Tapestry, Inc. (TPR) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining Tapestry's 2025 Investor Day. [Operator Instructions] The following presentation includes forward-looking statements that are based on information currently available to Tapestry and is subject to risks and uncertainties that could cause actual results to differ materially from the information presented today. In addition, the presentation will reference certain non-GAAP financial measures. Please see Tapestry's investor website for a full reconciliation of GAAP to non-GAAP financial measures. And now the program will begin with a short video. Now please welcome to the stage, Joanne Crevoiserat, CEO of Tapestry, Inc.

Good morning. Welcome, everyone. I'm Joanne Crevoiserat, and I'm excited to be here with our leadership team and on behalf of our 18,000 associates worldwide to welcome you to Tapestry's 2025 Investor Day. We are excited by the momentum in our business, and we're ready. We are ready to amplify, building on our strong foundation to reach more consumers, drive sustained growth and create more value for our stakeholders. Today, I'm going to cover who we are and our competitive advantages, our ongoing transformation, which has created more fuel for our brands and delivered superior financial results. And I want to spend most of our time today on what's next, our Amplify growth agenda that will drive sustained profitable growth for many years to come. I believe Tapestry is a differentiated and special company. So let's start with our advantages. We are anchored in our purpose to stretch what's possible. Our purpose pushes us to break boundaries going beyond conventional paradigms, constantly seeking growth, innovation and creativity in a way that is authentic to us. And this spirit lives in our 2 iconic brands, Coach and Kate Spade, each with a distinctive identity and strong emotional connections with their consumers. Coach is blazing a new trail with a new generation of consumers. Today, we will cover Coach's bold ambition, building on the success of the last 5 years. In Kate Spade, Kate has something rare. Kate Spade is an iconic brand that lives in the hearts of consumers. Today, you'll hear more about the deliberate steps we're taking to unlock that spirit and reignite growth at Kate Spade. Together, they represent compelling organic growth potential for our business. And our brands are supported by a direct-to-consumer model where we operate at global scale with $7 billion in revenue across 60 countries and nearly 1,300 directly operated stores worldwide. And importantly, our brands and our business are supported by our incredible associates across the globe. I say this all the time. You'll hear it more than once today maybe. We have the best team in the business. You see it in our stores. Hopefully, you'll take the time today and see it in our workshop or in our showrooms. Hopefully, you can feel it in our office. Our teams are bringing their passion and energy to our brands every day. And woven into our culture is our fabric of change, which reflects our ongoing commitment to building sustainable business for the long term to allow our business, our people, our communities and our planet to thrive. And leading our work is our world-class team. They've joined me today. You will hear from several of our leaders today, including myself, Todd and Scott, who speak to you every quarter. But I'm excited that you'll also hear from Sandeep Seth, our Chief Growth Officer and President of International, who is an expert in brand building; and Eva Erdmann, our CEO of Kate Spade, who comes to us with decades of proven success building luxury brands in the beauty space. And Peter Charles, our battle-tested Chief Supply Chain Officer, who leads the team that brings unmatched quality and innovation to our consumers with efficiency and always as required today with the agility that we need in a complex world. So what have we been up to over the last 5 years? We have structurally changed our business, setting an important foundation for our future growth. Through our acceleration program, which began in 2020, we put the consumer at the center of our business. And with Future Speed in 2022, we took the next step and began to operate at the speed of the consumer. Today, we know that consumer behaviors are shifting quickly. Data and digital innovation is changing how consumers and brands engage and what is true today may not be true tomorrow. These truths have profound implications, not only for our business, but for our industry. This requires staying close to our consumers, constantly delivering innovation and staying agile in responding to that change. At the end of the day, in a world where consumers have more choices than ever, brands matter. And that's why today, we have a culture of consumer-obsessed brand builders, supported by an agile and data-driven operating model. I want to emphasize, this is what differentiates us. This is in our culture. Brand building at Tapestry means building deep emotional connections with consumers at every touch point in our product, in our stores, on our website, in our marketing and in our communication. Brand building is embedded in everything we do. Today, you'll hear about how this strong culture is driving our growth and delivering for our shareholders. So you may be asking, how have we changed? As part of our transformation, as I mentioned, we've built robust brand-building capabilities across the organization from establishing a consumer listening function to our focus on customer acquisition to the way we invest in our brands. These capabilities are driving our success, and you're going to hear from Sandeep about where we're going to take them next. We'll also -- we've also further strengthened our operations, building robust data and analytics capabilities, establishing a truly global digital platform. And importantly, in today's world, building an even more diversified supply chain that maintains best-in-class quality and efficiency, and you'll hear more about that from Peter. Underpinning all of our work is a culture that allows us to move faster than ever, bringing innovative thinking to both challenges and opportunities. And before moving on, I want to touch on what it truly means to be data-driven at Tapestry. One of the ways we're innovating is how we bring -- we move from insights to action, where we see the payoff in our business by placing data and insights tools in the hands of decision-makers across our organization. This is an important differentiator that we've been building over the last 5 years. We are constantly listening and testing and leveraging data to inform the choices we make across the value chain from design and assortment planning through store operations, pricing and marketing at every touch point, we are improving the customer experience. That's what allows us to make stronger emotional connections with our consumers, and it brings together the magic and the logic in our business. And these competitive advantages are powering our execution behind our Future Speed agenda. And as a reminder, our Future Speed agenda focused on 4 key priorities: building lasting customer relationships, fueling fashion innovation, delivering compelling experiences and driving and powering global growth. And our strategies are working. You can see it in our results. Over the last 3 years, we have recruited more than 20 million new customers to our brands in North America alone. We have grown our top line by 10%, while generating 180 basis points of operating margin expansion. Notably, we have delivered on our commitment to generate over $5 in earnings, driving nearly 50% growth in earnings per share. Our foundation is strong, and this presents a compelling opportunity to amplify from a place of strength. So let's talk about our growth agenda. With the capabilities we built, we are now positioned to amplify. We are ready. It means scaling what's working and building on our strengths to power our growth. And as we look to the future, we know that trends are only accelerating in the marketplace. And because of that, the future will be written by those closest to the consumer. We are uniquely positioned against this truth. With the culture that we've built and the agility that we've embedded across our organization and a business that is 85% direct-to-consumer, we are wired to keep the consumer at the center of our focus and move with speed to maintain engagement and relevance. And guiding us forward is a clear vision to give more people the power to bring their own style and story into the world. And as we deliver on this vision, we're going to take our iconic brands to new heights. Let's take a look at what that looks like. [Presentation]

So have you agree, this is an exciting place to be. We are building off our strong foundation toward this bold vision with our Amplify Growth agenda. The strategies that guide us should look familiar to you. These are consistent strategies and they're proven, which we will execute through our Amplify agenda with even more focus. We will continue to deliver the financial outcomes you've come to expect from us. First, we will continue to create emotional connections with our consumers with a focus on driving new customer acquisition, particularly with younger consumers. Second, we will fuel fashion innovation and product excellence with a focus on our core leather goods category where we're positioned to lead with quality and creativity. Third, we'll deliver compelling experiences to drive global growth with a focus on our key markets of North America, Greater China and Europe. And finally, we'll ignite the power of our people, strengthening our culture and our capabilities to future-proof our growth. Let me unpack these in detail. New customers are like oxygen for our brands, necessary to drive our growth. This is why we are focused on new customer acquisition. To do this, it starts with knowing the customer, understanding them deeply to ensure that our brands are relevant and fit into their evolving lives. And we're focused on winning with young consumers as they're entering the market, expanding the market, fostering deeper brand love and providing higher lifetime value through lasting relationships. And we will invest in marketing to spark their brand desire and achieve our growth ambition. And as we fuel fashion innovation, we will focus on leather goods, continuing to create icons our customers will treasure. We will also prioritize innovation throughout our assortment while staying true to the craftsmanship and quality that define our products. And we will extend into lifestyle categories where we have a right to win, specifically in footwear. And as we look at the path ahead of us, it's exciting to see the opportunity to amplify growth across our key regions with continued growth in North America and accelerating growth in international markets, particularly in Greater China and in Europe, where we have lower penetration, and we see an opportunity to expand the market and our share. To achieve this growth, we will scale our proven brand-building capabilities globally while always mining and adapting to local consumer insights. Again, we will support our growth ambition with investment and targeted store expansion across these markets. And we know that our people and our culture are a differentiator for our company. It's our secret sauce. Our continued investment in talent and culture will future-proof our growth for years to come. Our ambition is to have brand builders in every seat with every person across our organization obsessed with knowing our consumers and building our brands. To do this, we'll be supporting our people in new ways, giving them the tools and training to continue to translate data and insights into action. Again, that's where we see the payoff in our business. We'll be fostering curiosity and empowering them to make decisions, enabling them to become the next generation of transformative leaders for our business and for our industry. And we're confident that these strategies will create durable growth with a compounding financial model that will drive significant returns to shareholders for many years to come. This is what amplifying looks like. We are confident in our existing fiscal '26 outlook, and we're excited about fiscal '27 and fiscal '28, where we expect to deliver mid-single-digit revenue growth, operating margin expansion to over 22% and low double-digit growth in earnings per share annually. And we plan to return $4 billion to shareholders over the next 3 years. This demonstrates our commitment to creating value for our shareholders, and it recognizes the underlying intrinsic value that we see in Tapestry because we're building a business to deliver solid growth not only over this 3-year time horizon, but well into the future. And before I hand it over to Sandeep, here are the things I hope you take away from today's Investor Day. Our strengths are structural. We have transformed our company to become consumer-obsessed brand builders, and we are winning with a new generation of consumers. This is driving our global momentum, and our growth is durable well into the future as we deliver our Amplify plan. Our vision is clear. We are giving more people the power to bring their own style and story into the world. This will deliver compounding financial returns and significant value for our people, our consumers, our brands and our shareholders. Thank you. And it's now my pleasure to turn the stage over to Sandeep.

Thank you, Joanne, and good morning, everyone. I've met many of you, but maybe it's the first time seeing a lot of you. So I'm going to start with a brief introduction. Hi, I'm Sandeep Seth, Tapestry's Chief Growth Officer and President, International. I've joined the company 4 years back as Coach's CMO and North America President. And prior to that, I've spent 23 years at Procter & Gamble, learning the art and science of brand building. I know many of you are here today to understand what have we done to unlock the growth that we are seeing and ask the question, what gives us confidence that this can be sustained. So what I'm going to share with you today is what we have unlocked and how we're going to bring this forward to drive long-term durable growth. And here are the 3 things that I'm sharing today. The tremendous headroom we see for growth. Two, how we unlocking the strategies, Joanne just shared to drive robust long-term growth. And three, what's our international agenda. So let's start with the headroom. Historically, this is the view of the market we've taken where we look at the market from a dollar value and the existing buyers in the market. Now this is an attractive market and Tapestry has 7% share in this $100 billion handbags, small leather goods and footwear market. And we see significant headroom for growth within this market. Now this historic view of the market limits our focus on current buyers of the market. And this overlooks the full potential and the focus really becomes gaining share from other existing players. So we are redefining this market. We are redefining this market to include qualified consumers who have the potential to purchase our handbags. Now this opens up the aperture and gives us a significantly higher global reach and grow by expanding the market. Now if I look back historically, Coach had achieved these back in the late '90s and early 2000 when the luxury market in America grew as we increase the consumer participation in the market. So we see exponential opportunity as we open up the aperture. So let's look at this market from a consumer lens point of view. Expanding this focus gives us a global reach to 1.9 billion potential consumers of this category. And if I look at the current penetration for Tapestry, it's only 0.6% within this market. In fact, what I want to focus on is the point of market entry, and we are honing into this point of market entry consumer, which comprises 275 million consumers out here. Point of market entry is the 18- to 27-year old. And this provides us with a really robust and sustainable cohort of consumers to drive long-term growth. And our brands are really well positioned to win with this point of market entry consumers. So let's look at why point of market entry and what does it give us? First and foremost, this is a sizable and sustainable TAM for us because every year over the next 10 years, 25 million women are going to turn 18, and they are all going to make their first major handbag purchase. Why 18 is significant? This is the age where they transition from carrying backpacks to handbags as most of them move from high school to college or university. And this provides a huge opportunity to grow by expanding that market. Second, our brands have it in their DNA to be considered for the first major handbag purchase. We've heard countless stories of consumers recounting their first coach handbag purchase. And this nostalgia stays with them forever. Now if I were to do a quick poll in this room by way of raising your hands, how many of you remember your first coach handbag, which you bought for yourself or significant others, there will be many hands up here. And I wanted to recount one of my own personal stories. 5 years back when I was interviewing with Tapestry, it was still COVID. I was doing the interviews from home and my wife overheard the name Coach, and she pulled out the first Coach handbag I bought her back in 1999, just a couple of months after we got married, which I bought on my way back from Hong Kong. And so these memories last forever. And we hear the same stories from Kate Spade consumers. And again, they continue to recount these beautiful memories of their first pack. Thirdly, point of market entry is critical because behavior is shaped at this age and it stays forever. Now we've seen for Coach, the boomers and the Gen X who bought Coach in their teens continue to stay loyal with the brand forever. Now this is not just happening because of the price points we offer. It is because of the brand heat that drives desirability and brand love that stays forever. Fourth, we've seen data to show that this generation has the highest reverse influence amongst all other generation. Again, our data at Coach shows that we are seeing growth across all generations once we unlock the growth with the Gen Zs and the point of market entry consumers. And lastly, capturing them at this point gives us the highest lifetime value that we can unlock. So with that tremendous TAM, how are we going to use the proven strategies to unlock the durable growth? Joanne just shared this. What's so significant about these strategies is they've been unchanged for the last couple of years. And what we've done over this period has gotten really focused on our where to play choices under each of them. And what I'm going to talk about is how we are leveraging these strategies with clear consumer building blocks, the capabilities that we are building from a brand building point of view and the investments that we're going to fuel behind these strategies. So let's start with the consumer building blocks. As you see here, we start with a robust planning of how many consumers we need to acquire over the next 3 years to hit our goals. We then break that up into who these consumers are, what are they going to buy and where are we going to capture them. As you see in this chart, 85% of these consumers are point of market entry consumers that we're going to acquire. And this really informs our teams on how do we emotionally connect with these consumers, what stories we need to engage them with. Two, 80% of them are going to come through our core handbag and leather goods products. Again, very important information for our design teams, our product teams, and our supply chain teams for their planning. And lastly, over 75% of them are going to be acquired across international markets, which informs our global agenda. With these clear building blocks, the next step is the brand growth capabilities that we are building. These brand growth capabilities is the part of what sets Tapestry apart. Our current growth is fueled behind the brand building we are doing. This is structural, and this is repeatable. It starts with knowing the consumer, building a deep understanding of who these consumers are, translating that understanding into the magic that our teams create across everything we do and eventually leveraging that to reach many consumers and drive acquisition at point of market entry. So let's start with knowing the consumer. We have defined a very clear and distinctive target segments for both our brands, Timeless Gen Z for Coach and Gen Z connectors for Kate Spade that Eva is going to talk about. This is based on demand spaces, and we've done quantitative segmentation work across all our global markets to define what these segments are. They are sizable, they are distinctive. We get clear data on their emotional and functional needs. We understand their category behaviors and all of this informs our teams. But we don't stop there. We go a step deeper to understand them beyond their category behavior to know their life and understand how and where our brands fit in this. For this, we are doing ethnographic studies. Personally, I have visited over 200 in-homes, meeting consumers myself here in the U.S., across Europe, across the different countries in Asia. We spend 2 to 3 hours in their homes. We talk to them, understand their aspiration, understand their future plans, understand what gives them confidence, what are their fears and what are the tensions they're facing. All of these are deep insights that then are translated into the storytelling. Coach recently launched a campaign last week that you may have seen, which brings these emotional stories to life and Kate Spade is doing the same. Equipped with this understanding, we have a clear picture of what this consumer is looking for. But the important thing I want to introduce is deselection barriers because it's equally important to know what they don't like. And that's where deselection barriers come in. Our consumers are presented with over 200 brands to choose from. And the way the brain works is not through a process of selection, it works through a subconscious process of deselection. And this is very important to understand what causes that deselection. Anything we don't like, anything that doesn't fit with our value system, our brain automatically deselects. And brands miss this quite often. So let me give you a couple of quick examples on what that looks like. Overexposure to discounting is a deselection barrier because it subconsciously sends a signal the brand is not hot and trying to push sales. Too many messages, e-mails, SMSs, let's say, 10, 15 messages a week is an annoyance and causes deselection. So our teams are constantly working whether in our communication, whether in our product stories, whether in our stores and experiences, what are those deselection barriers we need to eliminate so we can have people subconsciously put us in their top choice and remember us as the brand of choice. Now before I proceed, I would like to play a quick video to give you a snapshot of the consumer in homes and the work we're doing with these consumers. Can we play the video, please? [Presentation]

Hope that gives you a snippet of these consumers and what they have to say and how they are distinctive from each other. Now the key is to ensure everyone in the organization has this consumer understanding. We always try and bring as many people out for the consumer in homes, but we want to make sure that everyone has these insights and have this data, which then leads to the magic they all create. This information, these insights inform the product icons our teams are developing, the product and pricing strategy. It informs the storytelling that our teams are working on and the experiences, be it in our stores, our pop-ups, our digital presence, all come out of the data and insights from the consumers that we gather. -- which, in turn, enables us to reach a lot of consumers and drive acquisition at scale. Our strategy of focusing on point of market entry really gives us sustainable growth as new consumers are entering the category every day, and we want to be present with our brands first with them. Now it's equally important to retain these consumers and drive lifetime value. But here's the interesting insight. The strategies that drive acquisition are also the strategies that drive retention. Creating that best first experience is the best way to have the consumer come back. And on a lighter note, I would say something that we can all relate to, you only get a second date if you have a great experience in the first date. No amount of calling back will bring the person back on that. And that holds true for our consumers. We want to make sure we are creating the best experiences for our consumer at every touch point so that they want to come back repeatedly to our brand and drive the maximum lifetime value. And we're seeing it in our data. We're seeing it with our new consumers we're acquiring that our retention rates are going up. So with clear and tangible building blocks that our teams have and the foundational brand building capability, it's important we are investing behind these capabilities. And over the last 5 to 6 years, we have significantly increased our marketing investment. Back in fiscal year 2019, we were investing 4% in marketing, and it's up to 11% last fiscal year. If you look at the last 3 years, we've spent $1.8 billion in marketing investment, building these connections with our consumers and reaching many million consumers across the world. We're also investing in driving our footprint, both physically as well as online to reach the consumer. Shifting to brand-building capabilities. We want to make sure that every employee in the company has the foundational understanding of the brand growth capabilities we've just demonstrated. And to do that, we are establishing a brand university, and we'll make sure every employee has this understanding and is using the consumer knowledge to build the magic that they're doing. So how are we going to scale all of these strategies, all of these capabilities, internationally. Firstly, as I've mentioned, 75% of our growth over the next 3 years is going to come from international markets. As you look at this chart, you can see the significant size of the addressable market that we have across all our key geographies and the headroom that we have given our low penetration in all of them. As we focus on the top markets internationally, first and foremost, we are committed to driving growth and investment in North America. As we look internationally, Greater China and Europe provide us the largest opportunity in terms of the TAM and the low penetration that we have to grow. The way we're going to bring this global plan together is really mixing a global and local approach. There are some things that are going to stay globally consistent for us. Brand purpose is defined by the brands globally based on consumer understanding across all markets, and this stays consistent for us. Two, the icons, the product icons we are building will stay consistent globally. We've seen now data, compelling data on this that the products that work resonate globally for us. Three, our target segments. Our target segments are not going to change. The timeless Gen Z that Coach is focusing on and the Gen Z connector that Kate Spade is focusing on stay the same because this is based on segmentation work that we've done across all the key markets, and we know we have sizable segments that desire our brands. What our local markets then focus on is really deep understanding of the consumer and the culture in the market. They bring out the insights, which are then shared back with the design teams, but also used locally to create content and experiences that are relevant for that market. We then tailor our distribution strategies by market. As we look at China, we have a lot of physical footprint opportunity for expansion, while in Europe, a lot of this opportunity is going to come through wholesale or digital. Let me share a quick example of how the teams are planning against this. This is an example from China. We recently visited a city called Wuhan in China, and our teams penetrated here. Wuhan is somewhere between a Tier 1, Tier 2 city in China, but it presents a huge opportunity from a TAM point of view as you look at it. But what's significant here is Wuhan has 1.2 million university students, making it one of the largest university populations in the world. And as we look at our brands, Coach has 3 stores in Wuhan. It has single -- low single-digit unaided brand awareness, and it has only 0.5% penetration on that. So presenting a huge growth opportunity. So our teams leverage this data and do detailed planning, what's our media and marketing investment and content needed to drive unaided brand awareness. What's the footprint expansion we need to build there? What's the product and pricing strategy that we need to build behind this. And we are doing this meticulous planning for nearly 200 cities in China, building very, very specific plans to drive this growth. And as I mentioned, we do see significant opportunity to drive our footprint. We are looking at about 125 new doors opening for us globally and also in digital expansion from 9 to 26. But we are taking a very disciplined approach on this. Every store opening goes through our very strict productivity criteria, and every store has to make money and meet our productivity requirements. And that's the foundational way in which we are looking at every investment we make. So adding it all up, first and foremost, we are committed to consistently grow in North America. Internationally, we expect to deliver low double-digit growth in Greater China and Europe, and the rest of the world is going to deliver mid-single-digit growth for us. So to end up, here are the few key takeaways I want to leave with you on why we have confidence to deliver durable growth for the long term. First, as I mentioned, we play in a very attractive and large market with a huge opportunity to grow. And we are expanding the view of that market to include potential qualified consumers. Our focus on point of market entry makes our growth durable because this is a sizable growing segment, and our brands are well positioned to win with them. Three, our brand-building capabilities are foundational to what we do. They are a part of what's driving our growth today. They're structural and they're repeatable. Four, we are investing behind these strategies and these capabilities. And lastly, we see immense headroom in international markets for further growth, and we're investing behind that. Thank you very much for your time and attention. I'd now like to invite Todd Kahn, CEO of Coach.

Thank you so much. Thank you, Sandeep. Good morning, everyone. It's great to be here. I get to talk about my favorite subject, Coach. Many of you have been with us for a very long time. I know see faces around this room who have been covering us since Coach went public. Thank you for that. Some of you are new to our story, so I welcome you. I'm going to cover 3 things today. I'm going to talk a little bit about how we got here, where we are today. I'm going to talk about our bold ambition for the future. And then I'm going to talk about and give you concrete reasons why I have such conviction around the future. So at Coach, you know we love talking about blending magic and logic. I'm going to give you a little insight into the magic and a lot of insight into the logic. So let's get started. It starts with our vision. And our vision was audacious to be a brand that's loved. Loved is something you really have to work for. And this was designed to be a rallying cry for everyone. Equally important was our purpose. Our purpose, again, was designed initially for an internal audience to motivate our people. Today, our purpose is resonating with our clients worldwide. So how do you become loved? Well, it doesn't happen overnight. And in our case, we have been on an 80-year journey, and it started with an incredible origin story, a story that took place actually just a few blocks from here with a husband and wife entrepreneurs, with a group of artisans who took the most American icon a baseball glove and developed beautiful leather product. And that was our first beginning stages. And then we moved into the '60s with Bonnie Cashin, our first design director. Bonnie took everyday items. She literally was inspired by a paper grocery bag and turned that into a beautiful handbag. She was inspired by her convertible, which had the old turn-locks to turn down the top, and she created our most iconic closure. And then when some of you started to get interested in our story and we went public in the 2000s, and we launched accessible luxury, the concept that you didn't have to be an exclusive world to engage in luxury that when we talked about our product or handed you our product, we didn't put on white gloves. We engaged with you. You touched and felt the product, and that was incredible. And then in 2013, Stuart Vevers, my partner, came to Coach and elevated us. He brought us into the fashion conversation. And then the next phase in 2020, after 12 years of sitting in almost every seat in this company, I was given the opportunity and the privilege to become the CEO, coupled with our acceleration program. And then 3 years ago, here in this room with you, we launched expressive luxury, the next phase of growth for Coach. And now today, we're starting a new chapter, a new growth chapter for Coach, and we're going to talk about that. So how do we do? What's our 3-year report card? Well, first, on revenue, we said we would give you mid-single-digit growth. You know what we did? We gave you mid-single-digit growth. We said we would give you 73% gross margin. Well, we did a little better. We delivered 78% gross margin. We said our operating margin would be around 30%, we delivered 33% -- we say what we're going to do and we do what we're going -- what we say, and that's powerful. Well, that was about 30 seconds of celebration. Now we get to talk about the future and our ambition. And our ambition is bold. Our ambition is to take Coach to $10 billion annually in best-in-class margins. This many years ago, a couple of years ago, I gave this as a challenge for our internal teams. This was our moonshot. This was the rallying cry for all of our people. Today, I have more conviction that this is an attainable outcome than any time in our history. And I'm going to share with you how we're going to do it. Okay. It starts with understanding the game we're playing and having a winning playbook. And Sandeep talked about this. The first understanding of the game we're playing is focusing on the consumer. And this view that Sandeep shared with you of unlocking the potential of the consumer and not just sitting here and taking share from one player or the other player, this is the unlock for future growth. This is powerful. So the world is a big place, and we're winning and playing in 50 countries. But to achieve our goals over the next 3 years, we need to focus and win in 3 areas. First, in North America. North America, now I think everybody knows Coach in North America, and everybody should have a handbag in North America. But the truth of the matter is when we look at our focus market, Gen Z, we have only 4% penetration. That's massive headroom here. Second, China. China, as Sandeep talked about, is an incredible opportunity for us. Coach has been in China for over 25 years. And I almost feel like we have so much new territory to cover. Sandeep and I like talking about Wuhan. We visited Wuhan. But to give you perspective, when he talked about the college and university students, that's 5x Boston, 5x Boston, 3 stores, okay? Think about that opportunity. So we're going to win in Boston. We're also going to win in Wuhan. And then Europe and the Middle East. Europe and the Middle East is such an unlock for us. And the reason we're winning there is because our value and values resonate with that consumer. They like what they see. They like the value proposition of our product. And in fact, Europe and the Middle East has outgrown every other market over the last 2 years. That's incredible. Okay. We know where we're going to play, and we know the game. Let's talk about the how, and the how starts with expressive luxury. Expressive luxury came about from an insight we learn from the consumer that, in fact, the consumer wants to help them give them a sense of belonging and self-expression. They want to build their confidence. They see luxury not just about impressing. That's just a low-level need. They want their confidence. We launched this 3 years ago. Let's see what that looks like today. [Presentation]

What I love about that video is you see our clients' customers emote their love for the brand. That's powerful. And that comes about because we have a clear and consistent strategy. Now Joanne said it, Sandeep said it, our strategy has been very consistent and stable the last 3 years. We have not needed to change every quarter or year our strategy because it's working. We hone our strategy. There's 3 key pillars to our strategy. First, there's building a connection emotionally. An emotional connection starts with understanding the consumer, and we do that quite well. This is where the logic comes in. The logic, and we have big data. We have millions of consumers, and we see that data and unlock that data, and it's rich. But we do something else. We use small data. We do ethnographic work. Sandeep mentioned it, you see pictures here of Joanne, Sandeep, myself and every leader at Coach interacting with our customers, almost always on a no-name basis. So there's not a bias in reporting. We interact with them. We hear what they say. And what's powerful about this interaction is what people say they are going to do and what they do are not always the same. If you give out surveys, people will say a lot of things in a survey, but that's not always the truth. And let me give you one great example. We were in Japan. We met with a wonderful woman, young, targeted Gen Z client. She love pink. pink was her favorite color. In fact, she had pink appliances, okay? That's how powerful pink was in her life. But she never wore pink out. She only wore black out. She didn't have the confidence to wear pink. So what do you learn from that story? Well, you learned 2 things. You understand that confidence plays such a key role in their decision-making. And we learned that if we can actually help build her confidence through our storytelling, maybe we'll sell her a pink bag that she'll actually wear out. Nevertheless, we'll certainly sell her a black bag. That's powerful insight that we learned from these interactions. So I'm going to give you 2 significant takeaways about Gen Z universally. First, they're the most connected generation ever. They are seeing, interacting, responding to the same things globally. We see that from look at the #1 hit in Netflix today, a Korean animation that is popular across everyone. And I recently watched it on a plane and I think got some looks, why is this older guy watching this Korean animation, but it really was for work. But it was fabulous, okay? That's one. Second, because they're so connected, because they see and respond and interact to the same things, their fears, their likes, their dislikes are very similar. And we can tap into those emotions, and we hear it from the consumer. I was tired of not feeling confident, having the courage to be you and to stand up for who you are is so important. I could take those words and that attitude and put it in Chinese and put it in Korean and put it in French because the consumer is saying very similar things universally. So what do we do with this insight? Well, we turn it into action. We take the insight and the data and it inspires us. And it inspires us fundamentally in 2 key ways. First, we don't just chase trends. We develop new ideas, new concepts, and we make sure that everything we do is designed to inspire our values, purpose and our brand positioning of self-expression. And then we don't just lead with product. For a long time, like many fashion houses, we put out an ad, there is a beautiful model, here's a bag. Usually, they're alone, sometimes they have a friend, okay? You go through pages and pages of fashion magazines and you see the same thing, okay? We don't just do that. We take our beautiful product, and it anchors our storytelling of something much more profound as we -- as Sandeep referenced in our most recent campaign. So -- all of that insight, all of our storytelling. What does it do? Well, it creates desire. Now this is a year-over-year Google search representation. The size of the bubbles show the level of interest. Now our lawyers would not let me list all the competitors here. But I can assure you, they're everyone you think of. They're every brand in our space. They're every pinnacle luxury brand, and there are brands with apparel adjacencies. So what does desire create? Desire creates customers. You create desire, you bring them into the fold. And we have done that with our targeted consumers and everyone else. So when you're winning with our core audience, we win with everyone. Okay. How are we winning? It's great to tell a compelling story. It's great to have a purpose. You got to have wonderful product, and we have amazing product. And our product has been driven by fewer and richer stories, and it starts with a goal to take key products and turn them into icons. Now our teams can design beautiful products. It's the consumer who will determine if it becomes an icon, and the consumer has voted. First, we start with Tabby. Tabby was a bag that we launched in 2019. Tabby has grown every year since. Tabby is iconic to us because of the value, the structure and, of course, the unmistakable sea that grounds the entire proposition. And hopefully, you got -- when you walked in here, you spent a little time in the Tabby shop to see all of the various ways we can amplify the Tabby collection. Second, Brooklyn. Brooklyn was the premier anchor of the New York collection. Brooklyn was a bag that Stuart walked the runway with. Now interestingly, and we had a lot of conversations about Brooklyn, and this is where magic comes in. Brooklyn on its surface is not a fantastic coach bag. It doesn't have an adjustable strap. It has very -- no closure God forbid. It has very little branding, okay? It's a demure bag, yet it captured the feelings, the Zeitgeist, the authenticity that was always coached. Beautiful leather, beautiful product, and it feels so right for the era. And what's amazing, it's a year old. And I think what you saw in the showroom this morning is the amplification of the entire New York family and what a wonderful platform Brooklyn is to take it into other materials beyond just glovetanned leather. And I would not do this -- just this if I did not talk about Teri. Teri is an outlet bag that is one of our #1 recruiters of Gen Z at $200. Think about it. It's a small bag at $200, recruiting new customers. We've taken this learnings of developing fewer and richer stories, and we've expanded it into footwear. And we've done this with our Soho sneaker. And again, it starts with insight. The insight was if we want to win with Gen Z, 50% of the Gen Z closet is sneakers. We have to win with sneakers. Soho sneaker, which we launched last February, is at one price across all channels. That's going to be an important point that I'm going to make in a few minutes that we're winning with. And then I have to talk a little bit about fashion. We walked this Kiss Lock Bag down the runway. It is an oversized frame purse basically, okay? If somebody were to tell me an oversized frame purse is going to be impact, which Stuart told me, I had some doubts. But this is where we create a world where creatives can thrive, where we engage, we test and learn. And right now, in North America, there are over 92,000 customers who are on a waitlist to get this back. So the 2 out there, I think we have security watching the 2 out there because I know this group, okay? Some of you are coveting that bag. So what has this model changed? This has been a profound change in our business. We've gone from a highly seasonal to a core business. A core business reduces markdown. It takes away churn. It allows us to go and invest in deeper stories on fewer ideas to cut through those 200 other choices that people can make. We can put massive amounts of marketing behind these ideas. And here's the best part because I know what some of you are thinking. No single icon accounts for more than 10% of our sales. So there is not over concentration. It gives us a rich platform to continue to grow. Okay. We have a compelling story. We tell great marketing. We have amazing product. We have to bring it all together, and it has to come together in the environments that the consumer sees, both on digital and in the real world. And again, everything starts with an insight. Our insight that Gen Z, you know what Gen Z loves to do. They love to shop in the real world again. They love to be part of a community. They love to engage with their friends. Maybe part of it could be because so many formative years were spent in COVID, in lockdowns and being remote. So we want to engage them. Now the journey may start on their smartphone. but they love being in the real world. And when they're in the real world, we engage with them. And we get to engage with them in so many different ways. It could be our future coming at the end of this calendar year, flagship in Ginza, which is going to be incredible because as you can see, you're going to see that sea from a mile away, okay? Building and leaning in on that brand intellectual property is incredibly powerful. But then beyond these big flagships, we win when we go small, when we engage with them in what we call the Coach play environments, where there's tactical experiences that they get to experience and interact with the product, and it's not off putting. Sandeep talked about deselection barriers. One of the key deselection barriers is something off putting. This consumer, they spend most of their time looking down. Even the selling habits that we engaged with in the past, which interacting, welcome to Coach, look them in the eye. Actually, that doesn't always work. We have to make sure we meet our client -- customers where they are and how they want to interact. And this has expanded into gaining on all 5 senses. You experience and hopefully, you've enjoyed the Coach Coffee, the Tabby cake, the product that this engages. We love building experiential retail, particularly in coffee shops. And to be clear, this isn't just a marketing idea. This is a commercial idea. We like commercial ideas here. We like the fact that when there is a coffee shop, the linger time of the customer increases in our main store. That's powerful. So what does this look like? We are going to grow our store base across the world, primarily internationally, but for the first time in a dozen years, you will see store growth in North America. And what's powerful about this is we're not limited to the 2 models historically we were limited by, traditional mall or outlet center. We're going where the Gen Zs are. That can be lifestyle centers, that can be street locations. That can be all over China. But before you get too carried away because I know some of you are starting to say, okay, 100 and 200 stores, model, this is the outcome. Many of these stores are going to be smaller footprint stores, okay? We want to engage the consumer in different formats. But our commitment to you, something Joanne and I made 5 years ago, stores are commercial ideas. We will make money with our store openings. What is that? I guess we missed the video. Anyways, it's all good. Let me get to the next big idea and something we've hinted to over the last year, one brand, one coach. This is a profound change in the way we think about our business. We've talked to you a little bit about putting Tabby in outlet stores and the benefits of that. And we've experienced that. But it's profoundly different and more important than that. Because over the last 5 years, we so substantially reduced the discounting in outlets. Because over the last 5 years, the consumer is coming in at higher AURs. Because of the insight we're seeing from the data, the consumer today sees brands, not channels. When they go into Woodbury Common, when they go into Sawgrass, when they go into stores around the world, you know what they want, they want our best product. They want the product that they've seen us market. And you know what they're willing to do, pay full price for it. So we have added this complexity and quite unlocked growth vehicle from our outlet stores. And today, in the last quarter, our collection product, and that's going to be the nomenclature you're going to hear us talk about. It's not going to be retail and outlet product. Our collection product is penetrating at 10% in our outlets. And we're expanding that to digital as well. And this is really key because what we're able to do digitally is now direct traffic to one site and enhance the productivity of our marketing. So when you go to coachoutlet.com, you don't just lead with a discount message. You lead with our purpose and our storytelling. And that's why today, the tab sites look very similar. And come springtime, we'll have a fully integrated cart in North America. This is really powerful. And all of the data that we have seen, the customer, wherever they land and given the full assortment tend to shop up for Coach because they may come there with an idea bag and they may see something even more compelling for them. That's very powerful. So -- where does it start? It starts with our culture and teams. And many of you are familiar with the old paradigm. The old paradigm had 2 spheres of influence. You had a very strong CEO with commercial acumen and you have a very strong creative director with real insight, brilliance, creativity. We have that approach. I think we've demonstrated that. But today, we've shifted the spheres of influence from just 2 to the most important sphere of influence, putting the customer at the center of everything we do. Everyone is focused on this customer. The muse for HR, the muse for procurement, the muse not just for Stuart is the Timeless Gen Z. We all engage in that. That's what brand builders in every seat means. This is what it looks like. We still have the logic and magic. I still drive commercial results. Stuart still drives amazing product creation, but it's not limited to just that. We create an environment where great ideas can thrive, where we look at data. We love the gut of our merchants and our designers. It's important, but it's an informed gut because we look to this model. So what does that lead us to? Well, over the last 5 years, I've worked on some myths that we have heard over the 20 years prior to that. And I want to bring a few of them to light and give you the myth and the reality. Okay. First, myth. If we focus on Gen Z, we risk alienating our core consumers. Truth, in FY '25, we grew across all generations and particularly our Gen Z targeted generation. Myth, this one we hear a lot. So I'm coming -- I'm supporting you Gen Z. Gen Z is fickle and hard to retain. Truth, Gen Z year 1 retention in North America was more than 150 basis points above balance of cohorts. North America has hit its growth ceiling. We're overpenetrated. Well, you already know the answer to this. You saw the TAM, okay, 6% is overpenetrated. The truth is we've been growing in North America over the last 3 years, and we have a lot more growth ahead of us. And then my favorite myth of all, outlets dilute brand equity. Well, with our One Coach strategy, outlets are a channel of distribution, and they don't see it that way. They see the brand. The consumer wants our best product in outlet and 10% penetration of collection product is the beginning. It's not the end point. So what does this look like? We take all of this. We give you an algorithm. And the algorithm is powerful. We are committing to mid-single-digit revenue growth, top line and operating margin expansion over the next 3 years on our way and our path to $10 billion. Now I want to be extremely clear on this point. For me, this is our floor. This is our floor. This is what we are committing to you today given all the uncertainties in the world, and we're going to do -- I plan on looking at even greater opportunities for our future. So what are our building blocks to get there? Well, we have a lot of drivers. First, and it starts with customer acquisitions. Spending 11% on marketing is not just about storytelling. It's about acquiring new customers. That's why we're doing it. That's what's driving. That's the fuel. And then you can't have lifetime value of a customer if they don't repeat. Our customers are repeating. And they're repeating because we keep innovating in our core category of handbags, but then we're giving them so much more. We're giving them bag charms. We're giving them jewelry. We're giving them sneakers. And this is powerful. You know what's fascinating is we have a fantastic bag charm business, really great. And I didn't see the [indiscernible] moving materially even though wait a minute, we're selling a bag and we're selling a charm. And here's the insight we got. The consumer is coming back. They may come day 1 buy the bag. They may come back a week or 2 weeks later to buy the charm. How great is that? We get to interact with them twice in a shorter period and keeping that desire. And then, of course, our wonderful sales associates show them the next bag that they need to wish for. AUR growth. We have AUR growth ahead of us. And we have AUR growth ahead of us with some very simple ways of getting there, less discounting, more collection product and outlet, leaving aside the inherent white space that exists between us and some of the traditional European luxury players. We are going to stay focused on our $200 to $500 price points to make sure we capture this younger consumer. That's the win. That's the opportunity. But even in those price points, we will see AUR grow. And then new store opportunities. Again, probably a smaller number here compared to everything else, but yet powerful because we want to engage with them in multiple places, multiple locations, geographies and the new city growth that we can see in Asia is remarkable. That all leads to a beautiful, sustainable long-term outcome. So -- what do I hope to leave you with? If you have to remember one number from my presentation, remember $10 billion, okay? That is our goal. That is our opportunity. That is something we will achieve, and we will achieve it the right way. We will achieve it from profitable margin and sustainable growth, not just get there to get there. Second, we will continue to build our icons through brand -- through our brand and through new customers. That's the engine that fuels everything. Third, we will win in our 3 largest markets: North America, China and Europe and Middle East. And finally, we have clarity that this floor that we have set for you is very achievable. Thank you very much. And now I let you have a wonderful deserve break, and we'll reengage shortly. Thank you. [Break]

And now please welcome Eva Erdmann, CEO and Brand President, Kate Spade to the stage to begin the second half of our program.

Good morning. I'm Eva Erdmann, CEO and Brand President of Kate Spade. Well, it's been 10 months since I stepped into this brand after more than 2 decades of building brands in the beauty industry for LVMH and L'Oréal. And why? Because I saw something rare. I saw a brand with a massive potential. I saw a brand with a very unique emotional connection with the consumer. But also I saw a market that still hasn't seen the best of it, and I knew we could do better. So here's the truth for you today. We are not talking about fixing a broken brand. Today, we are talking about unlocking an underused asset that millions of consumers already know and like, but don't always choose first today. And you know to say that, I'm not guessing, I'm looking at the data. In the U.S. today, Kate Spade ranks top 5 in unaided brand awareness. So without any doubt, she knows our name. But when you ask her to name the first brand that comes to mind, we are not there. And if you're not there, when she's deciding between 2 or 3 handbag brands, you are invisible at the cash register. Second fact, she considers. Here again, we are ranked top 5 in consideration in the U.S. today, which means that she sees us in her universe. That's phenomenal. But again, at the point of sale, we lose her. She tells us that the offer that she sees is confusing, overwhelming and most importantly, not relevant enough. So that gap between knowing us and buying us is our single biggest growth lever. And that's why becoming top of mind and truly relevant is the unlock. Not with scattershot campaigns, but with disciplined cohesive brand expression with a strong product storytelling and a flawless execution. I'm sure it sounds familiar. Yes, these are exactly the same principles that have fueled the growth at our sister brand Coach. So our focus is crystal clear: build brand heat and relevance to drive acquisition and invest in brand media to put Kate Spade in her first thought. Focus on fueling relevant handbag blockbusters and invest in them over the long term deliver a consumer experience so compelling that all the selection barriers disappear. And we will get there by being consumer-led in every decision we make across the consumer journey, ensuring excellence in execution and of course, practicing financial discipline. And this is how I'm confident that we will see sequential improvement in fiscal '26, especially in the back half and return to profitable growth by '27. Kate Spade has massive potential, and we are going to fully leverage it. So now let's unpack how we're going to make that happen. I've always believed that the transformative journey of a brand starts with the consumer. And today, the younger generation is telling us they're going through a cultural shift. They are earning for connection and enjoyment. But also they are redefining the cause of luxury, looking for innovation and quality at the right pricing. Good news, Kate Spade is perfectly poised for all of that. Remember, 30 years ago, Kate Spade was founded on a pioneering vision and became a cultural phenomenon. Why? Because Kate Spade was talking to a younger generation and offering something that didn't exist in the market, a unique vision of the American [Foreign Language], where with the desire to spark something beautiful in every life moment and offering timeless handbag with function, feminity and a touch of it. So today, we are reigniting that original emotional connection that made Kate Spade distinctive and modernizing it for a new generation of consumers. [Presentation]

So we are leading into our very rich heritage while building relevance for a peer target, the Gen Z connector. And from all the consumer work we have done, we know she has high affinity with Kate. She's genuine. She's caring. She's an expert at bringing people together. Her style is feminine and she puts a lot of effort into looking effortlessly put together. She uses touches of colors to share her approachable personality. And when it comes to handbag, she's looking for something versatile, functional with something a little special. But most importantly, the connector is a sizable segment of the market, 15% of the market, the third biggest segment, a sizable segment of the market with high affinity with Kate. A sizable segment of the market with high affinity with Kate, high awareness and high consideration. That's a huge potential to unlock. And we aim to increase our Gen Z penetration by 60%. And for that, we are concretely embedding her at the center of all we do from products to campaigns, to pricing, to experiences. And we have reset our cultures and ways of working, embracing always on consumer testing. Internally, we call it we test before we invest. To match perfectly her very optimistic personality, our brand territory is an uplifting vision of luxury, where every day becomes a bit more radiant. And we design feminine, functional and versatile handbag with, of course, a touch of it. To become top of mind, we have also revamped our media strategy. And I'm sure you're going to remember that slide in those 3 words, more, longer and better. More because we're going to be increasing brand marketing investment by over 60%. Longer because we're going to move from intermittent spikes to spikes and sustain all year long to increase always on top-of-mind awareness and better with always-on consumer testing and insight optimization. On to our second pillar. We have sharpened our product strategy around 3 principles: driving relevance, focus and importantly, create desire. And for that, we have reinvented our design process. It starts with the consumer and testing at every stage with our Gen Z connector. Then every idea is filtered through the lens of our uplifting luxury territory. We bring the Kate Spade kit. We are uncompromising on design relevance with focus on what brings value to our Gen Z connector. And finally, we test again before we invest with our Gen Z connector. So this closed loop of innovation doesn't just deliver handbags that are desirable and distinctive. It ensures they are the right product, relevant validated and commercially scalable. We are doubling down on those blockbusters over time with amplified resources and investment marketing and also to make sure that they're going to cut through and be seen, we are streamlining our assortment, reducing size by 40%. We are also simplifying our lifestyle categories, consolidating them into one Kate across channels. This discipline ensures that every product we put forward has the scale, the visibility and the longevity to become a true icon. And building that relevance in our product is one of the steps to become desire-driven versus discount driven along a compelling pricing structure, making sure we get the right price upfront to increase full price selling and recruitment, a higher percent value, offering the functionality, the versatility she cares about and of course, a promotional pullback. All of this will help us grow AUR and gross margin over time. And here is a preview of how product is coming together. [Presentation]

On to our third pillar. Excellence in execution is a nonnegotiable. This is how we eliminate all barriers of this election. And it starts with one cohesive voice from paid media to organic social, from site to stores across mainline and outlet, we now deliver one consistent and relevant brand message. And we have 1 journey to our processes to make sure we can deliver an uncompromising 360 consistent consumer journey. It also requires excellence in the experience we are building for the consumer because cohesion only matters if the experience matches. So that's why we are revamping our website, optimizing our stores, with a clear target to lift NPS and increasing productivity. And finally, of course, meeting the consumer where they are. We are evolving our fleet, closing nonprofitable doors opening new Gen Z relevance locations by '28 to make sure we are where our consumer lives, shops and plays. Finally, of course. Our financial discipline is the backbone of this transformative journey to become durable profitable growth. Our investment areas are precise reflection of our strategic focus, increase brand investment to accelerate relevancy and acquisition, distorting investment in North America first, to improve trends by '26 and driving blockbuster styles with higher AUR and gross margin, investing in their inventory while cutting the long tail. So over the next 3 years, our objective and commitment are to deliver profitable growth starting from fiscal '27. We are informed by the journey of Coach. And that's why we know that our turnaround path will have 3 phases. We will streamline in '26, invest in the brand for the long term while maintaining financial discipline. In this phase, we are expecting modest operating loss with sequential improvement of the top line in the back half. We will be solidifying in fiscal '27, strengthening our healthy and streamlined foundation and returning to profitability and low single-digit growth. And in '28, we will shift to scale, accelerating growth and operating margin. But we won't wait for those lagging indicators to tell us how we are doing. We are managing ahead of the curve, adjusting in real time as we learn. The brand turnaround, we shop first in these leading indicators, improving step by step alongside the consumer journey. So step one. First, we both get on the consumers' mind and state up of mind. So here, we're going to be tracking consideration lift from campaigns and unaided brand awareness. Step two, we focus on moving from interest to intent. Here, we measure such intensity and traffic growth. And step three, success in awareness and consideration naturally converts to acquisition and sales growth. So this disciplined focus on leading indicators, gives us the ability to course correct early, accelerate what works and build momentum towards sustainable sales growth. We all know that turnarounds take time. But we also know how to make that happen. We have learned a lot from Coach playbook. And we have the Tapestry brand building growth capabilities. So I'm confident. I'm very confident in the path forward because we are consumer-led. She is embedded in every decision we make. We are focused, winning in North America with handbag blockbusters is our top priority. Because we are investing more than ever in brand building to build for the long term because we are agile. The tracking leading KPIs allow us to act quickly. And also, we are reinforced with new talents and resources to build for growth. So in short, we are not just turning Kate Spade around. We are reigniting it for the long term with consumers at the center, investment behind the brand and a strategy to build icons, setting the stage for long-term profitable growth. So yes, we know where we are today. And we know the work we have to do and the time it takes. But as the CEO of this brand, let me tell you this with conviction, we know exactly where we are going and how to get there. Thank you for your attention. And now it's my pleasure to welcome on stage Peter Charles, Chief Supply Chain Officer. Thank you very much.

Good morning, everybody, and it's such a pleasure to be with you today. And for those that haven't had the opportunity to meet me, my name is Peter Charles. I'm Chief Supply Chain Officer here at Tapestry, I've worked for the company for the last 9 years. I've been practitioning supply chain for more than 9 years. And it's an absolute pleasure and privilege to be here today to talk to you. Three things I'm going to share with you today. First of all, I'm going to talk a little bit about something that I'm passionate about, which is Tapestry supply chain. First of all, what we've built. Secondly, how we've navigated through what have been absolutely unprecedented challenges over the last few years. And thirdly, most importantly, I'm going to talk a little bit about where we're going in the future and what we're focused on. So let's talk a little bit about craftsmanship. You've heard from Joanne and you heard from Todd in their presentations, and they referenced the word craftsmanship. Tapestry supply chain, we talk a lot about craftsmanship at scale because in essence, that's really what we deliver to our consumers. And that craftsmanship at scale is built on the foundation of 3 fundamental pillars. First of all, it's built on the pillars of our internal talent. The internal talent and institutional knowledge that we have built up over many, many years here at Tapestry. Secondly, it's built on our manufacturing DNA. Coach started life in 1941 as a domestic manufacturing company. And those threads run all the way through our business and through our teams today over 80 years later. And thirdly, it is built on the foundation of the relationships that we have built with our strategic partners around the world that have been developed and built over 30 years. So consistently delivering craftsmanship at scale. Every single one of our leather goods are made by hand, handcrafted. On average, each of our bags takes over 3 hours of work content to produce. Think about that, 3 hours of individual work content that goes into each of our leather goods. Each of our bags have on average over 35 cut pieces that go into the construction and the engineering of that product. But it's not just the craftsmanship that separates Tapestry. It's the ability to deliver that at scale that is really the competitive advantage that we have. And here's 4 data points that illustrate that. First of all, 50 million units of leather goods production a year, produced by over 60,000 artisans working in our service providers and in our factories around the world that are touching that product every single day. They're made in 45 individual manufacturing facilities in 11 different countries. And then finally, distributed to our customers and our consumers within 20 fulfillment points of distribution around the world, 2 of which we own here in the United States, in Jacksonville, Florida and in North Las Vegas. So what are the results of craftsmanship at scale? If you take nothing from my presentation today, these 2 facts are things that I would like you to leave with you today. First of all, we deliver and execute product excellence and an outstanding value for money proposition that's unparalleled in the industry. It has led Coach to be ranked in a recent survey #1 in terms of value proposition for the consumer. And in tandem with that, we've also delivered AUC reductions that has delivered over 200 basis points of gross margin expansion over the last 3 years. Doing one of those things is really impressive. Doing both of those things together is really impressive. And we've delivered that by not cheating on the product, by not cheapening the product, we've done it by maintaining an outstanding quality and execution across our supply chain. So how have we done this? This is the product creation process, 5 simple steps. It looks really easy, right? Behind this are hundreds of processes that our supply chain organization manages, drives and controls at every single stage of the product creation life cycle, from an ideation all the way through to the production phase. Long ago, Tapestry gave up being a domestic manufacturing company. But the manufacturing DNA and philosophy that we learn through that functional capability drives this entire process. With our teams around the world, we touch every single stage of this process, and we add value. We have our own internal sample facilities. You'll see after the Q&A today, on the ninth floor here our Craftsman shop here in Hudson Yards. We cut our own patents. We make our own samples. We have teams of people that understand not how to talk about leather, but actually understand how to make leather. We test our own product in our own laboratories. We have our own engineering standards in which why we create our product, and those engineering standards are the standards that our manufacturers produce the product to in 41 facilities in 11 different countries. And it is this product life cycle. And it is this craftsmanship at scale model that delivers outstanding quality delivered to consumers on time, at a value-for-money proposition that's unparalleled in the industry. You've heard a lot on many earnings calls from Joanne and Scott about our diversified supply chain. This has been decades in the making. And this strategy has been intentional and it's been strategic. It has not been in response to the recent challenges we've seen in the market. This has been an intentional drive to create resiliency and agility over a long period of time. 20 years ago, 95% of our product was made in Mainland China. 10 years ago, 35% of our product was made in Mainland China. Today, less than 6% of our product is made in China, and we've built out this supply chain into multiple countries. And that has been done in the partnership and with the partnership of our suppliers, not just Tier 1 suppliers in the finished goods space, but we have built an ecosystem of a supply base from raw material suppliers to finished goods suppliers that is the envy of the industry. This has created a resiliency and agility that has allowed us to navigate through the last several years of unprecedented challenges. It has also been done around product capability. When we think about building this, we think about 4 Cs. We think about capability, we think about capacity, we think about cost, and we think about compliance. And of those 4 Cs, the first C that we think about is capability. We don't just chase lowest-cost denominator product. We drive value to consumers, and we always think through the lens of security of supply, and delivering outstanding quality to our consumers. Several years ago, most people didn't really understand what supply chain actually did. That has changed, and it's changed forever. The reality is we are living in a complicated macro geopolitical environment, and we don't think that's going to slow down. And what we have been able to do is not just survive during this period, but actually thrive. And as Joanne said in her opening remarks, we have used these challenges to transform our capabilities across our business and supply chain is no exception to that. We have built intentional competitive advantages and capabilities that have been built over many, many years. I've talked to you about a couple of those already. One is our scale. And the other one is around our diversified footprint. But I want to draw attention to 2 others. What is our internal talent. We have the best-in-class supply chain in the industry. Joanne talks about the best teams in retail, I believe, and we believe we have the best team in supply chain. It is a point of real differentiation for our business. And secondly, the suppliers and the relationships that we have built over decades through good business conditions and bad business conditions. These are partnerships that have survived over time, we communicate constantly with those suppliers, and we've built true inextricably linked strategic partnerships that have helped us and continue to help us. And then the other capability that I'd like to also talk about is technology and data. You've heard a lot this morning about the way in which we've used data and technology and analytics to mine data with our D2C business model. We are continuing to lean in on supply chain, around data and technology. No human being today can optimize supply chain. They're too complicated. We have to lean into this, and we are, and you'll see some of that capability in the Craftsman workshop later after the Q&A. But as Joanne likes to say, we're just getting started. And what are we focusing on? We're not just looking around corners in supply chain. We're looking at over the horizon. I say to my team all the time. In supply chain, you have to manage forward 6 months, you have to plan 3 years out. And you have to pull the concrete to build the foundations on which you can build your business and grow our brands. and that is what we are doing. Three key areas around that today. First of all, product innovation. Product has always and will always be at the absolute center of our business. We do not sell supply chain to consumers. We sell great product to consumers and outstanding value. And we are continuing to collaborate and work with our design and merchandising partners to develop techniques, product capability, and particularly thinking about next-generation to supply sustainable materials that will delight consumers and drive towards our decarbonization goals. Secondly, as I've mentioned, AI and analytics. It's not a shiny object for us. It's something we believe in, and we're going to double down on it. From digital product creation, which you'll see later after the Q&A today and the technology we're implying to help us create product to the ways we're looking at streamlining our planning and operational processes and the use of data and technology is going to be a central plank of a 3-year ambition. And then finally, leveraging automation and robotics in the 4 walls of our own distribution centers in North America, not only to streamline processes, reduce costs, but also deliver on the evolving needs of our consumers. So in conclusion, 4 key takeaways I'd like to leave you with today. Number one, craftsmanship at scale. It's a proven model. It works and our teams around the world are adding value at every single touch point in that process. Secondly, resilience. We have a proven track record with a diversified footprint of security of supply and delivering outstanding product quality. Thirdly, we add value. Gross margin expansion in an inflationary environment, really difficult to do, we have done it. And then finally, we believe that we're uniquely positioned to take advantage of technology as we think about the future and we think about supporting the growth ambitions that you've heard here today for our brands and for our business. And with that, I'm going to turn it over to Scott Roe, my friend and partner, our COO and CFO and somebody who I don't think he needs any introduction to this group. And with that, thank you for your attention and your time, and I'll hand it over to Scott. Thank you so much.

Love that music. My goodness, my goodness. If I were an influencer, that's what you'd listen to. But I'm not. So thank you, Peter. You know what, it's great to get a peek for you, all to get a peek behind the curtain. And I'm so happy. You got to see what Peter is up to, and please do come over around the corner of those of you in the room into the workshop and see what craftsmanship at scale really looks like. I think it will blow your mind. It's pretty cool stuff. So I am so glad to be here, and thank you for your attention in our story. I think it's a pretty compelling story. I guess you'll be the judge. You've seen a lot about our strategies. You've seen the building blocks of growth from our great brand leaders. You've seen craftsmanship at scale. And now we're going to bring it all home, right? We're going to talk about the so what does all this mean financially? So let's dive in. I'm going to talk about 4 things. First of all, we're going to take a little bit of a tour backwards. We're going to talk about -- it's almost 3 years almost to the day that we were here talking to you about future speeds. So we'll do a little tail of the tape. We'll talk about what's happened over the last 3 years financially at the Tapestry level. Then we're going to talk about the categories in which we play, and I think this is what I would call structural advantages of our business. These are things that I think are differentiators. And we'll dive into a little bit about what that means. Next, we'll talk about a compounding financial model. You expect me to talk about that, right? This is, I think, a competitive advantage of ours because we prepared for this moment, and we're ready to take advantage of the great opportunities that we have in these great brands. And finally, we generate a lot of cash, a whole lot of cash. Now we're going to talk about what we're going to do with that cash and how do we make those decisions and what are the priorities from a capital allocation standpoint. So let's go, right? Track record, how we've done over the last 3 years? Well, you saw this earlier from Joanne's presentation, we have found a new gear of growth and the acceleration most recently in the last year, really led by Coach has led us over this 3-year period to a 10% top line compounded annual growth rate, right, 10%. So this is a business that grew in the low single digits for a long period of time. And over the last 3 years, we found that new geared growth. And we've invested heavily into our business, right? We've essentially tripled our marketing investment. We've invested in foundational capabilities around data, AI and technology. We've invested in our stores. Even with that, we've got almost 2 full turns in the operating margin, 180 basis points expansion in operating margin and EPS of almost 50%. Remember, we returned a lot of cash. In future speed, we talked about $3 billion return of cash to shareholders and that's through dividends and significant repurchases. So what do you all think? I guess you liked it, right? So we're up 47%. Compounded annual return over this period. That's double the S&P 500 and almost 15x the retail index of our peer companies. So here's the best part of the slide from my perspective. I appreciate the recognition of what I think is a unique and differentiated model, but we're just getting started, right? And for the rest of this presentation, let's talk about what amplifying upon the strong base of future speed looks like. I mentioned attractive categories where we play. One of the things I like to remind ourselves and our management team is what are the most important decisions that you can make as a business leader is where to play. Because the difference between tailwinds and headwinds is significant. And we are really fortunate because we play in some very attractive categories. Let's break that down. I'll start with where Sandeep left off, which is we have opened the aperture. And we're talking to a much larger audience than maybe has traditionally been done here or I would argue with some of our peer set. So while many are talking to millions of consumers, we're talking to billions of consumers, right, almost $2 billion that's an order of magnitude, I think, 11x the size of the potential customer base. So why is that important? We're not going to grow through just trading share. In fact, some have said, well, you're just benefiting from a trade down. That math doesn't work. There's not enough units, right? There's not enough consumers. But we've opened this aperture and we're looking at a much broader audience. And that gives us -- that's one of the reasons we have great confidence in our ability to grow. So let's talk about our core categories. Right this chart works, the bottom, the yellow is leather goods, handbags and small leather goods and the top is footwear, that's over an extended period of time. You can see that these categories are resilient. They've grown at a mid-single-digit rate since the millennial, right, since the turn of the century. And think about what's happened during that period of time, right? We had a recession. We've had COVID, we've had so many disruptions at a macro level. And yet these categories continue to be durable. Let's talk about the biggest category, about 80% of our business, handbags and leather goods. This is also a unique category for another reason. It's both utilitarian, people need to carry their stuff, right? You want to have something that will functionally work, but it's also emotional, sometimes kind of irrationally so at a time like COVID, when there -- people weren't even leaving their house, they were buying handbags, right? Because there is something that buying that handbag says about them as a person you heard our brand leaders, you heard Sandeep talk about that. That's one of the reasons we love this category. Oh, by the way, it's high margin, too. And let's talk about footwear, also resilient, right? You've seen that this has been a large and growing category. And for us, that's mostly sneakers is the sweet spot of that. We like this also for a couple of other reasons. Not only is it a great growing category, but the frequency of purchase is significantly higher. So these are more opportunities or touch points for us to talk to our consumers and interact with them. Also that target, remember Gen Z, the younger consumer, they love this category, and they're very attached to it. So when you look at how do we access and find more ways to acquire consumers, this is one of the vehicles with which we can acquire those new consumers. So this is a chart that depicts what we've said in words many times, I've said it, Joanne said it, Todd said it. We like our position from a value standpoint. We deliver superior products that are innovative at a price point that is accessible for many. So remember, if we're going to talk to billions of people, that served market has to have a price point, which is accessible to them. And the great news is we have that. We're bringing superior product at a compelling price. Now remember, emotion innovation are the primary drivers, not price, but a deselection barrier can be, if something is out of people's ability to purchase it, they're not going to be able to buy it. So we love this positioning, right? We love this positioning. So let's talk about the way this chart works. Over the last 5 years, through the acceleration program, you've heard us, it's been off-quoted that we've increased our AURs for some categories and brands more than 50%. That can sound like you're out of room, right? How much more is there? That's a frequent question from all of you. But if you zoom out a couple of clicks and you look at this over a broader perspective over a longer horizon, this one goes back to 2009, you'll see that we're just now getting back. Even with those big AUR, increases. We're just getting back roughly to where we were 15 years ago or so, right? And that's during a time when the top, say, traditional European luxury has consistently taking price up every year. So whereas we had a gap between a similar bag from Coach and European luxury in 15 years ago, that was 2 to 3x in terms of the gap. Today, that's more like 5 to 10. So 2 to 10. It's never been wider. So let me tell you what that means and what that doesn't mean. What that means is when Eva and Todd talked about the sustainability of our AUR growth, you can believe it, right? That price value has never been more compelling. On the other hand, what it doesn't mean it's that we're going to close the gap, right? We're not telling you that we can get all the way there, but we are telling you that we like our positioning, and we think that's something that we're going to guard very carefully. Okay. So we've prepared for this moment, right? We've done a lot of hard work to establish a financial model that is a flywheel. It's reinforcing. So let's go back 3 years ago, and we talked about the fact that we weren't chasing sales. We were focused on growing high-quality sales. And for a while, you didn't see the top line move. I remember these conversations for many of you people out here in the audience. But what we did was we increased our gross margins. We saw new customer acquisitions that were increasing, and it took a while for us to see the acceleration in the top line. But we set the foundation based on strong fundamentals. Now as we're seeing this new year of growth as we're seeing this acceleration in the top line, you marry that acceleration in the top line with strong operational discipline and the ability to grow our margins and drive efficiency through the model. That allows us to do 2 things. Number one, to reinvest back in that growth for the future. We're continuing to invest in this long-range plan that we've just laid out and things like marketing and things like capabilities, technology, AI, et cetera. But it also means we can deliver superior earnings and cash returns at the same time. So that's the flywheel, right? Focus on quality sales, invest back into those sales while delivering superior returns and that flywheel keeps coming. That's one of the things that gives us confidence in the durability of this growth is all the levers that we have and the ability to continue to invest in our business while still giving you the returns that we laid out. So here it is. You've seen it in pieces. Maybe you've seen it all, I guess, by now, but here's the famous model. Hopefully, at the break, you got your muffin. Here's the model, right? It was an organic muffin by the way, did you notice that? Here's the model, right? It was an organic muffin, by the way. Did you notice that? Did you notice that? Actually, the lawyers told me I can't say that because that actually is not organic. So don't hold me to that. But you know our '26 guidance. So I'm really focused on the ongoing and durable algorithm, '27, '28 and beyond, right? So we found that new gear of growth, as I said, mid-single digits on a sustainable basis -- that's with reinvesting -- remember the flywheel, reinvesting back in the business and continuing to expand what we would say are superior margins. So over twofold turns, plus 22% plus from an operating margin standpoint and EPS at low double digits. That's the algorithm going forward. So as it relates to the growth portion of this, let's break that down in a little more detail. So here it is by brand. You saw all these pieces already. So mid-single digits at the Tapestry level led by Coach, which Todd unpacked, and then we're inflecting the growth at Kate Spade. This is a breakdown by category. Remember, we talked about the durability of our primary categories. 80% -- more than 80% of our growth is coming from our core handbags and leather goods. That's great news, right? Our core is strong. We're focused on maintaining the core. And again, oh, by the way, really good margin structure, and we're pretty good at it from a supply chain standpoint. The other biggest category, the second, as I said earlier, is footwear, and that's with a particular focus on the sneakers within footwear. And by channel, we are and will continue to be a D2C business. We are pretty good operators in retail. In fact, as I came into this organization, one thing that really impressed me and frankly, blew me away was the quality of our retail associates and the experience that we deliver for our consumers in store. It is truly exceptional. Hopefully, you'll go downstairs and experience that to some degree if you haven't recently. That's always been a core and a differentiator of us -- of our business. And that, coupled with our digital business, which is sizable, about 1/3 of the business online is the majority of our go-to-market breakdown. So why else do we love that? Because we own the experience. We know that our consumers -- you heard this from the brand presentations. We know that our consumers want to be in physical stores -- they want to be online. They want to interact with us, and we love to have them there. We're going to follow them wherever they want to go. The other thing we like about it is we own the data. So we get real-time first-party data based on those interactions. And that goes -- the consumer is at the center of everything we do. So these feedback loops are really critical for us to understand where we get it right, where we get it wrong, and we do get it wrong. But if we get it wrong, we can react more quickly and mitigate it. And where we get it right and we see those signals, we can lean in and chase those opportunities. This is a differentiator for us. Sandeep outlined and Todd and Eva underscored some of the international opportunities. So I won't unpack that in detail, but I will say this. So North America is and will continue to be the bedrock of our business. We're growing in North America. We're very optimistic about our North American business, but it's also the one we've been in the longest, right? We have the most penetration. And when we look at Europe, goodness, we're getting -- just getting started. It's only 6% of our business with a strong U.K. footprint and an extension into France and the rest of the continent is ours to expand. And then when we look at Asia, we have broad-based growth opportunities across Asia. They're anchored by China. And again, when you think about our positioning, the brand momentum that we have and the rising middle class in China, we are perfectly positioned to continue to grow significantly in that region. So you can't have a presentation with me without talking about margins. It's a particular I think, strength of this business model. So let me just unpack in this waterfall a little bit how we intend to have 2 full turns plus of margin from an operating margin standpoint. First of all, it's underpinned by continued expansion in gross margin. So what gives us that confidence? Well, a couple of things. We talked about AUR. Hopefully, you now see that we have the emotional connection, the investment and the price value relationship that will allow us to continue to take AUR gains or increases over time. We also have a structural advantage. 75% of our business or of our growth is going to come outside of the U.S. That's good for us from both a gross margin and an operating margin standpoint. That's a mix benefit, right? That's structural. And that's going to continue based on the growth profile that we see. And lastly, Peter just talked about AUC, our ability to effectively manage the supply chain. And this is not taking money out of somebody's pocket and putting into ours. That's not sustainable. This is working smarter and disintermediating the supply chain because we grew up as makers, right? We understand it end-to-end. And by us taking active roles and working smarter across that supply chain, we continue to find opportunities to bring efficiency and reduce cost, never compromising quality, never compromising our innovation. So we believe that our gross margin expansion is durable and sustainable. And that underpins a lot of the model, if you will. We've also worked hard to find efficiency across our expense base and make sure that we're focused on the things that are difference making, those platform capabilities that give us alpha value, right, that will help us be a little bit better than our competition. And those things we've talked quite a bit about, right, in terms of insights, understanding the consumer and marketing. And we're going to continue to invest in marketing, over 200 basis points in marketing. So leverage in the rest of SG&A, increased marketing expense allows that gross margin to fall through and expand our operating margin. The other thing I would say is we've created a more variable cost basis. So by putting so much money in marketing, by putting diligence around our store fleet, our average lease term is 4 years. We have a lot. 2/3 of our fleet is variable rent. All these things also give us protection in the event of a downturn, but mostly give us confidence in our ability to keep that durable growth on the top side -- on the top line. So tariffs, anybody want to talk about tariffs? It seems like the topic du jour. So as you know, from our last earnings call, we had a significant impact from the tariffs. And I want to unpack this just a little bit. So first of all, even with the significant increase in cost due to tariffs, we're growing our operating margin this year, and that's based on the outlook that we've already given that we just affirmed this morning. And we have great confidence in our ability to grow both gross margins and operating margins in '27 and beyond. Now some of you have said, well, gosh, why not earlier? And of course, we could take more price early, right? We have brand heat. We have momentum. There are options available, but just because we can do that doesn't mean that we should. And when Todd and Eva are looking so intently at their consumer and understanding that we apply elasticity models using AI to really understand that price value relationship, we've taken a fairly nontraditional or maybe even you can say, controversial point of view as it relates to pricing. We don't think about it as cost plus. We didn't work backwards to say how much price do we need? Well, of course, we know what that number is, but we didn't say, well, that's the price. We're looking at the value that the consumer sees and we're very protective of that because we believe that positioning and that trust that our consumer has is one of the reasons we can speak to billions of people, not just millions of people. So can we do more? Let's see, right? The consumer will lead us. They decide, by the way, not us. They decide what they're willing to pay, but we're going to be very protective of that. But what you should take away from this is we have great confidence that we will return to both gross and operating margin growth as we look at '27 and beyond. And we'll be opportunistic in the meantime based on what we can see the consumer is willing to go with us and where they perceive their value. So we're going to grow the top line. We've got operational discipline and the ability to transfer that into earnings. That also means we can translate that into cash flow. I'm just going to leave this number up here for a minute, $4 billion. So we talked 3 years ago about $3 billion, right? And we delivered, right? We delivered upon that. And now based on the higher level of growth, the maturity of the model, increasing margins, we see $4 billion of cash generation over the next 3 years based on the algorithm we just laid out. That's a big number. So what are we going to do with it? What are our allocation priorities? How do we deploy that $4 billion? Here's the great news. Our priorities are completely unchanged. These are the same priorities that we've been talking about now for a number of quarters, right, since our pivot to an organic model. And let me just unpack them here. So first of all, we're always going to make the first bite of the apple a reinvestment in our brands. We have momentum. We want to continue that momentum and feed it. That starts with Coach. That includes the Kate opportunities that we see, and that's our #1 priority. We also believe in the dividend, and I'll give you a little more about that, but we believe that the dividend is an important part of the equation, and we will continue to grow the dividend at least with earnings. And lastly, we have a lot -- even exhausting those first 2 priorities, we still have a lot of cash. So you saw in our press release, $3 billion authorization from our Board of Directors for share repurchases over this -- well, I guess it's not time bound, but we have a $3 billion authorization from our Board of Directors. Now let me talk about the fourth priority, right, strategic portfolio management, code for M&A. Once again, our priorities are unchanged. We established bright lines with which we won't cross. One of those is return to profitable and sustainable growth in Kate Spade. And the second bright line is the continued profitable growth at Coach. -- that's a hard red line, right? So while we believe in the future, there is an opportunity to grow this platform because of the capabilities that this plan is really focused on our organic business, right? And the way I would characterize that is as it relates to M&A, not no, but not now, right? This is an organic plan. Okay. So CapEx, the reinvestment back in the business, where is that going to go? Well, remember, our consumers love our stores. So 70% of our CapEx, which we're planning 2.5% to 3.5% of sales for CapEx 70% of that is going to go into stores. Now that's some store openings. That's obviously the normal refurbishment of the stores that takes place. The store openings will be predominantly Coach. We are opening stores in North America. By numbers, there will be more outside of the U.S. than inside. And just to double down on one thing that Todd said, not all stores are created equal. So I know many of you are trying to model this. These will generally be different formats, smaller formats. And if you want to do the math, this should account for a little less than 1% of sales over this 3-year period based on our estimates of the new store growth. The other 30% is mostly in the technology area. Now one of the things I love to point out when we talk about technology is a lot of the unsexy money, a lot of the tech debt is behind us, right? We're on one instance of ERP on the cloud. We have a patented data management system, a data platform, which is patented and allows us to take advantage of more sophisticated technologies like machine learning and AI. I hear a lot of people say, gosh, companies are making huge investments in AI, and there's no payback. Here's the good news. Actually, AI for us is more of a cultural issue than a money issue. The hard work has been done. We are investing in AI, and we have ample opportunity to continue to invest in AI. But we don't look at AI as a destination. We are focused on business outcomes. And the question always from Yang, who's in the audience here, who runs this for us is not how do we use AI, it's how do we achieve this outcome? And oh, is AI an enabler, right? And the interesting thing or the great news from my perspective is there are multiple use cases where we are getting better, smarter, faster by using technology, and that's only possible because of the hard work that's been done in the preparation for this moment. So let's talk about cash returns, right, something near and dear to your heart. So the dividend, I mentioned that we believe in the dividend. We intend to grow it at least with earnings. And we have a targeted payout ratio of about 30%, right? So the dividend is one key part. But when you do that math and think about it, we still have a significant amount available for share repurchases. So again, to reiterate, the Board has authorized a $3 billion share repurchase authorization. That means that 100% of that $4 billion that we talked about is coming to you, the shareholder through dividends and through share repurchases. Again, as an organic plan, we have the cash, we're going to return it back to you. So how do we make these decisions? Well, you saw the 4 lenses before. It's this -- it hasn't changed, right? We have the same criteria. As I said before, strategically, how to play -- where to play and how to win, really important decisions, great news. We like -- we really like where we play from a category and a brand standpoint. We're investing in those capabilities, which we think are leverageable and give us a discernible and meaningful point of difference over time. This is where we hope to create that alpha value based on those capabilities that Tapestry uniquely employs. We have a financial lens on all big decisions around capital, right? What's accretive from a TSR standpoint, and we have the rigor to do that. On the other hand, we're going to risk adjust that, right? We're going to take the execution risk and adjust all of those options as we think about how to deploy capital. So we have some rating agencies in the room. And I want you to know that we have -- we believe and strongly defend our investment-grade rating. Our balance sheet is in great shape. You'll notice that we define investment grade as less than 2.5x gross debt to EBITDA over a long period of time. We're about a full turn below that. You know what, that's okay. In this uncertain environment, in the macro conditions that we're at, we're okay with a little less leverage in this environment. We like where we are. It's not a presentation without a TSR waterfall from me, right? I've had a number of you pick me off in the hallway and ask, are we going to see the waterfall? Yes, you are going to see the waterfall. Here is the waterfall. So it's pretty intuitive, I think. We got mid-single-digit growth from a revenue standpoint. Again, remember, we're going to invest heavily back in the business and invest in our future growth, but still deliver 200 basis points of margin expansion. And then that $3 billion of cash returned to you via share repurchases is another 5%. Dividend yield, I'm making the assumption it's around 2%. And all that gets you to a low teens TSR delivery, roughly tough twice the expectation of the market according to BCG. So what's notable that's not here is any change in the PE. That's obviously your decision, right? You guys will determine what happens to our multiple. But I'd tell you what we believe and what I believe personally, I believe the intrinsic value, and we've done the math, the intrinsic value of this plan is significantly above where we trade today. And as a result, we're putting our money where our mouth is. We're investing -- we have an authorization for $3 billion worth of share repurchases, investing in ourselves. We're investing in Tapestry. And we think that's -- as we look at the cascade of choices against that 4-lens framework, we believe that's one of the best investments that we can make. I hope you agree. So in summary, we stood here 3 years ago. And I would say we gave you a plan, which was based on a lot of understanding of the consumer. It was based on the strategies that we had laid out, but it was a hypothesis. It was an educated guess, right? There was a lot of work that needed to be done. As we stand here today, we now know and have more conviction that these brand-building principles work when we apply them correctly. And the evidence is out there empirically, right? You look at what's happened at Coach. You look at what we're deploying at Kate Spade. We know that these are proven brand-building principles. And that gives us even more conviction on the durability of our growth on a long-term basis. So I'd ask you to remember 3 things. as we conclude here. Number one, we found a new year of growth. This business has moved from low single-digits to mid-single-digits on a sustainable, durable basis in the long term, and we have aspirations for even more. Second, I would say the operational discipline that you've come to know in this organization is still intact. So think what happens when you put a little bit more growth against that discipline and the strong margin profile that we have. You get earnings and you get cash flow. And the last thing is $4 billion, right? $4 billion, 100% of which is returned to you, the investor, via dividends and share repurchases. I think it's a compelling story. I hope you agree. I thank you for your attention and your time. We're going to Q&A.

Good morning. I'm Christina Colone, and I have the privilege of leading Investor Relations here at Tapestry. I'm pleased to be here with you to lead the Q&A. If you have a question, please indicate with your hand. I will call on you and someone will bring around a mic. Please introduce yourself and your firm. I also have the ability to take questions from the webcast. So let's dive in. Ike, why don't we start with you here in the back?

Ike Boruchow, Wells Fargo. I think I'm going to focus on a multipart question for Todd. We all kind of understand the Coach momentum today. I think it might be helpful given some context. Just historically, maybe just what wasn't working in the 10 years prior to the inflection, just -- and kind of to that point, what are the largest changes you've noticed behind Coach brand from then to today? And really, when did you see the inflection coming?

Right. It's a powerful question, and we could probably use up most of the Q&A on that. So I'll try to be a little more precise. I joke a little bit, we're an overnight success story 5 years in the making. And it really has been this 5 years. And something I think I said in the video, it was incremental. It's progress and progress a little bit. And you do something when -- I remember when we first launched our first purpose campaign, and you know what happened for the first 3 months, nothing. And it took a while to kick in. But when I look -- and I think about this a lot because I was here during the -- maybe the tail end of one of the great chapters of Coach and then maybe a low period. And I think it comes down to just a couple of key things. First, humility. I think we absolutely lack humility. We were winning. We had won for a very long time. And when you don't have humility, you immediately think you have all the right answers. You don't -- you're not curious, something that Joanne and I talk about a lot, staying curious is powerful. We had a comp mentality, comp the comp, comp the comp. When you get into that vicious cycle, you do dumb things. And we did a lot of dumb things. We also were such a closed-loop system, whether it was our sales vehicles, we didn't think about acquiring a new customer. That was really one of the most powerful things that we did not do. We talked about market share. We talked about TAM, but we didn't open the aperture that you're seeing us do today, which then led to -- we had a very efficient P&L, but efficiency at what cost. We spent 3% on marketing. We didn't acquire a new customer. And so with that efficiency, with that comp mentality, with that protectionism, it led to bad results. I think with starting with the acceleration program that we launched 5 years ago, starting with a different mindset, curiosity, humility, we unlocked where we are today. And I think those ways of working are now amplified and there -- not only will we do it, but you heard from Eva, you'll see it at Kate as well.

Thank you, Michael.

Michael Binetti with Evercore. Maybe just Joanne, what are some of the key inputs to drive retention and AUR progression over the 3 years in the plan with the new consumer, the Gen Z that you focused on so much today. When you think about evolving the loyalty programs, the CRM, some of the experiential retail and refining the marketing to deepen the lifetime value that you guys -- I know are focused on more behind the scenes. And then maybe a second one for Scott. At a high level, if we exclude tariffs, I think the guidance is for about 260 basis points of EBIT margin expansion this year. So really good if we exclude tariffs, which -- and that's on low single-digit revenue growth after this year, it looks like we get 80, 85 basis points on mid-single-digit revenue growth. Is that some harvesting of cost opportunity this year to help get through tariff? Or is there something different in the interchange as we get out to fiscal '27 and '28 that we should think about?

Joanne, why don't you start?

Sure. I'll kick it off. On your question about customer acquisition and driving our growth, I think it is important to talk about the fundamental capability that we're building is this curiosity and listening to our customer and understanding them, really understanding them deeply. And that is what we translate that we take those insights and translate them into action. And I said a couple of times in the presentation earlier that that's where we see the payoff. So we've worked over the last 5 years to embed the capability to take an insight and have it lead to an action in our business, whether that be a different place where we're marketing and putting our brand content -- if we're going to put it on YouTube, what is the content that the customer is expecting to see on that channel versus Instagram or TikTok or Dalion or any of the other myriad of platforms that the customer is moving to. So first, we have to stay close to our customer because they're not staying in one place for long. So it's the embedded disciplines of listening to the customer and taking an action. And it's interesting you mentioned loyalty programs. Our focus is on capturing a new consumer at point of market entry. And as Sandeep said in his presentation, we talk about it all the time in our business. We have to make sure they have a great first date, where we're not going to get a second date. It doesn't matter if we have somebody signed up for a loyalty program and we hit them over the head with 16 e-mails to say you've got 10 points, please come back. We need to make that experience terrific. And we do that at every touch point. It's really in our marketing. It's our brand building and storytelling. It's the incredible innovation and creativity. We're bringing behind those insights. Todd talked about this gut and merchant instinct is important, but it's informed, right? The creativity here is, I think, unparalleled, but it's informed creativity. So we're bringing really relevant product and experiences forward. So that's how we're maintaining. And we've seen as we invest in marketing, so that's the other real trigger for driving our growth. We're investing in the opportunity to reach these customers where they are with a new level of investment that allows us to sustain our campaign messages, our purpose messages so that we stay top of mind. And that, as you heard from Todd, we launched our first campaign, nothing happened. But we -- the important thing was that we didn't stop there. We continue to invest to sustain the message so that we cut through to our target consumer and remain top of mind. And then pretty soon, the customer starts telling our story for us. I can toss it to Sandeep. We could go on and on and build on this.

If you don't mind, I'll just add one thing. I mean, I did talk about the strategies that drive acquisition, also other strategies that drive retention. I'm going to make 3 key points on this. First, the reason people come back to buy us is brand heat, right, which is also the reason they buy us for the first time. So maintaining that brand heat is important. Second reason they come back is because they had a great experience first time they did. And third reason they come back is they love the product when they wear it on that. So I think those 3 strategies hold true when you're acquiring a new customer or bringing them back. And they are more important than any form of loyalty programs. Now that doesn't mean we don't reach out to our consumers. We have a really strong clienteling program. We do reach out, but we reach out to them on messages that are relevant to them versus just pushing discount messages or points, as Joanne said. So that's how we're looking at it. And we've seen amazing success in this, and people don't feel fatigued and annoyed with us just e-mailing them 10 times a week or sometimes even 10 times a day, which you may get from some brands.

And Scott?

Yes. And Michael, on the EBIT margin. So a couple of things I would say is, number one, we're talking about a long-term sustainable algorithm, which has investment back into the business. We talked about marketing. We have investment in growth. And -- but we're also disciplined. This is the only marketing guy I've ever seen. And when I say, Sandeep, I got more money, and he's like...

I don't want it now.

I don't want it now. We joke that we switch places sometimes. And I guess the point in that is these investments in growth are based on facts. They're based on KPIs, and we're going to be disciplined around those. We have ample investment to drive sustainable growth over a long period of time, but we're not going to spend it just to spend it. So that's one thing that I want to say to you. As it relates also to the pace of AUR growth, I mentioned this in the comment around tariffs and also maybe a little bit on where we're positioned. We're -- we have demonstrated our ability to take AUR, but we're very cautious, right, about the way we do that to make sure that it is perceived well by the consumer. There are times when we will see AURs grow even faster than we expect, and that's good for margins, EBIT margins all the way through. But we're going to let the natural growth rate develop based on what we're bringing in terms of innovation, product and brand engagement. So I think what you should take away from this is we are solid on our ability to deliver this algorithm, and we have multiple factors in our more variable expense base to drive that growth, but we're also going to remain disciplined to make sure the investments that we make pay off. And you asked me about EBIT margin, but maybe I'll just throw in one more thing as you think about earnings, right? We have assumed some modest increase in the tax rate in our earnings algorithm due to Pillar 2. Let's see if that happens. That would be in the out years, '27 and '28, not in '26. So that's another factor just to keep in mind as you think about this algorithm going forward.

Just to continue on that conversation about AUR, I was wondering when you think about the mid-single-digit growth at the Coach brand, will that continue to be driven by AUR in your model? And how big of a factor is that, Scott, in your 180 basis point gross margin expansion target?

Yes. Maybe I'll start, Todd, and go just to give you the numbers on it. So AUR has been one of the primary drivers looking back. It's notable that over the last couple of quarters, we've inflected the positive unit growth. That's a really important milestone. And as we look forward, we will have both unit growth and AUR, but most of -- the majority of that growth will still come from AUR.

But margin growth is AUC and AUR.

Yes, that's right. Oh, you were talking specifically -- I was thinking of top line growth, yes, but, yes, yes. I don't know if you heard what Joanne said, don't forget AUC. The most underappreciated part of our story, Peter.

Not anymore.

As I'd like to say. Did we answer your question? Okay.

Matt?

Great. Matt Boss, JPMorgan. So Joanne, could you speak to segmentation strategies in place and the foundation today that gives you confidence to expand the lens to the larger consumer total addressable market that you cited, I think, was just less than 1% today for the Coach brand?

Yes. For our business, we've really opened the aperture to look at all potential consumers of our products. And the reason we're doing that is because we're having such success in acquiring new customers, particularly at point of market entry when young consumers are entering the market, and we believe we can expand the category. When Coach was at its best, that's what we did. We expanded the category and brought new users into the category. And that's what we're seeing happen with Coach today around the world. We're seeing tremendous success. And you asked about segmentation, you're talking about market segmentation and where our brands play. We have very distinct brand identities. And we did all the math and we did all the homework on understanding the full market and where each of our brands play. But these are brands that are distinctive. -- each and unto themselves. We didn't create this positioning because we wanted them to be different. They are different. And so when we look at the overall market and who our brands -- who their target customer is for these brands, it is very clear. And it was very clear in the work that we did that these are very differentiated brands in the market. And as we talked about, it's a huge market. We have tons of headroom in the market to grow our brands where they are in our current positioning -- and of course, the market segmentation and market positioning also has a halo effect on the full market. Maybe, Sandeep, if you want to comment?

Yes. Again, look, we've used demand spaces to kind of look at what are the segments each brand goes against. And again, to the point Joanne said, it's the mapping of the brand positioning with those segments. Now they are pretty sizable. I mean, Eva talked about 16% for Coach, Timeless and the timeless segment is about 19%, but the halo spaces are massive, right, on that. So on one side, they are sizable and distinctive, but also the halo on a large space. And again, our point of market entry strategy is what differentiates the because they have the highest halo or reverse influence as we're seeing across large parts of that. So that's why we are able to design against those target audiences. That's why it's important to define who are you designing against. But that design has a large aspiration over much big spaces in that.

And one thing just to add, and I think this is clear, but just in case there's any doubt, that 275 million consumers we're talking about are in markets we play now. So this is not some hypothetical we're going to grow 100 million people in Africa or we're -- India is going to be the next big growth driver. That will come at some point, but that's -- we don't have to get there now to get to our ambition.

The 200 basis points margin expansion that you outlined, what have you embedded for recapture of the tariff headwind? I think this year, it was a little more than 150 basis points.

Yes. So you remember my little chart, we said we would continue to make progress and in fact, grow gross and operating margins in '27 and beyond. And we will fully mitigate the impacts of tariffs through this 3-year period. In fact, I would argue we already have, but we can debate that.

Paul?

Paul Lejuez, Citigroup. You put out some numbers in terms of top line growth algo's by region. You also talked about store growth a little bit. Can you maybe just break that down a little bit? How much of those top line numbers that you put out there are being driven by square footage growth versus what do you assume for comp growth by region? And then also in that store growth, how much of that is full price stores being opened versus factory in some of these international regions.

Paul, have you not listened -- First of all, there's no such thing as a factory store anymore. Okay. Let's start with that.

Well, I was just going to just -- to clarify the number, we didn't give it exactly in the detail that you just asked, but we said less than 1%, slightly less than 1% is the impact of the new stores, which you can infer from that, they're going to be generally smaller in format. And remember, while we are opening stores in the U.S., the majority of these are going to be outside of the U.S. with China as kind of the center of the bull's eye. Todd, if you want to add.

Yes. Again, you are going to hear us talk far less about channels of distribution. If, in theory, I have an outlet store that is penetrating 25% in collection product, if my discount rate is half what it historically was, okay? If we're attracting new consumers who the best mall in their location happens to be in historic outlet store. If the mall is something like a hybrid mall like in outside of Boston, Assembly Row, is that an outlet store? Or is that just a great place to interact with our customer? That's the mind shift. That's the difference. And that starts from product creation to the merchants to the way we're running our stores. So again, it is going to be materially different. We've done all this work now to get there. And that's why, particularly when you look at our digital footprint, that will change as well.

Adrienne?

Adrienne Yih from Barclays. I guess, Todd and Eva, my question for you is you're both targeting the same kind of point of market entry, the 18- to 27-year-old. How do you ensure that between the 2 brands that you keep a distinct kind of target and positioning? And then along those same lines, what have you found in your price elasticity work at each of the brands? How do you know when you can take more price? Do you just look at kind of the turns on full price selling? And if they're going really fast, you have -- you probably underpriced it for the market. So just some characteristics on the elasticity side of that.

Yes, I can kick it off. Honestly, we have 2 very distinct targets, and this is what allow us also to build very different brands. First of all, we have a very different heritage, and I'm sure you're going to say more about that, but also the consumer we're going after is very different. And I think you saw it in the video of Sandeep. They are Gen Z, they are young, but they are interestingly like a very different person and they are not looking for the same kind of products. They are not considering fashion for the same reason. They are not buying a handbag for the same reason. The Gen Z connector is -- she cares about connecting with people. She cares about fitting in. This is what does matter for her. So today, when she buys a handbag, in her mind, she wants to use this to show that she's approachable. She wants to use this as a pretext to connect with people, to trigger a discussion. So it's a very different motivation than the Gen Z, the timeless Gen Z of Coach. So she is looking for something different. She's looking for something very feminine. She's looking for something with more thoughtful details that shows that she is nice and kind and friendly. So it's a very different target. And we see that. Of course, you will always have consumer that will buy both brands or more brands, but they are looking for something very different. And when you focus on that consumer, when everything you do is at the length of this consumer, you're developing for them and with them, then you build something that's very distinctive.

Yes. Eva said it really well. I mean the brands sit in different places, different reasons to buy them. But listen, if somebody has 200 brands, if they don't buy us, I'm happy for them to buy Kate. So -- and it's a big, big audience that we're attracted. On the pricing side, sometimes historically, I'd say we were 2Q by half because sometimes we prided ourselves on incredibly dynamic pricing. I mean, so every day, we can switch prices and we can play with the discounting and you walk into a store and it's one thing and then the next day, it's another thing. First of all, we changed the conversation. We don't even lead with discounting. The first interaction is not welcome to Coach, here's a 20% off coupon, okay? That fundamentally changes things. Our shift from seasonality to core has also changed things. Do we always get pricing 100% right? No. Have we taken up pricing in a thoughtful, systemic way? Absolutely. We put new collections together. Sometimes we don't know. Predictive pricing for a future collection even with all of our technology is the hardest thing to unlock. But actually, we are using AI to help us with that quite a bit. And over time, our learning models have gotten better. So it's not just our great merchants and our great people who are involved in pricing, but it is technology. And we -- but the guardrail here is not to absolutely get the final best price. The guardrail is to ensure we show value for this consumer. Somebody asked me last night, why aren't you going after more $1,500, $2,000 bags? We have some, and we'll have a sprinkling of that for the halo impact. but that's not where we're going to win. We are going to win with bringing these new customers into the category between $200 and $500. Now 3 years from now, that might be $300 to $600, but we're going to be very thoughtful in our approach.

I may just add one thing. I mean these are very clear and distinct audiences, but the thing we need to remember is there are 275 million consumers and both brands put together, our penetration is only 0.6% on that. So there is enough space for these 2 brands to kind of grow.

Brooke?

Brooke, Goldman Sachs. I wanted to dive a little bit deeper into the Coach China strategy and what you're doing to capture that new customer there, specifically the inflection to new store growth in a market that is a little bit uncertain. What gives you confidence in delivering that targeted sales growth over the 3-year period when others have been struggling a little bit more?

Sandeep, do you want to start and then turn to Todd?

Yes. I'll start. Firstly, look, I'll start with something that we've already shared. We are already delivering 18% growth in China when the overall market is in the negative double digits on that. And this really starts with the brand heat that we are creating there and the desire we are building for the Coach brand, and we have the right value equation for that market to win in. Now I talked about 25 million women turning 18 every year over the next 10 years, 5 million of them are going to be in China. So there is a huge TAM out there, especially when we're talking point of market entry. And the way we're working is with precision on how do we target these consumers in the market. These consumers are coming into the market. They are going to make their handbag purchases. They're looking for a brand that fits their expression, right? And both for Coach and Kate Spade, I mean, that's a massive opportunity. Again, yes, we're going to expand our footprint. I gave the example of Wuhan and we're building that across other cities. But the key point is keeping a couple of things in mind. One, we got to be very disciplined on those store openings, right? Two is those stores open where these consumers are and shopping. So sometimes it doesn't have to be one of those traditional high-end malls like if you look at malls like in [indiscernible] which is more high-end luxury, the traffic is very low. On the other hand, you look at malls like MixC in China, where there's so much traffic and so many young college students out there. So all of those decisions are going into that. Again, I'll just end by saying before I pass over to Todd that there's a massive TAM there. There's a lot of point of market entry consumers. Our brand has the right heat at this point and momentum in terms of building, and we have the right value equation.

And that $5 million, just to clarify, is qualified.

Qualified.

Consumers who have the purchasing power, right?

And just building on something Sandeep just broke, but it's our brand position that is going to allow us to win. So this idea of expressive luxury, this idea, it's not just about impressing. For a long period of time, China, almost like a developing market was all about impressing. I'm going to save 6 months of salary to buy the impressive bag. There's a cultural shift that's happened in China that we will capitalize on because the idea that you have to save 3, 4, 5 months of salary to buy a handbag, even if you're living at home with your parents and don't have all the expenses has fallen out of fashion. So there is really something in the air where some of those very traditional European luxury that price themselves so high, they've lost some of that opportunity because it's not resonating with the customer in the correct way. And because we've changed our approach, that allows us now to do exactly what Sandeep said. We don't have to just go to the mall in the city that was us adjacent to very traditional European luxury players. We can go to wonderful places. We're in cities and in locations that are very different because I don't even have to look at the adjacencies. And by the way, that also helps in negotiating because when they want us in a location, and we may be the absolute pinnacle of luxury in a location, negotiating looks a little different there. We like that.

Oliver?

Oliver Chen, TD Cowen. The Coach brand has done so well. Is it at peak margins in terms of wanting to make sure you offer value to the consumer? And shouldn't you reinvest the AUC to give product back to the consumer? Also, the international opportunity is huge. So what are the toughest decisions you're making or the tougher problems, opportunities as you pursue international? How would you rank a couple? And as we think about Kate Spade, just would love your take on establishing icons. It's very important, and you're revisiting a lot of the whims and wit, but icons and cutting the SKUs sounds like a really great idea?

Todd, why don't you start and then we'll go to Eva.

Okay. So no, we have more room, be definitive there to take margin. And on the make, I want to be very clear. Peter's partnership and his team's partnership, we're not taking value out of the brand, okay? Everything we look at, okay, on an AUC basis has to meet a couple of criteria. And by the way, it's not just Peter, it's our -- the Coach CFO, who works with Scott, who does this, and it's Stuart as well. Stuart and our CFO at the Coach brand have led an AUC drive. And what's important is we will not cheapen the product, okay? We will do things that look to -- that are -- you can't even see -- and I'll give you one quick example. I think I've given this example in the past, but just for clarification. It's not a Coach bag unless it has a story patch. We all know that. You see it, open up your Coach bag. There was an extra stitch that we put in the story patch making that took an extra step. Remember, this is a story patch inside a bag. That -- and again, when you think about our scale of tens of millions of units, there was $1 million savings not doing that extra stitch. No consumer we'll ever know or see the durability. We tested it, we pulled it. We'll ever see that change. But that's an intellectual interesting, aggressive approach to looking at this. And remember what we're trying to do. We're not -- yes, can we keep growing gross margins? We will. But we're also taking the Tapestry Coach flywheel to put that money into our marketing, be very stingy on non-marketing SG&A and put that in to keep fueling this consumer. Any of us have ever made a camp fire. You know to keep the camp fire going, you got to keep throwing more wood in it, okay? That's what we're doing.

Eva?

Yes, answering your question on Kate, yes, building icons is crucial. If you want to make the brand a destination, if you want to build for the long term. So our strategy is made to build those icons over time. And how we do this, to your point, of course, is making space for them, but also making sure we develop relevant products. And that's what's our strategy? We have different steps. First of all, like making sure we're developing something that's relevant. And for this, we're going to test everything along the way and select the winning designs for the consumer. Then we're going to invest in them in inventory. We're going to invest in them in marketing. And I'm not talking one campaign, I'm talking over time to make sure we can build them at an icon. And then we're going to continue animating to your point, with new colors, new design, new idea around that icon. So this is the cycle we can create to build icons over time. I'm going to give you an example. Maybe you saw in the video, you saw in the showroom or even in stores, the geo bag that we have today. This is exactly how it has been developed -- has been developed with the consumer, has been tested. Everything has been tested in this value down to the name, down to the pricing, everything. Then we've been investing. Then now it's one very cohesive experience for the consumer. If you go to the website, if you go to our stores, in the windows, the sales associate, the training, everything is focused on building this as an icon, and we're going to continue animating it over time.

Alex?

Alex Straton, Morgan Stanley. Maybe for Todd, just on that $10 billion target for Coach, can you just help us bridge from the end of this plan to there? I see you're smiling. You're probably prepared for this?

Why it takes so long...

How we get there and maybe Scott can chime in just from the end of this plan to there.

Well, again, as I said, this plan is our floor. So I don't want to leave you with this is our highest aspiration. A long-term plan is a long-term plan. We see clarity that we have a $10 billion opportunity at the margins we want. Can I always add $1 billion? Of course, we can. We've seen what that looks like if we don't do it thoughtfully. So we are going to do this quarter after quarter in a sustainable way. The consumer is going to vote. We have a lot of opportunity. And there may be times where all of a sudden, the quarter or period does much better. It's not going to be artificially driven. It's going to be driven by a steady march forward. So what that looks like, we'll see. But what I hope you appreciate and take away is I have a great deal of confidence that we will achieve that number.

The only thing I would add to that, Alex, is what I think the main message is this brand is just getting started, right? And as you look at the runway and the potential to grow, it's not limited by this short somewhat arbitrary 3-year plan that we have laid out. It's important to do that for all the reasons that we know. And we establish what we think is a very durable base that you can build from but the potential here is massive. And we know it based on the way these guys have reframed the market and the aperture that we're looking at, it's changing everything on how you think about what the potential of this brand can be over time. So...

We'll take our final question from Dana.

As you think about -- and it's Dana Telsey from Telsey. As you think about the marketing spend on each brand, what's appropriate in the long-term targets of what you see as you're developing? And lastly, other categories, you talked about footwear. Is footwear and men's an opportunity? I think years ago, we talked about men's at one point.

Yes. And I'd love to start. Marketing is definitely an unlock. And I hope what you heard from us today is not just this 3-year plan, but the durability of this model over time. The building blocks of growth, we talked about opening the aperture, but we know where we're going to source our growth from, how many new customers we need to acquire to drive that growth. And how many of those customers will buy leather goods, our core category to drive that growth, 80%, over 80% will be in leather goods. And where around the world, we're going to drive that growth, which informs our investment. So if you think about new customer acquisition, we are winning with new customers, and it is really driving our growth right now, and we see the opportunity to continue that momentum as we move forward. And as we drive that momentum, we will feed marketing. We're not spending marketing with a hope. We have a lot of KPIs that we manage, and we manage our marketing spend in a very disciplined way. But some of the capabilities that we've built, I think, are a differentiator of our company. We understand what content to put on what platform to reach which customers. And we're really clear about what those are. So when we talk about the target customer, timeless Gen Z for Coach and the Gen Z connector for Kate, we're laser-focused on how to hit the radar and be relevant to them with the storytelling, with the marketing, the spike and sustain, and that requires investment, but it's not investment without discipline. It's disciplined investment. And we'll continue to feed that engine. That's the flywheel that Scott talked about. That is the Tapestry flywheel that drives our brand heat, allows us to expand margins. It allows us to drive that disciplined growth that we talked about with high margin that allows us then to reinvest back into our business. So can marketing spend go higher? I think absolutely, it can. And actually, in the presentation, we showed you we expect it to go higher, but it will go higher with the return that we expect as well. And that will drive the discipline. We're talking mid-single-digit growth for this 3-year time horizon, but well into the future. And we think that is a very compelling value creation model for us.

And just quickly on men's. Let's -- we -- this morning, we are very, very focused on our female customer, we have a big men's business. And there's huge opportunity. Footwear is an area where we're leading with that. Our sneaker, the Soho and the Highline, the 2 major sneakers are all gender. And if you hadn't noticed the clip, Charles Melton without a shirt on, selling the men's sneaker has very massive appeal. So you'll hear us keep talking in the future more about our men's, but we like our brand positioning here. And interestingly, who buys men, if you're winning with women's, you're winning in all gender.

Great. Joanne, now I'll turn it to you for some closing remarks.

Well, I can't believe we're done already. This has been really fun. I hope that you take away a lot from our presentations today. But the one thing I hope you take away is the durability of our growth. I just talked about it. Our -- we have momentum in our business, and our growth is durable, not just for these 3 years, but in the long term. And that's going to create a lot of value for all of our stakeholders. So thank you for coming today. I do want to -- a couple of housekeeping announcements. If you haven't taken the time to browse the Coach assortment out here, have a Coach coffee, please do that. The showroom upstairs for Kate Spade. I encourage you to go see what's brewing up at Kate Spade. And we are delighted to be able to share with you our workshop here on the ninth floor. It is unique to our business. Peter talked about craftsmanship at scale. You'll be able to see that in real life, touch it and feel it. So thank you for coming today, and enjoy the rest of your day.