MS. CREVOISERAT: No worries, Robin. I’ve heard it all before. I married that name over 33 years ago, so I’m used to it.
MS. CREVOISERAT: It’s great to be here with you. Thank you for having me.
MS. GIVHAN: Before we get started, I just want to remind everyone that we’d love to hear from you. So, please, you can send us your comments and questions by tweeting @PostLive, and hopefully, we’ll be able to even get to a couple of your questions.
So, Joanne, I wanted to start sort of a couple years back at the beginning of the pandemic. You were originally the CFO, beginning in August of 2019, and then you became the CEO, and it often seems like women ascend to the top job just as businesses are experiencing some kind of peril. So I’m curious to know what were the initial thoughts, reactions as you realized what the pandemic meant for business.
MS. CREVOISERAT: Well, it was an interesting time, and I would say Tapestry, as an executive team, we were in the process of preparing for change and transformation.
When I joined, as you mentioned, in 2019 as the CFO, we recognized as an executive team the need for us to change the way we did business so that we could amplify and accelerate our performance behind all three of our brands: Coach, Kate Spade, and Stuart Weitzman. And so, as we thought about that, even pre‑pandemic, we said, you know, we want to be ready to do business in what we called at the time the “new world of retailing, and that world to us looks like a world where consumer trends were changing much faster. The speed of change was happening faster and faster, that consumers were more digitally connected, and there was much more innovation in terms of data and analytics in our space. And we had an infrastructure that we knew we could rely on and use and leverage more to connect with consumers, and that environment required us to be more responsive as an organization.
So we were focused on harnessing the power of our organization, the power of our capabilities to move faster, and to your point, the pandemic only amplified those trends. The consumer was changing rapidly through the pandemic, both with the social unrest as well as the changes to their shopping behaviors, being more digital, and wanting to be more connected to brands whose values they shared.
So a lot of the work we had done early in the pandemic was preparing us actually to perform in the pandemic and, even more importantly, perform now that we’re coming out of the pandemic and meeting consumers in new places.
MS. GIVHAN: You mentioned the speed at which fashion is changing and how that affects the retail environment. I mean, the pressures for that kind of change, I mean, do you look towards fast fashion? Are you looking at social media? I mean, what are the factors that are really causing that incredible speedup?
MS. CREVOISERAT: Well, you know, our focus is to stay close to our consumers, and, you know, what we’re seeing is values really matter. And one of the things that we have done over the past three years is really get focused on the values of each of our brands and become more clear in how we communicate the values of the brand. That’s been one part of the transformation. So communicating what and how you communicate with consumers has become so much more important.
And then as you stay close to consumers, the things they value and what they’re looking for from a brand in terms of product, we’ve gone through incredible transformation over the last couple of years in just how the consumer is thinking about casualization and now how they’re thinking about reengaging with the real world, and in order to perform as a fashion brand, you have to be close to the consumer and stay ahead of those preferences and be able to bring the creativity that we all bring to our business in to product and innovation in product that the consumer will really value and that will be part of their life.
We are not focused actually on fast fashion, and our brands, all of them, stand for high‑quality product. And it’s interesting because we create our products really one at a time. They are crafted to last, and we know that the consumer appreciates that about our brands. And we see consumers choosing our brands because of that fact that they know these are handbags or footwear that they’re going to have with them for a long time that will stand the test of time, but that also strike that great emotional cord, that they’re really pleased to bring into their wardrobes and wear.
MS. GIVHAN: I know in your recent earnings report, you projected revenue of something, I think, like $8 billion by 2025. I mean, I think we all know that the average consumer doesn’t necessarily need a new handbag or a new pair of shoes, regardless of how fabulous they might be. I mean, how are you looking to propel that kind of growth?
MS. CREVOISERAT: Yeah. Well, we’re looking at growth across all of our brands and across all of our geographies. We operate a globally diversified business, and we see new consumers coming and engaging with our brands, particularly younger consumers. So, you know, we’re not‑‑we’re focused on delivering products, as I mentioned earlier, that are crafted to last.
I asked‑‑actually, in one of our stores, we were talking to a store manager about why she loved‑‑we were in a Coach store‑‑why she loved working at Coach, and she said three reasons. You know, the first is “This team is my family,” and the second is “I feel that I am empowered to run my business and support it,” but the third part of that story was “And I know that I’m selling a product, a beautiful product that our customers will take home with them and have for lifetime.”
And our brands actually live longer than a lifetime. We have (Re)Loved program with Coach where we repair, we refurbish. So we’re putting product in the marketplace that is, to my earlier point, crafted to last, but we’re also introducing this to more consumers around the globe and increasingly a younger consumer who cares and aligns with the values of our product. And, again, those are products that those customers can wear confidently forever.
MS. GIVHAN: I mean, you mentioned that younger consumers, they are increasingly concerned about the impact that fashion has on the environment. Many of your brands focus on leather goods. I mean, how are you balancing those, in some ways, competing ideas, the emphasis on leather goods but also trying to be a good citizen of the environment?
MS. CREVOISERAT: Yeah. Our business is‑‑our‑‑what we call our “social fabric” has been part of our business from the beginning, and our social fabric talks about our focus on our people, the planet, and our communities. And we are executing our ESG initiatives really as part of the fabric of our business. It’s so important for‑‑
MS. GIVHAN: I’m sorry. Joanne, could you‑‑ESG, what does that stand for?
MS. CREVOISERAT: Environmental, social, and governance.
MS. CREVOISERAT: Sorry about that.
MS. CREVOISERAT: I hate to use phraseology, but that is the‑‑that is the bucket that many investors actually ask us about, and it is about sustainability and how we think about it.
And, as I mentioned, we have three pillars to our sustainability programs that have to be part of the fabric of who we are as a company, and those three pillars are around our people and making sure we’re driving a diverse and inclusive workplace as well as impacting the communities around us.
And the planet is about our sustainability focus and how we think about and how we’re moving forward to make a positive impact. You know, we’ve committed to procuring 100 percent renewable energy in all of our owned operations, and we have a longer‑term commitment to driving net‑zero emissions by 2050 or sooner, no later than 2050. So we are working on the things that matter and make a difference.
We’ve done some work on traceability and mapping of our raw material; as you mentioned, leather. Leather is a key component of our product, and it is a material that lasts. And right now, it is a byproduct of the meat industry, but we’re also experimenting with other materials and sustainable materials that we’re incorporating more and more into our bags, things like recycled polyester and environmentally preferred materials. So we’ll continue to test and learn behind that.
We’re aggressively moving in that direction, and we’re staying, importantly, in touch with what our consumers are looking for from us, and that’s our focus. We want to make sure we’re managing our business in a sustainable way. It matters for, frankly, risk management in the supply chain, but it also matters because we want to do the right thing for the environment, for our planet, and we want to stay close to our consumers and deliver goods that they expect, which are high‑quality, long‑lasting goods that they can be proud to wear.
MS. GIVHAN: You mentioned the supply chain, and, you know, that is certainly something that is top of mind for anyone in manufacturing, production. I mean, how is that‑‑how are you dealing with the supply chain now, particularly with the zero‑covid policy in China? And how are you balancing that with the things that you mentioned, trying to reduce that carbon footprint?
MS. CREVOISERAT: Well, we‑‑you know, we have seen profound disruption in the supply chain. Our industry is working through, I think, disruptions that, you know, at least in my career have never been as challenging as it has been the last couple of years.
We manage a globally diversified supply chain, which certainly helps us navigate starts and stops. You mentioned zero covid. Actually, very little of our production is in China where that policy has had some disruption, but we’ve experienced disruption around the world, as has our industry, and navigating that has been challenging.
I think having a diverse footprint has helped. We have flexibility that we’re able to move manufacturing around when we see disruption, and our team has proven the ability and the agility to manage through all of the changes and disruptions that we’ve had. And, actually, we have driven growth above pre‑pandemic levels, even with all of that disruption.
And I think, you know, as we think about the supply chain and managing it, globalization and scale is important, but that diversity and that footprint is important for us to have flexibility and risk management as we’re managing through the environment. So those are all critically important, and we’re building on our proven capabilities in that area for even more flexibility.
MS. GIVHAN: I know for the luxury market, you know, Russia was always a point of big consumption. How is the Russian war in Ukraine affecting your sales there? Have you, like other companies, pulled out, or what’s happening with that?
MS. CREVOISERAT: We‑‑you know, at Tapestry, we had very little business in Russia, actually. We had a small wholesale business, and we have stopped shipping into that, into that market. And, you know, we look at the world and the appetite for luxury goods as an opportunity for us, but that is not a large opportunity.
Where we see our business building, we have real strength in North America, and we have strength in China and Japan. And Europe is a good business, although we are not as penetrated in the European market. And so, you know, we have a lot of confidence in our ability to continue to drive growth, particularly in the luxury goods market in North America, in our key markets of North America and China, and, you know, China has had tremendous disruption over the past year. But we continue to see opportunity long term in that market as well as the rest of Asia and in Europe and in Japan, so, you know, a global footprint, just not much business as all in Russia.
MS. GIVHAN: You mentioned Europe. I’ve always been curious that, you know, American luxury brands don’t usually have an enormous footprint in Europe, and I’m wondering if there are particular cultural reasons, traditional reasons why that might be the case. I mean, Europe is sort of known as, you know, the Ground Zero for a lot of luxury fashion businesses. Is some of that just sort of they are protective of their own?
MS. CREVOISERAT: You know, that’s an interesting question. You know, what we see in Europe, we’ve learned a lot actually over the last few years. With the disruption, it’s been an opportunity for us to really learn about our businesses.
You know, we have a pretty big tourist business in Europe. It was driven by a lot of tourism in the market, and certainly, when covid happened in the market for tourism, the tourists weren’t showing up at the same level. We had to rethink, you know, how we thought about our business, and we have actually begun‑‑you know, we’ve been driving growth. Again, our penetration there, it’s less than 5 percent of our business. So we have tremendous opportunity still in the market, but we’ve begun driving significant growth as we’ve leaned in to talking to a domestic consumer.
And, if you think about our products, our products represent tremendous value in the marketplace compared to the traditional European luxury players, who have continued to take price up. Our products represent a tremendous value, always have, and even more now, and we’re getting better at speaking to the domestic consumer in Europe and meeting them both in stores but also in digital channels. And that has really unlocked strong growth in the market.
MS. GIVHAN: The digital channels, does that mean that for you, the brick‑and‑mortar sites are sort of going the way of the dodo? I mean, are you really moving away from that and putting it all into online?
MS. CREVOISERAT: Yeah. That’s a question that I hear frequently, and, you know, what I‑‑what I like to say is that digital is an “and,” not an “or,” because, you know, leaning into digital is leveraging the capabilities that we’ve invested in over time and meeting the customer where they are. And, to me, it’s not about whether a customer chooses to shop only in online or in store. The consumer is becoming more omnichannel‑connected, and they may start their journey in a digital space from discovery to purchase to advocacy. That happens over a continuum, and it could start online and end with a purchase in a physical store, or it could start in a physical store and end with a purchase online. It could start on social media. We’ve become better at engaging consumers and actually transacting on social media.
So there are a number of different paths the consumer may take, and our focus at Tapestry is to follow the consumer, to meet the consumer where they are, and provide a seamless and consistent experience for that consumer, regardless of where they engage our brands.
Now, certainly, during the pandemic, when stores were closed, the consumer was shopping online, and that was‑‑you know, that’s how they could engage with our brands. But, importantly, the store represents an important physical touchpoint, and I think, even most importantly, they have an opportunity, the consumer, to connect with our associates when they’re in a store environment. And, in fact, that has been a real differentiator, I think, for our business because our associates are such passionate brand ambassadors. Even when stores were closed, our customer was reaching out to our associates for engagement. So we’ve begun and our associates are beginning to become influencers of their own right, meeting consumers not only in a physical store but also in virtual spaces. And that, I think, has potential even more to amplify our brands and blurs the lines even more between the digital and the physical.
MS. GIVHAN: I know one of the biggest areas of turnover in terms of employee was‑‑employees was in the area of retail. How are you finding hiring new associates, retaining associates, training them so that they understand the product and they are able to engage with customers? I mean, are you having those same kinds of hurdles in hiring employees that so many other industries are?
MS. CREVOISERAT: Yeah. Well, in fact, we are not seeing the same challenges that others are, and I believe it’s because we have a long history of recognizing the power of our associates and rewarding them. You know, our store managers receive equity. They’re owners of our business, and I walk into stores today, and I talk to associates who have eight, ten, twelve years of experience with our brands. And that, I know from my over 35 years in this industry, is unusual, and there is a passion that our teams have behind our brands. And we’ve rewarded that. You know, we reward that with how we pay. When all of our stores shut down in the pandemic, we continued to pay our associates.
And today, even when I go to our stores‑‑and I’m in stores quite frequently‑‑I hear from our associates how much they value that experience. They still talk to me about the way the company treated them during the pandemic is something they’ll never forget, and they have a passion and a commitment and a level of engagement that is, you know, in the top quartile of our industry. And that is what powers our business, and that is what powers our brands.
MS. GIVHAN: You mentioned that sometimes your store associates are sort of micro‑influencers, but recently, you signed on with perhaps the influencer of influencers, with Kim Kardashian now the brand ambassador for Stuart Weitzman. I am curious. How much can Kim Kardashian sell? I mean, she’s out there a lot.
MS. CREVOISERAT: Yeah. So we think about our influencer strategy in multiple tiers, right? We have a big celebrity influencer that has large reach and get‑‑and drives awareness for our brands, but we also have influencers who represent our brands and, you know, even micro‑influencers. So it’s not just one touchpoint of the brand.
And you mentioned our store associates. Our store associates are passionate about our brands, and they’ve begun engaging in social media in and of their own. So they’re creating followings. Our customers can be passionate advocates for our brands, and they influence many.
But, you know, as we think about and as we talked about our business over the last few years, it has been about getting close to our customer. But it’s also been about brand building, and we want to make the investments behind our brands that drive growth and health for the long term.
And we have changed our P&L to focus on that. We’ve generated a lot of efficiencies in our business, and we’re driving higher operating profit. But we’re doing that also with higher marketing spend so that we can continue to invest in our brands and ensure that we, as I said, protect them and help them grow for the long term.
And, when we think about an investment like Kim Kardashian, we do it with a strategic intent. Stuart Weitzman is a real gem of a brand. Our customers love the brand for the fashion and for the comfort and fit that it provides, but Stuart Weitzman has an opportunity to drive awareness. It has low awareness in the markets where it trades. So, if you’re trying to build, as we are, with that brand, awareness, higher awareness for our brand, particularly with the younger millennial consumer, there’s no better investment than we can make, we believe, than with Kim Kardashian, who will help, help us amplify the brand, let lots of people know about it. And we know that when consumers come to our brand, we have‑‑they’re 70 percent‑‑there’s a 70 percent that they’ll return to the brand. So to know the brand is to love the brand, and we think this will help more people know the brand.
MS. GIVHAN: I mean, I’m always curious about the impact of social media and influencers. Do you get to a point where someone like a Kim Kardashian or, you know, Jennifer Lopez who has been an ambassador for Coach, where their impact becomes just too diluted?
MS. CREVOISERAT: Well, authenticity is important as it relates to influencers and the customer today, and the customer understands when a brand is authentically showing up in their feed. So it is important for us to find influencers who authentically connect with our brands, and Jennifer Lopez authentically connects with Coach, has been part of the Coach story for decades, honestly, from her video back in the ’80s until all the way through today. She’s very authentic New York celebrity, yes, but authentic to Coach, and I think that’s why it works. She also speaks to multiple generations and multiple ages.
So we feel great about our partnership with Jennifer Lopez, and we’re looking forward to the impact that Kim Kardashian will have with Stuart Weitzman.
MS. GIVHAN: Well, I would love to ask, since you were recently appointed to the board of GM, if there are lessons that the auto industry can learn from the fashion industry.
MS. CREVOISERAT: Well, it’s a tremendous honor to join the GM board, given their focus on innovation and the transformation that they’re driving. You know, their ambition to become all electric with a vision for a world with zero crashes, zero congestion, and zero emissions is certainly something that I am proud to be a part of. And I’m looking forward to being part of those discussions.
And, you know, as I draw from my own experience at how to engage consumers with brands and brand building, you know, I hope to bring that to the company and drive that brand loyalty and engage with consumers in new ways.
MS. GIVHAN: As we wrap up, I would love if you could look into your crystal ball and give us a sense of what you see to be the future of retail, and in your perfect world, what would it look like?
MS. CREVOISERAT: So we just rolled out our three‑year‑‑as you mentioned, our three‑year ambition, and we talk about‑‑we called it “future speed,” and what I see happening is consumer trends moving faster and faster. And to win in retail and to win in fashion, I believe that we have to stay close to our consumer, and we have to move with agility to drive innovation at every touchpoint of our brands. And we’ve engineered our organization to be able to deliver for our consumers wherever and however they choose to engage with our brands‑‑that’s whether it be in a digital space or a physical space‑‑and to really talk about the purpose and the drivers behind our company as Tapestry as well as each of our brands, because that is how consumers emotionally connect with brands. And that’s our focus at Tapestry, and we’re looking forward to making it happen.
MS. GIVHAN: Well, I very much appreciate your time today, Joanne. That’s all the time that we, unfortunately, have. So thank you very much for being with us.
MS. CREVOISERAT: Thank you, Robin. It’s a real pleasure.
MS. GIVHAN: And, if you would like to know more about what’s coming up with Washington Post Live, please go to our website at WashingtonPostLive.com where you can find information about upcoming programs.
I’m Robin Givhan. Thank you very much.