Adrianne Yih

Adrienne Yih inquired about Tapestry's utilization of AI, the proportion of CapEx IT investments dedicated to AI, and the expected demand-side payback. For Coach, she asked about upcoming newness and how the culture of innovation prevents any single product franchise from exceeding 10% of sales.

Answer

CEO Joanne Crevoiserat explained that Tapestry, as a data-rich direct-to-consumer business, has long applied AI tools across the value chain (product development, inventory, pricing, marketing), leveraging a patented data fabric. AI drives both efficiency and creativity, accelerating design iteration and marketing content creation. CFO and COO Scott Roe noted that of the $200 million CapEx, over half is for stores, with the remainder for technology, indicating that AI adoption is more of a change management opportunity than a large investment challenge. Todd Kahn, CEO and Brand President of Coach, highlighted upcoming product innovation, emphasizing the commercial aspect of runway shows and focusing on relevance to Gen Z while maintaining the 'Coach' identity. He mentioned icons like Tabby, New York family, and Teri ('TNT') continue to drive growth, and the team balances logic and magic to create trends without single franchise dominance.

Adrienne Yih asked about the timing and method for exiting non-go-forward categories to avoid brand pressure, and how SKU rationalization within core categories will impact the number of alternative and seasonal scents.

Answer

CEO Daniel Heaf stated that SKU rationalization is driven by consumer feedback regarding an overwhelming in-store experience. Exits will begin in Spring (Q1 next year) and ramp up through 2026, using a 'test, learn' approach. CFO Eva Boratto mentioned utilizing semi-annual sales to clear inventory and successfully exiting Q3 with clean inventory despite pressures. She also noted that the exited categories are not expected to be a meaningful drag on sales.

Adrianne Yih asked about actions being taken to manage inventory and chase successful items between now and 2026, when major product fixes are expected. She also inquired about the proportion of U.S. e-commerce orders that previously utilized the de minimis exemption.

Answer

CEO Calvin McDonald reiterated that new agile processes, including upfront vendor collaboration on fabrics, are already in place to react quicker to successful items, potentially eliminating up to two months from the chase process. CFO Meghan Frank explained that approximately two-thirds of U.S. e-commerce orders were fulfilled from Canada, with most shipments under $800 qualifying for the de minimis exemption, making its removal a significant impact.