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TPR Tapestry

Participants
Christina Colone Vice President of Investor Relations
Joanne Crevoiserat President and Chief Executive Officer
Andrea Resnick Interim Chief Financial Officer
Todd Kahn Chief Executive Officer and Brand President of Coach
Robert Drbul Guggenheim Securities
Erinn Murphy Piper Sandler
Oliver Chen Cowen and Company
Matthew Boss JPMorgan Chase
Mark Altschwager Robert W. Baird
Lorraine Hutchinson BofA Securities
Michael Binetti Crédit Suisse AG
Call transcript
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Operator

Good day, and welcome to this Tapestry conference call. Today’s call is being recorded. [Operator Instructions] At this time, for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations at Tapestry, Christina Colone.

Christina Colone

Good morning. Thank you for joining us. Resnick, discuss and quarter Tapestry’s outlook Officer; Andrea to as as Chief today Financial and strategies Chief our are Shaw me our results third well Executive Officer. With Interim Tapestry’s Joanne Crevoiserat,

current Before fiscal includes conference will we business projections the of for involve this Litigation year. Securities the within call the statements our begin, Private point or forward-looking Reform that or must meaning we future out quarters certain Act. in This

risks and our those we guarantees, Form results may results in important Forward-looking our today forward-looking and could impact other filings from not statements our performance. included presentation and press that slides. refer issued on actual other for differ materially the with and our annual expressed the and of Exchange release factors future Securities financial in our are morning, XX-K, comments the report Commission in implied measures Non-GAAP and or are this to statements. Please our list a complete

You not of as to reconciliations well and we FY earnings today. year, XXXX, started last believe of COVID-XX FY pre-pandemic, or may as financial both the XXXX, and be onset pandemic information and www.tapestry.com/investors the the where as business financial viewing release then we providing Separately, information GAAP our year-over-year website, fully related presentation on have the comparisons will we Therefore, posted are the indicative performance. compared anniversary to corresponding find the applicable.

third our She we of provide Tapestry each Andrea priorities progress topics and our overview have Now of with financial conference continue with brief call. program. for let this results the made our Joanne in for the begin and brands. a an will will on me our forward. going the will acceleration recap of also speakers outline quarter

conclude with After will where CEO. Crevoiserat, will to brief Tapestry’s by it like Joanne and CEO I would will of that, President Coach. session we question-and-answer remarks. a Q&A, be now Brand Following we joined turn hold to Joanne Kahn, Todd over closing

Joanne Crevoiserat

you, morning. welcome, and everyone. Good Thank Christina,

press you As expectations, read of program power reported the reflecting brands. execution quarter, and Tapestry our which release, again in acceleration a outpaced the our once successful standout

the focus Spade at Weitzman, sequential of consumer meaningful improvement acquisition in quarter was Coach, robust to on overall trends. in increases two China, new Kate a digital sharpened contributing and Revenue the opportunity. fueled customer in Stuart top by line led Our and growth continued long-term areas

the we prior reduction AUR and activity operating year third addition, compared XXXX, fiscal In expense management. quarter, to supported pre-pandemic year and achieved by to disciplined well consecutive as and income for gains, a as higher both EPS promotional in

the strength us We generated challenging to enabled emerge navigate a in also stronger positioning Their and around flexibility. deliver free a pandemic momentum sustainable This while resilience to recent have and our our is Tapestry to world. demonstrating backdrop talented from on effectively our and to teams and flow build customers, the for agility growth. our quarter, creativity, significant cash drive financial testament performance the

have role our win we a who changes was together, will of continue now know excited as important company. to to perspectives unique we exceptional a Resnick Kahn, leader leading Coach we which Officer, Todd with and assume are recent and Communications and of discussion knowledge as stewardship done results. position brought dynamic team acceleration with has to brand company and deep to our combines balance tremendous our retail pillars, a executed environment. on leadership that I proven a delivering a to strategic has fresh Tapestry the Coach turning that consumer who she’ll appointed of in want contributions program announced ensured CEO, is make and where the our on as interim Before Chief Andrea we the she I’m new CFO, that delighted touch we we weeks. capabilities commercial job in successfully

investment credibility such, Colone, Relations. been community has of As experience the has Head Investor promoted with Christina to Global who tremendous and

in as Scott Finally, Strategy. as have confident this experience strong I’m fully enhance highly well right to further platforms, Head we shared developing financial strategic Roe empowered to a extensive as join teams. in potential retail thrilled around us across to for strategy global Tapestry’s passion purpose-led in our partner and now Officer Financial I’m brands his Chief deep apparel business with businesses, the as is place, expertise galvanized organization he building consumer, are best-in-class June leadership and his our With as With and commitment collaborative realized performance. multi-brand team and our growth of well inclusive

I important have discuss third progress Now will advancing during made acceleration program we the quarter. our the

billion immersive experiences size to driving to First, than $X.X create social across our our more a in ago. customer basis, XX-month a on doubling we revenue business continue trailing over e-commerce year global digital in from and channels,

total This customers. XX% to we brands led also to Z During generated our e-commerce to customers, recruitment of and successfully the we customers millennial we number not a by revenue purchase channels Gen growth digital prior growth, we across XXX,XXX frequency bringing did America, was the quarter, growing higher capture in continuing through a a North And brands. percentage new triple-digit where mid-teens approximately versus compared new of as only year sales drove recruit are of across e-commerce approximately last year.

omnichannel platform particularly strengthening is are opportunity growth our utilize advantage enabler and supporting we profit competitive term, scalable campaigns. both is marketing Digital a digital also that across positioning brands accretive long gains, This portfolio. operating done to Tapestry and excited We key us the for the by to data Overall, targeted have a digital to work while building. our given growth the the our and revenue to margin. business better unique the support customers lapsed crystallize platform we incredibly we remain more continued reflects our reactivate of to

sharpen significant the led both on ongoing consumer to to focus Chinese our in efforts and our growth as China Second, pre-pandemic compared year prior to levels.

pressure Mainland spend globally brand-building from experiences. in with pre-pandemic compared at of the integrated, more rate from to benefited strength which comprehensive drove the levels. increasing consumers continued tourist single-digit offset China than results results products, These and a sales-to-Chinese our strategies, high Chinese fact, our marketing lower innovative In

inventory the In processes, margin quarter, we SKU of we expansion business. of driving and we and Third, resource of is increase This data responsiveness. allowing significant changing to global A and informed is platform of our further environment agility changes to continue in culture, creating embedding that our the to our decision-making. SKU, levels messaging more operating to per AUR, to shared We Overall, the brand flexibility robust move leverage productivity our a key fleet. model way to gross strengthening our to assortment Fourth, are to ultimately driving and to these preferences specifically enhanced in in of the efficiencies deepen respond we and brands, to work in leverage utilized across the test-and-learn more capabilities we our powering helped understanding the behaviors. across each effective demand. and to consumer supporting higher promotional dynamic supporting teams element use resulting which the the turn our pricing XX% quickly drive higher clearer organization, activity. lower and consumer. a optimization optimized strategy in counts our customer operational affect And our analytics decisions, by reduction empowers we XX% a to preferences providing enhanced drive through data of planning, shift the drive data believe

As our is know, store focus our improve profitability to you across network.

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have changes Importantly, foundational. we made the are

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our high-growth continue to also including will our opportunities. into investments advantages, to We diversified and direct-to-consumer competitive distort lean globally model

I position With differentiated detailed of turn capture higher market a for levels it consumer-centric confident scalable us We clear platform to uniquely financial will Andrea. share to are that, discussion Andrea our powerful and profitability. strategy, that results of brands over at outlook. and our

Andrea Resnick

and everyone. morning, good Joanne, Thanks,

non-GAAP Before on I are my our website earnings the results. begin, the be found can comments GAAP and on today. Corresponding results please keep release based related posted in reconciliation mind that in

our in Joanne as backdrop. and FY As mentioned, XXXX, the growth the performance XXXX third despite sales of we was sequential XXXX income year expectations prior ahead the the of both operating our increased improvement and drove quarter. prior representing from our Compared Total to projections. a year-to-date well-outpaced quarter ahead and well levels volatile FY XX% FY revenue declined X%, from

pleased a in of we quarter. were Importantly, accelerated drove trends Coach’s quarter e-commerce pre-pandemic improvement X-year region, on the By across returned basis prior to and channels. as wholesale with levels to sales America stores, the compared the North

recover, given the consumer pressure the In during bricks-and-mortar sales continued, experienced government notable in while prior to In and XXXX, trend channel, of accordance to China. digital store in our the in line significant another the improvement compared XXXX of trends material want a growth below the pressures Asia, Europe, the portion Greater traffic a the revenue FY duty-free enable and the which XXXX, the was while XXXX province. in increase lean to platform in significant by in reflecting, traffic we while slowdown of FY in part, total FY improved, by started channel, the lockdowns wherever dissemination China’s fueled sales they continued region into and channel FY Hainan to as the meet increased below despite our vaccine. our In the regulations. as us remained balance approximately driven pleased In with given achieved XX% the with year by Across addition, the of compared to shop. declaration quarter with prior in sales to sales levels Asia, wholesale, a pressures. pre-pandemic triple-digit small capabilities, business significant gains aided in By line direct our continue in emergency with opportunity e-commerce year Japan quarter. global performance build to with of remain of levels were business were we growth state of

confident April, into continued the Joanne momentum consumer increasingly business as the trajectory our are improves. Importantly, we in and of backdrop mentioned, our as

drove XXXX North strategic compared AUR. the basis At in last Kate of a margin brands rose XXX points the the XXX we gross realized quarter Spade, as margin pullback points expectations. gross analytics price higher we our activity FY from promotion in gross to sales which lower Moving lower-margin margin to to Tapestry’s included in marketing XXX our margin compared rose down year-over-year strong and America. prior realizing third points, benefit disposition the data successfully along increase the expansion assortment with levels and exceeding to quarter, promotional our strategy basis total reduce messaging of leverage driven IMUs, Coach executed discipline, maintain basis with P&L, counts another resulting consumer. company SKU gross all above to points XXX in lower year, tailor year higher by product levels and basis margin and of

expense management year-to-date. increase changes in business, accrual were the company’s these actions notably and and was an our our as reflecting outperformance transform due compared X% operating benefit the previously from business. incentive in savings margin geographic SG&A year-over-year expense announced declined to the to reinvestments plan gross growth FX The strong to China and marketing higher offset from tailwind high-margin brand’s XXX the by effective given in mix as reflecting Weitzman, model. the annual Stuart a partially FY basis well spend the structural a X% For XXXX, points, primarily

compared delivered pre-pandemic in to the Taken the the together, margin income of third levels we and consecutive quarter of growth face challenging backdrop. operating expansion

year-to-date and both gross of increases we strategies as part in quarter highlighted efficiency-led reflect SG&A. by and third in reductions profit have the and in foundational acceleration made outperformance growth through Our the program our margin changes

significant across we prior quarter of fuel per brands compared levels. increase believe the a fully for sustainable Earnings growth. forward, the continued a of the gains, our long-term diluted Looking flywheel pre-pandemic we positioned to and momentum ahead XX% transition year share was unlocking are in to well a EPS loss the and demand-driven of $X.XX, to can company period

Now moving to distribution.

fleet to continue to global our We optimize profitability. prioritize

For locations XX closed year. net net as net the including year-to-date, Tapestry, alone, in a a QX closures representing we compared prior XX globally of to XX of closures

to Turning sheet free on our We $XXX and quarter revolver $X.X $X.X our previously balance we million and priorities at the the a turns. Therefore, reflecting, our near-term Total our time, balance pay beginning the the with prioritize strong are cash our our Consistent flows. below inventory billion of our count as cash in cash in position quarter. total and flow any shared, with actions remaining to to below sales inventory and equivalents utilized to this XX% billion. quarter of revolver. and at in discussion down stated borrowings ended borrowings outperformance was longer SKU year, deliberate the there IMU quarter, balance Due part, our last outstanding under expectations. of ended inventory in reduce no the the

constraints like As congestion COVID-XX, disruption globally. are capacity distribution causing discussed, previously port network to some we shipping all many and continuing others experiencing across related industries,

ability the West will lead quarter a result, higher impact for of receipts it levels results. notably in modest of blockage going turn, Suez should which, experiencing coming to through As may longer Separately, timing times, have in and on reported demand ports our a we limit Coast our materialize. are delayed forward fourth product Canal have chase widely the

environment. costs to addition, expect In to higher the incur to continue due freight we

CapEx same on versus of year a FY of year-to-date capital timing of based million, million year XXXX factors and the $XX as million outlay XXXX. a high-return will CapEx an projects. our spend of was the to inflow of was which our XX% flow be projects, $XXX have actualization million cash for basis, prioritize decline new in $XXX notably On favorable the a while was contemplated quarter year-to-date the an for last million year. area an our the I million, tightly $XXX in inflow and and $XXX of to free $XXX for as $XXX quarter in flow now compared million been FY in these year-to-date Free for cash period overall investments in ago, controlling prior during digital, We outflow stores. shortly. address Importantly, to we continue reducing expect versus outlook,

resilience strong the management flow and underscores of generation our brands Our cash business. effective and

capital our touching on Now priorities. allocation

the as to down the we business. term, noted, us on of January. flow Longer term, our the continue objectives will resulting our to of cash generation positioned free revolver cash In unchanged. business reinvesting while in strength remain our near pay hand our As and preserve

well return return strong sustainable Our bottom capital continued pay growth strategic cash is to debt flow intent as and enable to which line generation, shareholders. will top free down us as to to driving

Now to outlook. turning our

for This fourth the year. FY the to thereby levels fiscal fiscal sales as expectation basis. rate of a year-to-date approaching includes quarter XXX% noted prior our revenue the a XXXX mid-teens year, our and and now release, for basis the in both given revenue to we the project to XX-week a area assuming of performance As on from compared strong continuation increase recovery XX-week pandemic, the of increase in on XX-week to

the impact sales. mentioned, quarter As $XXX which fourth include to will also in an million of incremental projected is approximately contribute week, additional the previously

gross Turning to margin.

expansion $XXX we the savings said, headwinds implies comparison expectations, the that atypical the expect SG&A, with approximately continue This $XXX gross gross to to expense cancellation incentive XX-week on as higher marketing basis we impact structural as result the annual including lapping continue we run taken that a higher from net rate we associated aggressively COVID-XX. of control benefit to substantially implement spending to incremental with forecast gross due gross XXXX, moderate XX% reflects the Consistent savings, levels. and realize which expect to promotional we million well to as Touching in our included our variable notably investments plan. reflecting versus XXXX above approximately anniversary a we margin in in That year compared ago will year, higher of of level of meaningfully to the company’s costs margin on alone. FY Keep sales quarter as are over would be fourth to and QX, steps given changes full the levels activity estimate this in pre-pandemic in anticipate to million year have will we geographic actions for significant drive the reflecting original FY prior increase increased deliberate projecting pressure to AUR. We due SG&A a efficiency. drive our and savings lower our In depressed COVID-XX, be from investments, lower. forecast, mix expense mind, the

outlook despite are improving and benefits our results XX-week for more confidence year-to-date by to This gains. backdrop today. demonstrating our business basis. and outperformance as well levels the our in are environment, we our Taken the the achieved balance strength been as year year, pre-pandemic in the the our as iconic seeing of the Throughout have volatile our deliberate results this consumer traction taking we as EPS given a as well brands of acceleration the proud the are on together, favorable acceleration expecting bold a we of closing, actions In now we have driven of program, reflects of the ongoing efficiency-led we exceed part program. are

As corner pandemic, flywheel we bottom we turn line gains an the the in planning look to have opportunity over the horizon. line recovery top to of from and unlock excess drive fully our growth towards

open would this and will up Q&A. are fiscal that to foundational in have to We remain it we term, our intent both profitability. made our and changes you. Thank the the growth during over benefit drive we platform confident now like for organic strategic year I steadfast long

Operator

[Operator Bob from Our the Guggenheim first of line Drbul of question comes Instructions] Securities.

Robert Drbul

questions. of a couple Just got

are recovery. you digital trends of You on that And how’s you your of then, give increased a improving. mentioned backdrop What related the a the generally? seeing business the signs cannibalization? point, Are that signs any are confidence seeing in-store performing does now traffic you in

Joanne Crevoiserat

will Yes. A question. there cover points of your in couple I

our confidence. advantage. competitive platform. confidence in it how see a We have then around see we as digital is Tapestry on our the with First confidence, I we evolving. business our starting But in touch increasing see will backdrop what also and we

in also confidence the potential are talented program, acceleration globe. the gaining teams in We the the from that power see of including our our around we and execution the brands

volatile Our to building backdrop, the continue for foundation long-term confidence our a growth. and definitely results in sustainable deliver, despite teams have our the strategy are year-to-date we increased

ways, consumer, operating and We backdrop we we and are But have digital the are seeing getting data model. better improve. closer into also a remaining the streamlined to leveraging in

in We your progressing, are confidence, seeing encouraging signs vaccination to our for of resulting recovery, think seen have trends. increasing and And question demand improving strong I that consumer in-store traffic categories efforts we increasing we what approach our trends? our with to the do digital want shop. of in digital meeting business is And consumers see they question the laser-focused to those being begs really on where

our and experiences on with success, not we and, is see an or. digital are as We focused an contributing to qualifier. that the stores important an Digital, and omnichannel

new to strength business, begin acquiring these are the through are as even reopen and begins to our we We stores seeing levels. historic channels. And to younger back traffic customers ongoing digital build of

have We triple-digit trends. improvement another sequential driving also of growth, seen quarter store while in

are back. with color you to we back let we Coach. bit performance But what to starting can - are of see come specifically at say, talk starting So come a that encouraged Todd, we give me should traffic little by on seeing as he I

Todd Kahn

runway mentioned, is to Joanne we our significant productivity seeing continued while been our brick-and-mortar growth realize improving. have As

to growth. we see new we see and fueled fact by even continue is customer restrictions Specifically strong recruitment our improving has U.S., strong traffic. the incredibly supported in as This the digital brick-and-mortar demand our online, that

as of significant another an number the to being new see these we lifted. the Gen lifted, trends fact, to bringing store million in customers channels half approximately while, the trends, millennial. as sales In acceleration customers e-commerce in restrictions and quarter, I Joanne million, our XXX,XXX restrictions and example, two at encouraging, new is same North our being And platforms, Z then year-to-date added digital traffic we when take really in America. from two And while are I return remain from Texas time, these brick-and-mortar, those if what our we of mentioned, And are demand a experienced strong. the

So for we a this to traffic bodes North brick-and-mortar. return as America future well see our in really

Operator

line the from of Fargo. comes of [indiscernible] question next Wells Our

Unidentified Analyst

great being operating you Congrats my was and the accretive guess, on on to in for margin, another about talked sign I Joanne, which digital business. pretty great e-commerce. quarter. is the question profitability unique a

to And margin digital rates ultimately As and what Spade both mean that over businesses structure you increase, Kate see for Coach continues moving? the does then, where of do the penetration time?

Joanne Crevoiserat

see do Ike. the margins to Yes. being our business Thanks question, for digital operating the We accretive currently.

high It structurally than function AURs, that of it respective really in profitable. profitable more returns a channels. have quite low is structurally fact and Our digital business their higher we relatively bricks-and-mortar that And the is channel. margins is

also customers So Todd through is that through digital for, higher I And margins as new engaging think our performance. it channels. and mention consistently important new said, deliver we our to digital customers recruiting

of So makes the the terms accretive going, decide. channel that we penetration ultimately, well. as the And in see will where customer

unfolds. channels focused customers capturing margins example, we really ability well with terms staying consumers, and they TikTok, innovating on I business, very that, close said seeing to on an customer also, quite where today. to operating to to the And where our are the of have quarter quarter. committed of are digitally achieve We think and pre-pandemic social in pleased as Having they been our both are. meeting business levels customer real brick-and-mortar engage innovations our see brick-and-mortar this are the And exceed are - we levels that this how pre-pandemic we on

gains business, also bodes seen. that gross improve. also the that expect we And traffic for really So numbers we builds as well will by our have back, driven margin that those

we brick-and-mortar as focused on of as and digital our terms decide the driving in customer will see channel we So Ultimately, are it profitability well. penetration. improved accretive lands where in

Operator

of Sandler. line the from Murphy comes Piper question next of Erinn Our

Erinn Murphy

you Great. strategies back. influx do lapsed at Which coming you what keep a all was seeing made then, a have biggest go place I the them? And are Joanne, about the the Congratulations of you to consumer little hoping promotions consumer? deeper currently there. bit the could comment brands of to you in lapsed

Joanne Crevoiserat

you last reengagement unlock, of the better Weitzman, and doing are we we traction across particularly happening get the of clarify And ensure and it acquired all Erinn. is And The traction of across seeing are is tools And Spade to seeing. back as there to critically implementing the have brands, and been is speaking marketing, our closer some the that more our consumers. reengage retaining important. we But it and value. customer more, them we recruiting that bringing and frequency, consumers, our increasing work to the active the retention driving customer lapsed are we customer. brands are Thanks, seeing are also, that are have Kate while important is recruiting an Yes. technologies heard higher of activity, and which to taking really database with and Stuart in in also we brands, but that reengage only that as us ultimately that analytics more, increasing with leverage about really focused and not at we focus, about, we our making we recruitment, we which those work stay data to better work helping the data really shows core very and pleased consumer and on we lifetime driving us positioning talk

Todd Kahn

program, the tools for the is the their higher so Insider we is one the nonmembers. XX% launch our loyalty program. than Coach of that Coach brand, are program, of are with And of we that And pleased I what frequency a just can members add is seeing

the as get them customer, keep tool, coming brand. Joanne provide So what as the that customer to the to understand with needs are bodes to really closer to and well back says, reasons

Operator

question comes Chen of Oliver from next Our Cowen. line the of

Oliver Chen

of Coach outlet. in You a made lot progress

program? outlet year-over-year think innovation with doing, for you to make you outlet on you you progress what are are as of what I As thoughts broadcasting would are terms your there? of and you metrics continuing your rationale loyalty Coach on, the are customer a focused respect the anniversary direct the what customer to the on and marketing love the in as view well also as about sustainability from seeing on thoughts that, point

Todd Kahn

will Joanne. I I think take that,

question, as first coachoutlet.com of well. really the as sort interesting continue ability Coach for opportunity the to into talk that the can in a reimagined brand. last really our program. loyalty strong and I Tapestry demand. the sustainability, anniversary sustainability, And I about is see bring the this your pleased we really them On our question, will are And but as we to one I see we of think So Joanne indicated bode tools Coach

we we sustainability. brand, bags have over repair designers out a in leather, years, XX-year-old did them we unusable the forward strong. which authentic And of opportunities And call what handful up in brought that were incredibly we them way some grounded about them. the reloved, couldn’t reconstructed Earth to was bags, we hour. returned, Earth sold and an Day interesting particularly for is As were many our online talk put basically. that on our workshop demand done an And really And we one we have which a On in Day, literally were things. bags

about brands, scraps talking else the I brand. what an about thinking into for opportunities relove particularly start done, which we a Coach our it and see handbag. means that we concept, weave as new have something in creates this of sustainability basically at taking each entirely So turning and and is it

going do innovative really us are opportunities. to you think interesting some I So see and

to turn think, out sustainability I issues? Joanne [indiscernible]

Joanne Crevoiserat

Sure. Thanks, Todd, and I appreciate the Oliver. question,

around our communities call very our our it We our incorporates pillars are our We of and really on program of part focused the company. as sustainability our sustainability fabric fabric. planet. And three social people,

very inclusive and one leadership, under are diverse. organization across some representation and inclusive and equitable, are that And on metrics the environment, the driving people, that our an we fostering focused is focused and we on, of in

we doing goals also, our can the live and financial impact world on and through are drive We communities, meaningful volunteering positive programs, work. those communities the focused through brands. footprint, of materials. there carbon planet, And around we our that interesting But communities our we and and our some the preferred finally, Todd to reducing focused And supply and our actions. the around empowerment working the the and donations our internally then change increasing our product donations around also we in have focused reducing increasing where that have environmentally across mentioned some work is our we is team are environment. on on use within chain, are on initiatives impact on increasing traceability, traceability,

making of part we So and are important incredibly fundamentally it, company. are focused progress, on our we

Operator

line from Boss the Our JPMorgan. next of of question Matthew comes

Matthew Boss

nice And quarter. congrats on the

So each activity the the inning do of peaks? could to SKU AUR down you about promotional to as from from the think And remaining power we remaining we help and do relative stand you prior brands overall here? maybe reductions, overall what where in today opportunity pricing break today here, meaning, see maybe

Joanne Crevoiserat

Yes.

we have more and is Let to Todd, AUR. brand. on the better delivering are progress resonates in the function it pass in Coach consumer kick of them. really closer that in and brands, product effective color to can that work acceleration the it me program And who off leverage we of a this And our give also, our and with getting some But then made our data we foundationally, are how across doing our decision-making.

product Todd is all delivering I growth ability the Coach inventory assortments, pass Kate that streamlined assortments growth. our that allocate to brands, it contributing see Spade our both at resonating and at as those past talk retail AUR our and across posted to by But be progress our encouraged as with productive, they’ll opportunities we do the of in to turns, So we where showing about But quarter our are the that we to are we this those well, AUR all our improvements will at consumers. outlet, well. most are

Todd Kahn

both we XX%, with in Thank have much things this at are focused is and third we actions approximately and the have America. we deliberate shown rose the quarter, quarter And that about AUR pleased globally of very we this we how all are so made have as in handbag taken looking on our we indicated, In Joanne the and are you. AUR, Yes, progress progress North differently. the year.

put SKU innovative helping center. reduction driving led decision-making quick by with consumer and the at the data me example. starts incredibly strong direction. it using couple let is inform a product And you And AUR. We Stuart with our give then First, the Dever’s really, creative that really to

tired XXXX, now would right take family Tabby, of our happened retail XXXX. moved which the been and entire you in years, we on. have would If our bored with it the to what number an we one and what Entire family have, position back family Pillow and with of recognize iconic Instead, the it got by fleet, February bringing Tabby Tabby Tabby, have fleet. we launched is we in we time our #X in originally to July relaunched

our this So helps profitability. gross iconic you that life create do elongation to again. helps margin - greater and over and us raise AURs, an our over are of SKU I and going reduce of counts helps us see the family And think us cycle and

Operator

line Our comes of my Altschwager question next of Mark from Baird.

Mark Altschwager

think you what structurally, Coach? I And thinking then, a opportunities are where relative term, the do Are just the on reinvestments quarter. of there XXs XXXX? reasonable I on similarly here low a the questions of Kate guess, changes? longer margins. how term, of would And for strong that do with for just me first, on a we EBIT margin at Near guess, Congrats Spade, has couple should sustainability about range greater And the recovery? achieved recently? see you thoughts look with be in for you what XXXX? what level expectations like creative branch to of Coach any

Andrea Resnick

with into despite have Mark. are based high our know, say, digital which accomplished leveraging through Tapestry, that focus data we thrilled in profitability. our backdrop. consumer, leaner a will, will margin share on we we and are feel brands, and stronger got levels the of peak above positioned pandemic I on a XXXX. you the was And is if of projecting have this we teens market operating exiting higher the you I at really transformation to the take volatile been And a Sure, And even take are to made progress that. as previous outlook, house as we for organization.

this brand. We we’ll and at guidance digital are will a in op best-in-class to revenue And around already and year, think China detailed your the percent. we by be XX-ish point, have still that providing drivers. But Coach, being margin not

position are our and opportunity So Spade, to are our bottom at drive where our maintain line deliver Coach brand margins we and attractive growth. already. margin. both grow opportunity clarified we execution an really Kate the to have customers, line and top around excellent to better opportunities These have for top

driver I there will over think in, be meaningful has innings, a priority return I and Weitzman, and we are we horizon. when this we then Tapestry a growth And continues at early great profitability, to progress. would the look lastly, be to say, and planning our are Stuart making

China, have are in exited America, position We of our strength North which unprofitable number and doors our strengthened we into including margins, obviously has leaning quite have geographies, and we strong very wholesale. in in a

margins top very feel have line about or line we expect to exceed to that. good higher we our as horizon said, So over planning achieve and bottom

Joanne Crevoiserat

in Spade Kate of And Mark, the the confidence And you Spade. changes. have add will about brand. the asked I just to tremendous potential product still We Kate long-term

They is the team of new consumer, Spade are heritage marketing and team And really Liz this are builds the energized driving product it the focused on think across [indiscernible], of telling collaboration Kate and doing development on they fantastic brand. way by story I a are job. the increased and working. really creative innovation,

QX both to in are Kate to continue excited and the continue have develop, beyond we to So Spade. potential in and see confidence long-term that of

Operator

comes Bank question Hutchinson of Lorraine next from line of of America. Our the

Lorraine Maikis

have to for term hone some Spade for margins around the gross during gains pandemic and in Kate do shaped and outlook over both you and we gross maybe item wanted ask just out mix, made where Coach how I the the both takes puts changed and talk will brands? brands? long-term the think AUR, line margin just the geographic at And through you’ve AUC, on long to shake your

Joanne Crevoiserat

mentioned those as that I have getting and and data better new and But performance, earlier, say customers customers, details. to in it to we some us tools to gives I the Everything and to acquiring count, our in would close inventory me that and consumer on healthy in as confidence SKU our assortments and acceleration data reach to driving on well driving maintaining pass ways done consumer leveraging managing data more our is as and turn margin marketing our Andrea ways work gross new sustaining under to allowing pass I leveraging our healthy growth. to Let new done have puts program would start the from of some it new closer us And and staying we to our the focus. drive that and of Andrea But will a brands. go takes. all through I is of for growth say leveraging

Andrea Resnick

Joanne. Thanks,

us think gross when are gross we looking and Coach a overall to reduce given I this, and the are you as at margin, have see margin Joanne promotions, sustainable controlled SKU count, we Todd at alluded et ability we the our where for cetera. to

XX%, feel that infinitum, be look levels. in used to ad we stay area these XX% was which when So at can all of Coach’s going say gross factors we to we of those higher to the together, margin, taken at

We early in anywhere benefit of be having in for when from upside primarily at now to and do will mentioned, the gross I Spade, the the as you where you innings. of at that world, right that we think Kate the are have China margin the come growing are brands looking Lorraine margin all our gross continue. I this are, and absolutely will

is do AUR we and are sustain the think overall promo, gross So well we is the definitely on I I where perhaps of the with rise. across margin brands Coach help will lower think geographic again, mix in as it believe and as the best-in-class, both focus combination Tapestry But higher sustainable. change

Operator

for And and more ladies one we question. gentlemen, have time

Suisse. line come Credit of question of will from Our Michael last the Binetti

Michael Binetti

to there related questions gross promotional that give I with consistent gross promotional low next Is customer guess, as kind I dovetail margin levels being little Andrea, look as of to levels guess, right be how new you guess, Todd’s I Joanne, to might it on given some is would so ahead earlier in gave off level about about comments the safe for that where year. back and industry now, I are you mean, maybe, to inventories on of assume some fiscal new thoughts the whole total of customer. Joanne, and it metrics a you some that normalize year? just and think on margin on to the extent? Maybe the then, Texas. next

think that things what competitors So do about came you are old I’m customer early any learning your a indications customer is holiday of sticky curious million to has and customers, of really any said insights lapsed quarter, I number from bit I’m how was very that that assuming there trying to a last to too? with if of you that little with customers, any similar and by quarter, new big from levels that reactivating big customer. customer, gone X.X that, would repeat have with insights kind you where there you that cohorts. time relative be came on are the customer helpful.

Joanne Crevoiserat

Yes.

a gross the environment. just and comment quick margins on So

our consumer We closer maintain have a us and help these staying new of way margins. levers to developed to new working,

But things end on smarter control what is We see we have out And day, are more the than the our how is approach control. our a there we the getting confidence. increasing call mentioned of in assortments. few of about at already. our I

AURs our as our and fate to confidence relates our and managing increasing ability to managing control in our our margins, it We have manage own business. managing

So Andrea is. margins relates we, our are mentioned, sustainable our it as execution believe as and confidence program. focus of levers is we these the then given where customer our And acceleration metrics, building are the that to behind

of increasingly customers And customers. have many increasingly robust younger. years. are a customers new over These very we are maintained recruiting database We

they long-term bodes customers customers. point, focused these to of are increasingly driving that brands. And new are know we are value lifetime So the well And the are younger your to our brand. these that on health again, really fact for of the we

leveraging again, that and through staying repeat We these of consumers, stories. And are to relevant higher our program, building data, marketing seeing our marketing customers have close work doing at acceleration frequency. been new product a is we the tools, result

also for of consumers. our assortments better, our stories in the helps, focus stronger Some telling

over increasing lifetime So to margins, ability value our our continue we continue in time. have business only but as drive, our forward drive confidence is also to customers to not for

Operator

you. turn remarks. concluding call Thank will concludes for the to now over I Joanne Crevoiserat our That Q&A. any

Joanne Crevoiserat

us joining everyone, for thanks, today. Well,

Our standout quarter taking strength global under acceleration the deliberate our the reinforced teams. and for results of program the we actions third are our

growth on structure and analytics confident customers changes our our around We a delivering and you like Again, and and underway emerging all the a strategy great progress results optimized world differentiated that the are meaningful of foundational with our and Tapestry Thank and sustainable working pandemic your for you, in contributions I of interest thank ways and to use story. from stronger have clear can focused for are and strong brands. and support and for and third day. are the our data continued their teams demonstrating our we quarter a increasingly consumer have in would stronger the of platform, connections

Operator

does today’s conference everyone. conclude call. This you Thank

You may disconnect. now