This week, a look at the climate target back-pedaling across the industry and, conversely, why Coach, Kate Spade and Stuart Weitzman owner Tapestry is going all in. Also, the latest earnings from Macy’s and Amer Sports, and executive moves.
In an industry where many brands are quietly retreating from ambitious sustainability commitments, Tapestry, the parent company of Coach, Kate Spade New York and Stuart Weitzman, is standing firm in its dedication to sustainability targets and ESG commitments.
“We’ve set public targets on environmentally preferred materials, and we’ll continue to drive toward increased adoption across the portfolio of brands,” said Logan Duran, vp of ESG strategy at Tapestry, in a call with Glossy.
Companies that have recently reset their sustainability targets include footwear brand Crocs, which, in May, pushed its net zero carbon emissions goal back by a decade, from 2030 to 2040. U.K.-based online retailer Asos has done the same. For its part, over the years, Tapestry has invested millions of dollars in various sustainability efforts, including using environmentally preferred materials, reducing carbon emissions and promoting circularity in fashion. Duran declined to share specifics about the investment.
Layoffs are often wrapped up in companies’ choice to pull back on these goals. For example, in May, Nike dismissed dozens of sustainability managers as part of a company-wide expense reduction. And in the luxury sector, just before being named Time Magazine’s third “most sustainable company in the world” in May, Moncler dismissed its head of sustainability.
Currently, Tapestry is fighting against anticompetitive claims around its Capri Holdings acquisition. Capri Holdings owns Versace, Jimmy Choo and Michael Kors. This $8.5 billion acquisition, announced in August 2023, is set to create a new powerhouse in the luxury fashion industry that combines Tapestry’s strong American heritage brands with Capri’s iconic global names. The deal positions Tapestry as a competitor to European luxury giants, significantly expanding its global footprint and market influence.
Tapestry’s established sustainability practices are expected to be integrated into Capri’s brands, aligning them with Tapestry’s ESG goals and enhancing their commitment to responsible fashion.
This trend of “greenhushing,” where brands downplay or quietly adjust their sustainability goals to avoid scrutiny, underscores the challenges of maintaining ambitious environmental targets in the face of economic pressures and complex global supply chains. Despite these industry-wide setbacks, Tapestry has remained bullish on sustainability, exemplified by its collaboration with Bank & Vogue in June. The partnership centered on introducing Bank & Vogue’s post-consumer repurposed materials into the crafting of Coach’s iconic Signature Denim Soho Bag. Bank & Vogue is a Canadian-based company and is one of the largest and most established brokers of used and vintage clothing globally. To date, the $450 bag has sold more than 7,000 units and sold out multiple times. “The BVH partnership is an opportunity to drive circularity at scale,” Duran said.
Tapestry’s environmental, social and governance strategy, titled “The Fabric of Change,” focuses on four key pillars: people, planet, product and communities. It was announced in 2019 with included goals set for 2025.
“What we’re seeing broadly is that customers and stakeholders are more interested in sustainability activities further upstream [in the supply chain],” Duran said. “We want to make sure we’re meeting, articulating and sharing the circularity messages that are going to resonate best with our customers. A movement toward transparency, movement toward greater visibility on upstream sustainability activities and increased disclosure [about transparent supply chains] is something we continue to bring forward to [our brands] with our corporate responsibility report.”
He added, “We’ve committed to things like 95% traceability of raw materials by 2025. We’re focused on regenerative agriculture, whether that’s from cattle on the land or with regenerative cotton, and we’re focused on manufacturing processes. More specifically, we’re making sure that 90% of our leather is coming from gold- or silver-rated tanneries. Last year, we achieved that goal — 97% of our leather now comes from gold and silver tanneries.”
A year ago, Tapestry launched recycled nylon and recycled polyester into the Kate Spade brand, largely through product linings, corresponding to the product goals across Tapestry brands. Tapestry established an environmental marketing claim substantiation process to ensure its sustainability claims are thoroughly vetted. The vetting team includes members from the company’s sustainability, product compliance and legal departments, with input from marketing.
In 2023, Tapestry released the “Road to Circularity” film on social media. It highlights the company’s efforts to incorporate circular fashion principles into its design process.
Why regenerative fashion faces an uphill battles: Cost, time and the big brand dilemma
As the fashion industry increasingly grapples with the impact of its practices on the planet, the concept of regenerative agriculture has emerged as a potential solution to reverse environmental damage and foster sustainable practices.
However, despite its promise, the path to widespread adoption of regenerative practices is fraught with challenges — brands struggle with the associated costs, time commitment and scale.
“Never have we needed sustainable brands more, and never have more of them been crumbling,” said Kresse Wesling MBE, co-founder of the luxury accessories brand Elvis & Kresse, a U.K.-based brand known for its regenerative approach. Elvis & Kresse has built farm tours and workshops into its business model. Wesling declined to share revenues. “There is no level playing field. … If you have a completely sustainable, ethical supply chain or if you choose to use non-toxic materials and pay living wages, all of those things come with a cost. We’re competing against companies that have no conscience, operating at the lowest common denominator.”
This includes companies like Shein that is reportedly preparing for its London IPO and looking to sell shares to the public. Shein is known for its unsustainable and toxic production practices and labor rights abuses.
Sarah Grady, co-founder of regenerative leather company British Pasture Leather, explained the difficulties of creating a new supply chain from scratch. “We’ve made a commitment to only produce in Britain to keep the value circulating back into local communities and to shorten the distances that material travels during production,” she said. “But the result of that choice is that our costs are much higher. Leather is traditionally produced as a cheap global commodity, and the anonymity of that supply chain supports the attitude that leather is a cheap material made from a waste product.”
Jack Millington from luxury accessories brand Billy Tannery, another advocate of regenerative leather, noted the mismatch between small-scale regenerative practices and the demands of larger brands. “These huge organizations have bold ideas to do better, but trying to adopt them across the board isn’t going to happen quickly because the supply chain isn’t there yet,” he said. “The end product, regenerative leather, is still quite a premium product due to the lack of supply. This will only change over time as the supply increases.”
The long-term commitment required to adopt regenerative practices also poses a significant hurdle. Wesling said the transition to regenerative farming requires a minimum of three years, and most farmers can’t afford that. “If you tell a farmer that, for the next three years, they won’t earn anything and their labor costs will go up, they’ll look at you like you’re crazy,” Wesling said. “We’re fortunate because our business can finance the transition of our landscape. But for most, that’s not an option.”
This sentiment was shared by Alice Robinson from British Pasture Leather. “Brands want assurance that adopting these alternative supply chains is something they can do long-term,” she said. “To grow, there needs to be commitment and support from these brands. Otherwise, businesses like ours won’t be able to produce a material that facilitates those brands.”
The time and cost required to build these regenerative systems are compounded by the pressure on brands to maintain price competitiveness and scalability. “One of the frustrations in this work is the expectation that these alternative supply chains can eventually match the scale and price of business as usual,” said Robinson. “The problem is that we are producing and consuming too much at all levels. The question shouldn’t be whether regenerative leather can be as cheap and scalable as conventional leather, but rather: Should we really push forward in building these new types of systems that don’t just fill the demand of the current industry?”
The challenges aren’t limited to leather. The founders of Christy Dawn, a U.S.-based fashion brand committed to regenerative practices, also faced difficulties in aligning their sustainability goals with consumer expectations. “We had to let go of our ambition of being fully regenerative for every piece,” said co-founder Christy Dawn Baskauskas. “We had to start mixing in organic fabric to supplement our regenerative cotton, which felt like a big loss at the time. But it meant that we could live to see another day and continue telling our story. It was about being honest with where we are and recognizing that things take time; we can’t expect things to turn overnight.”
The issue of scale and marketing is particularly poignant. “While there’s a big marketing opportunity around regenerative leather, it still needs to be approached as a smaller project so it can be done properly,” said Millington. “It shouldn’t just be used as a big greenwashing opportunity, which is happening a lot in both fashion and food.”
According to Wesling, ‘We’ve created a landscape that’s become a biodiversity hotspot, and that’s deeply emotional. You’re not the owner of a landscape; you’re its custodian. The yields aren’t necessarily for us — they’re for everyone. That’s why it feels so powerful.”
Earnings
- Amer Sports, owner of Solomon and Arc’teryx, delivered strong second-quarter results for 2024, with 16% sales growth driven by the standout performance of Arc’teryx, which continues to lead the company’s portfolio with unprecedented growth and profitability. The brand’s success across all regions, especially in Greater China and Asia Pacific, contributed to a nearly 3% adjusted operating margin, well above expectations. Salomon also showed significant traction, particularly in footwear, further boosting overall results. Given this momentum, Amer Sports raised its full-year guidance, now expecting 15-17% revenue growth and adjusted EPS of 40-44 cents, underscoring its confidence in continued growth for the remainder of the year.
- Macy’s second-quarter 2024 results reflect a challenging retail environment, with net sales down to $5.1 billion from $5.6 billion last year, and a 7.3% decline in comparable sales. The company reported a decrease in gross margin to 38.1%, driven by increased promotional activity as consumers shift away from high-priced goods amid economic uncertainty. In response, Macy’s is focusing more on value-oriented offerings and private brands to attract cost-conscious shoppers. Consequently, Macy’s has revised its full-year guidance downward, highlighting the impact of changing consumer preferences on its financial performance.
Executive Moves
- After nearly 26 years as president, Joyce Brown, the first female and African American leader of the fashion school Fashion Institute of Technology, will step down at the end of the 2024-25 academic year. No replacement has been announced.
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