Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: What drove Coach's success this quarter, and is it sustainable? Also, how are you thinking about Kate Spade going forward? A: Joanne Crevoiserat, CEO, emphasized the power of Tapestry's organic growth and brand-building strategies, which are sustainable. Todd Kahn, CEO and Brand President of Coach, highlighted four key pillars: a changed culture fostering creativity, deep consumer insights, focus on Gen Z customer acquisition, and emphasis on handbags and leather goods. For Kate Spade, the focus is on execution and investment to drive long-term growth, with a new CEO and strategies to streamline offerings and reduce promotional activity.
Q: Can you provide more details on Coach's growth, specifically the contribution of the New York family and Tabby? What are the core drivers of potential margin expansion? A: Todd Kahn noted that no single platform, including Tabby and the New York family, accounts for more than 10% of sales, indicating room for growth. Scott Roe, CFO and COO, emphasized the focus on gross margin and operating margin expansion, driven by AUR growth, cost management, and effective marketing.
Q: Who is the target market for Kate Spade, and how is AUR growth being achieved at Coach? A: Joanne Crevoiserat stated that Kate Spade is focusing on building relevancy with younger consumers, reducing style counts, and decreasing promotional activity. Todd Kahn explained that Coach's AUR growth is driven by offering compelling products with strong value and values, focusing on fewer, deeper product stories to avoid markdown cycles.
Q: Can you elaborate on new customer acquisition trends in North America and Greater China for Coach? A: Joanne Crevoiserat highlighted that Coach is acquiring more customers, particularly Gen Z and millennials, who transact at higher AURs and with greater frequency. The focus is on understanding the target consumer and delivering relevant products and experiences.
Q: How do you balance the success of new handbag franchises with ensuring a full pipeline of new products? A: Todd Kahn explained that Coach focuses on innovating within existing platforms like Tabby and the New York family, allowing for continuous product evolution and maintaining consumer interest without exiting successful lines prematurely.
Q: What is driving the momentum in China, and how is the brick-and-mortar strategy evolving there? A: Joanne Crevoiserat noted that Greater China returned to growth, driven by strong brand positioning, innovation, and increased marketing investments. Todd Kahn emphasized the long-term opportunity in China, with plans for distribution growth and targeting the emerging middle class.
Q: Is there a point where Coach's growth will translate to unit growth, and how should we think about SG&A priorities if revenue upside continues? A: Joanne Crevoiserat stated that Coach sees opportunities for both AUR and unit growth through market expansion and category growth. Scott Roe mentioned that while there will be flow-through, investments will be made prudently where opportunities arise, balancing short-term gains with long-term growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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