What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-08-14 compared with 2024-08-15 · 210 added, 129 removed, 350 unchanged (49% of the section changed)

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is a house of iconic accessories and lifestyle brands.

Our global house of brands unites the magic of Coach, kate spade new york and Stuart Weitzman.

Each of our brands are unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across business channels and geographies.

We use our collective strengths to move our customers and empower our communities, to make the fashion industry more sustainable and to build a company that’s equitable, inclusive and diverse.

Our global house of brands unites the magic of Coach and kate spade new york.

We use our collective strengths to move our customers and empower our communities, to make the fashion industry more sustainable, and to harness the power of an inclusive culture.

Individually, our brands are iconic.

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• Kate Spade - Includes global sales primarily of kate spade new york brand products to customers through our DTC, wholesale and licensing businesses.

• Stuart Weitzman - Includes global sales of Stuart Weitzman brand products primarily through our DTC and wholesale businesses.

Each of our brands is unique and independent, while sharing a commitment to innovation and authenticity defined by distinctive products and differentiated customer experiences across business channels and geographies.

• Stuart Weitzman - Includes global sales of Stuart Weitzman brand products primarily through our DTC, wholesale and licensing businesses.

Our success does not depend solely on the performance of a single business channel, geographic area or brand.

Stuart Weitzman Business Divestiture

On February 16, 2025, the Company entered into a Purchase Agreement with Caleres to sell the Stuart Weitzman Business (as defined below).

The Purchaser acquired certain assets and liabilities of the Company's global business of designing, manufacturing, promotion, marketing, production, distribution, sales and licensing of Stuart Weitzman branded products (the "Stuart Weitzman Business") for total cash consideration of $105.0 million (the "Purchase Price"), subject to customary adjustments for cash, indebtedness, net working capital and transaction expenses.

The sale was completed on August 4, 2025 (the "Stuart Weitzman Business Divestiture").

Refer to Note 5, "Acquisitions and Divestitures," and Note 21, "Subsequent Events," for further information.

Capri Holdings Limited Acquisition

On August 10, 2023, the Company entered into the Merger Agreement by and among the Company, Sunrise Merger Sub, Inc., a direct wholly owned subsidiary of Tapestry, and Capri for $57.00 per share in cash for a total enterprise value of approximately $8.50 billion.

The Capri Acquisition, once completed, will bring together six highly complementary brands with global reach, powered by the Company’s data-rich customer engagement platform and diversified, direct-to-consumer operating model.

The transaction is expected to close during calendar year 2024.

On August 10, 2023, the Company entered into the Merger Agreement by and among the Company, Sunrise Merger Sub, Inc., a direct wholly owned subsidiary of Tapestry, and Capri.

In order to finance the Capri Acquisition, on November 27, 2023, the Company issued $4.50 billion of U.S.

dollar-denominated senior unsecured notes (the "Capri Acquisition USD Senior Notes") and €1.50 billion of Euro-denominated senior unsecured notes (the "Capri Acquisition EUR Senior Notes" and, together with the Capri Acquisition USD Senior Notes, the "Capri Acquisition Senior Notes") which, together with the $1.40 billion of delayed draw unsecured term loan facilities (the "Capri Acquisition Term Loan Facilities") executed on August 30, 2023, complete the expected financing for the Capri Acquisition.

The Company has received regulatory approval from all applicable jurisdictions except for the United States.

The FTC’s complaint alleges that the Capri Acquisition, if consummated, would violate Section 7 of the Clayton Act and that the Merger Agreement and the Capri Acquisition constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act and should be enjoined.

The Company believes the FTC’s claims are without merit and intends to defend the lawsuit vigorously.Refer to Note 5, "Acquisitions" for further information.

On April 22, 2024, the FTC filed a complaint against the Company and Capri in the United States District Court for the Southern District of New York seeking to enjoin the consummation of the Capri Acquisition, and on October 24, 2024, the Court issued its Opinion and Order granting the FTC's request for a preliminary injunction of the Merger, pending an administrative trial on the merits which was scheduled to begin on December 9, 2024.

On October 28, 2024, the Company and Capri filed a Notice of Appeal with respect to the October 24, 2024 Opinion and Order.

On November 6, 2024, the United States Court of Appeals for the Second Circuit entered an order setting an expedited briefing schedule for the appeal of the decision of the United States District Court of the Southern District of New York granting the preliminary injunction of the merger.

On November 13, 2024, the Parties entered into a Termination Agreement (the “Termination Agreement”), pursuant to which the Parties agreed to terminate the Merger Agreement, including all schedules and exhibits thereto and all ancillary agreements contemplated thereby or entered pursuant thereto (the “Termination Date”), effective immediately.

Pursuant to the Termination Agreement, the Company agreed to reimburse Capri for its expenses in an amount equal to $45.1 million in cash on November 14, 2024.

The Parties also agreed to release each other from claims, demands, damages, actions, causes of action and liability relating to or arising out of the Merger Agreement and the transactions contemplated therein or thereby.

Following termination of the Merger Agreement, the Parties and the FTC filed a stipulation withdrawing the appeal to the United States Court of Appeals for the Second Circuit on November 19, 2024 and the Second Circuit dismissed the appeal on November 20, 2024.

The Parties and the FTC also filed a Joint Motion to dismiss the complaint in the administrative trial on November 15, 2024 and the FTC dismissed the complaint on December 4, 2024.

On November 25, 2024, due to the termination of the Merger Agreement and pursuant to the terms of the indenture governing the Capri Acquisition Senior Notes, as supplemented, the Company redeemed all outstanding Capri Acquisition Senior Notes at a redemption price of 101% of the aggregate principal amount of such Capri Acquisition Senior Notes, plus accrued and unpaid interest to, but excluding, the date of redemption.

In addition, the Capri Acquisition Term Loan Facilities were terminated concurrently with the execution of the Termination Agreement on November 13, 2024.

Refer to Note 5, "Acquisitions and Divestitures" and Note 12, "Debt" for further information.

2025 Growth Strategy

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The Company aims to support balanced growth across regions, prioritizing North America and China, its largest markets, while capitalizing on opportunities in under-penetrated geographies such as Southeast Asia and Europe.

The Company's next investor day will be held in September 2025, during which the Company will present its latest long-term growth strategy.

GLOBAL ECONOMIC CONDITIONS AND INDUSTRY TRENDS

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Current Macroeconomic Conditions and Outlook

During fiscal 2024, the macroeconomic environment remained challenging and volatile.

Several organizations that monitor the world’s economy, including the International Monetary Fund, continue to forecast growth in the global economy, and remains unchanged since the third quarter of fiscal 2024.

The forecast is below the historical growth average and is reflective of the current volatile environment, including tighter monetary and fiscal policies which have started to moderate inflation, financial market volatility and the negative economic impacts of geopolitical instability in certain regions of the world.

In fiscal 2024, freight costs have continued to moderate as compared to prior year.

As a result, during fiscal 2024, the Company incurred lower freight expense of $84.2 million when compared to the prior year, positively impacting gross margin by approximately 130 basis points.

Currency volatility, geopolitical instability and political uncertainty, such as the impact of policies implemented and that may be implemented by the U.S.

Presidential Administration, including, but not limited to, changes to trade agreements, tax legislation or duty rates may also contribute to a worsening of the macroeconomic environment or adversely impact our business.

During the second half of fiscal 2025, the U.S.

Government announced tariffs on imports from select countries.

The majority of the Company's products sold in the U.S.

are imported from countries in which these tariffs were announced.

As a result of the Company's actions to accelerate inventory purchases and based on current trends of the business, we did not experience a meaningful negative impact to our results of operations in fiscal 2025.

At the time of this report, the Company estimates a projected tariff and trade policy impact of approximately 230 basis points to operating margin in fiscal 2026 after consideration of mitigating actions.

In addition, there could be further impact to our results of operations in fiscal 2026 and beyond depending on the outcome of trade negotiations.

The Company is prepared to take actions to mitigate this negative impact as changes in trade relations, economic and monetary policies are made clear.

The macroeconomic environment remained challenging and volatile during fiscal 2025.

Several organizations that monitor the world’s economy, including the International Monetary Fund, continue to forecast growth in the global economy.

Some of these organizations have recently revised the forecast slightly upwards since the third quarter of fiscal 2025.

The forecast is below the historical growth average and is reflective of the current volatile environment, including escalation of trade tensions, tighter monetary and fiscal policies which have continued to moderate inflation, financial market volatility and the negative economic impacts of geopolitical instability in certain regions of the world.

In fiscal 2025, the U.S.

Dollar has continued to fluctuate as compared to foreign currencies in regions where we conduct our business.

During fiscal 2024, this trend has resulted in impacts to our business including, but not limited to, decreased Net

sales of $77.3 million, a positive impact to gross margin of approximately 30 basis points which benefited from the Company's hedging activity and approximately 10 basis point positive impact to operating margin.

Currency volatility, political instability and potential changes to trade agreements or duty rates may also contribute to a worsening of the macroeconomic environment or adversely impact our business.

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.

In response to the current environment, the Company continues to take strategic actions considering near-term exigencies and remains committed to maintaining the health of the brands and business.

Geopolitical Disruptions to Supply Chain

During fiscal 2024, certain geopolitical events have impacted trade routes in the Red Sea which have modestly increased inventory in-transit times and costs.

The Company has taken actions to minimize any potential disruptions and, at this time, does not anticipate material impact to our business or operating results.

We will continue to closely monitor the situation.

Covid-19 Pandemic

The Covid-19 pandemic has resulted in varying degrees of business disruption for the Company since it began in fiscal 2020 and has impacted all regions around the world, resulting in restrictions and shutdowns implemented by national, state and local authorities.

Such disruptions continued during the first half of fiscal 2023, and the Company's results in Greater China were adversely impacted as a result of the Covid-19 pandemic.

Starting in December 2022, certain government restrictions were lifted in the region and business trends have improved.

During fiscal 2024, the Covid-19 pandemic did not materially impact our business or operating results.

We continue to monitor the latest developments regarding the Covid-19 pandemic and potential impacts on our business, operating results and outlook.

Refer to Part I, Item 1A.

"Risk Factors" for additional discussion regarding risks to our business associated with the Covid-19 pandemic.

During fiscal 2025, this trend has resulted in impacts to our business including, but not limited to, decreased Net sales of $13.4 million, no impact to gross margin and approximately 20 basis point negative impact to operating margin.

In response to the current environment, the Company is closely monitoring changes and continues to take strategic actions considering near-term exigencies and remains committed to maintaining the health of the brands and business.

Fiscal 2025 Impairment

During the fourth quarter of fiscal 2025, the Company performed its annual goodwill and indefinite-lived intangible assets impairment analysis.

The assessment concluded that the fair values of the Kate Spade reporting unit and indefinite-lived brand intangible asset did not exceed their respective carrying values due to a reduction in both current and future expected cash flows, which includes an estimated impact of cost increases due to changes in tariff and trade policies.

As a result, the Company recorded $244.1 million of impairment charges to goodwill for the Kate Spade reporting unit and $610.7 million of impairment charges to indefinite-lived brand intangible assets during the fourth quarter of fiscal 2025.

Refer to "Critical Accounting Policies and Estimates," herein, for further information.

Tax Legislation

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law by the Biden Administration, with tax provisions primarily focused on implementing a 15% CAMT on global adjusted financial statement income and a 1% excise tax on share repurchases.

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, with tax provisions primarily focused on implementing a 15% corporate alternative minimum tax (“CAMT”) on global adjusted financial statement income and a 1% excise tax on share repurchases.

The CAMT was effective at the beginning of fiscal 2024 and did not have a material impact on the Company’s effective tax rate.

On December 12, 2022, the E.U.

member states also reached an agreement to implement the OECD’s reform of international taxation known as GloBE, which broadly mirrors the Inflation Reduction Act by imposing a 15% global minimum tax on multinational companies.

Based on the countries in which we do business that have enacted legislation effective January 1, 2025, we do not expect the impact of these changes to be material for fiscal 2025.

A number of other countries are also implementing similar legislation with effective dates starting in 2026.

As a result, we do expect a modest negative impact on the Company’s effective tax rate, however, this could change as other countries enact similar legislation and further guidance is released.

We continue to closely monitor regulatory developments to assess potential impacts.

member states also reached an agreement to implement the Organization for Economic Co-operation and Development’s (“OECD”) reform of international taxation known as Global Anti-Base Erosion Rules (“GloBE”), which broadly mirrors the Inflation Reduction Act by imposing a 15% global minimum tax on multinational companies, which was effective on January 1, 2025.

Based on the countries in which we do business, these changes did not have a material impact in fiscal 2025.

Other countries are also implementing similar legislation with effective dates starting in fiscal 2026, known as Qualifying Domestic Minimum Top-Up Tax ("QDMTT").

On June 26, 2025, the U.S.

Treasury reached an agreement with the other G7 countries regarding the application of GloBE rules to U.S.

parented multinational enterprises ("U.S.

Most notably, the agreement includes a full exclusion for U.S.

MNEs from the Undertaxed Profits Rule and Income Inclusion Rule, which are two of the three taxing mechanisms under GloBE.

Given that the third mechanism, QDMTT is still in force, it is unclear what impact if any this agreement will have on the Company.

MNEs are likewise excluded from QDMTT, the Company believes QDMTT would have a negative impact on its effective tax rate in fiscal 2026 and beyond.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted.

Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of research and development expenditures (reinstating full expensing beginning January 2025), permanent extension of 100% bonus depreciation, and revisions to international tax regimes that more closely align with the original application of Tax Cut Jobs Act of 2017.

The Company is evaluating the financial implications of the OBBBA and will begin reflecting its effects in the first quarter of fiscal 2026.

The Company believes this legislation will not have a material impact on its financial statements but will continue to evaluate as guidance becomes available.

RESULTS OF OPERATIONS

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Fiscal Year Ended

June 29, 2024 July 1, 2023 Variance

June 28, 2025 June 29, 2024 Variance

(millions, except per share data)

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Operating income (loss) 415.0 5.9 1,140.1 17.1 (725.1) (63.6)

Interest expense, net 125.0 1.9 27.6 0.4 97.4 NM

Other expense (income) 3.2 — 1.7 — 1.5 84.1

Loss on extinguishment of debt 120.1 1.7 — — 120.1 NM

Interest expense, net 85.4 1.2 125.0 1.9 (39.6) (31.7)

Other expense (income) (6.6) (0.1) 3.2 — (9.8) NM

Income (loss) before provision for income taxes 216.1 3.1 1,011.9 15.2 (795.8) (78.7)

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The Company’s reported results are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The reported results during fiscal 2024 reflect certain items which affect the comparability of our results, as noted in the following table.

There were no charges affecting comparability during fiscal 2023.

The reported results during fiscal 2025 and fiscal 2024 reflect certain items which affect the comparability of our results, as noted in the following tables.

Refer to "Non-GAAP Measures" herein for further discussion on the Non-GAAP measures.

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Items affecting comparability

(As Reported) Acquisition and Divestiture Costs Organizational Efficiency Costs Impairment Non-GAAP Basis

(Excluding Items)

(millions, except per share data)

Coach $ 1,875.3 $ — $ (0.8) $ — $ 1,876.1

Kate Spade (769.2) — (5.7) (854.8) 91.3

Stuart Weitzman (15.4) (0.6) — — (14.8)

Corporate (675.7) (111.9) (10.7) — (553.1)

Operating income (loss) $ 415.0 $ (112.5) $ (17.2) $ (854.8) $ 1,399.5

Net income (loss) $ 183.2 $ (212.0) $ (13.9) $ (725.1) $ 1,134.2

Net income (loss) per diluted common share $ 0.82 $ (0.95) $ (0.06) $ (3.27) $ 5.10

In fiscal 2025, the Company incurred charges as follows:

• Acquisition and Divestiture Costs - Includes costs related to the terminated Capri Acquisition and the Stuart Weitzman Business Divestiture.

These charges include:

◦ Capri Acquisition Costs:

Total pre-tax charges of $268.4 million primarily related to:

▪ Loss on extinguishment of debt - $119.4 million primarily related to redemption premiums, as well as unamortized debt issuance costs and discounts, as a result of the redemption of the Capri Acquisition Senior Notes in fiscal 2025 due to the termination of the Capri Acquisition agreement;

▪ SG&A expenses - $88.8 million primarily related to expense reimbursement payment made to Capri and professional fees recorded;

▪ Interest expense, net - $60.2 million of financing related charges which primarily includes the net impact of the Capri Acquisition Senior Notes;

◦ Stuart Weitzman Business Divestiture Costs :

Total pre-tax charges of $23.7 million primarily due to the loss on business held for sale, professional fees, share-based compensation expense and store impairment.

• Organizational Efficiency Costs - Total pre-tax charges of $17.2 million primarily related to severance costs and technology costs.

• Impairment - Total pre-tax charges of $854.8 million primarily due to impairment charges on the indefinite-lived brand intangible asset and goodwill for Kate Spade.

Refer to Note 14, "Goodwill and Other Intangible Assets" for further information.

These actions taken together negatively impacted operating income by $984.5 million, increased Loss on extinguishment of debt by $119.4 million, increased interest expense by $60.2 million and reduced the provision for income tax by $213.1 million resulting in a net decrease in net income by $951.0 million or $4.28 per diluted share.

Supplemental Segment Data

Fiscal Year Ended June 28, 2025

Items affecting comparability

(As Reported) Acquisition and Divestiture Costs Organizational Efficiency Costs Impairment Non-GAAP Basis

(Excluding Items)

Coach $ 2,497.2 $ — $ 0.8 $ — $ 2,496.4

Kate Spade 1,567.2 — 5.7 854.8 706.7

Stuart Weitzman 133.8 0.6 — — 133.2

Corporate 675.7 111.9 10.7 — 553.1

SG&A expenses $ 4,873.9 $ 112.5 $ 17.2 $ 854.8 $ 3,889.4

Fiscal 2024 Items

Fiscal Year Ended June 29, 2024

Items affecting comparability

(As Reported) Acquisition Costs Non-GAAP Basis

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Fiscal Year Ended Variance

June 29, 2024 July 1, 2023 Amount % Constant Currency Change

June 28, 2025 June 29, 2024 Amount % Constant Currency Change

Coach $ 5,598.5 $ 5,095.3 $ 503.2 9.9 % 10.1 %

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Excluding the impact of foreign currency, net sales increased 10.1% or $514.5 million.

This increase in net sales was primarily due to an increase of $110.7 million in DTC sales driven by an increase in store and to a lesser extent, e-commerce sales.

The increase in net sales was also attributed to an $81.4 million increase in wholesale sales primarily driven by international, which included growth in the digital wholesale channel.

This increase in net sales was primarily due to an increase of $445.0 million in DTC sales as a result of an increase in both e-commerce and store sales, mainly driven by North America, Europe and Greater China.

The increase in net sales was also attributed to a $89.4 million increase in wholesale sales, mainly driven by North America and Greater China.

• Kate Spade Net Sales decreased 10.3% or $137.3 million to $1.20 billion in fiscal 2025.

Excluding the impact of foreign currency, net sales decreased 10.1% or $135.2 million.

This decrease in net sales was primarily due a decrease of $76.9 million in DTC sales as a result of lower store and to a lesser extent, e-commerce sales.

• Stuart Weitzman Net Sales decreased by 14.2% or $40.1 million to $241.5 million in fiscal 2024.

This decrease in net sales was due to a decrease of $148.7 million in DTC sales as a result of lower store and to a lesser extent, e-commerce sales.

The decrease in DTC sales was partially offset by an increase of $10.2 million in wholesale sales.

• Stuart Weitzman Net Sales decreased 10.9% or $26.4 million to $215.1 million in fiscal 2025.

Excluding the impact of foreign currency, net sales decreased 10.9% or $26.4 million.

Fiscal Year Ended

June 29, 2024 July 1, 2023 Variance

June 28, 2025 June 29, 2024 Variance

Amount % of Net Sales Amount % of Net Sales Amount %

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Gross margin in fiscal 2025 increased 210 basis points to 75.4% as compared to 73.3% in fiscal 2024.

This increase in Gross margin was primarily attributed to lower freight costs, net pricing improvements and favorable currency impacts.

Refer to "Current Macroeconomic Conditions and Outlook" herein, for further information.

This increase in Gross margin was primarily attributed to net pricing improvements.

The Company includes inbound product-related transportation costs from our service providers within Cost of sales.

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Fiscal Year Ended

June 29, 2024 July 1, 2023 Variance

June 28, 2025 June 29, 2024 Variance

Amount % of Net Sales Amount % of Net Sales Amount %

1 unchanged sentence

Kate Spade (1)

1,567.2 NM 738.6 55.3 828.6 NM

Stuart Weitzman (2)

133.8 62.2 164.1 68.0 (30.3) (18.5)

Corporate (3)(4)

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Tapestry $ 4,873.9 69.5 $ 3,749.4 56.2 $ 1,124.5 30.0

SG&A expenses increased 5.8% or $206.9 million to $3.75 billion in fiscal 2024 as compared to $3.54 billion in fiscal 2023.

SG&A expenses increased 30.0% or $1.12 billion to $4.87 billion in fiscal 2025 as compared to $3.75 billion in fiscal 2024.

As a percentage of net sales, SG&A expenses increased to 69.5% during fiscal 2025 as compared to 56.2% during fiscal 2024.

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SG&A as a percentage of net sales increased 90 basis points to 55.4% as compared to 54.5% in fiscal 2024.

This increase in SG&A as a percentage of net sales was primarily due to higher marketing spend, higher compensation costs, increased occupancy costs and higher professional fees, partially offset by a decrease in distribution costs.

This increase in SG&A as a percentage of net sales was primarily due to higher marketing spend and higher compensation costs driven by accrued incentive compensation, partially offset by leverage of fixed costs on higher net sales.

(1) In fiscal 2025, Kate Spade incurred charges affecting comparability of $860.5 million.

Excluding those items affecting comparability, SG&A expenses decreased 4.3% or $31.9 million to $706.7 million in fiscal 2025 as compared to $738.6 million in fiscal 2024.

SG&A as a percentage of net sales increased 380 basis points to 59.1% in fiscal 2025 as compared to 55.3% in fiscal 2024.

(2) In fiscal 2025, Stuart Weitzman incurred charges affecting comparability of $0.6 million.

Excluding those items affecting comparability, SG&A expenses decreased 18.9% or $30.9 million to $133.2 million in fiscal 2025 as compared to $164.1 million in fiscal 2024.

SG&A as a percentage of net sales decreased 610 basis points to 61.9% in fiscal 2025 as compared to 68.0% in fiscal 2024.

(3) In fiscal 2025, Corporate incurred charges affecting comparability of $122.6 million.

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Fiscal Year Ended

June 29, 2024 July 1, 2023 Variance

June 28, 2025 June 29, 2024 Variance

Amount % of Net Sales Amount % of Net Sales Amount %

Coach $ 1,875.3 33.5 % $ 1,651.1 32.4 % $ 224.2 13.6 %

Kate Spade 132.6 9.9 115.0 8.1 17.6 15.3

Stuart Weitzman (21.2) (8.8) (6.7) (2.4) (14.5) NM

Kate Spade (769.2) (64.3) 132.6 9.9 (901.8) NM

Stuart Weitzman (15.4) (7.1) (21.2) (8.8) 5.8 27.8

Corporate (675.7) NA (622.4) NA (53.3) (8.6)

Tapestry $ 415.0 5.9 $ 1,140.1 17.1 $ (725.1) (63.6)

Operating income decreased $32.3 million to $1.14 billion during fiscal 2024 as compared to $1.17 billion in fiscal 2023.

Operating income decreased $725.1 million to $415.0 million during fiscal 2025 as compared to $1.14 billion in fiscal 2024.

Operating margin was 5.9% in fiscal 2025 as compared to 17.1% in fiscal 2024.

Excluding items affecting comparability of $984.5 million in fiscal 2025, operating income increased $149.5 million to $1.40 billion from $1.25 billion in fiscal 2024;

and operating margin increased 110 basis points to 18.7% in fiscal 2024 as compared to 17.6% in fiscal 2023.

This increase in operating margin was primarily attributed to an increase of 250 basis points in gross margin partially offset by a 140 basis points increase in SG&A as a percentage of sales.

and operating margin increased approximately 130 basis points to 20.0% in fiscal 2025 as compared to 18.7% in fiscal 2024.

This increase in operating margin was primarily attributed to an increase of 210 basis points in gross margin partially offset by 90 basis points increase in SG&A as a percentage of sales.

• Coach Operating Income increased $224.2 million to $1.88 billion in fiscal 2025, resulting in an operating margin increase of 110 basis points to 33.5%, as compared to $1.65 billion and 32.4%, respectively in fiscal 2024.

This increase in operating margin was primarily attributed to:

◦ Gross Margin , increased 260 basis points mainly due to lower freight costs, net pricing improvements and favorable currency impacts;

◦ SG&A expenses as a percentage of net sales , increased 100 basis points mainly due to higher marketing spend and higher compensation costs, partially offset by a decrease in distribution costs.

• Kate Spade Operating Income increased $17.6 million to $132.6 million in fiscal 2024, resulting in an operating margin increase of 180 basis points to 9.9%, as compared to 115.0 million and 8.1%, respectively in fiscal 2023.

This increase in operating margin was primarily attributed to:

◦ Gross Margin , increased 180 basis points mainly due to lower freight costs and net pricing improvements;

◦ SG&A expenses as a percentage of net sales , remained even to prior year mainly driven by increased occupancy costs and higher information technology costs, partially offset by lower marketing spend, depreciation and lower compensation costs.

• Stuart Weitzman Operating Loss increased $14.5 million to a loss of $21.2 million in fiscal 2024, resulting in an operating margin decrease of 640 basis points to (8.8)%, as compared to an operating loss of $6.7 million and operating margin of (2.4)% in fiscal 2023.

◦ Gross Margin , increased 200 basis points mainly due to net pricing improvements;

◦ SG&A expenses as a percentage of net sales , increased 90 basis points mainly due to higher marketing spend, partially offset by leverage of fixed costs on higher net sales.

• Kate Spade Operating Loss increased $901.8 million to a loss of $769.2 million in fiscal 2025, resulting in an operating margin of (64.3)%, as compared to income of $132.6 million and 9.9%, respectively in fiscal 2024.

Excluding items affecting comparability, operating income decreased $41.3 million to $91.3 million in fiscal 2025 from $132.6 million in fiscal 2024;

and operating margin decreased 230 basis points to 7.6% in fiscal 2025 as compared to 9.9% in fiscal 2024.

This decrease in operating margin was primarily attributed to:

◦ Gross Margin , increased 150 basis points mainly due to lower duty expenses, lower freight costs and net pricing improvements;

◦ SG&A expenses as a percentage of net sales , increased 380 basis points mainly driven by higher marketing spend, deleverage of fixed costs on lower net sales, partially offset by a decrease in distribution costs.

• Stuart Weitzman Operating Loss decreased $5.8 million to a loss of $15.4 million in fiscal 2025, resulting in an operating margin increase of 170 basis points to (7.1)%, as compared to an operating loss of $21.2 million and operating margin of (8.8)% in fiscal 2024.

Excluding items affecting comparability, operating loss decreased $6.4 million to a loss of $14.8 million in fiscal 2025 from a loss of $21.2 million in fiscal 2024;

and operating margin increased 200 basis points to (6.8)% in fiscal 2025 as compared to (8.8)% in fiscal 2024.

• Corporate Operating Expenses increased 8.6% or $53.3 million to $675.7 million in fiscal 2025.

Excluding items affecting comparability, Corporate operating expenses increased $40.6 million to $553.1 million from $512.5 million in fiscal 2024.

This increase in operating expenses was attributed to an increase in SG&A expenses primarily due to increased compensation costs, higher professional fees and increased occupancy costs.

This increase in operating expenses was due to higher compensation costs driven by accrued incentive compensation and higher professional fees, partially offset by lower occupancy costs.

Loss on Extinguishment of Debt

Loss on extinguishment of debt increased $120.1 million in fiscal 2025 to $120.1 million as compared to $0.0 million in fiscal 2024.

Excluding items affecting comparability, Loss on extinguishment of debt was $0.7 million in fiscal 2025 as compared to $0.0 million in fiscal 2024.

Interest Expense, net

Interest expense, net, increased $97.4 million to $125.0 million in fiscal 2024 as compared to $27.6 million in fiscal 2023.

Excluding items affecting compatibility, Interest expense, net, decreased $19.3 million to $8.3 million from $27.6 million in fiscal 2023.

This decrease in Interest expense, net, was mainly due to higher interest income partially offset by higher interest on the term loan due 2027 (the "Term Loan due 2027").

Interest expense, net, decreased $39.6 million to $85.4 million in fiscal 2025 as compared to $125.0 million in fiscal 2024.

Excluding items affecting comparability, Interest expense, net, increased $16.9 million to $25.2 million from $8.3 million in fiscal 2024.

This increase in net interest expense was mainly due to an increase in interest expense as a result of the issuance of the 2030 and 2035 Senior Notes and borrowings under the Existing Revolving Credit Facility, partially offset by a decrease in interest expense as a result of the repayment of the Term Loan due 2027.

Other Expense (Income)

Other expense increased $1.5 million to $3.2 million in fiscal 2024 as compared to an expense of $1.7 million in fiscal 2023.

This increase in other expense was related to an increase in foreign exchange losses.

Other income increased $9.8 million to Other income of $6.6 million in fiscal 2025 as compared to Other expense of $3.2 million in fiscal 2024.

This increase in Other income was related to an increase in foreign exchange gains.

Provision (Benefit) for Income Taxes

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Excluding items affecting comparability, the effective tax rate was 17.8% in fiscal 2025 as compared to 19.2% in fiscal 2024.

The increase in effective tax rate was primarily driven by discrete items recognized in the period partially offset by geographic mix of earnings.

The decrease in effective tax rate was primarily driven by discrete items recognized in the period, partially offset by geographic mix of earnings.

Net Income (Loss)

Net income decreased 77.6% or $632.8 million to $183.2 million in fiscal 2025 as compared to a net income of $816.0 million in fiscal 2024.

Excluding items affecting comparability, net income increased 6.9% or $64.2 million to $1.00 billion in fiscal 2024 from $936.0 million in fiscal 2023.

Excluding items affecting comparability, net income increased 13.4% or $134.0 million to $1.13 billion in fiscal 2025 from $1.00 billion in fiscal 2024.

Net Income (Loss) per Share

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FISCAL 2024 COMPARED TO FISCAL 2023

The comparison of fiscal 2023 to 2022 has been omitted from this Form 10-K, but can be referenced in our Form 10-K for the fiscal year ended July 1, 2023, filed on August 17, 2023 within Part II.

The comparison of fiscal 2024 to 2023 has been omitted from this Form 10-K, but can be referenced in our Form 10-K for the fiscal year ended June 29, 2024, filed on August 15, 2024 within Part II.

"Management's Discussion and Analysis of Financial Conditions and Results of Operations".

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The Company’s reported results are presented in accordance with GAAP.

The reported SG&A expenses, operating income, interest expense, provision for income taxes, net income and earnings per diluted share in fiscal 2024 reflect certain items affecting comparability, including the impact of Acquisition costs.

There were no items affecting comparability in fiscal 2023.

As a supplement to the Company's reported results, these metrics are also reported on a non-GAAP basis to exclude the impact of these items along with a reconciliation to the most directly comparable GAAP measures.

The reported SG&A expenses, Operating income, Interest expense, Provision for income taxes, Net income and earnings per diluted share in fiscal 2025 and fiscal 2024 and the reported Loss on extinguishment of debt in fiscal 2025, reflect certain items affecting comparability, including the impact of Acquisition and Divestiture Costs, Organizational Efficiency Costs and Impairment charges.

As a supplement to the Company's reported results, these measures are also reported on a non-GAAP basis to exclude the impact of these items along with a reconciliation to the most directly comparable GAAP measures.

The Company incurred Acquisition and Divestiture Costs which consist of non-recurring acquisition and divestiture costs, primarily financing-related expenses and professional fees from the terminated Capri Acquisition as well as costs related to the Stuart Weitzman Business Divestiture, inclusive of the loss on business held for sale, professional fees, share-based compensation expense and store impairment.

The Company also incurred Organizational Efficiency Costs which consist of non-recurring costs, primarily from various initiatives aimed at streamlining the organization and optimizing processes.

These costs mainly include one-time severance and technology related charges.

Impairment charges incurred by the Company consist of non-recurring impairment costs related to Kate Spade indefinite-lived brand intangible assets and goodwill.

These non-GAAP performance measures were used by management to conduct and evaluate its business during its regular review of operating results for the periods affected.

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The Company’s internal management reporting excluded these items.

In addition, the HR Committee uses these non-GAAP measures when setting and assessing achievement of incentive compensation goals.

In addition, the human resources committee of the Company’s Board uses these non-GAAP measures when setting and assessing achievement of incentive compensation goals.

The Company operates on a global basis and reports financial results in U.S.

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Fiscal Year Ended

2025 June 29,

Net cash provided by (used in) operating activities $ 1,216.6 $ 1,255.6 $ (39.0)

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Net increase (decrease) in cash and cash equivalents $ (5,018.3) $ 5,415.9 $ (10,434.2)

The Company’s cash and cash equivalents increased by $5.42 billion in fiscal 2024 compared to a decrease of $63.7 million in fiscal 2023, as discussed below.

The Company’s cash and cash equivalents decreased by $5.02 billion in fiscal 2025 compared to an increase of $5.42 billion in fiscal 2024, as discussed below.

Net cash provided by (used in) operating activities

Net cash provided by operating activities increased $280.4 million primarily due to changes in operating assets and liabilities of $426.8 million partially offset by lower net income of $120.0 million and lower impact of non-cash adjustments of $26.4 million.

The $426.8 million increase in changes in operating asset and liability balances was primarily driven by the following:

• Accrued liabilities were a source of cash of $91.6 million in fiscal 2024 as compared to a use of cash of $93.0 million in fiscal 2023, primarily driven by accrued incentive compensation and an increase in accrued interest due to issuance of the Capri Acquisition Senior Notes.

• Accounts payable were a source of cash of $49.1 million in fiscal 2024 as compared to a use of cash of $98.1 million in fiscal 2023, primarily driven by a reduction of in-transit inventory in the prior year.

• Other Assets were a use of cash of $0.1 million in fiscal 2024 as compared to a use of cash of $100.7 million in fiscal 2023, primarily driven by an increase in other receivables due to the net investment hedge, tax refunds in the current year and lower cloud computing project spend.

Net cash provided by operating activities decreased $39.0 million primarily due to lower net income of $632.8 million and changes in operating assets and liabilities of $207.2 million partially offset by a higher impact of non-cash adjustments of $801.0 million primarily related to the impairment of goodwill and intangible assets.

The $207.2 million decrease in changes in operating asset and liability balances was primarily driven by the following:

• Inventories were a use of cash of $108.2 million in fiscal 2025 compared to a source of cash of $85.8 million in fiscal 2024, primarily driven by increased inventory purchases for Coach to support continued sales growth and pull forward of inventory receipts.

• Accounts payable were a use of cash of $15.0 million in fiscal 2025 as compared to a source of cash of $49.1 million in fiscal 2024, primarily driven by a decrease in professional fees due to higher spending in the prior year related to the Capri Acquisition and timing of other payments, partially offset by an increase in advertising.

• Accounts receivables were a source of cash of $8.8 million in fiscal 2025 as compared to a use of cash of $37.3 million in fiscal 2024, primarily driven by timing of collections.

Net cash provided by (used in) investing activities

Net cash used in investing activities was $1.04 billion in fiscal 2024 compared to a source of cash of $5.7 million in fiscal 2023, resulting in a $1.05 billion increase in net cash used in investing activities.

Net cash provided by investing activities was $914.0 million in fiscal 2025 compared to a use of cash of $1.04 billion in fiscal 2024, resulting in a $1.96 billion increase in net cash provided by investing activities.

The $914.0 million source of cash in fiscal 2025 was primarily due to proceeds from maturities and sales of investments of $2.92 billion, partially offset by purchases of investments of $1.89 billion, mainly related to the proceeds of the Capri Acquisition Senior Notes.

The $1.04 billion use of cash in fiscal 2024 was primarily due to purchases of investments of $2.71 billion, partially offset by maturities and sales of investments of $1.68 billion, mainly related to the proceeds of the Capri Acquisition Senior Notes.

The $5.7 million source of cash in fiscal 2023 was primarily due to proceeds from maturities and sales of investments of $148.0 million, settlement of net investment hedge of $41.9 million, partially offset by capital expenditures of $184.2 million.

Net cash provided by (used in) financing activities

Net cash provided by financing activities was $5.21 billion in fiscal 2024 as compared to a use of cash of $1.04 billion in fiscal 2023, resulting in a $6.25 billion increase in net cash provided by financing activities.

Net cash used in financing activities was $7.18 billion in fiscal 2025 as compared to a source of cash of $5.21 billion in fiscal 2024, resulting in a $12.39 billion increase in net cash used in financing activities.

The $7.18 billion use of cash in fiscal 2025 was primarily due to the repayment of debt of $7.16 billion, which mainly included the Capri Acquisition Senior Notes, use of cash of $2.02 billion under the Company's accelerated share repurchase program partially offset by proceeds from the issuance of debt of $2.25 billion.

The $5.21 billion source of cash in fiscal 2024 was primarily due to proceeds from the issuance of the Capri Acquisition Senior Notes of $6.09 billion, partially offset by the repayment of the Term Loan due 2027 of $468.8 million, and dividend payments of $321.4 million.

The $1.04 billion use of cash in fiscal 2023 was primarily due to repurchase of common stock of $703.5 million, dividend payments of $283.3 million, as well as taxes paid to net settle share-based awards of $55.6 million.

Effect of exchange rate changes on cash and cash equivalents

Effect of exchange rate changes on cash and cash equivalents was a decrease of $12.2 million as compared to a decrease of $8.7 million in fiscal 2023.

Effect of exchange rate changes on cash and cash equivalents was an increase of $26.3 million as compared to a decrease of $12.2 million in fiscal 2024.

Cash Flows - Fiscal 2024 Compared to Fiscal 2023

The comparison of fiscal 2023 to 2022 has been omitted from this Form 10-K, but can be referenced in our Form 10-K for the fiscal year ended July 1, 2023, filed on August 17, 2023 within Part II.

The comparison of fiscal 2024 to 2023 has been omitted from this Form 10-K, but can be referenced in our Form 10-K for the fiscal year ended June 29, 2024, filed on August 15, 2024 within Part II.

"Management's Discussion and Analysis of Financial Conditions and Results of Operations" .

Working Capital and Capital Expenditures

The following table presents our financial condition as of June 29, 2024 and July 1, 2023 :

June 29, 2024 July 1, 2023 Change

The following table presents our financial condition as of June 28, 2025 and June 29, 2024 :

June 28, 2025 June 29, 2024 Change

Cash and cash equivalents (1)

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Total Availability Borrowings Outstanding Remaining Availability

Revolving Credit Facility (1)

$ 2,000.0 $ — $ 2,000.0

Capri Acquisition Term Loan Facilities (1)

Amended Revolving Credit Facility (1)

$ 2,000.0 $ — $ 2,000.0

China Credit Facility (1)(2)

34.9 16.7 18.2

Total $ 2,034.9 $ 16.7 $ 2,018.2

(1) Refer to Note 12, "Debt" for further information on these instruments.

(2) The carrying amounts of the China Credit Facility include the impact of changes in the exchange rate of the United States Dollar against the RMB.

We believe that our Revolving Credit Facility is adequately diversified with no undue concentrations in any one financial institution.

As of June 29, 2024, there were 18 financial institutions participating in the Revolving Credit Facility and 24 financial institutions participating in the Capri Acquisition Term Loan Facilities with no one participant maintaining a combined maximum commitment percentage in excess of 10%.

(2) The carrying amounts of the China Credit Facility include the impact of changes in the exchange rate of the United States Dollar against the Renminbi.

We believe that our Amended Revolving Credit Facility is adequately diversified with no undue concentrations in any one financial institution.

As of June 28, 2025, there were 18 financial institutions participating in the Amended Revolving Credit Facility, with no one participant maintaining a commitment percentage in excess of 10%.

We have no reason to believe, at this time, that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the facility in the event we elect to draw funds in the foreseeable future.

We have the ability to draw on our credit facilities or access other sources of financing options available to us in the credit and capital markets for, among other things, acquisition or integration-related costs, our restructuring initiatives, settlement of a material contingency or a material adverse business or macroeconomic development, as well as for other general corporate business purposes.

If (i) the Capri Acquisition has not been completed by February 10, 2025 (or such later date mutually agreed between the Company and Capri) (such date, the “special mandatory redemption end date”), (ii) prior to the special mandatory redemption end date, the Merger Agreement is terminated in accordance with its terms or (iii) the Company otherwise notifies the trustee that it will not pursue the consummation of the Capri Acquisition, all of the Capri Acquisition Senior Notes will be redeemed at a redemption price equal to 101% of their principal amount, plus accrued and unpaid interest to, but excluding, the special mandatory redemption date.

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 2026 and beyond.

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This future operating performance and cash flow are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond the Company's control.

Stuart Weitzman Business Divestiture

On February 16, 2025, the Company entered into a Purchase Agreement to sell the Stuart Weitzman Business for total cash consideration of $105.0 million, subject to customary adjustments.

The sale was completed on August 4, 2025.

Refer to Note 5, "Acquisitions and Divestitures," and Note 21, "Subsequent Events," for further information.

Supply Chain Finance

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No guarantees are provided by the Company or any of our subsidiaries under the SCF program.

Refer to Note 2, "Basis of Presentation and Organization," for additional information.

Refer to Note 3, "Significant Accounting Policies," for additional information.

Capital Expenditures

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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 weather and macroeconomic events, such as pandemic diseases.

Stock Repurchase Plan

On May 12, 2022, the Company announced the Board authorized the additional repurchase of up to $1.50 billion of its 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.

Repurchased shares of common stock will become authorized but unissued shares.

These shares may be issued in the future for general corporate and other purposes.

In addition, the Company may terminate or limit the stock repurchase program at any time.

As of June 29, 2024 the Company had $800 million of additional shares available to be repurchased as authorized under the 2022 Share Repurchase Program.

In August 2023, the Company suspended its share repurchase activity in connection with the Capri Acquisition.

Refer to Note 5, "Acquisitions," for further information.

There were no shares repurchased during fiscal 2024.

Stock Repurchase Program

On May 12, 2022, the Company announced that its Board of Directors (the "Board") authorized a common stock repurchase program to repurchase up to $1.50 billion of its outstanding common stock (the "2022 Share Repurchase Program").

Purchases of the Company's common stock under this program were executed through open market purchases, including through purchase agreements under Rule 10b5-1.

On November 13, 2024, the Board authorized the Company to repurchase up to $2.00 billion of outstanding shares of its common stock (the "2025 Share Repurchase Program").

Under the 2025 Share Repurchase Program, the Company may repurchase shares on the open market, in privately negotiated transactions or in other transactions, including accelerated share repurchase programs.

On November 21, 2024, the Company entered into accelerated share repurchase agreements (the “ASR Agreements”) with Bank of America, N.A.

and Morgan Stanley & Co.

LLC (the “Dealers”) to repurchase an aggregate of up to $2.00 billion of the Company’s shares of common stock.

Under the ASR Agreements, the Company paid $2.00 billion to the Dealers and received an initial delivery of 28,363,766 shares of the Company's common stock on November 26, 2024.

The total number of shares purchased by the Company pursuant to the ASR Agreements will be based on the volume-weighted average price ("VWAP") of the Company's common stock on specified dates during the term of each of the ASR Agreements, less a discount, and subject to adjustments pursuant to the terms and conditions of the ASR Agreements.

The difference between the initially delivered shares and the total number of shares purchased will be settled in four tranches, no later than the first quarter of fiscal 2026.

During the quarter ended March 29, 2025, the Company cash settled $3.0 million related to 43,094 shares of common stock owed for the settlement of one tranche as a result of the increase in the VWAP of the Company's common stock.

During the quarter ended June 28, 2025, the Company cash settled $3.6 million related to 49,442 shares of common stock of an additional tranche.

As of June 28, 2025, the Company had $800.0 million of additional shares available to be repurchased as authorized under the 2022 Share Repurchase Program and no remaining availability to repurchase shares under the 2025 Share Repurchase Program.

There were no shares repurchased during the three months ended June 28, 2025 under the 2022 Share Repurchase Program and the 2025 Share Repurchase Program.

Contractual and Other Obligations

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Inventory purchase obligations (1)

353.0 353.0 — — —

Operating lease obligations 2,025.3 382.7 586.5 367.9 688.2

Finance lease obligations 1.3 1.3 — — —

Debt repayment (2)

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771.8 131.5 214.0 189.5 236.8

Mandatory transition tax payments (3)

14.9 14.9 — — —

Other 222.3 101.8 111.7 8.8 —

Total $ 5,820.0 $ 1,017.0 $ 1,311.8 $ 1,316.2 $ 2,175.0

(1) The principal amounts and interest of the Capri Acquisition EUR Senior Notes include the impact of changes in the exchange rate of the United States Dollar against the Euro as of June 29, 2024.

(1) Includes inventory purchase obligations related to the Stuart Weitzman Business as of June 28, 2025 of $24.6 million.

(2) The principal and interest of the China Credit Facility include the impact of changes in the exchange rate of the United States Dollar against the Renminbi as of June 28, 2025.

(3) Interest on outstanding debt includes fixed interest expenses for unsecured notes.

The estimated interest expenses associated with our term loan is based on the current interest rate as of June 29, 2024.

Refer to Note 12, "Debt," for further information.

(3) Mandatory transition tax payments represent our tax obligation incurred in connection with the deemed repatriation of previously deferred foreign earnings pursuant to the Tax Legislation.

Refer to Note 15, "Income Taxes," for further information.

We expect to fund these firm commitments with operating cash flows generated in the normal course of business and, if necessary, through availability under our credit facilities or other accessible sources of financing.

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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 June 29, 2024, a 10% change in the inventory reserve, would not have resulted in material change in inventory and cost of sales.

At June 28, 2025, a 10% change in the inventory reserve, would not have resulted in a material change in inventory and cost of sales.

Goodwill and Other Intangible Assets

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The Company performs its annual impairment assessment of goodwill as well as brand intangibles at the beginning of the fourth quarter of each fiscal year.

The Company determined that there was no impairment in fiscal 2024, fiscal 2023 and fiscal 2022.

Based on the annual assessment in fiscal 2024, 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 2024 testing date exceeded their carrying values by approximately 20% and 55%, respectively.

During the fourth quarter of fiscal 2025, the Company performed its annual goodwill and indefinite-lived intangible assets impairment analysis.

Accordingly, the Company recorded $244.1 million of impairment charges to goodwill for the Kate Spade reporting unit during the fourth quarter of the fiscal year.

The Company also recorded an impairment charge of $610.7 million related to the Kate Spade indefinite-lived brand intangible.

The Company determined that there was no impairment in fiscal 2024 or fiscal 2023.

Several factors could impact the Kate Spade brand's ability to achieve expected future cash flows, including the optimization of the store fleet productivity, the success of international expansion strategies, the impact of promotional activity, continued economic volatility and potential operational challenges related to the macroeconomic factors, the reception of new collections in all business channels and other initiatives aimed at increasing profitability of the business.

Given the relatively small excess of fair value over carrying value as noted above, if profitability trends decline during fiscal 2025 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.

If profitability trends decline during fiscal 2026 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.

Based on the annual assessment in fiscal 2025 of the Coach brand reporting unit, the Company determined the fair values significantly exceeded their respective carrying values, therefore resulting in no impairment.

Valuation of Long-Lived Assets

Long-lived assets, such as property and equipment, are evaluated for impairment whenever events or circumstances indicate that the carrying value of the assets may not be recoverable.

Long-lived assets, such as Property and equipment and Operating lease right-of-use ("ROU") assets, are evaluated for impairment whenever events or circumstances indicate that the carrying value of the assets may not be recoverable.

In evaluating long-lived assets for recoverability, the Company uses its best estimate of future cash flows expected to result from the use of the related asset group and its eventual disposition.

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Since the determination of future cash flows is an estimate of future performance, there may be future impairments in the event that future cash flows do not meet expectations.

The Company recorded $ 8.8 million and $ 6.3 million of impairment charges within SG&A expense in the Consolidated Statement of Operations in fiscal 2025 and fiscal 2024, respectively.

Share-Based Compensation

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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 7. Management’s Discussion and Analysis