Tapestry (TPR) Q1 FY2027 Earnings Call: Q&A Summary

Q: Ike Boruchow with Wells Fargo asked what gives management confidence in the durability of mid-single-digit growth in North America for Coach and shared thoughts on the U.S. consumer backdrop.

A: Joanne Crevoiserat stated that growth in North America drove the company's beat and reflected deliberate actions for long-term durable growth, noting broad-based consumer resilience across generations and income cohorts. Todd Kahn added that Coach grew in 22 of the last 23 quarters, grew 7% in North America in the first quarter, and will rely on the 200 to 500 dollar price band and core families like Tabby, New York family, and Teri.

Q: Matthew Boss with JPMorgan asked about similarities in customer files between the U.S. and China and how to think about the evolution of gross margin drivers for the rest of the year following the 130 basis point operational expansion in the first quarter.

A: Joanne Crevoiserat explained that regional growth shares more similarities than differences, driven by compelling value propositions and strong regional execution that resonates with Gen Z. Scott Roe added that full year gross margin and operating margin guidance were raised due to Coach's strength, driven by AUR growth, disciplined pricing, and favorable structural mix from growing faster outside the U.S.

Q: Bob Drbul with BTIG asked about performance and consumer environment trends in China, as well as the sustainability and status of the footwear business at Coach.

A: Joanne Crevoiserat noted that China growth remains strong and well above market due to new customer acquisition and low relative penetration, with mid-teens growth modeled for the second quarter and full year. Todd Kahn stated that footwear contributed about 6% of growth, highlighting the SoHo sneaker and Margot shoes as key acquisition and wholesale vehicles.

Q: Laurent Vasilescu with BNP Paribas asked how much new store concepts are touching the current fleet, how they roll up to the 80% target by 2030, and the expected impact on CapEx and return on invested capital.

A: Todd Kahn stated that the expressive luxury store concept is seeing positive reactions regarding dwell time and traffic, with retrofits touching major stores first. Scott Roe added that total CapEx is around 300 million dollars or 3% to 4% of sales, with about two-thirds related to stores, representing cost-effective investments expected to improve store productivity and performance.

Q: Michael Binetti with Evercore asked if industry trends support the expected mid-single-digit holiday growth in North America and whether the second quarter plan includes lower promotions.

A: Joanne Crevoiserat stated that industry forecasts and research point to a constructive backdrop for holiday, with consumers planning to spend more than a year ago. Todd Kahn added that promotional intensity will be reduced further by leaning into rarity, core product families like Tabby and Teri, and maintaining the 200 to 500 dollar sweet spot.

Q: Aneesha Sherman with Bernstein asked if Coach plans to move prices above the 500 dollar point and whether narrowing value gaps with European luxury brands pose any risk.

A: Todd Kahn clarified that 200 to 500 dollars remains the sweet spot for handbags, though entry price points under 200 dollars exist for small leather goods and footwear to drive brand aspiration. He stated that the delta with European luxury is material and that Coach welcomes competition given its focus on large addressable market opportunities and customer acquisition.

Q: Dana Telsey with Telsey Group asked how management frames the progress at Kate Spade regarding icons and collections, and if there are performance differences between outlet and full-price stores.

A: Joanne Crevoiserat stated that Kate Spade first quarter revenue met expectations with expanding gross margins, reflecting disciplined streamlining and foundational work. She highlighted that new Executive Creative Director Jonathan Saunders is sharpening creative execution to improve brand desire and drive long-term growth.

Q: Mark Altschwager with Baird asked about the cadence of the turnaround at Kate Spade and the drivers of SG&A leverage in the back half of the year.

A: Joanne Crevoiserat explained that Kate Spade is managing headwinds from pulling back on promotions and closing unproductive stores, with progress expected in the back half of the year as new creative execution rolls out. Scott Roe added that full year SG&A includes marketing investments at about 12% of sales to drive customer acquisition, offset by operational discipline and leverage across the rest of the P&L.