Logo product is back in vogue in the handbag business, which is good news for Tapestry Inc., while Michael Kors Holdings Ltd. continues its focus on product innovation.

The chairmen of Tapestry and Michael Kors both spoke at separate company presentations for investors at the Robert W. Baird & Co. Inc. Conference on Tuesday in Manhattan.

One key theme was how each was planning to expand their respective businesses in the current retail landscape. Baird retail analyst Mark R. Altschwager moderated the two separate presentations.

Victor Luis, chairman and chief executive officer of Tapestry, said that while each of its three brands need to do its own heavy lifting to create emotional connections with their consumers, there are back-end synergies that Tapestry can drive, whether through a leverage of the systems or on the supply chain side to scale material, labor and production.

As for the overall handbag market, he said that with the innovation by the luxury players back to logo product, “we’re back into that trend where logo and branding is absolutely vital, which, for us, of course, is very good news.”

He said that from about 2000 to 2010 or 2011, there was tremendous growth in the luxury space, particularly with logo product, which benefited accessible luxury brands such as Coach and Kate Spade, both under Tapestry’s umbrella. The third is footwear brand Stuart Weitzman.

Luis said the problem when the fashion cycle shifted and logo product was taken out was that brands shifted to working on leather without any differentiated shape that was easy to copy, and more importantly created a “sea of sameness” at the department store channel. The return of logos also means the return of highly branded product because that helps with differentiation, he said.

As for price point, Luis said the company has found the right balance between product at the sweet spot for Coach, between $300 and $400, and then for bags above the $400 and $500 range.

The chairman said that when consumers buy, they like to invest in brands that reflect their own fashion personality. Most importantly are handbags and accessories, representing a $40 billion global market. Second is premium footwear, which is a $28 billion market that’s highly fragmented. Last is outerwear, representing a $10 billion growth market. On the apparel side, Luis said the Kate Spade business, in its full-price business, has a “decent business, mostly in dresses, where they focus on a few key styles, driving efficiency and gross margin.”

The focus at Kate Spade will continue to be in handbags and accessories, Luis said. Newly named creative director Nicola Glass will show her first presentation to market in September, which will start hitting stores at the end of February. The brand is also focused on rolling out and testing a slightly more elevated retail concept. One test outlet site opened in Merrimack, N.H., and another, this one full-price, is slated to open in Hartford, Conn.

As for Stuart Weitzman, Luis said he’s seeing positive signs from samples being delivered for holiday and the fall deliveries. He said the brand has since the beginning been manufacturing shoes in El Dorado, Spain, using 10 small factories for a $380 million to $400 million business, and has now supplemented those facilities with a few more to provide some production bandwidth. The brand had some earlier hiccups with its new line, but the expectation is that the production cadence should return to normal over the next few months.

John D. Idol, Michael Kors’ chairman and chief executive officer, spoke about expansion plans for the Michael Kors brand, and that for Jimmy Choo, which the company acquired last year. He also spoke about the Runway 2020 plan, which was initiated last year to reposition the Michael Kors brand and take advantage of its luxury heritage.

Idol said the company is ahead of its plans, with about 65 percent of its accessories products that’s now in stores all new merchandise designs. The retail business is a key focus as that represents the key growth engine for the company.

He also said the Michael Kors brand has been focused on product innovation, and that the bellwether has been full price sell-through, which Idol said “has been growing.” That’s an indication that the consumer has been responding to the innovations to the product line, he told investors. Other areas of focus have been accessories and watches, women’s ready-to-wear and footwear.

Idol said the brand has been working on growing its brand engagement strategy, whether growing its Instagram following, or its customer database. The company also introduced Kors VIP, a tiered rewards loyalty program that has helped with brand engagement.

The company has also been investing in renovating its Michael Kors store base, such as at Roosevelt Fields and Short Hills in the Northeast and Beverly Center in California, as well investments in new store formats in London, Oslo and Singapore. The plan is to renovate 200 more stores, Idol said.

As for Jimmy Choo, Idol said the company plans to open 13 stores this year, with the thinking that the brand could ultimately support 250 stores, a number that the chairman said is “very consistent with its other luxury competitors. Most of that growth will be focused on the Asian market.” Also on the agenda is the acceleration of its footwear business, Idol said. The company will also expand the accessories business, now at 20 percent, but over time could be 50 percent of the business. “We believe [accessories] will add hundreds of millions of dollars to this company,” Idol said.

Thomas J. Edwards Jr., executive vice president and chief financial and chief operating officer, and treasurer, said the company will increase its retail mix to 70 percent and wholesale closer to 30 percent for the Michael Kors brand. The cfo said the Jimmy Choo brand is already about 30 percent wholesale.


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