Adrian, a lot of folks came into this quarter looking at North America,
expecting some degree of weakness, and they got that weakness for earnings beat
pretty handily and that appear to be because of China
remain. That's exactly correct.
So if you look at any of the macro data, any of the brick and mortar data kind of
in North America, each and every one of them decelerated materially during the
month of March and that all the way into April.
The huge upside here was the significance of the non North America,
the non US business, and it was across all the brands.
So, you know, coach obviously has the biggest footprint outside of the US, but
it was across Kate Spade. It was also Stuart Weitzman, which are
smaller pieces of the business. But that recovery I mean, we're talking
about 20 percent constant currency in the March ending quarter and 50 percent
5O percent expected growth in China, the June ending.
Talk to us a little bit here about inventory levels, because this has been
the been the big story really for any sort of apparel maker, any sort of
retail out there. Are we seeing a normalization here in
some of those inventory levels? So for Koch, absolutely, they are
probably one quarter away from actually having persistent and sustainable sales
growing faster than inventory. Right.
You hear us talk about that all of the time when sales is growing faster than
inventory. Obviously, you have more risk of upside.
Right. So positive margin impact versus the
downside. And we definitely saw that here.
One of the other metrics that we like to look at is inventory productivity.
That productivity is really starting to speed up.
And a lot of that has to do with the non U.S.
recovery we're seeing outside in Asia. When we look at the results that we got
out of Tapestry, Coach Kate Spade, of course, saw a really perennial brands
here that I think we all know and love. Talk about its direct competitor here,
CAC Holdings. Jimmy Choo was a Michael is probably
forgetting something else there year. Can we extrapolate from what we heard
today out of Tapestry into the earnings that we're gonna get out of corporate?
I actually think this is quite company specific, unique to Tapestry, so you're
absolutely right. The vast majority of corporate holdings
is going to be held with Michael Coors, which is definitely one of the dominant
U.S. brands.
It tends to be Michael Coors Tapestry and Kate Spade that make up the broad
swath of U.S. accessible luxury.
What I would say the difference maker here is that Tapestry has about 15, 16
percent of their sales coming from China, where as Covid Holdings, Michael
Coors only has about 8 percent coming from that.
The other big, big piece of it is going to be wholesale, wholesale in North
America. That's 3 percent for Tapestry.
That was actually down 7 percent. And, you know, this whole kind of
destocking phenomena that's happening all over.
Right. Hotels coming in, you know, down for the
next couple of quarters. So coffee actually has Michael Coors has
about twenty seven percent exposure to that channel.
When we talk about the economic conditions out there and the softening
in those economic conditions, the general belief, at least in markets, is
that luxury goods makers will hold up better because obviously they're
appealing to a client that by default has more money in their pocket.
But I am curious if you anticipate or you're preparing yourself for the
possibility that there could be some softness in sales for some of these
brands. You know, there actually has been, so we
already are factually seeing it. Year to date, Barclays data science
team. We obviously have a credit card arm and
we've been watching that and the luxury spenders.
Two hundred thousand off the high end lenders, 150 K on average.
Those two cohorts have actually been decelerating the fastest versus kind of
50 K counterparts. And that's really because they have the
money to slow down on the spending way. So they're not immune.
We heard this from LVMH. North America was slowing.
And again, it's China. China is that is the region of the world
that is actually accelerating. So they're not immune.
But what I would say is when we think about that slowing, it's temporary.
And you never want to underestimate sort of over a period of a year how many
goods a woman will actually find if she does need.