Joanne Crevoiserat
Chief Executive Officer at Tapestry
Good morning. Thank you, Christina, and welcome everyone. Our first quarter earnings were ahead of expectations despite the more challenging backdrop, demonstrating the strength of our brands, the agility of our operating model and the consistent execution of our passionate global team. Importantly, this performance also underscores our competitive advantages and Tapestry's successful transformation into a consumer-centric and data-driven organization, which has enabled us to successfully navigate the uncertain environment.
To this point, as we outlined at our Investor Day in September, our strategic agenda Futurespeed is designed to drive strong, sustainable growth by powering our iconic brands to move at the speed of the consumer in an ever-changing world. It requires resiliency, continuous innovation and adaptability to pivot and evolve to effectively build our brands and foster enduring customer relationships.
During the quarter, we did just that. Although the landscape continued to shift at a rapid pace, we were nimble and responsive to change, remaining on track to deliver our fiscal year earnings target, excluding the impact of currency, while intentionally advancing our long-term initiatives.
Now turning to the financial and strategic highlights of the quarter, first, we powered global growth, delivering record first quarter revenue. These results were led by double-digit constant currency growth in international markets, which we achieved despite COVID-related headwinds in China with pressure fully offset by outsized gains in the rest of Asia and Europe. In North America, sales grew slightly amid an increasingly difficult consumer backdrop. Overall, we achieved our top line expectations, highlighting the benefits of our globally diversified brands and business.
Second, we delivered compelling omnichannel experiences to drive another quarter of growth in our direct-to-consumer businesses. Our global stores led the growth, driven by significant traffic increases as consumers continue to embrace the return of in-person experiences. We leaned into this trend, supported by our world-class field organization and a fleet that is proven and highly profitable.
Against this backdrop, our digital business declined versus the strong gains from a year ago though remained over 3 times ahead of fiscal year '19 pre-pandemic levels. We continue to believe e-commerce represents a significant growth driver for our company long term as we leverage our established capabilities to connect with consumers across their purchase journey.
Moving forward, our goal is to continue to offer our customers seamless, consistent and unparalleled brand experiences wherever they choose to engage with us.
Third, on a constant currency basis, we drove AUR increases in each brand's core category globally and in North America, supported by fashion innovation and product excellence. In addition, we continue to use data and analytics to enhance our go-to-market strategies, including assortment planning and pricing optimization, enabled by a deeper understanding of the preferences and drivers of customer purchases.
Fourth, we continue to build lasting customer relationships with more active customers shopping our brands in the quarter in North America. At the same time, we drove higher average spend among our customer base fueled by increases across units per customer, transactions per customer and purchase frequency. This was a direct result of our marketing efforts focused on improving productivity of our existing customer base.
Importantly, our customers in North America were increasingly omni, purchasing in both stores and online. This increased engagement is key as our omnichannel customers spend over 2.5 times more than customers who shop with us in a single channel. In addition, we continue to acquire new customers across the portfolio with approximately 1.4 million new customers transacting with us in North America this quarter. Taken together, we generated first quarter earnings above our expectations.
On a currency-neutral basis, EPS rose 8%, which we accomplished even as we invested in platform capabilities and in our brands. notably with higher marketing. Overall, we continue to see significant runway ahead and are on track to deliver our 2025 strategic and financial goals as we remain focused on moving at the speed of the consumer to drive sustainable growth across our brands for years to come.
Now turning to highlights across each of our brands, starting with Coach. In the first quarter, we advanced our strategic initiatives, which fueled top line gains of 4% on a constant currency basis. First, we drove growth in our core leather goods offering with a focus on continuing to build equity in key families. Our icons again outperformed as we reinforced these pillars of the assortment through new and exciting platforms to create emotional connections with consumers. Our Willow family continued to resonate with customers and was the Number 1 family in the quarter. In Tabby, we debuted a seasonal refresh consisting of jewel tone leathers as well as a new version of our Signature C.
Importantly, we continue to see new introductions reinforce customer demand for the core Tabby style, which remained a top seller globally. And we expanded our Rogue family, which originally debuted in 2016 through a broader, well-balanced timeless offering. In addition, as a unique take on the style, we launched a limited edition Coachies collection, which features the brand's heritage details to create playful characters out of the handbags. The novelty collection was extremely successful, underpinned by an AUR of nearly $800 well above our average.
During the quarter, we also introduced the new and elevated Bandit family, which outperformed expectations globally at higher-than-average AUR. Importantly, the Bandit crossbody has proven to be a successful recruitment vehicle, specifically with Gen Z customers. The brand's compelling and innovative product assortment fueled a mid-single-digit constant currency increase in global handbag AUR, including an increase in North America as anticipated.
Second, we focused our marketing investments on brand-building activities to drive connections with consumers, leveraging the brand's purpose. At New York Fashion Week, we were excited to announce Lil Nas X as one of our new global brand ambassadors. Our Courage To Be Real campaign, which launched in early October, has resonated with our core customer base and attracted new younger cohorts. The campaign has generated high engagement rates, highlighted by user-generated video content with consumers sharing their own Courage To Be Real stories, igniting a conversation around self-expression across social platforms.
Third, we drove another quarter of outsized growth in our lifestyle offering, an area of significant opportunity as we know customers that transact across multiple categories have higher lifetime value. In footwear, strong revenue gains were fueled by our new styles, including the Leah loafer and the Lucy sandal, as well as continued momentum in the men's lowline sneaker. These options have been successful with both our core customer and younger consumers.
In ready-to-wear, our cut and sew assortment featuring our Signature C, Rexy and Horse & Carriage continued to resonate with consumers, highlighting the importance and resonance of Coach's iconic brand codes. In men's, our core leather goods families, including Gotham, League, Charter and Hitch continued to drive our results with success in backpack and messenger silhouette, while the traction in our Field Tote offering showcases the potential of our all gender assortment.
Fourth, we focused on enhancing omnichannel experiences to drive engagement and brand heat, showcasing expressive luxury. We delivered gains in our store business and leaned into experiential brand building through immersive pop-ups across the globe. We debuted our Mint + Serf collaboration through a 360-degree campaign, anchored by a disruptive space in Lower Manhattan aimed at attracting a new and younger audience through partnerships with influencers and interactive programs.
And in Korea, we created a localized pop-up to celebrate Coach's legacy through the lens of a quintessential American neighborhood, featuring an interactive post office, coffee shop and bakery. Additionally, we were excited to launch our first-ever virtual store just last week to kick off the holiday season, a nod to our focus on the omnichannel experience and our test-and-learn agenda. The store was inspired by a nostalgic gift shop and allows guests to move through themed rooms to shop the holiday collection.
Looking ahead, we're continuing to prioritize long-term brand health and remain disciplined in our approach to discounting amid an increasingly promotional environment. To this end, this holiday we're focused on winning with consumers through emotional product and storytelling, including impactful visual installations in stores.
Specifically, we will offer innovation across the assortment, including the relaunch of Demi, a classic icon from the brand's archive, as well as differentiated Capsule Collection and collaboration. And we're building on the momentum of the recent launch of the Courage To Be Real campaign. Coach's holiday marketing is inspired by its unique heritage and purpose, and highlights the timelessness of the brand in a fun and joyful way. Our campaigns will feature our global ambassadors and will be amplified with high-impact placements, notably on social channels such as YouTube and TikTok.
In closing, Coach is an iconic brand, and we are committed to continuing to grow in a healthy, sustainable way. In its next chapter, we are bringing expressive luxury to life to engage with the modern consumer through emotional brand storytelling and product innovation that allows for self-expression. We believe this builds on our recent momentum and the best of Coach's past while taking the brand to new heights in the future.
Now moving to Kate Spade, in the first quarter, revenue rose 10% in constant currency, led by a 7% gain in North America and 23% growth in international markets. Overall, we're harnessing the power of the brand to fuel multifaceted growth by focusing on 3 priorities: becoming more emotional; more lifestyle and more global. During the quarter, we made progress against these strategic priorities. First, we continued to amplify our key handbag platforms while simultaneously launching emotional newness. We saw continued traction in our Number 1 Knott collection. In addition, new platforms such as the Katy family resonated with both new and existing customers and outperformed expectations.
Looking ahead, we're continuing to build out these platforms as we create iconic families for the brand. At the same time, we introduced new on-trend handbags, including exciting fashion shapes, such as Boxxy. Importantly, this style was a recruitment driver, bringing younger, more diverse customers to the brand.
Within our novelty assortment, which remains a unique and differentiating factor for Kate Spade, we launched Lady Leopard, an elevated yet highly wearable offering that performed well globally. In fact, the Lady Leopard tote was a top-performing style during the quarter with an AUR of well over $400. Together, the success of our product offering supported the brand's handbag AUR growth of low-single digits at constant currency, including gains in North America.
Second, we expressed the unique world of Kate Spade through distinctive storytelling and engaging campaigns to fuel brand heat. Our fall campaign was centered on our townhouse theme and featured local activations showcasing the full lifestyle offering of the brand. We also experimented with our first foray into the Metaverse with our digital townhouse. In addition, we were excited by our return to New York Fashion Week in September to debut our upcoming Spring/Summer collection amid a wide array of female influencers that embody the brand's purpose. And we continue to increase our reach on social channels, focusing on the younger audience through platforms such as TikTok, Pinterest and YouTube.
Third, we built on the strong foundation of our lifestyle positioning and delivered high single-digit growth across ready-to-wear footwear and jewelry. As we've shared previously, these categories fostered deeper connections with customers supporting higher lifetime value and global expansion. To this end, growth in lifestyle contributed to Kate Spade's increase in average customer spend in North America.
Fourth, we delivered growth in North America while fueling significant sales growth internationally in keeping with our long-term goal of expanding the brand's global reach. To drive brand awareness and increase engagement in key regions, we hosted localized and relevant events to bring our fall townhouse campaign to life. For example, at our Ginza store in Japan, we created an immersive pop-up highlighted by live music, well-being discussions and flower arranging workshops. And just last month, we launched a new store design concept in Singapore. The environment is elevated and luxurious, while at the same time, warm and inviting, a representation of the brand. The initial performance has been strong, and we intend to leverage this format for our new store openings going forward.
Looking to holiday, we will connect with consumers by leading with emotion in everything we do. We're continuing to build iconic handbag styles with the expansion of key families, including the best-selling Knott collection and the new Katy family, as well as the introduction of Gramercy, an elevated core platform, which will include a chenille monogram. We're also offering emotional newness within novelty, including a Zebra animal print and playful candy theme styles. And we'll continue to fuel lifestyle with an emphasis on jewelry, footwear and ready-to-wear, capitalizing on our recent success.
To amplify our compelling product offering, we're continuing to lean into emotional storytelling. We just launched our Have A ball marketing campaign, which reinforces Kate Spade's Joy Colors Life mantra and a celebratory spirit to drive gifting and self-gifting. We're also focused on driving engagement with consumers across channels in new ways. For example, in key cities we're bringing local influencers together with our store associates to co-create content, highlighting a full range of products. Further, Kate Spade store associates will be live streaming on our e-commerce site throughout the season to showcase our collections and offer gifting ideas, underscoring our focus on delivering innovative omnichannel experiences.
Overall, we remain confident in the significant long-term runway ahead and are committed to investing in brand building activities that further unlock the power of the Kate Spade brand and community. Importantly, we've made meaningful progress over the last 2 years, and we have the right strategy in place to take us into the future to deliver sustainable top and bottom line growth over our planning horizon.
Turning to Stuart Weitzman. We delivered growth in North America, aided by strength in the wholesale channel while pressure remained in the highly penetrated Greater China region given COVID headwind. Importantly, we made progress on our strategy to win with heat to drive brand awareness and growth. First, we sparked consumer desire with high emotion product and a compelling assortment as we lean into our authority in occasion wear and build on our casual foundation. Recent introductions continue to resonate with our consumer base, specifically wear to work styles as we capitalize on the shifting needs within the market. The Stuart family, which was launched earlier in the calendar year is quickly becoming a staple within our offering. This collection of pumps and boots drove 15% of sales and was a favorite among both new and existing customers. At the same time, the recently introduced Soho loafer delivers outsized growth. Through our elevated assortment, coupled with price increases and a significant pullback in promotional activity, the brand delivered another quarter of AUR gains at constant currency, rising slightly versus the prior year on a global basis and high single digits in North America.
Second, we focused on strengthening wholesale partnerships and an increasing visibility of the brand for consumers. We've created disruptive activations, including pop-ups with key accounts and online takeovers. Additionally, we've improved placement within high-end wholesale locations, highlighted by a shoe floor takeover at the New York City Nordstrom in September, which well outperformed expectations.
Third, we created brand heat through impactful marketing campaigns, highlighted by the launch of our new purpose new visual identity and new ambassador in September. At the end of the quarter, we kickstarted brand heat with the debut of Kim Kardashian as the global brand ambassador, as we amplify Stuart Weitzman's purpose to celebrate women who stand strong. We were pleased to be listed in the best campaigns of the season by both Elle and Harper's Bazaar, as we diversified the placement of the announcement across social channels and out-of-home imagery across key global cities, including New York City, Los Angeles, London and Milan.
Looking to Holiday at Stuart Weitzman, we're focused on our strategy to win with heat to execute in a rapidly changing environment. We're capitalizing on our strength in boots and booties during this peak season. At the same time, we're updating our key items, including the Soho and Stuart families with emotional additions and embellishments to fuel excitement among consumers. Overall, we remain focused on our strategic priorities to build brand awareness, increase market share and position Stuart Weitzman for continued profitable growth.
In closing, our first quarter results continue to highlight the power of our brands and the attractive and durable nature of our categories. Importantly, our foundation is solid, and our strategic direction is clear. We remain focused on successfully navigating near-term headwinds, staying agile and close to consumers while advancing our long-term growth initiatives. We see significant opportunity ahead to drive meaningful, sustainable growth and value for all stakeholders.
With that, I'll turn it over to Scott, who will discuss our financial results, capital priorities and fiscal '23 outlook. Scott?
