Hundreds of handbag retailers across the U.S. are scrambling to deal with new tariffs on Chinese imports coming their way on Monday.
Tapestry Inc. is not one of them. The accessories giant, whose brands include Coach, Kate Spade New York and Stuart Weitzman, started diversifying production away from China over a decade ago, according to its chief executive officer Victor Luis, who was speaking at a Yahoo Finance conference in New York.
“It’s a process that we undertook quite a while back. It takes quite a few years to establish new facilities with our partners than actually can create and manufacture our product at quality.…It’s been more than a decade since we started that and less than 5 percent of our manufacturing today is in China,” Luis said. “We’re very highly diversified around the world. We produce in many countries.”
The handbag industry had been hoping that President Trump would make it exempt from tariffs after representatives made their case in Washington, D.C., this summer.
Their pleas fell on deaf ears this week and like many others, they will be hit with 10 percent tariffs on Chinese imports on Monday, which will rise to an eye-watering 25 percent by year’s end.
Tariffs aside, China is very important to Tapestry — not in terms of production, but for sales as it looks to capitalize further on Chinese consumers and their growing spending power.
“It’s one of the most exciting opportunities. It’s still the single largest geographical opportunity for us and for branded premium goods in general because the consumer there understands and appreciates quality and understands and appreciates brands,” he said.
The Coach brand launched in China in 2008 and now has revenues of $600 million there and is in 70 cities across country.
“We’re in a similar position now with Kate Spade, which is a business we’ve just taken control of in that market so we’re very excited about growth opportunities,” he said.