Ike Boruchow: Got it. Thanks.
Operator: Our next question is from Matthew Boss of JPMorgan.
Matthew Boss: Great. Thanks and congrats on the nice quarter.
Joanne Crevoiserat: Thanks, Matt
Matthew Boss: So Joanne, as we think about new customer acquisition, could you speak to differentiation of the Tapestry portfolio platform that you think allows the product innovation, data capabilities that support the continued global momentum? And then for Scott, could you speak to the continued gross margin drivers multiyear, maybe beyond this year’s freight recovery? And just how best to think about or any change to double-digit accretion in year 1 from the planned acquisition?
Joanne Crevoiserat: So I’ll kick it off on our customer — what we call customer obsession. And it is really the engine that drives growth for our brands, but frankly, for all brands. And it really does start with being curious about the customer and understanding how to bring our brand to the market with even more relevance, more connectivity and truly a more emotional — creating a more emotional connection with the consumer. We start that — it really permeates our entire value chain. So we start early with understanding who our target customer is and what the true DNA of each of our brands is and how that fits. But then we talk to a lot of customers. We do a tremendous amount of customer research, not only research that does our brand tracking, but deeper ethnographic research to understand how the customer feels in a store environment feels about our product, feels about their outlook on the world, and that’s something that always changes.
So it’s a continuous curiosity, I would say, in the company. We ingest those — that data across our company. And I talk a lot about putting the data and the insights in the hands of decision makers, the ways of working have changed at Tapestry over the last four years. And our teams are better and better gaining these insights and applying them to all of our work across the value chain. So we are using this not only in our brand positioning, but also in our product development, understanding as we develop products who we are speaking to and what value we are delivering, both emotional value as well as functional value, what needs we’re fulfilling for the consumer. And then we leverage data and insight as it relates to pricing, as it relates to our assortment, the breadth and depth of our assortment and allocation across the world and where that product and how that product shows up around the world, we test and learn on our website and some of our marketing capabilities so that we can continue to improve our execution.
So all the way — and I don’t know if I mentioned pricing, but pricing as well. So all the way through the value chain. And importantly, our focus has been to attract younger consumers to our brands. And we’ve seen a lot of traction with our execution behind the insights that we found. And you can see that, as we talked about the 2.5 million new customers we attracted the brands in this past quarter, nearly half being Gen Z and Millennial that is critical for us to continue to create the momentum we want to create for each of our brands. And then Scott I don’t know if you want to pick up the gross margin drivers?
Scott Roe: Yes. I’d love to. I’d love to talk about gross margin, and I’ll really start where you ended. And I think even if you look at this year, Matt, reinvesting back in those capabilities that help us understand who these consumers are, all the things that Joanne said, that’s what gives us confidence in our pricing power longer term, and that’s a key driver. And we see that when you take out the noise of freight and some of the other things, some of the mix, regional, all that stuff that’s going on quarter-by-quarter, we still see that core operational improvement is coming through, and we expect that to continue. And I’m not going to give — we’re not giving ’25 and beyond guidance other than the earnings reaffirmation on the 465 that I talked about, but one of the key linchpins is what Todd and Joanne talked about that flywheel, reinvesting back in the business which reinforces our margins and that — those margins that allow us to both increase our profitability and reinvest at the same time.
You also asked a little bit about double-digit accretion in year one. Short answer, I assume we’re talking about the Capri deal? The answer is yes. And I would also just add, in addition to accretion, which is kind of a mathematics problem, we also see strong returns in excess of our WACC. So we see return on capital that is also accretive as we continue to look at the deal. Remember, we never bought into necessarily your all’s estimates. We had what we call prudent assumptions on the condition of the business and we still have confidence in those key drivers.
Matthew Boss: Great. Best of luck.
Operator: Our next question is from Lorraine Hutchinson of Bank of America.
Lorraine Hutchinson: Thanks. Good morning. I wanted to focus on China for a minute. Understanding the year-over-year comparisons are pretty volatile. Joanne, can you just zoom out and give us your view on the health of the Chinese consumer? And what’s driving the Coach brand strength in China specifically?
Joanne Crevoiserat: Sure. We continue to believe that China represents long-term opportunity across our brands. And as you know, we’ve been in the market for a long time with the Coach brand over two decades. As it relates to the business right now, we are seeing a slower pace of recovery in the market. But our China business was landed right in line with our expectations in the second quarter at up ’19. Our outlook for this fiscal year is that we will drive mid-single-digit growth in the year. That expectation is unchanged. So the dynamics in the market are unfolding the way we expected. And again, we continue to have confidence in the long-term opportunity in the market. And what’s driving our success is that our teams in the market are doing an excellent job building our brands and connecting with consumers.
