Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Jun. 30, 2018 | Aug. 03, 2018 | Dec. 29, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | TAPESTRY, INC. | ||
Trading Symbol | TPR | ||
Entity Central Index Key | 1,116,132 | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 288,038,993 | ||
Entity Public Float | $ 12.4 | ||
Entity Current Reporting Status | Yes | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2018 | Jul. 01, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 1,243.4 | $ 2,672.9 |
Short-term investments | 6.6 | 410.7 |
Trade accounts receivable, less allowances of $1.5 and $1.9, respectively | 314.1 | 268 |
Inventories | 673.8 | 469.7 |
Income tax receivable | 25.8 | 41.5 |
Prepaid expenses | 82.6 | 58.6 |
Other current assets | 86.3 | 31.9 |
Total current assets | 2,432.6 | 3,953.3 |
Property and equipment, net | 885.4 | 691.4 |
Long-term investments | 0 | 75.1 |
Goodwill | 1,484.3 | 480.5 |
Intangible assets | 1,732.9 | 340.8 |
Deferred income taxes | 24.3 | 170.5 |
Other assets | 118.8 | 120 |
Total assets | 6,678.3 | 5,831.6 |
Current Liabilities: | ||
Accounts payable | 264.3 | 194.6 |
Accrued liabilities | 673.2 | 559.2 |
Current debt | 0.7 | 0 |
Total current liabilities | 938.2 | 753.8 |
Long-term debt | 1,599.9 | 1,579.5 |
Deferred income taxes | 206.2 | 63.3 |
Long-term income taxes payable | 222.4 | 0 |
Other liabilities | 467 | 433.1 |
Total liabilities | 3,433.7 | 2,829.7 |
Commitments and contingencies | ||
Stockholders’ Equity: | ||
Preferred stock: (authorized 25.0 million shares; $0.01 par value) none issued | 0 | 0 |
Common stock: (authorized 1.0 billion shares; $0.01 par value) issued and outstanding – 288.0 million and 281.9 million shares, respectively | 2.9 | 2.8 |
Additional paid-in-capital | 3,205.5 | 2,978.3 |
Retained earnings | 119 | 107.7 |
Accumulated other comprehensive income (loss) | (82.8) | (86.9) |
Total stockholders’ equity | 3,244.6 | 3,001.9 |
Total liabilities and stockholders’ equity | $ 6,678.3 | $ 5,831.6 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2018 | Jul. 01, 2017 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowances | $ 1.5 | $ 1.9 |
Preferred stock, authorized (shares) | 25,000,000 | 25,000,000 |
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, issued (shares) | 0 | 0 |
Common stock, authorized (shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, issued (shares) | 288,000,000 | 281,900,000 |
Common stock, outstanding (shares) | 288,000,000 | 281,900,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Income Statement [Abstract] | |||
Net sales | $ 5,880 | $ 4,488.3 | $ 4,491.8 |
Cost of sales | 2,026.1 | 1,407.2 | 1,440.5 |
Gross profit | 3,853.9 | 3,081.1 | 3,051.3 |
Selling, general and administrative expenses | 3,183.1 | 2,293.7 | 2,397.8 |
Operating income | 670.8 | 787.4 | 653.5 |
Interest expense, net | 74 | 28.4 | 26.9 |
Income before provision for income taxes | 596.8 | 759 | 626.6 |
Provision for income taxes | 199.3 | 168 | 166.1 |
Net income | $ 397.5 | $ 591 | $ 460.5 |
Net income per share: | |||
Basic (USD per share) | $ 1.39 | $ 2.11 | $ 1.66 |
Diluted (USD per share) | $ 1.38 | $ 2.09 | $ 1.65 |
Shares used in computing net income per share: | |||
Basic (shares) | 285.4 | 280.6 | 277.6 |
Diluted (shares) | 288.6 | 282.8 | 279.3 |
Cash dividends declared per common share (USD per share) | $ 1.350 | $ 1.350 | $ 1.35 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 397.5 | $ 591 | $ 460.5 |
Other comprehensive income (loss), net of tax: | |||
Unrealized (losses) gains on cash flow hedging derivatives, net | (1.6) | 11.8 | (13.2) |
Unrealized gains (losses) on available-for-sale investments, net | 0.4 | (0.7) | (0.2) |
Change in pension liability, net | 1.5 | 1.1 | (0.6) |
Foreign currency translation adjustments | 3.8 | (26.2) | 18.8 |
Other comprehensive income (loss), net of tax | 4.1 | (14) | 4.8 |
Comprehensive income | $ 401.6 | $ 577 | $ 465.3 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-in-Capital | (Accumulated Deficit)/ Retained Earnings | Accumulated Other Comprehensive (Loss)/Income |
Beginning balance (in shares) at Jun. 27, 2015 | 276.6 | ||||
Beginning balance at Jun. 27, 2015 | $ 2,489.9 | $ 2.8 | $ 2,754.4 | $ (189.6) | $ (77.7) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 460.5 | 460.5 | |||
Other comprehensive income (loss) | 4.8 | 4.8 | |||
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes (in shares) | 1.9 | ||||
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes | 16.4 | $ 0 | 16.4 | ||
Share-based compensation | 95.3 | 95.3 | |||
Excess tax effect from share-based compensation | (9) | (9) | |||
Dividends declared | (375) | (375) | |||
Ending balance (in shares) at Jul. 02, 2016 | 278.5 | ||||
Ending balance at Jul. 02, 2016 | 2,682.9 | $ 2.8 | 2,857.1 | (104.1) | (72.9) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 591 | 591 | |||
Other comprehensive income (loss) | (14) | (14) | |||
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes (in shares) | 3.4 | ||||
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes | 48.9 | $ 0 | 48.9 | ||
Share-based compensation | 76.1 | 76.1 | |||
Excess tax effect from share-based compensation | (3.8) | (3.8) | |||
Dividends declared | (379.2) | (379.2) | |||
Ending balance (in shares) at Jul. 01, 2017 | 281.9 | ||||
Ending balance at Jul. 01, 2017 | 3,001.9 | $ 2.8 | 2,978.3 | 107.7 | (86.9) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 397.5 | 397.5 | |||
Other comprehensive income (loss) | 4.1 | 4.1 | |||
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes (in shares) | 6.1 | ||||
Shares issued, pursuant to stock-based compensation arrangements, net of shares withheld for taxes | 133.9 | $ 0.1 | 133.8 | ||
Share-based compensation | 88.1 | 88.1 | |||
Additional paid-in-capital as part of purchase consideration | 5.3 | 5.3 | |||
Dividends declared | (386.2) | (386.2) | |||
Ending balance (in shares) at Jun. 30, 2018 | 288 | ||||
Ending balance at Jun. 30, 2018 | $ 3,244.6 | $ 2.9 | $ 3,205.5 | $ 119 | $ (82.8) |
Consolidated Statements of Sto7
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Statement of Stockholders' Equity [Abstract] | |||
Dividends declared (USD per share) | $ 1.350 | $ 1.350 | $ 1.35 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES | |||
Net income | $ 397.5 | $ 591 | $ 460.5 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 260.3 | 212.8 | 210.6 |
Provision for bad debt | 1.3 | 1.7 | 3.7 |
Share-based compensation | 81.3 | 73.6 | 86.8 |
Excess tax effect from share-based compensation | 0 | 3.8 | 9 |
Integration and restructuring activities | 134.9 | 8.5 | 17.7 |
Deferred income taxes | (50.9) | 78 | (52.3) |
Other non-cash charges, net | 3.1 | (19.1) | (14.7) |
Changes in operating assets and liabilities: | |||
Trade accounts receivable | (5.6) | (29.4) | (28.3) |
Inventories | 30.4 | (20) | 40.7 |
Other liabilities | 157.7 | (53.4) | 49.5 |
Accounts payable | (77.3) | 8.4 | (48.4) |
Accrued liabilities | (16.9) | (50.1) | 30.1 |
Other assets | 80.9 | 48 | (6.3) |
Net cash provided by operating activities | 996.7 | 853.8 | 758.6 |
CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES | |||
Hudson Yards sale of investments, net of expenses | 0 | 680.6 | 0 |
Sale of former headquarters, net of expenses | 0 | 126 | 0 |
Acquisition of interest in equity method investment | 0 | 0 | (140.3) |
Acquisitions, net of cash acquired | (2,375.8) | 0 | (25.6) |
Purchases of property and equipment | (267.4) | (283.1) | (396.4) |
Purchases of investments | (3.8) | (523.5) | (664.7) |
Proceeds from maturities and sales of investments | 482.2 | 591.2 | 425.9 |
Acquisition of lease rights, net of proceeds | 0 | (1.8) | 8.9 |
Net cash (used in) provided by investing activities | (2,164.8) | 593 | (810) |
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES | |||
Dividend payments | (384.1) | (378) | (374.5) |
Proceeds from issuance of debt, net of discount | 1,100 | 997.2 | 0 |
Debt issuance costs | 0 | (9.8) | 0 |
Repayment of debt | (1,100) | (285) | (15) |
Proceeds from share-based awards | 165.7 | 70.4 | 29.1 |
Taxes paid to net settle share-based awards | (31.5) | (21.5) | (15.5) |
Excess tax effect from share-based compensation | 0 | (3.8) | (9) |
Net cash (used in) provided by financing activities | (249.9) | 369.5 | (384.9) |
Effect of exchange rate changes on cash and cash equivalents | (11.5) | (2.4) | 3.5 |
(Decrease) increase in cash and cash equivalents | (1,429.5) | 1,813.9 | (432.8) |
Cash and cash equivalents at beginning of year | 2,672.9 | 859 | 1,291.8 |
Cash and cash equivalents at end of year | 1,243.4 | 2,672.9 | 859 |
Supplemental information: | |||
Cash paid for income taxes, net | 16.4 | 159.1 | 158.9 |
Cash paid for interest | 63 | 35.4 | 33.7 |
Non-cash investing activity – property and equipment obligations | $ 30.1 | $ 39.7 | $ 48 |
Nature of Operations
Nature of Operations | 12 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | NATURE OF OPERATIONS Tapestry, Inc. (the "Company") is a leading New York-based house of modern luxury accessories and lifestyle brands. Tapestry owns the Coach, Kate Spade and Stuart Weitzman brands. The Company’s primary product offerings, manufactured by third-party suppliers, include women’s and men’s bags, small leather goods, footwear, ready-to-wear including outerwear, watches, weekend and travel accessories, scarves, eyewear, fragrance, jewelry and other lifestyle products. The Coach segment includes global sales of Coach brand products to customers through Coach operated stores, including the Internet and concession shop-in-shops, and sales to wholesale customers and through independent third party distributors. The Kate Spade segment includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including the Internet, to wholesale customers, through concession shop-in-shops and through independent third party distributors. The Stuart Weitzman segment includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, including the Internet, to wholesale customers and through numerous independent third party distributors. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | SIGNIFICANT ACCOUNTING POLICIES Fiscal Year The Company’s fiscal year ends on the Saturday closest to June 30. Unless otherwise stated, references to years in the financial statements relate to fiscal years. The fiscal years ended June 30, 2018 (“fiscal 2018”) and July 1, 2017 (“fiscal 2017”) were 52-week periods, and the fiscal year ended July 2, 2016 (“fiscal 2016”) was a 53-week period. The fiscal year ending June 29, 2019 (“fiscal 2019”) will be a 52-week period. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates in amounts that may be material to the financial statements. Significant estimates inherent in the preparation of the consolidated financial statements include reserves for the realizability of inventory; customer returns, end-of-season markdowns and operational chargebacks; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes (including the impacts of the new tax legislation) and related uncertain tax positions; accounting for business combinations; the valuation of stock-based compensation awards and related expected forfeiture rates; reserves for restructuring; and reserves for litigation and other contingencies, amongst others. Principles of Consolidation The consolidated financial statements include the accounts of the Company and all 100% owned and controlled subsidiaries. All intercompany transactions and balances are eliminated in consolidation. Cash and Cash Equivalents Cash and cash equivalents consist of cash balances and highly liquid investments with a maturity of three months or less at the date of purchase. Investments Short-term investments consist primarily of high-credit quality U.S. and non-U.S. issued corporate debt securities, and U.S. Treasuries and government agency securities with original maturities greater than three months and with maturities within one year of balance sheet date, classified as available-for-sale. Long-term investments primarily consist of high-credit quality U.S. and non-U.S. issued corporate debt securities, U.S. Treasuries and government agency securities, classified as available-for-sale, and recorded at fair value, with unrealized gains and losses recorded in other comprehensive income. Dividend and interest income are recognized when earned. Additionally, GAAP requires the consolidation of all entities for which a Company has a controlling voting interest and all variable interest entities (“VIEs”) for which a Company is deemed to be the primary beneficiary. An entity is generally a VIE if it meets any of the following criteria: (i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity or receive the expected returns of the entity and substantially all of the entity’s activities involve or are conducted on behalf of the investor with disproportionately few voting rights. Concentration of Credit Risk Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. The Company places its cash investments with high-credit quality financial institutions and generally invests primarily in corporate debt securities, money market instruments, U.S. government and agency debt securities, commercial paper and bank deposits placed with major banks and financial institutions. Accounts receivable is generally diversified due to the number of entities comprising the Company's customer base and their dispersion across many geographical regions. The Company believes no significant concentration of credit risk exists with respect to these investments and accounts receivable. Inventories The Company holds inventory that is sold through retail and wholesale distribution channels, including e-commerce sites. Substantially all of the Company's inventories are comprised of finished goods, and are reported at the lower of cost or net realizable value. Inventory costs include material, conversion costs, freight and duties and are primarily determined by the first-in, first-out method. The Company reserves for inventory, including slow-moving and aged inventory, based on current product demand, expected future demand and historical experience. A decrease in product demand due to changing customer tastes, buying patterns or increased competition could impact the Company's evaluation of its inventory and additional reserves might be required. Property and Equipment, Net Property and equipment, net is stated at cost less accumulated depreciation including the impact of long-lived asset impairment and disposals. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Buildings are depreciated over 40 years and building improvements are depreciated over ten to 40 years . Machinery and equipment are depreciated over lives of five to seven years , furniture and fixtures are depreciated over lives of three to ten years , and software and computer equipment is depreciated over lives of three to ten years . Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease terms. Maintenance and repair costs are charged to earnings as incurred while expenditures for major renewals and improvements are capitalized. 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. 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. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than its carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. The Company recorded $9.1 million and $14.2 million of impairment charges in fiscal 2018 and fiscal 2017, respectively. In determining future cash flows, the Company takes various factors into account, including the effects of macroeconomic trends such as consumer spending, in-store capital investments, promotional cadence, the level of advertising and changes in merchandising strategy. 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. Business Combinations In connection with an acquisition, the Company records all assets acquired and liabilities assumed of the acquired business at their acquisition date fair value, including the recognition of contingent consideration at fair value on the acquisition date. These fair value determinations require judgment and may involve the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives, and market multiples, among other items. Furthermore, the Company may utilize or consider independent third-party valuation firms when necessary. Refer to Note 3, "Acquisitions," for detailed disclosures related to our acquisitions. Goodwill and Other Intangible Assets Upon acquisition, the Company estimates and records the fair value of purchased intangible assets, which primarily consists of brands, customer relationships, lease rights and order backlog. The excess of the purchase consideration over the fair value of net assets acquired, both tangible and intangible, is recorded as goodwill. Finite-lived intangible assets are amortized over their respective estimated useful lives and, along with other long-lived assets as noted above, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Estimates of fair value for finite-lived and indefinite-lived intangible assets are primarily determined using discounted cash flows and the multi-period excess earnings method, respectively, with consideration of market comparisons. This approach uses significant estimates and assumptions, including projected future cash flows, discount rates and growth rates. Goodwill and certain other intangible assets deemed to have indefinite useful lives, including brands, are not amortized, but are assessed for impairment at least annually. The Company generally performs its annual goodwill and indefinite-lived intangible assets impairment analysis using a quantitative approach. The quantitative goodwill impairment test identifies the existence of potential impairment by comparing the fair value of each reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess. The impairment charge recognized is limited to the amount of goodwill allocated to that reporting unit. Determination of the fair value of a reporting unit and intangible asset based on management's assessment, considering independent third-party appraisals when necessary. Furthermore, this determination is judgmental in nature and often involves the use of significant estimates and assumptions, which may include projected future cash flows, discount rates, growth rates, and determination of appropriate market comparables and recent transactions. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge. The Company performs its annual impairment assessment of goodwill as well as brand intangibles during the fourth quarter of each fiscal year. The Company determined that there was no impairment in fiscal 2018 , fiscal 2017 or fiscal 2016 . Operating Leases The Company’s leases for office space, retail locations and distribution facilities are accounted for as operating leases. Certain of the Company's leases contain renewal options, rent escalation clauses, and/or landlord incentives. Renewal terms generally reflect market rates at the time of renewal. Rent expense for non-cancelable operating leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning with the lease commencement date, or the date the Company takes control of the leased space, whichever is sooner. The excess of straight-line rent expense over scheduled payment amounts and landlord incentives is recorded as a deferred rent liability. As of the end of fiscal 2018 and fiscal 2017 , deferred rent obligations of $240.3 million and $242.4 million , respectively, were classified primarily within other non-current liabilities in the Company's Consolidated Balance Sheets. Certain rentals are also contingent upon factors such as sales. Contingent rentals are recognized when the achievement of the target (i.e., sale levels), which triggers the related rent payment, is considered probable and estimable. Asset retirement obligations represent legal obligations associated with the retirement of a tangible long-lived asset. The Company’s asset retirement obligations are primarily associated with leasehold improvements in which the Company is contractually obligated to remove at the end of a lease to comply with the lease agreement. When such an obligation exists, the Company recognizes an asset retirement obligation at the inception of a lease at its estimated fair value. The asset retirement obligation is recorded in current liabilities or non-current liabilities (based on the expected timing of payment of the related costs) and is subsequently adjusted for any changes in estimates. The associated estimated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over its useful life. As of the end of fiscal 2018 and fiscal 2017 , the Company had asset retirement obligations of $25.8 million and $22.9 million , respectively, primarily classified within other non-current liabilities in the Company's Consolidated Balance Sheets. Revenue Recognition Revenue is recognized by the Company when there is persuasive evidence of an arrangement, delivery has occurred (and risks and rewards of ownership have been transferred to the buyer), price has been fixed or is determinable, and collectability is reasonably assured. Retail store and concession-based shop-in-shop revenues are recognized at the point-of-sale, which occurs when merchandise is sold in an over-the-counter consumer transaction. Internet revenue from sales of products ordered through the Company’s e-commerce sites is recognized upon delivery and receipt of the shipment by its customers and includes shipping and handling charges paid by customers. Retail and internet revenues are reduced by an estimate for returns at the time of sale. Wholesale revenue is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of estimates of markdown allowances, returns and discounts. Estimates for markdown reserves are based on historical trends, actual and forecasted seasonal results, an evaluation of current economic and market conditions, retailer performance, and, in certain cases, contractual terms. Returns and allowances require pre-approval from management and discounts are based on trade terms. The Company reviews and refines these estimates on a quarterly basis. The Company’s historical estimates of these costs have not differed materially from actual results. Gift cards issued by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. The Company recognizes income for unredeemed gift cards when the likelihood of a gift card being redeemed by a customer is remote, which is generally approximately three years after the gift card is issued, and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. Revenue associated with gift card breakage is not material to the Company’s net operating results. The Company accounts for sales taxes and other related taxes on a net basis, excluding such taxes from revenue. Cost of Sales Cost of sales consists of inventory costs and other related costs such as reserves for inventory realizability and shrinkage, destruction costs, damages and replacements. Selling, General and Administrative ("SG&A") Expenses Selling expenses include store employee compensation, occupancy costs, depreciation, supply costs, wholesale and retail account administration compensation globally. These expenses are affected by the number of stores open during any fiscal period and store performance, as compensation and rent expenses can vary with sales. Advertising, marketing and design expenses include employee compensation, media space and production, advertising agency fees, new product design costs, public relations and market research expenses. Distribution and customer service expenses include warehousing, order fulfillment, shipping and handling, customer service, employee compensation and bag repair costs. SG&A expenses also include compensation costs for “corporate” functions including: executive, finance, human resources, legal and information systems departments, as well as corporate headquarters occupancy costs, consulting fees and software expenses. Shipping and Handling Shipping and handling costs incurred were $101.5 million , $45.8 million and $43.6 million in fiscal 2018 , fiscal 2017 and fiscal 2016 , respectively, and are included in SG&A expenses. The Company includes inbound product-related transportation costs from manufacturers within cost of sales. The balance of the Company's transportation-related costs related to its distribution network is included in SG&A expenses rather than in cost of sales. Advertising Advertising costs include expenses related to direct marketing activities, such as direct mail pieces, digital and other media and production costs. In fiscal 2018 , fiscal 2017 and fiscal 2016 , advertising expenses for the Company totaled $228.4 million , $178.3 million and $202.2 million , respectively, and are included in SG&A expenses. Advertising costs are generally expensed when the advertising first appears. Share-Based Compensation The Company recognizes the cost of equity awards to employees and the non-employee Directors based on the grant-date fair value of those awards. The grant-date fair values of share unit awards are based on the fair value of the Company's common stock on the date of grant. The grant-date fair value of stock option awards is determined using the Black-Scholes option pricing model and involves several assumptions, including the expected term of the option, expected volatility and dividend yield. The expected term of options represents the period of time that the options granted are expected to be outstanding and is based on historical experience. Expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on the Company's stock. Dividend yield is based on the current expected annual dividend per share and the Company’s stock price. Changes in the assumptions used to determine the Black-Scholes value could result in significant changes in the Black-Scholes value. For stock options and share unit awards, the Company recognizes share-based compensation net of estimated forfeitures and revises the estimates in subsequent periods if actual forfeitures differ from the estimates. The Company estimates the forfeiture rate based on historical experience as well as expected future behavior. The Company grants performance-based share awards to key executives, the vesting of which is subject to the executive’s continuing employment and the Company's or individual's achievement of certain performance goals. On a quarterly basis, the Company assesses actual performance versus the predetermined performance goals, and adjusts the share-based compensation expense to reflect the relative performance achievement. Actual distributed shares are calculated upon conclusion of the service and performance periods, and include dividend equivalent shares. If the performance-based award incorporates a market condition, the grant-date fair value of such award is determined using a Monte Carlo Simulation. Income Taxes The Company’s effective tax rate is based on pre-tax income, statutory tax rates, tax laws and regulations, and tax planning strategies available in the various jurisdictions in which the Company operates. The Company classifies interest and penalties on uncertain tax positions in the provision for income taxes. The Company records net deferred tax assets to the extent it believes that it is more likely than not that these assets will be realized. In making such determination, the Company considers all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent and expected future results of operation. The Company reduces deferred tax assets by a valuation allowance if, based upon the weight of available evidence, it is more likely than not that some amount of deferred tax assets is not expected to be realized. Before the Tax Legislation, the Company considered the earnings of its non-U.S. subsidiaries to be indefinitely reinvested, and accordingly, recorded no deferred income taxes on these earnings. In fiscal 2018, the Company partially changed its assertion and has recorded an estimate of the deferred tax impact associated with this change. The Company recognizes the impact of tax positions in the financial statements if those positions will more likely than not be sustained on audit, based on the technical merits of the position. Although the Company believes that the estimates and assumptions used are reasonable and legally supportable, the final determination of tax audits could be different than that which is reflected in historical tax provisions and recorded assets and liabilities. Tax authorities periodically audit the Company’s income tax returns and the tax authorities may take a contrary position that could result in a significant impact on the Company's results of operations. Significant management judgment is required in determining the effective tax rate, in evaluating tax positions and in determining the net realizable value of deferred tax assets. Refer to Note 14, "Income Taxes," herein for further discussion on the Company's income taxes. Derivative Instruments The majority of the Company’s purchases and sales involving international parties, excluding international customer sales, are denominated in U.S. dollars, which limits the Company’s exposure to the transactional effects of foreign currency exchange rate fluctuations. However, the Company is exposed to foreign currency exchange risk related to its foreign operating subsidiaries’ U.S. dollar-denominated inventory purchases and various cross-currency intercompany loans which are not long term in investment nature. The Company uses derivative financial instruments to manage these risks. These derivative transactions are in accordance with the Company’s risk management policies. The Company does not enter into derivative transactions for speculative or trading purposes. The Company records all derivative contracts at fair value on the Consolidated Balance Sheets. The fair values of foreign currency derivatives are based on the forward curves of the specific indices upon which settlement is based and include an adjustment for the Company’s credit risk. Judgment is required of management in developing estimates of fair value. The use of different market assumptions or methodologies could affect the estimated fair value. For derivative instruments that qualify for hedge accounting, the effective portion of changes in the fair value of these instruments is either (i) offset against the changes in fair value of the hedged assets or liabilities through earnings or (ii) recognized as a component of accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows, respectively. Each derivative instrument entered into by the Company that qualifies for hedge accounting is expected to be highly effective at reducing the risk associated with the exposure being hedged. For each derivative that is designated as a hedge, the Company documents the related risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, as well as how hedge effectiveness will be assessed over the term of the instrument. The extent to which a hedging instrument has been and is expected to remain highly effective in achieving offsetting changes in fair value or cash flows is assessed and documented by the Company on at least a quarterly basis. To the extent that a derivative designated as a cash flow hedge is not considered to be effective, any change in its fair value related to such ineffectiveness is immediately recognized in earnings within foreign currency gains (losses). If it is determined that a derivative instrument has not been highly effective, and will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are recognized in earnings within foreign currency gains (losses). Upon discontinuance of hedge accounting, the cumulative change in fair value of the derivative previously recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the original hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within foreign currency gains (losses). As a result of the use of derivative instruments, the Company may be exposed to the risk that the counterparties to such contacts will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings, among other factors. The fair values of the Company’s derivative instruments are recorded on its Consolidated Balance Sheets on a gross basis. For cash flow reporting purposes, the Company classifies proceeds received or amounts paid upon the settlement of a derivative instrument in the same manner as the related item being hedged, primarily within cash from operating activities. Hedging Portfolio The Company enters into forward currency contracts primarily to reduce its risks related to exchange rate fluctuations on U.S. dollar and Euro-denominated inventory purchases, as well as various cross-currency intercompany loans. To the extent its derivative contracts designated as cash flow hedges are highly effective in offsetting changes in the value of the hedged items, the related gains (losses) are initially deferred in AOCI and subsequently recognized in the Consolidated Statements of Operations as part of the cost of the inventory purchases being hedged within cost of sales, when the related inventory is sold to a third party. Current maturity dates range from July 2018 to March 2019. Forward foreign currency exchange contracts designated as fair value hedges and associated with intercompany and other contractual obligations are recognized within foreign currency gains (losses) generally in the period in which the related balances being hedged are revalued. Current maturity dates are in September 2018, and such contracts are typically renewed upon maturity if the related balance has not been settled. Foreign Currency The functional currency of the Company's foreign operations is generally the applicable local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the weighted-average exchange rates for the period. The resulting translation adjustments are included in the Consolidated Statements of Comprehensive Income as a component of other comprehensive income (loss) (“OCI”) and in the Consolidated Statements of Equity within AOCI. Gains and losses on the translation of intercompany loans made to foreign subsidiaries that are of a long-term investment nature also are included within this component of equity. The Company recognizes gains and losses on transactions that are denominated in a currency other than the respective entity's functional currency in earnings. Foreign currency transaction gains and losses also include amounts realized on the settlement of certain intercompany loans with foreign subsidiaries. Reclassifications Certain reclassifications have been made to the prior period's financial information in order to conform to the current period's presentation. This includes the realignment of the Company's segment reporting structure, as further described in Note 16, "Segment Information." Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-02, " Income Statement- Reporting Comprehensive Income (Topic 220) ," which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. An entity that elects to reclassify these amounts must reclassify stranded tax effects related to the change in federal tax rate for all items accounted for in accumulated other comprehensive income (loss). This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018 and early adoption is permitted. The Company adopted this standard in the third quarter of fiscal 2018 and reclassified stranded amounts related to the cash flow hedges from accumulated other comprehensive loss to retained earnings. The reclassification and adoption did not have a material impact to the consolidated financial statements, including accumulated other comprehensive loss and retained earnings. During the first quarter of fiscal 2018, the Company adopted ASU No. 2016-09, " Improvements to Employee Share-Based Payment Accounting (Topic 718), " which simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows beginning in fiscal 2018. Additionally, the Company began recognizing all excess tax benefits and shortfalls as income tax expense or benefit in the income statement within the reporting period in which they occur. The Company adopted this standard prospectively, which resulted in a decrease in the tax provision of $13.3 million in fiscal 2018 . Future impacts of the adoption of this standard on the consolidated financial statements, particularly the income tax provision, will be dependent upon future events which are unpredictable. The Company has elected to continue to estimate expected forfeitures in determining compensation expense. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which amends the hedge accounting recognition and presentation requirements in Accounting Standards Codification ("ASC") 815. The objective of this ASU is to improve the transparency and understandability of information conveyed to financial statement users about an entity's risk management activities by better aligning the entity's financial reporting for hedging relationships with those risk management activities and to reduce the complexity of and simplify the application of hedge accounting by preparers. The requirements for the new standard will be effective for fiscal years beginning after December 15, 2018, and interim periods therein, which for the Company is the first quarter of fiscal 2020. Early adoption is permitted upon issuance. The Company is currently in the process of evaluating the impact that adopting ASU 2017-12 will have on its consolidated financial statements and notes thereto. In February 2016, the FASB issued ASU No. 2016-02, " Leases (Topic 842), " which is intended to increase transparency and comparability among companies that enter into leasing arrangements. This ASU requires recognition of lease assets and lease liabilities on the balance sheet for nearly all leases (other than short-term leases), as well as a retrospective recognition and measurement of existing impacted leases. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2020. Early adoption is permitted. In July 2018, the FASB issued ASU 2018-11, with targeted improvements to the guidance including an additional transition method for the new standard. As a result, the new standard may be applied with a retrospective approach to each prior reporting period with various optional practical expedients, or with the initial application at the adoption date with a cumulative-effec |
Acquisitions
Acquisitions | 12 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | ACQUISITIONS Kate Spade & Company Acquisition On July 11, 2017, the Company completed its acquisition of Kate Spade & Company for $18.50 per share in cash for a total of $2.40 billion . As a result, Kate Spade became a wholly owned subsidiary of the Company. The combination of the Company and Kate Spade & Company creates a leading New York-based luxury lifestyle company with a more diverse multi-brand portfolio supported by significant expertise in handbag design, merchandising, supply chain and retail operations. The aggregate cash paid in connection with the acquisition of Kate Spade was $2.39 billion (or $2.32 billion net of cash acquired). Consideration also includes $5.3 million as a result of the conversion of previously granted unvested equity awards held by Kate Spade employees. The Company funded the acquisition through cash on-hand, as well as debt proceeds as described in Note 11, "Debt." The Company accounted for the acquisition of Kate Spade under the acquisition method of accounting for business combinations. Accordingly, the cost was allocated to the underlying net assets based on their respective fair values. The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill, which consists largely of the synergies expected from the acquisition. The purchase price allocation for the assets acquired and liabilities assumed is substantially complete. The following table summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date: Assets Acquired and Liabilities Assumed Fair Value At Acquisition Date Measurement Period Adjustments Adjusted Fair Value (millions) Cash and cash equivalents $ 71.8 $ — $ 71.8 Trade accounts receivable 62.8 — 62.8 Inventories (1) 310.1 — 310.1 Prepaid expenses and other current assets 33.9 (1.2 ) 32.7 Property and equipment 175.5 — 175.5 Goodwill (2)(3) 916.1 (16.1 ) 900.0 Brand intangible asset (4) 1,300.0 — 1,300.0 Other intangible assets (5) 119.2 — 119.2 Other assets 59.0 11.1 70.1 Total assets acquired 3,048.4 (6.2 ) 3,042.2 Accounts payable and accrued liabilities 233.3 233.3 Deferred income taxes (6) 333.0 (7.3 ) 325.7 Other liabilities (7) 84.8 1.1 85.9 Total liabilities assumed 651.1 (6.2 ) 644.9 Total purchase price 2,397.3 — 2,397.3 Less: Cash acquired (71.8 ) — (71.8 ) Total purchase price, net of cash acquired $ 2,325.5 $ — $ 2,325.5 (1) Included a step-up adjustment of approximately $67.5 million , which was amortized over 4 months. (2) The majority of the goodwill balance is not deductible for tax purposes. (3) The Company assigned $324 million of goodwill associated with the Kate Spade acquisition to Coach brand reporting units based upon the analysis of expected synergies, including the allocation of corporate synergies to the brands. Refer to Note 13, "Goodwill and Other Intangible Assets," for further information. (4) The brand intangible asset, of which the majority is not deductible for tax purposes, was valued based on the multi-period excess earnings method. (5) The components of other intangible assets included favorable lease rights of approximately $72.2 million (amortized over the remainder of the underlying lease terms), customer relationships of approximately $45.0 million (amortized over 15 years) and order backlog of $2.0 million (amortized over 6 months). Favorable lease rights were valued based on a comparison of market participant information and Company-specific lease terms. The customer relationship intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with the existing base of customers as of the acquisition date, factoring in expected attrition of the existing base. The order backlog intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with open customer orders as of the acquisition date. (6) The Company acquired approximately $200.1 million of net deferred tax assets related to Kate Spade historical federal and state net operating losses, net of a $39.3 million valuation allowance, which the Company expects to be able to utilize. The deferred tax adjustments resulting from the step-up in basis of acquired assets, most notably the brand intangible asset, resulted in an overall deferred tax liability. Refer to Note 14, "Income Taxes," for more information about changes to the Company's deferred tax position as a result of the enactment of the new tax legislation. (7) Includes an adjustment for unfavorable lease rights of approximately $49.5 million (amortized over the remainder of the underlying lease terms). The operational results of Kate Spade for the post-acquisition period from July 11, 2017 to June 30, 2018 are included in the Company’s accompanying Consolidated Statement of Operations for the year ended June 30, 2018 . Refer to Note 16, "Segment Information," for the operating results of the Kate Spade business. The following pro forma information has been prepared as if the Kate Spade acquisition and the related debt financing had occurred as of the beginning of fiscal 2017. These adjustments include the removal of certain historical amounts. The pro forma amounts reflect the combined historical operational results for Tapestry and Kate Spade, after giving effect to adjustments related to the impact of purchase accounting, transaction costs and financing. The pro forma financial information is not indicative of the operational results that would have been obtained had the transactions actually occurred as of that date, nor is it necessarily indicative of the Company’s future operational results. The following adjustments have been made: (i) Depreciation and amortization expenses related to the fair value adjustments to Kate Spade's property and equipment and intangible assets have been reflected in the year ended July 1, 2017 . Short-term purchase accounting amortization has been excluded from the pro forma amounts due to the non-recurring nature. (ii) Transaction costs in the year ended June 30, 2018 have been excluded from the pro forma amounts due to their non-recurring nature. (iii) Interest expense of debt issued to finance the acquisition, including amortization of deferred financing fees, has been reflected in the year ended July 1, 2017 . Historical interest expense for Kate Spade has been removed. (iv) The tax effects of the pro forma adjustments at an estimated statutory rate of 40.0% . (v) Earnings per share amounts are calculated using unrounded numbers and the Company's historical weighted average shares outstanding. Year Ended June 30, 2018 July 1, 2017 (unaudited) (millions, except per share data) Pro forma Net sales (1) $ 5,912.9 $ 5,837.4 Pro forma Net income (1) 472.8 695.4 Pro forma Net income per share: Basic $ 1.66 $ 2.48 Diluted $ 1.64 $ 2.46 (1) The pro forma results for the year ended June 30, 2018 include revenue and operating income from the pre-combination period in fiscal 2018. Distributor Acquisitions and Kate Spade Joint Ventures Operational Control During the third quarter of fiscal 2018, the Company acquired designated assets of its Stuart Weitzman distributor in Northern China, entered into an agreement to obtain operational control of the Kate Spade Joint Ventures that operate in mainland China, Hong Kong, Macau and Taiwan in which the Company has 50% interest, and acquired designated assets of its Coach distributor in Australia and New Zealand. The aggregate purchase consideration for the three acquisitions was $153.7 million , of which $106.9 million will be paid in cash and the remaining is related to non-cash consideration. Of the cash consideration, $61.5 million (or $55.6 million net of cash acquired) was paid during fiscal 2018 and the remaining will be paid in the future. Of the total purchase consideration of $153.7 million , $50.0 million of net assets were recorded at their fair values, and the excess of the purchase consideration over the fair value of the net assets acquired was recorded as non-tax deductible goodwill in the amount of $103.7 million . Of this amount, $52.8 million , $49.3 million and $1.6 million were recorded to the Company's Kate Spade, Stuart Weitzman and Coach segments, respectively. During the fourth quarter of fiscal 2018, there were measurement period adjustments of $2.3 million and $0.5 million , related to the Kate Spade and Stuart Weitzman segments, respectively, which decreased Goodwill. Refer to Note 13, "Goodwill and Other Intangible Assets," for further information. The results of the operations of each acquired entity have been included in the consolidated financial statements since the respective date of each acquisition. The purchase price allocation for these assets acquired and liabilities assumed is substantially complete, however may be subject to change as additional information is obtained during the acquisition measurement period. The pro forma results are not presented for these acquisitions as they are immaterial. |
Integration and Acquisition Cos
Integration and Acquisition Costs | 12 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Integration and Acquisition Costs | INTEGRATION AND ACQUISITION COSTS Fiscal 2018 The Company completed its acquisition of Kate Spade & Company during the first quarter of fiscal 2018. Furthermore, the Company completed its acquisitions of certain distributors for the Coach and Stuart Weitzman brands and assumed operational control of the Kate Spade Joint Ventures during the third quarter of fiscal 2018. As a result of these acquisitions, during the fiscal year ended June 30, 2018 , the Company incurred integration and acquisition-related costs of $301.6 million . The charges recorded in cost of sales for the fiscal year ended June 30, 2018 were $116.4 million . Of the amount recorded to cost of sales for the fiscal year ended June 30, 2018 , $106.5 million was recorded within the Kate Spade segment, $5.8 million was recorded within the Stuart Weitzman segment and $4.1 million was recorded within the Coach segment. The charges recorded in SG&A expenses for the fiscal year ended June 30, 2018 were $185.2 million . Of the amount recorded to SG&A expenses for the fiscal year ended June 30, 2018 , $113.7 million was recorded in the Kate Spade segment, $63.2 million was recorded within Corporate, $7.8 million was recorded within the Stuart Weitzman segment and $0.5 million was recorded within the Coach segment. The Company currently estimates that it will incur approximately $50 - 60 million in pre-tax charges, of which approximately $5 - 10 million are expected to be non-cash charges, in fiscal 2019. Refer to Note 3, "Acquisitions," for more information. A summary of the integration and acquisition charges and related liabilities, which are recorded as accrued liabilities as of June 30, 2018 , is as follows: Purchase Accounting Adjustments (1) Acquisition Costs (2) Inventory-Related Charges (3) Contractual Payments (4) Organization-Related (5) Other (6) Total (millions) Addition Related to Acquisitions $ — $ — $ 2.5 $ — $ — $ — $ 2.5 Fiscal 2018 charges 82.8 42.9 35.4 50.6 39.8 50.1 301.6 Cash payments — (42.2 ) (2.8 ) (50.6 ) (22.4 ) (37.4 ) (155.4 ) Non-cash charges (82.8 ) — (34.8 ) — (5.8 ) (9.7 ) (133.1 ) Liability as of June 30, 2018 $ — $ 0.7 $ 0.3 $ — $ 11.6 $ 3.0 $ 15.6 (1) Purchase accounting adjustments, of which $79.6 million was recorded within cost of sales and $3.2 million was recorded in SG&A expenses for the fiscal year ended June 30, 2018 , relate to the short-term impact of the amortization of fair value adjustments. Of the amount recorded to cost of sales for the year ended June 30, 2018 , $71.8 million was recorded within the Kate Spade segment, $4.1 million was recorded within the Coach segment and $3.7 million was recorded within the Stuart Weitzman segment. Of the amount recorded to SG&A expenses, $3.2 million was recorded within the Kate Spade segment. (2) Acquisition costs, which were recorded to SG&A expenses, and of which $23.6 million were within Corporate, $19.1 million were within the Kate Spade segment, and $0.2 million were within the Coach segment for the fiscal year ended June 30, 2018 , primarily relate to deal fees associated with the acquisitions. (3) Inventory-related charges, recorded within cost of sales, of which $34.7 million was recorded within the Kate Spade segment and $0.7 million was recorded within the Stuart Weitzman segment, primarily related to reserves for the future destruction of certain on-hand inventory and non-cancelable inventory purchase commitments related to raw materials. As of June 30, 2018 , a reserve of $4.9 million is included within inventories on the Company's Consolidated Balance Sheets. (4) Contractual payments, which were recorded to SG&A expenses within the Kate Spade segment, primarily related to severance and related costs as a result of pre-existing agreements that were in place with certain Kate Spade executives which became effective upon the closing of the acquisition. (5) Organization-related costs, which were recorded to SG&A expenses, and of which $25.6 million were within the Kate Spade segment, $10.4 million within Corporate and $3.8 million within the Stuart Weitzman segment for the fiscal year ended June 30, 2018 , primarily related to severance related charges. The severance related charges includes $6.0 million of accelerated share-based compensation expense. (6) Other primarily relates to professional fees, asset write-offs and inventory true-up. The charges were primarily recorded in SG&A expenses, of which $29.2 million was recorded within Corporate, $15.2 million was recorded within the Kate Spade segment, $4.0 million was recorded within the Stuart Weitzman segment and $0.3 million was recorded within the Coach segment. Furthermore, $1.4 million was recorded in cost of sales within Stuart Weitzman for the fiscal year ended June 30, 2018 . Fiscal 2017 The Company incurred integration and acquisition-related cost of $10.7 million during the fiscal year ended July 1, 2017 as a result of the acquisitions of Stuart Weitzman LLC and Kate Spade & Company. The charges recorded to cost of sales were $2.9 million within the Stuart Weitzman segment. Amounts recorded to SG&A related to expense incurred in the Stuart Weitzman segment of $17.7 million which were more than offset by the reversal of $19.4 million within Corporate, which primarily related to the reversal of an accrual for estimated contingent purchase price payments which were not paid for the Stuart Weitzman LLC acquisition. The Company incurred $9.5 million recorded within Corporate as Interest expense related to bridge financing for the Kate Spade and Company acquisition. |
Restructuring Activities
Restructuring Activities | 12 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Activities | RESTRUCTURING ACTIVITIES Operational Efficiency Plan During the fourth quarter of fiscal 2016, the Company announced a plan (the “Operational Efficiency Plan”) to enhance organizational efficiency, update core technology platforms and optimize international supply chain and office locations. The Operational Efficiency Plan was adopted as a result of a strategic review of the Company’s corporate structure which focused on creating an agile and scalable business model. During fiscal years 2018 and 2017, the Company incurred Operational Efficiency Plan related charges within SG&A expenses of $19.5 million and $24.0 million , respectively, primarily due to technology infrastructure costs, organizational efficiency costs and to a lesser extent, network optimization costs. Total cumulative charges incurred under the Operational Efficiency Plan to date are $87.4 million . The plan was completed in fiscal 2018. A summary of charges and related liabilities under the Company's Operational Efficiency Plan is as follows: Organizational Efficiency (1) Technology Infrastructure (2) Network Optimization (3) Total (millions) Liability as of June 27, 2015 $ — $ — $ — $ — Fiscal 2016 charges 40.4 — 3.5 43.9 Cash payments (9.7 ) — — (9.7 ) Non-cash charges (8.5 ) — (0.3 ) (8.8 ) Liability as of July 2, 2016 $ 22.2 $ — $ 3.2 $ 25.4 Fiscal 2017 charges 15.6 8.0 0.4 24.0 Cash payments (23.3 ) (7.7 ) (3.0 ) (34.0 ) Non-cash charges (7.9 ) — (0.6 ) (8.5 ) Liability as of July 1, 2017 $ 6.6 $ 0.3 $ — $ 6.9 Fiscal 2018 charges 0.6 18.9 — 19.5 Cash payments (5.6 ) (17.6 ) — (23.2 ) Non-cash charges (0.8 ) (1.0 ) — (1.8 ) Liability as of June 30, 2018 $ 0.8 $ 0.6 $ — $ 1.4 (1) Organizational efficiency charges, recorded within SG&A expenses, primarily related to accelerated depreciation associated with the retirement of information technology systems, severance and related costs of corporate employees, as well as consulting fees related to process and organizational optimization. (2) Technology infrastructure costs, recorded within SG&A expenses, related to the initial costs of replacing and updating the Company's core technology platforms. (3) Network optimization costs, recorded within SG&A expenses, related to lease termination costs. The balance as of June 30, 2018 and July 1, 2017 are included within Accrued liabilities on the Company's Consolidated Balance Sheets. The above charges were recorded as Corporate expenses within the Company's Consolidated Statements of Operations. Refer to Note 16, "Segment Information," for further information. Transformation Plan During the fiscal year ended June 28, 2014 ("fiscal 2014"), the Company announced a multi-year strategic plan to transform the Coach brand and reinvigorate growth. This multi-faceted, multi-year transformation plan (the "Transformation Plan"), which continued through the end of fiscal 2016, included key operational and cost measures. Total cumulative charges incurred under the Transformation Plan through July 2, 2016 were $321.5 million . The fourth quarter of fiscal 2016 was the last reporting period in which charges were incurred under this plan, as such, there were no transformation-related charges incurred in fiscal 2018 or fiscal 2017 . In fiscal 2016, the Company recorded charges of $44.1 million ( $33.4 million after-tax, or $0.12 per diluted share), which were largely related to Coach brand's North America business and recorded as Corporate expense within SG&A expenses. There were no remaining liabilities under the Company's Transformation Plan at June 30, 2018 and July 1, 2017 . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Jun. 30, 2018 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The components of accumulated other comprehensive income (loss), as of the dates indicated, are as follows: Unrealized (Losses) Gains on Cash Flow Hedging Derivatives (1) Unrealized Gains (Losses) on Available-for-Sale Investments Cumulative Translation Adjustment Other (2) Total (millions) Balances at July 2, 2016 $ (8.8 ) $ 0.3 $ (62.9 ) $ (1.5 ) $ (72.9 ) Other comprehensive income (loss) before reclassifications 7.7 (0.7 ) (26.2 ) — (19.2 ) Less: losses reclassified from accumulated other comprehensive income (4.1 ) — — (1.1 ) (5.2 ) Net current-period other comprehensive income (loss) 11.8 (0.7 ) (26.2 ) 1.1 (14.0 ) Balances at July 1, 2017 $ 3.0 $ (0.4 ) $ (89.1 ) $ (0.4 ) $ (86.9 ) Other comprehensive (loss) income before reclassifications (1.2 ) 0.5 3.8 — 3.1 Less: income (losses) reclassified from accumulated other comprehensive income 0.4 0.1 — (1.5 ) (1.0 ) Net current-period other comprehensive (loss) income (1.6 ) 0.4 3.8 1.5 4.1 Balances at June 30, 2018 $ 1.4 $ — $ (85.3 ) $ 1.1 $ (82.8 ) (1) The ending balances of AOCI related to cash flow hedges are net of tax of $(0.9) million and $(1.8) million as of June 30, 2018 and July 1, 2017 , respectively. The amounts reclassified from AOCI are net of tax of $(1.1) million and $2.2 million as of June 30, 2018 and July 1, 2017 , respectively. (2) Other represents the accumulated loss on the Company's minimum pension liability adjustment. The balances at June 30, 2018 and July 1, 2017 are net of tax of $0.6 million and $0.2 million , respectively. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | SHARE-BASED COMPENSATION The Company maintains several share-based compensation plans which are more fully described below. The following table shows the total compensation cost charged against income for these plans and the related tax benefits recognized in the Consolidated Statements of Operations: June 30, 2018 (1) July 1, 2017 (1) July 2, 2016 (1) (millions) Share-based compensation expense $ 88.1 $ 76.1 $ 95.3 Income tax benefit related to share-based compensation expense (2) 23.5 24.4 28.6 (1) During the year ended June 30, 2018 , the Company incurred $6.0 million of share-based compensation expense related to severance as a result of integration. During the fiscal years ended June 30, 2018 , July 1, 2017 and July 2, 2016 , the Company incurred $0.8 million , $2.5 million and $8.5 million of share-based compensation expense under the Company's Operational Efficiency Plan, respectively, primarily as a result of the accelerated vesting of certain awards. Refer to Note 4, "Integration and Acquisition Costs," and Note 5, "Restructuring Activities," for further information. (2) The tax rates used to calculate the income tax benefit for fiscal 2018 are based on the enactment of the new tax legislation. Refer to Note 14, "Income Taxes," for further information. Stock-Based Plans The Company maintains the Amended and Restated 2010 Stock Incentive Plan to award stock options and shares to certain members of management and the outside members of its Board of Directors (“Board”). The Company maintains the 2004 Stock Incentive Plan for awards granted prior to the establishment of the 2010 Stock Incentive Plan. These plans were approved by the Company's stockholders. The exercise price of each stock option equals 100% of the market price of the Company's stock on the date of grant and generally has a maximum term of 10 years . Stock options and service based share awards that are granted as part of the annual compensation process generally vest ratably over four years. Stock option and share awards are subject to forfeiture until completion of the vesting period, which ranges from one to four years. The Company issues new shares upon the exercise of stock options or vesting of share awards. Stock Options A summary of stock option activity during the year ended June 30, 2018 is as follows: Number of Options Outstanding Weighted- Average Exercise Price per Option Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (millions) (millions) Outstanding at July 1, 2017 15.0 $ 39.75 Granted 3.1 41.12 Exercised (4.6 ) 35.37 Forfeited or expired (1.0 ) 45.06 Outstanding at June 30, 2018 12.5 42.94 6.6 $ 75.8 Vested and expected to vest at June 30, 2018 12.2 42.99 6.5 74.4 Exercisable at June 30, 2018 6.5 46.35 4.9 33.3 The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model and the following weighted-average assumptions: June 30, July 1, July 2, Expected term (years) 5.1 4.4 4.2 Expected volatility 28.4 % 30.5 % 32.2 % Risk-free interest rate 1.8 % 1.1 % 1.4 % Dividend yield 3.3 % 3.4 % 4.3 % The expected term of options represents the period of time that the options granted are expected to be outstanding and is based on historical experience. Expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on the Company's stock. The risk free interest rate is based on the zero-coupon U.S. Treasury issue as of the date of the grant. Dividend yield is based on the current expected annual dividend per share and the Company’s stock price. The weighted-average grant-date fair value of options granted during fiscal 2018 , fiscal 2017 and fiscal 2016 was $7.76 , $7.36 and $5.65 , respectively. The total intrinsic value of options exercised during fiscal 2018 , fiscal 2017 and fiscal 2016 was $59.2 million , $15.4 million and $6.2 million , respectively. The total cash received from option exercises was $161.5 million , $68.2 million and $25.7 million in fiscal 2018 , fiscal 2017 and fiscal 2016 , respectively, and the cash tax benefit realized for the tax deductions from these option exercises was $11.4 million , $4.9 million and $2.3 million , respectively. At June 30, 2018 , $25.1 million of total unrecognized compensation cost related to non-vested stock option awards is expected to be recognized over a weighted-average period of 1.3 years . Service-based Restricted Stock Unit Awards (“RSUs”) A summary of service-based RSU activity during the year ended June 30, 2018 is as follows: Number of Non-vested RSUs Weighted- Average Grant- Date Fair Value per RSU (millions) Non-vested at July 1, 2017 3.5 $ 50.28 Granted 1.8 41.75 Awards issued in connection with acquisition 0.4 47.26 Vested (1.8 ) 39.14 Forfeited (0.4 ) 39.98 Non-vested at June 30, 2018 3.5 40.26 At June 30, 2018 , $72.2 million of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 1.3 years . The weighted-average grant-date fair value of share awards granted during fiscal 2018 , fiscal 2017 and fiscal 2016 was $41.75 , $39.57 and $31.65 , respectively. The total fair value of shares vested during fiscal 2018 , fiscal 2017 and fiscal 2016 was $83.4 million , $68.9 million and $45.8 million , respectively. Performance-based Restricted Stock Unit Awards (“PRSU”) The Company grants PRSUs to key executives, the vesting of which is subject to the executive’s continuing employment and the Company's achievement of certain performance goals. A summary of PRSU activity during the year ended June 30, 2018 is as follows: Number of Non-vested PRSUs Weighted- Average Grant- Date Fair Value per PRSU (millions) Non-vested at July 1, 2017 1.5 $ 37.78 Granted 0.4 43.80 Change due to performance condition achievement (0.6 ) 47.32 Vested (0.3 ) 36.29 Forfeited (0.1 ) 37.17 Non-vested at June 30, 2018 0.9 38.27 At June 30, 2018 , $15.9 million of total unrecognized compensation cost related to non-vested share awards is expected to be recognized over a weighted-average period of 1.1 years . The weighted-average grant-date fair value per share of PRSU awards granted during fiscal 2018 , fiscal 2017 and fiscal 2016 was $43.80 , $39.61 and $31.67 , respectively. The total fair value of awards that vested during fiscal 2018 , fiscal 2017 and fiscal 2016 was $11.4 million , $0.9 million and $1.4 million , respectively. During the fiscal years ended June 30, 2018 and July 1, 2017 , the Company granted 0.4 million shares (with a fair value of $16.0 million ) and 0.3 million shares (with a fair value of $10.0 million ) of common stock to executives, respectively. The shares are subject to a three -year cliff vesting, subject to the employee's continuing employment and the Company's achievement of the performance goals established at the beginning of the performance period. The fair value of the PRSU's is based on the price of the Company's common stock on the date of grant. In fiscal 2018 , fiscal 2017 and fiscal 2016 , the cash tax benefit realized for the tax deductions from all RSUs (service and performance-based) was $17.9 million , $19.0 million and $14.2 million , respectively. Employee Stock Purchase Plan Under the 2001 Employee Stock Purchase Plan, eligible employees are permitted to purchase a limited number of Company common shares at 85% of market value. Under this plan, the Company sold 0.1 million , 0.1 million and 0.1 million shares to employees in fiscal 2018 , fiscal 2017 and fiscal 2016 , respectively. Compensation expense is calculated for the fair value of employees’ purchase rights using the Black-Scholes model and the following weighted-average assumptions: Fiscal Year Ended June 30, July 1, July 2, Expected term (years) 0.5 0.5 0.5 Expected volatility 26.9 % 24.7 % 28.6 % Risk-free interest rate 1.3 % 0.6 % 0.3 % Dividend yield 3.1 % 3.6 % 4.1 % The weighted-average fair value of the purchase rights granted during fiscal 2018 , fiscal 2017 and fiscal 2016 was $9.62 , $8.08 and $7.43 , respectively. The Company issues new shares for employee stock purchases. |
Investments
Investments | 12 Months Ended |
Jun. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | INVESTMENTS The following table summarizes the Company’s primarily U.S. dollar-denominated investments, recorded within the Consolidated Balance Sheets as of June 30, 2018 and July 1, 2017 : June 30, 2018 July 1, 2017 Short-term Long-Term Total Short-term Long-term Total (millions) Available-for-sale investments: Commercial paper $ — $ — $ — $ 68.8 $ — $ 68.8 Government securities – U.S. — — — 130.4 — 130.4 Corporate debt securities – U.S. — — — 116.2 46.9 163.1 Corporate debt securities – non-U.S. — — — 92.6 28.2 120.8 Available-for-sale investments, total $ — $ — $ — $ 408.0 $ 75.1 $ 483.1 Other: Time deposits (1) 0.6 — 0.6 0.6 — 0.6 Other 6.0 — 6.0 2.1 — 2.1 Total Investments $ 6.6 $ — $ 6.6 $ 410.7 $ 75.1 $ 485.8 (1) These securities have original maturities greater than three months and are recorded at fair value. There were no material gross unrealized gains or losses on available-for-sale investments as of the periods ended June 30, 2018 and July 1, 2017 . |
Leases
Leases | 12 Months Ended |
Jun. 30, 2018 | |
Leases [Abstract] | |
Leases | LEASES The Company leases retail, distribution and office facilities. The lease agreements, which expire at various dates through 2037 , are subject, in most cases, to renewal options and provide for the payment of taxes, insurance and maintenance. Certain leases contain escalation clauses resulting from the pass-through of increases in operating costs, property taxes and the effect on costs from changes in consumer price indices. Certain store-related rent expense is also contingent upon sales. Rent expense for the Company's operating leases consisted of the following: Fiscal Year Ended June 30, July 1, July 2, (millions) Minimum rent (1) $ 359.8 $ 295.1 $ 229.9 Contingent rent 164.7 129.4 134.8 Total rent expense $ 524.5 $ 424.5 $ 364.7 (1) $0.2 million and $5.9 million of lease termination charges due to restructuring-related closures were included in fiscal 2017 and fiscal 2016, respectively. Future minimum rental payments under non-cancelable operating leases, as of June 30, 2018 , are as follows: Fiscal Year Amount (millions) 2019 $ 384.8 2020 343.1 2021 300.7 2022 279.0 2023 249.6 Subsequent to 2023 1,211.1 Total minimum future rental payments $ 2,768.3 During the first quarter of fiscal 2017, the Company announced the lease of its new global headquarters. Refer to Note 20, "Headquarters Transactions," for further information. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The Company categorizes its assets and liabilities, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy as set forth below. The three levels of the hierarchy are defined as follows: Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than quoted prices included in Level 1. Level 2 inputs include quoted prices for identical assets or liabilities in non-active markets, quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for substantially the full term of the asset or liability. Level 3 — Unobservable inputs reflecting management’s own assumptions about the input used in pricing the asset or liability. The Company does not have any Level 3 investments. The following table shows the fair value measurements of the Company’s financial assets and liabilities at June 30, 2018 and July 1, 2017 : Level 1 Level 2 June 30, July 1, June 30, July 1, (millions) Assets: Cash equivalents (1) $ 592.5 $ 760.0 $ 0.4 $ 226.0 Short-term investments: Time deposits (2) — — 0.6 0.6 Commercial paper (2) — — — 68.8 Government securities - U.S. (2) — 130.4 — — Corporate debt securities - U.S. (2) — — — 116.2 Corporate debt securities - non U.S. (2) — — — 92.6 Other — — 6.0 2.1 Long-term investments: Corporate debt securities - U.S. (3) — — — 46.9 Corporate debt securities - non U.S. (3) — — — 28.2 Derivative Assets: Inventory-related instruments (4) — — 5.6 3.5 Intercompany loan hedges (4) — — 0.3 — Liabilities: Derivative liabilities: Inventory-related instruments (4) $ — $ — $ 2.3 $ 1.0 Intercompany loan hedges (4) — — 0.1 0.7 (1) Cash equivalents consist of money market funds and time deposits with maturities of three months or less at the date of purchase. Due to their short term maturity, management believes that their carrying value approximates fair value. (2) Short-term available-for-sale investments are recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets. (3) Fair value is primarily determined using vendor or broker priced securities in active markets. (4) The fair value of these hedges is primarily based on the forward curves of the specific indices upon which settlement is based and includes an adjustment for the counterparty’s or Company’s credit risk. Refer to Note 11, "Debt," for the fair value of the Company's outstanding debt instruments. Non-Financial Assets and Liabilities The Company’s non-financial instruments, which primarily consist of goodwill, intangible assets and property and equipment, are not required to be measured at fair value on a recurring basis and are reported at carrying value. However, on a periodic basis whenever events or changes in circumstances indicate that their carrying value may not be fully recoverable (and at least annually for goodwill and indefinite-lived intangible assets), non-financial instruments are assessed for impairment and, if applicable, written-down to and recorded at fair value, considering market participant assumptions. Refer to Note 3, "Acquisitions," for further discussion of the approaches used in valuing acquired assets and assumed liabilities. The company recorded $9.1 million of impairment charges in fiscal 2018 to reduce the carrying amount of certain store assets (primarily leasehold improvements at selected retail store locations) to their fair values of $1.2 million as of June 30, 2018. The Company recorded $14.2 million of impairment charges in fiscal 2017 to reduce the carrying amount of certain store assets (primarily leasehold improvements at selected retail store locations) to their fair values of $3.1 million as of July 1, 2017. The fair values of these assets were determined based on Level 3 measurements. Inputs to these fair value measurements included estimates of the amount and the timing of the stores' net future discounted cash flows based on historical experience, current trends, and market conditions. No material impairment charges were recorded in fiscal 2016. |
Debt
Debt | 12 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | DEBT The following table summarizes the components of the Company’s outstanding debt: June 30, 2018 July 1, (millions) Current Debt: Capital Lease Obligations $ 0.7 $ — Total Current Debt $ 0.7 $ — Long-Term Debt: 4.250% Senior Notes due 2025 600.0 600.0 3.000% Senior Notes due 2022 400.0 400.0 4.125% Senior Notes due 2027 600.0 600.0 Note Payable 11.4 — Capital Lease Obligations 6.0 — Total Long-Term Debt 1,617.4 1,600.0 Less: Unamortized Discount and Debt Issuance Costs on Senior Notes (17.5 ) (20.5 ) Total Long-Term Debt, net $ 1,599.9 $ 1,579.5 During fiscal 2018 , 2017 and 2016 the Company recognized interest expense related to the outstanding debt of $86.3 million , $26.8 million and $32.9 million , respectively. Credit Facilities/Term Loans On May 30, 2017, the Company entered into a definitive credit agreement whereby Bank of America, N.A., as administrative agent, the other agents party thereto, and a syndicate of banks and financial institutions have (i) committed to lend to the Company, subject to the satisfaction or waiver of the conditions set forth in the agreement, an $800.0 million term loan facility maturing six months after the term loans thereunder are borrowed (the “ Six -Month Term Loan Facility”), and a $300.0 million term loan facility maturing three years after the term loans thereunder are borrowed (collectively with the Six -Month Term Loan Facility, the “Term Loan Facilities”) and (ii) made available to the Company a $900.0 million revolving credit facility, including sub-facilities for letters of credit, with a maturity date of May 30, 2022 (the “Revolving Credit Facility,” collectively with the Term Loan Facilities, "the Facility"). The Revolving Credit Facility replaced the Company’s previously existing revolving credit facility under the Amendment and Restatement Agreement, dated as of March 18, 2015, by and between the Company, certain lenders and JPMorgan Chase Bank, N.A., as administrative agent. The Revolving Credit Facility may be used to finance the working capital needs, capital expenditures, permitted investments, share purchases, dividends and other general corporate purposes of the Company and its subsidiaries (which may include commercial paper back-up). Letters of credit and swing line loans may be issued under the Revolving Credit Facility as described below. On July 10, 2017, the Company borrowed $800.0 million under the Six -Month Term Loan Facility and $300.0 million under the Three -Year Term Loan Facility to pay a portion of the purchase price of the Company's acquisition of Kate Spade. On January 10, 2018, the Company repaid the Six -Month Term Loan Facility in accordance with the terms of the agreement. On January 24, 2018, the Company repaid the Three -Year Term Loan Facility, earlier than the terms in the agreement. Accordingly, there were no outstanding borrowings on either the Term Loan Facilities or the Revolving Credit Facility as of June 30, 2018 . Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to, at the Borrowers’ option, either (a) an alternate base rate (which is a rate equal to the greatest of (i) the Prime Rate in effect on such day, (ii) the Federal Funds Effective Rate in effect on such day plus ½ of 1% or (iii) the Adjusted LIBO Rate for a one month Interest Period on such day plus 1% ) or (b) a rate based on the rates applicable for deposits in the interbank market for U.S. Dollars or the applicable currency in which the loans are made plus, in each case, an applicable margin. The applicable margin will be determined by reference to a grid, as defined in the Credit Agreement, based on the ratio of (a) consolidated debt plus 600% of consolidated lease expense to (b) consolidated EBITDAR. Additionally, the Company pays a commitment fee at a rate determined by the reference to the aforementioned pricing grid. 4.250% Senior Notes due 2025 On March 2, 2015, the Company issued $600.0 million aggregate principal amount of 4.250% senior unsecured notes due April 1, 2025 at 99.445% of par (the “2025 Senior Notes”). Interest is payable semi-annually on April 1 and October 1 beginning October 1, 2015. Prior to January 1, 2025 ( 90 days prior to the scheduled maturity date), the Company may redeem the 2025 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2025 Senior Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been payable in respect of the 2025 Senior Notes calculated as if the maturity date of the 2025 Senior Notes was January 1, 2025 (not including any portion of payments of interest accrued to the date of redemption), discounted to the redemption date on a semi-annual basis at the Adjusted Treasury Rate (as defined in the indenture for the 2025 Senior Notes) plus 35 basis points, plus, in the case of each of (1) and (2), accrued and unpaid interest to the redemption date. On and after January 1, 2025 ( 90 days prior to the scheduled maturity date), the Company may redeem the 2025 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to 100% of the principal amount of the 2025 Senior Notes to be redeemed, plus accrued and unpaid interest to the redemption date. 3.000% Senior Notes due 2022 On June 20, 2017, the Company issued $400.0 million aggregate principal amount of 3.000% senior unsecured notes due July 15, 2022 at 99.505% of par (the "2022 Senior Notes"). Interest is payable semi-annually on January 15 and July 15 beginning January 15, 2018. Prior to June 15, 2022 (one month prior to the scheduled maturity date), the Company may redeem the 2022 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2022 Senior Notes to be redeemed or (2) as determined by a Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been payable in respect of the 2022 Senior Notes calculated as if the maturity date of the 2022 Senior Notes was June 15, 2022 (not including any portion of payments of interest accrued to the date of redemption), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined in the Prospectus Supplement) plus 25 basis points, plus, in the case of each of (1) and (2), accrued and unpaid interest to the redemption date. 4.125% Senior Notes due 2027 On June 20, 2017, the Company issued $600.0 million aggregate principal amount of 4.125% senior unsecured notes due July 15, 2027 at 99.858% of par (the "2027 Senior Notes"). Interest is payable semi-annually on January 15 and July 15 beginning January 15, 2018. Prior to April 15, 2027 (the date that is three month prior to the scheduled maturity date), the Company may redeem the 2027 Senior Notes in whole or in part, at its option at any time or from time to time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2027 Senior Notes to be redeemed or (2) as determined by a Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest thereon that would have been payable in respect of the 2027 Senior Notes calculated as if the maturity date of the 2027 Senior Notes was April 15, 2027 (not including any portion of payments of interest accrued to the date of redemption), discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined in the Prospectus Supplement) plus 30 basis points, plus, in the case of each of (1) and (2), accrued and unpaid interest to the redemption date. At June 30, 2018 , the fair value of the 2025, 2022 and 2027 Senior Notes was approximately $592.5 million , $389.0 million , and $574.1 million , respectively, based on external pricing data, including available quoted market prices of these instruments, and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as Level 2 measurements within the fair value hierarchy. At July 1, 2017 , the fair value of the 2025, 2022 and 2027 Senior Notes was approximately $624 million , $395.0 million and $596.0 million , respectively. Note Payable As a result of taking operational control of the Kate Spade Joint Ventures, the Company has an outstanding Note Payable of $11.4 million as of June 30, 2018 to the other partner of the Kate Spade Joint Ventures to be payable in fiscal 2021. Capital Lease Obligations As a result of the Company's sale-leaseback agreement for its office building in North Bergen, NJ, the Company has total capital lease obligations of $0.7 million recorded within Current debt and $6.0 million recorded within Long-Term debt on the Consolidated Balance Sheets as of June 30, 2018. The remaining lease obligations will be amortized through May 1, 2025. Debt Maturities As of June 30, 2018 , the Company's aggregate debt, excluding capital lease obligations, is approximately $1.6 billion , of which $11.4 million is due in fiscal 2021, $400.0 million is due in fiscal 2023 and $1.2 billion is due subsequent to fiscal 2023. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Letters of Credit The Company had standby letters of credit, surety bonds and bank guarantees totaling $35.1 million and $9.0 million outstanding at June 30, 2018 and July 1, 2017 , respectively. The agreements, which expire at various dates through calendar 2039, primarily collateralize the Company’s obligation to third parties for duty, leases, insurance claims and materials used in product manufacturing. The Company pays certain fees with respect to letters of credit that are issued. Tax Legislation The Tax Legislation requires the Company to pay a one-time tax, or Transition Tax, on previously unremitted earnings of certain non-U.S. subsidiaries. The Company expects to pay approximately $266 million related to the Transition Tax. Refer to Note 14, "Income Taxes," for more information related to the impact of the Tax Legislation. Other The Company had other contractual cash obligations as of June 30, 2018 , including $342.8 million related to inventory purchase obligations, $21.5 million related to capital expenditure purchase obligations, $31.0 million of other purchase obligations, $9.7 million of payments related to the capital lease obligations, $1.61 billion of debt repayments and $468.6 million of interest payments on the outstanding debt. Refer to Note 9, "Leases," for a summary of the Company's future minimum rental payments under non-cancelable leases. In the ordinary course of business, the Company is a party to several pending legal proceedings and claims. Although the outcome of such items cannot be determined with certainty, the Company's management believes that the final outcome will not have a material effect on the Company's cash flow, results of operations or financial position. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The change in the carrying amount of the Company’s goodwill by segment is as follows: Coach Kate Spade Stuart Weitzman Total (millions) Balance at July 2, 2016 $ 346.9 $ — $ 155.5 $ 502.4 Measurement period adjustment — — 0.5 0.5 Foreign exchange impact (22.4 ) — — (22.4 ) Balance at July 1, 2017 324.5 — 156.0 480.5 Acquisition of goodwill (1) 1.6 968.9 49.3 1,019.8 Allocation of goodwill (2) 324.0 (324.0 ) — — Measurement period adjustment (1) — (18.4 ) (0.5 ) (18.9 ) Foreign exchange impact 4.7 0.5 (2.3 ) 2.9 Balance at June 30, 2018 $ 654.8 $ 627.0 $ 202.5 $ 1,484.3 (1) Refer to Note 3, "Acquisitions," for further information. (2) The Company assigned a portion of goodwill associated with the Kate Spade acquisition to Coach brand reporting units based upon the analysis of expected synergies, including the allocation of corporate synergies to the brands. Intangible Assets Intangible assets consist of the following: Fiscal Year Ended (1) June 30, 2018 July 1, 2017 Gross Accum. Net Gross Accum. Net (millions) Intangible assets subject to amortization: Customer relationships $ 100.5 $ (17.3 ) $ 83.2 $ 54.7 $ (9.7 ) $ 45.0 Order backlog 2.0 (2.0 ) — — — — Favorable lease rights 97.3 (24.4 ) 72.9 26.1 (7.1 ) 19.0 Total intangible assets subject to amortization 199.8 (43.7 ) 156.1 80.8 (16.8 ) 64.0 Intangible assets not subject to amortization: Brand intangible assets 1,576.8 — 1,576.8 276.8 — 276.8 Total intangible assets $ 1,776.6 $ (43.7 ) $ 1,732.9 $ 357.6 $ (16.8 ) $ 340.8 (1) Refer to Note 3, "Acquisitions," for further information. As of June 30, 2018 , the expected amortization expense for intangible assets is as follows: Amortization Expense (millions) Fiscal 2019 $ 21.8 Fiscal 2020 20.2 Fiscal 2021 18.7 Fiscal 2022 16.7 Fiscal 2023 15.7 Thereafter 63.0 Total $ 156.1 The expected future amortization expense above reflects remaining useful lives ranging from approximately 11.8 years to 14.0 years for customer relationships and the remaining lease terms ranging from approximately seven months to 16.8 years for favorable lease rights. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The provisions for income taxes, computed by applying the U.S. statutory rate to income before taxes, as reconciled to the actual provisions were: Fiscal Year Ended June 30, 2018 July 1, 2017 July 2, 2016 Amount Percentage Amount Percentage Amount Percentage (millions) Income before provision for income taxes: United States $ 161.2 27.0 % $ 365.5 48.2 % $ 357.5 57.1 % Foreign 435.6 73.0 393.5 51.8 269.1 42.9 Total income before provision for income taxes $ 596.8 100.0 % $ 759.0 100.0 % $ 626.6 100.0 % Tax expense at U.S. statutory rate $ 167.0 28.0 % $ 265.7 35.0 % $ 219.3 35.0 % State taxes, net of federal benefit 2.4 0.4 15.1 2.0 11.2 1.8 Effects of foreign operations (55.6 ) (9.3 ) (86.7 ) (11.4 ) (53.7 ) (8.6 ) Transition tax on deferred foreign earnings 266.0 44.6 — — — — Re-measurement of deferred taxes (87.8 ) (14.7 ) — — — — Effects of foreign tax credits and acquisition reorganization (36.2 ) (6.1 ) (12.3 ) (1.6 ) (19.6 ) (3.1 ) Release of state valuation allowance (40.7 ) (6.8 ) — — — — Other, net (15.8 ) (2.7 ) (13.8 ) (1.9 ) 8.9 1.4 Taxes at effective worldwide rates $ 199.3 33.4 % $ 168.0 22.1 % $ 166.1 26.5 % Current and deferred tax provision (benefit) was: Fiscal Year Ended June 30, 2018 July 1, 2017 July 2, 2016 Current Deferred Current Deferred Current Deferred (millions) Federal $ 181.1 $ (1.9 ) $ 42.9 $ 56.4 $ 145.8 $ (52.0 ) Foreign 79.1 (11.2 ) 39.7 7.4 46.8 2.2 State (10.0 ) (37.8 ) 7.4 14.2 25.8 (2.5 ) Total current and deferred tax provision (benefit) $ 250.2 $ (50.9 ) $ 90.0 $ 78.0 $ 218.4 $ (52.3 ) The components of deferred tax assets and liabilities were: June 30, July 1, (millions) Share-based compensation $ 27.1 $ 64.8 Reserves not deductible until paid 39.2 39.2 Deferred rent 22.5 22.7 Employee benefits 19.0 40.9 Foreign investments — 1.1 Net operating loss 395.2 199.2 Other 9.5 10.4 Prepaid expenses — 0.6 Inventory 18.9 21.6 Capital loss carryforward 56.8 — Gross deferred tax assets 588.2 400.5 Valuation allowance 305.9 196.1 Deferred tax assets after valuation allowance $ 282.3 $ 204.4 Goodwill 84.3 82.6 Other intangibles 347.9 — Property and equipment 25.8 8.4 Foreign investments 5.7 — Prepaid expenses 0.5 — Other — 6.2 Gross deferred tax liabilities 464.2 97.2 Net deferred tax (liabilities) assets $ (181.9 ) $ 107.2 Consolidated Balance Sheets Classification Deferred income taxes – noncurrent asset 24.3 170.5 Deferred income taxes – noncurrent liability (206.2 ) (63.3 ) Net deferred tax (liabilities) assets $ (181.9 ) $ 107.2 Significant judgment is required in determining the worldwide provision for income taxes, and there are many transactions for which the ultimate tax outcome is uncertain. It is the Company’s policy to establish provisions for taxes that may become payable in future years, including those due to an examination by tax authorities. The Company establishes the provisions based upon management’s assessment of exposure associated with uncertain tax positions. The provisions are analyzed at least quarterly and adjusted as appropriate based on new information or circumstances in accordance with the requirements of ASC 740. In fiscal 2018, the Company recorded a net deferred tax liability of $325.7 million as part of the opening balance sheet recorded in purchase accounting for fiscal 2019 acquisitions. Given that this balance was recorded as part of purchase accounting, it has no impact on total deferred tax expense recorded during fiscal 2018. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows: June 30, July 1, July 2, (millions) Balance at beginning of fiscal year $ 94.1 $ 138.6 $ 168.1 Gross increase due to tax positions related to prior periods 3.8 2.7 25.5 Gross decrease due to tax positions related to prior periods (4.0 ) (2.7 ) (4.4 ) Gross increase due to tax positions related to current period 6.4 8.1 8.7 Decrease due to lapse of statutes of limitations (23.9 ) (39.5 ) (59.0 ) Decrease due to settlements with taxing authorities (25.1 ) (13.1 ) (0.3 ) Increase due to current year acquisitions 24.0 — — Balance at end of fiscal year $ 75.3 $ 94.1 $ 138.6 In fiscal 2018, the Company recorded $24.0 million of unrecognized tax benefit as part of a purchase accounting adjustment for fiscal 2018 acquisitions, which did not impact the effective tax rate in fiscal 2018. Of the $75.3 million ending gross unrecognized tax benefit balance as of June 30, 2018 , $57.0 million relates to items which, if recognized, would impact the effective tax rate. Of the $94.1 million ending gross unrecognized tax benefit balance as of July 1, 2017 , $83.6 million relates to items which, if recognized, would impact the effective tax rate. As of June 30, 2018 and July 1, 2017 , gross interest and penalties payable was $12.9 million and $24.1 million , respectively, which are included in Other liabilities on the Company's Consolidated Balance Sheet. During fiscal 2018 , fiscal 2017 and fiscal 2016 , the Company recognized gross interest and penalty income of $10.8 million , gross interest and penalty income of $2.8 million and gross interest and penalty expense of $11.5 million , respectively. The Company files income tax returns in the U.S. federal jurisdiction, as well as various state and foreign jurisdictions. Tax examinations are currently in progress in select foreign and state jurisdictions that are extending the years open under the statutes of limitation. Fiscal years 2015 to present are open to examination in the U.S. federal jurisdiction, fiscal 2010 to present in select state jurisdictions and fiscal 2011 to present in select foreign jurisdictions. The Company anticipates that one or more of these audits may be finalized and certain statutes of limitation may expire in the foreseeable future. However, based on the status of these examinations, and the average time typically incurred in finalizing audits with the relevant tax authorities, the Company cannot reasonably estimate the impact these audits may have in the next 12 months, if any, to previously recorded uncertain tax positions. The Company accrues for certain known and reasonably anticipated income tax obligations after assessing the likely outcome based on the weight of available evidence. Although the Company believes that the estimates and assumptions used are reasonable and legally supportable, the final determination of tax audits could be different than that which is reflected in historical income tax provisions and recorded assets and liabilities. With respect to all jurisdictions, the Company has made adequate provision for all income tax uncertainties. As of June 30, 2018, the Company had the following tax loss carryforwards available: U.S. federal loss carryforwards of $448.4 million , U.S. federal capital loss carryforwards of $216.9 million , state tax loss carryforwards of approximately $831 million and tax loss carryforwards of various foreign jurisdictions of $921.9 million . As of July 1, 2017, the Company had tax loss carryforwards in various foreign jurisdictions of $715.3 million . The federal and state net operating loss carryforwards generally start to expire in 2027 and 2018, respectively. The U.S. federal capital loss carryforward will expire in fiscal 2019. The majority of the foreign net operating loss can be carried forward indefinitely. Deferred tax assets, including the deferred tax assets recognized on these net operating and capital losses, have been reduced by a valuation allowance of $305.9 million as of June 30, 2018 and $196.1 million as of July 1, 2017. The total estimated amount of unremitted earnings of foreign subsidiaries as of June 30, 2018 and July 1, 2017 was $3.09 billion and $2.91 billion , respectively. Before the Tax Legislation, the Company considered the earnings of its non-U.S. subsidiaries to be indefinitely reinvested, and accordingly, recorded no deferred income taxes on these earnings. The Tax Legislation imposed a one-time Transition Tax on the deemed repatriated earnings, thereby removing the potential federal income tax consequences of repatriating these earnings to the U.S. However actual remittance from non-U.S. subsidiaries may result in additional foreign withholding taxes, U.S. state taxes and taxes related foreign currency gains or losses. Based on the Company’s current analysis and amount it anticipates will be remitted from certain jurisdictions, it has recorded an estimate for state taxes of $5.5 million . The Company continues to be indefinitely reinvested with respect to all other unremitted earnings. Determination of the amount of unrecognized deferred income tax liabilities on those earnings is not practicable because such liability, if any, is subject to many variables and is dependent on circumstances existing if and when remittance occurs. Tax Legislation On December 22, 2017, H.R.1, formerly known as the Tax Cuts and Jobs Act (the “Tax Legislation”) was enacted. The Tax Legislation significantly revises the U.S. tax code by (i) lowering the U.S federal statutory income tax rate from 35% to 21% , (ii) implementing a territorial tax system, (iii) imposing a one-time transition tax on deemed repatriated earnings of foreign subsidiaries ("Transition Tax"), (iv) requiring current inclusion of global intangible low taxed income (“GILTI”) of certain earnings of controlled foreign corporations in U.S. federal taxable income, (v) creating the base erosion anti-abuse tax (“BEAT”) provision, (vi) implementing bonus depreciation that will allow for full expensing of qualified property, (vii) enacting a beneficial rate to be applied against Foreign Derived Intangible Income ("FDII") and (viii) limiting deductibility of interest and executive compensation expense, among other changes. Due to the fact that the Company is a fiscal year filer, the blended U.S. federal statutory rate for fiscal 2018 is 28.0% . The U.S. federal statutory rate will be 21.0% in fiscal 2019 and thereafter. The Company has recorded the required income tax effects under the Tax Legislation and provided disclosure pursuant to ASC 740, Income Taxes, and the SEC Staff Accounting Bulletin ("SAB") 118, using its best estimates based on reasonable and supportable assumptions and available inputs and underlying information as of the reporting date. The two provisions that significantly impact the Company for fiscal 2018 are the calculation of the Transition Tax and the impact of the U.S. federal statutory tax rate reduction, from 35% to 21%, on the current and deferred tax provision and related accounts. These amounts were recorded as provisional pursuant to SAB 118 since both require more detailed information before these amounts can be finalized. Pursuant to SAB 118, for certain elements of the Tax Legislation for which a reasonable estimate could not be determined, the Company has not reported provisional amounts related to these elements and has continued to account for them in accordance with ASC 740 based on the tax laws in effect before the Tax Legislation. The amounts recorded in the year ended June 30, 2018 are subject to adjustment as future guidance becomes available, additional facts become known or estimation approaches are refined. The following table represents amounts recorded to provision for income taxes in the year ended June 30, 2018 for items related to the Tax Legislation: Year Ended June 30, 2018 (millions) Impact of Change in U.S. Federal Statutory Rate on Pre-Tax Income $ (10.9 ) Discrete Impacts of Tax Legislation: Transition Tax - Federal and State (1) 266.0 Re-measurement of deferred taxes (2) (87.8 ) Total Impact of Tax Legislation (3) $ 167.3 (1) The Tax Legislation requires the Company to pay a Transition Tax on previously unremitted earnings of certain non-U.S. subsidiaries. The Transition Tax is payable in installments over 8 years beginning in the Company's fiscal 2018. In the year ended June 30, 2018, the Company recorded a cumulative charge of $266.0 million for the Transition Tax. In the year ended June 30, 2018, $222.4 million is recorded as long-term income taxes payable and $43.6 million is recorded in accrued liabilities related to the current portion of this payable on the Company's Consolidated Balance Sheet as of June 30, 2018. Additional detailed information required to complete the calculation includes, but is not limited to, (i) completing a foreign earnings and profit study to determine the Company’s deferred foreign income since 1986, including all acquisitions; (ii) determining foreign taxes paid against deferred foreign income; and (iii) concluding on the total balance of cash and cash equivalents. Based on the interpretation of available guidance, the Company expects to remit the first payment on the due date of its fiscal year 2018 income tax return, which will be in fiscal 2019. The balance of annual payments will be paid ratably in our quarterly estimated tax payments. The following table presents the expected timing of income tax payments related to the Transition Tax expected to be recognized by the Company: Transition Tax Payments (millions) Fiscal 2019 $ 43.6 Fiscal 2020 21.2 Fiscal 2021 21.2 Fiscal 2022 21.2 Fiscal 2023 39.7 Fiscal 2024 and 2025 119.1 Total $ 266.0 (2) Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The Company has estimated the rate change adjustment related to the deferred tax balances that reverses within the 2018 fiscal year at a blended U.S federal statutory income tax rate of 28% and those that will reverse after the 2018 fiscal year at the U.S federal statutory income tax rate of 21%. This deferred tax rate change adjustment is provisional and will be finalized after the Company files its federal and state tax returns for fiscal year 2018. The estimated impact recorded in fiscal 2018 will change if the timing of the deferred tax impacts shifts between fiscal 2018 and fiscal 2019 and beyond. The Company’s estimated adjustment may also be affected by other analysis related to the Tax Legislation, including, but not limited to, the calculation of deemed repatriation of deferred foreign income and the U.S. state income tax effect of adjustments made to federal temporary differences, such as the full expensing of qualified property which may not be allowed from a state tax perspective. (3) This table does not include the $40.7 million of valuation allowances that were initially established during purchase accounting, but were reversed based on facts introduced subsequent to the acquisition date that relate, in part, to the enactment of Tax Legislation. In addition, this table does not include $5.5 million of state taxes due on the expected remittance of earnings from non-U.S. subsidiaries. The Tax Legislation includes substantial changes to the taxation of foreign income, effectively converting the U.S. to a territorial income tax regime. Notable changes include that foreign earnings after December 31, 2017 will generally be eligible for a 100% dividends received exemption, however companies may be subject to the BEAT and GILTI, which would increase the Company's effective tax rate, and FDII, which would decrease the effective tax rate below 21%. These tax provisions do not impact the Company until fiscal year 2019, and based on current facts and circumstances, the Company believes that GILTI is the tax provision most likely to apply. Under GILTI, a portion of the Company’s foreign earnings will be subject to U.S. taxation, offset by available foreign tax credits subject to limitations. For companies subject to GILTI, the FASB has indicated that companies are allowed to record a deferred tax liability related to the outside basis difference in the fiscal year of enactment or record the tax associated with GILTI as a period cost in the period the earnings are included on the U.S. tax return. The Company has chosen to record the future tax associated with GILTI as a period cost, and accordingly, the Company has recorded no additional deferred tax liability in fiscal 2018. Other provisions of the new legislation that are not applicable to the Company until fiscal 2019 include, but are not limited to, limiting deductibility of interest and executive compensation expense. Based on current facts and circumstances, the Company does not anticipate the impact of these provisions to be material to the overall financial statements. |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Defined Contribution Plan | DEFINED CONTRIBUTION PLAN The Company maintains the Tapestry, Inc. 401(k) Savings Plan, which is a defined contribution plan. Employees who meet certain eligibility requirements and are not part of a collective bargaining agreement may participate in this program. The annual expense incurred by the Company for this defined contribution plan was $12.3 million , $9.1 million and $8.3 million in fiscal 2018 , fiscal 2017 and fiscal 2016 , respectively. |
Segment Information
Segment Information | 12 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION Prior to fiscal 2018, the Company had three reportable segments: North America (Coach brand), International (Coach brand) and Stuart Weitzman. Beginning in fiscal 2018 and as a result of the Kate Spade acquisition, the Company aligned its reportable segments with the new structure of its business. As a result, the Company has three reportable segments: • Coach - Includes global sales of Coach brand products to customers through Coach operated stores, including the Internet and concession shop-in-shops, and sales to wholesale customers and through independent third party distributors. • Kate Spade - Includes global sales primarily of kate spade new york brand products to customers through Kate Spade operated stores, including the Internet, to wholesale customers, through concession shop-in-shops and through independent third party distributors. • Stuart Weitzman - Includes global sales of Stuart Weitzman brand products primarily through Stuart Weitzman operated stores, including the Internet, to wholesale customers and through numerous independent third party distributors. In deciding how to allocate resources and assess performance, the Company's chief operating decision maker regularly evaluates the sales and operating income of these segments. Operating income is the gross margin of the segment less direct expenses of the segment. Additionally, certain costs were reclassified in fiscal 2017 results from Corporate to the Coach and Stuart Weitzman segments, as the costs can now be specifically identified to a segment. Starting in fiscal 2019, certain SG&A expenses that were reported within our reportable segments in fiscal 2018 will be reflected as Corporate expense. The costs primarily relate to employee costs within shared functional groups. The Company intends to recast its fiscal 2018 segment results for comparability purposes for the quarter ended September 30, 2018. There will be no change to the Company's consolidated results. The following table summarizes segment performance for fiscal 2018 , fiscal 2017 and fiscal 2016 : Coach (1) Kate Spade (1) Stuart Weitzman (1) Corporate (2) Total (millions) Fiscal 2018 Net sales $ 4,221.5 $ 1,284.7 $ 373.8 $ — $ 5,880.0 Gross profit 2,931.5 711.1 211.3 — 3,853.9 Operating income (loss) 1,084.2 (61.9 ) (2.6 ) (348.9 ) 670.8 Income (loss) before provision for income taxes 1,084.2 (61.9 ) (2.6 ) (422.9 ) 596.8 Depreciation and amortization expense (3) 139.5 67.2 20.8 43.8 271.3 Total assets 2,256.8 2,626.3 746.4 1,048.8 6,678.3 Additions to long-lived assets (4) 134.4 34.4 7.8 90.8 267.4 Fiscal 2017 Net sales $ 4,114.7 $ — $ 373.6 $ — $ 4,488.3 Gross profit 2,855.0 — 226.1 — 3,081.1 Operating income (loss) 1,040.0 — 15.5 (268.1 ) 787.4 Income (loss) before provision for income taxes 1,040.0 — 15.5 (296.5 ) 759.0 Depreciation and amortization expense (3) 149.9 — 18.9 50.1 218.9 Total assets 1,937.1 — 628.4 3,266.1 5,831.6 Additions to long-lived assets (4) 170.5 — 20.2 92.4 283.1 Fiscal 2016 Net sales $ 4,147.1 $ — $ 344.7 $ — $ 4,491.8 Gross profit 2,848.9 — 202.4 — 3,051.3 Operating income (loss) 1,024.4 — 32.5 (403.4 ) 653.5 Income (loss) before provision for income taxes 1,024.4 — 32.5 (430.3 ) 626.6 Depreciation and amortization expense (3) 132.6 — 19.6 66.9 219.1 Total assets 1,975.5 — 631.2 2,286.0 4,892.7 Additions to long-lived assets (4) 210.2 — 11.5 174.7 396.4 (1) During the first quarter of fiscal 2018, the Company completed its acquisition of Kate Spade & Company. During the third quarter of fiscal 2018, the Company completed its acquisition of certain distributors for the Coach and Stuart Weitzman brands and obtained operational control of the Kate Spade Joint Ventures. The operating results of the respective entity have been consolidated commencing on the date of each transaction. (2) Corporate, which is not a reportable segment, represents certain costs that are not directly attributable to a brand. These costs primarily represent administrative and information systems expense. Furthermore, certain integration and acquisition costs as well as costs under the Company's Operational Efficiency Plan and Transformation Plan as described in Note 5, "Restructuring Activities," are included within Corporate. (3) Depreciation and amortization expense includes $11.0 million of Integration & Acquisition costs for the fiscal year ended June 30, 2018 . There were no costs incurred related to the Operational Efficiency Plan for the fiscal year ended June 30, 2018 . Depreciation and amortization expenses includes $6.1 million of Operational Efficiency Plan charges and $8.5 million of Operational Efficiency Plan and Transformation Plan charges for the fiscal years ended July 1, 2017 and July 2, 2016, respectively. These charges are recorded within Corporate. Depreciation and amortization expense for the segments includes an allocation of expense related to assets which support multiple segments. (4) Additions to long-lived assets for the reportable segments primarily includes store assets as well as assets that support a specific brand. Corporate additions include all other assets which includes a combination of Corporate assets, as well as assets that may support all segments. As such, depreciation expense for these assets may be subsequently allocated to a reportable segment. The following table shows net sales for each product category represented: Fiscal Year Ended June 30, 2018 July 1, 2017 July 2, 2016 Amount % of total net sales Amount % of total net sales Amount % of total net sales (millions) Coach: Women's Handbags $ 2,298.2 39 % $ 2,308.0 52 % $ 2,392.9 53 % Men's 844.6 14 808.0 18 725.7 16 Women's Accessories 747.1 13 721.0 16 721.6 16 Other Products 331.6 6 277.7 6 306.9 7 Total Coach $ 4,221.5 72 % $ 4,114.7 92 % $ 4,147.1 92 % Kate Spade: (1) Women's Handbags $ 703.4 12 % $ — — % $ — — % Other Products 311.6 5 — — — — Women's Accessories 269.7 5 — — — — Total Kate Spade $ 1,284.7 22 % $ — — % $ — — % Stuart Weitzman (2) $ 373.8 6 % $ 373.6 8 % $ 344.7 8 % Total Net Sales $ 5,880.0 100 % $ 4,488.3 100 % $ 4,491.8 100 % (1) On July 11, 2017, the Company completed its acquisition of Kate Spade. The operating results of the Kate Spade brand have been consolidated in the Company's operating results commencing on July 11, 2017. (2) The significant majority of sales for the Stuart Weitzman brand is attributable to women's footwear. Geographic Area Information As of June 30, 2018 , the Company operated 322 retail stores and 281 outlet stores in the United States and 51 retail stores and 16 outlet stores in Canada. Outside of North America, the Company operated 276 concession shop-in-shops within department stores, retail stores and outlet stores in Japan, 275 in Greater China (including mainland China, Hong Kong and Macau) and 211 in other international locations. Geographic revenue information is based on the location of our customer sale. Geographic long-lived asset information is based on the physical location of the assets at the end of each fiscal year and includes property and equipment, net and other assets. United States Japan Greater China (2) Other (3) Total (millions) Fiscal 2018 Net sales (1) $ 3,457.4 $ 695.7 $ 737.4 $ 989.5 $ 5,880.0 Long-lived assets 663.3 60.6 98.4 181.9 1,004.2 Fiscal 2017 Net sales (1) $ 2,432.5 $ 572.8 $ 643.9 $ 839.1 $ 4,488.3 Long-lived assets 497.7 58.3 93.2 162.2 811.4 Fiscal 2016 Net sales (1) $ 2,477.3 $ 559.8 $ 652.2 $ 802.5 $ 4,491.8 Long-lived assets 750.3 74.8 96.6 141.5 1,063.2 (1) Includes net sales from our global travel retail business in locations within the specified geographic area. (2) Greater China includes mainland China, Hong Kong and Macau. (3) Other international sales reflect shipments to third-party distributors, primarily in East Asia, and sales from Company-operated stores and concession shop-in-shops in Europe, Canada, Taiwan, South Korea, Malaysia and Singapore. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE Basic net income per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted net income per share is calculated similarly but includes potential dilution from the exercise of stock options and restricted stock units and any other potentially dilutive instruments, only in the periods in which such effects are dilutive under the treasury stock method. The following is a reconciliation of the weighted-average shares outstanding and calculation of basic and diluted earnings per share: Fiscal Year Ended June 30, July 1, July 2, (millions, except per share data) Net income $ 397.5 $ 591.0 $ 460.5 Weighted-average basic shares 285.4 280.6 277.6 Dilutive securities: Effect of dilutive securities 3.2 2.2 1.7 Weighted-average diluted shares 288.6 282.8 279.3 Net income per share: Basic $ 1.39 $ 2.11 $ 1.66 Diluted $ 1.38 $ 2.09 $ 1.65 At June 30, 2018 , options to purchase 3.4 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $48.08 to $78.46 , were greater than the average market price of the common shares. At July 1, 2017 , options to purchase 4.5 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $45.13 to $78.46 , were greater than the average market price of the common shares. At July 2, 2016 , options to purchase 5.1 million shares of common stock were outstanding but not included in the computation of diluted earnings per share, as these options’ exercise prices, ranging from $39.42 to $78.46 , were greater than the average market price of the common shares. Earnings per share amounts have been calculated based on unrounded numbers. Options to purchase shares of the Company's common stock at an exercise price greater than the average market price of the common stock during the reporting period are anti-dilutive and therefore not included in the computation of diluted net income per common share. In addition, the Company has outstanding restricted stock unit awards that are issuable only upon the achievement of certain performance goals. Performance-based restricted stock unit awards are included in the computation of diluted shares only to the extent that the underlying performance conditions (and any applicable market condition modifiers) (i) are satisfied as of the end of the reporting period or (ii) would be considered satisfied if the end of the reporting period were the end of the related contingency period and the result would be dilutive under the treasury stock method. As of June 30, 2018 , July 1, 2017 and July 2, 2016 , there were approximately 4.2 million , 5.6 million , and 5.9 million , respectively, of shares issuable upon exercise of anti-dilutive options and contingent vesting of performance-based restricted stock unit awards, which were excluded from the diluted share calculations. |
Related Parties
Related Parties | 12 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Parties | RELATED PARTIES The Stuart Weitzman brand owns approximately 50% of a factory and one of its former employees, who left the Company during fiscal 2017, maintains a partial ownership interest of less than 50% in a factory, both of which are located in Spain, which are involved in the production of Stuart Weitzman inventory. Payments to these two factories represented $17.1 million and $27.6 million in fiscal 2018 and fiscal 2017 , respectively. Amounts payable to these factories were not material at June 30, 2018 or July 1, 2017 . |
Supplemental Balance Sheet Info
Supplemental Balance Sheet Information | 12 Months Ended |
Jun. 30, 2018 | |
Disclosure Text Block Supplement [Abstract] | |
Supplemental Balance Sheet Information | SUPPLEMENTAL BALANCE SHEET INFORMATION The components of certain balance sheet accounts are as follows: June 30, July 1, (millions) Property and equipment Land and building $ 19.0 $ 13.7 Machinery and equipment 56.0 34.4 Software and computer equipment 409.1 310.4 Furniture and fixtures 322.5 329.6 Leasehold improvements 891.0 729.7 Construction in progress 142.2 71.7 Less: accumulated depreciation (954.4 ) (798.1 ) Total property and equipment, net $ 885.4 $ 691.4 Accrued liabilities Payroll and employee benefits $ 174.3 $ 152.7 Accrued rent 53.9 45.5 Dividends payable 97.2 95.1 Operating expenses 347.8 265.9 Total accrued liabilities $ 673.2 $ 559.2 Other liabilities Deferred lease obligation $ 200.7 $ 204.2 Gross unrecognized tax benefit 75.3 94.1 Other 191.0 134.8 Total other liabilities $ 467.0 $ 433.1 |
Headquarters Transactions
Headquarters Transactions | 12 Months Ended |
Jun. 30, 2018 | |
Leases [Abstract] | |
Headquarters Transactions | HEADQUARTERS TRANSACTIONS Sale of Interest and Lease Transaction of Hudson Yards During the first quarter of fiscal 2017, the Company sold its investments in 10 Hudson Yards, in New York City, and announced the lease of its new global headquarters. The Company sold its equity investment in the Hudson Yards joint venture as well as net fixed assets related to the design and build-out of the space. The Company received a purchase price of approximately $707 million (net of approximately $77 million due to the developer of Hudson Yards) before transaction costs of approximately $26 million , resulting in a gain of $28.8 million , which will be amortized through SG&A expenses over the lease term of 20 years, as discussed below. The Company has simultaneously entered into a 20 -year lease, accounted for as an operating lease, for the headquarters space in the building, comprised of approximately 694,000 square feet. Under the lease, the Company has the right to expand its premises to portions of the 24 th and 25 th floors of the building and has a right of first offer with respect to available space on the 26 th floor of the building. The total commitment related to this lease was approximately $1.05 billion . Minimum lease payments of $45.1 million are due each year from fiscal 2018 through fiscal 2021, and $825.5 million total due for years subsequent to 2021. In addition to its fixed rent obligations, the Company is obligated to pay its percentage share for customary escalations for operating expenses attributable to the building and the Hudson Yards development, taxes and tax related payments. The Company is not obligated to pay any amount of contingent rent. Sale of Former Headquarters During the second quarter of fiscal 2017, the Company completed the sale of its former headquarters on West 34th Street. Net cash proceeds of $126.0 million were generated and the sale did not result in a material gain or loss. Sublease Agreement On September 13, 2017, the Company entered into a Sublease (the "Sublease"), as sublandlord, with The Guardian Life Insurance Company of America, a New York mutual insurance company ("Guardian"), as subtenant, pursuant to which the Company has agreed to sublease to Guardian three floors of the Company's leased space at 10 Hudson Yards, New York, NY, consisting of approximately 148,813 square feet of office space. The term of the Sublease expires on June 29, 2036 (the "Expiration Date"). The rent commencement date under the Sublease is estimated to occur on February 1, 2019. Under the terms of the Sublease, and assuming a rent commencement date of February 1, 2019, Guardian has agreed to pay monthly base rent to the Company of approximately $0.8 million from March 1, 2019 through June 30, 2019 and monthly base rent ranging from approximately $1.1 million to $1.3 million depending on the period from July 1, 2019 through the Expiration Date. In addition to monthly base rent, Guardian has agreed to pay to the Company Guardian’s proportionate share of increases in payments in lieu of taxes and taxes over the tax year commencing July 1, 2019, as well as Guardian’s proportionate share of increases in operating expenses over the operating year commencing January 1, 2019. Subject to certain customary conditions set forth in the Sublease, the Company has agreed to reimburse Guardian for certain subtenant improvements in an amount equal to $80.00 per rentable square foot, or approximately $11.9 million in the aggregate, subject to a deduction equal to $10.00 per rentable square foot, or approximately $1.5 million in the aggregate, for work previously performed by or on behalf of the Company. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Jun. 30, 2018 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | Schedule II — Valuation and Qualifying Accounts For the Fiscal Years Ended June 30, 2018 , July 1, 2017 and July 2, 2016 Balance at Beginning of Year Additions Charged to Costs and Expenses Additions Related to Acquisition Write-offs/ Allowances Taken Balance at End of Year (millions) Fiscal 2018 Allowance for bad debts $ 1.9 $ 1.3 $ — $ (1.7 ) $ 1.5 Allowance for returns 4.4 12.9 5.0 (10.8 ) 11.5 Allowance for markdowns 9.4 51.4 9.1 (53.2 ) 16.7 Valuation allowance 196.1 20.7 129.8 (40.7 ) 305.9 Total $ 211.8 $ 86.3 $ 143.9 $ (106.4 ) $ 335.6 Fiscal 2017 Allowance for bad debts $ 2.2 $ 1.7 $ — $ (2.0 ) $ 1.9 Allowance for returns 6.0 10.3 — (11.9 ) 4.4 Allowance for markdowns 15.2 36.9 — (42.7 ) 9.4 Valuation allowance 173.4 22.7 — — 196.1 Total $ 196.8 $ 71.6 $ — $ (56.6 ) $ 211.8 Fiscal 2016 Allowance for bad debts $ 3.1 $ 3.7 $ — $ (4.6 ) $ 2.2 Allowance for returns 7.5 11.5 — (13.0 ) 6.0 Allowance for markdowns 18.0 54.1 — (56.9 ) 15.2 Valuation allowance 169.8 3.6 — — 173.4 Total $ 198.4 $ 72.9 $ — $ (74.5 ) $ 196.8 |
Quarterly Financial Data
Quarterly Financial Data | 12 Months Ended |
Jun. 30, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data | Quarterly Financial Data (unaudited) First Quarter Second Quarter Third Quarter Fourth Quarter (millions, except per share data) Fiscal 2018 (1) Net sales $ 1,288.9 $ 1,785.0 $ 1,322.4 $ 1,483.7 Gross profit 764.4 1,177.4 908.9 1,003.2 Net income (17.7 ) 63.2 140.3 211.7 Net income per common share: Basic $ (0.06 ) $ 0.22 $ 0.49 $ 0.74 Diluted $ (0.06 ) $ 0.22 $ 0.48 $ 0.73 Fiscal 2017 (1) Net sales $ 1,037.6 $ 1,321.7 $ 995.2 $ 1,133.8 Gross profit 714.7 906.2 705.7 754.5 Net income 117.4 199.7 122.2 151.7 Net income per common share: Basic $ 0.42 $ 0.71 $ 0.44 $ 0.54 Diluted $ 0.42 $ 0.71 $ 0.43 $ 0.53 Fiscal 2016 (1)(2) Net sales $ 1,030.3 $ 1,273.8 $ 1,033.1 $ 1,154.6 Gross profit 696.5 859.1 713.0 782.7 Net income 96.4 170.1 112.5 81.5 Net income per common share: Basic $ 0.35 $ 0.61 $ 0.40 $ 0.29 Diluted $ 0.35 $ 0.61 $ 0.40 $ 0.29 (1) The sum of the quarterly earnings per share may not equal the full-year amount, as the computations of the weighted-average number of common basic and diluted shares outstanding for each quarter and the full year are performed independently. (2) The fourth quarter of fiscal 2016 included the results of the 53rd week, contributing to $84.4 million in net revenues and $0.07 in net income per diluted share. |
Significant Accounting Polici31
Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Fiscal Year | Fiscal Year The Company’s fiscal year ends on the Saturday closest to June 30. Unless otherwise stated, references to years in the financial statements relate to fiscal years. The fiscal years ended June 30, 2018 (“fiscal 2018”) and July 1, 2017 (“fiscal 2017”) were 52-week periods, and the fiscal year ended July 2, 2016 (“fiscal 2016”) was a 53-week period. The fiscal year ending June 29, 2019 (“fiscal 2019”) will be a 52-week period. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from estimates in amounts that may be material to the financial statements. Significant estimates inherent in the preparation of the consolidated financial statements include reserves for the realizability of inventory; customer returns, end-of-season markdowns and operational chargebacks; useful lives and impairments of long-lived tangible and intangible assets; accounting for income taxes (including the impacts of the new tax legislation) and related uncertain tax positions; accounting for business combinations; the valuation of stock-based compensation awards and related expected forfeiture rates; reserves for restructuring; and reserves for litigation and other contingencies, amongst others. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and all 100% owned and controlled subsidiaries. All intercompany transactions and balances are eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash balances and highly liquid investments with a maturity of three months or less at the date of purchase. |
Investments | Investments Short-term investments consist primarily of high-credit quality U.S. and non-U.S. issued corporate debt securities, and U.S. Treasuries and government agency securities with original maturities greater than three months and with maturities within one year of balance sheet date, classified as available-for-sale. Long-term investments primarily consist of high-credit quality U.S. and non-U.S. issued corporate debt securities, U.S. Treasuries and government agency securities, classified as available-for-sale, and recorded at fair value, with unrealized gains and losses recorded in other comprehensive income. Dividend and interest income are recognized when earned. Additionally, GAAP requires the consolidation of all entities for which a Company has a controlling voting interest and all variable interest entities (“VIEs”) for which a Company is deemed to be the primary beneficiary. An entity is generally a VIE if it meets any of the following criteria: (i) the entity has insufficient equity to finance its activities without additional subordinated financial support from other parties, (ii) the equity investors cannot make significant decisions about the entity’s operations or (iii) the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity or receive the expected returns of the entity and substantially all of the entity’s activities involve or are conducted on behalf of the investor with disproportionately few voting rights. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. The Company places its cash investments with high-credit quality financial institutions and generally invests primarily in corporate debt securities, money market instruments, U.S. government and agency debt securities, commercial paper and bank deposits placed with major banks and financial institutions. Accounts receivable is generally diversified due to the number of entities comprising the Company's customer base and their dispersion across many geographical regions. The Company believes no significant concentration of credit risk exists with respect to these investments and accounts receivable. |
Inventories | Inventories The Company holds inventory that is sold through retail and wholesale distribution channels, including e-commerce sites. Substantially all of the Company's inventories are comprised of finished goods, and are reported at the lower of cost or net realizable value. Inventory costs include material, conversion costs, freight and duties and are primarily determined by the first-in, first-out method. The Company reserves for inventory, including slow-moving and aged inventory, based on current product demand, expected future demand and historical experience. A decrease in product demand due to changing customer tastes, buying patterns or increased competition could impact the Company's evaluation of its inventory and additional reserves might be required. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net is stated at cost less accumulated depreciation including the impact of long-lived asset impairment and disposals. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Buildings are depreciated over 40 years and building improvements are depreciated over ten to 40 years . Machinery and equipment are depreciated over lives of five to seven years , furniture and fixtures are depreciated over lives of three to ten years , and software and computer equipment is depreciated over lives of three to ten years . Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease terms. Maintenance and repair costs are charged to earnings as incurred while expenditures for major renewals and improvements are capitalized. |
Valuation of Long-Lived Assets | 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. 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. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than its carrying value, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. The Company recorded $9.1 million and $14.2 million of impairment charges in fiscal 2018 and fiscal 2017, respectively. In determining future cash flows, the Company takes various factors into account, including the effects of macroeconomic trends such as consumer spending, in-store capital investments, promotional cadence, the level of advertising and changes in merchandising strategy. 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. |
Business Combinations | Business Combinations In connection with an acquisition, the Company records all assets acquired and liabilities assumed of the acquired business at their acquisition date fair value, including the recognition of contingent consideration at fair value on the acquisition date. These fair value determinations require judgment and may involve the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives, and market multiples, among other items. Furthermore, the Company may utilize or consider independent third-party valuation firms when necessary. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Upon acquisition, the Company estimates and records the fair value of purchased intangible assets, which primarily consists of brands, customer relationships, lease rights and order backlog. The excess of the purchase consideration over the fair value of net assets acquired, both tangible and intangible, is recorded as goodwill. Finite-lived intangible assets are amortized over their respective estimated useful lives and, along with other long-lived assets as noted above, are evaluated for impairment periodically whenever events or changes in circumstances indicate that their related carrying values may not be fully recoverable. Estimates of fair value for finite-lived and indefinite-lived intangible assets are primarily determined using discounted cash flows and the multi-period excess earnings method, respectively, with consideration of market comparisons. This approach uses significant estimates and assumptions, including projected future cash flows, discount rates and growth rates. Goodwill and certain other intangible assets deemed to have indefinite useful lives, including brands, are not amortized, but are assessed for impairment at least annually. The Company generally performs its annual goodwill and indefinite-lived intangible assets impairment analysis using a quantitative approach. The quantitative goodwill impairment test identifies the existence of potential impairment by comparing the fair value of each reporting unit with its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, the reporting unit's goodwill is considered not to be impaired. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recognized in an amount equal to that excess. The impairment charge recognized is limited to the amount of goodwill allocated to that reporting unit. Determination of the fair value of a reporting unit and intangible asset based on management's assessment, considering independent third-party appraisals when necessary. Furthermore, this determination is judgmental in nature and often involves the use of significant estimates and assumptions, which may include projected future cash flows, discount rates, growth rates, and determination of appropriate market comparables and recent transactions. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the amount of any such charge. The Company performs its annual impairment assessment of goodwill as well as brand intangibles during the fourth quarter of each fiscal year. |
Operating Leases | Operating Leases The Company’s leases for office space, retail locations and distribution facilities are accounted for as operating leases. Certain of the Company's leases contain renewal options, rent escalation clauses, and/or landlord incentives. Renewal terms generally reflect market rates at the time of renewal. Rent expense for non-cancelable operating leases with scheduled rent increases and/or landlord incentives is recognized on a straight-line basis over the lease term, including any applicable rent holidays, beginning with the lease commencement date, or the date the Company takes control of the leased space, whichever is sooner. The excess of straight-line rent expense over scheduled payment amounts and landlord incentives is recorded as a deferred rent liability. As of the end of fiscal 2018 and fiscal 2017 , deferred rent obligations of $240.3 million and $242.4 million , respectively, were classified primarily within other non-current liabilities in the Company's Consolidated Balance Sheets. Certain rentals are also contingent upon factors such as sales. Contingent rentals are recognized when the achievement of the target (i.e., sale levels), which triggers the related rent payment, is considered probable and estimable. Asset retirement obligations represent legal obligations associated with the retirement of a tangible long-lived asset. The Company’s asset retirement obligations are primarily associated with leasehold improvements in which the Company is contractually obligated to remove at the end of a lease to comply with the lease agreement. When such an obligation exists, the Company recognizes an asset retirement obligation at the inception of a lease at its estimated fair value. The asset retirement obligation is recorded in current liabilities or non-current liabilities (based on the expected timing of payment of the related costs) and is subsequently adjusted for any changes in estimates. The associated estimated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over its useful life. |
Revenue Recognition | Revenue Recognition Revenue is recognized by the Company when there is persuasive evidence of an arrangement, delivery has occurred (and risks and rewards of ownership have been transferred to the buyer), price has been fixed or is determinable, and collectability is reasonably assured. Retail store and concession-based shop-in-shop revenues are recognized at the point-of-sale, which occurs when merchandise is sold in an over-the-counter consumer transaction. Internet revenue from sales of products ordered through the Company’s e-commerce sites is recognized upon delivery and receipt of the shipment by its customers and includes shipping and handling charges paid by customers. Retail and internet revenues are reduced by an estimate for returns at the time of sale. Wholesale revenue is recognized at the time title passes and risk of loss is transferred to customers. Wholesale revenue is recorded net of estimates of markdown allowances, returns and discounts. Estimates for markdown reserves are based on historical trends, actual and forecasted seasonal results, an evaluation of current economic and market conditions, retailer performance, and, in certain cases, contractual terms. Returns and allowances require pre-approval from management and discounts are based on trade terms. The Company reviews and refines these estimates on a quarterly basis. The Company’s historical estimates of these costs have not differed materially from actual results. Gift cards issued by the Company are recorded as a liability until they are redeemed, at which point revenue is recognized. The Company recognizes income for unredeemed gift cards when the likelihood of a gift card being redeemed by a customer is remote, which is generally approximately three years after the gift card is issued, and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. Revenue associated with gift card breakage is not material to the Company’s net operating results. The Company accounts for sales taxes and other related taxes on a net basis, excluding such taxes from revenue. |
Cost of Sales | Cost of Sales Cost of sales consists of inventory costs and other related costs such as reserves for inventory realizability and shrinkage, destruction costs, damages and replacements. |
Selling, General and Administrative (SG&A) Expenses | Selling, General and Administrative ("SG&A") Expenses Selling expenses include store employee compensation, occupancy costs, depreciation, supply costs, wholesale and retail account administration compensation globally. These expenses are affected by the number of stores open during any fiscal period and store performance, as compensation and rent expenses can vary with sales. Advertising, marketing and design expenses include employee compensation, media space and production, advertising agency fees, new product design costs, public relations and market research expenses. Distribution and customer service expenses include warehousing, order fulfillment, shipping and handling, customer service, employee compensation and bag repair costs. SG&A expenses also include compensation costs for “corporate” functions including: executive, finance, human resources, legal and information systems departments, as well as corporate headquarters occupancy costs, consulting fees and software expenses. |
Shipping and Handling | Shipping and Handling Shipping and handling costs incurred were $101.5 million , $45.8 million and $43.6 million in fiscal 2018 , fiscal 2017 and fiscal 2016 , respectively, and are included in SG&A expenses. The Company includes inbound product-related transportation costs from manufacturers within cost of sales. The balance of the Company's transportation-related costs related to its distribution network is included in SG&A expenses rather than in cost of sales. |
Advertising | Advertising Advertising costs include expenses related to direct marketing activities, such as direct mail pieces, digital and other media and production costs. In fiscal 2018 , fiscal 2017 and fiscal 2016 , advertising expenses for the Company totaled $228.4 million , $178.3 million and $202.2 million , respectively, and are included in SG&A expenses. Advertising costs are generally expensed when the advertising first appears. |
Share-Based Compensation | Share-Based Compensation The Company recognizes the cost of equity awards to employees and the non-employee Directors based on the grant-date fair value of those awards. The grant-date fair values of share unit awards are based on the fair value of the Company's common stock on the date of grant. The grant-date fair value of stock option awards is determined using the Black-Scholes option pricing model and involves several assumptions, including the expected term of the option, expected volatility and dividend yield. The expected term of options represents the period of time that the options granted are expected to be outstanding and is based on historical experience. Expected volatility is based on historical volatility of the Company’s stock as well as the implied volatility from publicly traded options on the Company's stock. Dividend yield is based on the current expected annual dividend per share and the Company’s stock price. Changes in the assumptions used to determine the Black-Scholes value could result in significant changes in the Black-Scholes value. For stock options and share unit awards, the Company recognizes share-based compensation net of estimated forfeitures and revises the estimates in subsequent periods if actual forfeitures differ from the estimates. The Company estimates the forfeiture rate based on historical experience as well as expected future behavior. The Company grants performance-based share awards to key executives, the vesting of which is subject to the executive’s continuing employment and the Company's or individual's achievement of certain performance goals. On a quarterly basis, the Company assesses actual performance versus the predetermined performance goals, and adjusts the share-based compensation expense to reflect the relative performance achievement. Actual distributed shares are calculated upon conclusion of the service and performance periods, and include dividend equivalent shares. If the performance-based award incorporates a market condition, the grant-date fair value of such award is determined using a Monte Carlo Simulation. |
Income Taxes | Income Taxes The Company’s effective tax rate is based on pre-tax income, statutory tax rates, tax laws and regulations, and tax planning strategies available in the various jurisdictions in which the Company operates. The Company classifies interest and penalties on uncertain tax positions in the provision for income taxes. The Company records net deferred tax assets to the extent it believes that it is more likely than not that these assets will be realized. In making such determination, the Company considers all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent and expected future results of operation. The Company reduces deferred tax assets by a valuation allowance if, based upon the weight of available evidence, it is more likely than not that some amount of deferred tax assets is not expected to be realized. Before the Tax Legislation, the Company considered the earnings of its non-U.S. subsidiaries to be indefinitely reinvested, and accordingly, recorded no deferred income taxes on these earnings. In fiscal 2018, the Company partially changed its assertion and has recorded an estimate of the deferred tax impact associated with this change. The Company recognizes the impact of tax positions in the financial statements if those positions will more likely than not be sustained on audit, based on the technical merits of the position. Although the Company believes that the estimates and assumptions used are reasonable and legally supportable, the final determination of tax audits could be different than that which is reflected in historical tax provisions and recorded assets and liabilities. Tax authorities periodically audit the Company’s income tax returns and the tax authorities may take a contrary position that could result in a significant impact on the Company's results of operations. Significant management judgment is required in determining the effective tax rate, in evaluating tax positions and in determining the net realizable value of deferred tax assets. |
Derivative Instruments | Derivative Instruments The majority of the Company’s purchases and sales involving international parties, excluding international customer sales, are denominated in U.S. dollars, which limits the Company’s exposure to the transactional effects of foreign currency exchange rate fluctuations. However, the Company is exposed to foreign currency exchange risk related to its foreign operating subsidiaries’ U.S. dollar-denominated inventory purchases and various cross-currency intercompany loans which are not long term in investment nature. The Company uses derivative financial instruments to manage these risks. These derivative transactions are in accordance with the Company’s risk management policies. The Company does not enter into derivative transactions for speculative or trading purposes. The Company records all derivative contracts at fair value on the Consolidated Balance Sheets. The fair values of foreign currency derivatives are based on the forward curves of the specific indices upon which settlement is based and include an adjustment for the Company’s credit risk. Judgment is required of management in developing estimates of fair value. The use of different market assumptions or methodologies could affect the estimated fair value. For derivative instruments that qualify for hedge accounting, the effective portion of changes in the fair value of these instruments is either (i) offset against the changes in fair value of the hedged assets or liabilities through earnings or (ii) recognized as a component of accumulated other comprehensive income (loss) ("AOCI") until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows, respectively. Each derivative instrument entered into by the Company that qualifies for hedge accounting is expected to be highly effective at reducing the risk associated with the exposure being hedged. For each derivative that is designated as a hedge, the Company documents the related risk management objective and strategy, including identification of the hedging instrument, the hedged item and the risk exposure, as well as how hedge effectiveness will be assessed over the term of the instrument. The extent to which a hedging instrument has been and is expected to remain highly effective in achieving offsetting changes in fair value or cash flows is assessed and documented by the Company on at least a quarterly basis. To the extent that a derivative designated as a cash flow hedge is not considered to be effective, any change in its fair value related to such ineffectiveness is immediately recognized in earnings within foreign currency gains (losses). If it is determined that a derivative instrument has not been highly effective, and will continue not to be highly effective in hedging the designated exposure, hedge accounting is discontinued and further gains (losses) are recognized in earnings within foreign currency gains (losses). Upon discontinuance of hedge accounting, the cumulative change in fair value of the derivative previously recorded in AOCI is recognized in earnings when the related hedged item affects earnings, consistent with the original hedging strategy, unless the forecasted transaction is no longer probable of occurring, in which case the accumulated amount is immediately recognized in earnings within foreign currency gains (losses). As a result of the use of derivative instruments, the Company may be exposed to the risk that the counterparties to such contacts will fail to meet their contractual obligations. To mitigate this counterparty credit risk, the Company has a policy of only entering into contracts with carefully selected financial institutions based upon an evaluation of their credit ratings, among other factors. The fair values of the Company’s derivative instruments are recorded on its Consolidated Balance Sheets on a gross basis. For cash flow reporting purposes, the Company classifies proceeds received or amounts paid upon the settlement of a derivative instrument in the same manner as the related item being hedged, primarily within cash from operating activities. Hedging Portfolio The Company enters into forward currency contracts primarily to reduce its risks related to exchange rate fluctuations on U.S. dollar and Euro-denominated inventory purchases, as well as various cross-currency intercompany loans. To the extent its derivative contracts designated as cash flow hedges are highly effective in offsetting changes in the value of the hedged items, the related gains (losses) are initially deferred in AOCI and subsequently recognized in the Consolidated Statements of Operations as part of the cost of the inventory purchases being hedged within cost of sales, when the related inventory is sold to a third party. Current maturity dates range from July 2018 to March 2019. Forward foreign currency exchange contracts designated as fair value hedges and associated with intercompany and other contractual obligations are recognized within foreign currency gains (losses) generally in the period in which the related balances being hedged are revalued. Current maturity dates are in September 2018, and such contracts are typically renewed upon maturity if the related balance has not been settled. |
Foreign Currency | Foreign Currency The functional currency of the Company's foreign operations is generally the applicable local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect at the balance sheet date, while revenues and expenses are translated at the weighted-average exchange rates for the period. The resulting translation adjustments are included in the Consolidated Statements of Comprehensive Income as a component of other comprehensive income (loss) (“OCI”) and in the Consolidated Statements of Equity within AOCI. Gains and losses on the translation of intercompany loans made to foreign subsidiaries that are of a long-term investment nature also are included within this component of equity. The Company recognizes gains and losses on transactions that are denominated in a currency other than the respective entity's functional currency in earnings. Foreign currency transaction gains and losses also include amounts realized on the settlement of certain intercompany loans with foreign subsidiaries. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior period's financial information in order to conform to the current period's presentation |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In February 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-02, " Income Statement- Reporting Comprehensive Income (Topic 220) ," which allows a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. An entity that elects to reclassify these amounts must reclassify stranded tax effects related to the change in federal tax rate for all items accounted for in accumulated other comprehensive income (loss). This ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018 and early adoption is permitted. The Company adopted this standard in the third quarter of fiscal 2018 and reclassified stranded amounts related to the cash flow hedges from accumulated other comprehensive loss to retained earnings. The reclassification and adoption did not have a material impact to the consolidated financial statements, including accumulated other comprehensive loss and retained earnings. During the first quarter of fiscal 2018, the Company adopted ASU No. 2016-09, " Improvements to Employee Share-Based Payment Accounting (Topic 718), " which simplifies several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows beginning in fiscal 2018. Additionally, the Company began recognizing all excess tax benefits and shortfalls as income tax expense or benefit in the income statement within the reporting period in which they occur. The Company adopted this standard prospectively, which resulted in a decrease in the tax provision of $13.3 million in fiscal 2018 . Future impacts of the adoption of this standard on the consolidated financial statements, particularly the income tax provision, will be dependent upon future events which are unpredictable. The Company has elected to continue to estimate expected forfeitures in determining compensation expense. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which amends the hedge accounting recognition and presentation requirements in Accounting Standards Codification ("ASC") 815. The objective of this ASU is to improve the transparency and understandability of information conveyed to financial statement users about an entity's risk management activities by better aligning the entity's financial reporting for hedging relationships with those risk management activities and to reduce the complexity of and simplify the application of hedge accounting by preparers. The requirements for the new standard will be effective for fiscal years beginning after December 15, 2018, and interim periods therein, which for the Company is the first quarter of fiscal 2020. Early adoption is permitted upon issuance. The Company is currently in the process of evaluating the impact that adopting ASU 2017-12 will have on its consolidated financial statements and notes thereto. In February 2016, the FASB issued ASU No. 2016-02, " Leases (Topic 842), " which is intended to increase transparency and comparability among companies that enter into leasing arrangements. This ASU requires recognition of lease assets and lease liabilities on the balance sheet for nearly all leases (other than short-term leases), as well as a retrospective recognition and measurement of existing impacted leases. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2018, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2020. Early adoption is permitted. In July 2018, the FASB issued ASU 2018-11, with targeted improvements to the guidance including an additional transition method for the new standard. As a result, the new standard may be applied with a retrospective approach to each prior reporting period with various optional practical expedients, or with the initial application at the adoption date with a cumulative-effect adjustment to the opening balance of retained earnings. The Company is currently performing a comprehensive evaluation of the impact of adopting this guidance on its consolidated financial statements and notes thereto, and has not yet determined which transition method will be applied upon adoption. The Company expects the guidance will result in a significant increase to long-term assets and liabilities on its consolidated balance sheets and does not expect it to have a material impact on the Consolidated Statements of Operations. This guidance is not expected to have a material impact on the Company's liquidity. In May 2014, the FASB issued ASU No. 2014-09, " Revenue from Contracts with Customers ," which provides a single, comprehensive revenue recognition model for all contracts with customers, and contains principles to determine the measurement of revenue and timing of when it is recognized. The model will supersede most existing revenue recognition guidance, and also requires enhanced revenue-related disclosures. The FASB has also issued several related ASUs which provide additional implementation guidance and clarify the requirements of the model. The requirements of the new standard will be effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods, which for the Company is the first quarter of fiscal 2019. Early adoption is permitted for annual reporting periods beginning after December 15, 2016, including interim periods within those annual periods. The Company performed a comprehensive evaluation of the impact, including a review of current accounting policies and processes, as well as typical terms in contracts with customers, to identify differences upon the adoption of the new standard. Based on these efforts, the Company has determined that the performance obligations underlying its core revenue streams (i.e., its retail and wholesale businesses), and the timing of revenue recognition thereof, will remain substantially unchanged. As a result, the impact of adoption of the new standard will not be material to the financial statements although accounting for certain customer arrangements will change. Related to wholesale arrangements, the Company will change the classification of certain considerations paid to customers from SG&A expense to a reduction of net sales. Further, related to licensing arrangements, the Company has also determined that the timing of recognizing sales-based royalties will change. The Company will elect to recognize contractually guaranteed minimum royalty amounts ratably over the license year and recognize no excess sales-based royalties until the minimum royalty threshold is achieved. This change will not alter the total amount of revenue recognized from licensing agreements during a contract year, and the timing change within a contract year is expected to be immaterial to the Consolidated Statements of Operations as the licensing business represented approximately 1% of total net sales in fiscal 2018. The new standard will also change accounting for sales returns by requiring balance sheet presentation on a gross basis. The Company has determined that the guidance will be adopted using the modified retrospective basis with a cumulative adjustment to opening retained earnings in fiscal 2019; the cumulative adjustment is not expected be material. |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Summary of assets acquired and liabilities assumed | The following table summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date: Assets Acquired and Liabilities Assumed Fair Value At Acquisition Date Measurement Period Adjustments Adjusted Fair Value (millions) Cash and cash equivalents $ 71.8 $ — $ 71.8 Trade accounts receivable 62.8 — 62.8 Inventories (1) 310.1 — 310.1 Prepaid expenses and other current assets 33.9 (1.2 ) 32.7 Property and equipment 175.5 — 175.5 Goodwill (2)(3) 916.1 (16.1 ) 900.0 Brand intangible asset (4) 1,300.0 — 1,300.0 Other intangible assets (5) 119.2 — 119.2 Other assets 59.0 11.1 70.1 Total assets acquired 3,048.4 (6.2 ) 3,042.2 Accounts payable and accrued liabilities 233.3 233.3 Deferred income taxes (6) 333.0 (7.3 ) 325.7 Other liabilities (7) 84.8 1.1 85.9 Total liabilities assumed 651.1 (6.2 ) 644.9 Total purchase price 2,397.3 — 2,397.3 Less: Cash acquired (71.8 ) — (71.8 ) Total purchase price, net of cash acquired $ 2,325.5 $ — $ 2,325.5 (1) Included a step-up adjustment of approximately $67.5 million , which was amortized over 4 months. (2) The majority of the goodwill balance is not deductible for tax purposes. (3) The Company assigned $324 million of goodwill associated with the Kate Spade acquisition to Coach brand reporting units based upon the analysis of expected synergies, including the allocation of corporate synergies to the brands. Refer to Note 13, "Goodwill and Other Intangible Assets," for further information. (4) The brand intangible asset, of which the majority is not deductible for tax purposes, was valued based on the multi-period excess earnings method. (5) The components of other intangible assets included favorable lease rights of approximately $72.2 million (amortized over the remainder of the underlying lease terms), customer relationships of approximately $45.0 million (amortized over 15 years) and order backlog of $2.0 million (amortized over 6 months). Favorable lease rights were valued based on a comparison of market participant information and Company-specific lease terms. The customer relationship intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with the existing base of customers as of the acquisition date, factoring in expected attrition of the existing base. The order backlog intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with open customer orders as of the acquisition date. (6) The Company acquired approximately $200.1 million of net deferred tax assets related to Kate Spade historical federal and state net operating losses, net of a $39.3 million valuation allowance, which the Company expects to be able to utilize. The deferred tax adjustments resulting from the step-up in basis of acquired assets, most notably the brand intangible asset, resulted in an overall deferred tax liability. Refer to Note 14, "Income Taxes," for more information about changes to the Company's deferred tax position as a result of the enactment of the new tax legislation. (7) Includes an adjustment for unfavorable lease rights of approximately $49.5 million (amortized over the remainder of the underlying lease terms). |
Business acquisition, pro forma information | The following pro forma information has been prepared as if the Kate Spade acquisition and the related debt financing had occurred as of the beginning of fiscal 2017. These adjustments include the removal of certain historical amounts. The pro forma amounts reflect the combined historical operational results for Tapestry and Kate Spade, after giving effect to adjustments related to the impact of purchase accounting, transaction costs and financing. The pro forma financial information is not indicative of the operational results that would have been obtained had the transactions actually occurred as of that date, nor is it necessarily indicative of the Company’s future operational results. The following adjustments have been made: (i) Depreciation and amortization expenses related to the fair value adjustments to Kate Spade's property and equipment and intangible assets have been reflected in the year ended July 1, 2017 . Short-term purchase accounting amortization has been excluded from the pro forma amounts due to the non-recurring nature. (ii) Transaction costs in the year ended June 30, 2018 have been excluded from the pro forma amounts due to their non-recurring nature. (iii) Interest expense of debt issued to finance the acquisition, including amortization of deferred financing fees, has been reflected in the year ended July 1, 2017 . Historical interest expense for Kate Spade has been removed. (iv) The tax effects of the pro forma adjustments at an estimated statutory rate of 40.0% . (v) Earnings per share amounts are calculated using unrounded numbers and the Company's historical weighted average shares outstanding. Year Ended June 30, 2018 July 1, 2017 (unaudited) (millions, except per share data) Pro forma Net sales (1) $ 5,912.9 $ 5,837.4 Pro forma Net income (1) 472.8 695.4 Pro forma Net income per share: Basic $ 1.66 $ 2.48 Diluted $ 1.64 $ 2.46 (1) The pro forma results for the year ended June 30, 2018 include revenue and operating income from the pre-combination period in fiscal 2018. |
Integration and Acquisition C33
Integration and Acquisition Costs (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Business Acquisitions | A summary of the integration and acquisition charges and related liabilities, which are recorded as accrued liabilities as of June 30, 2018 , is as follows: Purchase Accounting Adjustments (1) Acquisition Costs (2) Inventory-Related Charges (3) Contractual Payments (4) Organization-Related (5) Other (6) Total (millions) Addition Related to Acquisitions $ — $ — $ 2.5 $ — $ — $ — $ 2.5 Fiscal 2018 charges 82.8 42.9 35.4 50.6 39.8 50.1 301.6 Cash payments — (42.2 ) (2.8 ) (50.6 ) (22.4 ) (37.4 ) (155.4 ) Non-cash charges (82.8 ) — (34.8 ) — (5.8 ) (9.7 ) (133.1 ) Liability as of June 30, 2018 $ — $ 0.7 $ 0.3 $ — $ 11.6 $ 3.0 $ 15.6 (1) Purchase accounting adjustments, of which $79.6 million was recorded within cost of sales and $3.2 million was recorded in SG&A expenses for the fiscal year ended June 30, 2018 , relate to the short-term impact of the amortization of fair value adjustments. Of the amount recorded to cost of sales for the year ended June 30, 2018 , $71.8 million was recorded within the Kate Spade segment, $4.1 million was recorded within the Coach segment and $3.7 million was recorded within the Stuart Weitzman segment. Of the amount recorded to SG&A expenses, $3.2 million was recorded within the Kate Spade segment. (2) Acquisition costs, which were recorded to SG&A expenses, and of which $23.6 million were within Corporate, $19.1 million were within the Kate Spade segment, and $0.2 million were within the Coach segment for the fiscal year ended June 30, 2018 , primarily relate to deal fees associated with the acquisitions. (3) Inventory-related charges, recorded within cost of sales, of which $34.7 million was recorded within the Kate Spade segment and $0.7 million was recorded within the Stuart Weitzman segment, primarily related to reserves for the future destruction of certain on-hand inventory and non-cancelable inventory purchase commitments related to raw materials. As of June 30, 2018 , a reserve of $4.9 million is included within inventories on the Company's Consolidated Balance Sheets. (4) Contractual payments, which were recorded to SG&A expenses within the Kate Spade segment, primarily related to severance and related costs as a result of pre-existing agreements that were in place with certain Kate Spade executives which became effective upon the closing of the acquisition. (5) Organization-related costs, which were recorded to SG&A expenses, and of which $25.6 million were within the Kate Spade segment, $10.4 million within Corporate and $3.8 million within the Stuart Weitzman segment for the fiscal year ended June 30, 2018 , primarily related to severance related charges. The severance related charges includes $6.0 million of accelerated share-based compensation expense. (6) Other primarily relates to professional fees, asset write-offs and inventory true-up. The charges were primarily recorded in SG&A expenses, of which $29.2 million was recorded within Corporate, $15.2 million was recorded within the Kate Spade segment, $4.0 million was recorded within the Stuart Weitzman segment and $0.3 million was recorded within the Coach segment. Furthermore, $1.4 million was recorded in cost of sales within Stuart Weitzman for the fiscal year ended June 30, 2018 . |
Restructuring Activities (Table
Restructuring Activities (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Operational Efficiency Plan | |
Restructuring Cost and Reserve [Line Items] | |
Summary of Restructuring Plan Charges and Related Liabilities | A summary of charges and related liabilities under the Company's Operational Efficiency Plan is as follows: Organizational Efficiency (1) Technology Infrastructure (2) Network Optimization (3) Total (millions) Liability as of June 27, 2015 $ — $ — $ — $ — Fiscal 2016 charges 40.4 — 3.5 43.9 Cash payments (9.7 ) — — (9.7 ) Non-cash charges (8.5 ) — (0.3 ) (8.8 ) Liability as of July 2, 2016 $ 22.2 $ — $ 3.2 $ 25.4 Fiscal 2017 charges 15.6 8.0 0.4 24.0 Cash payments (23.3 ) (7.7 ) (3.0 ) (34.0 ) Non-cash charges (7.9 ) — (0.6 ) (8.5 ) Liability as of July 1, 2017 $ 6.6 $ 0.3 $ — $ 6.9 Fiscal 2018 charges 0.6 18.9 — 19.5 Cash payments (5.6 ) (17.6 ) — (23.2 ) Non-cash charges (0.8 ) (1.0 ) — (1.8 ) Liability as of June 30, 2018 $ 0.8 $ 0.6 $ — $ 1.4 (1) Organizational efficiency charges, recorded within SG&A expenses, primarily related to accelerated depreciation associated with the retirement of information technology systems, severance and related costs of corporate employees, as well as consulting fees related to process and organizational optimization. (2) Technology infrastructure costs, recorded within SG&A expenses, related to the initial costs of replacing and updating the Company's core technology platforms. (3) Network optimization costs, recorded within SG&A expenses, related to lease termination costs. |
Accumulated Other Comprehensi35
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Components of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive income (loss), as of the dates indicated, are as follows: Unrealized (Losses) Gains on Cash Flow Hedging Derivatives (1) Unrealized Gains (Losses) on Available-for-Sale Investments Cumulative Translation Adjustment Other (2) Total (millions) Balances at July 2, 2016 $ (8.8 ) $ 0.3 $ (62.9 ) $ (1.5 ) $ (72.9 ) Other comprehensive income (loss) before reclassifications 7.7 (0.7 ) (26.2 ) — (19.2 ) Less: losses reclassified from accumulated other comprehensive income (4.1 ) — — (1.1 ) (5.2 ) Net current-period other comprehensive income (loss) 11.8 (0.7 ) (26.2 ) 1.1 (14.0 ) Balances at July 1, 2017 $ 3.0 $ (0.4 ) $ (89.1 ) $ (0.4 ) $ (86.9 ) Other comprehensive (loss) income before reclassifications (1.2 ) 0.5 3.8 — 3.1 Less: income (losses) reclassified from accumulated other comprehensive income 0.4 0.1 — (1.5 ) (1.0 ) Net current-period other comprehensive (loss) income (1.6 ) 0.4 3.8 1.5 4.1 Balances at June 30, 2018 $ 1.4 $ — $ (85.3 ) $ 1.1 $ (82.8 ) (1) The ending balances of AOCI related to cash flow hedges are net of tax of $(0.9) million and $(1.8) million as of June 30, 2018 and July 1, 2017 , respectively. The amounts reclassified from AOCI are net of tax of $(1.1) million and $2.2 million as of June 30, 2018 and July 1, 2017 , respectively. (2) Other represents the accumulated loss on the Company's minimum pension liability adjustment. The balances at June 30, 2018 and July 1, 2017 are net of tax of $0.6 million and $0.2 million , respectively. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total Compensation Cost Charged Against Income and Related Tax Benefits | The following table shows the total compensation cost charged against income for these plans and the related tax benefits recognized in the Consolidated Statements of Operations: June 30, 2018 (1) July 1, 2017 (1) July 2, 2016 (1) (millions) Share-based compensation expense $ 88.1 $ 76.1 $ 95.3 Income tax benefit related to share-based compensation expense (2) 23.5 24.4 28.6 (1) During the year ended June 30, 2018 , the Company incurred $6.0 million of share-based compensation expense related to severance as a result of integration. During the fiscal years ended June 30, 2018 , July 1, 2017 and July 2, 2016 , the Company incurred $0.8 million , $2.5 million and $8.5 million of share-based compensation expense under the Company's Operational Efficiency Plan, respectively, primarily as a result of the accelerated vesting of certain awards. Refer to Note 4, "Integration and Acquisition Costs," and Note 5, "Restructuring Activities," for further information. (2) The tax rates used to calculate the income tax benefit for fiscal 2018 are based on the enactment of the new tax legislation. Refer to Note 14, "Income Taxes," for further information. |
Summary of Stock Option Activity | A summary of stock option activity during the year ended June 30, 2018 is as follows: Number of Options Outstanding Weighted- Average Exercise Price per Option Weighted- Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (millions) (millions) Outstanding at July 1, 2017 15.0 $ 39.75 Granted 3.1 41.12 Exercised (4.6 ) 35.37 Forfeited or expired (1.0 ) 45.06 Outstanding at June 30, 2018 12.5 42.94 6.6 $ 75.8 Vested and expected to vest at June 30, 2018 12.2 42.99 6.5 74.4 Exercisable at June 30, 2018 6.5 46.35 4.9 33.3 |
Stock Option Grant Weighted Average Assumptions | The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model and the following weighted-average assumptions: June 30, July 1, July 2, Expected term (years) 5.1 4.4 4.2 Expected volatility 28.4 % 30.5 % 32.2 % Risk-free interest rate 1.8 % 1.1 % 1.4 % Dividend yield 3.3 % 3.4 % 4.3 % |
Employee Purchase Rights Weighted Average Assumptions | Compensation expense is calculated for the fair value of employees’ purchase rights using the Black-Scholes model and the following weighted-average assumptions: Fiscal Year Ended June 30, July 1, July 2, Expected term (years) 0.5 0.5 0.5 Expected volatility 26.9 % 24.7 % 28.6 % Risk-free interest rate 1.3 % 0.6 % 0.3 % Dividend yield 3.1 % 3.6 % 4.1 % |
Service Based Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested Share Activity | A summary of service-based RSU activity during the year ended June 30, 2018 is as follows: Number of Non-vested RSUs Weighted- Average Grant- Date Fair Value per RSU (millions) Non-vested at July 1, 2017 3.5 $ 50.28 Granted 1.8 41.75 Awards issued in connection with acquisition 0.4 47.26 Vested (1.8 ) 39.14 Forfeited (0.4 ) 39.98 Non-vested at June 30, 2018 3.5 40.26 |
Performance Shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested Share Activity | A summary of PRSU activity during the year ended June 30, 2018 is as follows: Number of Non-vested PRSUs Weighted- Average Grant- Date Fair Value per PRSU (millions) Non-vested at July 1, 2017 1.5 $ 37.78 Granted 0.4 43.80 Change due to performance condition achievement (0.6 ) 47.32 Vested (0.3 ) 36.29 Forfeited (0.1 ) 37.17 Non-vested at June 30, 2018 0.9 38.27 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Investments | The following table summarizes the Company’s primarily U.S. dollar-denominated investments, recorded within the Consolidated Balance Sheets as of June 30, 2018 and July 1, 2017 : June 30, 2018 July 1, 2017 Short-term Long-Term Total Short-term Long-term Total (millions) Available-for-sale investments: Commercial paper $ — $ — $ — $ 68.8 $ — $ 68.8 Government securities – U.S. — — — 130.4 — 130.4 Corporate debt securities – U.S. — — — 116.2 46.9 163.1 Corporate debt securities – non-U.S. — — — 92.6 28.2 120.8 Available-for-sale investments, total $ — $ — $ — $ 408.0 $ 75.1 $ 483.1 Other: Time deposits (1) 0.6 — 0.6 0.6 — 0.6 Other 6.0 — 6.0 2.1 — 2.1 Total Investments $ 6.6 $ — $ 6.6 $ 410.7 $ 75.1 $ 485.8 (1) These securities have original maturities greater than three months and are recorded at fair value. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Leases [Abstract] | |
Schedule of Operating Lease Rent Expense | Rent expense for the Company's operating leases consisted of the following: Fiscal Year Ended June 30, July 1, July 2, (millions) Minimum rent (1) $ 359.8 $ 295.1 $ 229.9 Contingent rent 164.7 129.4 134.8 Total rent expense $ 524.5 $ 424.5 $ 364.7 (1) $0.2 million and $5.9 million of lease termination charges due to restructuring-related closures were included in fiscal 2017 and fiscal 2016, respectively. |
Future Minimum Rental Payments | Future minimum rental payments under non-cancelable operating leases, as of June 30, 2018 , are as follows: Fiscal Year Amount (millions) 2019 $ 384.8 2020 343.1 2021 300.7 2022 279.0 2023 249.6 Subsequent to 2023 1,211.1 Total minimum future rental payments $ 2,768.3 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements of Assets and Liabilities | The following table shows the fair value measurements of the Company’s financial assets and liabilities at June 30, 2018 and July 1, 2017 : Level 1 Level 2 June 30, July 1, June 30, July 1, (millions) Assets: Cash equivalents (1) $ 592.5 $ 760.0 $ 0.4 $ 226.0 Short-term investments: Time deposits (2) — — 0.6 0.6 Commercial paper (2) — — — 68.8 Government securities - U.S. (2) — 130.4 — — Corporate debt securities - U.S. (2) — — — 116.2 Corporate debt securities - non U.S. (2) — — — 92.6 Other — — 6.0 2.1 Long-term investments: Corporate debt securities - U.S. (3) — — — 46.9 Corporate debt securities - non U.S. (3) — — — 28.2 Derivative Assets: Inventory-related instruments (4) — — 5.6 3.5 Intercompany loan hedges (4) — — 0.3 — Liabilities: Derivative liabilities: Inventory-related instruments (4) $ — $ — $ 2.3 $ 1.0 Intercompany loan hedges (4) — — 0.1 0.7 (1) Cash equivalents consist of money market funds and time deposits with maturities of three months or less at the date of purchase. Due to their short term maturity, management believes that their carrying value approximates fair value. (2) Short-term available-for-sale investments are recorded at fair value, which approximates their carrying value, and are primarily based upon quoted vendor or broker priced securities in active markets. (3) Fair value is primarily determined using vendor or broker priced securities in active markets. (4) The fair value of these hedges is primarily based on the forward curves of the specific indices upon which settlement is based and includes an adjustment for the counterparty’s or Company’s credit risk. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The following table summarizes the components of the Company’s outstanding debt: June 30, 2018 July 1, (millions) Current Debt: Capital Lease Obligations $ 0.7 $ — Total Current Debt $ 0.7 $ — Long-Term Debt: 4.250% Senior Notes due 2025 600.0 600.0 3.000% Senior Notes due 2022 400.0 400.0 4.125% Senior Notes due 2027 600.0 600.0 Note Payable 11.4 — Capital Lease Obligations 6.0 — Total Long-Term Debt 1,617.4 1,600.0 Less: Unamortized Discount and Debt Issuance Costs on Senior Notes (17.5 ) (20.5 ) Total Long-Term Debt, net $ 1,599.9 $ 1,579.5 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Change in Carrying Value of Goodwill | The change in the carrying amount of the Company’s goodwill by segment is as follows: Coach Kate Spade Stuart Weitzman Total (millions) Balance at July 2, 2016 $ 346.9 $ — $ 155.5 $ 502.4 Measurement period adjustment — — 0.5 0.5 Foreign exchange impact (22.4 ) — — (22.4 ) Balance at July 1, 2017 324.5 — 156.0 480.5 Acquisition of goodwill (1) 1.6 968.9 49.3 1,019.8 Allocation of goodwill (2) 324.0 (324.0 ) — — Measurement period adjustment (1) — (18.4 ) (0.5 ) (18.9 ) Foreign exchange impact 4.7 0.5 (2.3 ) 2.9 Balance at June 30, 2018 $ 654.8 $ 627.0 $ 202.5 $ 1,484.3 (1) Refer to Note 3, "Acquisitions," for further information. (2) The Company assigned a portion of goodwill associated with the Kate Spade acquisition to Coach brand reporting units based upon the analysis of expected synergies, including the allocation of corporate synergies to the brands. |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets consist of the following: Fiscal Year Ended (1) June 30, 2018 July 1, 2017 Gross Accum. Net Gross Accum. Net (millions) Intangible assets subject to amortization: Customer relationships $ 100.5 $ (17.3 ) $ 83.2 $ 54.7 $ (9.7 ) $ 45.0 Order backlog 2.0 (2.0 ) — — — — Favorable lease rights 97.3 (24.4 ) 72.9 26.1 (7.1 ) 19.0 Total intangible assets subject to amortization 199.8 (43.7 ) 156.1 80.8 (16.8 ) 64.0 Intangible assets not subject to amortization: Brand intangible assets 1,576.8 — 1,576.8 276.8 — 276.8 Total intangible assets $ 1,776.6 $ (43.7 ) $ 1,732.9 $ 357.6 $ (16.8 ) $ 340.8 (1) Refer to Note 3, "Acquisitions," for further information. |
Schedule of Finite-Lived Intangible Assets | Intangible assets consist of the following: Fiscal Year Ended (1) June 30, 2018 July 1, 2017 Gross Accum. Net Gross Accum. Net (millions) Intangible assets subject to amortization: Customer relationships $ 100.5 $ (17.3 ) $ 83.2 $ 54.7 $ (9.7 ) $ 45.0 Order backlog 2.0 (2.0 ) — — — — Favorable lease rights 97.3 (24.4 ) 72.9 26.1 (7.1 ) 19.0 Total intangible assets subject to amortization 199.8 (43.7 ) 156.1 80.8 (16.8 ) 64.0 Intangible assets not subject to amortization: Brand intangible assets 1,576.8 — 1,576.8 276.8 — 276.8 Total intangible assets $ 1,776.6 $ (43.7 ) $ 1,732.9 $ 357.6 $ (16.8 ) $ 340.8 (1) Refer to Note 3, "Acquisitions," for further information. |
Expected Amortization Expense for Intangible Assets | As of June 30, 2018 , the expected amortization expense for intangible assets is as follows: Amortization Expense (millions) Fiscal 2019 $ 21.8 Fiscal 2020 20.2 Fiscal 2021 18.7 Fiscal 2022 16.7 Fiscal 2023 15.7 Thereafter 63.0 Total $ 156.1 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Provision (Benefit) | The provisions for income taxes, computed by applying the U.S. statutory rate to income before taxes, as reconciled to the actual provisions were: Fiscal Year Ended June 30, 2018 July 1, 2017 July 2, 2016 Amount Percentage Amount Percentage Amount Percentage (millions) Income before provision for income taxes: United States $ 161.2 27.0 % $ 365.5 48.2 % $ 357.5 57.1 % Foreign 435.6 73.0 393.5 51.8 269.1 42.9 Total income before provision for income taxes $ 596.8 100.0 % $ 759.0 100.0 % $ 626.6 100.0 % Tax expense at U.S. statutory rate $ 167.0 28.0 % $ 265.7 35.0 % $ 219.3 35.0 % State taxes, net of federal benefit 2.4 0.4 15.1 2.0 11.2 1.8 Effects of foreign operations (55.6 ) (9.3 ) (86.7 ) (11.4 ) (53.7 ) (8.6 ) Transition tax on deferred foreign earnings 266.0 44.6 — — — — Re-measurement of deferred taxes (87.8 ) (14.7 ) — — — — Effects of foreign tax credits and acquisition reorganization (36.2 ) (6.1 ) (12.3 ) (1.6 ) (19.6 ) (3.1 ) Release of state valuation allowance (40.7 ) (6.8 ) — — — — Other, net (15.8 ) (2.7 ) (13.8 ) (1.9 ) 8.9 1.4 Taxes at effective worldwide rates $ 199.3 33.4 % $ 168.0 22.1 % $ 166.1 26.5 % Current and deferred tax provision (benefit) was: Fiscal Year Ended June 30, 2018 July 1, 2017 July 2, 2016 Current Deferred Current Deferred Current Deferred (millions) Federal $ 181.1 $ (1.9 ) $ 42.9 $ 56.4 $ 145.8 $ (52.0 ) Foreign 79.1 (11.2 ) 39.7 7.4 46.8 2.2 State (10.0 ) (37.8 ) 7.4 14.2 25.8 (2.5 ) Total current and deferred tax provision (benefit) $ 250.2 $ (50.9 ) $ 90.0 $ 78.0 $ 218.4 $ (52.3 ) The following table represents amounts recorded to provision for income taxes in the year ended June 30, 2018 for items related to the Tax Legislation: Year Ended June 30, 2018 (millions) Impact of Change in U.S. Federal Statutory Rate on Pre-Tax Income $ (10.9 ) Discrete Impacts of Tax Legislation: Transition Tax - Federal and State (1) 266.0 Re-measurement of deferred taxes (2) (87.8 ) Total Impact of Tax Legislation (3) $ 167.3 (1) The Tax Legislation requires the Company to pay a Transition Tax on previously unremitted earnings of certain non-U.S. subsidiaries. The Transition Tax is payable in installments over 8 years beginning in the Company's fiscal 2018. In the year ended June 30, 2018, the Company recorded a cumulative charge of $266.0 million for the Transition Tax. In the year ended June 30, 2018, $222.4 million is recorded as long-term income taxes payable and $43.6 million is recorded in accrued liabilities related to the current portion of this payable on the Company's Consolidated Balance Sheet as of June 30, 2018. Additional detailed information required to complete the calculation includes, but is not limited to, (i) completing a foreign earnings and profit study to determine the Company’s deferred foreign income since 1986, including all acquisitions; (ii) determining foreign taxes paid against deferred foreign income; and (iii) concluding on the total balance of cash and cash equivalents. Based on the interpretation of available guidance, the Company expects to remit the first payment on the due date of its fiscal year 2018 income tax return, which will be in fiscal 2019. The balance of annual payments will be paid ratably in our quarterly estimated tax payments. The following table presents the expected timing of income tax payments related to the Transition Tax expected to be recognized by the Company: Transition Tax Payments (millions) Fiscal 2019 $ 43.6 Fiscal 2020 21.2 Fiscal 2021 21.2 Fiscal 2022 21.2 Fiscal 2023 39.7 Fiscal 2024 and 2025 119.1 Total $ 266.0 (2) Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The Company has estimated the rate change adjustment related to the deferred tax balances that reverses within the 2018 fiscal year at a blended U.S federal statutory income tax rate of 28% and those that will reverse after the 2018 fiscal year at the U.S federal statutory income tax rate of 21%. This deferred tax rate change adjustment is provisional and will be finalized after the Company files its federal and state tax returns for fiscal year 2018. The estimated impact recorded in fiscal 2018 will change if the timing of the deferred tax impacts shifts between fiscal 2018 and fiscal 2019 and beyond. The Company’s estimated adjustment may also be affected by other analysis related to the Tax Legislation, including, but not limited to, the calculation of deemed repatriation of deferred foreign income and the U.S. state income tax effect of adjustments made to federal temporary differences, such as the full expensing of qualified property which may not be allowed from a state tax perspective. (3) This table does not include the $40.7 million of valuation allowances that were initially established during purchase accounting, but were reversed based on facts introduced subsequent to the acquisition date that relate, in part, to the enactment of Tax Legislation. In addition, this table does not include $5.5 million of state taxes due on the expected remittance of earnings from non-U.S. subsidiaries. |
Components of Deferred Tax Assets and Liabilities | The components of deferred tax assets and liabilities were: June 30, July 1, (millions) Share-based compensation $ 27.1 $ 64.8 Reserves not deductible until paid 39.2 39.2 Deferred rent 22.5 22.7 Employee benefits 19.0 40.9 Foreign investments — 1.1 Net operating loss 395.2 199.2 Other 9.5 10.4 Prepaid expenses — 0.6 Inventory 18.9 21.6 Capital loss carryforward 56.8 — Gross deferred tax assets 588.2 400.5 Valuation allowance 305.9 196.1 Deferred tax assets after valuation allowance $ 282.3 $ 204.4 Goodwill 84.3 82.6 Other intangibles 347.9 — Property and equipment 25.8 8.4 Foreign investments 5.7 — Prepaid expenses 0.5 — Other — 6.2 Gross deferred tax liabilities 464.2 97.2 Net deferred tax (liabilities) assets $ (181.9 ) $ 107.2 Consolidated Balance Sheets Classification Deferred income taxes – noncurrent asset 24.3 170.5 Deferred income taxes – noncurrent liability (206.2 ) (63.3 ) Net deferred tax (liabilities) assets $ (181.9 ) $ 107.2 |
Unrecognized Tax Benefits Reconciliation | A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows: June 30, July 1, July 2, (millions) Balance at beginning of fiscal year $ 94.1 $ 138.6 $ 168.1 Gross increase due to tax positions related to prior periods 3.8 2.7 25.5 Gross decrease due to tax positions related to prior periods (4.0 ) (2.7 ) (4.4 ) Gross increase due to tax positions related to current period 6.4 8.1 8.7 Decrease due to lapse of statutes of limitations (23.9 ) (39.5 ) (59.0 ) Decrease due to settlements with taxing authorities (25.1 ) (13.1 ) (0.3 ) Increase due to current year acquisitions 24.0 — — Balance at end of fiscal year $ 75.3 $ 94.1 $ 138.6 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Summary of Segment Performance | The following table summarizes segment performance for fiscal 2018 , fiscal 2017 and fiscal 2016 : Coach (1) Kate Spade (1) Stuart Weitzman (1) Corporate (2) Total (millions) Fiscal 2018 Net sales $ 4,221.5 $ 1,284.7 $ 373.8 $ — $ 5,880.0 Gross profit 2,931.5 711.1 211.3 — 3,853.9 Operating income (loss) 1,084.2 (61.9 ) (2.6 ) (348.9 ) 670.8 Income (loss) before provision for income taxes 1,084.2 (61.9 ) (2.6 ) (422.9 ) 596.8 Depreciation and amortization expense (3) 139.5 67.2 20.8 43.8 271.3 Total assets 2,256.8 2,626.3 746.4 1,048.8 6,678.3 Additions to long-lived assets (4) 134.4 34.4 7.8 90.8 267.4 Fiscal 2017 Net sales $ 4,114.7 $ — $ 373.6 $ — $ 4,488.3 Gross profit 2,855.0 — 226.1 — 3,081.1 Operating income (loss) 1,040.0 — 15.5 (268.1 ) 787.4 Income (loss) before provision for income taxes 1,040.0 — 15.5 (296.5 ) 759.0 Depreciation and amortization expense (3) 149.9 — 18.9 50.1 218.9 Total assets 1,937.1 — 628.4 3,266.1 5,831.6 Additions to long-lived assets (4) 170.5 — 20.2 92.4 283.1 Fiscal 2016 Net sales $ 4,147.1 $ — $ 344.7 $ — $ 4,491.8 Gross profit 2,848.9 — 202.4 — 3,051.3 Operating income (loss) 1,024.4 — 32.5 (403.4 ) 653.5 Income (loss) before provision for income taxes 1,024.4 — 32.5 (430.3 ) 626.6 Depreciation and amortization expense (3) 132.6 — 19.6 66.9 219.1 Total assets 1,975.5 — 631.2 2,286.0 4,892.7 Additions to long-lived assets (4) 210.2 — 11.5 174.7 396.4 (1) During the first quarter of fiscal 2018, the Company completed its acquisition of Kate Spade & Company. During the third quarter of fiscal 2018, the Company completed its acquisition of certain distributors for the Coach and Stuart Weitzman brands and obtained operational control of the Kate Spade Joint Ventures. The operating results of the respective entity have been consolidated commencing on the date of each transaction. (2) Corporate, which is not a reportable segment, represents certain costs that are not directly attributable to a brand. These costs primarily represent administrative and information systems expense. Furthermore, certain integration and acquisition costs as well as costs under the Company's Operational Efficiency Plan and Transformation Plan as described in Note 5, "Restructuring Activities," are included within Corporate. (3) Depreciation and amortization expense includes $11.0 million of Integration & Acquisition costs for the fiscal year ended June 30, 2018 . There were no costs incurred related to the Operational Efficiency Plan for the fiscal year ended June 30, 2018 . Depreciation and amortization expenses includes $6.1 million of Operational Efficiency Plan charges and $8.5 million of Operational Efficiency Plan and Transformation Plan charges for the fiscal years ended July 1, 2017 and July 2, 2016, respectively. These charges are recorded within Corporate. Depreciation and amortization expense for the segments includes an allocation of expense related to assets which support multiple segments. (4) Additions to long-lived assets for the reportable segments primarily includes store assets as well as assets that support a specific brand. Corporate additions include all other assets which includes a combination of Corporate assets, as well as assets that may support all segments. As such, depreciation expense for these assets may be subsequently allocated to a reportable segment. |
Net Sales by Product Category | The following table shows net sales for each product category represented: Fiscal Year Ended June 30, 2018 July 1, 2017 July 2, 2016 Amount % of total net sales Amount % of total net sales Amount % of total net sales (millions) Coach: Women's Handbags $ 2,298.2 39 % $ 2,308.0 52 % $ 2,392.9 53 % Men's 844.6 14 808.0 18 725.7 16 Women's Accessories 747.1 13 721.0 16 721.6 16 Other Products 331.6 6 277.7 6 306.9 7 Total Coach $ 4,221.5 72 % $ 4,114.7 92 % $ 4,147.1 92 % Kate Spade: (1) Women's Handbags $ 703.4 12 % $ — — % $ — — % Other Products 311.6 5 — — — — Women's Accessories 269.7 5 — — — — Total Kate Spade $ 1,284.7 22 % $ — — % $ — — % Stuart Weitzman (2) $ 373.8 6 % $ 373.6 8 % $ 344.7 8 % Total Net Sales $ 5,880.0 100 % $ 4,488.3 100 % $ 4,491.8 100 % (1) On July 11, 2017, the Company completed its acquisition of Kate Spade. The operating results of the Kate Spade brand have been consolidated in the Company's operating results commencing on July 11, 2017. (2) The significant majority of sales for the Stuart Weitzman brand is attributable to women's footwear. |
Geographical Area Information | United States Japan Greater China (2) Other (3) Total (millions) Fiscal 2018 Net sales (1) $ 3,457.4 $ 695.7 $ 737.4 $ 989.5 $ 5,880.0 Long-lived assets 663.3 60.6 98.4 181.9 1,004.2 Fiscal 2017 Net sales (1) $ 2,432.5 $ 572.8 $ 643.9 $ 839.1 $ 4,488.3 Long-lived assets 497.7 58.3 93.2 162.2 811.4 Fiscal 2016 Net sales (1) $ 2,477.3 $ 559.8 $ 652.2 $ 802.5 $ 4,491.8 Long-lived assets 750.3 74.8 96.6 141.5 1,063.2 (1) Includes net sales from our global travel retail business in locations within the specified geographic area. (2) Greater China includes mainland China, Hong Kong and Macau. (3) Other international sales reflect shipments to third-party distributors, primarily in East Asia, and sales from Company-operated stores and concession shop-in-shops in Europe, Canada, Taiwan, South Korea, Malaysia and Singapore. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Earnings Per Share | The following is a reconciliation of the weighted-average shares outstanding and calculation of basic and diluted earnings per share: Fiscal Year Ended June 30, July 1, July 2, (millions, except per share data) Net income $ 397.5 $ 591.0 $ 460.5 Weighted-average basic shares 285.4 280.6 277.6 Dilutive securities: Effect of dilutive securities 3.2 2.2 1.7 Weighted-average diluted shares 288.6 282.8 279.3 Net income per share: Basic $ 1.39 $ 2.11 $ 1.66 Diluted $ 1.38 $ 2.09 $ 1.65 |
Supplemental Balance Sheet In45
Supplemental Balance Sheet Information (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Disclosure Text Block Supplement [Abstract] | |
Components of Certain Balance Sheet Accounts | The components of certain balance sheet accounts are as follows: June 30, July 1, (millions) Property and equipment Land and building $ 19.0 $ 13.7 Machinery and equipment 56.0 34.4 Software and computer equipment 409.1 310.4 Furniture and fixtures 322.5 329.6 Leasehold improvements 891.0 729.7 Construction in progress 142.2 71.7 Less: accumulated depreciation (954.4 ) (798.1 ) Total property and equipment, net $ 885.4 $ 691.4 Accrued liabilities Payroll and employee benefits $ 174.3 $ 152.7 Accrued rent 53.9 45.5 Dividends payable 97.2 95.1 Operating expenses 347.8 265.9 Total accrued liabilities $ 673.2 $ 559.2 Other liabilities Deferred lease obligation $ 200.7 $ 204.2 Gross unrecognized tax benefit 75.3 94.1 Other 191.0 134.8 Total other liabilities $ 467.0 $ 433.1 |
Quarterly Financial Data (Table
Quarterly Financial Data (Tables) | 12 Months Ended |
Jun. 30, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | First Quarter Second Quarter Third Quarter Fourth Quarter (millions, except per share data) Fiscal 2018 (1) Net sales $ 1,288.9 $ 1,785.0 $ 1,322.4 $ 1,483.7 Gross profit 764.4 1,177.4 908.9 1,003.2 Net income (17.7 ) 63.2 140.3 211.7 Net income per common share: Basic $ (0.06 ) $ 0.22 $ 0.49 $ 0.74 Diluted $ (0.06 ) $ 0.22 $ 0.48 $ 0.73 Fiscal 2017 (1) Net sales $ 1,037.6 $ 1,321.7 $ 995.2 $ 1,133.8 Gross profit 714.7 906.2 705.7 754.5 Net income 117.4 199.7 122.2 151.7 Net income per common share: Basic $ 0.42 $ 0.71 $ 0.44 $ 0.54 Diluted $ 0.42 $ 0.71 $ 0.43 $ 0.53 Fiscal 2016 (1)(2) Net sales $ 1,030.3 $ 1,273.8 $ 1,033.1 $ 1,154.6 Gross profit 696.5 859.1 713.0 782.7 Net income 96.4 170.1 112.5 81.5 Net income per common share: Basic $ 0.35 $ 0.61 $ 0.40 $ 0.29 Diluted $ 0.35 $ 0.61 $ 0.40 $ 0.29 (1) The sum of the quarterly earnings per share may not equal the full-year amount, as the computations of the weighted-average number of common basic and diluted shares outstanding for each quarter and the full year are performed independently. (2) The fourth quarter of fiscal 2016 included the results of the 53rd week, contributing to $84.4 million in net revenues and $0.07 in net income per diluted share. |
Significant Accounting Polici47
Significant Accounting Policies - Narrative (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Significant Accounting Policies [Line Items] | |||
Impairment charges | $ 9,100,000 | $ 14,200,000 | $ 0 |
Goodwill impairment | 0 | 0 | 0 |
Deferred rent obligations | 240,300,000 | 242,400,000 | |
Noncurrent asset retirement obligation | $ 25,800,000 | 22,900,000 | |
Breakage revenue, unredeemed gift card recognition period | 3 years | ||
Advertising expenses | $ 228,400,000 | $ 178,300,000 | $ 202,200,000 |
Share-based compensation, excess tax benefit, amount | $ (13,300,000) | ||
Building | |||
Significant Accounting Policies [Line Items] | |||
Property and equipment, useful life | 40 years | ||
Building Improvements | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Property and equipment, useful life | 10 years | ||
Building Improvements | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Property and equipment, useful life | 40 years | ||
Machinery and Equipment | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Property and equipment, useful life | 5 years | ||
Machinery and Equipment | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Property and equipment, useful life | 7 years | ||
Furniture and Fixtures | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Property and equipment, useful life | 3 years | ||
Furniture and Fixtures | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Property and equipment, useful life | 10 years | ||
Computer Software | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Property and equipment, useful life | 3 years | ||
Computer Software | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Property and equipment, useful life | 10 years | ||
Net Sales | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% |
Ancillary Sources | Net Sales | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 1.00% | ||
Shipping and Handling | |||
Significant Accounting Policies [Line Items] | |||
Costs | $ 101,500,000 | $ 45,800,000 | $ 43,600,000 |
Acquisitions - (Narrative) (Det
Acquisitions - (Narrative) (Details) $ / shares in Units, $ in Millions | Jul. 11, 2017USD ($)$ / shares | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($)acquisition | Mar. 31, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Jul. 01, 2017USD ($) | Jul. 02, 2016USD ($) |
Business Acquisition [Line Items] | ||||||||
Payments to acquire businesses, net of cash acquired | $ 2,375.8 | $ 0 | $ 25.6 | |||||
Valuation allowance | $ 305.9 | $ 305.9 | $ 305.9 | 196.1 | ||||
Effective income tax rate reconciliation, at federal statutory income tax rate, percent | 28.00% | |||||||
Measurement period adjustment | $ (18.9) | 0.5 | ||||||
Kate Spade & Company | ||||||||
Business Acquisition [Line Items] | ||||||||
Business acquisition, share price (USD per share) | $ / shares | $ 18.50 | |||||||
Cash paid in connection with the acquisition | $ 2,400 | |||||||
Payments to acquire businesses, gross | 2,390 | |||||||
Payments to acquire businesses, net of cash acquired | 2,320 | |||||||
Consideration transferred, equity interests issued and issuable | 5.3 | |||||||
Inventory step-up adjustment | $ 67.5 | |||||||
Inventory step-up adjustment, amortization period | 4 months | |||||||
Goodwill, not expected tax deductible amount | $ 916.1 | 900 | 900 | 900 | ||||
Recognized identifiable assets acquired and liabilities assumed, deferred tax assets | 200.1 | |||||||
Valuation allowance | 39.3 | |||||||
Off-market lease, unfavorable | 49.5 | |||||||
Total assets acquired | 3,048.4 | 3,042.2 | 3,042.2 | 3,042.2 | ||||
Measurement period adjustment | $ (16.1) | |||||||
Distributor Acquisitions and Kate Spade Joint Ventures | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash paid in connection with the acquisition | $ 153.7 | |||||||
Payments to acquire businesses, gross | 61.5 | |||||||
Payments to acquire businesses, net of cash acquired | 55.6 | |||||||
Goodwill, not expected tax deductible amount | $ 103.7 | $ 103.7 | ||||||
Number of businesses acquired | acquisition | 3 | |||||||
Consideration transferred, cash | $ 106.9 | |||||||
Total assets acquired | $ 50 | $ 50 | ||||||
Off-Market Favorable Lease | Kate Spade & Company | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite-lived intangible assets acquired | 72.2 | |||||||
Customer Relationships | Kate Spade & Company | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite-lived intangible assets acquired | $ 45 | |||||||
Acquired finite-lived intangible assets, weighted average useful life | 15 years | |||||||
Order or Production Backlog | Kate Spade & Company | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite-lived intangible assets acquired | $ 2 | |||||||
Acquired finite-lived intangible assets, weighted average useful life | 6 months | |||||||
Pro Forma | Kate Spade & Company | ||||||||
Business Acquisition [Line Items] | ||||||||
Effective income tax rate reconciliation, at federal statutory income tax rate, percent | 40.00% | |||||||
Corporate Joint Venture | Kate Spade Joint Ventures | ||||||||
Business Acquisition [Line Items] | ||||||||
Percentage of voting interests acquired | 50.00% | 50.00% | ||||||
Stuart Weitzman | Distributor Acquisitions and Kate Spade Joint Ventures | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill, not expected tax deductible amount | $ 49.3 | $ 49.3 | ||||||
Measurement period adjustment | 0.5 | |||||||
Kate Spade & Company | ||||||||
Business Acquisition [Line Items] | ||||||||
Measurement period adjustment | (18.4) | 0 | ||||||
Kate Spade & Company | Distributor Acquisitions and Kate Spade Joint Ventures | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill, not expected tax deductible amount | 52.8 | 52.8 | ||||||
Measurement period adjustment | $ 2.3 | |||||||
Coach | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill, not expected tax deductible amount | $ 324 | |||||||
Measurement period adjustment | $ 0 | $ 0 | ||||||
Coach | Distributor Acquisitions and Kate Spade Joint Ventures | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill, not expected tax deductible amount | $ 1.6 | $ 1.6 |
Acquisitions - Assets Acquired
Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Jul. 11, 2017 | Jun. 30, 2018 | Jun. 30, 2018 | Jul. 01, 2017 |
Assets Acquired and Liabilities Assumed | ||||
Goodwill, adjustments | $ (18.9) | $ 0.5 | ||
Kate Spade & Company | ||||
Assets Acquired and Liabilities Assumed | ||||
Cash and cash equivalents | $ 71.8 | 71.8 | $ 71.8 | |
Trade accounts receivable | 62.8 | 62.8 | 62.8 | |
Inventories | 310.1 | 310.1 | 310.1 | |
Prepaid expenses and other current assets | 33.9 | 32.7 | 32.7 | |
Prepaid expenses and other current assets, adjustment | (1.2) | |||
Property and equipment | 175.5 | 175.5 | 175.5 | |
Goodwill | 916.1 | 900 | 900 | |
Goodwill, adjustments | (16.1) | |||
Brand intangible asset | 1,300 | 1,300 | 1,300 | |
Other intangible assets | 119.2 | 119.2 | 119.2 | |
Other assets | 59 | 70.1 | 70.1 | |
Other assets, adjustments | 11.1 | |||
Total assets acquired | 3,048.4 | 3,042.2 | 3,042.2 | |
Total assets acquired, adjustments | (6.2) | |||
Accounts payable and accrued liabilities | 233.3 | 233.3 | 233.3 | |
Deferred income taxes | 333 | 325.7 | 325.7 | |
Deferred income taxes, adjustments | (7.3) | |||
Other liabilities | 84.8 | 85.9 | 85.9 | |
Other liabilities, adjustments | 1.1 | |||
Total liabilities assumed | 651.1 | 644.9 | 644.9 | |
Total liabilites assumed, adjustments | (6.2) | |||
Total purchase price | 2,397.3 | 2,397.3 | $ 2,397.3 | |
Less: Cash acquired | (71.8) | (71.8) | ||
Total purchase price, net of cash acquired | $ 2,325.5 | $ 2,325.5 |
Acquisitions - (Pro Forma) (Det
Acquisitions - (Pro Forma) (Details) - Kate Spade & Company - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Business Acquisition [Line Items] | ||
Pro forma net sales | $ 5,912.9 | $ 5,837.4 |
Pro forma net income | $ 472.8 | $ 695.4 |
Pro forma net income per share - basic earnings (per share) | $ 1.66 | $ 2.48 |
Pro forma net income per share - diluted earnings (per share) | $ 1.64 | $ 2.46 |
Integration and Acquisition C51
Integration and Acquisition Costs - (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Jul. 01, 2017 | Jun. 30, 2018 | Jul. 01, 2017 | |
Kate Spade & Company | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | $ 301.6 | ||
Kate Spade & Company | Cost of Sales | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | 116.4 | ||
Kate Spade & Company | Selling, General and Administrative Expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | 185.2 | ||
Stuart Weitzman LLC and Kate Spade & Company | Cost of Sales | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | 10.7 | ||
Kate Spade & Company | Kate Spade & Company | Cost of Sales | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | 106.5 | ||
Kate Spade & Company | Kate Spade & Company | Selling, General and Administrative Expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | 113.7 | ||
Stuart Weitzman | Kate Spade & Company | Cost of Sales | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | 5.8 | ||
Stuart Weitzman | Kate Spade & Company | Selling, General and Administrative Expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | 7.8 | ||
Stuart Weitzman | Stuart Weitzman LLC and Kate Spade & Company | Cost of Sales | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | $ 2.9 | ||
Stuart Weitzman | Stuart Weitzman LLC and Kate Spade & Company | Selling, General and Administrative Expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | $ (17.7) | ||
Coach | Kate Spade & Company | Cost of Sales | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | 4.1 | ||
Coach | Kate Spade & Company | Selling, General and Administrative Expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | 0.5 | ||
Corporate Unallocated | Kate Spade & Company | Selling, General and Administrative Expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | 63.2 | ||
Corporate Unallocated | Kate Spade & Company | Interest Expense | |||
Restructuring Cost and Reserve [Line Items] | |||
Pre-tax acquisition costs | $ 9.5 | ||
Corporate Unallocated | Stuart Weitzman | Selling, General and Administrative Expenses | |||
Restructuring Cost and Reserve [Line Items] | |||
Charges | $ (19.4) | ||
Minimum | Kate Spade & Company | |||
Restructuring Cost and Reserve [Line Items] | |||
Integration reserve, expected cost remaining | 50 | ||
Integration reserve, settled without cash, expected cost remaining | 5 | ||
Maximum | Kate Spade & Company | |||
Restructuring Cost and Reserve [Line Items] | |||
Integration reserve, expected cost remaining | 60 | ||
Integration reserve, settled without cash, expected cost remaining | $ 10 |
Integration and Acquisition C52
Integration and Acquisition Costs - (Addition Related to Integration and Acquisition) (Details) - Kate Spade & Company $ in Millions | 12 Months Ended |
Jun. 30, 2018USD ($) | |
Integration Reserve [Roll Forward] | |
Integration reserve, start | $ 2.5 |
Charges | 301.6 |
Cash payments | (155.4) |
Non-cash charges | (133.1) |
Integration reserve, end | 15.6 |
Purchase Accounting Adjustments | |
Integration Reserve [Roll Forward] | |
Integration reserve, start | 0 |
Charges | 82.8 |
Cash payments | 0 |
Non-cash charges | (82.8) |
Integration reserve, end | 0 |
Acquisition Costs | |
Integration Reserve [Roll Forward] | |
Integration reserve, start | 0 |
Charges | 42.9 |
Cash payments | (42.2) |
Non-cash charges | 0 |
Integration reserve, end | 0.7 |
Inventory-Related Charges | |
Integration Reserve [Roll Forward] | |
Integration reserve, start | 2.5 |
Charges | 35.4 |
Cash payments | (2.8) |
Non-cash charges | (34.8) |
Integration reserve, end | 0.3 |
Contractual Payments | |
Integration Reserve [Roll Forward] | |
Integration reserve, start | 0 |
Charges | 50.6 |
Cash payments | (50.6) |
Non-cash charges | 0 |
Integration reserve, end | 0 |
Organizational-Related | |
Integration Reserve [Roll Forward] | |
Integration reserve, start | 0 |
Charges | 39.8 |
Cash payments | (22.4) |
Non-cash charges | (5.8) |
Integration reserve, end | 11.6 |
Other | |
Integration Reserve [Roll Forward] | |
Integration reserve, start | 0 |
Charges | 50.1 |
Cash payments | (37.4) |
Non-cash charges | (9.7) |
Integration reserve, end | 3 |
Cost of Sales | |
Integration Reserve [Roll Forward] | |
Charges | 116.4 |
Cost of Sales | Purchase Accounting Adjustments | |
Integration Reserve [Roll Forward] | |
Charges | 79.6 |
Selling, General and Administrative Expenses | |
Integration Reserve [Roll Forward] | |
Charges | 185.2 |
Selling, General and Administrative Expenses | Purchase Accounting Adjustments | |
Integration Reserve [Roll Forward] | |
Charges | 3.2 |
Stuart Weitzman | Cost of Sales | |
Integration Reserve [Roll Forward] | |
Charges | 5.8 |
Stuart Weitzman | Cost of Sales | Purchase Accounting Adjustments | |
Integration Reserve [Roll Forward] | |
Charges | 3.7 |
Stuart Weitzman | Cost of Sales | Inventory-Related Charges | |
Integration Reserve [Roll Forward] | |
Charges | 0.7 |
Stuart Weitzman | Cost of Sales | Other | |
Integration Reserve [Roll Forward] | |
Charges | 1.4 |
Stuart Weitzman | Selling, General and Administrative Expenses | |
Integration Reserve [Roll Forward] | |
Charges | 7.8 |
Stuart Weitzman | Selling, General and Administrative Expenses | Organizational-Related | |
Integration Reserve [Roll Forward] | |
Severance costs | 3.8 |
Stuart Weitzman | Selling, General and Administrative Expenses | Other | |
Integration Reserve [Roll Forward] | |
Charges | 4 |
Kate Spade & Company | Cost of Sales | |
Integration Reserve [Roll Forward] | |
Charges | 106.5 |
Kate Spade & Company | Cost of Sales | Purchase Accounting Adjustments | |
Integration Reserve [Roll Forward] | |
Charges | 71.8 |
Kate Spade & Company | Cost of Sales | Inventory-Related Charges | |
Integration Reserve [Roll Forward] | |
Charges | 34.7 |
Kate Spade & Company | Selling, General and Administrative Expenses | |
Integration Reserve [Roll Forward] | |
Charges | 113.7 |
Kate Spade & Company | Selling, General and Administrative Expenses | Purchase Accounting Adjustments | |
Integration Reserve [Roll Forward] | |
Charges | 3.2 |
Kate Spade & Company | Selling, General and Administrative Expenses | Acquisition Costs | |
Integration Reserve [Roll Forward] | |
Charges | 19.1 |
Kate Spade & Company | Selling, General and Administrative Expenses | Organizational-Related | |
Integration Reserve [Roll Forward] | |
Severance costs | 25.6 |
Kate Spade & Company | Selling, General and Administrative Expenses | Other | |
Integration Reserve [Roll Forward] | |
Charges | 15.2 |
Coach | Cost of Sales | |
Integration Reserve [Roll Forward] | |
Charges | 4.1 |
Coach | Cost of Sales | Purchase Accounting Adjustments | |
Integration Reserve [Roll Forward] | |
Charges | 4.1 |
Coach | Selling, General and Administrative Expenses | |
Integration Reserve [Roll Forward] | |
Charges | 0.5 |
Coach | Selling, General and Administrative Expenses | Acquisition Costs | |
Integration Reserve [Roll Forward] | |
Charges | 0.2 |
Coach | Selling, General and Administrative Expenses | Other | |
Integration Reserve [Roll Forward] | |
Charges | 0.3 |
Corporate Unallocated | Selling, General and Administrative Expenses | |
Integration Reserve [Roll Forward] | |
Charges | 63.2 |
Corporate Unallocated | Selling, General and Administrative Expenses | Acquisition Costs | |
Integration Reserve [Roll Forward] | |
Charges | 23.6 |
Corporate Unallocated | Selling, General and Administrative Expenses | Organizational-Related | |
Integration Reserve [Roll Forward] | |
Severance costs | 10.4 |
Share-based compensation arrangement by share-based payment award accelerated compensation cost | 6 |
Corporate Unallocated | Selling, General and Administrative Expenses | Other | |
Integration Reserve [Roll Forward] | |
Charges | 29.2 |
Inventories | |
Integration Reserve [Roll Forward] | |
Integration reserve, end | $ 4.9 |
Restructuring Activities - Oper
Restructuring Activities - Operational Efficiency Plan (Details) - Operational Efficiency Plan - USD ($) $ in Millions | 12 Months Ended | 27 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | Jun. 30, 2018 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 19.5 | $ 24 | $ 43.9 | $ 87.4 |
Organizational Efficiency | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 0.6 | $ 15.6 | $ 40.4 |
Restructuring Activities - Rest
Restructuring Activities - Restructuring Liability Rollforward (Details) - Operational Efficiency Plan - USD ($) $ in Millions | 12 Months Ended | 27 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | Jun. 30, 2018 | |
Restructuring Reserve [Roll Forward] | ||||
Restructuring liability, beginning balance | $ 6.9 | $ 25.4 | $ 0 | |
Restructuring charges | 19.5 | 24 | 43.9 | $ 87.4 |
Cash payments | (23.2) | (34) | (9.7) | |
Non-cash charges | (1.8) | (8.5) | (8.8) | |
Restructuring liability, ending balance | 1.4 | 6.9 | 25.4 | 1.4 |
Organizational Efficiency | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring liability, beginning balance | 6.6 | 22.2 | 0 | |
Restructuring charges | 0.6 | 15.6 | 40.4 | |
Cash payments | (5.6) | (23.3) | (9.7) | |
Non-cash charges | (0.8) | (7.9) | (8.5) | |
Restructuring liability, ending balance | 0.8 | 6.6 | 22.2 | 0.8 |
Technology Infrastructure | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring liability, beginning balance | 0.3 | 0 | 0 | |
Restructuring charges | 18.9 | 8 | 0 | |
Cash payments | (17.6) | (7.7) | 0 | |
Non-cash charges | (1) | 0 | 0 | |
Restructuring liability, ending balance | 0.6 | 0.3 | 0 | 0.6 |
Network Optimization | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring liability, beginning balance | 0 | 3.2 | 0 | |
Restructuring charges | 0 | 0.4 | 3.5 | |
Cash payments | 0 | (3) | 0 | |
Non-cash charges | 0 | (0.6) | (0.3) | |
Restructuring liability, ending balance | $ 0 | $ 0 | $ 3.2 | $ 0 |
Restructuring Activities - Tran
Restructuring Activities - Transformation Plan (Details) - Transformation Plan - USD ($) | 12 Months Ended | 27 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | Jul. 02, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 0 | $ 0 | $ 44,100,000 | $ 321,500,000 |
Restructuring charges, after tax | $ 33,400,000 | |||
Restructuring charges per diluted share (USD per share) | $ 0.12 | |||
Restructuring liability | $ 0 | $ 0 |
Accumulated Other Comprehensi56
Accumulated Other Comprehensive Income (Loss) - (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Roll Forward] | ||
Beginning balance | $ 3,001.9 | $ 2,682.9 |
Other comprehensive income (loss) before reclassifications | 3.1 | (19.2) |
Less: gains (losses) reclassified from accumulated other comprehensive income | (1) | (5.2) |
Net current-period other comprehensive income (loss) | 4.1 | (14) |
Ending balance | 3,244.6 | 3,001.9 |
Unrealized (Losses) Gains on Cash Flow Hedging Derivatives | ||
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Roll Forward] | ||
Beginning balance | 3 | (8.8) |
Other comprehensive income (loss) before reclassifications | (1.2) | 7.7 |
Less: gains (losses) reclassified from accumulated other comprehensive income | 0.4 | (4.1) |
Net current-period other comprehensive income (loss) | (1.6) | 11.8 |
Ending balance | 1.4 | 3 |
Unrealized Gains (Losses) on Available-for-Sale Investments | ||
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Roll Forward] | ||
Beginning balance | (0.4) | 0.3 |
Other comprehensive income (loss) before reclassifications | 0.5 | (0.7) |
Less: gains (losses) reclassified from accumulated other comprehensive income | 0.1 | 0 |
Net current-period other comprehensive income (loss) | 0.4 | (0.7) |
Ending balance | 0 | (0.4) |
Cumulative Translation Adjustment | ||
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Roll Forward] | ||
Beginning balance | (89.1) | (62.9) |
Other comprehensive income (loss) before reclassifications | 3.8 | (26.2) |
Less: gains (losses) reclassified from accumulated other comprehensive income | 0 | 0 |
Net current-period other comprehensive income (loss) | 3.8 | (26.2) |
Ending balance | (85.3) | (89.1) |
Other | ||
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Roll Forward] | ||
Beginning balance | (0.4) | (1.5) |
Other comprehensive income (loss) before reclassifications | 0 | 0 |
Less: gains (losses) reclassified from accumulated other comprehensive income | (1.5) | (1.1) |
Net current-period other comprehensive income (loss) | 1.5 | 1.1 |
Ending balance | 1.1 | (0.4) |
Total | ||
Accumulated Other Comprehensive (Loss) Income, Net of Tax [Roll Forward] | ||
Beginning balance | (86.9) | (72.9) |
Ending balance | $ (82.8) | $ (86.9) |
Accumulated Other Comprehensi57
Accumulated Other Comprehensive Income (Loss) - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Unrealized Gains (Losses) on Cash Flow Hedges | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated other comprehensive income, accumulated tax | $ (0.9) | $ (1.8) |
Amounts reclassified from AOCI, tax | (1.1) | (2.2) |
Other | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Accumulated other comprehensive income, accumulated tax | $ 0.6 | $ 0.2 |
Share-Based Compensation - Tota
Share-Based Compensation - Total Compensation Cost and Related Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 88.1 | $ 76.1 | $ 95.3 |
Income tax benefit related to share-based compensation expense | 23.5 | 24.4 | 28.6 |
Operational Efficiency Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | 0.8 | $ 2.5 | $ 8.5 |
Employee Severance | Integration and Acquisition | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 6 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercise price of stock option as percentage of market price of stock to date of grant | 100.00% | ||
Expected term | 5 years 1 month | 4 years 5 months | 4 years 2 months |
Stock option vesting period | 4 years | ||
Weighted-average grant-date fair value of options granted (USD per share) | $ 7.76 | $ 7.36 | $ 5.65 |
Total intrinsic value of options exercised | $ 59.2 | $ 15.4 | $ 6.2 |
Total cash received from option exercises | 161.5 | 68.2 | 25.7 |
Tax benefit from option exercises | 11.4 | $ 4.9 | $ 2.3 |
Total unrecognized compensation cost related to non-vested awards | $ 25.1 | ||
Total unrecognized compensation cost related to non-vested awards, recognized over a weighted-average period | 1 year 3 months | ||
Stock Options | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 10 years | ||
Stock option vesting period | 4 years | ||
Stock Options | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock option vesting period | 1 year | ||
Service Based Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted-average grant-date fair value of options granted (USD per share) | $ 41.75 | $ 39.57 | $ 31.65 |
Total unrecognized compensation cost related to non-vested awards | $ 72.2 | ||
Total unrecognized compensation cost related to non-vested awards, recognized over a weighted-average period | 1 year 3 months | ||
Total fair value of shares vested | $ 83.4 | $ 68.9 | $ 45.8 |
Non-vested shares granted (USD per share) | $ 41.75 | ||
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Tax benefit from option exercises | $ 17.9 | $ 19 | $ 14.2 |
Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 1 year 1 month | ||
Weighted-average grant-date fair value of options granted (USD per share) | $ 43.80 | $ 39.61 | $ 31.67 |
Total fair value of shares vested | $ 11.4 | $ 0.9 | $ 1.4 |
Total unrecognized compensation cost related to non-vested awards | $ 15.9 | ||
Non-vested shares granted (USD per share) | $ 43.80 | ||
Performance Restricted Stock Units, Total Stockholder Return Based | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock option vesting period | 3 years | ||
Shares issued (shares) | 0.4 | 0.3 | |
Grant date fair value of award | $ 16 | $ 10 | |
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 6 months | 6 months | 6 months |
Employee stock purchase plan, percentage of market value | 85.00% | ||
New common shares sold to employees under the employee stock purchase plan (shares) | 0.1 | 0.1 | 0.1 |
Non-vested shares granted (USD per share) | $ 9.62 | $ 8.08 | $ 7.43 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Option Activity (Details) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Number of Options Outstanding | |
Outstanding, beginning of period (in shares) | shares | 15 |
Granted (in shares) | shares | 3.1 |
Exercised (in shares) | shares | (4.6) |
Forfeited or expired (in shares) | shares | (1) |
Outstanding, end of period (in shares) | shares | 12.5 |
Number of options outstanding, vested and expected to vest (in shares) | shares | 12.2 |
Number of options outstanding, exercisable (in shares) | shares | 6.5 |
Weighted-Average Exercise Price | |
Outstanding, beginning of period (USD per share) | $ / shares | $ 39.75 |
Granted (USD per share) | $ / shares | 41.12 |
Exercised (USD per share) | $ / shares | 35.37 |
Forfeited or expired (USD per share) | $ / shares | 45.06 |
Outstanding, end of period (USD per share) | $ / shares | 42.94 |
Weighted-average exercise price, shares vested or expected to vest (USD per share) | $ / shares | 42.99 |
Weighted-average exercise price, exercisable (USD per share) | $ / shares | $ 46.35 |
Weighted- Average Remaining Contractual Term (in years) | |
Outstanding | 6 years 7 months |
Vested or expected to vest | 6 years 6 months |
Exercisable | 4 years 11 months |
Aggregate Intrinsic Value | |
Outstanding | $ | $ 75.8 |
Vested or expected to vest | $ | 74.4 |
Exercisable | $ | $ 33.3 |
Share Based Compensation - Stoc
Share Based Compensation - Stock Option Grant Weighted Average Assumptions (Details) - Stock Options | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 5 years 1 month | 4 years 5 months | 4 years 2 months |
Expected volatility | 28.40% | 30.50% | 32.20% |
Risk-free interest rate | 1.80% | 1.10% | 1.40% |
Dividend yield | 3.30% | 3.40% | 4.30% |
Share-Based Compensation - Su62
Share-Based Compensation - Summary of Service-Based Restricted Stock Unit Activity (Details) - Service Based Restricted Stock Units shares in Millions | 12 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Number of Non-vested RSUs | |
Non-vested (shares) | shares | 3.5 |
Granted (shares) | shares | 1.8 |
Awards issued in connection with acquisitions (shares) | shares | 0.4 |
Vested (shares) | shares | (1.8) |
Forfeited (shares) | shares | (0.4) |
Non-vested (shares) | shares | 3.5 |
Weighted-Average Grant-Date Fair Value per RSU | |
Non-vested (USD per share) | $ / shares | $ 50.28 |
Granted (USD per share) | $ / shares | 41.75 |
Awards issued in connection with acquisitions (USD per share) | $ / shares | 47.26 |
Vested (USD per share) | $ / shares | 39.14 |
Forfeited (USD per share) | $ / shares | 39.98 |
Non-vested (USD per share) | $ / shares | $ 40.26 |
Share-Based Compensation - Su63
Share-Based Compensation - Summary of Performance-Based Restricted Stock Unit Activity (Details) - Performance Shares shares in Millions | 12 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Number of Non-vested PRSUs | |
Non-vested (shares) | shares | 1.5 |
Granted (shares) | shares | 0.4 |
Change due to performance condition achievement (shares) | shares | (0.6) |
Vested, less than (shares) | shares | (0.3) |
Forfeited (shares) | shares | (0.1) |
Non-vested (shares) | shares | 0.9 |
Weighted-Average Grant-Date Fair Value per PRSU | |
Non-vested (USD per share) | $ / shares | $ 37.78 |
Granted (USD per share) | $ / shares | 43.80 |
Change due to performance condition achievement (USD per share) | $ / shares | 47.32 |
Vested (USD per share) | $ / shares | 36.29 |
Forfeited (USD per share) | $ / shares | 37.17 |
Non-vested (USD per share) | $ / shares | $ 38.27 |
Share-Based Compensation - Purc
Share-Based Compensation - Purchase Rights Weighted Average Assumptions (Details) - Employee Stock Purchase Plan | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 6 months | 6 months | 6 months |
Expected volatility | 26.90% | 24.70% | 28.60% |
Risk-free interest rate | 1.30% | 0.60% | 0.30% |
Dividend yield | 3.10% | 3.60% | 4.10% |
Investments - Summary of Invest
Investments - Summary of Investments (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jul. 01, 2017 |
Debt Securities, Available-for-sale [Line Items] | ||
Short-term | $ 6.6 | $ 410.7 |
Long-Term | 0 | 75.1 |
Total | 6.6 | 485.8 |
Available-for-sale Securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short-term | 0 | 408 |
Long-Term | 0 | 75.1 |
Total | 0 | 483.1 |
Available-for-sale Securities | Commercial Paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short-term | 0 | 68.8 |
Long-Term | 0 | 0 |
Total | 0 | 68.8 |
Available-for-sale Securities | Government securities - U.S. | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short-term | 0 | 130.4 |
Long-Term | 0 | 0 |
Total | 0 | 130.4 |
Available-for-sale Securities | Corporate debt securities - U.S. | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short-term | 0 | 116.2 |
Long-Term | 0 | 46.9 |
Total | 0 | 163.1 |
Available-for-sale Securities | Corporate debt securities - non-U.S. | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short-term | 0 | 92.6 |
Long-Term | 0 | 28.2 |
Total | 0 | 120.8 |
Other Investments | Time deposits | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short-term | 0.6 | 0.6 |
Long-Term | 0 | 0 |
Total | 0.6 | 0.6 |
Other Investments | Other | ||
Debt Securities, Available-for-sale [Line Items] | ||
Short-term | 6 | 2.1 |
Long-Term | 0 | 0 |
Total | $ 6 | $ 2.1 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) | Jun. 30, 2018 | Jul. 01, 2017 |
Investments, Debt and Equity Securities [Abstract] | ||
Available-for-sale investments, gross unrealized gain (loss) | $ 0 | $ 0 |
Leases - Rent Expense for Opera
Leases - Rent Expense for Operating Leases (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Leases [Abstract] | |||
Minimum rent | $ 359.8 | $ 295.1 | $ 229.9 |
Contingent rent | 164.7 | 129.4 | 134.8 |
Total rent expense | $ 524.5 | 424.5 | 364.7 |
Lease termination charges | $ 0.2 | $ 5.9 |
Leases - Future Minimum Rental
Leases - Future Minimum Rental Payments Under Noncancelable Operating Leases (Details) $ in Millions | Jun. 30, 2018USD ($) |
Leases [Abstract] | |
2,019 | $ 384.8 |
2,020 | 343.1 |
2,021 | 300.7 |
2,022 | 279 |
2,023 | 249.6 |
Subsequent to 2023 | 1,211.1 |
Total minimum future rental payments | $ 2,768.3 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Measurements of Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jul. 01, 2017 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 592.5 | $ 760 |
Level 1 | Inventory-related Instruments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Derivative liability | 0 | 0 |
Level 1 | Intercompany Loan Hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0 | 0 |
Derivative liability | 0 | 0 |
Level 1 | Short-term Investments | Time Deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term Investments | Commercial Paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term Investments | Government Securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 130.4 |
Level 1 | Short-term Investments | Corporate debt securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term Investments | Corporate debt securities - non-U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Short-term Investments | Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Long-term Investments | Corporate debt securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 1 | Long-term Investments | Corporate debt securities - non-U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0.4 | 226 |
Level 2 | Inventory-related Instruments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 5.6 | 3.5 |
Derivative liability | 2.3 | 1 |
Level 2 | Intercompany Loan Hedges | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 0.3 | 0 |
Derivative liability | 0.1 | 0.7 |
Level 2 | Short-term Investments | Time Deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0.6 | 0.6 |
Level 2 | Short-term Investments | Commercial Paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 68.8 |
Level 2 | Short-term Investments | Government Securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 0 |
Level 2 | Short-term Investments | Corporate debt securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 116.2 |
Level 2 | Short-term Investments | Corporate debt securities - non-U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 92.6 |
Level 2 | Short-term Investments | Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 6 | 2.1 |
Level 2 | Long-term Investments | Corporate debt securities - U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | 0 | 46.9 |
Level 2 | Long-term Investments | Corporate debt securities - non-U.S. | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments | $ 0 | $ 28.2 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Asset impairment charges | $ 9,100,000 | $ 14,200,000 | $ 0 |
Leasehold Improvements | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Asset fair value | $ 1,200,000 | $ 3,100,000 |
Debt - Summary of Outstanding D
Debt - Summary of Outstanding Debt (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | Jun. 20, 2017 | Mar. 02, 2015 | |
Current Debt: | |||||
Current debt | $ 0.7 | $ 0 | |||
Long-Term Debt: | |||||
Long-term debt | 1,617.4 | 1,600 | |||
Less: Unamortized Discount and Debt Issuance Costs on Senior Notes | (17.5) | (20.5) | |||
Total Long-Term Debt, net | 1,599.9 | 1,579.5 | |||
Interest expense | 86.3 | 26.8 | $ 32.9 | ||
Capital Lease Obligations | |||||
Current Debt: | |||||
Current debt | 0.7 | 0 | |||
Long-Term Debt: | |||||
Long-term debt | 6 | 0 | |||
Senior Notes | 4.250% Senior Notes due 2025 | |||||
Long-Term Debt: | |||||
Long-term debt | $ 600 | 600 | |||
Interest rate, stated percentage | 4.25% | 4.25% | |||
Senior Notes | 3.000% Senior Notes due 2022 | |||||
Long-Term Debt: | |||||
Long-term debt | $ 400 | 400 | |||
Interest rate, stated percentage | 3.00% | 3.00% | |||
Senior Notes | 4.125% Senior Notes due 2027 | |||||
Long-Term Debt: | |||||
Long-term debt | $ 600 | 600 | |||
Interest rate, stated percentage | 4.125% | 4.125% | |||
Note Payable | |||||
Long-Term Debt: | |||||
Long-term debt | $ 11.4 | $ 0 |
Debt - Credit Facilities_Term L
Debt - Credit Facilities/Term Loans (Details) - USD ($) | May 30, 2017 | Jun. 30, 2018 | Jul. 10, 2017 | Jul. 01, 2017 |
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 1,599,900,000 | $ 1,579,500,000 | ||
Term Loan | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | 0 | |||
Term Loan | Six-Month Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 800,000,000 | |||
Debt Instrument, Term | 6 months | |||
Long-term Debt | $ 800,000,000 | |||
Term Loan | Three-Year Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 300,000,000 | |||
Debt Instrument, Term | 3 years | |||
Long-term Debt | $ 300,000,000 | |||
Revolving Credit Facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 900,000,000 | |||
Long-term Debt | $ 0 | |||
Revolving Credit Facility | Revolving Credit Facility | Federal Funds Effective Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Revolving Credit Facility | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
Reference ratio, percentage of lease expense | 600.00% |
Debt - Senior Notes (Details)
Debt - Senior Notes (Details) - USD ($) | Jun. 20, 2017 | Mar. 02, 2015 | Jun. 30, 2018 | Jul. 01, 2017 |
4.250% Senior Notes due 2025 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 600,000,000 | |||
Interest rate, stated percentage | 4.25% | 4.25% | ||
Debt instrument, issuance amount, percent of par | 99.445% | |||
Long-term debt, maturities, redemption period before maturity | 90 days | |||
Debt instrument, redemption price, percentage | 100.00% | |||
3.000% Senior Notes due 2022 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 400,000,000 | |||
Interest rate, stated percentage | 3.00% | 3.00% | ||
Debt instrument, issuance amount, percent of par | 99.505% | |||
Debt instrument, redemption price, percentage | 100.00% | |||
4.125% Senior Notes due 2027 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 600,000,000 | |||
Interest rate, stated percentage | 4.125% | 4.125% | ||
Debt instrument, issuance amount, percent of par | 99.858% | |||
Debt instrument, redemption price, percentage | 100.00% | |||
Fair Value, Inputs, Level 2 | 4.250% Senior Notes due 2025 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, fair value | $ 592,500,000 | $ 624,000,000 | ||
Fair Value, Inputs, Level 2 | 3.000% Senior Notes due 2022 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, fair value | 389,000,000 | 395,000,000 | ||
Fair Value, Inputs, Level 2 | 4.125% Senior Notes due 2027 | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, fair value | $ 574,100,000 | $ 596,000,000 | ||
Adjusted Treasury Rate | 4.250% Senior Notes due 2025 | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, redemption, basis spread on variable discount rate | 0.35% | |||
Adjusted Treasury Rate | 3.000% Senior Notes due 2022 | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, redemption, basis spread on variable discount rate | 0.25% | |||
Adjusted Treasury Rate | 4.125% Senior Notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, redemption, basis spread on variable discount rate | 0.30% |
Debt - Note Payable, Capital Le
Debt - Note Payable, Capital Lease and Maturities (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jul. 01, 2017 |
Debt Instrument [Line Items] | ||
Capital lease obligations | $ 9.7 | |
Total Long-Term Debt, net | 1,599.9 | $ 1,579.5 |
Due in 2021 | 11.4 | |
Due in 2022 | 400 | |
Due subsequent to 2022 | 1,200 | |
Debt, Current | ||
Debt Instrument [Line Items] | ||
Capital lease obligations | 0.7 | |
Long-term Debt | ||
Debt Instrument [Line Items] | ||
Capital lease obligations | 6 | |
Corporate Joint Venture | Kate Spade Joint Ventures | ||
Debt Instrument [Line Items] | ||
Notes payable | $ 11.4 |
Commitments and Contingencies -
Commitments and Contingencies - (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Commitments and Contingencies Disclosure [Line Items] | ||
Letters of credit amount outstanding | $ 35.1 | $ 9 |
Transition tax for accumulated foreign earnings, provisional income tax expense | 266 | |
Capital lease obligations | 9.7 | |
Debt repayment obligations | 1,610 | |
Senior Notes | 2022 Senior Notes, 2025 Senior Notes, and 2027 Senior Notes | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Interest payment obligation | 468.6 | |
Inventories | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Contractual cash obligations | 342.8 | |
Capital Expenditures | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Contractual cash obligations | 21.5 | |
Other Commitments | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Contractual cash obligations | $ 31 |
Goodwill and Other Intangible76
Goodwill and Other Intangible Assets - (Change in Carrying Value of Goodwill) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jun. 30, 2018 | Jul. 01, 2017 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 480.5 | $ 502.4 |
Acquisition of goodwill | 1,019.8 | |
Allocation of goodwill | 0 | |
Measurement period adjustment | (18.9) | 0.5 |
Foreign exchange impact | 2.9 | (22.4) |
Ending balance | 1,484.3 | 480.5 |
Coach | ||
Goodwill [Roll Forward] | ||
Beginning balance | 324.5 | 346.9 |
Acquisition of goodwill | 1.6 | |
Allocation of goodwill | 324 | |
Measurement period adjustment | 0 | 0 |
Foreign exchange impact | 4.7 | (22.4) |
Ending balance | 654.8 | 324.5 |
Kate Spade | ||
Goodwill [Roll Forward] | ||
Beginning balance | 0 | 0 |
Acquisition of goodwill | 968.9 | |
Allocation of goodwill | (324) | |
Measurement period adjustment | (18.4) | 0 |
Foreign exchange impact | 0.5 | 0 |
Ending balance | 627 | 0 |
Stuart Weitzman | ||
Goodwill [Roll Forward] | ||
Beginning balance | 156 | 155.5 |
Acquisition of goodwill | 49.3 | |
Allocation of goodwill | 0 | |
Measurement period adjustment | (0.5) | 0.5 |
Foreign exchange impact | (2.3) | 0 |
Ending balance | $ 202.5 | $ 156 |
Goodwill and Other Intangible77
Goodwill and Other Intangible Assets - (Indefinite and Finite Lived Assets) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jul. 01, 2017 |
Intangible assets subject to amortization: | ||
Gross carrying amount | $ 199.8 | $ 80.8 |
Accumulated amortization | (43.7) | (16.8) |
Finite-lived intangible assets, net | 156.1 | 64 |
Intangible assets not subject to amortization: | ||
Intangible assets, gross (excluding goodwill) | 1,776.6 | 357.6 |
Intangible assets, net (excluding goodwill) | 1,732.9 | 340.8 |
Brand intangible assets | ||
Intangible assets not subject to amortization: | ||
Indefinite-lived intangible assets (excluding goodwill) | 1,576.8 | 276.8 |
Customer Relationships | ||
Intangible assets subject to amortization: | ||
Gross carrying amount | 100.5 | 54.7 |
Accumulated amortization | (17.3) | (9.7) |
Finite-lived intangible assets, net | 83.2 | 45 |
Order Backlog | ||
Intangible assets subject to amortization: | ||
Gross carrying amount | 2 | 0 |
Accumulated amortization | (2) | 0 |
Finite-lived intangible assets, net | 0 | 0 |
Favorable Lease Rights | ||
Intangible assets subject to amortization: | ||
Gross carrying amount | 97.3 | 26.1 |
Accumulated amortization | (24.4) | (7.1) |
Finite-lived intangible assets, net | $ 72.9 | $ 19 |
Goodwill and Other Intangible78
Goodwill and Other Intangible Assets - (Future Amortization Expense) (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jul. 01, 2017 |
Expected Amortization Expense for Intangible Assets | ||
Fiscal 2,019 | $ 21.8 | |
Fiscal 2,020 | 20.2 | |
Fiscal 2,021 | 18.7 | |
Fiscal 2,022 | 16.7 | |
Fiscal 2,023 | 15.7 | |
Thereafter | 63 | |
Finite-lived intangible assets, net | $ 156.1 | $ 64 |
Goodwill and Other Intangible79
Goodwill and Other Intangible Assets - (Narrative) (Details) | 12 Months Ended |
Jun. 30, 2018 | |
Customer Relationships | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 11 years 9 months |
Customer Relationships | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 14 years |
Favorable Lease Rights | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 7 months |
Favorable Lease Rights | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 16 years 9 months |
Income Taxes - Provisions for I
Income Taxes - Provisions for Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | Jun. 27, 2015 | |
Income before provision for income taxes, amount | ||||
United States | $ 161.2 | $ 365.5 | $ 357.5 | |
Foreign | 435.6 | 393.5 | 269.1 | |
Income before provision for income taxes | 596.8 | 759 | $ 626.6 | 626.6 |
Tax expense at U.S. statutory rate | 167 | 265.7 | 219.3 | |
State taxes, net of federal benefit | 2.4 | 15.1 | 11.2 | |
Effects of foreign operations | (55.6) | (86.7) | (53.7) | |
Transition tax on deferred foreign earnings | 266 | 0 | 0 | |
Re-measurement of deferred taxes | (87.8) | 0 | 0 | |
Effects of foreign tax credits and acquisition reorganization | (36.2) | (12.3) | (19.6) | |
Release of state valuation allowance | (40.7) | 0 | 0 | |
Other, net | (15.8) | (13.8) | 8.9 | |
Taxes at effective worldwide rates | $ 199.3 | $ 168 | $ 166.1 | $ 166.1 |
Income before provision for income taxes, percentage | ||||
United States | 27.00% | 48.20% | 57.10% | |
Foreign | 73.00% | 51.80% | 42.90% | |
Total income before provision for income taxes | 100.00% | 100.00% | 100.00% | |
Tax expense at U.S. statutory rate | 28.00% | 35.00% | 35.00% | |
State taxes, net of federal benefit | 0.40% | 2.00% | 1.80% | |
Effects of foreign operations | (9.30%) | (11.40%) | (8.60%) | |
Transition tax on deferred foreign earnings | 44.60% | 0.00% | 0.00% | |
Re-measurement of deferred taxes | (14.70%) | 0.00% | 0.00% | |
Effects of foreign tax credits and acquisition reorganization | (6.10%) | (1.60%) | (3.10%) | |
Release of state valuation allowance | (6.80%) | (0.00%) | (0.00%) | |
Other, net | (2.70%) | (1.90%) | 1.40% | |
Taxes at effective worldwide rates | 33.40% | 22.10% | 26.50% |
Income Taxes - Current and Defe
Income Taxes - Current and Deferred Tax Provisions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jun. 27, 2015 | |
Current | |||
Federal | $ 181.1 | $ 42.9 | $ 145.8 |
Foreign | 79.1 | 39.7 | 46.8 |
State | (10) | 7.4 | 25.8 |
Total current and deferred tax provision (benefit) | 250.2 | 90 | 218.4 |
Deferred | |||
Federal | (1.9) | 56.4 | (52) |
Foreign | (11.2) | 7.4 | 2.2 |
State | (37.8) | 14.2 | (2.5) |
Total current and deferred tax provision (benefit) | $ (50.9) | $ 78 | $ (52.3) |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jul. 01, 2017 |
Deferred Tax Assets, Gross [Abstract] | ||
Share-based compensation | $ 27.1 | $ 64.8 |
Reserves not deductible until paid | 39.2 | 39.2 |
Deferred rent | 22.5 | 22.7 |
Employee benefits | 19 | 40.9 |
Foreign investments | 0 | 1.1 |
Net operating loss | 395.2 | 199.2 |
Other | 9.5 | 10.4 |
Prepaid expenses | 0 | 0.6 |
Inventory | 18.9 | 21.6 |
Capital loss carryforward | 56.8 | 0 |
Gross deferred tax assets | 588.2 | 400.5 |
Valuation allowance | 305.9 | 196.1 |
Deferred tax assets after valuation allowance | 282.3 | 204.4 |
Deferred Tax Liabilities, Gross [Abstract] | ||
Goodwill | 84.3 | 82.6 |
Other intangibles | 347.9 | 0 |
Property and equipment | 25.8 | 8.4 |
Foreign investments | 5.7 | 0 |
Prepaid expenses | 0.5 | 0 |
Other | 0 | 6.2 |
Gross deferred tax liabilities | 464.2 | 97.2 |
Net deferred tax (liabilities) assets | (181.9) | 107.2 |
Consolidated Balance Sheets Classification | ||
Deferred income taxes – noncurrent asset | 24.3 | 170.5 |
Deferred income taxes – noncurrent liability | $ (206.2) | $ (63.3) |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits Reconciliation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance at beginning of fiscal year | $ 94.1 | $ 138.6 | $ 168.1 |
Gross increase due to tax positions related to prior periods | 3.8 | 2.7 | 25.5 |
Gross decrease due to tax positions related to prior periods | (4) | (2.7) | (4.4) |
Gross increase due to tax positions related to current period | 6.4 | 8.1 | 8.7 |
Decrease due to lapse of statutes of limitations | (23.9) | (39.5) | (59) |
Decrease due to settlements with taxing authorities | (25.1) | (13.1) | (0.3) |
Increase due to current year acquisitions | 24 | 0 | 0 |
Balance at end of fiscal year | $ 75.3 | $ 94.1 | $ 138.6 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Jun. 29, 2019 | Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | Jun. 27, 2015 | |
Income Tax Contingency [Line Items] | |||||
Increase due to current year acquisitions | $ 24 | $ 0 | $ 0 | ||
Gross unrecognized tax benefit | 75.3 | 94.1 | 138.6 | $ 168.1 | |
Unrecognized tax benefit that would impact effective tax rate | 57 | 83.6 | |||
Gross interest and penalties payable | 12.9 | 24.1 | |||
Interest and penalty expense (income) | 10.8 | 2.8 | $ 11.5 | ||
Net operating loss | 395.2 | 199.2 | |||
Capital loss carryforward | 56.8 | 0 | |||
Valuation allowance | 305.9 | 196.1 | |||
Undistributed earnings of foreign subsidiaries | 3,090 | 2,910 | |||
Undistributed earnings of foreign subsidiaries, tax | $ 5.5 | ||||
Effective income tax rate reconciliation, at federal statutory income tax rate, percent | 28.00% | ||||
Transition tax for accumulated foreign earnings, provisional income tax expense | $ 266 | ||||
Long-term income taxes payable | 222.4 | 0 | |||
Accrued income taxes, current | 43.6 | ||||
Valuation allowances, purchase accounting adjustment | 40.7 | ||||
Federal | |||||
Income Tax Contingency [Line Items] | |||||
Net operating loss | 448.4 | ||||
Capital loss carryforward | 216.9 | ||||
State | |||||
Income Tax Contingency [Line Items] | |||||
Net operating loss | 831 | ||||
Undistributed earnings of foreign subsidiaries, tax | 5.5 | ||||
Foreign | |||||
Income Tax Contingency [Line Items] | |||||
Net operating loss | 921.9 | $ 715.3 | |||
2019 Acquisitions | |||||
Income Tax Contingency [Line Items] | |||||
Deferred tax liabilities, net | $ 325.7 | ||||
Scenario, Forecast | |||||
Income Tax Contingency [Line Items] | |||||
Effective income tax rate reconciliation, at federal statutory income tax rate, percent | 21.00% |
Income Taxes - Provisions for85
Income Taxes - Provisions for Income Taxes Related to Tax Legislation (Details) $ in Millions | 12 Months Ended |
Jun. 30, 2018USD ($) | |
Income Tax Disclosure [Abstract] | |
Impact of Change in U.S. Federal Statutory Rate on Pre-Tax Income | $ (10.9) |
Transition tax for accumulated foreign earnings, provisional income tax expense | 266 |
Re-measurement of Deferred Taxes | (87.8) |
Impact of Tax Legislation | $ 167.3 |
Income Taxes Income Taxes - Ann
Income Taxes Income Taxes - Annual Payments (Details) $ in Millions | Jun. 30, 2018USD ($) |
Income Tax Disclosure [Abstract] | |
Fiscal 2,019 | $ 43.6 |
Fiscal 2,020 | 21.2 |
Fiscal 2,021 | 21.2 |
Fiscal 2,022 | 21.2 |
Fiscal 2,023 | 39.7 |
Fiscal 2024 and 2025 | 119.1 |
Total | $ 266 |
Defined Contribution Plan - (Na
Defined Contribution Plan - (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Retirement Benefits [Abstract] | |||
Defined contribution plan expense | $ 12.3 | $ 9.1 | $ 8.3 |
Segment Information - Narrative
Segment Information - Narrative (Details) | 12 Months Ended |
Jun. 30, 2018storesegment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | segment | 3 |
United States | Retail Stores | |
Segment Reporting Information [Line Items] | |
Number of stores operated | 322 |
United States | Outlet Store | |
Segment Reporting Information [Line Items] | |
Number of stores operated | 281 |
Canada | Retail Stores | |
Segment Reporting Information [Line Items] | |
Number of stores operated | 51 |
Canada | Outlet Store | |
Segment Reporting Information [Line Items] | |
Number of stores operated | 16 |
Japan | Concession Shop-in-Shops | |
Segment Reporting Information [Line Items] | |
Number of stores operated | 276 |
Greater China | Retail and Outlet Stores | |
Segment Reporting Information [Line Items] | |
Number of stores operated | 275 |
Other International | Concession Shop-in-Shops | |
Segment Reporting Information [Line Items] | |
Number of stores operated | 211 |
Segment Information - Summary o
Segment Information - Summary of Segment Performance (Details) - USD ($) | Jul. 02, 2016 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 30, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Dec. 31, 2016 | Oct. 01, 2016 | Jul. 02, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | Jun. 27, 2015 |
Segment Reporting Information [Line Items] | |||||||||||||||||
Net sales | $ 84,400,000 | $ 1,483,700,000 | $ 1,322,400,000 | $ 1,785,000,000 | $ 1,288,900,000 | $ 1,133,800,000 | $ 995,200,000 | $ 1,321,700,000 | $ 1,037,600,000 | $ 1,154,600,000 | $ 1,033,100,000 | $ 1,273,800,000 | $ 1,030,300,000 | $ 5,880,000,000 | $ 4,488,300,000 | $ 4,491,800,000 | |
Gross profit | 1,003,200,000 | $ 908,900,000 | $ 1,177,400,000 | $ 764,400,000 | 754,500,000 | $ 705,700,000 | $ 906,200,000 | $ 714,700,000 | 782,700,000 | $ 713,000,000 | $ 859,100,000 | $ 696,500,000 | 3,853,900,000 | 3,081,100,000 | 3,051,300,000 | ||
Operating income (loss) | 670,800,000 | 787,400,000 | 653,500,000 | ||||||||||||||
Income (loss) before provision for income taxes | 596,800,000 | 759,000,000 | 626,600,000 | $ 626,600,000 | |||||||||||||
Depreciation and amortization expense | 271,300,000 | 218,900,000 | 219,100,000 | ||||||||||||||
Total assets | 4,892,700,000 | 6,678,300,000 | 5,831,600,000 | 4,892,700,000 | 6,678,300,000 | 5,831,600,000 | 4,892,700,000 | ||||||||||
Additions to long-lived assets | 267,400,000 | 283,100,000 | 396,400,000 | ||||||||||||||
Integration and acquisitions costs, depreciation and amortization expense | 11,000,000 | ||||||||||||||||
Coach | |||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||
Net sales | 4,221,500,000 | 4,114,700,000 | 4,147,100,000 | ||||||||||||||
Kate Spade | |||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||
Net sales | 1,284,700,000 | 0 | 0 | ||||||||||||||
Stuart Weitzman | |||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||
Net sales | 373,800,000 | 373,600,000 | 344,700,000 | ||||||||||||||
Operating Segments | Coach | |||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||
Net sales | 4,221,500,000 | 4,114,700,000 | 4,147,100,000 | ||||||||||||||
Gross profit | 2,931,500,000 | 2,855,000,000 | 2,848,900,000 | ||||||||||||||
Operating income (loss) | 1,084,200,000 | 1,040,000,000 | 1,024,400,000 | ||||||||||||||
Income (loss) before provision for income taxes | 1,084,200,000 | 1,040,000,000 | 1,024,400,000 | ||||||||||||||
Depreciation and amortization expense | 139,500,000 | 149,900,000 | 132,600,000 | ||||||||||||||
Total assets | 1,975,500,000 | 2,256,800,000 | 1,937,100,000 | 1,975,500,000 | 2,256,800,000 | 1,937,100,000 | 1,975,500,000 | ||||||||||
Additions to long-lived assets | 134,400,000 | 170,500,000 | 210,200,000 | ||||||||||||||
Operating Segments | Kate Spade | |||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||
Net sales | 1,284,700,000 | 0 | 0 | ||||||||||||||
Gross profit | 711,100,000 | 0 | 0 | ||||||||||||||
Operating income (loss) | (61,900,000) | 0 | 0 | ||||||||||||||
Income (loss) before provision for income taxes | (61,900,000) | 0 | 0 | ||||||||||||||
Depreciation and amortization expense | 67,200,000 | 0 | 0 | ||||||||||||||
Total assets | 0 | 2,626,300,000 | 0 | 0 | 2,626,300,000 | 0 | 0 | ||||||||||
Additions to long-lived assets | 34,400,000 | 0 | 0 | ||||||||||||||
Operating Segments | Stuart Weitzman | |||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||
Net sales | 373,800,000 | 373,600,000 | 344,700,000 | ||||||||||||||
Gross profit | 211,300,000 | 226,100,000 | 202,400,000 | ||||||||||||||
Operating income (loss) | (2,600,000) | 15,500,000 | 32,500,000 | ||||||||||||||
Income (loss) before provision for income taxes | (2,600,000) | 15,500,000 | 32,500,000 | ||||||||||||||
Depreciation and amortization expense | 20,800,000 | 18,900,000 | 19,600,000 | ||||||||||||||
Total assets | 631,200,000 | 746,400,000 | 628,400,000 | 631,200,000 | 746,400,000 | 628,400,000 | 631,200,000 | ||||||||||
Additions to long-lived assets | 7,800,000 | 20,200,000 | 11,500,000 | ||||||||||||||
Corporate Unallocated | |||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||
Net sales | 0 | 0 | 0 | ||||||||||||||
Gross profit | 0 | 0 | 0 | ||||||||||||||
Operating income (loss) | (348,900,000) | (268,100,000) | (403,400,000) | ||||||||||||||
Income (loss) before provision for income taxes | (422,900,000) | (296,500,000) | (430,300,000) | ||||||||||||||
Depreciation and amortization expense | 43,800,000 | 50,100,000 | 66,900,000 | ||||||||||||||
Total assets | $ 2,286,000,000 | $ 1,048,800,000 | $ 3,266,100,000 | $ 2,286,000,000 | 1,048,800,000 | 3,266,100,000 | 2,286,000,000 | ||||||||||
Additions to long-lived assets | 90,800,000 | 92,400,000 | 174,700,000 | ||||||||||||||
Operational Efficiency Plan | |||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||
Depreciation and amortization expense | $ 0 | $ 6,100,000 | |||||||||||||||
Transformation Plan and Operational Efficiency Plan | |||||||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||||||
Depreciation and amortization expense | $ 8,500,000 |
Segment Information - Net Sales
Segment Information - Net Sales by Product Category (Details) - USD ($) $ in Millions | Jul. 02, 2016 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 30, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Dec. 31, 2016 | Oct. 01, 2016 | Jul. 02, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 |
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 84.4 | $ 1,483.7 | $ 1,322.4 | $ 1,785 | $ 1,288.9 | $ 1,133.8 | $ 995.2 | $ 1,321.7 | $ 1,037.6 | $ 1,154.6 | $ 1,033.1 | $ 1,273.8 | $ 1,030.3 | $ 5,880 | $ 4,488.3 | $ 4,491.8 |
Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 100.00% | 100.00% | 100.00% | |||||||||||||
Coach | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 4,221.5 | $ 4,114.7 | $ 4,147.1 | |||||||||||||
Coach | Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 72.00% | 92.00% | 92.00% | |||||||||||||
Coach | Women's Handbags | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 2,298.2 | $ 2,308 | $ 2,392.9 | |||||||||||||
Coach | Women's Handbags | Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 39.00% | 52.00% | 53.00% | |||||||||||||
Coach | Men's | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 844.6 | $ 808 | $ 725.7 | |||||||||||||
Coach | Men's | Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 14.00% | 18.00% | 16.00% | |||||||||||||
Coach | Women's Accessories | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 747.1 | $ 721 | $ 721.6 | |||||||||||||
Coach | Women's Accessories | Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 13.00% | 16.00% | 16.00% | |||||||||||||
Coach | Other Products | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 331.6 | $ 277.7 | $ 306.9 | |||||||||||||
Coach | Other Products | Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 6.00% | 6.00% | 7.00% | |||||||||||||
Kate Spade & Company | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 1,284.7 | $ 0 | $ 0 | |||||||||||||
Percent of total sales | 0.00% | |||||||||||||||
Kate Spade & Company | Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 22.00% | 0.00% | ||||||||||||||
Kate Spade & Company | Women's Handbags | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 703.4 | $ 0 | $ 0 | |||||||||||||
Percent of total sales | 0.00% | |||||||||||||||
Kate Spade & Company | Women's Handbags | Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 12.00% | 0.00% | ||||||||||||||
Kate Spade & Company | Women's Accessories | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 269.7 | $ 0 | $ 0 | |||||||||||||
Percent of total sales | 0.00% | |||||||||||||||
Kate Spade & Company | Women's Accessories | Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 5.00% | 0.00% | ||||||||||||||
Kate Spade & Company | Other Products | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 311.6 | $ 0 | $ 0 | |||||||||||||
Percent of total sales | 0.00% | |||||||||||||||
Kate Spade & Company | Other Products | Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 5.00% | 0.00% | ||||||||||||||
Stuart Weitzman | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Net sales | $ 373.8 | $ 373.6 | $ 344.7 | |||||||||||||
Stuart Weitzman | Net Sales | ||||||||||||||||
Revenue from External Customer [Line Items] | ||||||||||||||||
Percent of total sales | 6.00% | 8.00% | 8.00% |
Segment Information - Geographi
Segment Information - Geographic Area Information (Details) - USD ($) $ in Millions | Jul. 02, 2016 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 30, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Dec. 31, 2016 | Oct. 01, 2016 | Jul. 02, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 |
Segment Reporting Information [Line Items] | ||||||||||||||||
Net sales | $ 84.4 | $ 1,483.7 | $ 1,322.4 | $ 1,785 | $ 1,288.9 | $ 1,133.8 | $ 995.2 | $ 1,321.7 | $ 1,037.6 | $ 1,154.6 | $ 1,033.1 | $ 1,273.8 | $ 1,030.3 | $ 5,880 | $ 4,488.3 | $ 4,491.8 |
Long-lived assets | 1,063.2 | 1,004.2 | 811.4 | 1,063.2 | 1,004.2 | 811.4 | 1,063.2 | |||||||||
United States | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Net sales | 3,457.4 | 2,432.5 | 2,477.3 | |||||||||||||
Long-lived assets | 750.3 | 663.3 | 497.7 | 750.3 | 663.3 | 497.7 | 750.3 | |||||||||
Japan | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Net sales | 695.7 | 572.8 | 559.8 | |||||||||||||
Long-lived assets | 74.8 | 60.6 | 58.3 | 74.8 | 60.6 | 58.3 | 74.8 | |||||||||
Greater China | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Net sales | 737.4 | 643.9 | 652.2 | |||||||||||||
Long-lived assets | 96.6 | 98.4 | 93.2 | 96.6 | 98.4 | 93.2 | 96.6 | |||||||||
Other | ||||||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||||||
Net sales | 989.5 | 839.1 | 802.5 | |||||||||||||
Long-lived assets | $ 141.5 | $ 181.9 | $ 162.2 | $ 141.5 | $ 181.9 | $ 162.2 | $ 141.5 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Weighted Average Shares Outstanding and Calculation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | Jul. 02, 2016 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 30, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Dec. 31, 2016 | Oct. 01, 2016 | Jul. 02, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 |
Earnings Per Share [Abstract] | ||||||||||||||||
Net income | $ 211.7 | $ 140.3 | $ 63.2 | $ (17.7) | $ 151.7 | $ 122.2 | $ 199.7 | $ 117.4 | $ 81.5 | $ 112.5 | $ 170.1 | $ 96.4 | $ 397.5 | $ 591 | $ 460.5 | |
Weighted-average basic shares (shares) | 285.4 | 280.6 | 277.6 | |||||||||||||
Effect of dilutive securities (shares) | 3.2 | 2.2 | 1.7 | |||||||||||||
Weighted-average diluted shares (shares) | 288.6 | 282.8 | 279.3 | |||||||||||||
Net income per share: | ||||||||||||||||
Basic (USD per share) | $ 0.74 | $ 0.49 | $ 0.22 | $ (0.06) | $ 0.54 | $ 0.44 | $ 0.71 | $ 0.42 | $ 0.29 | $ 0.40 | $ 0.61 | $ 0.35 | $ 1.39 | $ 2.11 | $ 1.66 | |
Diluted (USD per share) | $ 0.07 | $ 0.73 | $ 0.48 | $ 0.22 | $ (0.06) | $ 0.53 | $ 0.43 | $ 0.71 | $ 0.42 | $ 0.29 | $ 0.40 | $ 0.61 | $ 0.35 | $ 1.38 | $ 2.09 | $ 1.65 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - $ / shares shares in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Options' exercise prices, lower limit (USD per share) | $ 48.08 | $ 45.13 | $ 39.42 |
Options' exercise prices, upper limit (USD per share) | $ 78.46 | $ 78.46 | $ 78.46 |
Options to Purchase Common Stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Options to purchase shares of common stock excluded from the computation of diluted earnings per share (shares) | 3.4 | 4.5 | 5.1 |
Restricted Stock Units (RSUs) | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Options to purchase shares of common stock excluded from the computation of diluted earnings per share (shares) | 4.2 | 5.6 | 5.9 |
Related Parties - (Details)
Related Parties - (Details) $ in Millions | 12 Months Ended | |
Jun. 30, 2018USD ($)factory | Jul. 01, 2017USD ($) | |
Suart Weitzman Brand and Former Employee | ||
Related Party Transaction [Line Items] | ||
Payments to related parties | $ | $ 17.1 | $ 27.6 |
Stuart Weitzman | Suart Weitzman Brand and Former Employee | ||
Related Party Transaction [Line Items] | ||
Number of factories invested in | factory | 2 | |
Stuart Weitzman | Stuart Weitzman Brand | ||
Related Party Transaction [Line Items] | ||
Ownership percentage | 50.00% | |
Stuart Weitzman | Former Employee | ||
Related Party Transaction [Line Items] | ||
Ownership percentage | 50.00% |
Supplemental Balance Sheet In95
Supplemental Balance Sheet Information - Components of Certain Balance Sheet Accounts (Details) - USD ($) $ in Millions | Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | Jun. 27, 2015 |
Property and equipment | ||||
Land and building | $ 19 | $ 13.7 | ||
Machinery and equipment | 56 | 34.4 | ||
Software and computer equipment | 409.1 | 310.4 | ||
Furniture and fixtures | 322.5 | 329.6 | ||
Leasehold improvements | 891 | 729.7 | ||
Construction in progress | 142.2 | 71.7 | ||
Less: accumulated depreciation | (954.4) | (798.1) | ||
Total property and equipment, net | 885.4 | 691.4 | ||
Accrued liabilities | ||||
Payroll and employee benefits | 174.3 | 152.7 | ||
Accrued rent | 53.9 | 45.5 | ||
Dividends payable | 97.2 | 95.1 | ||
Operating expenses | 347.8 | 265.9 | ||
Total accrued liabilities | 673.2 | 559.2 | ||
Other liabilities | ||||
Deferred lease obligation | 200.7 | 204.2 | ||
Gross unrecognized tax benefit | 75.3 | 94.1 | $ 138.6 | $ 168.1 |
Other | 191 | 134.8 | ||
Total other liabilities | $ 467 | $ 433.1 |
Headquarters Transactions - (De
Headquarters Transactions - (Details) $ in Millions | Sep. 13, 2017USD ($)ft²$ / ft² | Oct. 01, 2016USD ($)ft² | Jun. 30, 2019USD ($) | Dec. 31, 2016USD ($) | Jun. 30, 2018USD ($) | Jul. 01, 2017USD ($) | Jul. 02, 2016USD ($) | Jun. 29, 2036USD ($) |
Sale Leaseback Transaction [Line Items] | ||||||||
Minimum lease payments | $ 1,050 | |||||||
Minimum lease payments, sale leaseback transactions, remainder of fiscal year | 45.1 | $ 45.1 | ||||||
Minimum lease payments, sale leaseback transactions, thereafter | 825.5 | |||||||
Sale of former headquarters, net of expenses | $ 126 | 0 | $ 126 | $ 0 | ||||
Minimum Lease Payments | ||||||||
Remainder of fiscal year | 45.1 | 45.1 | ||||||
2,019 | 45.1 | |||||||
2,020 | 45.1 | |||||||
2,021 | 45.1 | |||||||
2,022 | $ 45.1 | |||||||
Office Building | ||||||||
Sale Leaseback Transaction [Line Items] | ||||||||
Investment purchase price received | 707 | |||||||
Amount due to developer | 77 | |||||||
Transaction costs | 26 | |||||||
Deferred gain | $ 28.8 | |||||||
Amortization period of deferred gain | 20 years | |||||||
Lease term | 20 years | |||||||
Leased building area (sq ft) | ft² | 694,000 | |||||||
The Guardian Life Insurance Company of America | Office Building | ||||||||
Sale Leaseback Transaction [Line Items] | ||||||||
Leased building area (sq ft) | ft² | 148,813 | |||||||
Tenant improvements expense per rentable area | $ / ft² | 80 | |||||||
Tenant improvements expense | $ 11.9 | |||||||
Tenant reimbursements per rentable area | $ / ft² | 10 | |||||||
Tenant reimbursements | $ 1.5 | |||||||
Scenario, Forecast | The Guardian Life Insurance Company of America | Office Building | ||||||||
Sale Leaseback Transaction [Line Items] | ||||||||
Operating leases, rent expense, sublease rentals per month | $ 0.8 | |||||||
Minimum | Scenario, Forecast | The Guardian Life Insurance Company of America | Office Building | ||||||||
Sale Leaseback Transaction [Line Items] | ||||||||
Operating leases, rent expense, sublease rentals per month | $ 1.1 | |||||||
Maximum | Scenario, Forecast | The Guardian Life Insurance Company of America | Office Building | ||||||||
Sale Leaseback Transaction [Line Items] | ||||||||
Operating leases, rent expense, sublease rentals per month | $ 1.3 |
Schedule II - Valuation and Q97
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | $ 211.8 | $ 196.8 | $ 198.4 |
Additions Charged to Costs and Expenses | 86.3 | 71.6 | 72.9 |
Additions Related to Acquisition | 143.9 | 0 | 0 |
Write-offs/ Allowances Taken | (106.4) | (56.6) | (74.5) |
Balance at End of Year | 335.6 | 211.8 | 196.8 |
Allowance for bad debts | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | 1.9 | 2.2 | 3.1 |
Additions Charged to Costs and Expenses | 1.3 | 1.7 | 3.7 |
Additions Related to Acquisition | 0 | 0 | 0 |
Write-offs/ Allowances Taken | (1.7) | (2) | (4.6) |
Balance at End of Year | 1.5 | 1.9 | 2.2 |
Allowance for returns | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | 4.4 | 6 | 7.5 |
Additions Charged to Costs and Expenses | 12.9 | 10.3 | 11.5 |
Additions Related to Acquisition | 5 | 0 | 0 |
Write-offs/ Allowances Taken | (10.8) | (11.9) | (13) |
Balance at End of Year | 11.5 | 4.4 | 6 |
Allowance for markdowns | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | 9.4 | 15.2 | 18 |
Additions Charged to Costs and Expenses | 51.4 | 36.9 | 54.1 |
Additions Related to Acquisition | 9.1 | 0 | 0 |
Write-offs/ Allowances Taken | (53.2) | (42.7) | (56.9) |
Balance at End of Year | 16.7 | 9.4 | 15.2 |
Valuation allowance | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | 196.1 | 173.4 | 169.8 |
Additions Charged to Costs and Expenses | 20.7 | 22.7 | 3.6 |
Additions Related to Acquisition | 129.8 | 0 | 0 |
Write-offs/ Allowances Taken | (40.7) | 0 | 0 |
Balance at End of Year | $ 305.9 | $ 196.1 | $ 173.4 |
Quarterly Financial Data - Sche
Quarterly Financial Data - Schedule of Quarterly Information (Details) - USD ($) $ / shares in Units, $ in Millions | Jul. 02, 2016 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 30, 2017 | Sep. 30, 2017 | Jul. 01, 2017 | Apr. 01, 2017 | Dec. 31, 2016 | Oct. 01, 2016 | Jul. 02, 2016 | Mar. 26, 2016 | Dec. 26, 2015 | Sep. 26, 2015 | Jun. 30, 2018 | Jul. 01, 2017 | Jul. 02, 2016 |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||||
Net sales | $ 84.4 | $ 1,483.7 | $ 1,322.4 | $ 1,785 | $ 1,288.9 | $ 1,133.8 | $ 995.2 | $ 1,321.7 | $ 1,037.6 | $ 1,154.6 | $ 1,033.1 | $ 1,273.8 | $ 1,030.3 | $ 5,880 | $ 4,488.3 | $ 4,491.8 |
Gross profit | 1,003.2 | 908.9 | 1,177.4 | 764.4 | 754.5 | 705.7 | 906.2 | 714.7 | 782.7 | 713 | 859.1 | 696.5 | 3,853.9 | 3,081.1 | 3,051.3 | |
Net income | $ 211.7 | $ 140.3 | $ 63.2 | $ (17.7) | $ 151.7 | $ 122.2 | $ 199.7 | $ 117.4 | $ 81.5 | $ 112.5 | $ 170.1 | $ 96.4 | $ 397.5 | $ 591 | $ 460.5 | |
Net income per common share: | ||||||||||||||||
Basic (USD per share) | $ 0.74 | $ 0.49 | $ 0.22 | $ (0.06) | $ 0.54 | $ 0.44 | $ 0.71 | $ 0.42 | $ 0.29 | $ 0.40 | $ 0.61 | $ 0.35 | $ 1.39 | $ 2.11 | $ 1.66 | |
Diluted (USD per share) | $ 0.07 | $ 0.73 | $ 0.48 | $ 0.22 | $ (0.06) | $ 0.53 | $ 0.43 | $ 0.71 | $ 0.42 | $ 0.29 | $ 0.40 | $ 0.61 | $ 0.35 | $ 1.38 | $ 2.09 | $ 1.65 |