We continue to see consumer desire for our brands is strong and we saw that through the second quarter. And importantly, in the surveys we field in the market purchase intent in our category handbags and leather goods is still high with consumers in the market. So again, expectations are high. Maybe I’ll pass it to Todd, if there’s any other color on your secret sauce in the market, Todd?
Todd Kahn: Well, I won’t give away the full secret sauce, but I will say building on your comment. We feel really good about China, particularly the long-term opportunities in China. And one of the things that I point to and one of the questions all of you ask me every quarter is how do you continue to AUR growth and expansion. When you look at where the Coach brand sits today and the white space between us and traditional European luxury, that’s at an all-time high. And in a market like China, where maybe people are being more frugal and thoughtful about their purchase, that bodes very well for Coach. So I’m excited by the white space. I’m excited by our brand positioning, expressive luxury is working, as Joanne said in the prepared remarks. Our last quarter, we saw growth in all markets, including China. So excited by what we have coming up and we’re already seeing Coachtopia take hold in that market in a really meaningful way.
Lorraine Hutchinson: Thank you.
Operator: Our next question is from Brooke Roach of Goldman Sachs.
Brooke Roach: Good morning and thank you for taking our question. Joanne, I was hoping you could provide some additional thoughts on how you’re thinking about the outlook for North America handbag and accessories, but specifically both for your Coach brand and for Kate Spade? What’s driving the underlying confidence in stronger growth in the back half of the year, specifically in fiscal fourth quarter? And how are you thinking about that relative to the competitive pressures that you might be seeing in the market?
Joanne Crevoiserat: Yes. North American market is always competitive. We love a competitive market, and we’re performing. What we saw in Q2, our business was flat with last year, in line with last year, but above our expectations. And we’re driving that business at higher margins. So we continue to prioritize a healthy business and healthy — and managing a healthy business, and we will focus on healthy growth in the market. What we see happening in the market is, frankly, the consumer is being choiceful and they’re responding to newness and innovation and the elevated brand messaging that we’re delivering in the market. And we’ll continue to do that. Our outlook for the rest of the year is, frankly, in line with where it was in the first half.
So no dramatic inflection in the first — between first half and second half of the year. We think trends will be in line. But again, we’re managing the business in a healthy way. We grew AUR last quarter, expanded gross margin and operating margin. Our inventories importantly are well positioned, not only in North America, but globally. So we expect to continue to manage a healthy business in North America as we move forward.
Brooke Roach: Great. Thank you.
Todd Kahn: And the only thing I’ll add for Coach is, obviously, we’re always aware of competition, but we’re playing our own game. And this new virtuous flywheel where we’re really growing these new customers, 1.5 million in North America last year. They’re younger, they’re transacting at a higher AUR, that’s the fuel, that’s the cogenomics that will play out in many quarters ahead. So they’re coming in our brand. We’re touching them through expressive luxury through with purpose and innovation. And as long as we keep doing that, using our data, I think there’s so much room for growth in North America. We feel really stronger – good about what’s ahead of us, particularly in the fourth quarter where we have easier comps, obviously. But beyond the comp issue, we just see a lot of growth ahead even in our most mature market because as we saw, we can continue to grow awareness. So that’s really important for us.
Operator: Our next question is from Michael Binetti of Evercore.
Michael Binetti: Hey, guys, thanks for taking our question. I’ll add my congrats on a nice quarter. Maybe just a near-term one first. On the revenue guidance for flat in third quarter, is that what you’re seeing today? Maybe just comment there? It sounded like you’re seeing an inflection in China with some of the comments on tourism, but then Todd also mentioned some choicefulness from the consumers as well. Maybe just a little color on what you expect in China in the second half. And then maybe jump ball, Joanne and Scott. Scott since we’ve talked about this for a lot of years at your previous life about the philosophy and the filters you used to assess which brands belong in a portfolio of brands. I’m curious how you guys look ahead to being a house of six brands on of different scales, different market shares within the sub-categories, different global opportunities.
And maybe speak a little bit about what are the lenses you use at Tapestry to determine which brands are best fit within this platform?
Scott Roe: Yes. Sure, Michael. I’ll take the first part of that. And you haven’t read our website and all that’s out there, anyway. The third quarter really — there’s a lot of noise to make it simple. The biggest issue is China, right? So, if you think about in Q2, we were up 19%, in line with our guide. Our expectations, really that was anniversary and COVID issues. And then we had revenge spending, right, which is coming in Q3, so it’s a tougher compare. But when you zoom out from that to click and look at the overall, we said mid-single digits last quarter in terms of our expectation, that’s right where we are today. So yes, there’s noise quarter by quarter. It puts particular pressure in the third quarter from a top and bottom line. But when you zoom out and look at the top, we beat in the second quarter, we took the full year up, right? So I would ask you to understand the noise but really don’t lose the big picture here.
Michael Binetti: Got it.
