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CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | 9 Months Ended
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Mar. 31, 2025
Restructuring and Related Activities [Abstract] |
CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES | CHARGES ASSOCIATED WITH RESTRUCTURING AND OTHER ACTIVITIES Restructuring Program Component of the Profit Recovery and Growth Plan As announced on November 1, 2023, the Company launched the Profit Recovery and Growth Plan ("PRGP") to help progressively rebuild its profit margins in fiscal years 2025 and 2026. The PRGP is focused on rebuilding stronger, more sustainable profitability, supporting sales growth acceleration and increasing speed and agility. The plan is designed to improve gross margin, lower the cost base and reduce overhead expenses, while increasing investments in key consumer-facing activities. Upon completion of this plan, the Company expects to have improved its gross margin and expense base to drive greater operating leverage for the future. As a component of the PRGP, on February 5, 2024, the Company announced a two-year restructuring program. The restructuring program’s main focus included the reorganization and rightsizing of certain areas of the Company as well as simplification and acceleration of processes. The Company committed to this course of action on February 1, 2024. In connection with the restructuring program, the Company estimated a net reduction in the range of approximately 1,800 to 3,000 positions globally, which was about 3-5% of its positions including temporary and part-time employees as of June 30, 2023. This reduction took into account the elimination of some positions as well as retraining and redeployment of certain employees in select areas. The Company planned to substantially complete specific initiatives under the restructuring program through fiscal 2026. The Company expected that the restructuring program would result in restructuring and other charges totaling between $500 million and $700 million, before taxes, consisting of employee-related costs, contract terminations, asset write-offs and other costs associated with implementing these initiatives. After reviewing additional potential initiatives and the progress of previously approved initiatives, on February 3, 2025, the Company committed to the expansion of the PRGP, including an expansion of the restructuring program. The expansion of the overall PRGP is focused on three key areas. First, the Company plans to adopt a more competitive approach to procurement, a key pillar of savings, by further consolidating spending and strategically re-evaluating key supplier relationships. Second, the Company plans to further improve efficiencies within its supply chain network through a zero-waste approach, aiming to improve demand forecasting and innovation planning to minimize excess inventory and product destruction. Third, the Company is outsourcing select services to proven global partners. The expanded component of the restructuring program began during the Company’s fiscal 2025 third quarter with all initiatives to be approved by the end of fiscal 2026. Specific initiatives under the expanded component of the restructuring program are expected to be substantially completed by the end of fiscal 2027. The focus of the now expanded restructuring program (now, collectively the “Restructuring Program”) includes (i) reorganization and rightsizing of certain areas and (ii) simplification and acceleration of processes, along with the newly added focus on (i) outsourcing of select services and (ii) evolution of go-to-market footprint and selling models. In connection with the Restructuring Program, the Company now estimates a net reduction in the range of approximately 5,800 to 7,000 positions globally, which is about 9-11% of its positions including temporary and part-time employees as of June 30, 2023. This net reduction takes into account the elimination of positions after retraining and redeployment of certain employees in select areas. The Company now expects that the Restructuring Program will result in restructuring and other charges totaling between $1,200 million and $1,600 million, before taxes, consisting of employee-related costs, contract terminations, asset write-offs and other costs associated with implementing these initiatives, which other than the non-cash charges, are expected to result in future cash expenditures funded from cash provided by operations. Restructuring Program Component of the Profit Recovery and Growth Plan Approvals Cumulative charges for initiatives approved by the Company in connection with the Restructuring Program as of March 31, 2025 and through April 24, 2025 were:
|  | Sales Returns (included in Net Sales) |  | Cost of Sales |  | Operating Expenses |  | Total
(In millions) |  |  |  | Restructuring Charges |  | Other Charges |
Total Charges Approved |  |  |  |  |  |  |  |  |  |
Cumulative charges approved through June 30, 2024 |  | $ | — |  |  | $ | — |  |  | $ | 109 |  |  | $ | 78 |  |  | $ | 187 |
Nine months ended March 31, 2025 |  | 5 |  |  | 10 |  |  | 351 |  |  | 42 |  |  | 408 |
Cumulative charges approved through March 31, 2025 |  | 5 |  |  | 10 |  |  | 460 |  |  | 120 |  |  | 595 |
April 1, 2025 - April 24, 2025 |  | — |  |  | — |  |  | 28 |  |  | — |  |  | 28 |
Cumulative charges approved through April 24, 2025 |  | $ | 5 |  |  | $ | 10 |  |  | $ | 488 |  |  | $ | 120 |  |  | $ | 623 |
Included in the above table, cumulative restructuring charges for initiatives approved by the Company in connection with the Restructuring Program as of March 31, 2025 and through April 24, 2025 were:
(In millions) |  | Employee- Related Costs |  | Asset- Related Costs |  | Contract Terminations |  | Other Exit Costs |  | Total
Restructuring Charges Approved |  |  |  |  |  |  |  |  |  |
Cumulative charges approved through June 30, 2024 |  | $ | 93 |  |  | $ | 7 |  |  | $ | — |  |  | $ | 9 |  |  | $ | 109 |
Nine months ended March 31, 2025 |  | 330 |  |  | 6 |  |  | 3 |  |  | 12 |  |  | 351 |
Cumulative charges approved through March 31, 2025 |  | 423 |  |  | 13 |  |  | 3 |  |  | 21 |  |  | 460 |
April 1, 2025 - April 24, 2025 |  | 26 |  |  | — |  |  | — |  |  | 2 |  |  | 28 |
Cumulative charges approved through April 24, 2025 |  | $ | 449 |  |  | $ | 13 |  |  | $ | 3 |  |  | $ | 23 |  |  | $ | 488 |
Specific actions taken since the Restructuring Program inception to drive future sales growth and productivity to rebuild gross and operating margin profitability include: •Value Chain Optimization – The Company approved initiatives to reduce spans and layers and right-size organizational capability within its supply chain and research and development functions. These actions will primarily result in employee severance through a net reduction in workforce, as well as costs to decommission and relocate activities, and asset write-offs. •Enabling Function Re-Invention – The Company approved initiatives to reorganize and right-size various corporate functions. These activities will primarily result in employee severance through a net reduction in workforce. •Future of Brand-led Model – The Company approved initiatives to redesign spans and layers in its marketing and creative organization to make it leaner, faster, and more agile. These activities will primarily result in employee severance through a net reduction in workforce. •Go-to-Market Operating Model Acceleration – The Company approved initiatives to optimize and right-size the organizational structure within its geographic regions to drive greater efficiency and effectiveness, as well as exit unprofitable brands from specific markets and distribution channels. These activities will result in employee severance through a net reduction in workforce, inventory write-offs, as well as costs associated with sales returns. •Digital Organization Transformation – The Company approved initiatives to begin to reorganize and right-size its technology functions, which support its internal enterprise and commercial capabilities, to create a leaner, faster, more effective and more agile technology organization. These activities will primarily result in employee severance through a net reduction in workforce. Once the relevant accounting criteria have been met, the Company expects to record restructuring and other charges of approximately $623 million (before tax) in connection with these initiatives, which other than the non-cash charges, are expected to result in future cash expenditures funded from cash provided by operations. Restructuring Program Restructuring and Other Charges The Company classifies restructuring charges as follows: Employee-Related Costs – Employee-related costs are primarily comprised of severance and other post-employment benefit costs, calculated based on salary levels, prior service and other statutory minimum benefits, if applicable. Asset-Related Costs – Asset-related costs primarily consist of asset write-offs or accelerated depreciation related to long-lived assets (including rights associated with commercial operating leases and operating lease right-of-use assets) that will be taken out of service prior to their existing useful life as a direct result of a restructuring initiative. Contract Terminations – Costs related to contract terminations include continuing payments to a third party after the Company has ceased benefiting from the rights conveyed in the contract, or a payment made to terminate a contract prior to its expiration. Other Exit Costs – Other exit costs related to restructuring activities generally include costs to relocate facilities or employees, recruiting to fill positions as a result of relocation of operations, and outplacement for separated employees. The Company classifies other charges associated with restructuring activities as follows: Sales Returns and Cost of Sales – Product returns (offset by the related cost of sales) and inventory write-offs or write-downs as a direct result of an approved restructuring initiative to exit certain businesses or locations will be recorded as a component of Net sales and/or Cost of sales when estimable and reasonably assured. Other Charges – Other charges related to the design and implementation of approved initiatives, which are charged to Operating expenses as incurred and primarily include the following: •Consulting and other professional services for organizational design of the future structures and processes as well as the implementation thereof; •Temporary labor backfill; •Costs to establish and maintain a Project Management Office for the duration of the Restructuring Program, including internal costs for employees dedicated solely to project management activities, and consulting services to assist with business case development; and •Recruitment and training costs for new and reskilled employees to acquire and apply the capabilities needed to perform responsibilities as a direct result of an approved restructuring initiative. The Company records approved charges associated with restructuring and other activities once the relevant accounting criteria have been met. Total cumulative charges recorded associated with restructuring and other activities for the Restructuring Program were:
|  | Sales Returns (included in Net Sales) |  | Cost of Sales |  | Operating Expenses |  | Total
(In millions) |  |  |  | Restructuring Charges |  | Other Charges |
Total Cumulative Charges |  |  |  |  |  |  |  |  |  |
Cumulative charges through June 30, 2024 |  | $ | — |  |  | $ | — |  |  | $ | 92 |  |  | $ | 23 |  |  | $ | 115 |
Six months ended December 31, 2024 |  | — |  |  | 9 |  |  | 256 |  |  | 23 |  |  | 288 |
Three months ended March 31, 2025 |  | — |  |  | — |  |  | 81 |  |  | 14 |  |  | 95 |
Cumulative charges through March 31, 2025 |  | $ | — |  |  | $ | 9 |  |  | $ | 429 |  |  | $ | 60 |  |  | $ | 498 |
(In millions) |  | Employee- Related Costs |  | Asset- Related Costs |  | Contract Terminations |  | Other Exit Costs |  | Total
Restructuring Charges |  |  |  |  |  |  |  |  |  |
Cumulative charges through June 30, 2024 |  | $ | 90 |  |  | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 92 |
Six months ended December 31, 2024 |  | 247 |  |  | 7 |  |  | — |  |  | 2 |  |  | 256 |
Three months ended March 31, 2025 |  | 78 |  |  | — |  |  | 3 |  |  | — |  |  | 81 |
Cumulative charges through March 31, 2025 |  | $ | 415 |  |  | $ | 9 |  |  | $ | 3 |  |  | $ | 2 |  |  | $ | 429 |
For the three and nine months ended March 31, 2024, charges recorded associated with restructuring and other activities for the Restructuring Program were $17 million. Changes in accrued restructuring charges from the Restructuring Program for the nine months ended March 31, 2025 were:
(In millions) |  | Employee- Related Costs |  | Asset- Related Costs |  | Contract Terminations |  | Other Exit Costs |  | Total
Balance at June 30, 2024 |  | $ | 88 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 88 |
Charges |  | 325 |  |  | 7 |  |  | 3 |  |  | 2 |  |  | 337 |
Cash payments |  | (70) |  |  | — |  |  | — |  |  | (2) |  |  | (72) |
Non-cash asset write-offs |  | — |  |  | (7) |  |  | — |  |  | — |  |  | (7) |
Translation and other adjustments |  | (8) |  |  | — |  |  | — |  |  | — |  |  | (8) |
Balance at March 31, 2025 |  | $ | 335 |  |  | $ | — |  |  | $ | 3 |  |  | $ | — |  |  | $ | 338 |
Accrued restructuring charges at March 31, 2025 relating to the Restructuring Program are expected to result in cash expenditures funded from cash provided by operations of approximately $122 million, $150 million, $61 million and $5 million for the remainder of fiscal 2025 and for fiscal 2026, 2027 and 2028, respectively. Charges associated with restructuring and other activities are not allocated to the Company's product categories or geographic regions because they are centrally directed and controlled, are not included in internal measures of product category or geographic region performance and result from activities that are deemed Company-wide initiatives to redesign, resize and reorganize select areas of the business. Post-COVID Business Acceleration Program The Company approved specific initiatives under the Post-COVID Business Acceleration Program (the “PCBA Program”) through fiscal 2022 and has substantially completed those initiatives. Additional information about the PCBA Program is included in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 5.P.4.e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479823/420-10-S99-2 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/420/tableOfContent Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 420 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482017/420-10-50-1 + Details
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