Tapestry, the US-based parent company of Coach, Kate Spade New York and Stuart Weitzman, has expanded its outlet strategy and overall marketing spend in response to evolving consumer behavior.
Tapestry's third-quarter net income fell to $139.4 million from $186.7 million in the same period last year. Executives attending the company's earnings conference mentioned strategic initiatives aimed at strengthening customer engagement.
Tapestry is increasing its focus on outlet stores, adding high-demand items like the Coach Tabby handbag to the outlet store at full price. Coach CEO and brand president Todd Kahn said bringing premium products to outlet stores will influence the habits of consumers, who often use their smartphones to make product selections. The lines between retailers and retailers are blurring as customers search for products across multiple touchpoints.
“In June, we will be selling Tabby at full price in 100 outlet stores across North America,” Kahn said. The move is part of Tapestry's broader strategy to harmonize the shopping experience across different retail formats, recognizing that consumers don't always know the difference between an outlet and a retail store.
In parallel, the newly launched katespadeoutlet.com will replace the brand's “surprise” sales and offer outlet consumers a more seamless online shopping experience. This digital component is designed to support omnichannel customer penetration, and results show we've already seen an increase this quarter.
The big change in Tapestry's approach is that it has tripled its marketing spend over the past few years, focusing on top-of-the-funnel marketing to build stronger connections with consumers. This pivot is designed to not just drive immediate sales, but to enhance storytelling and brand engagement. “We're spending more and more on top-of-funnel marketing to tell our story and increase our connection with consumers,” Khan said.
This increased marketing investment is already yielding tangible benefits. For example, Tapestry's brand has been successful in attracting new customers, especially young people. The company reported adding approximately 1.2 million new customers in North America alone during the quarter, more than half of whom are Gen Z and Millennials. Products such as the Coach Tabby and the new Coach Swing Zip bag resonate with young people.
A focus on innovation remains a cornerstone of Tapestry's strategy. The introduction of high-value items like Quilted Tabby highlights the company's commitment to refreshing its product line with new products. “The Tabby family exceeded expectations by an additional quarter, nearly doubling our results compared to last year,” Khan said.
