal 2021; and SG&A expenses as a percentage of net sales decreased to 56.4% in fiscal 2022 from 59.9% in fiscal 2021.
No guarantees are provided by the Company or any of our subsidiaries under the SCF program. 37 We will continue to monitor these trends and 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.
We will continue to monitor these trends and 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.
Stock Repurchase Plan On May 9, 2019, the Company announced that its Board of Directors had authorized the repurchase up to $1.00 billion of shares of its outstanding common stock. Pursuant to this program, purchases of the Company's common stock will be made subject to market conditions and at prevailing market prices, through open market purchases.
On May 12, 2022, the Company announced the Board of Directors authorized the additional repurchase of up to $1.50 billion of its common stock (the "2022 Share Repurchase Program"). Pursuant to this program, purchases of the Company's common stock will be made subject to market conditions and at prevailing market prices, through open market purchases.
Excluding items affecting comparability, Stuart Weitzman operating loss decreased $51.6 million to an operating loss of $5.0 million from an operating loss of $56.6 million in fiscal 2020; and operating margin was (1.8)% in fiscal 2021 as compared to (19.8)% in fiscal 2020.
Excluding items affecting comparability, Stuart Weitzman operating loss decreased $10.4 million to an operating income of $5.4 million from an operating loss of $5.0 million in fiscal 2021; and operating margin was 1.7% in fiscal 2022 as compared to (1.8)% in fiscal 2021.
On June 20, 2017, the Company issued $400.0 million aggregate principal amount of 3.000% senior unsecured notes due July 15, 2022 at 99.505% of par (the "2022 Senior Notes"), and $600.0 million aggregate principal amount of 4.125% senior unsecured notes due July 15, 2027 at 99.858% of par (the "2027 Senior Notes").
In June 2017, the Company issued $600.0 million aggregate principal amount of 2027 Senior Notes, and $400.0 million aggregate principal amount of 3.000% senior unsecured notes due July 15, 2022 at 99.505% of par (the "2022 Senior Notes"). The 2022 Senior Notes were fully redeemed as of July 2, 2022.
Refer to Note 16, "Income Taxes," for further information. Excluded from the above contractual obligations table is the non-current liability for unrecognized tax benefits of $113.1 million as of July 3, 2021, as we cannot make a reliable estimate of the period in which the liability will be settled, if ever.
Excluded from the above contractual obligations table is the non-current liability for unrecognized tax benefits of $101.1 million as of July 2, 2022, as we cannot make a reliable estimate of the period in which the liability will be settled, if ever.
Excluding items affecting comparability of $23.7 million and $106.6 million in fiscal 2021 and fiscal 2020, respectively, SG&A expenses decreased 5.8% or $39.4 million to $636.2 million in fiscal 2021 compared to $675.6 million in fiscal 2020; and SG&A expenses as a percentage of sales decreased to 52.6% in fiscal 2021 from 58.8% in fiscal 2020.
Excluding items affecting comparability of $5.9 million and $23.7 million in fiscal 2022 and fiscal 2021, respectively, SG&A expenses increased 17.7% or $112.5 million to $748.7 million in fiscal 2022 compared to $636.2 million in fiscal 2021; and SG&A expenses as a percentage of sales decreased to 51.8% in fiscal 2022 from 52.6% in fiscal 2021.
The Company has been experiencing other global logistics challenges, such as delays as a result of port congestion, vessel availability and container shortages for imported products that are expected to persist in fiscal 2022, which will result in the Company using air freight with greater frequency than in the past.
The Company has been experiencing other global logistics challenges, such as delays as a result of port congestion, vessel availability, container shortages for imported products and rising freight costs. To mitigate delays, the Company strategically used air freight with greater frequency than in the past, primarily in the second and third fiscal quarter of 2022.
Seasonality The Company's results are typically affected by seasonal trends. During the first fiscal quarter, we build inventory for the holiday selling 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 months of November and December.
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.
Excluding the impact of foreign currency, net sales increased 18.6% or $656.4 million. The following discussion is presented excluding the favorable impact of the 53rd week to net sales of $67.7 million and the impact of foreign currency.
Excluding the impact of foreign currency, net sales increased 16.2% or $691.0 million. The following discussion is presented excluding the favorable impact of the 53rd week to fiscal 2021 net sales of $67.7 million and the impact of foreign currency.
Excluding the impact of foreign currency, net sales increased by 14.1% or $699.0 million. Included in net sales of $5.75 billion in fiscal 2021 is the favorable impact of the 53rd week, which resulted in incremental net revenues of $92.7 million. • Coach Net Sales increased 20.6% or $727.4 million to $4.25 billion in fiscal 2021.
Excluding the impact of foreign currency, net sales increased by 16.8% or $964.5 million. Included in net sales of $5.75 billion in fiscal 2021 is the favorable impact of the 53rd week, which resulted in incremental net revenues of $92.7 million. • Coach Net Sales increased 15.7% or $668.2 million to $4.92 billion in fiscal 2022.
Included in operating income excluding items affecting comparability of $1.10 billion is $30.0 million from the favorable impact of the 53rd week in fiscal 2021. • Coach Operating Income increased $722.7 million to $1.31 billion in fiscal 2021, resulting in an operating margin of 30.9%, as compared to $589.4 million and 16.7%, respectively in fiscal 2020.
Within operating income in fiscal 2021 of $1.10 billion, which excludes items affecting comparability, is $30.0 million from the favorable impact of the 53rd week. • Coach Operating Income increased $161.8 million to $1.47 billion in fiscal 2022, resulting in an operating margin of 29.9%, as compared to $1.31 billion and 30.9%, respectively in fiscal 2021.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations". 47 FINANCIAL CONDITION Cash Flows - Fiscal 2021 Compared to Fiscal 2020 Fiscal Year Ended July 3, 2021 June 27, 2020 Change (millions) Net cash provided by operating activities $ 1,323.7 $ 407.0 $ 916.7 Net cash provided by (used in) investing activities (91.0) 44.3 (135.3) Net cash provided by (used in) financing activities (666.0) 5.9 (671.9) Effect of exchange rate changes on cash and cash equivalents 14.7 (0.1) 14.8 Net increase (decrease) in cash and cash equivalents $ 581.4 $ 457.1 $ 124.3 The Company’s cash and cash equivalents increased by $581.4 million in fiscal 2021 compared to an increase of $457.1 million in fiscal 2020, as discussed below.
"Management’s Discussion and Analysis of Financial Condition and Results of Operations". 44 FINANCIAL CONDITION Cash Flows - Fiscal 2022 Compared to Fiscal 2021 Fiscal Year Ended July 2, 2022 July 3, 2021 Change (millions) Net cash provided by (used in) operating activities $ 853.2 $ 1,323.7 $ (470.5) Net cash provided by (used in) investing activities (253.6) (91.0) (162.6) Net cash provided by (used in) financing activities (1,778.1) (666.0) (1,112.1) Effect of exchange rate changes on cash and cash equivalents (39.4) 14.7 (54.1) Net increase (decrease) in cash and cash equivalents $ (1,217.9) $ 581.4 $ (1,799.3) The Company’s cash and cash equivalents decreased by $1.22 billion in fiscal 2022 compared to an increase of $581.4 million in fiscal 2021, as discussed below.
As an alternative to our payment terms, available to certain suppliers is 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.
To improve our working capital efficiency, starting in fiscal 2021 we made 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.
Operating margin was 16.8% in fiscal 2021 as compared to (11.1)% in fiscal 2020. Excluding items affecting comparability of $127.3 million in fiscal 2021 and $989.2 million in fiscal 2020, operating income increased $656.9 million to $1.10 billion from $438.4 million in fiscal 2020; and operating margin was 19.1% in fiscal 2021 as compared to 8.8% in fiscal 2020.
Operating margin was 17.6% in fiscal 2022 as compared to 16.8% in fiscal 2021. Excluding items affecting comparability of $42.8 million in fiscal 2022 and $127.3 million in fiscal 2021, operating income increased $123.3 million to $1.22 billion from $1.10 billion in fiscal 2021; and operating margin was 18.2% in fiscal 2022 as compared to 19.1% in fiscal 2021.
The Company 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 that of entities that include all costs related to their distribution network in Cost of sales. • Coach Gross Profit increased 30.6% or $737.4 million to $3.15 billion in fiscal 2021 from $2.41 billion in fiscal 2020.
The Company 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 that of entities that include all costs related to their distribution network in Cost of sales.
Further, these non-GAAP measures may be unique to the Company, as they may be different from non-GAAP measures used by other companies. 46 For a detailed discussion on these non-GAAP measures, see Item 7.
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 Item 7.
This increase in operating income includes the favorable impact of the 53rd week in fiscal 2021 of $4.7 million and is due to an increase in gross profit and lower SG&A expenses. • Stuart Weitzman Operating Loss decreased $612.8 million to an operating loss of $8.6 million in fiscal 2021, as compared to an operating loss of $621.4 million in fiscal 2020.
This increase in operating income is due to an increase in gross profit, partially offset by higher SG&A expenses and the favorable impact of the 53rd week in fiscal 2021 of $4.7 million. • Stuart Weitzman Operating Income increased $10.4 million to $1.8 million in fiscal 2022, resulting in an operating margin of 0.6%, as compared to an operating loss of $8.6 million in fiscal 2021 and operating margin of (3.1)%.
This future operating performance and cash flow are subject to prevailing economic conditions, which is uncertain as a result of Covid-19, and to financial, business and other factors, some of which are beyond the Company's control. The Company expects total capital expenditures to be approximately $220 million in fiscal 2022 as the Company continues to prioritize investing in digital capabilities.
This future operating performance and cash flow are subject to prevailing economic conditions, which is uncertain as a result of Covid-19, and to financial, business and other factors, some of which are beyond the Company's control.
Fiscal Year Ended July 3, 2021 June 27, 2020 Variance (millions, except per share data) Amount % of net sales Amount % of net sales Amount % Net sales $ 5,746.3 100.0 % $ 4,961.4 100.0 % $ 784.9 15.8 % Gross profit 4,081.9 71.0 3,239.3 65.3 842.6 26.0 SG&A expenses 3,113.9 54.2 3,790.1 76.4 (676.2) (17.8) Operating income (loss) 968.0 16.8 (550.8) (11.1) 1,518.8 NM Interest expense, net 71.4 1.2 60.1 1.2 11.3 18.8 Other expense (income) (0.7) — 13.3 0.3 (14.0) NM Income (Loss) before provision for income taxes 897.3 15.6 (624.2) (12.6) 1,521.5 NM Provision for income taxes 63.1 1.1 27.9 0.7 35.2 NM Net income (loss) 834.2 14.5 (652.1) (13.1) 1,486.3 NM Net income (loss) per share: Basic $ 3.00 $ (2.34) $ 5.34 NM Diluted $ 2.95 $ (2.34) $ 5.29 NM NM - Not meaningful 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”).
Fiscal Year Ended July 2, 2022 July 3, 2021 Variance (millions, except per share data) Amount % of net sales Amount % of net sales Amount % Net sales $ 6,684.5 100.0 % $ 5,746.3 100.0 % $ 938.2 16.3 % Gross profit 4,650.4 69.6 4,081.9 71.0 568.5 13.9 SG&A expenses 3,474.6 52.0 3,113.9 54.2 360.7 11.6 Operating income (loss) 1,175.8 17.6 968.0 16.8 207.8 21.5 Loss on extinguishment of debt 53.7 0.8 — — 53.7 NM Interest expense, net 58.7 0.9 71.4 1.2 (12.7) (17.7) Other expense (income) 16.4 0.2 (0.7) — 17.1 NM Income (Loss) before provision for income taxes 1,047.0 15.7 897.3 15.6 149.7 16.7 Provision for income taxes 190.7 2.9 63.1 1.1 127.6 NM Net income (loss) 856.3 12.8 834.2 14.5 22.1 2.7 Net income (loss) per share: Basic $ 3.24 $ 3.00 $ 0.24 8.0 Diluted $ 3.17 $ 2.95 $ 0.22 7.5 NM - Not meaningful 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”).
Since fiscal 2019, the U.S. and China have both imposed tariffs on the importation of certain product categories into the respective country, with limited progress in negotiations to reduce or remove the tariffs.
Since fiscal 2019, the U.S. and China have both imposed tariffs on the importation of certain product categories into the respective country, with limited progress in negotiations to reduce or remove the tariffs. Additionally, the Company has historically benefited from duty-free imports on certain products from certain countries pursuant to the U.S. Generalized System of Preferences (“GSP”) program.
The following discussion is presented excluding the favorable impact of the 53rd week to net sales of $3.3 million and the impact of foreign currency.
The following discussion is presented excluding the favorable impact of the 53rd week to fiscal 2021 net sales of $3.3 million and the impact of foreign currency. The increase in net sales was primarily attributed to a $27.6 million increase in wholesale sales.
Fiscal Year Ended Variance July 3, 2021 June 27, 2020 Amount % Constant Currency Change % Change versus FY19 (millions) Coach $ 4,253.1 $ 3,525.7 $ 727.4 20.6 % 18.6 % (0.4) % Kate Spade 1,210.0 1,149.5 60.5 5.3 4.6 (11.5) Stuart Weitzman 283.2 286.2 (3.0) (1.0) (3.4) (27.3) Total Tapestry $ 5,746.3 $ 4,961.4 $ 784.9 15.8 14.1 (4.7) Net sales in fiscal 2021 increased 15.8% or $784.9 million to $5.75 billion.
Fiscal Year Ended Variance July 2, 2022 July 3, 2021 Amount % Constant Currency Change % Change versus FY19 (millions) Coach $ 4,921.3 $ 4,253.1 $ 668.2 15.7 % 16.2 % 15.2 % Kate Spade 1,445.5 1,210.0 235.5 19.5 20.1 5.8 Stuart Weitzman 317.7 283.2 34.5 12.2 10.8 (18.4) Total Tapestry $ 6,684.5 $ 5,746.3 $ 938.2 16.3 16.8 10.9 Net sales in fiscal 2022 increased 16.3% or $938.2 million to $6.68 billion.
We do not have the ability to refinance or modify payment terms to the global financial institution through the SCF program.
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.
Excluding items affecting comparability, the effective tax rate was 17.9% in fiscal 2021 as compared to 25.7% in fiscal 2020.
Provision for Income Taxes The effective tax rate was 18.2% in fiscal 2022 as compared to 7.0% in fiscal 2021. Excluding items affecting comparability, the effective tax rate was 18.1% in fiscal 2022 as compared to 17.9% in fiscal 2021.
Net cash provided by (used in) investing activities Net cash used in investing activities was $91.0 million in fiscal 2021 compared to a source of cash of $44.3 million in fiscal 2020, resulting in a $135.3 million decrease in net cash provided by investing activities.
Net cash provided by (used in) investing activities Net cash used in investing activities was $253.6 million in fiscal 2022 compared to a use of cash of $91.0 million in fiscal 2021, resulting in a $162.6 million increase in net cash used in investing activities.
Excluding items affecting comparability of $135.4 million in fiscal 2021 and $871.2 million in fiscal 2020, SG&A expenses increased 2.0% or $59.6 million to $2.98 billion from $2.92 billion in fiscal 2020; and SG&A expenses as a percentage of net sales decreased to 51.8% in fiscal 2021 from 58.8% in fiscal 2020.
Excluding items affecting comparability of $42.8 million in fiscal 2022 and $135.4 million in fiscal 2021, SG&A expenses increased 15.2% or $453.3 million to $3.43 billion from $2.98 billion in fiscal 2021; and SG&A expenses as a percentage of net sales decreased to 51.3% in fiscal 2022 from 51.8% in fiscal 2021. • Coach SG&A Expenses increased 13.2% or $243.0 million to $2.08 billion in fiscal 2022 as compared to $1.84 billion in fiscal 2021.
Net cash provided by (used in) financing activities Net cash used in financing activities was $666.0 million in fiscal 2021 as compared to a source of cash of $5.9 million in fiscal 2020, resulting in a $671.9 million decrease in net cash provided by financing activities.
Net cash provided by (used in) financing activities Net cash used in financing activities was $1.78 billion in fiscal 2022 as compared to a use of cash of $666.0 million in fiscal 2021, resulting in a $1.11 billion increase in net cash used in financing activities.
Refer to Note 16, "Income Taxes" for further information. • Acceleration Program - Total charges incurred under the Acceleration Program are primarily professional fees incurred as a result of the development and execution of the Company's comprehensive strategic initiatives, share-based compensation, as well as actions to streamline the Company's organization, which include severance.
Refer to Note 12, "Debt," for further information. • Acceleration Program - Total charges incurred under the Acceleration Program are primarily share-based compensation and professional fees incurred as a result of the development and execution of the Company's comprehensive strategic initiative. Refer to the "Executive Overview" herein and Note 5, "Restructuring Activities," for further information.
Estimates may differ from actual results due to the quantity, quality and mix of products in inventory, consumer and retailer preferences and market conditions. At July 3, 2021, a 10% change in the inventory reserve, would not have resulted in material change in inventory and cost of sales.
Estimates may differ from actual results due to the quantity, quality and mix of products in inventory, consumer and retailer preferences and market conditions.
This increase is primarily due to a net increase of $79.5 million in net global retail sales driven by higher global e-commerce sales, partially offset by lower stores sales in Other Asia, notably Japan, North America and Europe, due to the Covid-19 outbreak.
The increase is primarily due to a net increase of $221.3 million in net retail sales driven by higher store and e-commerce sales in North America and store sales in Europe partially offset by a decrease in store sales in Greater China due to Covid-19 related disruptions.
Excluding items affecting comparability of $65.8 million and $86.6 million in fiscal 2021 and fiscal 2020, respectively, SG&A expenses increased 13.6% or $45.3 million to $378.2 million in fiscal 2021 as compared to $332.9 million in fiscal 2020.
Excluding items affecting comparability of $26.6 million and $65.8 million in fiscal 2022 and fiscal 2021, respectively, SG&A expenses increased 13.9% or $52.5 million to $430.7 million in fiscal 2022 as compared to $378.2 million in fiscal 2021. This increase in SG&A expenses is primarily due to higher compensation costs.
The decrease in our effective tax rate was primarily attributable to geographic mix of earnings and the impact of nondeductible expenses on lower pretax operating income in fiscal 2020. 45 Net Income (Loss) Net income increased $1.49 billion to a net income of $834.2 million in fiscal 2021 as compared to a net loss of $652.1 million in fiscal 2020.
The increase in our effective tax rate was primarily attributable to geographic mix of earnings. 42 Net Income (Loss) Net income increased $22.1 million to a net income of $856.3 million in fiscal 2022 as compared to a net income of $834.2 million in fiscal 2021.
To the extent that estimated future undiscounted net cash flows attributable to the asset are less than its carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. 54 In determining future cash flows, the Company takes various factors into account, including the effects of macroeconomic trends such as consumer spending, in-store capital investments, promotional cadence, the level of advertising and changes in merchandising strategy.
To the extent that estimated future undiscounted net cash flows attributable to the asset are less than its carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions.
This decrease in operating loss includes the favorable impact of the 53rd week in fiscal 2021 of $0.2 million and is due to a lower SG&A expenses, partially offset by a decrease in gross profit. Interest Expense, net Net interest expense increased 18.8% or $11.3 million to $71.4 million in fiscal 2021 as compared to $60.1 million in fiscal 2020.
This decrease in operating loss is due to an increase in gross profit, partially offset by higher SG&A expenses and the favorable impact of the 53rd week in fiscal 2021 of $0.2 million.
This decrease in gross margin is primarily due to channel mix and increased promotional activity. 43 Selling, General and Administrative Expenses Fiscal Year Ended July 3, 2021 June 27, 2020 Variance (millions) Amount % of Net Sales Amount % of Net Sales Amount % Coach $ 1,836.9 43.2 % $ 1,822.2 51.7 % $ 14.7 0.8 % Kate Spade 659.9 54.5 782.2 68.0 (122.3) (15.6) Stuart Weitzman 173.1 61.1 766.2 NM (593.1) (77.4) Corporate 444.0 NA 419.5 NA 24.5 5.8 Tapestry $ 3,113.9 54.2 $ 3,790.1 76.4 $ (676.2) (17.8) SG&A expenses decreased 17.8% or $676.2 million to $3.11 billion in fiscal 2021 as compared to $3.79 billion in fiscal 2020.
This increase in gross margin is primarily due to reduced promotional activity and favorable product mix and pricing actions offset by unfavorable geography and channel mix. 40 Selling, General and Administrative Expenses Fiscal Year Ended July 2, 2022 July 3, 2021 Variance (millions) Amount % of Net Sales Amount % of Net Sales Amount % Coach $ 2,079.9 42.3 % $ 1,836.9 43.2 % $ 243.0 13.2 % Kate Spade 754.6 52.2 659.9 54.5 94.7 14.3 Stuart Weitzman 182.8 57.5 173.1 61.1 9.7 5.6 Corporate 457.3 NA 444.0 NA 13.3 3.0 Tapestry $ 3,474.6 52.0 $ 3,113.9 54.2 $ 360.7 11.6 SG&A expenses increased 11.6% or $360.7 million to $3.47 billion in fiscal 2022 as compared to $3.11 billion in fiscal 2021.
Excluding items affecting comparability, Kate Spade operating income increased $91.4 million to $132.2 million from $40.8 million in fiscal 2020, resulting in an operating margin of 10.9% as compared to 3.6% in fiscal 2020.
Excluding items affecting comparability, Kate Spade operating income increased $31.1 million to $163.3 million from $132.2 million in fiscal 2021; and operating margin was 11.3% in fiscal 2022 as compared to 10.9% in fiscal 2021.
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 channels and geographies. The disruptions related to Covid-19 have materially adversely impacted our operations, cash flow, and liquidity.
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 channels and geographies. The outbreak of a novel strain of Covid-19 continues to impact a significant majority of the regions in which we operate, resulting in significant global business disruptions.
Net cash provided by (used in) operating activities Net cash provided by operating activities increased $916.7 million primarily due to changes in net income of $1.49 billion and changes in operating assets and liabilities of $310.6 million, partially offset by the impact of non-cash charges of $880.2 million.
Net cash provided by (used in) operating activities Net cash provided by operating activities decreased $470.5 million primarily due to changes in operating assets and liabilities of $597.1 million, partially offset by the loss on extinguishment of debt of $53.7 million, the impact of non-cash charges of $50.8 million and higher net income of $22.1 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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The interest rate payable on the 2022 and 2027 Senior Notes will be subject to adjustments from time to time if either Moody’s or S&P or a substitute rating agency (as defined in the Prospectus Supplement furnished with the SEC on June 7, 2017) downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the respective Senior Notes of such series.
The interest rate payable on the 2027 Senior Notes will be subject to adjustments from time to time if either Moody’s or S&P or a substitute rating agency (as defined in the Prospectus Supplement furnished with the SEC on June 7, 2017) downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the respective Senior Notes of such series.
As a result of the above considerations, we do not believe that we are exposed to any undue concentration of counterparty credit risk associated with our derivative contracts as of July 3, 2021. The Company is also exposed to transaction risk from foreign currency exchange rate fluctuations with respect to various cross-currency intercompany loans and payables.
As a result of the above considerations, we do not believe that we are exposed to any undue concentration of counterparty credit risk associated with our derivative contracts as of July 2, 2022. The Company is also exposed to transaction risk from foreign currency exchange rate fluctuations with respect to various cross-currency intercompany loans, payables and receivables.
The fair value of outstanding foreign currency contracts included in current liabilities at July 3, 2021 and June 27, 2020 was $1.2 million and $1.7 million, respectively. The fair value of these contracts is sensitive to changes in foreign currency exchange rates.
The fair value of outstanding foreign currency contracts included in current liabilities at July 2, 2022 and July 3, 2021 was $3.2 million and $1.2 million, respectively. The fair value of these contracts is sensitive to changes in foreign currency exchange rates.
To mitigate such risk, certain subsidiaries enter into forward currency contracts. As of July 3, 2021 and June 27, 2020, forward currency contracts designated as cash flow hedges with a notional amount of $61.4 million and $586.2 million, respectively, were outstanding.
To mitigate such risk, certain subsidiaries enter into forward currency contracts. As of July 2, 2022 and July 3, 2021, forward currency contracts designated as cash flow hedges with a notional amount of $41.5 million and $61.4 million, respectively, were outstanding.
This primarily includes exposure to exchange rate fluctuations in the Chinese Renminbi, the British Pound Sterling and the Euro. To manage the exchange rate risk related to these loans, the Company enters into forward currency contracts.
This primarily includes exposure to exchange rate fluctuations in the Chinese Renminbi, the Japanese Yen and the Euro. To manage the exchange rate risk related to these balances, the Company enters into forward currency contracts.
As of July 3, 2021 and June 27, 2020, the total notional values of outstanding forward foreign currency contracts related to these loans were $248.2 million and $76.9 million, respectively. The fair value of outstanding forward currency contracts included in current assets at July 3, 2021 and June 27, 2020 was $0.3 million and $2.9 million, respectively.
As of July 2, 2022 and July 3, 2021, the total notional values of outstanding forward foreign currency contracts related to these loans, payables and receivables were $274.1 million and $248.2 million, respectively. The fair value of outstanding forward currency contracts included in current assets at July 2, 2022 and July 3, 2021 was $0.4 million and $0.3 million, respectively.
At July 3, 2021, the fair value of the 2025 Senior Notes, 2022 Senior Notes and 2027 Senior Notes was approximately $652 million, $407 million and 56 $659 million, respectively. At June 27, 2020, the fair value of the 2025 Senior Notes, 2022 Senior Notes and 2027 Senior Notes was approximately $577 million, $393 million and $565 million, respectively.
At July 3, 2021, the fair value of the 2027 Senior Notes, 2022 Senior Notes and 2025 Senior Notes was approximately $659 million, $407 million and $652 million, respectively. The 2022 Senior Notes were fully redeemed as of July 2, 2022.
Interest Rate Risk The Company is exposed to interest rate risk in relation to its Revolving Credit Facility entered into under the credit agreement dated October 24, 2019 as amended May 19, 2020, the 2025 Senior Notes, 2022 Senior Notes, 2027 Senior Notes (collectively the "Senior Notes") and investments.
Interest Rate Risk The Company is exposed to interest rate risk in relation to its $1.25 Billion Revolving Credit Facility and $500.0 Million Term Loan entered into under the credit agreement dated May 11, 2022, the Term Loan, the 2032 Senior Notes, 2027 Senior Notes, and 2025 Senior Notes (collectively the "Senior Notes") and investments.
A sensitivity analysis of the effects of foreign exchange rate fluctuations on the fair values of our derivative contracts was performed to assess the risk of loss. As of July 3, 2021, a 10% devaluation of the U.S. Dollar against the exchange rates for foreign currencies under contract would result in an immaterial impact on derivative contract fair values.
A sensitivity analysis of the effects of foreign exchange rate fluctuations on the fair values of our derivative contracts was performed to assess the risk of loss. As of July 2, 2022, a 10% change in the value of the U.S.
Furthermore, a prolonged disruption on our business resulting from the Covid-19 pandemic may impact our ability to satisfy the terms of our Revolving Credit Facility, including our liquidity covenant. The Company is exposed to changes in interest rates related to the fair value of the Senior Notes.
A hypothetical 10% change in the Credit Facilities interest rate would have resulted in an immaterial change in interest expense in fiscal 2022. Furthermore, a prolonged disruption on our business resulting from the Covid-19 pandemic may impact our ability to satisfy the terms of our Credit Facilities, including our liquidity covenant.
Borrowings under the Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) an alternate base rate (which is a rate equal to the greatest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on such day plus ½ of 1% or (iii) the Adjusted LIBO Rate for a one month Interest Period on such day plus 1%) or (b) a rate based on the rates applicable for deposits in the interbank market for U.S. dollars or the applicable currency in which the loans are made plus, in each case, an applicable margin.
Borrowings under the Term Loan bear interest at a rate per annum equal to, at the Company’s option, either (i) an alternate base rate or (ii) a term secured overnight financing rate plus, in each case, an applicable margin. The applicable margin will be adjusted by reference to a pricing grid based on the Gross Leverage Ratio.
Our exposure to changes in interest rates is primarily attributable to debt outstanding under the Revolving Credit Facility.
Our exposure to changes in interest rates is primarily attributable to debt outstanding under the $1.25 Billion Revolving Credit Facility and $500.0 Million Term Loan (collectively, the "Credit Facilities"). Borrowings under the $1.25 Billion 52 Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, (i) for borrowings in U.S.
The applicable margin will be determined by reference to a grid, as defined in the Credit Agreement, based on the ratio of (a) consolidated debt plus operating lease liability to (b) consolidated EBITDAR. A hypothetical 10% change in the credit agreement interest rate would have resulted in an immaterial change in interest expense in fiscal 2021.
The applicable margin will be adjusted by reference to a grid (the “Pricing Grid”) based on the ratio of (a) consolidated debt to (b) consolidated EBITDAR (the “Gross Leverage Ratio”).
Added
Dollar against the exchange rates for foreign currencies under contract would result in an immaterial impact on derivative contract fair values. The Company is also exposed to foreign currency exchange rate fluctuations with respects to net investment hedges.
Added
As of July 2, 2022, we have multiple fixed to fixed cross currency swap agreements with aggregate notional amounts of $1.20 billion to hedge our net investment in Euro-denominated subsidiaries and Japanese Yen-denominated subsidiaries against future volatility in the exchange rates between the United States dollar and their local currencies.
Added
The fair values of outstanding derivative contracts related to net investment hedges included in long-term assets and long-term liabilities at July 2, 2022 are $47.8 million and $44.0 million, respectively.
Added
Under the term of these contracts, we will exchange the semi-annual fixed rate payments on United States denominated debt for fixed rate payments of 2.4% to 2.7% in Euros and 0.6% to 1.3% in Japanese Yen.
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A 10% change in the value of the U.S. dollar against the exchange rates for currencies under contract as of July 2, 2022, would result in an immaterial impact on the net investment hedge derivative contract fair values. Refer to Note 10, "Derivative Investments and Hedging Activities," for additional information.
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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.
Added
The Company is exposed to changes in interest rates related to the fair value of the Senior Notes. At July 2, 2022, the fair value of the 2032 Senior Notes, 2027 Senior Notes and 2025 Senior Notes was approximately $409 million, $383 million and $304 million, respectively.
Added
The fair value of the 2027 Senior Notes and 2025 Senior Notes at July 2, 2022 reflects the impact of the $500 million cash tender offer completed during the second quarter of fiscal 2022.

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