The Company completed the sale of its Stuart Weitzman Business to Caleres, Inc. on August 4, 2025, for $105.0 million in cash. This divestiture, following a period of declining sales for the brand (down 10.9% in FY25), allows Tapestry to streamline its brand portfolio and focus on core strengths.

The proposed merger with Capri Holdings Limited was terminated on November 13, 2024, following a preliminary injunction from the FTC. This termination resulted in $268.4 million in pre-tax expenses in fiscal 2025, including $119.4 million for debt extinguishment premiums and $88.8 million in SG&A expenses for reimbursement and professional fees.

Tapestry's 'futurespeed' strategy emphasizes building lasting customer relationships, fueling fashion innovation, delivering compelling omni-channel experiences, and powering global growth, particularly in North America and China. This strategic roadmap aims to amplify competitive advantages and drive customer lifetime value.

Gross margin increased by 210 basis points to 75.4% in fiscal 2025, up from 73.3% in fiscal 2024. This improvement was primarily attributed to net pricing improvements, demonstrating management's ability to optimize product pricing and potentially manage input costs effectively.

Total marketing-related activities expenses rose to $744.5 million (approximately 11% of net sales) in fiscal 2025, compared to $616.8 million (over 9% of net sales) in fiscal 2024. This increased investment aligns with the 'futurespeed' strategy's focus on building customer relationships and brand awareness through a 360-degree marketing approach.

The Company incurred $17.2 million in pre-tax 'Organizational Efficiency Costs' in fiscal 2025, primarily for severance and technology initiatives. Additionally, total capital expenditures and cloud computing implementation costs were $153.0 million, indicating ongoing efforts to streamline operations and enhance digital capabilities.

Tapestry recorded $854.8 million in impairment charges for the Kate Spade reporting unit's goodwill ($244.1 million) and indefinite-lived brand intangible assets ($610.7 million) in fiscal 2025. This was driven by a reduction in current and future expected cash flows, including an estimated impact of cost increases due to changes in tariff and trade policies, signaling a material risk to the brand's future profitability.

The U.S. Government announced new tariffs on imports in the second half of fiscal 2025, with an estimated impact of approximately 230 basis points to operating margin in fiscal 2026. This highlights a significant macroeconomic risk that could increase product costs and adversely affect profitability, despite the Company's plans for mitigation.

As of June 28, 2025, consolidated debt was approximately $2.39 billion. The Company is required to comply with a maximum net leverage ratio of 4.00:1.00 under its Amended Revolving Credit Facility. Failure to meet this covenant or generate sufficient cash flows could restrict future business opportunities or lead to accelerated debt payments, posing a material financial risk.

The Coach segment increased net sales by 9.9% to $5,598.5 million in fiscal 2025 and saw its operating income rise by $224.2 million to $1.88 billion, with an operating margin increase of 110 basis points to 33.5%. This performance indicates Coach's strong brand recognition and market position, contrasting with the struggles of other brands in the portfolio.

Tapestry's direct-to-consumer (DTC) business accounted for approximately 86% of total net sales in fiscal 2025. This strong DTC presence, encompassing retail stores and e-commerce sites, provides the Company with immediate and controlled access to consumers, fostering customer relationships and potentially enhancing pricing power.

Kate Spade's net sales decreased 10.3% in fiscal 2025, and the brand incurred $854.8 million in impairment charges for goodwill and intangible assets. This suggests a weakening competitive position, potentially due to changing consumer preferences, increased competition, or challenges in product design and marketing, impacting its market share dynamics.

Tapestry's gross margin increased by 210 basis points to 75.4% in fiscal 2025 from 73.3% in fiscal 2024. This improvement was primarily driven by net pricing improvements, indicating successful management of pricing strategies and potentially favorable product mix or reduced promotional activity.

Selling, General and Administrative (SG&A) expenses increased 30.0% to $4,873.9 million in fiscal 2025, reaching 69.5% of net sales, up from 56.2% in fiscal 2024. Excluding comparability items, SG&A increased 6.9% primarily due to higher marketing spend and increased compensation costs, partially offset by leverage of fixed costs on higher net sales.

Inventories were a use of cash of $108.2 million in fiscal 2025, a shift from a source of $85.8 million in fiscal 2024. This change was primarily driven by increased inventory purchases for the Coach brand to support its continued sales growth and to pull forward inventory receipts, reflecting proactive supply chain management to meet demand.

During fiscal 2025, Tapestry continued to enhance its artificial intelligence (both predictive and generative) and machine learning models. These investments are targeted at improving data analytics, planning, marketing, customer journey personalization, pricing, and product creation to drive more tailored and effective customer engagement.

The Company utilizes a cloud-based digital platform that integrates critical business components, including customer shopping sites, Order Management Systems, Point of Sale systems, Customer Services, Enterprise Resource Planning systems, and product management systems. This unified platform aims to provide best-in-class service and a dynamic, responsive company across all brands.

Total capital expenditures and cloud computing implementation costs amounted to $153.0 million in fiscal 2025. This substantial investment underscores the Company's commitment to digital transformation and leveraging technology to support its long-term growth strategies and operational efficiency.

Net cash used in financing activities significantly increased to $7.18 billion in fiscal 2025 from a source of $5.21 billion in fiscal 2024. This was primarily driven by the repayment of $7.16 billion in debt, mainly including the redemption of the Capri Acquisition Senior Notes after the merger agreement was terminated, demonstrating a commitment to deleveraging.

The Company entered into Accelerated Share Repurchase (ASR) agreements in November 2024 to repurchase up to $2.00 billion of common stock. In fiscal 2025, $1.72 billion was used for repurchases, with $800.0 million remaining under a previous authorization. This indicates management's belief that shares are undervalued and a commitment to returning value to shareholders.

On May 22, 2025, Tapestry refinanced its existing revolving credit facility with a new $2.00 billion unsecured revolving credit facility, maturing May 22, 2030. This new facility, with no outstanding borrowings as of June 28, 2025, provides substantial liquidity and financial flexibility for future operational and strategic needs.

Tapestry has introduced its 'Fabric of Change' Corporate Responsibility (CR) strategy, focusing on four pillars: Power of Our People, Sustain the Planet, Uplift Our Communities, and Create Products with Care. This integrated approach demonstrates a commitment to balancing fashion authority with meaningful, positive change across its operations.

The Company has established goals for utilizing 100% renewable energy, reducing waste, minimizing water use, and achieving greenhouse gas (GHG) emissions reduction targets (Scope 1, 2, 3, Forest, Land and Agriculture) that have been validated by the Science Based Targets initiative. These commitments highlight a strong focus on environmental sustainability.

Tapestry's CR strategy includes goals for employee volunteer service hours, financial and product donations to nonprofit organizations, and empowerment programs for supply chain partners. The Company also emphasizes diversity, inclusion, and employee well-being, including resources for mental wellness and an Associate Relief Fund, reflecting a holistic approach to social responsibility.

The macroeconomic environment remained challenging and volatile during fiscal 2025, characterized by escalating trade tensions, tighter monetary and fiscal policies, financial market volatility, and geopolitical instability. These conditions are expected to continue, impacting global consumer spending on discretionary items.

The U.S. Government's announcement of tariffs on imports from select countries in the second half of fiscal 2025 is projected to negatively impact Tapestry's operating margin by approximately 230 basis points in fiscal 2026. While the Company is preparing mitigation actions, this represents a material headwind from trade policy changes.

Fluctuations in the U.S. Dollar against foreign currencies in fiscal 2025 resulted in a $13.4 million decrease in Net sales and a 20 basis point negative impact to operating margin. Given the Company's global operations, currency volatility remains a continuous risk factor affecting financial results.