Tapestry (TPR) 8 Feb 242024 Q2 Earnings call transcript

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 the Global Head of Investor Relations, Christina Colone.

Good morning. us. joining for you Thank Financial With me well Crevoiserat, quarter as Tapestry's our Chief Operating to our strategies discuss Chief Roe, as Scott Joanne Officer; second and and Chief Executive Officer. results and today Officer outlook Tapestry's are

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

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

our today are measures financial Non-GAAP in included our comments and presentation in slides.

full presentation For the our view and release reconciliation please the earnings and visit financial website, www.tapestry.com/investors, information, today. then a posted corresponding GAAP to

for let brands. in priorities the me topics highlights and this each call. outlook going results, our Now and Joanne with with begin of speakers conference our our continue Scott will allocation will for financial outline Tapestry capital forward.

Q&A, joined Following that, After we conclude closing Kahn, will Todd by be and where a CEO President question-and-answer will will remarks. Coach. Joanne hold with we Brand of session brief

it CEO. to like Tapestry's turn now to over Crevoiserat, Joanne I'd

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

growth and achieving press earnings delivered record revenue quarter holiday outpacing our strong we quarter, As in release, expectations. noted per share with second a

disciplined brand centricity passion and and driving to financial our through our engagement consistent advanced talented the standout agility global and power strategic creativity, building, of I progress to continue consumer whose our recognize Importantly, fuel results. want teams agenda, customer execution. we

quarter. Touching the on the highlights for

our sales benefits included growth our diversified was increase XX% a at demonstrating driven global in business First, growth consistent gain, by which achieve of This China, we growth internationally, to XX% with the Greater X% powered model. currency expectations. constant

Further, rate, which sales Chinese a to included tourists. at continued with grew globally Chinese growth mid-teens consumers

Looking committed only in platform our this China region important but to established business the in leveraging remain our brands, Tapestry's ahead, build to in cohort investing we not with worldwide.

Revenue increased Turning respectively, gains. X% sales And with against to Asia delivering growth Europe, Japan. strong rose Other and and XX%, X%. year's each last in double-digit

better America, North our with in we year and expectations. in last Finally, delivered line than revenue

We gross compared are continuing and to expansion plan. underscored year to drive and significant a healthy operating by last margin business,

on in we Second, to Gen at our Z higher building America AUR customer our to of recruit see And consumers brands. we million remain to focused base. and In with new the customers customer North new X.X approximately than our customers roughly which half quarter, of brands. younger we engagement our consistent alone, balance continue across strategy were millennials, acquired the transact

to lapsed existing the customer while bringing in brands. to customers customer time, America, ability new base with improved we our demonstrating our At same North our engage reactivation

direct-to-consumer meet unique currency as Omnichannel shop. stores in both To the we they basis, reinforcing growth delivered data-rich, seamless online and mid-single-digit model. continue of constant customers to we a our Third, drove experiences, we and on end, choose where to operating benefits this our

the world, our X/X in of strong welcome while teams digital, represented we to maintained which positioning retail our exceptional more Our customers around stores revenue.

continue Las Omnichannel supporting proud we new in quarter, the speed, as sustainability center fulfillment capabilities, our we invest were to and growth. Vegas During multi-brand open a to in

holiday handbag lifestyle consumers, drove AUR newness time, At gifting compelling our and growth for leather which overall fueled season. excellence Fourth, product and and we small supported in the the innovation goods we to fashion globally. delivering gains by value offerings, same important

We accelerate generated Overall, future highlighting to building exceeded strong the in our growth. record disciplined which second of strategic power prior brands execution. investments while the compared these brand quarter and year, and increased significantly we achieved expectations to results EPS, making

across quarter of to to turning by relevant We to Coach. bringing highlights starting our unique that team positioning brands, desire the our to another delivered as expressive brand a with life, each Now and fuel Coach. luxury continues standout is

are consumer supported innovation, highlighted driving financial across margin strategy Our revenue expansion. by consistent and by growth results, and strong connections significant geographies execution

of over-indexing details with and to at fueled across our further bags goods, in growth some bring We're leather with on versus launched including achieved touching Tabby last nearly We iconic runway doubling Quilted our ahead. and by leather goods quarter. small outperformed Tabby, expectations, family above-average the new offering Now platforms. year recently AUR. younger second continuing newness to and consumers this iconic the again,

At the we Rogue across and drivers. our Willow remain the families, volume balance anchored time, by the same drove growth of assortment foundational which

and expanding creative offering the a products growth We Overall, gain including new also America. North global with AUR Family, the our Idol mid-single-digit sizes. with recently drove handbag innovative in in supported momentum introduced

pricing represent quarter our same gains In core in continued and in as we compelling lifestyle advanced improvements and we recruitment, innovation value. brand focus assortment that on purchase time, customer Growth customer of of with the frequency was key goal Looking ready-to-wear, pipeline styles to reach by given ultimately, strategy heat. the consumers the value. a we powering fueled driven opportunity build lifetime outerwear. for our we with building forward, see brand's At the

And Relay In growth outperform. footwear, Hitch in continued key success goods, to driven the men's leather was by Leah and the in Charter Loafer families. Gotham,

the emotional meaningful building storytelling, brand. purpose-led created connections with we Next,

continue campaign, fashion Wear expression empowerment. use means a Shine and which strength as We Your the for to the consumers personal of lean inspires to into

gold and bags, collection own confidence. metallic to included accessories, and shine range of Shine customers a The allowing ready-to-wear with their

More us the We celebrates be give confidence also through that content than a to campaign, ourselves. our gift delivered gifts emotional the which

And fielded consumers, in investments our U.S. a North Overall, work America, including according Coach customers quarter, to saw millennials. new in campaigns led are with of helped awareness the Gen brand success unaided during of our of building number million the approximately versus that a to tracking year the acquisition prior these underscoring lift growing in working. Z and Gen support by gains brand Z X.X

continue reimagination the finally, in And to a vision product process build we of evolve creation our to Coachtopia, sub-brand momentum our circularity. of

the style. During or was with shoulder top-selling leather quarter, Coachtopia's bag either made the repurposed Ergo leather scraps

younger the consumer While excited Coachtopia assortment, remains specifically significant the audiences. are a small it's we portion of attention with receiving by

insights continues a bringing execution new innovation, Coach in is consistent rooted strategy, and closing, strength, and power of new on customers to the commitment iconic sustainable The and new consumer to tremendous purpose this confident growth. luxury and strength runway clear In potential behind unique to expressive investing ahead. we're build brand, with deep in

Kate Now Spade. moving to

heat. our quarter, second, marketing experience; Kate have ambition gross to opportunity year, accelerate said and the our progress handbag brand, through demonstrating our order more margin advance third, priorities, for expansion, we emotional the we remain the led we were that, and line ahead that strengthening in During In Omnichannel and an end, areas: the improved our discipline. first, need and reinforcing this direction. key powering strategic core to execution. expectations Having by we X long-term brand offering; Spade's to relevance driving top fuels of realize To see prior continued the agility Profits both challenged. trends

results in quarterly detail. focus our on touch in more each I'll of areas these Now

and are innovation assortment the provided creating a we've reimagining and to First, consistent our have emotion, channels, where more across brand's the And we broadening be newness, more brand customers responded. and core intent. with larger foundation profitable handbag strategic our

in declines to assortment we've offset dynamic a win the our in required families, However, backdrop. need underperformed seen reinforces faster core innovative traction the today's with products consumer by This move carryover to build new expectation. to that's which was more

silhouettes are assortment. back bringing relevancy which the we're improving our laser-focused into inform the execution help green we of half forward, strategies builds penetration with increase and newness incorporating innovation of on investments. product year handbag the This to while of consumer fiscal the The year Moving today, the bags feedback will our the new pipeline elements. distinctive across channels branding materials, on and insights, and to 'XX the more launch of shoots seeing and offering, for featuring

maintain rose value. acquisition vehicle important novelty differentiators To Spade lifestyle time, brand. point, our and for Kate customer remained offerings, the with double the our digits lifetime footwear in focus we'll and an strength jewelry enhancing of At consistent the this the same strategy while quarter, on

Second, opportunity stronger the is execution a strategy of engagement. a cohesive customer to key Omnichannel drive

brand Kate dedicated online. consumers During shop outlet.com the more the site a launched Spade for outlet a seamless and replacing the brand way and to providing surprise discover we site, quarter,

supporting we scale growth. our more a all can Overall, sustainable across our driving and efficiently merchandising of marketing efforts, unified points, more focused by brand experience and to bringing goal direct-to-consumer consumers touch

fuels on Third, creating relevance on global brand and that we heat are a focused marketing emotional scale.

supported new the become life more awareness of to Coach activations the brand with strategy acquisition the that from our in global In to During internationally. keeping America. approximately brand we of marketing investments London physical quarter, brand brand, the a and a XXX,XXX customers our series launched Shanghai North brought to helped to grow

to campaign top-of-funnel our enhance and our into distort customer the we over brand in has anchored creating to brand time. York the the to recognize of move Unique color on of shifting our been fashion Moving focus drive building a And strength marketing joy, credibility marketing and to need spring, of forward, the our efforts through as City. marketing engagement New impact. will we we launch to by brand storytelling codes investment

future. we're ways operational to expansion enhanced our brand's embedded our has Kate accelerate continuing our margin This fuel and we in long-term of as gross and brand far excellence, for we're this leaning thus year the supported strategies progress. for strategies Finally, while we the at will success. is Spade, in working advance to profit to a with and Overall, maintain intention meaningful positioning commitment innovation, long-term the focus

and Our path our brand vision is and is for the its clear forward potential unchanged.

trends. and for in That partially and on we brand's reduction These unsatisfied were against in profitability with continued continue last ongoing margin POS Weitzman. to and health pace Stuart China and line part recovery, results positive focus strategic wholesale grew offset growth were by shipments. versus to gross AUR, Further, reflecting COVID-impacted consumers. improved of off-price wholesale the brand the in year. in the expanded Turning we innovation quarter delivering compare prioritizing year's said, Top pressured, we prior remain headwinds

elements strategic from pillars Touching the growth of on quarter. brand's key the

families. including delivered casual curated loafers classification, with we offering and relevant seasonless more We XXXX out product. in we of boot core a gains and in our assortment continued Further, our styles, flats. First, by emotional Soho the growth build belle to fueled

our time, new a handbag collection, also a engineered fashion of assortment a drove sneaker function. at assortment, During the we launched combine featuring designs, the range to of the growth same still and portion while high quarter, small At innovative AUR.

more with As we in will the into rapidly deliver consumer we move evolving keeping assortment trends. newness forward, core

brand influencers we to engage heat our of Grainge. to He XXth employed engaging marketing anniversary, consideration. consumers Next, array marketing, and to an including of In to the Kim a utilizing Sofia created brand's fuel multipronged to from Kardashian Cong Richie approach we organically with celebration

result, brand As increased in across drove and we channels. awareness social saw customer YouGov a our improve the engagement per U.S.

enhanced in Similarly, Stuart more storytelling term. and its this foundation focused rose and customer brand diversified against a through and the drive fueling is launch Weitzman of purpose-led campaign. significantly following differentiated exposure emotional brand heat long of strategic to product stronger, on profitability China, priorities, engagement Overall, deepening growth executing the team

In positioning to for us strong share the raise year. second our earnings outlook Tapestry delivered per closing, quarter, a fiscal

everything at consumer and the speed our the agenda confident strategic our making Importantly, while the this of and brands bring the advance top the investing and to sustainable in our bottom progress in do to life, remain organic vision at move to ability iconic to to we gains. future. power an We environment drive customer putting vision ever-changing of our line our reflects in we're that center in

plan. financial acquisition significant opportunity planned while of our the Capri, a accelerate to strategies see our accretion strong through driving to stand-alone we Further,

Overall, expand for in talent leader our as powerful Tapestry excited years the opportunity to a brands, positioning by house we remain and shareholder to of development come. innovation, returns

forward We continue to towards look to make transaction appropriate at detailed an sharing the growth strategies time. progress for closing more and future the

Scott, outlook. discuss it 'XX fiscal With that, financial capital who turn to priorities results, will and Scott? over I'll

Thanks, everyone. Joanne, morning, good and

significantly growth, flow. mentioned, and exceeded Joanne $XXX generating free fiscal As expanded We line for QX and revenue cash results the holiday expectations. our EPS key top quarter drove margin gross while million delivered record in over

well of business our agility. demonstrates as model our Our strong and as benefit globally the diversified performance direct-to-consumer financial consistent discipline and

us in delivering this that earnings. brand record continue while invest growth It's to discipline allows to long-term

XX% currency of In on strong the details travel spend the revenue of a increased last international Asia to year, anniversaried trends year's COVID-impacted with basis. rose same in from an Greater prior China with beginning growth revenue across moving results. X% by constant to At time, and Sales China, tourist Europe. quarter, uptick continued increases compared the fueled to Now we've we as the see XX%. Mainland

regions, revenue Korea, Asia, Australia above and sales Singapore, tourist and have year. increased been X% Japan, in remain Europe, continued well trends year. we strength drove levels, In sales with In Chinese the ahead. gains representing last in strong our encouraging, grew in these Other demand, to Zealand. grew including anniversarying in further due Outside tourists New to globally XX% key China, below opportunity While international pre-pandemic revenue growth prior of X%, momentum

were prior expectations year chasing stronger not brand North on with above line and in margins, And health the sales. America, supporting sales and in

revenue for on quarter. touching by channel the Now

direct-to-consumer fueled North Our X%, declined wholesale in grew in offset X%, pressure growth by partially stores accounts. about globally, America, business in by and wholesale, represents sales in international reflecting which digital. of revenue both XX% And growth market mid-single-digit

and expansion by We mix P&L. basis expense last delivered down outperformance, decade, pricing was lower fueled improvements. which as our was Moving benefit operational of a net well of due gross to in XXX driven margin a year. quarter freight XXX expectations points strongest and our geographic tailwinds year-over-year ahead as This above points to by basis second over

forecast SG&A our rose reflecting both basis, a on X%, to a rate savings compared which favorable dollar plan. to was and operational

investments people and to Importantly, our we're strategic ongoing while continuing tightly platforms. brands, control business in costs making

ahead rose of taken ahead year, So XX%. our EPS the margin of both operating expectations. And compared record of and quarter to expanded $X.XX together, basis operating our XXX and XX% growth of points guidance second income represented was prior

our to billion, total billion which $X.X cash I'll balance $X.X flows. Now the We and financing Free to investments in with turning sheet Capri, of related touch the acquisition the of which quarter on planned cash momentarily. cash and ended reflects and reflecting to inflow $XXX borrowings million. inventory quarter related end inventory were and and our focus flow was million. of XX% year, disciplined return. for management the at an CapEx prior levels on driving And implementation computing quarter cloud $XX were costs below inventory bond

Before moving to to costs did freight in situation the incorporated the has and fiscal on want in related touch which Red increase been lead the on, the modest back closely conflict. provided disruption We're in and outlook Sea I half this monitoring currently today. of estimate the times year, a

anticipate experience currently inventory. and our to impact results we customer well-positioned Importantly, our operating minimal given

our to dividend Turning program.

$XX $X.XX Our quarterly payments Directors of per Board of a common representing dividend cash share, the declared million for quarter. dividend in

increase to $X.XX a shareholders to XX% compared continue we rate year, share, $XXX fiscal dividend annual year. million an at approximately of the to For through to per expect return the last

on our non-GAAP does Now any not planned which the potential and fiscal 'XX, provided Capri. impact basis to guidance acquisition is a for of from include moving

for fiscal our while second strong raise quarter taking position us Our half our outlook results prudent planning. second to to the approach year, a EPS

and from Kate Stuart our EPS same On maintaining as Coach's the headwinds brands. year, second basis on outlook revenue, the our well of quarter to margin time, at Weitzman. moderating the our stewards and disciplined lower a Spade we're results in we're commitment by our expectations being reflect offset for given as reported FX, raising stronger At we outperformance estimate as

brands our strategic into guidance strategies. be of decision profit our our invest QX to long-term a business and Our support back the to reflects also portion

detail. year fiscal the in further Moving to

We in basis. prior approximately expect an $X.X versus the X% representing revenue area increase year on of a billion, reported of

Excluding anticipate an FX currency XXX constant we headwind sales of roughly growth points, basis X%. of

prior Japan, to region the Europe, manage mid-single brands high to increase we maintaining by China, growth. unchanged are North single-digit we details line revenue forecasted ranges Greater sales is contemplates rate. sales provided. in to currency, is long low expected growth. double-digit slightly to And to at constant previously to with term. anticipate In higher from we business expect mid-single-digit In as be above a which Other revenue forecast our our and Turning margins for while America, commitment at in This expect Asia we year. digits, grow the In

In which from benefit costs addition, includes our basis the basis XXX operating approximately assumes points, XXX basis anticipate freight outlook moderating margin gross roughly of points. margin in XXX of expansion of area We a points. gains

basis our and On of in initiatives. in support of SG&A reinvestments deleverage people reflecting expect expenses, growth brands, XXX roughly business we points,

year. to be rate to XXX forecasted the be the approximately $XX shares. is is Net expected area for approximately Moving anticipated million. to the tax below-the-line our diluted and count of XX%, share in weighted The be is interest expense expectations average to million

So to taken growth year. versus to $X.XX of last EPS together, we're now X% $X.XX, X% projecting representing

contemplating before expect investments. costs, flow costs to $XXX half balance and be roughly we and This of related digital cloud CapEx $X.X store in includes the still of of mostly area billion, forecast IT primarily to to be Asia, any spend anticipate ongoing and Finally, to and the openings, cash with approximately our the related relocations free we renovations deal-related million. computing in

you let Now me through the year. of take shaping the

the X%. easier and third relatively expect consistent the constant in stronger growth currency to expectation the by includes helped continue second between fourth line quarter, North half America. the to for of We relative comparisons in quarter the top at around first This half growth anniversary

the dollar year. SG&A Therefore, business. line with fourth higher on contemplates be the of QX in we're outperformance expect and second quarters, By half the gross versus outlook with a margin both based reinvest growth noted, investments to quarter quarter, prior our income roughly to of and the we brands in our prior operating modestly in as our our income, expansion pace versus operating second QX people, in portion third On in utilizing year. the now

the to roughly currency be pressure. and down third expect For we for the growth prior slightly in third slightly FX EPS quarter a constant be with basis QX. to aggregate, in $X.XX, revenue we In of with reported specifically, above line year in the points XXX to for of anticipate including area on quarter anticipated basis,

forward, which allocation to looking outline priorities Now our are unchanged. capital

in will growth. our First, invest support we and sustainable to brands businesses

cash Second, rapid our flow utilize debt we strong will repayment. for free

to solid less of the a To debt that close. target transaction Capri gross long-term of EBITDA are this maintaining within years to we X committed rating. investment-grade We adjusted X.Xx end, a to initiated a achieve leverage expect and on than basis

return we will Finally, shareholders our capital through to dividend.

strong profile with us and believe we flow provides Importantly, for return. our opportunity cash capital investment further

Following of leverage we repurchases share resume time, over our XX% to our increase the of with the ratio achieving XX% target goal our the to achievement in expect opportunity the see and stated payout to target, of dividend future.

Before enhanced touch accretion believe want to logic to financial value being the drive cash on adjusted acquisition of with underpinned returns, a acquisition by closing, I compelling earnings, consistent planned Capri. that immediate industrial with flow We commitment more our to strong the will creation disciplined significant is financial operators. holistically and

in to these assumption Capri business of the important unsynergized expectations this Embedded in it's EPS the to cash on expect area a will continue To Capri to accretion that on million is an that the $XXX compelling adjusted generate flow double-digit ROIC. free end, stand-alone and basis. non-GAAP basis we generate highlight

and existing of we've bonds, noted, in expectations. euro inclusive further our interest and issued close. debt all-in as rate with progress Tapestry's In consistent we debt $X.X an billion of November, achieving USD X.X%, And transaction towards made

synergies our post company's leverage in X to Our supports million flow ability paydown with stated within strong integration efforts financing months and rapid $XXX continue combined in moving closing. confidence achieve the XX strategy achieve close, We're of order over target given of years free run planning gain our cash generation. rate to forward cost within to debt

transaction receiving towards clearance the publicly received work as in to all China. authority, the and regulatory announced regulatory continuing we're required finally, Chinese approvals, And by

our of our timing, ability calendar complete consistent terms to In XXXX, a with expected close in the transaction remain we confident expectations. in original with

of long-term closing, teams. margin strategies, This talented In for by highlighted demonstrates outperformance quarter, growth gains, significant in growth flow to earnings' global cash results, expansion, the our we and operating the invest and continuing generation strong the while model business. of revenue our drove power

brands returns will Looking disciplined stewards come. forward, we to profitable to business our for and unwavering commitment of with years sustainable, drive shareholder remain an and growth

turn your With and the it take to that, questions. I'll back operator

[Operator Instructions]

Bob of Our first Guggenheim. Drbul comes question from

you a on I momentum? you the the Coach in you're great at brand question this give the Can trends we've of deal. just Since any how a just And if update quarter. strength and about the seeing an you on a announced your your talk Coach, confidence separately, Capri. have seen the of changed transaction, on at thinking? has Congratulations us softening maintaining at Can and

that solid quarter, we and growth the a share. We is delivered first, recognize want teams per are across a and we the We testament consistently. income to revenue, And delivered earnings operating passionate strong holiday have executing world. to I which around

fact, our is we're for record protecting earnings see gross showing second delivering earnings And while at really margin the commitments, health bright In the delivered brand margin our time, delivering against which maintaining per we're brand. expansion, operating same we that share. future and quarter we

question the Todd's of sustainability on it Todd? let to momentum, that to the cash of point, These of and up discipline the X come and end him acquisition. and importantly, operational results I'll consistent the at for then on and to momentum strong pick gaining Coach. back that all your stealing we years, And that pass we've flow. we're at shown to comment instead And I'll speak driving the over free your thunder, momentum are now him excellence and maybe

with this and to fall campaign. Z Wear previous mind, the on confirms way. of 'XX. expressive this good holiday, in focus and that I'm the about target of opportunity unique talk consumer morning, traction Shine market, because an confident Gen of in and What our luxury, building provided into Bob. a feeling timeless you, brand momentum September it we meaningful future our our the launched consumer. campaign authentic, positioning The of to we Your we've seen that in which with on With clarity clients it campaign Thank purpose our very us and Joanne, did, launched

product. to Turning

Our working innovation Tabby our by demonstrated about. as talk I is which family, enough can't

SG&A flywheel. So reducing reducing when you increasing cogenomic. and a invest and compelling lifetime virtuous the with pricing and non-marketing our take our initial driving we product This us younger Growing sales. talk meaningful promotions, full in value coupled we grow sales me storytelling marketing, and COGS, clients. which brand together, new our younger to leads about and are enhances what growth consumers heat. efficient This new generating by with as margin We drives creates refer gross of allows to funnel to productive

Our bodes ahead. growth years model cogenomic well for in future quarters our and the

these acquisition. the pick thanks, start about on platform, by we the by opportunity question And your this saying our the the expected We our value excited results that execution outlook. economics the terms We're just deal, evidenced that's towards and making on And in brands, the we in have close strategies of leveraging great referenced, deliver. up prior we ahead. that as from me strong. unlock the and progress by calendar unchanged to remain let Well, I'll year confidence continued Coach our execution, are Tapestry improving remain the runway recognize Todd. and Todd

with the integration And to value. teams are opportunities continue. I've working we planning can continue impressed together. confidence how been meantime, efforts gain in add in the we And where the

reflected raise reported Importantly, though, laser-focused strong our beat organic the quarter which and today. second remain we driving we on in is business,

Boruchow Ike take question We'll our from Fargo. Wells next of

congrats. my add I'll

million is maybe So down of any August, repo. you August, business goals those the could deals. you the margins if are us I'm In have in yourself, took Joanne. $XXX the this for Scott updated or to I some 'XX to on which thoughts organically, and so give the updated $X back because how set organic of evolving in think on the Scott, XX% thoughts you fiscal for excluding lack pre some about think, I gave us you included guess, internally? targets Curious But the trying guys

the Scott, a asking brand above the really, goals with very of in least opposite several for at your basis few and your 'XX performance kind set versus specifically come fiscal the And XX% mid-teens I'm margins the hundred looks goal you different initial basis Coach probably goals. points looking this because hundred to year, points below

So any would thoughts year. that's next all on think organically of evolving kind when business how we just the about into us help

Yes, happy it. take sure. to I'm

speaks $XXX have And is first And you allocators, where -- opportunities those But being share we reiterate, to the million, just of $X but also, of we're Coach, is feeding I right? model, So I you little a all, the evolved capital which less, the it yes, think the growth. see repos, still that differently? really it It as momentum curtailment our the think to the not only this the a testament said, has we in see confidence. to has. discipline

of mentioned, margin discipline expansion. the the across terms Joanne P&L, seeing as You're gross in

areas cost ability most we back across and points leverage difference of drive to see brand. getting in the where We're reinvesting the

I differently, little So I bit have and evolved confidence, yes, of just the while it's we a this organization. discipline think to the think still the the model in and speaks diversity that

Boss of from Matthew next question JPMorgan. is Our

on quarter. the nice Congrats

that you the product could the about Joanne, capabilities then platform global innovation, that So portfolio X to best And think you how for recovery? to as continued think year acquisition, the data And Scott, drivers margin you freight support to we about the planned customer to accretion continued new double-digit momentum? Tapestry gross speak allows of differentiation in think just could or speak this the any acquisition? multiyear, maybe beyond year's change from

creating is off engine customer it kick And on our brands, customer really start all -- more it the chain. that even for and frankly, what market for really call with permeates brand the but the to with about We truly our growth -- being emotional And I'll consumer. to and brands. the how entire customer So really a drives more understanding more -- it with connectivity our curious start we more it our obsession. value that does emotional connection relevance, bring a

early that to start we our the with and of our who target brands So is and understanding we a lot of fits. then of customers. talk true customer DNA each is how But what

does world, feels a do a understand customer feels amount feels only of about but research, and that our not the about always the tremendous something changes. that's that customer tracking, research product, to deeper their in ethnographic environment, brand We research store on how outlook our

it's changed And curiosity, company. the would that putting of across I insights a in them ways working decision value ingest I a the work over teams the our better about chain. lot these continuous better those hands -- are at the in and the So of last talk insights years. say, across and And company. and our gaining to of Tapestry data applying the makers, the data X We have all our

assortment, who And So needs can data leverage to value allocation product as on insight speaking as our product and up we to positioning, well test that products, so pricing, we the to that delivering, as our we the capabilities it and our the also not and fulfilling of both and of marketing product around what depth are value understanding functional we're our the in execution. to relates we value, world, as but continue and are develop and where then improve in we we are shows website assortment consumer. and using how learn this some that and brand relates it our as for breadth we our development, what world emotional our across only

if I and way all pricing mentioned -- know as pricing, well. I So don't but the

I then each to attract the all chain. our up importantly, gross through half has Gen brands. if focus continue can And our So we margin our you critical million we younger attracted our to that value way the know in brands create been execution we to to And the customers to that pick found. Z want seen lot nearly don't we've quarter, this about us is drivers? the And see insights X.X for millennial want to a new for brands. you the talked past create the traction the as that, consumers momentum of And behind of we being with and

what of we Yes. that I'm still that us longer ended. if Todd on Joanne I this increase the profitability guidance that reinvesting all allow coming is things and start you quarter-by-quarter, both going I'd flywheel, us and what gives a time. we of core and look to expect that the our back beyond freight love driver. through, think in and reinvest one are, the not back that and that's love same see things, business million that you to those the really the I we key to that's I'd other margins the take that about we're even other talk those help at confidence to Matt, the these out all improvement our said, I'll consumers is giving that's reinforces our reinvesting who where power and year, earnings pricing continue. margin, term, in some key that regional, but give and about, -- about when than And understand reaffirmation in both operational And And us you stuff linchpins which at $XXX that mix, to. talked margins Joanne the gross the going some of 'XX noise not talked of on see and capabilities

Short about year accretion strong I add, we bit in of the And double-digit WACC. in of a excess see were mathematics just The little problem, is X. yes. answer, also answer a also accretion, kind also deal? returns to our addition about talking we would which You is in assume Capri asked I

drivers. we So the never bought confidence return on prudent We see as had what have to also capital into look condition and that euros necessarily continue accretive assumptions in on at we of estimates. the call still we those key business we Remember, the deal. is we

Lorraine is Hutchinson of question America. of next Bank Our from

you a of brand to your just year-over-year pretty Understanding Joanne, driving Chinese wanted specifically? And I the can what's the on give volatile. us on and focus strength zoom comparisons view the in China out for consumer? the China minute. are Coach health

Sure.

X for our And market opportunity China brand continue brands. in a believe know, long-term the We represents time we've that been decades. with over you to as across long the Coach

we the in right But now, in with our landed business the As market. right China slower recovery relates of line to are second a XX%. seeing was pace the in business it expectations our at quarter up

fiscal expectation mid-single-digit for in growth That we that year. is this unchanged. will outlook Our drive year the is

way the we dynamics are So market the expected. unfolding the in

market connecting doing we And success building brands job the confidence teams to have consumers. again, market. driving what's in opportunity excellent our that and is our the in And are in our an the long-term with continue

we importantly, surveys consumers see the through We desire strong in our our we high handbags And market is is in category, with for and still the continue in leather the to intent second and field in the saw brands purchase market. consumer that goods quarter.

are on pass sauce if there's secret high. I'll Todd, your to it in expectations color again, So Todd? any Maybe other market, the

full about an expansion. white a Well, brand And that's quarter I Coach When opportunities on more bodes for luxury, to being purchase, feel Coach. look away say people the traditional things of see the AUR the I growth are that well your and China. one market thoughtful me in at us and one point today between their you and long-term will maybe you and the you comment, the at China, building give And all-time all where frugal high. ask do but European sits where and of China, like about very that questions good to I in sauce, the of every continue is particularly won't how really secret we space

I'm white is excited as positioning, So in remarks. I'm excited prepared said by expressive space. our Joanne brand the luxury the working, by

saw in growth Our we quarter, last all China. including markets,

So up Tabby market in and really excited take Coach in and way. by have what hold already a we seeing meaningful that coming we're

Goldman is of question Brooke from next Our Sachs. Roach

could growth might stronger handbag be for America year, that in outlook thinking in confidence thinking brand North Joanne, the you're about the thoughts additional seeing driving and Coach that quarter? in in fourth half market? the you specifically your What's back both how Spade? Kate pressures for I on for the about was you the the how some relative to are of And hoping underlying provide competitive you and accessories, specifically but fiscal

North market competitive. Yes. American always is

market, with driving last So margins. business flat and at line we love performing. And a we're year, What competitive our with last -- we're business but year expectations. higher above we that saw was our in QX, in

to and to elevated a healthy and continue and the on is, market we the the market. What business consumer business, And prioritize in we're we innovation in -- the brand and delivering to frankly, is in a growth that. they're messaging So happening we will managing continue focus healthy market. healthy the healthy newness and and being that choiceful do responding we'll see

rest in in the of for the is, half. was frankly, outlook year it line with Our the first where

expanded way. So no margin. in dramatic the business trends will first AUR first the gross and we're last again, We second managing half line. grew quarter, inflection and year. the of a But -- in healthy think half between operating We be in margin

North importantly not inventories globally. Our well are only America, but in positioned,

North business So expect as continue to a move in to we we healthy forward. America manage

competition, last higher own we're out our that's really where customers, in they're that fuel, many thing million They're play the AUR, only ahead. I'll playing game. is, these And Coach will North transacting growing And cogenomics younger, add new at flywheel always aware in X.X year. of for the we're a quarters we're virtuous new the but that's obviously, this America

the brand. coming feel But for America. We they're And luxury them particularly North we really lot even that, just in data, as have I think because long through our through issue, grow comp expressive the as in touching fourth doing see we awareness. our We're ahead there's using beyond easier a can us, innovation. much so at as about to keep of most market we comps, mature with we where growth So purpose quarter our and growth ahead room in saw, we what's of obviously. in continue stronger

So for that's really us. important

question of from Binetti Our next Evercore. Michael is

first. on a nice near-term Maybe Congrats quarter. a just one

in how Maybe brands about seeing what like which flat ahead the house today? -- on second the different in little in tourism, revenue within previous the X in you're for philosophy China your choicefulness this you then third at of but about brands, use China belong are you expect a Joanne half. curious and speak life at of market what shares jump best opportunities. what Scott, and guidance a quarter, color on ball, talked you're we've It a in which Tapestry in then mentioned this the for sounded brands little Maybe of that a different filters years their as scales, the to look to bit global within to since fit On also portfolio inflection maybe just to sub-categories, And you consumers different are maybe just of there. about assess with of determine on used I'm an lenses platform. brands a guys the lot comment being And a comments well. the Scott is Todd some seeing

I'll there, And first man, read website, you haven't Michael. our that. part anyway. out the all Yes. Sure, take of that's

is it issue guide. but with really make biggest our quarter of there's China, third lot up in about were if think QX, The noise you line simple, So, to -- we the -- XX%, a right? in

anniversarying when tougher we Our terms it's right last expectations, of in which click was said overall, the really in our out quarter And issues. that expectation, from we then right, are revenge digits look so is that that's where coming you at But COVID zoom today. spending, QX, we mid-single had to compare. a and

right? second took a ask we the in big but the noise But by quarter really pressure So puts would and from the look the I picture and up, noise the at particular zoom don't there's It when lose you out top, quarter. in third yes, to year beat top here. you quarter, So bottom line. we full quarter understand the

Yes.

asked. Let -- me portfolio shaping up you pick portfolio the question

to across our that are brands growing and geographies logic We of are talked our important attractive these categories. we've house It thing platform, industrial most brands. global about trade that customer and creating a us, extends is and And iconic this iconic the to strong categories. across important Adding reach these across what's they transaction. in of segments, product the brands

drive opportunity superior enhances our taken value diversification more provides -- our our for it of business, value all to stakeholders. So and together, for

capital We are disciplined allocators.

we capital a we your allocation point, framework. X-lens -- to And we decision make, any use

and as these You in expect; an landed mentioned lenses X of our X in owner, what really outcome we we and company; quite good we really, a shareholder acquisition lens modeling the third, And discipline. first, acquisition the arrived is decision second, and allocation compelling. make we all the the a capital a those any execution. lenses make degree how we this And with and on does is And fourth those, are to it our of we future of the are fit discipline rigor same owner at assets; strategies Capri is we return do There the decision rigor Capri. financial as we lenses. the and as expect same of evaluation. difficulty will the is of That's evaluated bring what apply

Mark Altschwager from is of question Baird. next Our

of questions couple A on Kate.

separately, are some see. the then few over are there. expansion informing What insights accelerate few on that this margin last to is delivering you're nice making which of you've gathered are Kate changes despite to pressure the And year, the the to quarters the at sales over the seasons ongoing need the about plans margin, changes talked you you here? First, next

that So even thinking is get level update was us to within on EBIT timeline needed What's there the about I a just the or to is revenue you're mid there? range? hoping And you that of could path margin. how that high-teens

remain quarter. and exercised profit. the the Spade. strategies team expanded in vision long-term agility your point, incredible Kate discipline Thanks, to Mark. margin gross for your To margin, we and in We operating The our point, and confident,

of from your top the point, to and All were But ahead We of last year of see quarter. remains didn't expectations. challenging. our inflection first line an those ahead

delivered handbag about continues we newness So and aspirations handbag areas innovation for foundation. first we noted X talked really in execution key improve our our have that to growth. we higher prepared remarks. saw to respond. the assortment, brand our Where an relates We've in been seeing customer an focused opportunity are we core as opportunity. quarter the to trends. be our a on core continuation it of the And We strengthening And and we've

move see back we the and into the we And half newness into grow, as half in will fiscal XXXX. back both

will grow a in Newness our as percent in assortment. penetration

see is The an opportunity Omnichannel to experience that consumers. opportunity the we power second with our

You real to important it's element believe build XXX foundational we last, fuel forward. that with experience more saw brand. then move That quarter. to provide an quality a us consumers We launch outlet.com and in heat. And can the opportunity on that is last drive experience to XXX foundation the an a marketing we emotional as brand

So it's around the points. execution in these X

cut be brand spring the in drive see heat. we more noise to -- top-of-funnel us actually, launched and more campaign. week, We'll our this marketing You'll investing through

in for actions clear have moving higher the We're have those We we to brand. with aspirations place. speed achieve

But the we that well margin. is And this both opportunities as there again, expect welcome ahead the in growth, it. year, expectations part line continued demonstrated are margin. in this as of line to margin is other on pace the we quarter. growth of certainly, improvement quarter, as top a of growth we And are operating drive top leveraging The

about as expansion coming right? make do and I've that's down disciplined, this operating of been they has margin teens expenses think right? modest a as think a do made teams insights One controlling from path pressured, time. -- the second it don't teens top And in at margin. margin expansion, I'll teens And of everything see year, product So on inventory, and discipline it and with the growth, innovation even the room just simple, line overall a and I do, percent in repeatedly, I said overall growth, that, quick gross don't that right? but build you didn't mean, Yes. thing brand, of maybe even down for our Mark. operating couple still Tapestry do We mention we've this to the And we our new

of general, and data, trends But see we and our help our direct-to-consumer quicker. model make decisions because they, issues better us in and

in us the Kate So that react operating top even inventory, of that's And of line. reasons to in and the terms pressure expansion on react this of with in that's one expenses. to margin see the gross allowed terms you

from Our Oliver of TD next question Cowen. is Chen

a As about will average What then for platforms side, great of been that was mix we the is it second unit you Spade platform. Tabby? others to in there core a or time retail, addition be be And And has on strengthening outlet? times. And will do think right that combination Tabby you really Kate why great see like-for-like both? mentioned the or now more the few a ahead?

need love means and that finally, research has would really indicating on you what your there. Todd, Just that been thoughts And amazing. Coachtopia consumer what is

material see our is how that do that at heading model to time? -- where the over you Just And modeling? penetration

total. that questions X the it Did me count get right? I we Do take you want to X?

Tabby, with Todd. off it kick We'll

a think to I that's great start. place

I agree. you, Oliver. Thank

Tabby by created of clients. platforms is incredible created our And us, aren't are by have, They platform. both all, First an ultimately. platforms

is every it's new to Tabby what a with see does to see incredibly it is that a a multiyear we keeping on year, And Tabby that just elevates or it Quilted platform, continue fabrications readings, you something isn't of doing as iteration a We Tabby. Our Tabby. in launched phenomenal. time or different relevant. job Tabby, of And Really it's I early opportunity. a but season it innovate treatment, well. launch all it's

we're So seeing there. what pleased super with we're

both On of discounting, approach. the our really less AUR, in disciplined is it initial being pricing, combo

by excited we're that. So

I and one, a a something maybe your giant product, effect, Lastly, been to in I not again, the our product us for think see big. material that in which in There desire with, us incredible said creating put own it's we which us strong size Coachtopia. What some to for is its it is Coachtopia The giving halo could not is it's not meaningful opportunities and that its is yet in yet. for But Coachtopia in for decide. vote. of day. very will, It's we've platform doing very perspective I and effectively loop outpunches that's one resonating. dollars become Coachtopia becoming to seen have enough our are a What And relevancy a nylon particularly from time, basically before, is consumers clients this model. history, brand. over

Kate not that, codes. hear customers self-expression, to strong that clear signature we handbag. the they from Kate has foundation. is but strengthening and or excited They're that for we Kate about building us That's it very outlet.com more equities. quickly what a and end for allows But time. here is And customers I'll really a XXX the our a of pick to our all at up about for approach the question experience we creating about Kate outlet.com experience customers and Kate, core and where that branding known the and channels And tremendous build. we're do core our on opportunity are Spade tell served better continue as experience at joy us in product

on of we program that canvas excited that's signature branding there. We're last work Dakota and hardware, Outlet start, with it saw spade what the and launched about Kate. stronger doing stronger we're the Madison a good the the a flower coated focused You ahead That's But codes. to at quarter, runway work. launch. we're excited at about that's off It's

And a of from Citi. question Lejuez take we'll Paul

the drove what Curious margin gross beat.

any how in you some may more mentioned on second are Any or terms you of the in pressure you -- specifics side side, that freight half, about I in operational well. and mentioned specifically by as I the up going puts you takes brand performance, quantification but can there provide? the you dollars think channel? freight think And thinking on be seeing

year a the for our be for said, a freight. the was quarter basis freight with about as moderate year. What second there's that XXX in in expect to. benefit point you but about still happy XXX And XXX I full XXX expansion of half. story, points Over and positive in outlook, correctly full Yes, think of great And to we right? it basis the the

positive, in half. the still moderating second it's but somewhat So

an And I'll again, earlier reference comment.

would Todd around talking way, and really, our forward, a think that obviously, don't to combination that outlook for which 'XX. we across and was brands. going say that discipline is power, grew give about know really we're said any I you But all in prices of pricing earlier. I I operationally, gross is by if what not As margin it's just the But discounts. which Coach, headline

we brands, coming understanding stuff based quarter-by-quarter, we to freight noise and We reinvestment expect our through our the we of see continue marketing consumer in mix that all would and we move have increased underneath all forward. insights the that as expect, and that on and the that and

That concludes our remarks. answer. now for to will question I turn Joanne some concluding and it over

you for consistent future. us delivering. thank relationships raised have to outlook this share thank story, from We to our our and earnings execution and runway quarter the for ahead in Well, investing in strong the build consumers. growth full and I'm to while sustainable who Thanks and and a are continue shareholder for clear interest drive your with great per foundation. day. second talented and our joining you It's record our returns and that significant revenue global earnings our year and brands achieved our for disciplined our team strategies confident again,

your earnings concludes thank participation. call. conference This you for Tapestry's We