[music]

>> Yahoo Finance bring you more elite

interviews from Cannes. The Tapestry CEO

sat down with executive editor Brian

Sozzi to discuss the state of the luxury

retail market.

>> How do you explain all the the momentum

behind the Coach brand?

>> Well, I you know, I think it has to

start with our team. We have a great

team and we've built our growth engine

by design and it really is fueling a

culture of creativity. So bringing it

back to why we're here at Cannes,

um you know, we've defined our target

market. It's a massive TAM, right? We

speak to a lot of consumers and we've

really gotten focused on this point of

market entry young consumer who's buying

a luxury handbag perhaps for the first

time. We want to earn the right to be

that customer's first luxury bag

purchase. And as we get really focused,

our team is insatiably curious about how

to do that, how to be relevant for that

target customer, bringing all of our

brand building capabilities that we've

intentionally built over the last 7

years together with the creativity that

that customer is craving. And so when we

come to a place like this, I think it

explains that real insatiable curiosity

that our teams have to learn what's new,

to understand culture to deeper level

and connect the consumer to our brands

on an emotional level and that's what's

winning the day for Coach.

>> I I came across this stat and it's

something I hadn't thought about for a

while, maybe because I'm just getting

old and it was from JP Morgan and I

think they said 25 million people turn

18

every year

and

I'm like, that is a huge driver of your

business and they want a handbag. Like

it's it's their first handbag that they

ever bought on their own, right?

>> Well, and we hear these stories. It's

authentic to who we are. If you think

about and you know, you and I have been

in this business for a long time, is we

do work with consumers, we hear

frequently about Coach or Kate Spade and

just the fond memories consumers have.

It was my first luxury bag purchase. I

remember how it made me feel. So, those

two moments of inspiration for us are

this is authentic to who we are. We are

a brand that speaks to actually 2

billion people around the world can

afford to buy one of our handbags. And

so, with that large an audience, we had

to get focused became focused on this

first luxury bag buyer because it is so

authentic to who we are and the great

news is that 25 million women in the

markets where we serve today will turn

18 this year and every year for the next

10 years. So, that provides a tremendous

opportunity, but that's all that is is

opportunity. Then we have to do the work

to understand culture, understand the

customer, and take those insights and

and bring them forward with great

product, great brand experiences, and

great marketing. And that all comes

together in service of the brand and the

emotional connection with the consumer.

>> So, that 18-year-old, when they walk

into your store, look, you're 18 years

old. You don't have a lot of You don't

have a lot of money. They're not

probably buying a 8-900 bag. When they

walk into your store now, in that Coach

store,

what are they buying as their first bag?

>> Well, an interesting insight, Brian, a

Gen Z consumer gives us about 60 seconds

when they cross the threshold of a store

to determine whether they want to be

there.

>> 60 seconds is all we have to have that

customer feel like it's a brand for

them, that they're in a place where they

can feel inspired, they can be engaged.

So, we spend a lot of time understanding

what's important to this customer, not

just, you know, what kind of handbag and

what is the trend style, but how they

want to be treated, how we have to

display the product in a way that makes

it accessible so they feel that they can

be they can touch it and explore it and

try it on. We do actually a lot of work

on training our associates on how to

engage a Gen Z consumer who walks into

our store because it doesn't look the

same as every other generation.

>> do you engage them? Hey, hey, hey,

buddy. I did [laughter] this panel.

How's it How do How does this generation

even speak?

>> It's It's

It's knowing that, right? It's knowing

how to engage them, knowing that it's

not important to just be in their face

every minute. It's It's knowing how to

give them help because they don't really

want help, but they want help. And

understanding that nuance and actually

we have AI training tools that help our

associates not only train to understand

what to do, but then practice how to do

it. And these AI training tools give

tips in real time back to our

associates, which is a less intimidating

way to train on your techniques and in

the ways that we engage and approach our

customers. So, I would say that the

takeaway is that we understand we take

it very seriously to understand what's

important to our consumers. And then we

invest. We invest behind not only the

products that we're delivering. So, you

know, we can talk about the Tabby bag or

the Brooklyn bag or the Terry bag, which

are, you know, tremendous Gen Z

engagement vehicles. They love these

bags and the innovation we're bringing

there is is terrific. But it also

matters the experience that we give them

when they come into the store and the

marketing and how they see us where they

we we engage with them on social media

as well.

>> I earlier we got a conversation with uh

Gap's CEO

and he was telling me a story he was

trying to tell around his legacy brand

in Gap. You know, for him it goes back

to a store I believe in the late '70s

that used to sell music. And I was

thinking of you all um amazing heritage

uh amazing story to tell there. How is

that How is channeling your heritage

helped revive this business?

>> What is so critically important is that

we're not just a brand for today. We are

a brand with heritage and and to your

point, we go back to that inspiration of

the baseball glove. Our glove tanned

leather was inspired by the glove the

leather in a baseball glove. I don't

know if you knew this.

>> I got to tell my boss George, he's over

there. He's a big baseball fan.

>> Yeah, because you know, that is if you

you probably still have your childhood

glove or a glove

>> actually.

>> Well, you you are you are still young.

So, you probably still use it, too.

>> [laughter]

>> But in our house, they may be older, but

that leather the patina gets better over

time and that inspired

the Coach brand from its very beginning.

It's it's this genuine crafted to last

product that was inspired by a baseball

glove and has built on this credible

credibility for being a house of leather

over many generations. And so, it is

important not to let go of being genuine

and and the courage to be real this

bringing that back today for a modern

consumer is about allowing the consumer

to build confidence through

self-expression with our product and our

brand. Genuine leather crafted to last.

That is something that has been

consistent over time and will remain

consistent into the future. And the

reason we're here today is to understand

how to take that territory and make it

relevant for a young consumer and bring

the right product to to market, bring

the right experiences in terms of our

store experience or the AI gift

concierge that we have at Kate Spade,

right? What is that experience that is

relevant to a modern consumer but brings

the brand heritage forward in a very

authentic way. So, it's it's critically

important.

>> Marriott CEO told me July 4th holiday

bookings are strong.

What's the state of that consumer that

comes into your stores? It's steady,

strong, somewhere in between?

>> There's a lot written about, you know,

how difficult the macro environment is

particularly for young consumers, our

target consumer group, yet quarter after

quarter we're acquiring millions of new

consumers every quarter.

And that's because we're delivering the

innovation and the relevance that

they're looking for.

>> just finding money to buy what you're

selling.

>> I think they're prioritizing. And you

know, frankly, in a in a world where the

consumer may feel more challenged, and

again, lot written about that, I love

our value proposition in that market.

You know, we are well-positioned to

compete and win in any market given the

really the strength of our value

proposition. But that isn't just a price

point. I think it is really important to

say that what the consumer's responding

to is they're responding to the

innovation we're delivering. And that

innovation happens in product. You know,

we've talked about the Tabby bag and the

Brooklyn bag and the Terry bag or the

Duo at Kate Spade. We're seeing growth

in AUR, double-digit growth in AUR.

>> in a row.

>> Uh more than that, almost five years in

a row now at the Coach brands. So we,

you know, we have consistently seen this

young customer engage our brand for the

first time

and they're coming in at higher than

average AUR. So a young consumer who's

shopping at a price point that's higher

than our average consumer. And now the

the beautiful thing is when we deliver a

great first experience, we see them

coming back with higher frequency. So

retention rates of our young consumer

are actually higher than any other

age cohort. So we're starting to see the

compounding benefits of the work that

we're doing. And you know, the the

reason we're here today is because we're

not complacent with those results. It

makes us even more curious about what's

happening in culture so that we can

continue to deliver that innovation on

repeat.

>> So you're planning for a big holiday

season?

>> We're always planning for a big holiday

season.

>> every day it's like one day closer to

the holiday season.

>> Yeah, we

you You

there are so many wonderful

opportunities to

um um to drive our business. Holiday is

a terrific opportunity for us to

showcase our brands and create more

emotional connections with our brands to

our target consumers. But, we're seeing

that in the everyday. Actually, uh over

60% of Gen Z consumers

like to give gifts just to brighten

someone's day. So, we're actually seeing

the younger consumer not need a reason

to give a gift.

>> Gen Z.

>> [laughter]

>> Please, please. I'm I'm all in.

>> You know, and and I think it's it's a

signal that that customer isn't just

waiting for the moment in the year where

they're supposed to gift. They're doing

it because they feel that they want to

drive brighten someone's day, drive that

emotional connection around to their

friend group, and live more in the

moment. This is a consumer group that we

often hear is struggling with, you know,

affordability issues, but one that is

maybe putting off life moments. They're

not thinking about buying a house

tomorrow or maybe getting married, but

they do want to live for today and

really make the best of what they have

today. And the value proposition that we

deliver, which includes the incredible

innovation and creativity that we're

delivering, in addition to the trend

right silhouette and the price points

that we're delivering, make it a

compelling option for our consumers.