Tapestry, Inc.

Good day and welcome to this Tapestry conference call. Today's call is being recorded. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one on your telephone keypad. You may withdraw yourself from the queue by pressing star two. At this time, for opening remarks and introductions, I would like to turn the call over to the Global Head of Investor Relations, Christina Colon.

Good morning. Thank you for joining us with me today to discuss our second quarter results, as well as our strategies and outlook are Joanne for VoiceRat, Tapestry's Chief Executive Officer, and Scott Rowe, Tapestry's Chief Financial Officer and Chief Operating Officer. Before we begin, we must point out that this conference call will involve certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. This includes projections for our business in the current or future quarters or fiscal years. Forward-looking statements are not guarantees, and our actual results may differ materially from those expressed or implied in the forward-looking statements. Please refer to our annual report on Form 10-K, the press release we issued this morning, and our other filings with the Securities and Exchange Commission for a complete list of risks and other important factors that could impact our future results and performance. Non-GAAP financial measures are included in our comments today and in our presentation slides. For a full reconciliation to corresponding GAAP financial information, please visit our website, www.tapestry.com forward slash investors, and then view the earnings release and the presentation posted today. Now, let me outline the speakers and topics for this conference call. Joanne will begin with highlights for Tapestry and each of our brands. Scott will continue with our financial results, capital allocation priorities, and our outlook going forward. Following that, we will hold a question and answer session where we will be joined by Todd Kahn, CEO and brand president of Coach. After Q&A, Joanne will conclude with brief closing remarks. I'd now like to turn it over to Joanne Prevoicerat, Tapestry CEO.

Good morning. Thank you, Christina, and welcome, everyone. As noted in our press release, we delivered a strong holiday quarter, achieving record second quarter revenue and earnings per share with growth outpacing expectations. Importantly, we advanced our strategic agenda, driving consistent progress through the power of brand building, customer centricity, and disciplined execution. I want to recognize our talented global teams whose creativity, passion, and agility continue to fuel consumer engagement and our standout financial results. Touching on the highlights for the quarter. First, we powered global growth to achieve a 3% sales gain, demonstrating the benefits of our diversified business model. This increase was driven by 12% growth at constant currency internationally, which included 19% growth in greater China, consistent with our expectations. Further, sales to Chinese consumers globally grew at a mid-teens rate, which included continued growth with Chinese tourists. Looking ahead, we remain committed to investing in our brands, leveraging Tapestry's established platform in the region to build our business not only in China but with this important cohort worldwide. Turning to Japan, revenue rose 6% and in other Asia and Europe, sales increased 9% and 11% respectively, with each delivering strong growth against last year's double-digit gains. Finally, in North America, we delivered revenue in line with last year and better than our expectations. We are continuing to drive a healthy business underscored by significant gross and operating margin expansion compared to last year and plan. Second, we remain focused on building customer engagement across our brands. In the quarter, we acquired approximately 2.5 million new customers in North America alone. of which roughly half were Gen Z and millennials, consistent with our strategy to recruit younger consumers to our brands. And we continue to see new customers transact at higher AUR than the balance of our customer base. At the same time, we improved lapsed customer reactivation in North America, demonstrating our ability to engage with our existing customer base while bringing new customers to our brands. Third, we delivered unique and seamless omnichannel experiences, reinforcing the benefits of our data-rich, direct-to-consumer operating model. To this end, we drove mid-single-digit growth on a constant currency basis, both in stores and online, as we continue to meet our customers where they choose to shop. Our exceptional retail teams welcomed more customers to our stores around the world, while we maintained our strong positioning in digital, which represented one-third of revenue. During the quarter, we were proud to open a new multi-brand fulfillment center in Las Vegas as we continued to invest in our omnichannel capabilities, supporting speed, sustainability, and growth. Fourth, we fueled fashion innovation and product excellence by delivering compelling newness and value to consumers, which supported overall handbag AUR gains globally. At the same time, we drove growth in our small leather goods and lifestyle offerings, important for the holiday gifting season. Overall, we generated record second quarter EPS, which exceeded expectations and increased significantly compared to the prior year, highlighting the power of brand building and disciplined execution. We achieved these strong results while making strategic investments in our brands to accelerate future growth. Now turning to the highlights across each of our brands, starting with Coach. We delivered another standout quarter as our team continues to fuel brand desire by bringing expressive luxury to life, a positioning that is relevant and unique to Coach. Our strategies, supported by consistent execution, are driving strong innovation, consumer connections, and financial results, highlighted by revenue growth across geographies and significant margin expansion. Now, touching on some details of the second quarter. We achieved growth in our leather goods offering fueled by our iconic platforms. Tabby, again, outperformed expectations, nearly doubling versus last year and over-indexing with new and younger consumers at above average AUR. We're continuing to bring newness to this iconic family across bags and small leather goods, including the recently launched quilted Tabby with further runway ahead. At the same time, we drove growth across the balance of the assortment anchored by our Willow and Rogue families, which remain foundational volume drivers. We also drove momentum with the recently introduced Idle family, expanding the offering with new sizes. Overall, our creative and innovative products supported a mid-single-digit gain in global handbag AUR, including growth in North America. Looking forward, we see continued opportunity for pricing improvements given our innovation pipeline, and brand heat. At the same time, we fueled gains in lifestyle as we focused on building the brand's reach with consumers with the goal of powering customer recruitment, purchase frequency, and ultimately customer lifetime value. In ready-to-wear, we advanced our strategy to build a core assortment of key styles that represent compelling value. Growth in the quarter was driven by outerwear. In footwear, the Lea Loafer continued to outperform, And in men's leather goods, growth was driven by success in the key Gotham, Charter, Hitch, and Relay families. Next, we created purpose-led storytelling, building meaningful emotional connections with the brand. We continued to lean into the strength of the Wear Your Shine campaign, which inspires consumers to use fashion as a means for personal expression and empowerment. The Shine collection included a range of gold and metallic bags, ready-to-wear and accessories, allowing customers to own their shine with confidence. We also delivered emotional content through our More Than a Gift campaign, which celebrates the gifts that give us the confidence to be ourselves. Overall, the success of these campaigns helped to support the acquisition of approximately 1.5 million new customers in North America, including a growing number of Gen Z and millennials. And according to our U.S. brand tracking work fielded during the quarter, Coach saw a lift in unaided awareness versus prior year, led by gains with Gen Z consumers, underscoring that our investments in brand building are working. And finally, we continue to build momentum in our sub-brand Coachtopia, our reimagination of the product creation process to evolve our vision of circularity. During the quarter, Coachtopia's ergo shoulder bag, made with either repurposed leather or leather scraps, was the top-selling style. While Coachtopia remains a small portion of the assortment, we are excited by the significant consumer attention it's receiving, specifically with younger audiences. In closing, Coach continues to build strength on strength with a clear strategy, unique purpose, and commitment to investing behind sustainable growth. The power of expressive luxury rooted in deep consumer insights and consistent execution is bringing new innovation, new customers, and new potential to this iconic brand, and we're confident in the tremendous runway ahead. Now, moving to Kate Spade. During the quarter, we continued to advance our long-term priorities, reinforcing our strategic direction. Profits were ahead of both expectations and the prior year, led by gross margin expansion and demonstrating our agility and discipline. Having said that, top-line trends remain challenged. In order to realize the ambition we have for the brand, we need to accelerate our progress through improved execution. To this end, we see an opportunity in three key areas. First, strengthening Kate Spade's core handbag offering. Second, powering the omni-channel experience. And third, driving more emotional marketing that fuels brand relevance and heat. Now I'll touch on our quarterly results in each of these focus areas in more detail. First, we are reimagining and broadening the brand's core handbag assortment across channels, creating the foundation to be a larger and more profitable brand consistent with our strategic intent. And where we've provided more newness, innovation, and emotion, our customers have responded. However, the traction we've seen with new product was offset by declines in carryover families, which underperformed our expectations. This reinforces the need to move faster to build a more innovative core assortment that's required to win in today's dynamic consumer backdrop. Moving forward, we are laser focused on improving the execution of our handbag offering, bringing more relevancy to the assortment. The pipeline for the back half of the year and into fiscal year 25 will increase the penetration of newness across channels with the launch of bags featuring new materials, silhouettes, and distinctive branding elements. This innovation builds on the green shoots we're seeing today while incorporating consumer feedback and insights, which help to inform our product strategies and investments. At the same time, we'll maintain the strength of our novelty and lifestyle offerings, differentiators for the Kate Spade brand. To this point, footwear rose double digits in the quarter, while jewelry remained an important acquisition vehicle, consistent with our strategy and focus on enhancing customer lifetime value. Second, the execution of a cohesive omnichannel strategy is a key opportunity to drive stronger customer engagement. During the quarter, we launched a dedicated katespadeoutlet.com site, replacing the brand surprise site and providing a more seamless way for outlet consumers to discover and shop the brand online. Overall, by bringing a more focused and unified experience to consumers across all brand touchpoints, we can more efficiently scale our marketing and merchandising efforts. supporting our goal of driving sustainable direct-to-consumer growth. Third, we are focused on creating emotional marketing that fuels brand relevance and heat on a global scale. During the quarter, our marketing investments supported the acquisition of approximately 950,000 new customers to the brand in North America. In keeping with our strategy to become a more global brand, we launched a series of physical activations from London to Shanghai that brought the brand's codes to life and helped grow brand awareness internationally. Moving forward, we recognize the need to distort our marketing efforts to brand building to enhance our impact. Unique storytelling has been a strength of the brand over time, and as we move into spring, we will focus on creating marketing to drive fashion credibility and customer engagement. by shifting our investment to top-of-funnel marketing through the launch of our campaign anchored in the brand codes of Joy, Color, and New York City. Finally, as we fuel enhanced innovation, we will maintain a commitment to operational excellence, positioning the brand for long-term success. This focus has supported the brand's meaningful gross margin and profit expansion thus far this year and is embedded in our strategies and ways of working for the future. Overall, while we're continuing to advance our long-term strategies at Kate Spade, we're leaning in with intention to accelerate our progress. Our path forward is clear, and our vision for the brand and its potential is unchanged. Turning to Stuart Weitzman. Top-line results in the quarter were pressured, reflecting in part the ongoing strategic reduction in off-price wholesale shipments. These headwinds were partially offset by growth in China against last year's COVID-impacted compare. and continued positive wholesale POS trends. Further, we grew AUR, expanded gross margin, and improved profitability versus prior year. That said, we remain unsatisfied with the brand's pace of recovery, and we continue to focus on prioritizing brand health and delivering innovation for consumers. Touching on key elements of the brand's strategic growth pillars from the quarter. First, we curated a relevant offering of emotional product. we delivered growth in our core boot classification fueled by gains in the Soho and 50-50 families. Further, we continued to build out our assortment with more seasonless casual styles, including loafers and ballet flats. During the quarter, we also launched a new sneaker assortment featuring a range of innovative designs engineered to combine fashion and function. At the same time, our handbag collection, while still a small portion of the assortment, drove growth at high AUR, As we move forward, we will deliver more newness into the core assortment in keeping with rapidly evolving consumer trends. Next, we created engaging marketing to fuel brand heat and consideration. In celebration of the brand's 30th anniversary, we employed a multi-pronged approach to our marketing, including utilizing an array of influencers to organically engage with consumers, from He Kong to Kim Kardashian to Sofia Richie Grange. As a result, we saw brand awareness improve in the U.S. per YouGov and drove increased customer engagement across our social channels. Similarly, in China, brand exposure rose significantly following the launch of this campaign. Overall, the Stuart Weitzman team is focused on executing against its strategic priorities, fueling brand heat and deepening customer engagement through a stronger, more diversified foundation of differentiated product, and emotional purpose-led storytelling to drive enhanced growth and profitability long-term. In closing, Tapestry delivered a strong second quarter, positioning us to raise our earnings per share outlook for the fiscal year. Importantly, this reflects the progress we're making to advance our strategic agenda and power our iconic brands to move at the speed of the consumer in an ever-changing environment while investing in our future. We remain confident in our vision and in our ability to bring that vision to life, putting the customer at the center of everything we do to drive sustainable organic top and bottom line gains. Further, through the planned acquisition of Capri, we see a significant opportunity to accelerate our strategies while driving accretion to our strong standalone financial plan. Overall, we remain excited by the opportunity to expand our house of powerful brands and positioning Tapestry as a leader in innovation, talent development, and shareholder returns for years to come. We continue to make progress toward closing the transaction and look forward to sharing more detailed growth strategies for the future at an appropriate time. With that, I'll turn it over to Scott, who will discuss financial results, capital priorities, and fiscal 24 outlook. Scott?