Digital Efforts Bring Tapestry 1 Million New Customers
Coach, Kate Spade and Stuart Weitzman parent company Tapestry, Inc. acquired nearly 1 million new customers through its digital channels and reported a narrower-than-expected loss in its fourth quarter.
In Q4, 2020, Tapestry reported a loss of $294 million, or $1.06 a share, after income of $149 million, or 51 cents a share, in the year-earlier period. The company's adjusted per-share loss came to 25 cents, better than the 56 cents loss per share consensus of FactSet analysts, Marketwatch reports.
“This performance exceeded internal expectations, demonstrating the power of our unique brands and the decisive actions taken to adapt our business to the rapidly evolving environment and enhance financial flexibility,” said Joanne Crevoiserat, Interim CEO.
The apparel company and retailer saw its digital sales jump at a triple-digit rate in the quarter, with strong growth in every month, as it recruited new consumers into its brands at an accelerated pace.
Tapestry also said it will slash costs in light of the current retail environment, through reducing rent costs and driving procurement savings, including curtailing external third-party services. It also has been decreasing corporate costs through temporary compensation reductions for its board, management team, and employees.
The company estimates it will save $300 million from various initiatives, including $200 million projected for fiscal 2021.
“Leaning into the momentum that we're driving in our digital channels, we will offer immersive customer experiences across our e-commerce and social platforms,” said Crevoiserat. “I've been so impressed with the way our teams have responded to recent challenges and the innovation they've introduced to engage consumers over digital and social media platforms, reaching consumers where they are and how they want to engage with us. We've seen tremendous traction across our digital channels as a result, evidenced in part by the recruitment of new younger customers to our brand at an accelerated rate.
Tapestry recruited nearly one million new customers across brands in North America through its digital channels in Q4 and is also reengaging lapsed customers.
“And not only are we driving revenue growth online, but we're driving but we're driving profitability as well as our digital businesses carry higher operating margins than their respective bricks-and-mortar channels,” she noted.
Coach’s Digital Efforts
Todd Kahn, president and interim CEO & brand president of Coach, said the Coach brand will be making significant investment in the digital and omnichannel experience globally. Coach recently launched made-to-order CitySole on coach.com, for example, allowing customers to design personalized sneakers, featuring a new 3D and augmented reality experience.
In the value channel, Kahn said the company has rethought its online outlet, focusing on the value proposition rather than primarily on price promotion and is investing in marketing to drive customer acquisition. It launched coachoutlet.com in April and has acquired nearly 600,000 new customers across its digital channel since then.
“Of these new customers, half were Gen Z and millennials,” he said. “This is a strong example that our strategy and our product resonate with the younger consumer.”
Next, Coach will offer a special membership benefit to its online outlet loyalists beginning this fall.
Stuart Weitzman’s Digital Plans
Stuart Weitzman is utilizing the website to offer extended size options, while embedding greater personalization throughout the customer journey. The company is rolling out a new platform to update its site technology, which will allow it to create a more personalized and frictionless customer experience. It's is also leveraging its store associates to support customer care and help with live chat.
Stuart Weitzman saw new customer share in the U.S. increase plus 9% in the fourth quarter.
Kate Spade to Upgrade Website
According to CEO & brand president Liz Fraser, by simply refocusing Kate Spade’s communications to its core consumers, the company has seen a significant increase in social engagement, including a 20%-25% year-on-year increase in engagement on Instagram just in the past few months.
“Our data insights team will be crucial to developing a deeper knowledge and better insight into our key customers,” said Fraser. “To become truly consumer-centric, we will bring these insights to all decisions being made at the brand across product, marketing and customer experience.”
In Q4, Kate Spade attracted over 350,000 new customers in its digital channels in North America, an increase of over 100% from the prior year. Additionally, it reactivated nearly 140,000 lapsed customers as compared to last year. Nearly 20% of all digital customers made two or more purchases for the quarter.
Kate Spade plans to upgrade its North American website with a revamped aesthetic, a best-in-class video streaming capability and a dramatically improved site performance this fall.
“Consumers want authentic engagement and we are focused on developing meaningful relationships to play a more active role in the consumer's life, specifically through content development,” said Fraser.