What changed in this filing

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Item 1. Business

2020-08-13 compared with 2019-08-15 · 83 added, 66 removed, 236 unchanged (39% of the section changed)

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Tapestry is powered by optimism, innovation and inclusivity.

Our brands convey our belief that true luxury is a freedom of expression that ignites confidence and authenticity.

Our brands are approachable and inviting and create joy every day for people around the world.

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To further accelerate brand awareness, aggressively grow market share and to exercise greater control of our brands, the Company has historically acquired its joint venture partner’s interests or distribution rights in these international regions.

Tapestry acquired or obtained operational control of the retail businesses from its distributors or its joint venture partners during fiscal 2018 and fiscal 2019 as follows:

Australia and New Zealand

• Stuart Weitzman:

Northern China

• Kate Spade:

Greater China (including mainland China, Hong Kong, Macau and Taiwan)

• Stuart Weitzman:

Southern China and Australia

• Kate Spade:

Australia, Singapore and Malaysia

The Company has three reportable segments:

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These costs primarily include administrative and information systems expense.

Acceleration Program

The Company is undergoing a review of its business under its multi-year growth agenda (the "Acceleration Program").

The guiding principle of the Company’s multi-year growth agenda 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

This multi-faceted, multi-year strategic growth plan reflects:

(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.

The Company incurred $87.0 million under the plan for fiscal 2020 .

Including charges taken in the fourth quarter of fiscal year 2020, the Company expects to incur total pre-tax charges under the plan of $185 - $200 million .

The Company estimates that it will realize approximately $300 million in gross run rate expense savings from these initiatives, including $200 million projected for fiscal 2021.

Covid-19 Impact

Tapestry began fiscal 2020 with a focus on profitable growth through innovation, global expansion, investing in digital capabilities, and harnessing the power of a multi-brand model.

However, in December 2019, a novel strain of coronavirus ("Covid-19") surfaced and was officially declared a global pandemic by the World Health Organization on March 11, 2020.

The virus has had significant impacts on our business globally.

As a result, while the Company remains confident in its long-term strategy and executing against its multi-year growth agenda, its short-term focus includes adapting to the challenges resulting from Covid-19.

Coach is a leading design house of modern luxury accessories and lifestyle collections, with a long-standing reputation built on quality craftsmanship.

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Fiscal 2018 includes the addition of 21 stores acquired as a result of the Coach distributor acquisition in Australia and New Zealand completed during the third quarter of fiscal 2018.

In fiscal 2020, we expect little change in overall store count.

Furthermore, we expect to continue investing in the elevation of our existing store environments.

Internet — We view our www.coach.com website as a key communications vehicle for the brand to promote traffic in retail stores and department store locations and build brand awareness, as well as an additional channel to sell Coach brand products directly to customers.

In fiscal 2021, we expect a modest reduction in overall store count as the Company looks to drive increased profitability under the Acceleration Program and shifts our focus with greater emphasis on digital channels.

Internet — 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.

Our online store provides a showcase environment where consumers can browse through a selected offering of the latest styles and colors.

To a lesser extent, our e-commerce programs also include our invitation-only outlet flash sales site.

Our digital channel provides a showcase environment where consumers can browse through a selected offering of the latest styles and colors.

Wholesale — We work closely with our wholesale partners to ensure a clear and consistent product presentation.

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We utilize automatic replenishment with major accounts in an effort to optimize inventory levels across wholesale doors.

The wholesale business for Coach brand comprised approximately 8% of total brand net sales for fiscal 2019.

The wholesale business for Coach brand comprised approximately 6% of total segment net sales for fiscal 2020.

As of June 27, 2020 , Coach's products are sold in over approximately 1,700 wholesale and distributor locations globally.

Coach's most significant wholesale partnerships are with department stores including Macy's (including Bloomingdale's), Dillard's, Hudson's Bay Company (including The Bay, Saks 5th Ave and Lord & Taylor), Nordstrom,Von Maur, Zappos, Neiman Marcus and Belk.

Coach products are also available on these customers' websites.

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.

During the fiscal year ended June 29, 2019, Coach's most significant distributors are Korea Duty Free, the DFS Group, Al Tayer Insignia and China Duty Free.

As of June 27, 2020 and June 29, 2019 , Coach did not have any customers who individually accounted for more than 10% of the segment's total net sales.

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Polished ease, thoughtful details and a modern, sophisticated use of color—Kate Spade’s founding principles define a unique style synonymous with joy.

The brand continues to celebrate confident women with a youthful spirit.

Stores — Kate Spade operates freestanding flagship, specialty retail and outlet stores as well as concession shop-in-shops.

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Net change vs.

Square Footage

Net change vs.

Average Square Footage

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Fiscal 2019 includes the addition of 21 stores acquired as a result of the Kate Spade distributor acquisitions in Australia, Malaysia and Singapore during fiscal 2019.

Fiscal 2018 includes the addition of 50 stores related to taking operational control of the Kate Spade Joint Ventures that operate in Greater China in fiscal 2018.

We expect to modestly grow in store count in the next fiscal year within North America and internationally.

Furthermore, we expect to continue investing in the elevation of our existing store environments.

Internet — We view our www.katespade.com website as a key communications vehicle for the brand to promote traffic in retail stores and department store locations and build brand awareness, as well as an additional channel to sell Kate Spade brand products directly to customers.

Fiscal 2018 includes the addition of 50 stores related to taking operational control of the Kate Spade Joint Ventures that operate in Greater China.

We expect to modestly reduce our store count in the next fiscal year as the Company looks to drive increased profitability under the Acceleration Program and shift our focus with greater emphasis on digital channels.

Internet — We view our digital platforms as instruments to deliver Kate Spade brand products to customers directly with the benefit of added accessibility as consumers can purchase Kate Spade 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.

To a lesser extent, our e-commerce programs also include our outlet flash sales site.

Our digital channel provides a showcase environment where consumers can browse through a selected offering of the latest styles and colors.

Wholesale — As of June 27, 2020 , Kate Spade brand's products are sold in approximately 1,000 wholesale and distributor locations, primarily in the U.S, Canada and Europe.

The most significant wholesale partnerships primarily include sales of kate spade new york products.

These partnerships include Nordstrom, Macy's (including Bloomingdale's), The TJX Companies Inc.

and Dillard's.

Kate Spade products are also available on these customers' websites.

The wholesale business for Kate Spade brand comprised approximately 13% of total brand net sales for fiscal 2019.

The wholesale business for Kate Spade brand comprised approximately 12% of total segment net sales for fiscal 2020.

Kate Spade has developed relationships with a select group of distributors who sell Kate Spade products through travel retail locations and in certain international countries where Kate Spade does not have directly operated retail locations.

During the fiscal year ended June 29, 2019, Kate Spade's most significant distributors are Al-Futtaim Group, Valiram, DFS Group, Starboard and Pangea.

As of June 27, 2020 and June 29, 2019 , Kate Spade did not have any customers who individually accounted for more than 10% of the segment's total net sales.

Stuart Weitzman

Stuart Weitzman offers beautiful shoes that combine fashion and function.

For more than 30 years, every pair has been handcrafted using the finest materials and meticulously engineered for a flawless fit.

The brand is one of the most recognizable names in footwear;

its award-winning shoes are worn by stylish women around the globe and by celebrities both on and off the red carpet.

Stuart Weitzman is currently evolving into a multi-category brand with the expansion of handbags and accessories.

Stuart Weitzman is a leading footwear brand that is synonymous with strength in femininity.

Defined by an energetic, bold and purpose-driven attitude, Stuart Weitzman is known for its unique approach to melding fashion, function and fit in every silhouette.

The brand's focus on creating effortless shoes - each engineered to empower women with both confidence and comfort - has resonated around the world and continues to inspire women to conquer every day, one step at a time.

Stores — Stuart Weitzman products are primarily sold in freestanding flagship, retail and outlet stores.

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Fiscal 2018 includes the addition of 20 stores acquired as a result of the Stuart Weitzman distributor acquisition in Northern China during fiscal 2018.

In fiscal 2020, we expect modest growth in store count and square footage internationally.

Internet — We view our www.stuartweitzman.com website as a key communications vehicle for the brand to promote traffic in retail stores and department store locations and build brand awareness, as well as an additional channel to sell Stuart Weitzman brand products directly to customers.

In fiscal 2021, we expect a reduction in store count and square footage globally as we exit certain locations and regions to increase profitability under the Acceleration Program.

Internet — 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.

The website also acts as a communications vehicle to build brand awareness.

Our digital channel provides a showcase environment where consumers can browse through a selected offering of the latest styles and colors.

Wholesale — Stuart Weitzman brand products are primarily sold through approximately 900 wholesale and distributor locations globally, which include multi-brand boutiques as of fiscal 2020.

Stuart Weitzman's most significant wholesale partnerships

include Nordstrom, Hudson's Bay Company (including Saks 5th Ave and Lord & Taylor), Macy's (including Bloomingdale's) and Neiman Marcus.

The wholesale business for Stuart Weitzman brand comprised approximately 39% of total brand net sales for fiscal 2019.

The wholesale business for Stuart Weitzman brand comprised approximately 27% of total segment net sales for fiscal 2020.

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.

During the fiscal year ended June 29, 2019, Stuart Weitzman's most significant distributors are Pedder Group and Hermanns Imports.

As of June 27, 2020 and June 29, 2019 , Stuart Weitzman did not have any customers who individually accounted for more than 10% of the segment's total net sales.

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Our key licensing relationships and their calendar year expirations as of June 27, 2020 are as follows:

Tech Accessories

Fashion Bedding

Steve Madden (1)

Stationery and Gift

Lifeguard Press

Tech Accessories

The Company intends to bring the majority of the Kate Spade brand women's footwear business in-house in fiscal 2020.

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 licensing partners pay royalties on their net sales of our branded products.

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.

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June 29, 2019

June 30, 2018 (1)

Women's Handbags

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Other Products

Kate Spade (1)

Women's Handbags

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Total Net sales

The Company completed its acquisition of Kate Spade in fiscal 2018.

The Company completed its acquisition of Kate Spade and Company in fiscal 2018.

The operating results of the Kate Spade brand have been consolidated in the Company's operating results commencing on July 11, 2017.

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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.

In addition, Kate Spade brand kids ready-to-wear items, housewares and home accessories, such as fashion bedding and tableware, and stationery and gifts are included in this category.

In addition, Kate Spade brand kids ready-to-wear and footwear items, housewares and home accessories, such as fashion bedding and tableware, and stationery and gifts are included in this category.

DESIGN AND MERCHANDISING

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Visitors to our e-commerce sites provide an opportunity to increase the size of these databases, as well as point of transactions globally, except where restricted.

For Coach, we have e-commerce sites in the U.S., Canada, Japan, mainland China, several throughout Europe, and South Korea.

For Kate Spade, we have e-commerce sites in the U.S., Canada, Japan and throughout Europe.

For Stuart Weitzman, we have e-commerce sites in the U.S, Canada, Europe, Hong Kong and mainland China.

In fiscal 2019 , Coach had informational websites in Hong Kong, Korea, Malaysia, Singapore and Taiwan, as well as a global informational website where other customers are directed.

For Coach, we have e-commerce sites in the U.S., Canada, Japan, mainland China, several throughout Europe, Australia and South Korea.

For Kate Spade, we have e-commerce sites in the U.S., Canada, mainland China, Japan and throughout Europe.

For Stuart Weitzman, we have e-commerce sites in the U.S, Canada, Europe, and mainland China.

The Company also leverages Tmall as an additional platform to sell our products to customers.

In fiscal 2020 , Coach had informational websites in Hong Kong SAR, China, Korea, Malaysia, Singapore and Taiwan, China, as well as a global informational website where other customers are directed.

In fiscal 2020 , Kate Spade had an informational website in mainland China.

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This broad-based, global manufacturing strategy is designed to optimize the mix of cost, lead times and construction capabilities.

During fiscal 2019, manufacturers of Coach products were primarily located in Vietnam, Cambodia, mainland China and the Philippines.

During fiscal 2019 , Coach had one vendor, located in Vietnam, who individually provided approximately 10% of the brand's total purchases.

During fiscal 2019, Kate Spade products were manufactured primarily in Vietnam, mainland China and the Philippines.

Kate Spade had two vendors, one located in Vietnam and one located in the Philippines, who individually provided

over 10% of the brand's total purchases (or approximately 40% in the aggregate).

During fiscal 2020, manufacturers of Coach products were primarily located in Vietnam, Cambodia, the Philippines and mainland China.

During fiscal 2020 , Coach did not have any vendors who individually provided approximately 10% of the brand's total purchases.

During fiscal 2020, Kate Spade products were manufactured primarily in Vietnam, mainland China and Cambodia.

Kate Spade had two vendors, one located in Vietnam and one located in Cambodia, who individually provided over 10% of the

brand's total purchases (or approximately 35% in the aggregate).

The Company expects that the level of products manufactured in each country will change during fiscal 2021 as it continues to further diversify the brand’s supply chain globally.

Stuart Weitzman products were primarily manufactured in Spain.

During fiscal 2019, Stuart Weitzman had three vendors, all located in Spain, who individually provided over 10% of the brand's total units (or approximately 30% in the aggregate).

During fiscal 2020, Stuart Weitzman had two vendors, one located in Spain and one located in mainland China, who individually provided over 10% of the brand's total units (or approximately 20% in the aggregate).

Each brand's products are shipped from manufacturers to distribution centers around the world for inspection, storage, order processing and shipment.

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Outside of North America, the Company has established regional distribution centers through third-parties for each brand.

For Coach products, these centers are located in the Netherlands, Japan, Hong Kong, mainland China, Macau, South Korea, Taiwan, Malaysia, Australia and Singapore to support directly operated local markets.

For Coach products, these centers are located in the Netherlands, Japan, Greater China (mainland China, Hong Kong SAR, Macao SAR and Taiwan), South Korea, Malaysia, Australia and Singapore to support directly operated local markets.

The Company distributes Kate Spade products through facilities that are operated by third parties in the United States, Europe and Asia.

For Kate Spade, product fulfillment in North America is facilitated by our automated warehouse management system and electronic data interchange system, while the unique requirements of the direct to consumer business are supported by selective warehouse and distribution systems operated by a third-party.

The Company also operates local distribution centers through third-parties in the U.K., Japan, mainland China, Hong Kong, Australia, Singapore and Malaysia for Kate Spade product.

The Company also operates local distribution centers through third-parties in the U.K., Japan, mainland China, Hong Kong SAR, China, Australia, Singapore and Malaysia for Kate Spade product.

The Company distributes Stuart Weitzman products through facilities located in the United States, Canada, Spain, Italy and mainland China that are operated by third parties.

INFORMATION SYSTEMS

The Company embarked on a multi-year Enterprise Resource Planning ("ERP") implementation in fiscal 2017.

During fiscal 2018, the Company implemented a global consolidation system which provides a common platform for financial reporting.

During the second quarter of fiscal 2019, the Company deployed global finance and accounting systems for Corporate, Coach and Stuart Weitzman.

During the third quarter of fiscal 2019, the Company deployed global finance, accounting, supply chain and human resource information systems for Kate Spade.

This project was substantially completed during fiscal 2019, with the remaining supply chain functions for Coach and Stuart Weitzman implemented at the beginning of fiscal 2020.

In fiscal 2020, the Company completed its multi-year Enterprise Resource Planning ("ERP") implementation.

Key milestones were achieved as follows:

Implementation of a global consolidation system which provided a common platform for financial reporting.

Deployment of global finance and accounting systems for Corporate, Coach and Stuart Weitzman and global finance, accounting, supply chain and human resource information systems for Kate Spade.

Supply chain functions for Coach and Stuart Weitzman were implemented at the beginning of fiscal 2020.

The Company is also implementing a point-of-sale system which supports all in-store transactions, distributes management reporting for each store, and collects sales and payroll information on a daily basis.

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"Risk Factors, " for further information as it relates to the Company's ERP system implementation efforts.

CORPORATE RESPONSIBILITY

Tapestry’s corporate responsibility strategy, Our Social Fabric, unites teams across our 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.

The Company is a signatory to the United Nations ("UN") Global Compact, and as such, our corporate responsibility strategy is aligned with the UN Sustainable Development Goals.

Tapestry’s goals cover three strategic pillars:

Our People, Our Planet and Our Communities.

Goals focus on diversity, inclusion, progression and wellness initiatives across our workforce.

Goals include sourcing and environmental initiatives to increase traceability of our products and reduce our impact.

Our Communities:

Goals include focus on volunteerism programs, philanthropic initiatives and supply chain empowerment programs.

Additional information on our corporate responsibility strategy and 2025 Corporate Responsibility Goals can be found at www.tapestry.com/responsibility .

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.

TRADEMARKS AND PATENTS

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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.

GOVERNMENT REGULATION

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FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

Refer to Note 17, "Segment Information," presented in the Notes to the Consolidated Financial Statements for geographic information.

Refer to Note 5, "Revenue," and Note 18, "Segment Information," presented in the Notes to the Consolidated Financial Statements for geographic information.

AVAILABLE INFORMATION

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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.

Additionally, the Company filed with the New York Stock Exchange (“NYSE”) the CEO’s certification regarding the Company’s compliance with the NYSE’s Corporate Governance Listing Standards (“Listing Standards”) pursuant to Section 303A.12(a) of the Listing Standards, which indicated that the CEO was not aware of any violations of the Listing Standards by the Company.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business