Bloomberg Talks
00:00:02 · Romaine Bostick, Kailey Leinz, Kailey Leinz, Joanne Crevoiserat
[00:00:02] S0: Bloomberg Audio Studios. Podcasts. Radio. [00:00:06] S1: News. [00:00:07] S2: One of the bright spots, though, today, as we stick with the consumer, is actually Tapestry. Those shares up about 6%. On the back of that, company's most recent earnings report, a beat. And a boost to the guidance. Joining us right now to talk a little bit more about this is the CEO, Joanne Crevoiserat, who said on the earnings call that while U.S. consumers are discerning, she sees a constructive backdrop heading into the holiday season. [00:00:30] S0: Joanne, great to see you again. [00:00:32] S3: Great to see you. [00:00:33] S0: Thanks. [00:00:33] S3: Great to be here. [00:00:34] S2: I know we've talked a lot about the momentum that we continue to see in tapestry, particularly with the Coach brand. [00:00:39] S0: But give me a sense here. [00:00:41] S2: You had enough confidence to raise your forecast at a time where a lot of people are talking about the state of the economy. A lot of people are talking about not just whether people have the money to spend, but whether they're willing to spend it. [00:00:51] S0: What gave you the confidence to raise your guidance?
00:00:51 · Romaine Bostick, Joanne Crevoiserat, Kailey Leinz
[00:00:51] S0: What gave you the confidence to raise your guidance? [00:00:53] S3: Well, you know, we just came off a quarter, Romaine, that we beat expectations. A really, I would say, another strong quarter. It shows the compounding growth we're able to deliver going really from strength to strength. We came off of a very strong year last year. And what we see in our business is it's strong around the world. It's strong in North America, which is our biggest region, and we're winning there. We're winning in Asia with China as our anchor there. [00:01:20] S0: We're winning in Europe. [00:01:21] S3: We're really seeing broad-based gains. And so that's what gave us the confidence to raise our outlook for the year. And I think more important than what we delivered last quarter is how we're delivering it and the capabilities we're building to deliver this durable growth. [00:01:37] S2: Well, give me a sense here as to how you're actually delivering that. So when we talk about the potential increase in revenue, is that because people are buying more goods from tapestry or is it a function more of pricing?
00:01:37 · Kailey Leinz, Joanne Crevoiserat
[00:01:37] S2: Well, give me a sense here as to how you're actually delivering that. So when we talk about the potential increase in revenue, is that because people are buying more goods from tapestry or is it a function more of pricing? [00:01:51] S3: Well, it's all part of the equation. But as we've talked about on the show before, our anchor point is really it starts with the consumer. And we work to understand the consumer at a very deep level. And as we get to know our target consumer, we gain insights that are deep insights and are able to turn those insights into action and impact in our business. And that's where we bring the magic, right? It starts with knowing them deeply and then bringing the magic and product and product innovation, quality and craftsmanship that all matter as part of the value equation along with our price positioning. And we're bringing it to our storytelling through our marketing. We're investing in more marketing and to the experiences we're delivering, including our coffee shops that we're delivering around the world, to have really immersive experiences that our customers can relate to. And that all is part of the value perception that they have. And our value perception and the value delivery we're delivering in the market globally, I think, is unparalleled. That value proposition is stronger than it's ever been, and that's winning with consumers.
00:01:51 · Joanne Crevoiserat, Kailey Leinz
[00:01:51] S3: Well, it's all part of the equation. But as we've talked about on the show before, our anchor point is really it starts with the consumer. And we work to understand the consumer at a very deep level. And as we get to know our target consumer, we gain insights that are deep insights and are able to turn those insights into action and impact in our business. And that's where we bring the magic, right? It starts with knowing them deeply and then bringing the magic and product and product innovation, quality and craftsmanship that all matter as part of the value equation along with our price positioning. And we're bringing it to our storytelling through our marketing. We're investing in more marketing and to the experiences we're delivering, including our coffee shops that we're delivering around the world, to have really immersive experiences that our customers can relate to. And that all is part of the value perception that they have. And our value perception and the value delivery we're delivering in the market globally, I think, is unparalleled. That value proposition is stronger than it's ever been, and that's winning with consumers. [00:02:54] S1: Well, so talk about Chinese consumers specifically. What's different about those consumers that you're targeting, given the strength, as you've alluded to a few times now, that you're seeing in that business in particular, in that region?
00:03:05 · Joanne Crevoiserat
[00:03:05] S3: Well, as I said, we're anchored on the consumer and our target consumer. And our target consumer is a young consumer. We're targeting a Gen Z consumer because that is the consumer who is maybe entering the category for the first time. And it's a place that we've played authentically for many years. Coach and Kate Spade, we hear stories all the time. I remember when I bought my first Coach handbag or my first Kate Spade handbag. So it's an area that we can play authentically and we like engaging consumers at point of market entry. There's a need. These are consumers who may be leaving their backpacks at home and wanting to buy a handbag for the first time, explore a luxury handbag. And our work is to earn the right to be that first luxury handbag. And in China, what we're seeing is we get to know these young consumers at a deeper level. Our teams are translating our value proposition in a very authentic, incredible way that resonates with the local consumer on the ground. That's building capabilities in marketing, making sure we're delivering the right innovation and product and the experiences I've talked about. I was in Shenzhen just a few weeks ago at our new Coach Play store that we opened there. There's so much energy around that store and that store location and this is a place where the young consumers responding, and they're gravitating. They love the community feel of those stores and the way they can engage with our associates in those stores. And it's helping us win and attract more customers, not only to our brands, but into the category. So we're growing the category while we're growing our share.
00:04:35 · Kailey Leinz, Joanne Crevoiserat, Romaine Bostick
[00:04:35] S2: I am curious, though, with those particular customers in China, the younger customers, are they coming to Coach because of, I guess, at the expense of some of the European luxury handbag and apparel makers, or are these people... sort of new entrance into this sort of luxury or luxury light space? [00:04:52] S3: Well, we're not relying on customers to trade from another brand, particularly from the top of the market down. These are customers who are mostly entering the category for the first time. And we make sure we protect the value proposition for those customers to be able to, you know, at our value proposition, we appeal to a broad range of consumers that are consumers that the top end of the market can't reach, right? So our value proposition is really important to us, and we're quite thoughtful about how we build product and experiences to ensure that we hit the sweet spot. Todd likes to talk about, Todd Conner, our coach CEO, talks about this $ 200 to $ 500 sweet spot. That sweet spot to deliver an incredible luxury handbag, right? Genuine leather, crafted to last, reflecting new trend. I was at our Dongguan Center in China just a few weeks ago as well, watching our design teams work with real intention around hitting that value equation that our customer responds to. [00:05:52] S0: Is that strategy, and let's just bring this back to the U.S. [00:05:54] S2: Though, particularly with the pricing strategy and obviously going after Gen Z, and I saw your numbers are pretty good, the acquisition levels. [00:06:01] S0: I think for Cotra, likely 40%.