Luxury showed resilience across the brands of fashion house Tapestry, owner of Coach, Kate Spade and Stuart Weitzman, as a mix of data, artificial intelligence (AI) and omnichannel sales drove strength in a challenging quarter.
Tapestry CEO Joanne Crevoiserat told investors that the company’s fiscal second quarter for the three months ended Dec. 31 saw record earnings across the portfolio. Digital initiatives, new store concepts, and video selling on platforms including YouTube and TikTok all contributed to the brand’s 1,450 physical locations.
“We delivered seamless omnichannel experiences, harnessing the power of our direct-to-consumer business model and highlighting our ability to meet consumers where they are shopping,” Crevoiserat said on a call with analysts.
She noted that with the 2022 rush back to physical retail, “our digital business declined low single-digits as anticipated,” but added that “digital sales were three times ahead of fiscal 2019 levels and represented one-third of total revenue, underscoring the continued importance of this channel.”
Platform capabilities also helped the fashion house deliver results despite headwinds, with this being “the first holiday season that all our brands were on our digital enterprise platform, which was designed to enhance engagement and simplify the customer journey.”
Read also: Coach Owner Tapestry Says 30% of Sales Now Digital
Crevoiserat said Tapestry leveraged new data analytics capabilities “to optimize our product allocation processes, such as utilizing artificial intelligence to forecast customer demand and better position inventory in stores.” The use of data helped the company ensure inventory availability and better match supply with demand.
While pointing to issues in North America where consumers were holding back in some areas, Tapestry brands performed well in other markets, notably China, where the lifting of COVID-19 restrictions was a boost toward the end of the quarter.
Premium average unit retail (AUR) pricing across the portfolio helped accessible luxury brand Coach, and a September online campaign featuring new brand ambassador Lil Nas X “has approximately 350 million views, and we’ve seen improvements in purchase consideration for Gen Z consumers,” Crevoiserat said.
She added that “we continue to test and learn new ways to engage consumers on digital channels in keeping with our multifaceted marketing strategy designed to increase customer lifetime value,” using an array of YouTube shorts to convey brand and product stories.
She said digital video pushes like the YouTube Shorts campaign helped Coach gain “nearly 1.5 million new Coach customers in North America alone.”
See also: Luxury Brands Prepare for ‘Millennial Domination’
For Kate Spade, new styles and colorways helped the brand. Crevoiserat said global pop-ups were successful in attracting new customers, and on the digital front, “we continue to diversify across social platforms, notably Tik Tok and YouTube where we focused on engaging with the younger consumer. Taken together, our impactful marketing helped to fuel the recruitment of approximately 1 million new customers in North America.”
Tapestry rolled out a new Kate Space store concept in Singapore in October, followed by Taipei and Chicago.
The Stuart Weitzman collection “declined in the quarter, impacted by the brand’s significant exposure to China as well as a decrease in wholesale reflecting in part a reduction in off-price shipments as we remain focused on tight inventory management and brand elevation,” Crevoiserat said, while Kim Kardashian’s role as brand ambassador helped by “driving growth and new customers, including outsized gains with millennials.”
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