Tapestry, Inc., the U.S.-based parent company of Coach, Kate Spade New York and Stuart Weitzman, has expanded its outlet strategy and overall marketing spending in response to evolving consumer behaviors.
Tapestry’s third-quarter net income dropped to $139.4 million from $186.7 million last year. Executives on the company’s earnings call noted strategic initiatives aimed at enhancing customer engagement.
Tapestry is upping its focus on outlet stores, including by adding high-demand products like the Coach Tabby handbag to these channels at full prices. Todd Kahn, CEO and brand president of Coach, said bringing premium products to outlet stores plays to the habits of consumers who often use smartphones to choose their purchases. The line between retail stores and outlets is blurring as customers look for products across multiple touchpoints.
“In June, we’re going to take the Tabby at full price to 100 outlet stores in North America,” Kahn stated. This move is part of Tapestry’s broader strategy to harmonize the shopping experience across different retail formats, acknowledging that consumers do not always perceive the distinctions between outlet and retail stores.
In parallel, the newly launched katespadeoutlet.com replaces the brand’s “Surprise” sales, offering a more seamless online shopping experience for outlet consumers. This digital component is designed to help with omnichannel customer penetration, which has already seen an uptick this quarter according to the results.
A significant shift in Tapestry’s approach is its tripling of marketing spending over the last few years, emphasizing top-of-the-funnel marketing to forge stronger connections with consumers. This pivot aims to enhance storytelling and brand engagement rather than just drive immediate sales. “We’re spending more and more on top of the funnel marketing to tell stories, to create more connection with our consumers,” Kahn said.
This increased marketing investment is already yielding tangible benefits. For instance, Tapestry’s brands have been successful in attracting new customers, particularly younger demographics. The company reported gaining approximately 1.2 million new customers in North America alone during the quarter, with over half being Gen Z and millennials. Products like the Coach Tabby and the newly viral Coach Swing Zip bag have resonated well with younger cohorts.
The emphasis on innovation remains a cornerstone of Tapestry’s strategy. The introduction of high-value items like the Quilted Tabby underscores the company’s commitment to refreshing its product lines with new offerings. “The Tabby family delivered another quarter ahead of expectations and nearly doubled versus last year,” said Kahn.
