Joanne Crevoiserat predicts the post-COVID-19 world will resemble something similar to the Roaring ’20s.
“We’re looking forward to, as the vaccine rolls out, consumers heading back into the physical world, with people going to events, to dinners, to weddings,” the chief executive officer of Tapestry Inc. told WWD. “That gives people a reason to engage with our products again.”
In fact, while the pandemic has wreaked havoc on nearly every industry, causing changes that will long outlast the pandemic, the desire to socialize will remain undeterred, said Todd Kahn, Coach interim CEO and brand president, and chief administrative officer.
“We’re all social creatures,” he said. “That bodes well for us and for our products as people venture back out.”
That’s also good news for a company that lost $652 million for the 2020 fiscal year, which just happened to be the onset of the pandemic. Kate Spade’s array of ready-to-wear apparel, Stuart Weitzman’s fancy footwear and even handbags at Coach didn’t mix well with shoppers as they hunkered down at home for months on end, canceling in-person events in the process.
But in the last two quarters Tapestry — parent company to the Coach, Kate Spade and Stuart Weitzman brands — has slowly been regaining footing in a challenging retail landscape. Shares of Tapestry, which closed up 4.6 percent to $36.19 each on Thursday, are up nearly 25 percent, year-over-year. On Thursday, the retailer revealed a $311 million profit in the most recent quarter, despite top-line revenue declines at all three brands.
And as vaccines roll out in 2021, the company said it will continue to rebalance its assortment with a mix of casual offerings and more structured items, such as outerwear, bridal and pumps.
“The consumer is changing rapidly in their values, shopping behaviors and connection to brands and these changes have highlighted opportunities for our brands and our business,” Crevoiserat told analysts on Thursday morning’s conference call.
The determining factor in Tapestry’s success, then, will be its ability to master a fully functional omnichannel operation.
“The pandemic has really accelerated our focus on digital and using data analytics,” Crevoiserat said. “It forced many consumers to shop digitally. Some of them couldn’t go out, couldn’t go to physical stores. Some of these shopping behaviors will stick around [post-pandemic].”
During the quarter ending Dec. 26, for example, Tapestry acquired 1.5 million new customers across all three brands in North American by way of its e-commerce operations. Many of them were younger, Millennial or Gen Z consumers, Crevoiserat said.
During China’s Singles’ Day on Nov. 11, Coach was rated the number-one brand for handbags, luggage and leather goods on Tmall, while Stuart Weitzman was rated the number-one footwear brand on the platform through the holiday season. As a result, revenues grew more than 30 percent during the quarter, year-over-year, in Mainland China.
Meanwhile, the company’s e-commerce channel grew triple digits during the quarter, year-over-year, with digital representing one-third of all sales, or half of all revenue in North America. In addition, Tapestry’s digital business has grown to $1.3 billion in the last 12 months, more than double what it was a year ago, Crevoiserat said.
In January, Tapestry was the first luxury brand to launch e-commerce on Douyin, the TikTok of China, helping attract even more new shoppers. The company also continues to work with brand ambassadors, such as Serena Williams for Stuart Weitzman and Jennifer Lopez for Coach, in addition to new faces, like Chinese rapper Lay Zhang.
“We’re sharpening our focus on the consumer,” Crevoiserat said. “We’re getting much better at engaging consumers on these platforms. We’re engaging more consumers on our social media platforms; our teams are working with microinfluencers. We’re meeting our customers where they want to shop.”
For now, that’s mostly online, with lingering lockdowns as a second wave of the coronavirus surges in some parts of the world. But Crevoiserat added, “stores still matter,” even as in-person traffic continues to lag.
“We’re building a truly omnichannel customer,” Crevoiserat said. “We want to make sure we have the right experiences for our customers and our stores meet our productivity and profitability threshold.”
Tapestry ended the most recent quarter with 1,491 stores, or 960 Coach, 422 Kate Spade and 109 Stuart Weitzman locations. Most notable of them was Coach’s new Shanghai store, the first brick-and-mortar unit to combine digital innovations for an immersive experience.
“All the walls are floor-to-ceiling videos, so consumers can interact with them,” said Kahn, explaining that videos are controlled by gaming technology and feature a mix of vintage Coach artwork and current marketing materials, allowing shoppers to curate their own in-store experience.
“And they can change every few months,” he added. “So our team can change the store without removing the fixtures. It creates a reason to come back into the store every so often. It’s all the benefits of a pop-up, but in a permanent location.”
Kahn said Tapestry will slowly roll out additional interactive stores, like the one in Shanghai, to new markets.
“We’re not going to open 200 of these stores,” he said. “But we will have more of a test-and-learn agenda. We’ll wait and see and learn [from the stores we already have] and consider additional stores as our [old] store leases come up for renewal.
“Stores are not marketing exercises,” Kahn added. “They’re about productivity and profitability.”
Crevoiserat acknowledged that some pandemic headwinds will persist in the near term, such as store closures, limited in-store capacities and increased shipping and freight costs. That’s particularly evident in Europe, where a fresh round of lockdowns have made in-person shopping impossible. It also caused revenues to slow in the region during the most recent quarter. But the CEO added that Tapestry’s European operations represent only about 5 percent of the total business.
“We’ve managed through a lockdown before,” Crevoiserat said. “Unfortunately, we’ve gotten really good at opening and closing stores. We’re confident that we’re on the right track. And we’re super encouraged by the rollout of the vaccine.”