Joanne Crevoiserat
Chief Executive Officer at Tapestry
Good morning. Thank you, Christina, and welcome, everyone. As noted in our press release, we achieved record first quarter earnings per share as we meaningfully advanced our strategic priorities against the dynamic external backdrop. Our consistent progress demonstrates the power of brand building, customer centricity and disciplined execution, which enable us to fuel innovation and cultivate new and lasting relationships with consumers around the world. I want to thank our talented global teams for their passion and unwavering focus, which continue to drive our strong and differentiated results.
Touching on the strategic and financial highlights for the quarter. First, we powered global growth, achieving 2% constant-currency revenue gains, consistent with our outlook and underscoring the benefits of our globally-diversified business model. This top line growth was fueled by a 7% gain internationally, which included a 9% increase in Greater China, again surpassing our peak in FY '21. In addition, our business with Chinese consumers globally rose low-double-digits, supported by improving tourist trends in Asia and Europe.
Looking ahead, while the consumer environment in China continues to be volatile, we remain committed to investing behind our brands, leveraging Tapestry's established platform in the region to drive long-term growth, both in China and with this important consumer cohort, worldwide. Turning to Japan. We drove continued momentum with revenue rising 12%. And in other Asia and Europe, sales were relatively in line with the prior year.
Finally, in North America, we delivered revenue roughly in line with last year and consistent with our expectations. Despite the challenging consumer backdrop in the United States, we are driving a healthy business, underscored by significant gross and operating margin expansion compared to last year. Second, we remain focused on building customer engagement across our brands, harnessing the power of our data-rich platform. In the quarter, we acquired over 1.2 million new customers in North America alone, of which roughly half were Gen-Z and Millennials, as we advance our strategy to attract younger consumers to our brands. Importantly, we continue to see new customers transact at a higher AUR than the balance of our customer base.
Third, we delivered unique and seamless omnichannel experiences, reinforcing the benefits of our operating model. We drove growth in direct-to-consumer sales on a constant-currency basis, including a low-single-digit gain in brick-and-mortar sales, supported by our world-class field organization and a store fleet that is proven and highly profitable. In addition, we maintained our strong positioning in digital, leveraging our established capabilities to connect with consumers across their purchase journey. While sales declined slightly, revenue still represented nearly 25% of sales, approximately three times pre-pandemic levels.
Fourth, we fueled fashion innovation and product excellence, delivering compelling newness and value to customers around the world with success in new launches and branding elements outperforming expectations and fueling handbag AURs globally. At the same time, we delivered outsized topline gains in our small leather goods and lifestyle offerings, key to enhancing brand relevance and fueling customer lifetime value. Taken together, we generated record first quarter earnings per share, increasing at a high-teens rate compared to the prior year, which we accomplished despite a volatile demand backdrop.
Our strong and consistent results reinforce the power of our brands and strategies, amplified by the advantages and agility of our model. As we look forward, we remain laser focused and confident in our ability to drive sustainable profitable growth.
Now turning to the highlights across each of our brands, starting with Coach. Our team continued to bring expressive luxury to life, building the brand through emotional consumer connections, innovation that encourages self-expression and immersive omnichannel experiences. These strategies are driving sustainable momentum and exceptional financial results, highlighted by 5% constant-currency revenue growth and a 180 basis-points of operating margin expansion, supported by strong gross margin gains. Touching on some details of the quarter. First, we fueled growth in our leather goods offering by leaning into our iconic platforms. We reinforced our key families, including Tabby, Willow and Rogue through continued focus on core styles, while animating the icons to drive excitement.
Tabby again outperformed expectations, nearly doubling versus last year with strengths across bags and small leather goods, it's strong AURs relative to the balance. We're continuing to iterate on this icon, including a new size in our shoulder bag, which over-index with the younger consumer, as well as a braided option of our soft style. Overall, Tabby remains an important volume and recruitment driver for the brand, and we see even further runway ahead. At the same time, Willow and Rogue remained important volume drivers within the assortment.
In keeping with consumer trends, we also launched new silhouettes across a range of price points and sensibilities, including the Idol shoulder bag, which was a notable highlight in Greater China, where AUR was well ahead of the average. Overall, our creative and innovative products supported a mid-single-digit gain in global handbag AUR at constant-currency, including growth in North America. Importantly, we see continued runway for pricing improvements, given our innovation pipeline and brand heat.
Second, we delivered gains across lifestyle, an area of long-term opportunity for the brand. We drove top line growth in ready-to-wear footwear and men's, as we develop our core families with a goal of driving customer recruitment, purchase frequency and ultimately, customer lifetime value. In ready-to-wear, we focused on our strategy of building a timeless assortment of key styles that represent a compelling value. This included the successful launch of our Snap front leather jacket at a $695 price point, as well as success in our evergreen trench coats.
In footwear, the Leah loafer remained a top seller and delivered significant growth. And in men's, we delivered outsized gains, driven by the performance of our Relay Tote, which was again a top style, while the newly introduced bag family of sporty and sophisticated options also delivered strong results. Third, we created purpose-led storytelling directly tied to our product. We began the quarter with a debut of our third purpose campaign, Wear Your Shine, which inspires consumers to express themselves authentically using fashion as a means for personal expression and empowerment. The shine collection includes metallic and sparkle bags, ready-to-wear and accessories, allowing customers to shine brightly.
Our campaign featured new global ambassadors, including Dove Cameron and Youngji Lee. We brought the campaign to life through experiences across the world with physical and digital activations from campus takeovers in the US to a partnership with Vogue World in Europe to pop up installments across Asia. Overall, the success of this campaign helped to support the acquisition of approximately 800,000 new customers in North America, including a growing number of millennials and Gen-Z.
Fourth, we focused on deepening connections with consumers by further developing our customer insights capabilities to build stronger and longer-term connections. And keeping with this strategic pillar, we launched a trial on Amazon in September. The platform provides broad consumer reach and plays a vital role in the customers' discovery and purchase journeys, specifically for younger cohorts. And finally, we built momentum in our sub-brand, Coachtopia, our reimagination of the product creation process to evolve our vision of circularity.
We expanded our reach in North America while launching in Japan, with additional international opportunities in the pipeline. We've also further innovated across the assortment, including our Coachtopia Loop collection designed with a mono-material approach, recycled PET plastic. While Coachtopia remains a small portion of the assortment, we are very excited by the significant consumer attention, specifically with younger audiences.
Looking ahead to the holiday, we're continuing to focus on building stronger emotional connections with our consumer base, while prioritizing brand health, and we remain disciplined in our approach to discounting in an increasingly promotional environment. We're bringing our purpose to life, delivering an emotional narrative through a more than a gift holiday campaign, which celebrates the gifts that give us confidence to be ourselves. We're also leaning into the strength of our Shine campaign, layering onto the successful launch of our metallic series with a gold addition to capitalize on the holiday theme.
In closing, Coach continues to deliver with a clear strategy, unique and authentic purpose and commitment to driving sustainable, healthy growth through profit gains that fund brand building. We remain focused on fueling further momentum and are confident in the tremendous runway ahead for this iconic brand.
Now, moving to Kate Spade. During the quarter, top line performance improved sequentially amid a difficult demand backdrop. Importantly, we expanded gross margin and delivered another quarter of handbag AUR gains, which fueled increases in operating profit and margin. At the same time, we continue to invest in the brand and capabilities that underpin our long-term ambition. We remain confident in our strategies and are agile, as we focus on driving enhanced innovation and financial results.
In the quarter, we advanced our strategic initiatives. First, we remain focused on building a compelling and innovative handbag offering. We launched the Dakota family in retail, which features new signature hardware. The bold and modern collection outperformed our expectations, resonating with younger consumers at an above-average AUR. Based on Dakota's initial performance, we're excited to build momentum through marketing amplification and the introduction of new styles within the family.
And in outlet, we accelerated the introduction of Madison, a collection of reinvigorated Saffiano leather styles to build out the core offering. The family outperformed plan and over-indexed with new and younger customers, while also driving an increase in customer reactivation, underscoring future opportunity. Having said that, performance in carryover families declined, reinforcing our strategic decision to move with urgency to accelerate the pace of newness to drive stronger customer engagement and financial results. Touching on novelty, which continued to bring heightened emotion to the brand and build out the world of Kate Spade, our Martini collection embedded across our lifestyle categories resonated with our customer base, notably among our highest spending customers.
Overall, our product initiatives, coupled with our use of data to, deepen our understanding of consumer preferences, supported mid-single-digit handbag AUR growth globally, demonstrating our commitment to brand building and fueling innovation. Next, we advanced our strategy to become more lifestyle with momentum in jewelry and footwear, where we delivered double-digit topline growth. Jewelry remained an important acquisition vehicle with outsized resonance among younger consumers, while footwear outperformed on strength in loafers and sneakers as we infuse Kate Spade's branding and codes into key styles. We know that customers who shop across categories are our highest-value customers, demonstrating the importance of the brand's lifestyle offering as a long-term growth driver.
Now, touching on marketing. We delivered campaigns that express the world of Kate Spade with a direct link to our product offering. In the quarter, we evolved our New York Fashion Week presentation to further engage the broader community, including our Creators Loft, a three day popup designed to support up-and-coming Gen-Z creators. Further and keeping with our brand values, we hosted the Global Summit on Women's Mental Health & Empowerment in partnership with Pinterest, which brought together leaders from Kate Spade Social Impact Council and key industry partners to encourage conversation, education and research around this important cause. These campaigns and engagements, alongside our compelling product offering, drove an improvement in brand consideration in the US compared to last year, which included notable increase among young female millennials for YouGov. At the same time, our efforts helped to support the recruitment of over 400,000 new customers in North America alone.
Next, consistent with our priority is becoming more global, we invested in brand activations across international markets to drive awareness, a key opportunity. As such, we launched experiential events, supporting the introduction of Dakota, including a playful giant Dakota bag in Japan, a traveling bus serving macho across Singapore and branded taxis, featuring our iconic green, dots and stripes in the UK. These activations successfully introduced new and younger customers to our brand.
Finally, we remain focused on the omnichannel opportunities for the brand. In October, we launched a dedicated katespadeoutlet.com site, replacing the brand's surprise site in order to provide a more cohesive way for outlet consumers to discover and shop the brand online. Importantly, the seamless launch of the site enables us to offer our customers a consistent omnichannel outlet experience across product, marketing and messaging. For the upcoming holiday shopping season, we will lean in the Kate Spade's unique positioning as a brand that embodies joy and celebration. We're launching distinctive newness and core platforms across channels. In retail, we will expand the Dakota family, building on our recent success.
In outlet, we will animate the Madison collection with the introduction of a mini duffle. We're also excited to launch our Spade Flower coated canvas pattern, establishing a new signature branding platform for the channel. We also have compelling gifting and novelty assortments designed to drive differentiation and customer engagement. In marketing, we will focus on storytelling, highlighting Kate Spade's optimistic and playful spirit, true to the brand and the holiday season. In addition, we are launching physical activations of our brand codes globally, while delivering content that reinforces our product strategies.
Overall, we're making important progress at Kate Spade, executing with intention and agility to forge strong emotional bonds with consumers, while at the same time, driving enhanced profitability. Our go forward strategy is clear and we are well positioned to successfully navigate the dynamic environment in the near term, while delivering on our long-term ambition for the brand.
Turning to Stuart Weitzman. Results in the quarter were pressured against the volatile external backdrop. Specifically, top line trends reflected a continued reduction in off-price wholesale shipments, as well as a slower-than-anticipated recovery in China. That said, we achieved positive wholesale trends at POS and expanded gross margin. While we are unsatisfied with the brand's performance, we are focused on prioritizing brand health and delivering innovation for consumers.
Touching on key elements of the brand's strategic growth pillars. First, during the quarter, we curated a relevant offering of emotional product. Our core collection of boots and booties drove outsized recruitment of younger customers, while at the same time driving lapsed customer reactivation. Our expanded 5050 family outperformed expectations as we introduce modern takes on the iconic boot, including new colorways, backed by our fall campaign, which I'll touch on in a moment.
Further, we continue to build out the brand's offering, notably, with more seasonless casual styles and keeping with evolving consumer preferences. To this end, loafers as well as our assortment of on-trend ballet style flats resonated with consumers, highlighting potential in these relatively under-penetrated categories. And just this month, we launched a new sneaker campaign, featuring extensive range of innovative designs engineered to combine fashion and function, a hallmark of the brand. At the same time, our handbag collection, while still a small portion of the assortment drove engagement with both new and existing clients at high AUR.
Next, we leveraged new marketing tactics to fuel brand heat and consideration. In September, we launched the invincibly iconic fall campaign centered around and nostalgic 5050 boot in celebration of our 30th anniversary. We've employed a multi-pronged approach to our marketing, including utilizing an array of influencers to organically engage with consumers from He Cong to Kim Kardashian to Sofia Richie Grainge.
For holiday, we will continue to drive engagement through this campaign, celebrating the brand's heritage and capitalizing on its strength in boots and booties during the peak season. Overall, while the brand has seen continued pressure from external conditions in its core markets, the Stuart Weitzman team is focused on executing against the brand strategic priorities, building a stronger foundation with relevant assortments and new categories to deepen consumer engagement and improve profitability over the long term.
In closing, we have meaningfully advanced our strategic agenda, remaining focused on powering our iconic brands to move at the speed of the consumer in an ever-changing environment. As a result, we are in a position of strength with meaningful runway for sustainable growth. Through a relentless drive to fuel brand magic and deliver for our customers, we are confident in our ability to achieve organic top and bottom line gains.
Further, through the planned acquisition of Capri Holdings, we see a significant opportunity to accelerate our strategies, while driving accretion to our strong, standalone financial plan. Importantly, this combination establishes a new powerful global house of luxury and fashion brands that expands our portfolio reach across consumer segments, geographies and product categories. By bringing together six iconic brands with heritage and design and craftsmanship and leveraging our modern consumer engagement platform, we will drive greater innovation, consumer connectivity and cultural relevance, creating superior value for our consumers, employees, communities and shareholders around the world. We are making progress towards closing the transaction and look forward to sharing more detailed strategies for the future at the appropriate time.
With that, I'll turn it over to Scott, who will discuss our financial results, capital priorities and fiscal '24 outlook. Scott?
