The paragraph discusses the Tapestry Conference Call, which includes opening remarks by the Global Head of Investor Relations, Christina Colone. The call involves discussions on the company's first-quarter results, strategies, and outlook, led by CEO Joanne Crevoiserat and CFO/COO Scott Roe. It mentions that forward-looking statements will be made, which are not guaranteed and may differ from actual outcomes. The paragraph advises referencing official documents for risk factors and provides information on accessing non-GAAP financial measures on the company's website. The call will cover highlights for Tapestry and its brands, financial results, capital allocation, and an outlook, followed by a Q&A session with additional insights from Todd Kahn, CEO and Brand President of Coach. Joanne will conclude the call with closing remarks.

In the quarterly report, Tapestry's CEO Joanne Crevoiserat highlighted the company's better-than-expected performance, attributing it to the strength of their global teams and diverse business model. Key achievements included maintaining revenues on a constant currency basis and experiencing growth in international markets, particularly in Europe. While sales in Greater China declined by 5%, this was within expectations and better than industry trends. In North America, an anticipated decrease in wholesale contributed to a 1% revenue decline, but profit increased due to improved margins. The company also focused on expanding consumer relationships, acquiring 1.4 million new customers in North America.

The paragraph outlines the successful execution of a strategy to attract younger consumers, particularly Gen Z and Millennials, who spend more per transaction than other segments. It highlights improvements in reactivating inactive customers in North America and emphasizes strong digital sales growth and profitability, with digital accounting for over 25% of revenue. Despite a slight decline in global brick-and-mortar sales, profitability remained robust. The company achieved record first-quarter gross margins due to product innovation, quality, and an agile supply chain, leading to record earnings per share growth while continuing to invest strategically in their brands.

The paragraph discusses the company's strong performance and future strategies. They raised their annual guidance due to this outperformance and are appealing a court decision related to a pending acquisition of Capri. Despite the legal situation, the company remains focused on organic growth and brand strength. The Coach brand, in particular, has shown strong results with increased consumer engagement through innovative products and storytelling, achieving notable revenue and margin improvements. In the first quarter, they expanded their leather goods line, particularly the iconic Tabby handbag series, which has gained popularity, especially among younger consumers.

The paragraph discusses Coach's recent product and marketing successes. The company launched the Tabby 26 at full price in outlet stores, which exceeded expectations and expanded to over 200 locations. This test, along with the successful launch of the New York Family bags, including the Brooklyn and Empire bags, is shaping future strategies. These new products, particularly the Brooklyn shoulder bag, were popular with Gen Z and went viral on TikTok. Coach's handbag and accessory growth outpaced the industry, with notable sales increases in North America. The brand aims to expand into underrepresented categories like footwear and men's products, highlighting the release of the new Highline Sneaker.

The paragraph describes Coach's recent marketing strategies aimed at boosting brand awareness and engagement, particularly among Gen Z and Millennials. They launched a campaign titled "Unlock Your Courage" featuring ambassadors like Elle Fanning and Charles Melton to inspire self-expression. Coach has seen improvements in brand awareness and purchase intent, especially in the U.S. and globally, including China where they increased marketing investments. They also engaged younger consumers through gaming collaborations with Roblox and ZEPETO, resulting in over 12 million interactions and increased brand consideration. Consequently, Coach acquired approximately 930,000 new customers in North America, with 60% being Gen Z and Millennials. Moving forward, Coach plans to continue these brand-building efforts through focused customer engagement.

The paragraph discusses Coach's and Kate Spade's business strategies and performance. Coach is experiencing success with its product pipeline, including the Tabby line and the Coach Originals collection, and aims to maintain brand relevance through marketing and creativity. Kate Spade, despite seeing a revenue decline, achieved improved profit margins and is focused on long-term growth. New CEO Ava Erdmann is expected to enhance brand building and execution. The brand is prioritizing its core handbag offerings, and recent launches like the Deco Collection are particularly resonating with younger consumers.

The paragraph outlines several strategies for brand building and growth for Kate Spade. The company is focusing on telling cohesive brand stories, expanding its lifestyle offerings like jewelry, and maximizing its omnichannel presence, exemplified by a product trial on Amazon aimed at younger consumers. Marketing efforts are directed at increasing brand awareness and customer acquisition, fueled by ethnographic consumer insights. The company aims to enhance its marketing campaigns with more targeted messages, leveraging its strong brand recognition in the US to boost brand desire and purchase consideration.

The paragraph discusses the strategies and performance of the brands Kate Spade and Stuart Weitzman. Kate Spade is focusing on customer acquisition through holiday gifting and a social-first campaign, while working on long-term growth and profitability. Despite meeting expectations, there is room for improvement. Stuart Weitzman achieved revenue growth in North America, though challenges remain in Greater China. The brand focuses on product innovation and brand building, with successful launches like the Vinny Pump and Naomi Boot. Its refreshed iconic styles and modernized key families have driven significant growth in North America's wholesale business, with order bookings up nearly 30% year-to-date.

The paragraph highlights Tapestry's strategic focus on enhancing revenue and profitability by leveraging emotional storytelling and brand campaigns to boost customer acquisition and digital traffic. It underscores continued innovation in product offerings and purpose-driven marketing, especially during the key boot selling season. The company expresses confidence in its long-term growth potential, aided by a dedicated team. Tapestry reported strong earnings growth, exceeding expectations, and raised its outlook for the year. The paragraph concludes by acknowledging Andrea Resnick's impending retirement after her 97th earnings call with the company.

The paragraph discusses Andrea's significant contributions to Tapestry, highlighting her role in promoting transparency and effective communication. Scott Roe then reviews Tapestry's strong first-quarter financial performance, with revenue exceeding expectations due to international growth, particularly in Europe, Australia, New Zealand, and South Korea. However, sales declined in Japan and Greater China. Despite market challenges, Tapestry is investing in long-term growth, with North America experiencing a slight sales decline attributed to reduced wholesale, although direct sales in the region were positive.

In the quarter, both gross and operating margins improved compared to the previous year, supported by long-term brand health initiatives. The direct-to-consumer segment remained stable, with digital revenue rising while global brick and mortar sales slightly declined. Wholesale revenue was consistent with the prior year, benefiting from international digital growth. A record first-quarter gross margin was achieved, boosted by operational performance, reduced freight costs, and favorable foreign exchange impacts. SG&A expenses increased by 3%, primarily due to elevated marketing efforts for brand building. The operating margin grew by 90 basis points, resulting in a 10% EPS growth to $1.02, surpassing guidance. The balance sheet showed $7.3 billion in cash and total borrowings, reflecting acquisition-related financing. Free cash flow was $94 million, with $30 million spent on cloud computing investments. Inventory levels rose 9%, aligning with expectations amidst supply chain challenges.

The paragraph discusses the company's current and projected financial performance. Entering the holiday season, the company expects to close both Q2 and the full fiscal year with higher inventory levels than the prior year. The Board declared a quarterly cash dividend of $0.35 per share, amounting to $80 million for the quarter, and anticipates returning $325 million to shareholders annually through dividends. The fiscal 2025 outlook has been raised due to strong first-quarter performance, with projected revenue exceeding $6.75 billion, reflecting 1% to 2% growth. Regionally, high growth is expected in Europe, moderate growth in other Asia, a slight decline in Japan, and stable revenue in North America and greater China. Operating margin is expected to expand by over 50 basis points, driven by gross margin improvements, while SG&A expenses are anticipated to grow at the same rate as revenue.

The company is focusing on controlling costs while investing in high-impact growth initiatives, including increased marketing spend. Corporate expenses are expected to decline modestly compared to the previous year, with continued brand investment. Below the line, net interest income is projected at $20 million, considering the Federal Reserve's rate cuts. The anticipated tax rate is 19%, and the diluted share count is around 238 million. EPS guidance has been raised to $4.50-$4.55, indicating mid-single-digit growth. Free cash flow is expected to be around $1.1 billion, excluding deal costs, with CapEx and cloud computing expenses estimated at $190 million, mainly for store developments and digital/IT investments. Sales growth is projected to be slight in the first half and low single digits in the second half, with Q2 sales expected to grow 1%-2%. Operating margins are anticipated to expand across the year, driven by gross margin and SG&A leverage, with balanced mid-single-digit EPS growth expected, and Q2 EPS forecast near $1.70. The paragraph concludes with a mention of the proposed acquisition of Capri.

The company is appealing a district court's order related to a merger agreement and has paused integration efforts. They are focusing on capital allocation to drive growth and shareholder value, with commitments to investing in brands and maintaining a dividend rate of $1.40 per share in fiscal '25, aiming to increase dividends over time. They emphasize maintaining a solid investment-grade rating and a leverage target below 2.5 times, with plans to use excess cash flow for share repurchases if the merger with Capri does not proceed. Additionally, they are committed to disciplined financial management and strategic portfolio evaluation.

The closing paragraph highlights the company's successful quarter, marked by record gross margin and earnings per share, driven by a disciplined growth strategy and strong execution of their organic growth plan. Their diverse brand portfolio, skilled global teams, data-driven platform, and robust cash flow are cited as competitive advantages that provide strategic and financial flexibility. Looking forward, the company is optimistic about accelerating organic growth and enhancing shareholder value in the coming years. During a Q&A session, Bob Drbul from Guggenheim Securities questions the company's plans regarding a deal and their vision and capital allocation priorities in a deal break scenario. Joanne Crevoiserat responds by emphasizing the ongoing appeal process related to the deal, their strong focus on organic business growth, and confidence in their future growth potential, particularly highlighting the success of Coach and the contribution of their global teams at Tapestry.

The paragraph discusses Tapestry's approach to capital allocation and shareholder returns. The company is awaiting outcomes from an appeals process but highlights foundational investments in its organic business, aiming to maintain and eventually increase dividends. In case a deal falls through, Tapestry outlines three principles: maintaining a long-term leverage ratio and investment-grade rating, resuming share repurchases as a priority due to their compelling nature, and disciplined strategic portfolio management. The focus remains on strengthening Coach, ensuring sustainable growth at Kate Spade, and being disciplined about M&A, emphasizing their current business's creativity and capability to drive success.

In the paragraph, Joanne Crevoiserat addresses questions about share buybacks and the company's performance in China. She begins by clarifying that she will first discuss China and then pass it to Scott for details on share buybacks. She reports that their performance in Greater China was strong, landing at the high end of their guidance range despite a 5% decline. The region's performance is outpacing the industry, supported by investments in marketing and a strong brand presence. Digital trends in China are positive, highlighting the effectiveness of their local teams and platform investments. Crevoiserat expresses long-term confidence in China and Asia's markets, before passing the discussion to Todd Kahn for additional insights on China, and then to Scott for buyback details.

The paragraph discusses a company's recent performance in China and its plans for expansion. Despite a challenging market, the company reported a smaller decline in the quarter compared to the industry average. The speaker is optimistic about growth opportunities in China, particularly in smaller cities like Wuxi, where their brand resonates with young customers. They foresee significant distribution growth in China over the next few years. Additionally, the CFO, Scott Roe, addresses questions about stock buybacks, emphasizing the company's strong financial position with substantial capacity for investment while maintaining a leverage target. All financial strategies, including advanced share repurchase (ASR), are being considered.

In the paragraph, Matthew Boss from JPMorgan questions Joanne Crevoiserat about Coach brand's market share gains at exceptional margins and the drivers behind its outperformance over the past year. Joanne highlights that Coach has successfully catered to consumers by emphasizing choice, innovation, and emotion, alongside delivering value through quality and craftsmanship. She emphasizes the brand's consistent global approach and methodical investment in its capabilities, which have led to Coach's success despite a broader market slowdown in the handbag and leather goods category. Joanne remains optimistic about future growth for Coach.

The paragraph discusses the growth prospects and current success of the Coach brand within the handbag category. Todd Kahn highlights strong demand for Coach products, particularly the Brooklyn bag and the New York collection, which have seen significant consumer interest without affecting demand for other products like the Tabby family. He emphasizes the acquisition of younger customers, increased transaction frequency at higher average unit retail prices (AURs), and successful marketing campaigns. Coach plans to continue this momentum by maintaining close consumer connections and leveraging their strong product assortment, which suggests optimism for sustained growth. A follow-up question on gross margin is mentioned for Scott Roe.

The paragraph discusses the confidence in long-term gross margin growth, noting that Q1 saw a 280 basis point gain partly due to favorable freight conditions, though minor negative impacts are expected later. Wholesale pressure in Q1, expected to decrease later, was a timing issue that helped margins initially. Overall, gross margins are projected to rise, driving a 50 basis point operating margin expansion primarily in the first half of the year. The second half will see increased leverage on the SG&A side. Structural drivers include Average Unit Retail (AUR) improvements due to brand investment and Average Unit Cost (AUC) efficiencies from consumer insights and supply chain optimization. Following this, Lorraine Hutchinson from Bank of America seeks clarity on growth strategies for Kate Spade, addressing recent sales declines and stabilization plans.

In the paragraph, Joanne Crevoiserat expresses confidence in the Kate Spade brand and highlights opportunities in brand building and innovation. She announces the appointment of a new CEO, Ava, who has a strong background in building global luxury brands. The company has improved gross and operating margins and is introducing successful new products while recruiting new customers. Ava will sharpen the strategic roadmap and focus on execution improvements. Immediate actions include enhancing marketing strategies, storytelling, and refining product lines. Scott Roe adds that no growth is expected this fiscal year, with trends remaining consistent. Lorraine Hutchinson finds this information helpful, and the operator directs the next question to Michael Binetti of Evercore.

In the paragraph, Scott Roe and Todd Kahn discuss financial performance, particularly focusing on Coach's wholesale and direct-to-consumer channels. A $12 million impact on wholesale sales is attributed to the timing of Amazon orders, but this is not seen as a long-term issue. Both wholesale and direct-to-consumer sales are expected to grow throughout the year. Direct-to-consumer and online channels, especially in the Coach brand, showed strong performance, with Coach seeing a 3% global growth when excluding wholesale factors. The growth is driven by collections like the Empire and New York Collections and the Tabby line, with positive trends in North America and global improvement in average unit retail (AUR), reflecting the brand's health.

The paragraph discusses the enthusiasm around customer reactions to a product offering and the strategy for long-term customer acquisition through purpose-driven campaigns, emphasizing the significant lifetime value these new consumers bring to the Coach brand. Todd Kahn and Tracy Cogan [ph] discuss the growth in Average Unit Retail (AUR) both globally and in the US, noting that it is driven more by strategic marketing and less discounting rather than product changes. North America leads this growth, with interests in products like Brooklyn and the Tabby bag contributing significantly. AUR growth is expected to continue as the brand focuses on marketing and maintaining full prices for desired products in outlets, highlighting how consumers view the brand holistically across all channels.

The paragraph discusses the growth outlook for a company in North America. Rick Patel from Raymond James asks about the shape of growth, given that Q1 was down 1%, but the guidance suggests modest growth for the year. Joanne Crevoiserat mentions that North America's trends were better than expected in Q1 despite a wholesale drag, which was a one-time issue. They are focusing on discipline in managing the business, improving gross margins, operating margins, and acquiring new consumers. Scott Roe adds that underlying trends are positive, expecting slight growth for the rest of the year as wholesale normalizes and direct-to-consumer trends continue.

The paragraph provides insights on Tapestry's business performance and strategy, focusing on the digital versus brick-and-mortar sales channels in North America and internationally. Joanne Crevoiserat highlights that digital sales have offset slight declines in physical stores, emphasizing the company's focus on omnichannel capabilities as a competitive advantage. The digital and omnichannel businesses were in line with the previous year, with international growth, particularly in China, driving wholesale growth through digital channels. The strategy aims to meet customers where they are and acquire new ones, which is seen as vital for the brands' future.

In the paragraph, the speakers discuss the company's strategy and challenges related to customer acquisition and supply chain management. They highlight success in acquiring younger customers through digital channels, which boosts profits and strengthens the brand. Scott Roe talks about the company's resilience in handling supply chain disruptions, such as port strikes and tariff changes, by having a diverse and adaptable supply chain. He notes that the company's sourcing from China is minimal, particularly for leather goods, reducing exposure to potential tariff impacts. Dana Telsey then asks about future brand growth, balancing new and core collections, pricing, and margin impact given the sourcing challenges mentioned by Scott. Joanne Crevoiserat is set to respond.

The paragraph discusses the strategy of balancing innovation with investment in iconic products at Coach. The emphasis is on continuously innovating within existing successful lines, such as the Tabby, while introducing new product offerings to build additional brand pillars. The approach combines consumer insights, data analytics, and strategic marketing investments. Todd Kahn highlights the importance of maintaining focus on successful product lines for the long term. He recounts how past efforts to improve productivity by focusing on major product families, like the Tabby, have proven successful, and emphasizes the ongoing commitment to selling core products to untapped customer markets.

The paragraph discusses Coach's marketing and product strategy, highlighting the creative influence of Stuart Vevers and the success of the New York collection, which differs from the traditional Tabby collection. The New York collection has gained strong traction despite lacking typical Coach features, expanding the brand's appeal at attractive prices. Aneesha Sherman from Bernstein questions Coach executives about their growth expectations and margin impacts from product diversification, noting increased optimism around the Coach brand's growth potential. Joanne Crevoiserat responds that Coach is currently outpacing market growth and sees continued opportunities for expansion.

The paragraph discusses the strong and enduring emotional connection consumers have with a product category, focusing on the brands Coach and Kate Spade. It highlights the optimism for continued growth in these brands through improved execution and organic development. The discussion touches on maintaining and growing margins, despite differences in category gross margins, suggesting overall operational margins will be favorable. Joanne Crevoiserat concludes by emphasizing their strong operational position, the momentum behind Coach due to successful brand building, and their competitive advantages that allow for organic growth and value creation.

The speaker expresses confidence in the future, thanks the global teams for their contributions to success, and concludes Tapestry's earnings conference call, with the operator thanking participants.

This summary was generated with AI and may contain some inaccuracies.