1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,920 --> 00:00:09,160 Speaker 2: Dodd, it's great to see you here. 3 00:00:09,240 --> 00:00:13,360 Speaker 1: We're in Coach House right here on Fifth Avenue in 4 00:00:13,440 --> 00:00:16,120 Speaker 1: New York City, to really talk about what I guess 5 00:00:16,200 --> 00:00:18,640 Speaker 1: has become a bit of a revival for the Coach 6 00:00:18,960 --> 00:00:23,360 Speaker 1: brand itself. Sales have taken off, sales growth, I should say, 7 00:00:23,480 --> 00:00:25,320 Speaker 1: and a lot of that has to do with the 8 00:00:25,400 --> 00:00:28,240 Speaker 1: laser focus that you and your team have put on 9 00:00:28,760 --> 00:00:32,680 Speaker 1: Generation Z and their shopping habits. And I wonder if 10 00:00:32,680 --> 00:00:34,520 Speaker 1: you can maybe start off by just talking a little 11 00:00:34,520 --> 00:00:37,920 Speaker 1: bit about what exactly you learned about what they wanted. 12 00:00:38,320 --> 00:00:41,360 Speaker 3: Yeah, well, thank you and thank you for joining me 13 00:00:41,440 --> 00:00:44,479 Speaker 3: in Coach House. We love having you here. It is 14 00:00:44,520 --> 00:00:48,120 Speaker 3: our home, it's our global flagship, and it's probably the 15 00:00:48,159 --> 00:00:51,600 Speaker 3: best representation of the brand, so come visit. 16 00:00:52,680 --> 00:00:55,640 Speaker 2: That's the quick editorial. No, we. 17 00:00:57,120 --> 00:01:00,840 Speaker 3: Focus very much on trying to figure out I often 18 00:01:00,880 --> 00:01:04,160 Speaker 3: say we're an overnight success story, six years in the making. 19 00:01:04,680 --> 00:01:09,840 Speaker 3: And Stewart and I many years ago recognized among other 20 00:01:09,880 --> 00:01:13,800 Speaker 3: people at Coach as well, that we were too much 21 00:01:13,880 --> 00:01:16,920 Speaker 3: often considered a brand for everyone and hence a brand 22 00:01:16,920 --> 00:01:21,160 Speaker 3: for no one, and we became extraordinarily focused on Gen 23 00:01:21,280 --> 00:01:26,800 Speaker 3: z and part of our focus was listening, learning, doing 24 00:01:26,880 --> 00:01:29,360 Speaker 3: a lot of sometimes what I call big data and 25 00:01:29,400 --> 00:01:30,160 Speaker 3: little data. 26 00:01:30,280 --> 00:01:31,240 Speaker 2: Big data is. 27 00:01:31,600 --> 00:01:35,480 Speaker 3: We're a direct to consumer business. We have millions of customers. 28 00:01:35,520 --> 00:01:37,759 Speaker 3: We have a lot of data from them. Little data 29 00:01:37,920 --> 00:01:41,160 Speaker 3: is sometimes going into people's houses doing shop. 30 00:01:40,920 --> 00:01:45,360 Speaker 2: Alongs with them. They don't often know which brand they're. 31 00:01:45,160 --> 00:01:49,240 Speaker 3: Speaking with and listening to them, and we gain real 32 00:01:49,400 --> 00:01:52,080 Speaker 3: insight from them. And so what I often say is 33 00:01:52,600 --> 00:01:56,000 Speaker 3: I don't want to supplant the gut of our creatives. 34 00:01:56,280 --> 00:01:57,920 Speaker 2: I just want to create an informed gut. 35 00:01:58,240 --> 00:02:01,120 Speaker 3: So that's what we're doing and and that's what you're 36 00:02:01,120 --> 00:02:01,880 Speaker 3: seeing working. 37 00:02:02,320 --> 00:02:06,000 Speaker 1: There was a great line by your predecessor, Lou Frankfurt, 38 00:02:06,840 --> 00:02:09,760 Speaker 1: who ran coach as a company for years, who talked 39 00:02:09,760 --> 00:02:12,520 Speaker 1: about the idea of never assume. 40 00:02:12,800 --> 00:02:13,600 Speaker 2: Always ask. 41 00:02:13,960 --> 00:02:17,480 Speaker 1: And I am curious about the balance between asking the 42 00:02:17,520 --> 00:02:20,440 Speaker 1: consumer what they want and just looking at the hard data. 43 00:02:20,520 --> 00:02:23,120 Speaker 1: What is sort of the line where those two intercept. 44 00:02:24,040 --> 00:02:28,720 Speaker 3: That's such a powerful place to talk lose a mentor 45 00:02:28,800 --> 00:02:31,600 Speaker 3: a dear friend. I had the opportunity to be hired 46 00:02:31,600 --> 00:02:35,000 Speaker 3: by Lou, I worked with him for many years. He's 47 00:02:35,040 --> 00:02:39,360 Speaker 3: still somebody I talked too often. We launched his book 48 00:02:39,360 --> 00:02:44,480 Speaker 3: party at Coach when it first came out. We talk 49 00:02:44,560 --> 00:02:48,040 Speaker 3: a lot about balancing logic and magic, and that's the 50 00:02:48,200 --> 00:02:52,959 Speaker 3: art you want to hear from the consumer. But I 51 00:02:53,000 --> 00:02:57,119 Speaker 3: don't want the consumer to create a back Okay, we'll 52 00:02:57,120 --> 00:03:00,320 Speaker 3: get their input, we'll co create with them, but we 53 00:03:00,360 --> 00:03:03,519 Speaker 3: have an amazing creative director, amazing. 54 00:03:02,960 --> 00:03:04,160 Speaker 2: Designers and merchants. 55 00:03:04,600 --> 00:03:08,720 Speaker 3: I want them to be informed, But ultimately I don't 56 00:03:08,720 --> 00:03:13,680 Speaker 3: want to outsource our commercial judgment, or our business judgment, 57 00:03:14,080 --> 00:03:19,240 Speaker 3: or our creative judgment. And finding that balance is where 58 00:03:19,320 --> 00:03:21,720 Speaker 3: the magic takes place. 59 00:03:22,520 --> 00:03:25,640 Speaker 4: I think that's really interesting because it sounds like basically 60 00:03:25,960 --> 00:03:28,079 Speaker 4: you're saying that you don't want to be too reactionary. 61 00:03:28,280 --> 00:03:31,840 Speaker 4: You know, you think about fashion, you think about handbags, 62 00:03:31,880 --> 00:03:34,000 Speaker 4: and you know this is actually a conversation we've had 63 00:03:34,040 --> 00:03:36,240 Speaker 4: with Lou. I mean, how much of it is being 64 00:03:36,320 --> 00:03:40,080 Speaker 4: that taste maker trying to anticipate where the trends are 65 00:03:40,080 --> 00:03:43,200 Speaker 4: going to go versus you know, following the logic, following 66 00:03:43,600 --> 00:03:46,400 Speaker 4: the data and seeing what is resonating with gen Z 67 00:03:46,560 --> 00:03:47,240 Speaker 4: for example. 68 00:03:47,920 --> 00:03:51,480 Speaker 3: Yeah, so what we do again, Lou said it, we 69 00:03:51,640 --> 00:03:55,040 Speaker 3: have to remain curious. Also, what I often talk about, 70 00:03:55,040 --> 00:03:57,840 Speaker 3: we have to remain humble. We don't have all the answers. 71 00:03:58,920 --> 00:04:01,720 Speaker 3: We have a sense of where fashion is going. We 72 00:04:01,840 --> 00:04:06,120 Speaker 3: pick up cues. Our creatives, our designers, our merchants are 73 00:04:06,160 --> 00:04:11,360 Speaker 3: shopping the streets of Shanghai, of Tokyo, of New York, 74 00:04:11,560 --> 00:04:16,560 Speaker 3: of LA and seeing and listening to trends. We are 75 00:04:17,000 --> 00:04:20,279 Speaker 3: not just following trends. If you're just in the following 76 00:04:20,400 --> 00:04:24,960 Speaker 3: trend business, you're not really a significant fashion house. 77 00:04:25,440 --> 00:04:27,320 Speaker 2: So we're listening to what they like. 78 00:04:27,440 --> 00:04:32,440 Speaker 3: We understand there's functional needs and coach I will say 79 00:04:32,440 --> 00:04:36,320 Speaker 3: in our eighty five year history, excel at having an 80 00:04:36,360 --> 00:04:38,119 Speaker 3: incredibly high functioning bag. 81 00:04:38,760 --> 00:04:41,960 Speaker 2: But what draws you to our category? 82 00:04:42,440 --> 00:04:44,960 Speaker 3: No one needs our category. You can carry your stuff 83 00:04:45,000 --> 00:04:47,120 Speaker 3: in a paper bag, you can carry your stuff. 84 00:04:46,880 --> 00:04:48,360 Speaker 2: In a fifty thousand dollars back. 85 00:04:49,920 --> 00:04:54,640 Speaker 3: Of course there's material differences, but ultimately it's an emotional purchase. 86 00:04:55,240 --> 00:04:59,440 Speaker 3: We want to make sure our bags talk to that person, 87 00:05:00,040 --> 00:05:02,599 Speaker 3: connect emotionally with them, and. 88 00:05:02,480 --> 00:05:04,520 Speaker 2: That's what we do. 89 00:05:04,640 --> 00:05:06,680 Speaker 3: I think when we do it well, we're doing it 90 00:05:06,760 --> 00:05:07,560 Speaker 3: our best. 91 00:05:07,839 --> 00:05:08,000 Speaker 2: Well. 92 00:05:08,040 --> 00:05:10,520 Speaker 4: You mentioned that global perspective, and I do want to 93 00:05:10,520 --> 00:05:14,159 Speaker 4: bring that back to the conversation around gen Z, since 94 00:05:14,360 --> 00:05:16,640 Speaker 4: you know that's not that many are trying to crack. 95 00:05:17,000 --> 00:05:19,520 Speaker 4: You think about gen Z and it seems like looking 96 00:05:19,560 --> 00:05:22,599 Speaker 4: at their shopping trends, that it's much more about items. 97 00:05:22,600 --> 00:05:26,120 Speaker 4: They're more comfortable, you know, buying luxury, buying affordable luxury, 98 00:05:26,160 --> 00:05:29,159 Speaker 4: whereas Millennials, which is my generation, it was much more 99 00:05:29,440 --> 00:05:33,040 Speaker 4: and it still is about experiences. Travel, for example, it 100 00:05:33,120 --> 00:05:37,160 Speaker 4: comes at a premium, but the American gen Z shopper 101 00:05:37,920 --> 00:05:41,200 Speaker 4: does that profile apply around the world as well. 102 00:05:41,839 --> 00:05:44,960 Speaker 3: So it's interesting something we've learned about gen Z. First, 103 00:05:44,960 --> 00:05:49,799 Speaker 3: they're the most connected generation in history. The influences somebody 104 00:05:49,839 --> 00:05:54,760 Speaker 3: sees in soul, in Shanghai or New York are similar. 105 00:05:54,839 --> 00:05:59,440 Speaker 3: If you think about some of the number one music 106 00:05:59,640 --> 00:06:04,760 Speaker 3: or movies. They're similar across all geographies. And because we're 107 00:06:04,800 --> 00:06:08,719 Speaker 3: all so connected socially, their likes and dislike are often 108 00:06:08,839 --> 00:06:09,480 Speaker 3: very similar. 109 00:06:09,800 --> 00:06:11,800 Speaker 2: Now many gen Z will tell you they love. 110 00:06:11,680 --> 00:06:16,160 Speaker 3: Experiences just as much as you love experiences. The difference, 111 00:06:16,200 --> 00:06:20,360 Speaker 3: I think is they're very, very thoughtful about their purchases. 112 00:06:21,800 --> 00:06:25,520 Speaker 3: And sometimes people talk to me a lot about Wow, 113 00:06:26,120 --> 00:06:29,200 Speaker 3: people are shopping in the real world again, and they're 114 00:06:29,200 --> 00:06:33,800 Speaker 3: going to malls again. Malls are alive and you know, thriving. 115 00:06:34,120 --> 00:06:36,479 Speaker 3: Why is that, and one of the reasons I think 116 00:06:36,600 --> 00:06:41,960 Speaker 3: because maybe during some very formidable years gen Z because 117 00:06:42,000 --> 00:06:46,120 Speaker 3: of COVID, we're shut in, So they're really very much 118 00:06:46,279 --> 00:06:50,640 Speaker 3: engaging in real life experiences and community experiences. 119 00:06:51,080 --> 00:06:55,679 Speaker 2: Shopping is a social event. Today. 120 00:06:55,839 --> 00:06:59,200 Speaker 3: You'll see you'll come into a Coach store, You'll see 121 00:06:59,560 --> 00:07:02,600 Speaker 3: gen Z shop. They'll be with their friends, or they'll 122 00:07:02,640 --> 00:07:05,600 Speaker 3: quickly be on their phone showing their friends the. 123 00:07:05,560 --> 00:07:06,320 Speaker 2: Bag they want. 124 00:07:06,839 --> 00:07:10,720 Speaker 3: Mostly they've already come in with a great understanding of 125 00:07:10,760 --> 00:07:13,600 Speaker 3: what it is they want, and then they focus a 126 00:07:13,640 --> 00:07:14,640 Speaker 3: little bit more when they're here. 127 00:07:14,680 --> 00:07:17,280 Speaker 1: But with regards to that connectivity, particularly on a global basis, 128 00:07:17,280 --> 00:07:20,200 Speaker 1: as Katie alluditude, I assume to a certain extent that 129 00:07:20,200 --> 00:07:23,239 Speaker 1: makes your job a little easier. But I'm also wondering 130 00:07:23,280 --> 00:07:26,280 Speaker 1: if that also raises the risk that if I see 131 00:07:26,360 --> 00:07:30,160 Speaker 1: Coach over every social media platform, TikTok and reels and 132 00:07:30,200 --> 00:07:33,240 Speaker 1: everything else, at some point, does it become saturation even 133 00:07:33,280 --> 00:07:34,400 Speaker 1: if that's not the reality. 134 00:07:34,600 --> 00:07:38,520 Speaker 3: Yeah, So one of the issues is, and our investors 135 00:07:38,520 --> 00:07:41,920 Speaker 3: talk about this all the time, you know, fear of ubiquity. 136 00:07:42,000 --> 00:07:42,520 Speaker 2: What I love. 137 00:07:42,560 --> 00:07:45,640 Speaker 3: In this last quarter, we grew twenty five percent top line, 138 00:07:46,120 --> 00:07:48,920 Speaker 3: No single family accounts for more than ten percent. 139 00:07:49,960 --> 00:07:51,320 Speaker 2: So the platforms we. 140 00:07:51,480 --> 00:07:56,160 Speaker 3: Have to create different self expression, which is really our 141 00:07:56,200 --> 00:08:01,240 Speaker 3: goal to inspire gen Z for their full expressive self. 142 00:08:01,640 --> 00:08:04,160 Speaker 3: We have the Tappy family, we have the Terry family, 143 00:08:04,480 --> 00:08:07,880 Speaker 3: We have the New York Family. I call it TNT, 144 00:08:08,120 --> 00:08:14,360 Speaker 3: which leads to explosive growth. Those three platforms alone are magnificent, 145 00:08:14,800 --> 00:08:17,520 Speaker 3: not even talking about some of our traditional platforms like 146 00:08:17,600 --> 00:08:21,520 Speaker 3: Signature C Right now, we're having a moment of a Y. 147 00:08:21,520 --> 00:08:22,480 Speaker 2: Two K moment. 148 00:08:22,600 --> 00:08:26,920 Speaker 3: You probably see that trend back to that era, which 149 00:08:27,360 --> 00:08:30,840 Speaker 3: obviously something that we love because was one of the 150 00:08:31,360 --> 00:08:31,840 Speaker 3: probably the. 151 00:08:31,800 --> 00:08:34,800 Speaker 2: Original heyday of Coach. Now we're a new Heyday of Coach. 152 00:08:35,200 --> 00:08:39,839 Speaker 3: So I feel very good about the number of ways 153 00:08:40,240 --> 00:08:42,880 Speaker 3: you can engage the brand. The other thing we're very 154 00:08:42,920 --> 00:08:45,280 Speaker 3: focused on because we're focused on gen Z, and we're 155 00:08:45,320 --> 00:08:49,320 Speaker 3: particularly focused actually very soon on Jen alpha point of 156 00:08:49,360 --> 00:08:50,079 Speaker 3: market entry. 157 00:08:50,360 --> 00:08:51,720 Speaker 2: We want to be her first. Back. 158 00:08:52,320 --> 00:08:55,200 Speaker 3: When I think about in those terms, there are twenty 159 00:08:55,320 --> 00:09:00,160 Speaker 3: five million women who will turn eighteen every year in 160 00:09:00,200 --> 00:09:02,840 Speaker 3: the markets we play for the next five years. That's 161 00:09:02,840 --> 00:09:06,800 Speaker 3: a massive tam that we want to be their bag 162 00:09:06,880 --> 00:09:07,560 Speaker 3: of choice. 163 00:09:07,720 --> 00:09:09,640 Speaker 1: Well, we'll talk a little bit about that tam and 164 00:09:09,679 --> 00:09:12,520 Speaker 1: the expansion of it. Twenty five percent growth for any 165 00:09:12,520 --> 00:09:15,360 Speaker 1: company is not necessarily going to be stable long term. 166 00:09:15,400 --> 00:09:17,400 Speaker 1: I mean, that's a phenomenal growth, right, maybe it is. 167 00:09:17,520 --> 00:09:20,319 Speaker 1: You can tell me different. The new customer, it's a 168 00:09:20,320 --> 00:09:23,640 Speaker 1: phenomenal Oh okay, But the new customers you're bringing in now, 169 00:09:24,040 --> 00:09:26,920 Speaker 1: how much can you count on them to be customers 170 00:09:27,200 --> 00:09:28,920 Speaker 1: ten years from now or twenty years from now, and 171 00:09:28,920 --> 00:09:32,400 Speaker 1: for that matter, their children or grandchildren to be customers 172 00:09:32,400 --> 00:09:34,520 Speaker 1: as well as that something you're factoring in to this 173 00:09:34,559 --> 00:09:35,760 Speaker 1: total addressable market. 174 00:09:35,920 --> 00:09:36,840 Speaker 2: So a couple of things. 175 00:09:38,360 --> 00:09:41,520 Speaker 3: We brought in two point nine million new customers in 176 00:09:41,559 --> 00:09:42,439 Speaker 3: our last quarter. 177 00:09:42,240 --> 00:09:43,160 Speaker 2: Of the holiday quarridor. 178 00:09:43,320 --> 00:09:45,440 Speaker 3: So these are people that have never never shot to 179 00:09:45,480 --> 00:09:48,520 Speaker 3: coach a coach two point nine million, And again those 180 00:09:48,559 --> 00:09:51,480 Speaker 3: are markets we know, I don't often know wholesale markets 181 00:09:52,160 --> 00:09:57,599 Speaker 3: a new customer coach. What we're finding is their frequency 182 00:09:57,640 --> 00:10:03,520 Speaker 3: of purchase, especially gen Z, is higher than other cohorts. Again, 183 00:10:03,600 --> 00:10:05,720 Speaker 3: not all two point nine wargen Z, but a large 184 00:10:05,760 --> 00:10:06,679 Speaker 3: portion war gen Z. 185 00:10:08,440 --> 00:10:09,760 Speaker 2: We often talk about. 186 00:10:09,600 --> 00:10:11,839 Speaker 3: If you have a good first date, you then have 187 00:10:11,920 --> 00:10:15,000 Speaker 3: multiple dates in the future, and we know this to 188 00:10:15,040 --> 00:10:17,720 Speaker 3: be true even if you go back twenty thirty years. 189 00:10:18,000 --> 00:10:20,600 Speaker 3: I've been a coach for eighteen years. I can't tell 190 00:10:20,640 --> 00:10:23,560 Speaker 3: you the number of times I've heard somebody say, my 191 00:10:23,679 --> 00:10:27,320 Speaker 3: first bag was a coach back my memory was a gift, 192 00:10:27,840 --> 00:10:30,840 Speaker 3: self purchase, something that inspired me. 193 00:10:31,320 --> 00:10:33,120 Speaker 2: When we can create. 194 00:10:32,840 --> 00:10:36,000 Speaker 3: That kind of goodwill, I think we have them for 195 00:10:36,559 --> 00:10:41,000 Speaker 3: a long period. But what I said to our investors, 196 00:10:41,600 --> 00:10:46,840 Speaker 3: you don't have to believe that retention is higher than 197 00:10:46,880 --> 00:10:49,960 Speaker 3: in the past. If I keep the retention rates that 198 00:10:50,040 --> 00:10:53,600 Speaker 3: I have historically had, but I'm bringing in so many 199 00:10:54,080 --> 00:11:00,360 Speaker 3: new customers, your overall tam your overall market penetration goes 200 00:11:00,440 --> 00:11:01,320 Speaker 3: substantially up. 201 00:11:01,400 --> 00:11:05,160 Speaker 1: But does that require creating more products, meaning a wider 202 00:11:05,440 --> 00:11:07,640 Speaker 1: variety and a higher number of products to offer. 203 00:11:08,440 --> 00:11:09,800 Speaker 2: We are very discipline. 204 00:11:09,840 --> 00:11:12,200 Speaker 3: One of the things we did six years ago is 205 00:11:12,240 --> 00:11:16,760 Speaker 3: we cut the number of skews by forty percent. Often 206 00:11:16,840 --> 00:11:19,160 Speaker 3: say a good bag is a good bag everywhere. One 207 00:11:19,200 --> 00:11:22,080 Speaker 3: of the things we did, and we learned from traditional 208 00:11:22,120 --> 00:11:25,280 Speaker 3: European luxury, we were killing off some of our best 209 00:11:25,320 --> 00:11:28,640 Speaker 3: bags too early. And I'll give you the classic example, Tabby, 210 00:11:28,800 --> 00:11:29,920 Speaker 3: one of our number one bags. 211 00:11:29,960 --> 00:11:32,240 Speaker 2: I think it's all over the room. 212 00:11:32,920 --> 00:11:35,360 Speaker 3: That bag was starting to slow down in the winter 213 00:11:35,440 --> 00:11:36,080 Speaker 3: of twenty. 214 00:11:36,520 --> 00:11:37,679 Speaker 2: What typically would. 215 00:11:37,520 --> 00:11:40,319 Speaker 3: Have happened is we would have exited it, gone through 216 00:11:40,320 --> 00:11:44,320 Speaker 3: a markedown cycle a year later, magically a bag that 217 00:11:44,400 --> 00:11:47,640 Speaker 3: looked very similar, maybe called Gabby, would start the cycle 218 00:11:47,640 --> 00:11:53,280 Speaker 3: over again. Instead, we focused on animating that bag with 219 00:11:53,559 --> 00:12:00,000 Speaker 3: first it was pillow tabby, different materials that enhanced the franchise. Today, again, 220 00:12:00,440 --> 00:12:02,880 Speaker 3: it's still less than ten percent of our total business, 221 00:12:03,080 --> 00:12:06,880 Speaker 3: but it's a massive driver of new customers. 222 00:12:07,600 --> 00:12:10,920 Speaker 4: Well, speaking of new customers, you mentioned Gen Alpha and 223 00:12:11,320 --> 00:12:13,199 Speaker 4: I think that would make a lot of people's headspins. 224 00:12:13,240 --> 00:12:17,040 Speaker 4: And when it comes to targeting Gen Alpha and hopefully 225 00:12:17,040 --> 00:12:20,720 Speaker 4: bringing them in as new customers, I mean Gen Alpha, 226 00:12:20,800 --> 00:12:24,839 Speaker 4: they're spending their parents' money. You know, these are teenagers 227 00:12:24,880 --> 00:12:29,000 Speaker 4: and youngers, So how do you reach them and start 228 00:12:29,040 --> 00:12:33,600 Speaker 4: to build that brand loyalty at a young age. 229 00:12:33,960 --> 00:12:39,559 Speaker 2: Oh, it's New York. I'm surprised it took this lot. 230 00:12:41,080 --> 00:12:42,520 Speaker 2: Katie will take the question to answer that. 231 00:12:43,080 --> 00:12:48,040 Speaker 4: Okay, I hope it's okay out there. 232 00:12:48,320 --> 00:12:50,720 Speaker 2: Whatever's happening. Yeah, that was minor. 233 00:12:53,559 --> 00:12:57,760 Speaker 4: Speaking of new customers, you mentioned Gen Alpha and Gen Alpha. 234 00:12:57,800 --> 00:12:59,679 Speaker 4: I don't have the exact stats, but I believe we're 235 00:12:59,679 --> 00:13:03,200 Speaker 4: talk about teenagers and below. So how do you go 236 00:13:03,320 --> 00:13:07,800 Speaker 4: about even reaching them because they're spending their parents' money 237 00:13:07,800 --> 00:13:09,360 Speaker 4: in a lot of cases, it's not like gen Z, 238 00:13:09,520 --> 00:13:11,840 Speaker 4: which a lot of them have jobs at this point. 239 00:13:11,920 --> 00:13:13,880 Speaker 4: So how do you target them and how do you 240 00:13:14,120 --> 00:13:17,960 Speaker 4: start to go about building brand loyalty with that cohort? 241 00:13:18,360 --> 00:13:21,200 Speaker 3: Well, first, as a father of a gen Z or 242 00:13:21,360 --> 00:13:24,000 Speaker 3: they still spend their parents money. Okay, the bank of 243 00:13:24,040 --> 00:13:29,079 Speaker 3: mom and dad is real enough, but beyond that, we're 244 00:13:29,120 --> 00:13:30,320 Speaker 3: learning about gen Alpha now. 245 00:13:30,400 --> 00:13:33,199 Speaker 2: So depending on who you talk to, Gen. 246 00:13:33,080 --> 00:13:37,360 Speaker 3: Alpha turns eighteen in twenty twenty seven, twenty twenty eight. 247 00:13:38,280 --> 00:13:45,280 Speaker 3: So we're engaging, we're learning, we're understanding them, and yes, 248 00:13:45,360 --> 00:13:49,200 Speaker 3: they will spend some of their parents' money. But what's 249 00:13:49,240 --> 00:13:52,600 Speaker 3: interesting about both jen Alpha and gen Z, particularly gen 250 00:13:52,640 --> 00:13:54,320 Speaker 3: Alpha now, they all. 251 00:13:54,160 --> 00:13:55,360 Speaker 2: Seem to have a side hustle. 252 00:13:55,679 --> 00:13:58,680 Speaker 3: They you know, we used to say when I was younger, 253 00:13:58,679 --> 00:14:01,320 Speaker 3: you know, you babysit, or you know, maybe you got 254 00:14:01,360 --> 00:14:03,640 Speaker 3: to work like I did in my parents' shop. 255 00:14:03,400 --> 00:14:08,920 Speaker 2: Cleaning the counters. They are micro influencers. They do all. 256 00:14:08,760 --> 00:14:13,080 Speaker 3: These things in the internet and digital economy that is 257 00:14:13,120 --> 00:14:16,679 Speaker 3: so interesting. So and they're very one thing we've already 258 00:14:16,720 --> 00:14:20,480 Speaker 3: heard and some of this could be AI related. Not 259 00:14:20,520 --> 00:14:23,600 Speaker 3: only are they tech savvy, but they're kind of business 260 00:14:23,640 --> 00:14:27,600 Speaker 3: savvy too, and that's true for young gen Z. So 261 00:14:28,280 --> 00:14:30,840 Speaker 3: we like that about them and we're learning about them. 262 00:14:31,040 --> 00:14:32,960 Speaker 2: And one of the things. 263 00:14:32,720 --> 00:14:35,080 Speaker 3: That is so powerful about Coach we stay in the 264 00:14:35,120 --> 00:14:38,240 Speaker 3: sweet spot of two to five hundred dollars while we 265 00:14:38,280 --> 00:14:39,680 Speaker 3: have bags that are much higher. 266 00:14:40,280 --> 00:14:41,280 Speaker 2: That's our sweet spot. 267 00:14:41,600 --> 00:14:45,400 Speaker 3: And I get off asked the question often well because 268 00:14:45,440 --> 00:14:49,040 Speaker 3: traditionally European luxury now is ten x what we are 269 00:14:49,160 --> 00:14:51,160 Speaker 3: when historically was three to five x. 270 00:14:51,600 --> 00:14:54,480 Speaker 2: Isn't there so much whitespace? Shouldn't you go after that space? 271 00:14:55,080 --> 00:14:57,840 Speaker 3: And there's opportunities there, But we don't want to miss 272 00:14:57,880 --> 00:15:00,840 Speaker 3: out on the opportunity to be that FIRS bag for 273 00:15:00,960 --> 00:15:05,280 Speaker 3: that Gen Alpha or that Gen Z customer, to engage 274 00:15:05,280 --> 00:15:07,600 Speaker 3: them in a price point that makes sense. 275 00:15:08,080 --> 00:15:10,600 Speaker 4: And I do wonder, you know, how if at all 276 00:15:10,880 --> 00:15:13,000 Speaker 4: some of the Coach coffee shops play and when it 277 00:15:13,040 --> 00:15:16,400 Speaker 4: comes to Gen Alpha, because obviously a croissan a cup 278 00:15:16,440 --> 00:15:19,760 Speaker 4: of coffee, you know, it socializes the idea of Coach, 279 00:15:19,840 --> 00:15:22,080 Speaker 4: but it's much more affordable than a handbag. 280 00:15:22,400 --> 00:15:26,560 Speaker 3: Yeah, it starts to introduce the experience and experience today 281 00:15:26,880 --> 00:15:31,960 Speaker 3: is incredible, incredibly important to younger I think all generations, 282 00:15:31,960 --> 00:15:33,160 Speaker 3: but we are focused. 283 00:15:33,160 --> 00:15:35,520 Speaker 2: We have twenty coffee shops globally. We have four in 284 00:15:35,520 --> 00:15:36,200 Speaker 2: North America. 285 00:15:36,800 --> 00:15:39,080 Speaker 3: By the time we end this fiscal year in June, 286 00:15:39,120 --> 00:15:43,600 Speaker 3: we'll have another four, usually in high traffic areas, and 287 00:15:44,040 --> 00:15:45,840 Speaker 3: they do a number of things for us. First, the 288 00:15:45,840 --> 00:15:49,480 Speaker 3: coffee shop themselves are great coach experiences for exactly the 289 00:15:49,480 --> 00:15:50,600 Speaker 3: reasons you said. 290 00:15:50,880 --> 00:15:51,840 Speaker 2: We sell chissant about. 291 00:15:51,840 --> 00:15:56,440 Speaker 3: What's really popular is the tabby cake that looks like 292 00:15:56,480 --> 00:16:00,320 Speaker 3: a tabby bag. Incredible social media moment to capture. Sure, 293 00:16:00,560 --> 00:16:04,480 Speaker 3: little miss Joe is compelling, So we have that part. 294 00:16:04,760 --> 00:16:08,120 Speaker 3: We have unique merchandise that you can only get at 295 00:16:08,160 --> 00:16:12,360 Speaker 3: coach coffee shops. My head of Food and Beverage yesterday 296 00:16:12,360 --> 00:16:15,040 Speaker 3: I had a meeting with him and he's saying there's 297 00:16:15,120 --> 00:16:18,160 Speaker 3: really demand for coach merchandise across the fleet that I'm like, 298 00:16:18,240 --> 00:16:21,000 Speaker 3: for now, only you can only get it in a 299 00:16:21,040 --> 00:16:24,240 Speaker 3: coach coffee shop. I want that unique call to action 300 00:16:24,440 --> 00:16:26,280 Speaker 3: that you have to go to a coach coffee shop 301 00:16:26,320 --> 00:16:30,440 Speaker 3: to buy this compelling coach coffee shop merchandise. The other 302 00:16:30,520 --> 00:16:35,080 Speaker 3: benefit the linger time for the shoppers where there's a 303 00:16:35,080 --> 00:16:39,600 Speaker 3: Coach coffee shop is significantly increase. So I don't just 304 00:16:39,720 --> 00:16:43,320 Speaker 3: do coffee shops for marketing or social purposes. 305 00:16:43,840 --> 00:16:45,280 Speaker 2: It's really good business for us. 306 00:16:46,280 --> 00:16:48,680 Speaker 1: I do want to talk about marketing and particularly ads spending. 307 00:16:48,760 --> 00:16:52,960 Speaker 1: It's grown pretty significantly. If you look at least at Tapestry, 308 00:16:52,960 --> 00:16:55,200 Speaker 1: at the parent company, you've gone from basically five percent 309 00:16:55,560 --> 00:16:57,720 Speaker 1: of sales I have. I had Span too, I think 310 00:16:57,880 --> 00:17:02,120 Speaker 1: above ten percent. Now you're the CFO of Tapestry, talked 311 00:17:02,160 --> 00:17:04,399 Speaker 1: about this on the most recent conference call that that 312 00:17:04,560 --> 00:17:06,800 Speaker 1: is a big part of the success and being able 313 00:17:06,840 --> 00:17:09,879 Speaker 1: to attract gen Z and for that matter, Jen Alpha. 314 00:17:10,359 --> 00:17:12,560 Speaker 1: How much more do you think you need to spend? 315 00:17:12,800 --> 00:17:15,000 Speaker 2: So you're exactly right. 316 00:17:15,040 --> 00:17:17,479 Speaker 3: So if I go back to f Y nineteen, right 317 00:17:17,520 --> 00:17:19,439 Speaker 3: before I took over for the Coach brand, we were 318 00:17:19,520 --> 00:17:23,040 Speaker 3: spending about three percent on marketing and. 319 00:17:23,080 --> 00:17:23,800 Speaker 2: That was true. 320 00:17:23,920 --> 00:17:28,399 Speaker 3: Since the early two thousands through FOY twenty, we started 321 00:17:28,400 --> 00:17:33,919 Speaker 3: to spend more, particularly first during COVID digitally a lower 322 00:17:34,480 --> 00:17:38,520 Speaker 3: funnel activity, and we learned our way into it. Today, 323 00:17:38,800 --> 00:17:42,200 Speaker 3: the Coach brand spends eleven percent on marketing. We're doing 324 00:17:42,240 --> 00:17:47,919 Speaker 3: that mostly with mid to upper funnel long format campaigns 325 00:17:47,920 --> 00:17:52,600 Speaker 3: about the brand, we find that that is compelling. We 326 00:17:52,640 --> 00:17:56,359 Speaker 3: are getting close to sufficiency in certain markets, so it 327 00:17:56,400 --> 00:17:58,959 Speaker 3: doesn't mean I have to spend fifteen or twenty percent. 328 00:17:59,600 --> 00:18:04,320 Speaker 3: We are very disciplined on understanding what our ROI. 329 00:18:03,960 --> 00:18:04,840 Speaker 2: Is on that spend. 330 00:18:05,160 --> 00:18:07,760 Speaker 3: So as I said to my CMO, you know, we'll 331 00:18:07,800 --> 00:18:12,080 Speaker 3: spend close to billion dollars next year telling our story 332 00:18:12,200 --> 00:18:13,800 Speaker 3: in long format. 333 00:18:13,680 --> 00:18:15,520 Speaker 2: Fashion in key markets. 334 00:18:16,080 --> 00:18:20,040 Speaker 3: That's a mote for our brand and for Tapestry that 335 00:18:20,119 --> 00:18:21,959 Speaker 3: not everybody can replicate. 336 00:18:22,920 --> 00:18:25,119 Speaker 2: And we are very. 337 00:18:24,880 --> 00:18:28,680 Speaker 3: Focused on acquisition of new customers in their marketing stories. 338 00:18:29,440 --> 00:18:31,200 Speaker 2: That becomes very compelling. 339 00:18:31,440 --> 00:18:35,320 Speaker 3: So I think that gives us longevity and we measure it, 340 00:18:35,400 --> 00:18:38,159 Speaker 3: and that is the if you will. You know, if 341 00:18:38,200 --> 00:18:41,000 Speaker 3: you ever made a fire, you put a lot of 342 00:18:41,040 --> 00:18:42,560 Speaker 3: wood in it to make a great fire. 343 00:18:42,800 --> 00:18:44,600 Speaker 2: We have a roaring fire right now. 344 00:18:44,960 --> 00:18:46,720 Speaker 1: Well, part of that fire too is some of the 345 00:18:46,720 --> 00:18:49,880 Speaker 1: brand ambassadors you have, the celebrities, if you will, all 346 00:18:49,880 --> 00:18:53,920 Speaker 1: from kind of different sort of tears. I am curious 347 00:18:53,920 --> 00:18:55,919 Speaker 1: how much of that is organic, how much of that 348 00:18:56,040 --> 00:18:59,280 Speaker 1: is basically just striking an agreement on paper with whoever 349 00:18:59,320 --> 00:19:02,200 Speaker 1: that is to get to you know, sports your brand. 350 00:19:02,960 --> 00:19:05,320 Speaker 2: So we have a whole team that looks at this, 351 00:19:05,400 --> 00:19:06,760 Speaker 2: and stud and I are very involved. 352 00:19:07,200 --> 00:19:10,359 Speaker 3: Often they bring me people I don't recognize, which is 353 00:19:10,440 --> 00:19:14,320 Speaker 3: usually a good sign. My twenty eight year old often 354 00:19:14,359 --> 00:19:16,520 Speaker 3: tells me you need to get this one and more. 355 00:19:16,960 --> 00:19:18,200 Speaker 2: She's more right than wrong. 356 00:19:19,359 --> 00:19:20,680 Speaker 1: But well, I looked up some of your brand and 357 00:19:21,080 --> 00:19:23,480 Speaker 1: I had, yeah, a couple. 358 00:19:23,359 --> 00:19:27,080 Speaker 2: Of our university like l Fanning. You you know who 359 00:19:27,119 --> 00:19:31,000 Speaker 2: she is. She's up for an Academy award. So we 360 00:19:31,080 --> 00:19:32,520 Speaker 2: do a couple. We do a number of things. 361 00:19:32,520 --> 00:19:34,920 Speaker 3: First of all, we have to have brand ambassadors. We 362 00:19:35,240 --> 00:19:38,040 Speaker 3: call it constellation, so it's not just one or two 363 00:19:38,160 --> 00:19:43,439 Speaker 3: single stars. We want a group of ambassadors, friends of coach, 364 00:19:43,520 --> 00:19:45,880 Speaker 3: friends of the house, as well as people we put 365 00:19:45,920 --> 00:19:47,880 Speaker 3: in our major campaign. So I didn't give the time, 366 00:19:47,880 --> 00:19:51,960 Speaker 3: we'll have twenty or thirty in total. We also have 367 00:19:52,080 --> 00:19:55,040 Speaker 3: that we want them to look like our customer base, 368 00:19:55,520 --> 00:19:59,440 Speaker 3: so we don't want a singularity of look or attitudes. 369 00:20:00,000 --> 00:20:03,520 Speaker 3: We want people to relate to them. Student and I 370 00:20:03,560 --> 00:20:07,359 Speaker 3: have off excuse me. Student and I have also talked 371 00:20:07,359 --> 00:20:09,359 Speaker 3: about we like working with nice people. 372 00:20:10,560 --> 00:20:12,720 Speaker 2: We like working with people who. 373 00:20:12,720 --> 00:20:17,200 Speaker 3: Are engaged, who are thoughtful, who truly represent the values 374 00:20:17,240 --> 00:20:17,919 Speaker 3: of our brand. 375 00:20:19,280 --> 00:20:20,400 Speaker 2: You don't always get that right. 376 00:20:20,960 --> 00:20:24,280 Speaker 3: I'm not saying every celebrity I've ever worked with is 377 00:20:24,440 --> 00:20:27,240 Speaker 3: like that, but right now the cohort we have today 378 00:20:27,320 --> 00:20:32,040 Speaker 3: are amazing. They're lovely people, they represent a global community, 379 00:20:32,600 --> 00:20:34,120 Speaker 3: and they're excited. 380 00:20:33,800 --> 00:20:34,480 Speaker 2: To work with us. 381 00:20:35,320 --> 00:20:37,160 Speaker 4: I do want to talk about pricing a little bit 382 00:20:37,200 --> 00:20:39,160 Speaker 4: because one of the things that seems to be unique 383 00:20:39,160 --> 00:20:41,840 Speaker 4: about Coach is that you've managed to break out of 384 00:20:41,880 --> 00:20:45,040 Speaker 4: the promotional cycle, which for a lot of brands turns 385 00:20:45,080 --> 00:20:48,520 Speaker 4: into a downward cycle. And I want to talk about 386 00:20:48,520 --> 00:20:50,840 Speaker 4: how that strategy relates to what you're doing in your 387 00:20:50,840 --> 00:20:54,320 Speaker 4: outlet stores, because it's interesting you've actually dropped the word 388 00:20:54,320 --> 00:20:58,040 Speaker 4: outlet altogether from a lot of those locations, and within them, 389 00:20:58,200 --> 00:21:02,160 Speaker 4: you're actually selling it for price in many instances, which 390 00:21:02,200 --> 00:21:06,200 Speaker 4: is interesting. So walk us through the strategy there and 391 00:21:06,400 --> 00:21:09,680 Speaker 4: you know how that's impacted how people shop at those 392 00:21:10,119 --> 00:21:11,240 Speaker 4: former outlet stores. 393 00:21:11,359 --> 00:21:14,719 Speaker 2: Yeah, so this started from consumer insight. 394 00:21:15,400 --> 00:21:19,120 Speaker 3: Consumer insight for younger generations, very different from. 395 00:21:19,480 --> 00:21:20,280 Speaker 2: What I learned. 396 00:21:20,440 --> 00:21:22,919 Speaker 3: You know, I've been in this business for thirty plus years. 397 00:21:23,280 --> 00:21:27,920 Speaker 3: We spend thirty years distinguishing between outlet and retail. And 398 00:21:28,000 --> 00:21:30,960 Speaker 3: you'd go to the outlet for a deal and you'd 399 00:21:31,000 --> 00:21:32,040 Speaker 3: go and buy last. 400 00:21:31,880 --> 00:21:33,639 Speaker 2: Year's product or made for outlet product. 401 00:21:34,200 --> 00:21:39,600 Speaker 3: What we learned is gen Z don't see channels, they 402 00:21:39,720 --> 00:21:44,359 Speaker 3: see brands. Sometimes the quote unquote outlet store is the 403 00:21:44,400 --> 00:21:47,760 Speaker 3: best mall in their neighborhood. Sometimes, if I'm traveling from 404 00:21:48,200 --> 00:21:52,080 Speaker 3: Brazil and I happen to be in the Fort Lotter 405 00:21:52,160 --> 00:21:54,960 Speaker 3: Miami region, I'm the only shop at Sawgrass, which is 406 00:21:55,000 --> 00:21:59,639 Speaker 3: a beautiful high end outlet mall. They come into our 407 00:21:59,640 --> 00:22:03,160 Speaker 3: stories they want Tabby. So part of what we recognized 408 00:22:03,480 --> 00:22:07,840 Speaker 3: was our value is so good, I don't need to 409 00:22:07,920 --> 00:22:12,760 Speaker 3: discount our value of our product. And what we want 410 00:22:12,800 --> 00:22:16,439 Speaker 3: to do is put our best product front and center. 411 00:22:16,800 --> 00:22:17,840 Speaker 2: It does a number of things. 412 00:22:17,840 --> 00:22:21,360 Speaker 3: First of all, it satisfies the demand that we have. 413 00:22:22,080 --> 00:22:24,920 Speaker 3: It increases your au R as a business person. That's 414 00:22:24,960 --> 00:22:28,879 Speaker 3: a fantastic thing. But it also makes everything around it 415 00:22:28,920 --> 00:22:34,199 Speaker 3: look good. So maybe I come in and Tabby If 416 00:22:34,240 --> 00:22:37,199 Speaker 3: I'm a young person, you know, a three ninety four 417 00:22:37,320 --> 00:22:39,280 Speaker 3: ninety five bag, maybe a little bit of a stretch, 418 00:22:39,440 --> 00:22:42,160 Speaker 3: but maybe I'll buy a tarry back you know, at 419 00:22:42,320 --> 00:22:47,440 Speaker 3: two two twenty five and still desire a Tabby. 420 00:22:47,119 --> 00:22:47,760 Speaker 2: In the future. 421 00:22:48,160 --> 00:22:52,400 Speaker 3: It makes the tarry more desirable. It creates the whole 422 00:22:52,440 --> 00:22:56,600 Speaker 3: world of coach in a very engaging way and it's working, 423 00:22:56,720 --> 00:22:58,720 Speaker 3: so you're going to see us do more and more 424 00:22:58,760 --> 00:22:59,080 Speaker 3: of this. 425 00:22:59,480 --> 00:23:01,400 Speaker 2: We don't about channel anymore. 426 00:23:01,520 --> 00:23:04,240 Speaker 3: We talk about there are stores, yes, and there's different 427 00:23:04,520 --> 00:23:08,119 Speaker 3: ways we operate the stores, but we put collection or 428 00:23:08,240 --> 00:23:13,680 Speaker 3: multi multi channel product across the fleet. And I see 429 00:23:13,720 --> 00:23:17,040 Speaker 3: this as a huge growth opportunity and we're extending it 430 00:23:17,119 --> 00:23:19,600 Speaker 3: not just in bags, but we've done it in foot 431 00:23:19,640 --> 00:23:22,880 Speaker 3: where fragrance has always been a one price point, where 432 00:23:22,880 --> 00:23:25,080 Speaker 3: you're going to see us do it in jewelry and 433 00:23:25,119 --> 00:23:30,440 Speaker 3: other opportunities to and from a business perspective, it reduces 434 00:23:30,440 --> 00:23:34,760 Speaker 3: your skew count, It creates more universality and allows me 435 00:23:34,800 --> 00:23:37,760 Speaker 3: to put the right product the right place to satisfy. 436 00:23:37,320 --> 00:23:38,120 Speaker 2: A consumer need. 437 00:23:39,119 --> 00:23:41,840 Speaker 4: And what sense do you have of what pricing power 438 00:23:41,880 --> 00:23:44,760 Speaker 4: looks like right now? Because I mean, on the consumer side, 439 00:23:44,840 --> 00:23:48,480 Speaker 4: we're coming off of several years of stubbornly high inflation. 440 00:23:48,600 --> 00:23:50,520 Speaker 4: It seems like we've settled, at least for right now. 441 00:23:50,560 --> 00:23:53,760 Speaker 4: And I mean on your side as well, higher tariffs 442 00:23:53,760 --> 00:23:56,159 Speaker 4: that's hitting consumers and I have to imagine it's hitting 443 00:23:56,400 --> 00:23:59,520 Speaker 4: your supply chain as well. So what does pricing power 444 00:23:59,560 --> 00:24:02,040 Speaker 4: look like right now, and how is that translating to 445 00:24:02,119 --> 00:24:03,199 Speaker 4: margins going forward. 446 00:24:03,359 --> 00:24:10,000 Speaker 3: Yeah, we announced in our holiday quarter the best margin 447 00:24:10,080 --> 00:24:13,479 Speaker 3: in our history, and we're focused on that, but it's 448 00:24:13,520 --> 00:24:14,520 Speaker 3: a balancing act. 449 00:24:15,600 --> 00:24:17,359 Speaker 2: We love the sweet spot. 450 00:24:17,400 --> 00:24:20,440 Speaker 3: As I said earlier, of the two to five hundred range, 451 00:24:20,520 --> 00:24:23,679 Speaker 3: there's a lot of room there. If I discount less 452 00:24:24,880 --> 00:24:29,520 Speaker 3: at the bottom end, I raised my overall margins substantially. 453 00:24:30,000 --> 00:24:32,800 Speaker 3: So we're not looking to do what some people did 454 00:24:32,880 --> 00:24:37,640 Speaker 3: take price three four x what it was four years ago. 455 00:24:37,880 --> 00:24:38,920 Speaker 2: I don't need to do that. 456 00:24:39,320 --> 00:24:44,880 Speaker 3: We want our job and our mission is sustainable, healthy growth, 457 00:24:45,280 --> 00:24:48,080 Speaker 3: so we should keep up with inflation. That should be 458 00:24:48,440 --> 00:24:52,040 Speaker 3: your starting place. And then there's things that the consumer values. 459 00:24:52,160 --> 00:24:56,880 Speaker 3: So we compare our product our inputs, and we look 460 00:24:56,920 --> 00:24:59,920 Speaker 3: at how the consumer precedes value, and there are certain 461 00:25:00,520 --> 00:25:06,360 Speaker 3: classifications and materials that the consumer sees value in and 462 00:25:06,400 --> 00:25:09,800 Speaker 3: we take a price accordingly. But we're very sensitive to 463 00:25:10,640 --> 00:25:16,800 Speaker 3: having price points that work for our core timeless gen 464 00:25:16,920 --> 00:25:17,879 Speaker 3: Z customer. 465 00:25:17,640 --> 00:25:18,440 Speaker 2: Only issue have costs. 466 00:25:18,440 --> 00:25:20,159 Speaker 1: I mean, have you ran into any issues as of 467 00:25:20,280 --> 00:25:22,640 Speaker 1: late with regard to being able to source your leather, 468 00:25:22,720 --> 00:25:25,399 Speaker 1: whether it's because of terraces or the cattle shortage we 469 00:25:25,440 --> 00:25:27,560 Speaker 1: hear about or even just the idea that you know, 470 00:25:27,600 --> 00:25:30,120 Speaker 1: the people, the expertise and being able to tan leather. 471 00:25:30,240 --> 00:25:32,520 Speaker 1: Is the number of people who can do that these days, 472 00:25:32,520 --> 00:25:34,199 Speaker 1: it's a lot different than what it was when you 473 00:25:34,200 --> 00:25:35,679 Speaker 1: guys were founded in the nineteen forty one. 474 00:25:35,880 --> 00:25:40,359 Speaker 3: Yeah, so fortunately we're a substantial house and we have 475 00:25:40,520 --> 00:25:43,720 Speaker 3: deep resources. We started as a manufacturer, so we still 476 00:25:43,720 --> 00:25:48,240 Speaker 3: have a manufacturer mindset. We have leather experts in our company. 477 00:25:48,640 --> 00:25:52,159 Speaker 3: We source leather from around the world. We work with 478 00:25:52,200 --> 00:25:56,800 Speaker 3: the best hanneries. Our units are significant, so people want 479 00:25:56,800 --> 00:26:01,560 Speaker 3: to work with us, so we do get the choice 480 00:26:01,760 --> 00:26:04,760 Speaker 3: to get what's the best out there. We have not 481 00:26:04,880 --> 00:26:10,000 Speaker 3: seen an issue with our leather suppliers, nor have we 482 00:26:10,040 --> 00:26:13,680 Speaker 3: seen an issue with our make manufacturers. We are making 483 00:26:14,560 --> 00:26:16,720 Speaker 3: coach products with some of the same people we've made 484 00:26:16,760 --> 00:26:19,719 Speaker 3: for twenty or thirty years. We have very deep relations. 485 00:26:19,880 --> 00:26:22,320 Speaker 3: Of course, tariffs is an issue. But one thing about 486 00:26:22,320 --> 00:26:25,840 Speaker 3: our company that you need to bear in mind. We 487 00:26:25,960 --> 00:26:27,800 Speaker 3: see in the next three year seventy percent of our 488 00:26:27,800 --> 00:26:33,480 Speaker 3: growth coming from international, so when I'm selling internationally, teariffs 489 00:26:33,880 --> 00:26:37,000 Speaker 3: are no longer in play. Now we've had phenomenal growth 490 00:26:37,000 --> 00:26:41,399 Speaker 3: in North America. Last quarter, we did twenty seven percent 491 00:26:41,960 --> 00:26:45,520 Speaker 3: top line growth in North America. That's phenomenal. We also 492 00:26:45,560 --> 00:26:50,840 Speaker 3: saw thirty seven percent growth in China and I'm sorry, 493 00:26:50,840 --> 00:26:55,719 Speaker 3: thirty seven percent growth in Europe and high twenty percent 494 00:26:55,800 --> 00:27:00,000 Speaker 3: growth in China. So we had substantial growth across the world. 495 00:27:00,520 --> 00:27:02,120 Speaker 2: That takes the terrif issue out of play. 496 00:27:02,160 --> 00:27:04,280 Speaker 1: We'll talk a little bit more about China. You have 497 00:27:04,560 --> 00:27:07,199 Speaker 1: several stores there now. I think on the last conference 498 00:27:07,280 --> 00:27:09,359 Speaker 1: call there was some discussion about the number of stores 499 00:27:09,400 --> 00:27:11,760 Speaker 1: that you planned to open there in twenty twenty six. 500 00:27:12,160 --> 00:27:15,919 Speaker 2: Yeah, so we have. We've been in China literally for 501 00:27:15,960 --> 00:27:18,360 Speaker 2: all Let's try it one more time. 502 00:27:18,720 --> 00:27:23,199 Speaker 1: Sure things outside of the world, Okay, you already have 503 00:27:23,359 --> 00:27:25,960 Speaker 1: a big footprint in China. There was some discussion on 504 00:27:25,960 --> 00:27:30,040 Speaker 1: the most recent earnings call about expanding even further into 505 00:27:30,080 --> 00:27:31,879 Speaker 1: that market. How many stores are you there? Are you 506 00:27:31,880 --> 00:27:33,320 Speaker 1: planning to add in twenty twenty six. 507 00:27:33,560 --> 00:27:36,800 Speaker 3: So what we said publicly is over the next few years, 508 00:27:36,800 --> 00:27:38,720 Speaker 3: we think we'll add about one hundred stores in China, 509 00:27:38,760 --> 00:27:39,320 Speaker 3: and that. 510 00:27:39,280 --> 00:27:41,320 Speaker 2: May be the number, give or take. 511 00:27:42,520 --> 00:27:46,119 Speaker 3: And part of it is China is so vast and 512 00:27:46,119 --> 00:27:50,240 Speaker 3: there's so much opportunity to go into places that historically 513 00:27:50,359 --> 00:27:55,760 Speaker 3: Coach didn't go into traditional luxury, went into high end 514 00:27:55,800 --> 00:27:58,200 Speaker 3: malls in different cities. 515 00:27:57,840 --> 00:27:59,800 Speaker 2: Around the country. 516 00:28:00,320 --> 00:28:04,000 Speaker 3: Last year, I went to Wuhan is a city has 517 00:28:04,160 --> 00:28:08,160 Speaker 3: six million university students, I mean, massive city, so much 518 00:28:08,200 --> 00:28:11,600 Speaker 3: opportunity there. I think at the time we have three stores, 519 00:28:12,920 --> 00:28:14,720 Speaker 3: you know, we can triple the number of stores there. 520 00:28:14,760 --> 00:28:16,320 Speaker 2: Actually we might have a little bit more than that. 521 00:28:16,359 --> 00:28:21,720 Speaker 2: But the reality is those are opportunities. That said, I'm still. 522 00:28:21,560 --> 00:28:26,160 Speaker 3: Very focused on productivity of our stores. Having a store 523 00:28:26,240 --> 00:28:32,880 Speaker 3: in a great location gives us opportunity to enhance our productivity. Now, 524 00:28:32,920 --> 00:28:36,159 Speaker 3: what I started to say was, we're also able because 525 00:28:36,200 --> 00:28:39,000 Speaker 3: our focus is on gen Z, we can go into 526 00:28:39,000 --> 00:28:43,160 Speaker 3: neighborhoods that others may not. We'll go into a cool, 527 00:28:43,520 --> 00:28:47,800 Speaker 3: young neighborhood that they have a street location that I 528 00:28:47,920 --> 00:28:51,720 Speaker 3: am not worried today if traditional European luxury is on 529 00:28:51,760 --> 00:28:54,480 Speaker 3: the left and right of me, it's wholly irrelevant to me. 530 00:28:54,800 --> 00:28:56,200 Speaker 1: I do have to just ask you a given that 531 00:28:56,240 --> 00:28:59,440 Speaker 1: we're filming this interview, it started the lunar New Year. 532 00:29:00,040 --> 00:29:02,640 Speaker 1: Have you seen any sort of increase in sales as 533 00:29:02,640 --> 00:29:05,000 Speaker 1: a result of that? Are these types of holidays do 534 00:29:05,080 --> 00:29:06,920 Speaker 1: they become moments for Coach or is that not part 535 00:29:06,960 --> 00:29:07,680 Speaker 1: of the strategy. 536 00:29:07,840 --> 00:29:12,200 Speaker 3: They're always moments for Coach. We love celebrating key moments. 537 00:29:12,240 --> 00:29:15,280 Speaker 3: And this is now the year of the horse. 538 00:29:15,080 --> 00:29:18,440 Speaker 2: The fire horse. The fire horse is correct, the fire horse. 539 00:29:18,560 --> 00:29:20,160 Speaker 2: I'm not sure what the difference. 540 00:29:19,800 --> 00:29:24,520 Speaker 3: Is, but it sounds cooler fire horse and it's a 541 00:29:24,520 --> 00:29:27,560 Speaker 3: phenomenal period for us. We're very happy with the reaction 542 00:29:27,960 --> 00:29:31,880 Speaker 3: the Coach product is receiving. We did an interesting collab 543 00:29:31,960 --> 00:29:37,040 Speaker 3: with a street band in China called clot very relevant 544 00:29:37,080 --> 00:29:41,280 Speaker 3: product to this younger generation and if you haven't seen 545 00:29:41,320 --> 00:29:46,480 Speaker 3: the ad campaign, the marketing, it's phenomenal. I don't want 546 00:29:46,480 --> 00:29:48,760 Speaker 3: to know what the production costs were for this thing, 547 00:29:48,800 --> 00:29:50,000 Speaker 3: but it was amazing. 548 00:29:50,640 --> 00:29:53,400 Speaker 4: Yeah, something's better left on said. I do want to 549 00:29:53,400 --> 00:29:56,000 Speaker 4: talk a little bit about Europe because you mentioned your 550 00:29:56,040 --> 00:29:59,080 Speaker 4: growth there and I wonder, you know, who are you 551 00:29:59,280 --> 00:30:03,040 Speaker 4: necessarily taking share from? Because you think about the European 552 00:30:03,480 --> 00:30:07,000 Speaker 4: luxury handbags have to imagine they have a huge presence there. 553 00:30:07,080 --> 00:30:10,280 Speaker 4: So are you seeing you know, you actually you know, 554 00:30:10,480 --> 00:30:12,240 Speaker 4: taking a little bit of their slice of the pie 555 00:30:12,320 --> 00:30:13,240 Speaker 4: or is the pie growing? 556 00:30:13,800 --> 00:30:14,120 Speaker 2: Well? 557 00:30:14,920 --> 00:30:18,200 Speaker 3: It's an interesting phenomenon. So again, let me focus on 558 00:30:18,280 --> 00:30:19,240 Speaker 3: last quarter, we grew. 559 00:30:19,040 --> 00:30:19,960 Speaker 2: Twenty five percent. 560 00:30:20,800 --> 00:30:24,880 Speaker 3: The category would have shrunk but for Coach, so we 561 00:30:24,960 --> 00:30:28,560 Speaker 3: grew the category. I don't think that just people who 562 00:30:28,600 --> 00:30:32,360 Speaker 3: would have bought a traditional European luxury bag. I think 563 00:30:32,400 --> 00:30:35,840 Speaker 3: we're bringing new people into the category. I think sometimes 564 00:30:35,840 --> 00:30:37,680 Speaker 3: we used to talk about share of wallet. I think 565 00:30:37,680 --> 00:30:41,280 Speaker 3: our share of wallet has been enhanced because of the 566 00:30:41,320 --> 00:30:46,720 Speaker 3: compelling nature of our product. So the value equation is massive. 567 00:30:46,880 --> 00:30:50,280 Speaker 3: When you see the quality of our leather, sometimes people 568 00:30:50,320 --> 00:30:53,520 Speaker 3: forget as an eighty five year old house. We're older 569 00:30:53,520 --> 00:30:58,560 Speaker 3: than many traditional European luxury houses. So our authenticity cuts 570 00:30:58,600 --> 00:31:03,920 Speaker 3: through and outhenticity. Both our value and values resonate with 571 00:31:04,520 --> 00:31:09,640 Speaker 3: a European client. And what's interesting is we're sort of 572 00:31:09,680 --> 00:31:14,360 Speaker 3: just getting started. We have a very strong business in England, 573 00:31:14,720 --> 00:31:17,200 Speaker 3: we have a nice business in France. We're starting to 574 00:31:17,280 --> 00:31:23,440 Speaker 3: expand both digitally and through our wholesale channel, and we're 575 00:31:23,440 --> 00:31:30,040 Speaker 3: getting very very good responses to what we're seeing all 576 00:31:30,080 --> 00:31:30,680 Speaker 3: over the world. 577 00:31:31,800 --> 00:31:33,959 Speaker 4: And there is this idea out there. I think it 578 00:31:34,040 --> 00:31:36,480 Speaker 4: was Dana Telsey who said the fact that you have 579 00:31:36,600 --> 00:31:41,240 Speaker 4: seen some of those European handbag makers raise their prices 580 00:31:41,280 --> 00:31:43,560 Speaker 4: that maybe that's given you a little bit more room, 581 00:31:43,880 --> 00:31:45,640 Speaker 4: especially when it comes to that two hundred to five 582 00:31:45,720 --> 00:31:48,440 Speaker 4: hundred dollars range, to bump up your prices as well. 583 00:31:48,520 --> 00:31:50,920 Speaker 4: Is that something that you agree with? And how much 584 00:31:51,080 --> 00:31:55,040 Speaker 4: time do you spend paying attention to what exactly your 585 00:31:55,080 --> 00:31:57,120 Speaker 4: competitors are doing when it comes to their pricing. 586 00:31:58,440 --> 00:32:02,080 Speaker 3: We look at everything so, but it doesn't drive what 587 00:32:02,120 --> 00:32:04,800 Speaker 3: we do, you know, on a very personal level. 588 00:32:06,240 --> 00:32:11,480 Speaker 2: Suck. We look at everything, but it doesn't drive what 589 00:32:11,520 --> 00:32:13,600 Speaker 2: we do. On a very personal level. 590 00:32:14,280 --> 00:32:17,240 Speaker 3: I find it offensive that somebody has to save four 591 00:32:17,280 --> 00:32:18,800 Speaker 3: months of salary to buy a handbag. 592 00:32:19,120 --> 00:32:21,320 Speaker 2: Okay, that's not a business I want to be in. 593 00:32:21,720 --> 00:32:24,560 Speaker 3: I love that you can walk into a coach store 594 00:32:25,040 --> 00:32:30,440 Speaker 3: anywhere in the world and buy something compelling and you 595 00:32:30,480 --> 00:32:34,200 Speaker 3: don't have to make the choice of missing out on 596 00:32:34,240 --> 00:32:36,040 Speaker 3: something you would have saved for for four months. 597 00:32:36,400 --> 00:32:37,520 Speaker 2: That's powerful to me. 598 00:32:37,720 --> 00:32:42,040 Speaker 3: So I like our position, and we play our own game.