Tapestry, Inc. (NYSE:TPR) Bernstein Strategic Decisions Conference May 30, 2019 2:00 PM ET
Victor Luis - CEO
- Victor Luis - 首席执行官
Jamie Merriman - Bernstein
- 杰米梅里曼 - 伯恩斯坦
Good afternoon, everyone. I’m Jamie Merriman, Bernstein’s US softlines and specialty retail analyst. I’m thrilled to welcome Victor Luis, Tapestry’s CEO at the Strategic Decision Conference today. Victor has been the driving force between behind creating Tapestry based on his long term vision of creating the first US based host of modern luxury lifestyle brands. He oversaw Tapestry’s first acquisition, Stuart Weitzman in 2015 and most recently, the acquisition of Kate Spade in New York in 2017. Victor joined Coach in 2006 as President and CEO of Coach Japan, rapidly assuming leadership responsibilities across Asia and Europe, becoming Chief Commercial Officer in 2013 and then CEO of Coach, Inc. in 2014.
So again, thank you very much for joining me. Appreciate it.
大家下午好。 我是Jamns Merriman，Bernstein的美国软线和专业零售分析师。 我很高兴今天在战略决策会议上欢迎Tapestry的首席执行官Victor Luis。 Victor凭借其创建美国第一家现代奢侈生活方式品牌的长期愿景，成为制作Tapestry的推动力。 他曾在2015年监督Tapestry的第一次收购Stuart Weitzman，最近一次是2017年在纽约收购Kate Spade。Victor于2006年加入Coach，担任Coach Japan的总裁兼首席执行官，迅速担任亚洲和欧洲的领导职务，成为首席商业 2013年担任官员，2014年担任Coach，Inc。首席执行官。
Thank you for having me. Glad to be here.
So I thought we could just start out by talking about the Tapestry model and specifically how the platform is differentiated and how you think about the core competencies and how you leverage those across multiple brands?
Sure. I think that in our space, quite often, of course, when people in general think about multi brand, there's the traditional European model. And then that's often compared to the American model, which I think, prior to us, at least in the luxury space, really didn't exist. There's been a few, what I would call, more apparel players and in the shoe space as well in the US and we've always envisioned our model and have developed it more as a hybrid between the two, one where brands could be held at the forefront and where we could be consumer led from a culture perspective, but also one that would leverage much more of the backend platform, then what is the case in traditional European groups? And I think there are three or four characteristics that we use to really define our thinking in our model.
First and foremost, that comes down to the brand's themselves to have very differentiated brands, not only in terms of, of course, the market segments that they may be going after and with a global reach, but also in terms of the brand attitude, there were some companies that may be would want to go from a brand perspective to have a specific attitude at various price points, which we often see. We decided in each of our brands to go after very different consumer attitudes, because fashion trends can change, and therefore we would not be beholden to one.
If you're, for example, in a positioning which is focused on, let's say, sexiness, which is a topic especially in the recent four or five years, that's been a topic of discussion across a few apparel players, we did not want to be beholden to that one specific view, of course that changes and the definition to a female consumer of what is sexy and acceptable to her has evolved and changed.
And so with Coach, we have a brand that goes and I think targets a much broader consumer than the other two, which is really focused much more on the classic look, one where consumers appreciate authenticity and craftsmanship. In the case of Kate Spade, we have a brand that is more millennial focused, but that is not so much focused on craftsmanship, much more focused on femininity and this kind of fun attitude.
And in the case of Stuart Weitzman, we have a brand that maybe focuses a little bit more on the sensual and I would say, much more of a global view of glamour than the other two. And so with each of those, a different position, I would say that's one characteristic.
Secondly, you talked about the platform, we have been very hard at work, establishing a platform that can be truly leveraged across the three brands. And what do I mean by that? First and foremost, from a systems perspective, we've been on a 3.5 year journey to put all three brands on the same core IS platform, we're about to complete the installation of an SAP S/4HANA cloud based platform from an ERP perspective, we've got the brands on a very similar ecommerce perspective, which is demandware Salesforce cloud, we've got the entire company on success factors from a people database perspective, Ariba, and all of the other core systems from a back end ordering and purchasing down to supply chain, all tied in together, so that all the brands benefit from that. And of course that provides synergies, just as importantly, it's going to provide us with tremendous opportunity later on to drive learnings much more quickly across the organization as we're going to have one very easily accessible case of the truth.
其次，你谈到了这个平台，我们一直在努力工作，建立一个可以真正利用这三个品牌的平台。我的意思是什么？首先，从系统的角度来看，我们已经花了3。5年的时间将所有三个品牌放在同一个核心IS平台上，我们即将完成从ERP安装SAP S / 4HANA云平台从角度来看，我们已经从非常类似的电子商务角度看待品牌，即需求软件Salesforce云，我们从人员数据库角度，Ariba以及后端的所有其他核心系统中获得了整个公司的成功因素订购和采购到供应链，全部捆绑在一起，以便所有品牌都从中受益。当然，这提供了协同效应，同样重要的是，它将为我们提供巨大的机会，以便在整个组织内更快地推动学习，因为我们将有一个非常容易获得的事实。
Secondly, the same is true in systems that deal with consumer. We're all on one consumer database. Now, globally, we've got approximately 120 million names on there with the vast majority having transactions, which we've been capturing for a good two to three decades now since our founding as really more of a catalog company, which is a Hadoop database, which is supported now by a data labs team, all on AWS, doing analytics and leveraging those tools to drive consumer insights, which we can share across the three brands as well.
And now we've just announced, in fact, leveraging that back end platform, we've just announced a new COO, Tom Glaser, who's going to come in and truly drive that. Tom joins us from VF, where the supply chain is very similar to what we intend, which is all the brands leveraging one unified supply chain where that knowledge is shared across the organization. And we're really, really pleased with his announcement. We've known him for quite a few years, have been tracking them and dating him for quite a few years and we're happy that he's decided to join us.
And on the front end, on the ecommerce side, we’ve also about a month and a half ago, announced the joining of Noam Paransky as our Chief Digital Officer, where we're also going to leverage those insights. So Noam will be partnering with the data labs team on gathering insights, to drive our ecommerce business, of course, much more efficiently. He'll drive all of the strategic relationships with third-parties here in the US, whether that be the social media platforms, search platforms, in China, of course, everything from Tencent, WeChat, to Ali Baba, to, of course, more recent new platforms like Redbook and others, he'll be driving the innovation agenda as well across all the brand teams to leverage a lot of those learnings, so very excited about what that platform means.
Thirdly, I would say that we're, on the one hand, very similar to the European brands in that we're direct to consumer. Our business is 95% or there abouts direct to consumer. And that's a huge strength, that is very much a part of a lot of the investments that in fact we've been making across the business. So when we look at the US, especially, and more recently now investments that we've made in buying back the Kate Spade business in China and Asia, the Stuart Weitzman business in China and a few other Southeast Asian markets as well, most of our business now are across the world, with the exception of small wholesale business here in the US, and a wholesale business that still has some opportunity for growth in Europe, I would say, that we are really a direct to consumer business. And that's very much similar to our European colleagues, very different from a lot of the American branded players that are much more wholesale driven.
And lastly, I would say that from a capital allocation perspective, this is where we may be are different than our European friends. We try to be as disciplined as possible. We don't look at deals where we have 2025, ‘26 time multiples, we've been very disciplined in the deals that we've looked at. And in the case of obviously, Kate Spade, especially with the most recent one where it's been accretive from day one, I think we've shown that we're looking for deals where we can drive value quickly.
事实上，我们刚刚宣布利用这个后端平台，我们刚刚宣布了一位新的首席运营官Tom Glaser，他将进入并真正实现这一目标。 Tom从VF加入我们，供应链与我们的目标非常相似，这是所有品牌利用一个统一的供应链，在整个组织内共享知识。我们对他的宣布非常非常满意。我们已经认识他好几年了，一直在追踪他们并与他约会了好几年，我们很高兴他决定加入我们。
第三，我会说，一方面，我们与欧洲品牌非常相似，因为我们直接面向消费者。我们的业务是95％或直接面向消费者。这是一个巨大的优势，这实际上是我们在整个企业中进行的大量投资的一部分。因此，当我们特别关注美国，以及最近我们在回购中国和亚洲的Kate Spade业务时所做的投资，Stuart Weitzman在中国和其他一些东南亚市场的业务，我们的业务现在遍布全球，除了美国的小批发业务，以及在欧洲仍有一些增长机会的批发业务，我想说，我们真的是直接面向消费者的业务。这与我们的欧洲同事非常相似，与许多批发更多的美国品牌玩家截然不同。
Great, thank you. So you hinted at one of my next questions, which is about digital, and what Noam’s mandate is as the new Chief Digital Officer, but can you talk a little bit about what you think the digital opportunity is still ahead for Tapestry?
Yeah, it’s still very significant. In general, when you look at premium, and I would say, right from the accessible luxury space that we play in up to traditional luxury, the business that is done digitally is in the vicinity of 10% compared to many other premium, I would say, branded, less more broadly wholesale distributed branded products where it can be anywhere from 20% to 25%. So the opportunity for those of us who have much more control of our own distribution to grow directly still through digital channels is substantial. I think that's through limited third party partners and just as importantly, through our own.
Much more opportunity is still in Europe, where our digital businesses are very small scale, but growing at a very, very fast clip, and growing well north of 30%, 40%. And in Asia, we're also not only direct, but through third-party platforms, we’re in certain conversations to drive that much more aggressively, as well as those platforms gain credibility. The reality is that in the US, there is still not great third-party platforms that consumers can go and access luxury goods on that are domestic.
There's one or two small platforms that play out of Europe, but they're mostly playing on price differences, based on selling product from European markets to the US to that consumer, giving them a savings, if you will. But if you think about the platforms in the US, specifically, the very large ones, they're not yet, I believe, at a stage where our brands can play in a credible way without some form of either danger of commoditization or just being perceived as being in the wrong neighborhood in terms of how the brand is shown to the consumer. And so that's something that we're very, very careful of. Noam joins us from a multi brand organization.
He was previously at the Gap where he ran all of their brands in a unified backbone. So he has that experience, which is very, very important to us. He's going to come in obviously and with Salesforce Cloud and Demandware, drive that across the entire organization, so that we’re sitting on one instance. And again, we benefit from the synergies, but then every investment that we make can go equally across the three brands and benefit the entire business, while also playing to that innovation agenda for us, because I think approaching, until today, all of the brands from a marketing perspective are approaching all of the social media platforms, all of the search platforms and other third parties from an innovation perspective on a very individualistic perspective.
And I think we can get the benefit. I don't know that there's immediate economic benefit, but there is certainly a learning agenda benefit, and the ability to take the learnings and scale them much more quickly from a revenue perspective. By putting that on an enterprise level, which we will be doing, so he will own the product, meaning all of the IT infrastructure and software that we're leveraging, as well as owning the agenda for us from an enterprise perspective to ensure that we're prioritizing all of the massive amounts of opportunities that are out there from an innovation perspective, they are truly endless, and you will hear us taking a few very significant steps forward with a few partners where we can now, based on having three terrific brands, be perceived as a strategic partner for them to try innovations on their platforms as well.
Great. So in the context of that digital opportunity, how do you think about the North American store footprint from here and within that, the mix of full price and outlet?
Yeah. I think that when I look at stores globally, and today we have a flat -- basically a fleet of approximately 1500 locations across the world. And I almost equally balanced more or less between a few more in the US. But Asia being the second largest piece, and very small and growing in Europe, as I mentioned, where there's still a wholesale opportunity, whereas there isn't one in Asia. I think that's in the US, you won't see us adding tremendous stores. In fact, I think you're going to see as leases come up with the Coach brand, we’ll be evaluating them on a case by case basis, and you'll probably continue to see a few closures as we go forward. And that's been our strategy following the very significant closures at the commencement of our transformation plan 4.5, 5 years ago.
Secondly, in the case of Coach, you'll see slight growth potentially still in China, as new cities continue to develop. There are tier 2 and tier 3, tier 4 cities where we may see some, again, some openings and closings, you won't see dramatic numbers, but maybe a few incremental openings for the Coach brand in Asia and a few incremental openings for the Coach brand in Europe.
Looking at Kate Spade, the opportunity is much more substantial. You'll see us opening 40 to 50 doors a year. The brand still has some opportunity here in North America much more limited, but still here. And I think then the most significant of which is across Asia and especially a tremendous focus on Greater China, where we continue to double down across all three brands, given how confident we are about the opportunity there for that consumer both domestically and what that consumer means for us in fact globally.
And in Stuart Weitzman, you'll see us also continuing to add doors again, much more focused on the China opportunity where we've bought back the business as is the case with Kate Spade. And we're now -- we've got the teams on the ground, able to not only drive the negotiations of those openings more effectively, but much more importantly, of course, drive the business on a day-to-day basis and build the brands.
是啊。我认为，当我在全球范围内看待商店时，今天我们有一个公寓 - 基本上是全球约1500个地点的车队。而且我在美国几乎同等地平衡了几个。但正如我所提到的那样，亚洲是第二大产品，而且在欧洲非常小且不断增长，但仍有批发机会，而亚洲没有。我认为那是在美国，你不会看到我们增加了大量的商店。事实上，我认为你会看到Coach品牌的租约，我们将根据具体情况对它们进行评估，你可能会继续看到我们前进的几个关闭。在5年前我们的转型计划4.5开始时非常重要的关闭之后，这就是我们的战略。
而在Stuart Weitzman，你会发现我们也会继续增加大门，更多地关注我们回购业务的中国机会，就像Kate Spade一样。我们现在 - 我们已经有了实地团队，不仅能够更有效地推动这些职位的谈判，更重要的是，当然，他们每天都在推动业务发展，打造品牌。
Okay. Great. And that was actually one of my next questions, so China, think about the strategic pillar of maximizing that opportunity, can you talk about the traction that you're seeing across the brands today, and what you see as the opportunity to go forward and then how you think about costs in China and specifically impacting the business from China tariffs?
好的。 大。 这实际上是我的下一个问题之一，所以中国，考虑最大化这个机会的战略支柱，你能谈谈你今天在品牌中看到的牵引力，以及你认为前进的机会和 那你如何看待中国的成本，特别是影响中国关税的业务？
Okay. Let's start with the second part, tariffs and then how we think about it. We've seen no impact from tariffs in terms of consumer sentiment. What we have seen, of course, is the impact of the initial tariffs that the US government has put on Chinese imports and the impact that that has on the product that we're importing from those markets from China into the US, which in the case of leather goods, which is the product that would be impacted today would be basically approximately 4% of our business, so very negligible. We've already baked that in and it's something that we were dealing with already last year, went to 25, dropped to 10.
Now we're back to the 25%. Now, of course, if the remainder of the second bucket of tariffs that's been discussed, which is north of $300 billion of product, which would impact more specifically footwear and apparel comes into play, then I think we're going to see for us a little bit more of an impact, but again, those businesses are much smaller to us, the footwear and apparel business, where we have a core handbag business that across basically our brands, leather goods in general handbags and small leather goods is well north of 50%, 60% would be much less of an impact than some competitors here in the US, as we read about.
And as I mentioned, we haven't seen necessarily and I don't read anything into the Chinese consumer being impacted by the discussion on trade tariffs. I was just in China and Japan, in fact, all of last week. And to the first part of your question, we remain very, very bullish about that market. The opportunity for us across the three brands is significant. The Coach brand has had a magnificent, I would say, right from January, December into the current period of business there, we invested in a very significant marketing campaign there last December, and that continues to be a wind at our back. In fact, we just finished a panel, which we've been discussing, a consumer panel where we saw Coach brand unaided awareness move from 32% to 41%, which is very significant jump in a one year period on the aided awareness side, the brand is north of 70, we are in the top five.
And I can tell you that from five to four, the drop off gets more and more significant. And so we're very excited about that. In the case of the Kate Spade brand, we're in the very early stages, it's in the same shape that I think you can think about from a size and business perspective that the Coach brand was when we took it back in 2008, at approximately a $40 million to $50 million business when we took it back. And we see great opportunity there. We're very heavily investing in talent, very heavily investing in the network, as I mentioned earlier, from a distribution perspective, getting that team aligned digitally.
Because the Coach brand has been a leader on all of the social media platforms WeChat, Sina Weibo, and now Redbook, we have been easily the number one fashion brand in all of those, that's been a long, long journey for us that we continue to stay a little bit ahead of the curve. And ahead of our competition on that, we're really excited by and was part of my agenda last week, in fact, with Noam in China, and we're looking to even double down further and push ahead further on that agenda.
And Stuart Weitzman is the main reason we were attracted to that brand is its success in that market. We've got doors that are really attractive, a tremendous opportunity to leverage that at scale. We've got a great team on the ground, very entrepreneurial, that was managing the business beforehand that continues to do so. And I think now, being beyond some of the logistics and supply chain issues that we dealt with, especially on the manufacturing side about a year ago, we see tremendous opportunity for that business to gain steam in the year ahead. So we're excited about China in general, very excited.
Stuart Weitzman是我们被该品牌吸引的主要原因是它在该市场上的成功。 我们拥有非常有吸引力的大门，这是一个大规模利用大门的巨大机会。 我们在实地拥有一支优秀的团队，非常具有企业家精神，他们事先管理着这项业务，并继续这样做。 我现在认为，超出我们处理的一些物流和供应链问题，特别是大约一年前的制造方面，我们看到该业务在未来一年获得动力的巨大机会。 所以我们对中国感到非常兴奋，非常兴奋。
Great. And switching a little bit to the category, can you just talk about what you're seeing in the market for premium bags and leather goods? And then what you're seeing in footwear and outerwear, and whether you're still confident in the accessible luxury position?
非常好。 并且稍微转换一下类别，你能谈谈你在高端包袋和皮革制品市场上看到的东西吗？ 然后你在鞋类和外套上看到了什么，以及你是否仍然对自由奢侈品的位置充满信心？
Yes. Okay. Total market for leather goods, footwear, outerwear, we're looking at a $90 billion global opportunity that is growing. And that I would say, in general, there's no one that could argue that it's not healthy. I think that when you look at what is happening, and you were hinting to that with the accessible luxury versus traditional luxury, the growth, especially in the handbag sector has been much more driven by the traditional luxury brands. And there's a couple of specialty that are driving that growth. And then from a brand perspective, and then I would say from a geographic perspective, especially coming out of Asia.
So when we look at accessible luxury, I think what's important there is and that compares, let's talk about handbag growth in the mid to high single digits and dollars globally. And if we look at the US, I would say low-single-digits is what we're seeing for the last couple of quarters. And when we look at that, the main difference comes down to the US has a much higher penetration of the accessible luxury brands. And the key learning there is one of brand management. The reality is that starting with ourselves in the mid to late-2000s and into this decade, and the transformation that we had to undergo and the fact that accessible luxury brands are mostly based here in the US, so we think of ourselves and our main competitors.
What part of the issue has been the lack of long term real brand management to some extent, I look at it and the need for brands to be more innovative and transforming themselves and manage themselves more healthfully in the home market where there is much more of a different dynamic in terms of distribution, in terms of promotional cadence, and the impact that may or may not have on brands. If we look at the accessible luxury brands and I can only put, so and there with real data point to ourselves. We look at our business in Europe where we're again still relatively small, but growing very healthily.
We look at our businesses across Asia, China and Japan, which was a very mature market that I participated and ran in for a good decade. And I look at having just been here last week, the health of our brands in those markets, I get excited about the opportunity for us. And then I think about where accessible luxury sits from a medium to long term perspective. And I think it's often in the market, there's a confusion and where people talk about the middle of the market. I don't look at accessible luxury being in the middle of the market. I don't really think there's much below us.
There's a tremendous unbranded space. But consumers are not very actively engaging with the unbranded handbag space. And I don't have a fear tomorrow that young women and consumers in general, young and old, are going to go and buy a non-branded Amazon or Walmart handbag to use a comparison, I don't have that fear. Okay, we live in the category where consumers leverage branding the most to help, if you will, create their own identity. And unlike some of the commoditized apparel categories, where you see a lot of product moving into some of the disposition channels, we call it here in North America, the TJ Maxx’s and others of this world, a lot of product moving into even some of the online platforms where the damage and the potential damage of basically commoditization comes into play.
We're being very careful to segment our channels, segments our markets, create a much more premium position internationally that we can leverage. And in the US, while it's a bit more challenging, we're being careful and playing for the long term. And then we look at the opportunity as people come into the accessible luxury space, which in essence is the entry into luxury. You come and they get their first experience with a branded handbag through Coach, through Kate Spade and Stuart Weitzman is in a little bit of a different place. And I'll talk about that separately, because their consumer is much more of a luxury consumer who is looking for shoes as an everyday -- Stuart Weitzman shoe for everyday.
The Stuart Weitzman consumers today probably already buying an LV, Gucci and other luxury handbag to name a few that we see in general in our studies. In the case of Kate Spade and Coach, we see it as the entry into luxury and the opportunity for consumers. And I do a lot of exercises, I encourage some of you to do it when you have nothing to do and you're on the train, count the number of unbranded handbags versus branded handbags. I do it all the time, I take 100.
And I look at what the number of unbranded handbags and that for me, that's all opportunity, as young women come into the space, of course, you have new consumers coming in, but you also think about the markets and developing markets and the opportunity that we have still in China, Southeast Asia, Indonesia for me is the next big opportunity, following China and Asia. That comes with India, of course, all of South America. And goodness, if we ever get Africa growing, I get excited.
我们非常谨慎地细分我们的渠道，细分市场，在国际上创造一个我们可以利用的更优质的地位。而在美国，虽然它更具挑战性，但我们要小心并长期玩牌。然后，当人们进入无障碍豪华空间时，我们会看到机会，这实际上是进入奢侈品市场。你来了，他们通过Coach获得了品牌手提包的第一次体验，通过Kate Spade和Stuart Weitzman在一个不同的地方。我将分别讨论这个问题，因为他们的消费者更像是一个奢侈品消费者，他们每天都在寻找日常鞋 - Stuart Weitzman鞋。
今天Stuart Weitzman的消费者可能已经购买了LV，Gucci和其他奢侈手提包，仅举几例我们在研究中看到的。在Kate Spade和Coach的案例中，我们将其视为奢侈品的入口和消费者的机会。而且我做了很多练习，我鼓励你们中的一些人在没有任何事情的情况下这样做而且你们在火车上，计算无品牌手提包和品牌手提包的数量。我一直这样做，我拿100。
We had a lunch speaker yesterday, who would make you pretty bullish about Africa?
Yeah, good. I am. I tell my own children that whereas China, in my career has been the center of my focus, I think for them, you only have to look at the pure demographics and the numbers in the youth and birth rates for at least my 19 and 18 year olds to think about Africa as probably what they're going to be focused on for the next 20 to 40 years. I hope, at least, that's what I’ve told them.
好耶。 我是。 我告诉自己的孩子，虽然中国在我的职业生涯中一直是我关注的焦点，但我认为，对于他们来说，你只需要看一下纯粹的人口统计数据以及青少年的数字和出生率至少我的19和18岁。 一年到头的人认为非洲可能会成为他们未来20到40年的重点。 我希望，至少，这是我告诉他们的。
So maybe switching a little bit to the opportunities that you see by brand, let's start with Coach. So what are the expected drivers to get you to the low single digit comps that you expect? And then, more broadly, how do you see opportunities for growth in your – with your most mature brands?
所以也许转换一下你所看到的品牌机会，让我们从Coach开始吧。 那么有什么期望的驱动因素能够让你达到预期的低单位数？ 然后，更广泛地说，您如何看待自己最成熟的品牌增长机会？
Sure, sure. I think, look, the keyword for the Coach brand obviously is comp, you're not going to see distribution growth, we talked about that. And comp needs to be driven by brand relevance, needs to be driven by innovation, and the way in which we create an emotional connection with the consumer and get them excited about the brand, which means being culturally relevant. And we're doing a tremendous amount of work on that. Josh Schulman, the CEO of that brand is experienced, energetic, he has a passion for this.
We have a great creative director who understands the space and what they have lined up for the next 12 to 24 months, and we have an agenda, 12 to 24 months from a product perspective, and specifically through this idea of leveraging collaborations and drops and maintaining and being a part of the conversation is truly, truly exciting. So that's where you're going to see a vast majority of our focus and of course, continuing from a distribution perspective, the incrementality is going to come out of Europe, where we still have a lot of room for growth and I would say secondly, leveraging the digital platforms across, especially the European, Asian, and to a lesser extent, but still very significant here in the US, given our base to continue to drive growth.
I think that's when you look at the other brands in the portfolio, we have distribution to play with. And as I mentioned, in the case of Kate, it’s truly global. In the case of then other categories, I think in the Coach case, we're definitely driving growth with footwear, which is a license that we took back three years ago, we've been on a learning agenda, we're finally getting to the point now where both from a supply chain perspective, from a design and merchandising perspective, we're beginning to hit it. And I think we'll see the same in the case of Kate Spade where we're taking that license back.
And we're going to leverage all of that three years of hard learning in the Coach brand to get that to jumpstart much quicker. And I think it will be quicker with Kate Spade, because that's a brand that already has and I see Jamie that you are wearing one of our dresses, but that's a brand that already has one of -- already has a lifestyle of fashion credibility. And that's very significant in terms of the consumer, giving us permission to be in those categories. And that's been a key part of our relevance in China.
We, in the US, we started as a heritage handbag brand in China, from very early days, we had outerwear, we had footwear, and we developed the brand as a lifestyle brand, which not only takes some pressure off of the handbags, but gives us the relevance and the cultural context for the brands that continue to renew itself and that's significant. And so in the case of Kate Spade, we have that in all of the markets that we're in. So I think we're going to see an even quicker uptake. The brand already has higher penetration in ready to wear and in footwear in certain cases. But we're going to see a quicker uptake, especially on the take back of the footwear license, which we look to have year one in the next 12 months.
好的好的。我认为，看起来，Coach品牌的关键字显然是合适的，你不会看到分销增长，我们谈到了这一点。 comp需要由品牌相关性驱动，需要由创新驱动，以及我们与消费者建立情感联系并让他们对品牌感到兴奋的方式，这意味着与文化相关。我们正在做很多工作。该品牌的首席执行官Josh Schulman经验丰富，精力充沛，他对此充满激情。
而且我们将利用Coach品牌中所有这三年的艰苦学习来快速启动。而且我觉得Kate Spade会更快，因为这是一个已经拥有的品牌，我看到杰米，你穿着我们的一件衣服，但这是一个已经拥有的品牌 - 已经拥有时尚可信度的生活方式。这在消费者方面非常重要，允许我们加入这些类别。这是我们在中国相关的关键部分。
Okay. Great. And so switching gears to Kate, what do you see as the most significant accomplishments that you've made in the brand since you acquired it? And then what are the areas where you still feel like there's more work to do?
好的。 大。 因此切换到Kate，您认为自从您获得品牌以来，您在品牌中取得的最重要成就是什么？ 然后你仍然觉得还有更多工作要做的领域是什么？
Yeah. So first I think, look, and I stated this a little bit when I talked about our platform. And I think it's important to reiterate, we went in with eyes wide open into what the Kate Spade opportunity was, what we thought the valuation was and obviously from a brand that we knew everyone knew is very public, publicly traded company that had been comping negatively, and the opportunity to drive growth by both getting the product right and to leveraging the distribution opportunity, given the experience that we had. Those were the two very significant insights that we had going in. And so we have basically been incredibly busy taking a brand that in essence, could benefit first and foremost from our platform.
So the brand is already fully on the Coach supply chain, Tapestry’s supply chain now and benefiting from better pricing and that's been where we've seen all of the gross margin accretion over the past 12 months. Now, as we get into this quarter, we already are in fact, we're comping that. But we had over the last 12 months, a very significant gross margin accretion and benefit at better quality. And now, if there are any Kate Spade consumers, either here or listening, go to the store today look at the quality compare to what was prior us, and the feedback we're getting is very clear, very, very positive.
And so it's on our supply chain platform, two, it's already on our systems platform. So in fact, Kate Spade was the first one of our brands to be fully on the S/4HANA platform. So it's already beginning to benefit from all of that, which allows then, of course, for the synergies we had, we don't need two or three IS teams managing what in essence in Kate Spade alone was, I believe we had four or five ERP systems, managing $1 billion business or north of 1 billion, we're now putting the whole company on the one system. And then secondly, from a platform perspective, of course, benefiting from the front end, so they're benefiting from the analytics that our data labs team can provide, they're benefiting from actually just us putting in place processes that allow us to capture the actual data from consumers.
This is still a very brick-and-mortar driven business and they were capturing transactions, for example, prior to our acquisition at a 25% to 30% clip. We brought them into a standard where we're capturing data on 85% to 90% of consumers that come into our stores. That's a gold mine. That is something that makes -- that is what in essence is making up that 120 million that we have and we're able to see of course performance and look at transactions now as well across brands with much more confidence than what we were able to before. We've put the team in place. We have a CEO and a creative director that have done this that have basically driven and merchandised a handbag driven business from, at scale to up to $4 billion business.
And so we have a lot of confidence in their ability to understand what it means to take a Kate Spade handbag core business from $1.2 billion to $2 billion over our planning horizon, which is our target. And I'm really excited that from day one as a result of those decisions and the valuation that the thing has been accretive from the very first day. And now we're in the process, of course, of launching just over the last three months, Nicholas First [ph] collections as we transform the entire full price fleet and products, which will be done by the end of this month, we're actually in the last month right now, almost all of the product is already in Nicholas collection. And slowly the same will happen in outlet, about 25% to 30% of that product, by the end of the quarter will be Nicholas with a lot of work to do so over the next few months. But we're excited about what we're seeing and truly believe the opportunity for us is limitless when we think about, especially the global and international growth.
所以它在我们的供应链平台上，两个，它已经在我们的系统平台上。事实上，Kate Spade是我们第一个完全进入S / 4HANA平台的品牌。因此，它已经开始受益于所有这一切，当然，当然，为了我们所拥有的协同作用，我们不需要两个或三个IS团队来管理Kate Spade本质上的本质，我相信我们有四个或者五个ERP系统，管理10亿美元业务或10亿北方，我们现在将整个公司放在一个系统上。然后，从平台的角度来看，当然，从前端受益，所以他们从我们的数据实验室团队可以提供的分析中受益，他们实际上只是从我们实施允许我们的流程中受益从消费者那里获取实际数据。
这仍然是一个非常实实在在的业务，他们正在捕获交易，例如，在我们以25％至30％的收购价格收购之前。我们将它们带入了一个标准，我们正在为进入我们商店的85％到90％的消费者捕获数据。那是一个金矿。这就是我们所拥有的东西 - 这实际上是我们拥有的1.2亿，我们能够看到当然的业绩，现在看看各个品牌的交易，比我们能够更有信心的品牌之前。我们已经把团队安排到位。我们有一位首席执行官和一位创意总监，他们已经完成了这项工作，基本上推动并推销了一个手提袋驱动的业务，从规模到高达40亿美元的业务。
因此，我们非常有信心能够理解在我们的规划期内将Kate Spade手袋核心业务从12亿美元增加到20亿美元意味着什么，这是我们的目标。从第一天开始，我就非常兴奋，因为这些决定以及从第一天开始就增加了这个东西。当然，现在我们正在进行过程，即过去三个月内推出Nicholas First [ph]系列，因为我们将改造全部价格的车队和产品，这将在本月底完成，我们实际上在上个月，几乎所有产品都已经在尼古拉斯系列中。并且慢慢地同样会在插座中发生，大约25％到30％的产品，到本季度末将是尼古拉斯在接下来的几个月里做了很多工作。但我们对我们所看到的东西感到兴奋，并且真正相信当我们思考时，我们的机会是无限的，尤其是全球和国际增长。
And so on that topic, can you just talk a little bit more about what you see as the key growth path to get Kate to 2 billion and a little bit about the response that Nicholas First collection had?
I mean, it'll be driven by comps and driven by distribution. I mean, as I mentioned, we got 40 to 60 doors, and China especially is a tremendous focus, Southeast Asia, where we're beginning to push forward as well, write it down into Australia and a little bit less so, a little bit less so, but, because the brand is more mature in Japan, and then Europe is like the Coach brand all Greenfield and we'd like very much what we're seeing in the initial stores that we've walked back in China, we know the trends, we've been there. So it's a journey we've taken with the Coach brand, this is not new road for us. And yes, the context has changed. But the relationships that we have, the understanding of the consumer in the market, and the resources that we can put to play to driving it are obviously very, very clear and proven. And I think in the case of Nicholas product, I mean, it's been really pleasing to see that product perform per the penetration that we planned at plan. And so over the next, I think, as we roll out the rest of outlet product, we’ll continue to see progress, leading to the positive comps that we have guided to.
Okay. Stuart Weitzman, can you talk about how you think about profitability for the brand? And, whether there are any structural reasons why the brand won't return to double digit margins?
好的。 Stuart Weitzman，您能谈谈您对品牌盈利能力的看法吗？ 而且，是否有任何结构性原因导致该品牌不会恢复到两位数的利润率？
Structural reasons? Absolutely not. I mean, I think at the end of the day, that is a business that when we bought it was much more of a wholesale business, that by definition, as a result, was going to be capped in growth. Because it was well distributed from a wholesale perspective, there is no, again, I want to repeat, because there really is no wholesale opportunity in Asia for luxury brands. This is, whether you're in a department store, or you're in a shopping mall, it is a retail business, unless you start getting into what you can get into is licensing the brand to some extent, which obviously from a brand management perspective, given the opportunity for gross margin, and profitability accretion from those markets would be the absolute wrong decision and especially with the proven experience and teams that we have on the ground there.
And the impact that that consumer has in the duty free markets, the impact that that consumer has in duty paid markets, both here in the US, a little bit less right now, given the current environment. And of course, very significant in Europe where that brand has a presence. So good brand management in those markets is absolutely key to driving global profitability for the luxury space, absolutely key. So we're being very careful. And we've taken that back. So being more of a wholesale, moving from a wholesale to a retail business is absolutely necessary. And of course that comes with all of the initial, again, a path we’ve traveled, it comes with all the initial investments, you got to take the real estate on, you got to take the staffing on, you got to put inventory in stores, you got to market directly and not depend on third parties.
And doing that more effectively, of course with more consistency, and better health leads to the returns that we will see in that brand. Now, that's combined with as I mentioned, of course, our own executional issues that we had last year around this time with the brand which really started with the founder leaving us and the fact that the brand did not have the systems, the talents, and I think the processes in place to make up for that departure and that was our own team’s opportunity to not have really managed that as effectively as we could. We've been working incredibly hard. It's the only brand that we have that depends on the Spain supply chain, almost fully, which is part of the opportunity. So we’ve been working incredibly hard to put the talent in there, get the production capacity in place, ensure that the quality and the processes are there for on time delivery, and the vast majority of those issues are now behind us, and I think you will see us with a significant inflection, and that brand’s profitability in the fiscal year ahead.
Now, I've gotten a couple of questions from the audience about the next topic, which is capital allocation. So, you recently announced the billion dollar share repurchase program. A couple of the questions from the audience are around just the language that you used around that announcement in terms of using it to offset dilution rather than looking at your share price and thinking that's the best investment you can make today.
现在，我从观众那里得到了关于下一个主题的几个问题，即资本分配。 所以，你最近宣布了十亿美元的股票回购计划。 观众提出的几个问题只是围绕着公告所使用的语言，用它来抵消稀释而不是看你的股价，并认为这是你今天可以做的最好的投资。
Yeah, it is right now.
So can you just talk about how you think about capital allocation and your priorities?
Sure. We've been clear and very, very consistent. I mean, the number one investments we're making, of course are behind our brands and driving our business both. Every year, we've been returning 350 million to 400 million to shareholders via our dividend, we expect to maintain that, we want to maintain that, we are maintaining it. And of course, most recently, we've announced the buyback, we got $1 billion repurchase program in place, which allows us, yes, first and foremost, to deal with dilution. But as we said, in our notes, at the last call, and, as I'll say here live today as well, when the opportunity is there, and we feel that the value is there for us, we will be looking at beyond dilution. And that's all we will say at the moment.
当然。 我们一直很清楚，非常非常一致。 我的意思是，我们正在进行的头号投资当然落后于我们的品牌并推动我们的业务。 每年，我们通过股息向股东返还3.5亿至4亿股，我们期望维持这一点，我们希望维持这一点，我们正在维持这一点。 当然，最近，我们宣布了回购，我们获得了10亿美元的回购计划，这使我们首先能够应对稀释。 但正如我们所说的那样，在我们的笔记中，在最后一次电话会议上，并且，正如我今天所说的那样，当机会在那里时，我们觉得价值在那里，我们将会超越 稀释。 这就是我们现在要说的全部内容。
Okay. Fair enough. So in a minute, I'm going to open up to more of your questions. If you have any them, please do write them on the card and someone will come around and collect them.
好的。 很公平。 所以在一分钟之内，我会打开你的更多问题。 如果你有任何它们，请在卡片上写下来，有人会到处收集它们。
You've done such a good job with your list, you've answered all of them.
I don't know, I bet they have more. They probably have some tough ones. My last question, though, is actually a question that all Bernstein analysts are asking all CEOs that have come to sit down with us at the conference this year. So we're trying to think about themes across, I think, 109 companies that we have here. So the question is this, what are you investing in today that you think will have the biggest payoff in the next five years?
我不知道，我打赌他们还有更多。 他们可能有一些艰难的。 不过，我的最后一个问题实际上是一个问题，所有伯恩斯坦分析师都要求所有在今年的会议上与我们坐下来的所有CEO。 因此，我们试图考虑我们在这里拥有的109家公司的主题。 所以问题是，你今天投资的是什么，你认为在未来五年内会有最大的收益？
I think for us, without a doubt, at the top of our list is our brands. I mean, the number one single most important asset that we have is ensuring their relevance, ensuring their health from a long term perspective. And that comes down, of course, to first and foremost, as I touched upon managing that distribution, controlling and managing pricing as much as possible, which is key to the long term brand health of the franchise, putting the right marketing in place, and making sure that we remain culturally relevant and part of the conversation, which is absolutely necessary when you're in the fashion space. So I would say that that's absolutely key.
Two, we've been making and I touched upon this earlier, I mean, we've been making substantial investments in the platform that will allow those brands as a result of being the whole being better than the sum of the parts, better managed, and hopefully better leveraged through our infrastructure and platforms that we're putting in place. And that comes down, of course, to what we're doing from a systems perspective, supply chain perspective, with a lot of work still ahead of us there. And as well, from a real estate perspective, as we look to leverage the portfolio across 1500 stores and how we manage the current portfolio much more effectively go forward with the leverage of the three brands as well.
And then lastly, I don't think there's anything more important than our team and people. So the announcements that we have made in terms of Tom and Noam and others that we continue to make in terms of getting just the right talent in place that has been there, knows the journey that we want go on, and can much more effectively help us achieve it and execute with the high level of perfection. That's the key areas where I think you'll see us at least see the investment.
Now, if I were to talk much more globally, I would say that in terms of just the trends that we see, over the next 5 to 10 years, there's no doubt that technology and the impact of technology is one. And then secondly, of course, globalization and the need for us to continue to look at global markets as room for growth is absolutely vital to ensure that we're relevant because consumers continue to travel, consumers across the middle class, across the world continues to play an increasingly important role in the consumer marketplace. And as consumer brands, we need to be there and develop our brands very early on. So we're going to have to make our bets there.
Okay. So some questions from investors in the room. One is, can you talk maybe a little bit on that globalization topic, just about European markets and what you're seeing there?
好的。 所以房间里的投资者提出了一些问题。 一个是，你能谈谈这个全球化话题，关于欧洲市场和你在那里看到的东西吗？
Sure. We’re less, I would say compared to some of our competition, well, there's only one really large player in Europe in the accessible luxury place. And they were there first, when we were very, very focused on Asia. And so I think they benefited from that, we're really pleased with what we're seeing. I mean, we are, I would say now, in the midst of seeing the traction that we've been working so hard to achieve, and it's come, I think, as a result of a tremendous amount of key important decisions that we've made from a focus perspective. We initially went in to Europe, which is a very expensive market from a real estate perspective.
So one needs to be very, very careful. But we initially went into Europe. And rather, I would say the other key -- there's a lot of, obviously regulatory restrictions from a talent perspective and other areas in terms of recruitment and the like. And so we've been very careful in terms of the decisions that we made. But when we initially went in, we knew that we would benefit from our tourist traffic, specifically the Asian consumers who come to Europe, and the beautiful thing now is, we're beginning to see very real traction with a local customer.
And we know that that's an opportunity, it's an opportunity, not only in the sense that the European consumer, like the American consumer, is beginning to see the attractiveness of the accessible luxury space, too often, we can sit in a room like this and think, oh, they're going to Europe to compete with the traditional luxury brands, the traditional European, middle class consumer are not all carrying European luxury brands, they're not all in the $2500 to $3,000 AUR bucket.
And so the opportunity is for them to actually see an attractive global offering in the accessible luxury space. And the accessible luxury players out of Europe have been much weaker. The accessible luxury players out of the US have been the ones that have created the standard globally. And there is one there and we are very much now in play to be the next and we're being very aggressive. So we're excited about it, we're not seeing, I think some of -- again a lot of noise, in terms of Brexit, a lot of noise in terms of tourists. And I can look at the last 24 months and see ups and downs in certain markets.
But generally, I would say underlying tone is we're pleased with what we're seeing for our brands and the traction that we're seeing, and really pleased with what we're seeing in traction on the dotcom space, and doubling down to now roll that out much, much more aggressively. And I would say at a much higher standard as we bring all of our platforms there onto the Demandware platform so that we can leverage the infrastructure across Europe.
所以需要非常非常小心。但我们最初进入欧洲。更确切地说，我会说另一个关键 - 从人才角度和招聘等方面的其他方面来看，显然存在很多监管限制。因此，我们在做出的决定方面一直非常谨慎。但是当我们最初进入时，我们知道我们将从我们的旅游交通中受益，特别是来到欧洲的亚洲消费者，现在美好的事物，我们开始看到与当地客户非常真实的牵引力。
因此，他们有机会在无障碍的豪华空间中真正看到具有吸引力的全球产品。而来自欧洲的无障碍豪华玩家则要弱得多。美国以外的无障碍豪华玩家是那些在全球范围内创造标准的玩家。而且那里有一个，我们现在非常注重成为下一个，我们非常积极。所以我们对它感到兴奋，我们没有看到，我认为其中一些 - 在英国退欧方面又是很多噪音，在游客方面噪音很大。我可以看看过去24个月，并看到某些市场的跌宕起伏。
Okay. And another question, which is can you talk about your views on the luxury resale market?
Yeah, we've been asked that a little bit, because I think there's at least one or two potential IPOs in the US market especially, and I’ve talked a bit about it in our last call. And we actually -- it's a space we know, it's a space we followed. And what I can share with you is having been in Asia, a good 15 years of my career and seeing what is referred to there as the parallel market, which in essence, are consumers, traders, third parties buying product from less, lower premium markets in Europe and the US and then reselling in Asia, this is not new.
The difference, of course, is they're buying new product, reselling it new in the Asian markets to take advantage of pricing. So I'll start there where in Asia today, we do not see the consumer being attracted to the idea of buying a used handbag. That's very, very clear. Okay, with very slight exception. So what the main thing we've seen in the used, I should say, in that perspective, resale used market is very, very substantial share for watches, of course, gold and other jewelry where the intrinsic value -- the intrinsic resale value is real. And there's a global marketplace for it.
If I come to the US and specifically with some of US and Europe, specifically with some of the more recent sites and a lot of attention around it, because there's a potential IPO, so all of these other platforms that are third party platforms, and all looking for the opportunity to how do they fight for that market share, how much market share really there is, and we've done analysis on some of these platforms and you can go into it. What you see is that is traditional luxury, selling, yes, at a lower price.
But still at very high AURs in the handbag space, you go into these platforms and you're going to see a traditional luxury bag that resold, that was sold at 2500 and the consumer maybe is thinking, this is last season's bag, I'm going to sell it and I'm going to use the money to help me buy this season's bag. They're selling it for $1,000, you're not going to have someone come to your home, pick up a handbag, refurbish it, put it into DC and ship it back out at much lower AURS and still drive tremendous profitability.
And so that's really what we've been seeing basically, as a much higher AUR and consumers who are looking for the next European fashion bag, buying into that fashion bag. Does that mean some of them are trading up from accessible luxury? Yes. Does it mean that some of them are maybe already luxury customers who are not buying new and are buying used? Yes, but I don't see it, given the numbers of units in the accessible luxury space and the numbers of units that we estimate at those AURs on these sites. I don't see it as a threat necessarily to us into what we're doing in our space.
是的，我们被问到了一点点，因为我认为在美国市场上至少有一两个潜在的IPO，我在上次电话会议上谈了一些。我们实际上 - 它是我们所知道的空间，它是我们遵循的空间。我可以与你分享的是在亚洲，我职业生涯的15年，并看到那里所谓的平行市场，实质上是消费者，交易商，第三方从更少，更低的溢价购买产品在欧洲和美国市场然后在亚洲转售，这并不新鲜。
当然，不同之处在于他们正在购买新产品，在亚洲市场转售新产品以利用定价。因此，我将从那里开始，在今天的亚洲，我们看不到消费者被购买旧手提包的想法所吸引。这非常非常清楚。好的，非常轻微的例外。那么我们在使用过程中看到的主要内容，我应该说，从这个角度来看，转售二手市场对于手表来说是非常非常可观的份额，当然，黄金和其他珠宝的内在价值 - 内在的转售价值是真实的。它有一个全球市场。
And maybe last one. So you talked about your investment in team and we talked about specifically about Noam and his role in digital and you talked a little bit about your newest hire? Can you talk about Tom a little bit more in terms of what that opportunity is?
也许最后一个。 所以你谈到了你对团队的投资，我们特别谈到了Noam和他在数字方面的角色，你谈了一下你最近的聘用？ 关于这个机会，你能谈谈汤姆吗？
Sure, yeah, he's a highly experienced individual who has been leading the entire supply chain for VF Corp who, and its first and foremost company, we admire greatly and have a tremendous amount of respect, in terms of how, not only they've integrated brands, managed them, but just as importantly, how they've created a very flexible and massive footprint in their supply chain to deal with a number of units, which I think we're a small portion of. So dealing with complexity, dealing with speed, both owned and third party, third party manufacturing, which are all things that we need to think about and consider because as soon as you start getting into customization at scale, speed at scale, these are the things that we're most interested in.
And Tom brings a real unique expertise and having done that, within that organization, but look, nothing, of course, compares with just a proven, great global leader, global leader who understands talent, can motivate talent, drive talent, help us make the key decisions across the platform, and then across in essence, all of our manufacturing, all of our distribution, all of our IS systems, ensure that from the front end of the business, right to the factory floor, that we're tied in, and can leverage the great work that the brand teams are doing, and pull that product through much more effectively, so that we're not tied to the old process, which in essence, even through all of the digitization that's taken place, when you still have your traditional fashion companies still operating on a 12 month calendar, hard to believe, but true. We're designing product with blinking samples and putting it through, we're ordering it, not knowing what's going to sell or sell and making some guesses and then putting it through into an inventory bucket that we then look to create demand on which is a very old way of looking at things. So a lot of opportunity and I'm excited. He joins us July 15. And excited by all of the opportunity he has to help us be much better in creating the Tapestry platform for the three brands to benefit from.
Okay. Well, thank you so much.
Thank you, Jamie. Thank you, everybody.
Thanks for being here.
- Tapestry, Inc. 电话会议
- Tapestry, Inc. 财务报告
- 老虎证券开户教程 美股8折佣金， 11股小米股票（价值385港币）, 还会邀请你进付费交流群
- 雪盈证券开户教程 开户后 最高可领取1066港币。美股佣金最低0.002美元/股，港股小额免佣，打新手续费全免
- 富途牛牛证券开户教程 开户即可领取1股汇丰，入金达到2万港币即可领取1股腾讯；新股一键认购，最高支持10倍杠杆融资，免新股认购手续费，暗盘交易免佣；
- 华盛通开证券户教程 开通美股或者港股， 享受现金200元,美股8折奖励。
- 微牛证券开户教程 首次入金到账2000美金以上，可以免费抽取5只股票，每只价值9-1400美金。转仓可以报销，上限100美金。
- 必贝证券开户教程 开通后 享有280元现金奖励
- 玖富证券开户教程 开通后 最低入金1W港币可以领218元红包
- 长桥证券开户教程 开通后 可获得15美金~25美金奖励
- 盈立证券开户教程 注册随机领3股，注册后可随机抽取苹果、腾讯、阿里、京东等热门股票
- 美股开户教程, 请查看
- 港股开户教程, 请查看
- 美股、港股入金教程, 请查看
- 美股、港股投资交流群, 请查看
- 美股、港股开户优惠汇总, 请查看
- 如何购买Tapestry, Inc.股票
- 美股、港股付费交流群, 请查看