Good day, and welcome to the Tapestry’s Conference Call. Today’s call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Global Head of Investor Relations and Corporate Communications of Tapestry’s Andrea Resnick.

Good morning and thank you for joining us. With me today to discuss our quarterly results and annual forecast are Victor Luis, Tapestry, Inc.’s Chief Executive Officer; and Kevin Wills, Tapestry CFO. Before we begin, we must point out that this conference call will involve certain forward-looking statements, including projections for our business in the current or future quarters or fiscal years. These statements are based upon a number of continuing assumptions. Future results may differ materially from our current expectations based upon a number of important factors, including risks and uncertainties such as our ability to achieve intended benefits, cost savings and synergies from acquisitions; expected economic trends or our ability to anticipate consumer preferences, control costs, successfully execute our operational efficiency initiatives and growth strategies and the impact of tax reform legislation. Please refer to our latest quarterly report on Form 10-Q, our annual report on Form 10-K and our other filings with the Securities and Exchange Commission for a complete list of risks and important factors. Please note that historical trends may not be indicative of future performance. Also, certain financial information and metrics that will be discussed today will be presented on a non-GAAP basis. These non-GAAP measures exclude certain items related to our operational efficiency plan, integration and acquisition related charges, and the impact of tax reform legislation as well as the impact of foreign currency fluctuations where noted. You may identify these non-GAAP measures by the terms non-GAAP, adjusted for constant currency. The Company believes that presenting these non-GAAP measures is a useful for investors and others to evaluate the Company’s ongoing operations and financial results against historical performance, and in a manner that is consistent with management’s evaluation of the business. You may find the corresponding GAAP financial information or metric as well as a related reconciliation on our website, www.tapestry.com /investors, and then viewing the earnings release posted today. Now, let me outline the speakers and topics for this conference call. Victor Luis will provide an overall summary of our second fiscal quarter 2018 results for our three brands. Kevin Wills will continue with details on financial and operational results, and our outlook for the balance of FY18. Following that we will hold a question-and-answer session where we will be joined by Josh Schulman, Chief Executive Officer and Brand President of Coach and Todd Kahn, Tapestry's President and Chief Administrative Officer. This Q&A session will end shortly before 9:30 a.m. We will then conclude with some brief summary remarks. I’d now like to introduce Victor Luis, Tapestry’s CEO.

Good morning, thank you Andrea and welcome everyone. We are delighted to report a second quarter which exceeded our internal expectations from both the top line and bottom line perspective leveraging the strong holiday season in North America and the benefits of Tapestry's multi brand global model. As noted in our press release this morning our results benefited from both organic sales growth at Coach and Stuart Weitzman, as well as the contribution of Kate Spade. Naturally we were excited to drive positive global and North American comps for Coach as our inventory mix improved notably in outlets while our retail business was driven by innovation and improved domestic mall traffic for the first time in several years. We were also pleased to deliver better than expected results across financial metrics. Most notably and as will be shared in more detail by Kevin we experienced a significant sequential improvement in gross margin trend at Coach and outperformance at Kate Spade where we carefully managed promotions across channels. The Kate Spade integration onto our operating platform continued smoothly during the quarter as we executed on the strategic actions to position the brand for long term success. These included the pull back on flash sales and wholesale disposition while taking substantial steps to unlock cost and operating synergies. We remain especially excited about the opportunities for the brand both in terms of revenue growth driven by distribution expansion and productivity and profitability improvement as we leverage our scale across our supply chain and corporate functions. As previously shared we continue to expect to achieve synergies primarily related to SG&A of about 30 million to 35 million in FY '18 and run rate synergies from both COGS and SG&A of approximately 100 million to 115 million in fiscal 2019. This past quarter we…

Thanks Victor. Victor has just taken you through the highlight and strategies. Let me now take you through some of the important financial details of the quarter as well as our outlook for fiscal year '18. Before I begin please note the comments I'm about to make are based on non-GAAP results, corresponding results as well as the related reconciliation can be found in the earnings release posted on our website today. Turning to the financial details. Net sales totaled 1.79 billion as compared to 1.32 billion in the prior-year, an increase of 35% driven by the acquisition of Kate Spade and organic growth. Coach net sales totaled 1.23 billion as compared to 1.2 billion in the prior-year, an increase of 2%. Kate Spade net sales totaled 435 million reflecting in part the strategic pullback in wholesale disposition and online flash. Stuart Weitzman net sales totaled $121 million an increase of 2% and slightly ahead of guidance due to wholesale shipment time and favorability as mentioned. Gross profit totaled $1.2 billion while gross margin was 67% as compared to 68.6% in the prior year. The addition of Kate Spade pressured our overall gross margin by approximately 120 basis points, given the lower margin profile of the Kate Spade brand. Gross margin for Coach was 68.8% as compared to gross margin of 69% in the prior year. We experienced a negative 30 basis points impact due to bringing the women's footwear business in house. In addition, currency pressured the brands gross margin rate with 10 basis points in the quarter. As Victor mentioned we were pleased with the sequential improvement in gross margin trend at Coach in combination with positive comparable store sales. Kate Spade gross margin was 63.3%. This performance was above our expectations and prior year, benefiting in part…

Operator, we are ready for Q&A.

Your first question comes from Bob Drbul of Guggenheim Securities.

I just have two questions, I guess. The first one is you talked about the growth and the performance of the global premium handbag category. I was wondering if you could give us some insight into what you saw in the North American premium handbag category? And then the second part of it, is specifically to keep call out Coach's outperformance in North America I was wondering if you could elaborate a little bit more on that first?

Sure, as we have noted Bob, both last quarter and on this speakers notes that we just provided, we're providing global sales and comps and of course are committed to providing global category growth quarterly growth forward, that said to your question with a couple of significant players that have yet to report, it does appear that the North American premium handbag and accessory market grew at a mid-single digit rate which is an acceleration from the low single digit rate that we saw in the September quarter and we believe that was of course part fueled by our own sequential improvements and I will let Josh chime in a little bit on that.

Hi Bob, as Victor mentioned in North America we outperformed the global performance and what we would say is that about one comp point either way would be similar and anything beyond that would be outperformance and we were just so pleased with the results in North America, it was really across business units stores and the internet and across channels and it was a combination I would say that are traffic in the malls that we see and heard about coupled with excellent execution on the part of our teams.

[Operator Instructions] Your next question comes from the line of Ike Boruchow of Wells Fargo.

So, Victor maybe this one is for you, I want to ask about more about the acquisition of the Kate Spade JV in Asia. Can you talk a little bit more about what the business looks like today, maybe some of the key similarities and differences you can draw back to when you took the Coach China business in house and then just lastly, can you may be size the opportunity there longer term?

Very excited about our witness development opportunities in that part of the world, as we mentioned in our speakers notes, we're actually taking some actions across a couple of market with two real key strategies there, first and foremost is around the Chinese consumer and that obviously relates most to what we're doing with Kate Spade, but also, we're very excited with the buyback of the business from China. And the Kate Spade opportunity in that market, excuse me, and the Kate Spade opportunity in that market today it's not dramatically different quite frankly from where couch was when we purchase that business back in 2008 and so we're very excited by the experience of course across our teams and the ability to help that brand grow, terrific opportunity for distribution of course across both tier 1, 2 and 3 cities, very developed infrastructure which we know well of course with Coach having well north of 150 locations now in that market, we have terrific relationship with the trade and with distribution and we're really focused now on putting in the right investments and talent of course and driving up awareness for the brand in that market not only in the Mainland but also in Hong Kong, Macau and in Taiwan. And then the second part of our strategy not directly connected to your question Ike is what we're doing with the Australia, New Zealand buyback of Coach which is really about leveraging a Tapestry multi brand model to allow us to successfully grow our brands in the smaller medium sized markets where each of them independently would not have the scale to be managed directly so very excited about that opportunity and look forward to sharing more on that with you in the future as well.

Your next question comes from the line of David Schick of Consumer Edge Research.

Hi, good morning, thanks for taking my question. As you seem to be moving faster maybe that's not fair but faster at least based on conversations we're already having this morning on doing what you do buying back distribution, moving through your game plan on Kate, and global synergy is part of what you talked about. Can you talk about the sourcing cost both on materials and labor as you look out through the balance of this year and longer term?

We don't see much impact as we discussed in the past David for this year obviously we've discussed and shared the inventory that we inherited and we're working through that right across the second half. Of course, we are and have been working incredibly hard across our supply chains both from a sourcing of materials perspective as well as from a labor perspective with all of our partners across the supply chain and what we have shared with you of course is that when we think of the FY '19 run rate of a 100 million to 115 million approximately half of that should be cogs and Kate of course will benefit from that directly, so very excited about that. Just as importantly we're really excited of course about the opportunity to grow top line and that is a very significant work that the team is doing on maximizing the distribution for the brand not only here in North America but globally but also bringing in the talent that we have. Nicola Glass is going to be wonderful, she's done this at scale, she's very experienced, she really understands the brand well. I've been partnering with her now for almost a month and I'm very excited with the rest of the team for the vision that she's creating for the Kate Spade brand and that's the next chapter.

Your next question comes from the line of Erinn Murphy of Piper Jaffray.

Great, thanks good morning and good quarter. I just wanted to focus a little bit on the logo transferring the second quarter. Can you just talk a little bit about what you're seeing from a consumer perspective, are you bringing in a new or a lapsed consumer, were you seeing any traction in tourism and then if you just think about the penetration rate within outlet and then as you launch within spring for full line, where do you see that going over time, thank you.

Sure, I'll let Josh take that one.

Good morning, so I think it's really important as we talked about the logo trend to separate between the inventory issues that we experienced in outlet in Q1. As we moved into Q2 we were able to normalize our inventory in the ongoing carryover logo product that has always been a part of our outlet assortment. As we look forward what we've been talking about is the re-introduction of signature which is a historic part of our brand as you know to our retail channel. And what we are seeing there is a part of global movement in luxury brands toward a higher penetration of logo product. Now that has been absent from our retail assortments, these past few years during the brand transformation and that new product that appeared on Stuart Vevers run way in September will only hit our retail stores as part of the March 1st, floor set. The editorial response and the response from the wholesale community, our most elevated partners around the world has been terrific on that more elevated product. So, whether it’s a Harper's Bazaar or appearing in the Neiman Marcus catalog, the most elevated partners are excited about the way Stuart introduced it in conjunction with a collaboration with the key pairing archives. We want to be very clear though that we're going to take a very measured approach and a very disciplined approach in how we reintroduce this into retail, a building on the organic demand that is by the way. I also want to clarify one point from your question, that the recruitment in our North America customer base rose during this period.

Your next question comes from the line of Anna Andreeva of Oppenheimer.

We had more of a modeling questions, so I guess to Kevin as it relates to 3Q given the nights margin improvement at the Coach brand in 2Q, and sounds like you are very well positioned from innovation standpoint. Maybe talk about the P&L dynamics between the gross margin and SG&A. For Coach brand gross margin to be up in 3Q I'm not sure if you quantify the timing shift on expenses from 2Q and how should we think about the Easter shift benefit?

Good morning, as we think about the third and fourth quarter, we have given the guidance for the year. We would think from a modeling perspective the third quarter maybe in a flattish range and the gross margin with the fourth quarter up in part due to the softer gross margin performance we had in last year's fourth quarter. And as you noted there was some timing shifts on the SG&A between the second quarter and the balance of the year. And we would expect the higher impacts of the SG&A probably in the third quarter versus the fourth quarter.

Your next question comes from the line of Oliver Chen of Cowen & Company.

Victor on the digital frontier what are your thoughts on key and near-term and longer-term priorities and your thoughts on the evolution of the supply chain digitally and as you approach digital as well as we think about both customer relationship management and fashion and big data and algorithms, what are your thoughts -- there's a lot of a different revolutions happening including with luxury goods, so I'm wondering how you see that evolving and what your customer wants?

On the broader supply chain question Oli, we have been may be one of the first certainly in our space to dedicate resources to trying to digitize the backend of the process, one of the first investments we made was really on 3D technology to allow our design teams as well as our product development teams to work very closely with all of our vendors on the back end. And that is the process that continues, you will be a hearing a little bit more about some experimentation that we're going to be doing with digitizing from front to back to increased speed and agility in our supply chain. In terms of the front end of the business, you just heard this morning the recruitment that we have made of David Kahn who has just joined us, he will be playing a dual role firstly foremost leading e-commerce for our largest brand partnership with Josh who has as you all know a great passion for all things digital and driving the strategies for couch. At the same time leveraging that platform David will play a key role across all brand looking for opportunities for us to leverage innovation along with our data laps team across our digital platforms. Some of the areas that we have been thinking about and I think you know that we have an incredible asset in our data, we've made substantial investment over the last couple of years across all three brands in technology with a Hadoop database investment. We currently have over 120 million names in that database and one of our key objectives is to leverage that data and recruiting the talent that allows us to obviously think about how we can not only approach consumers more directly in a more customize manner but also in terms of how we think about leveraging machine learning for the inventory management process internally, these are all areas that we're having discussions on and working on right now, so very exciting space indeed.

Your next question comes from the line of Lindsay Drucker Mann of Goldman Sachs.

I had two quick one, first I was hoping you can comment on the tenor of promotions in the outlook channel for Coach and Kate, I think you mentioned it got better for Kate, which is curious what you're seeing there generally. And then second, Kevin I don’t know if you're able to help us get some understanding of what the tax rate could be in F19 and beyond once you have to deal guilty in sort of fully loaded number.

I will let Josh chime in on the Coach promotion and gross margin in a minute but as you stated Lindsey in the case of Kate we really have been very, very focused on leveraging a much cleaner approach channels with the very important focus on reducing of course flash, not only in terms of number of events but also dramatic reduction in the actual circulation of our mainland's and as well as the work that we done across the disposition channel, so across Kate we seen very nice improvements in our gross margin and excited by what the future hold there as we head into a better inventory position in terms of quality of inventory in the second half and beyond and I will let Josh touch on that.

Hi there, in the Coach brand as expected and the North America outlet channel was more promotional in Q2 but far better than what we experienced in Q1 and I think you can see the results of that in the gross margin performance that the team was able to achieve in the second quarter.

Good morning Lindsay, this is Kevin, as it relates to your question on the '19 taxes. As you know there were a number of changes in the tax law and we outlined in the press release this morning those changes that we think would have the most material impact on the business. We are currently in the process of working through all of those items, it’s fairly complex, we've done a lot of work but we will need until the end of this fiscal year to fully determine the final impact plus there may be additional regulatory guidance is issued on some of the tax law changes. Having said that on a preliminary basis we would estimate their effective tax rate would go down by about 300 basis points versus what we would have expected so by way of example we originally guided fiscal year '18 effective tax rate in the 24 to 25 so you should think about fiscal year '19 maybe the 21 to 22% range. So about 300 basis points but again more work to come on that.

Your next question comes from the line of Mark Altschwager of Baird.

Nice to see the recovery in Coach comps this quarter, just wondering as you look at the first half and normalize for all the calendar shifts weather disruptions, inventory issues, what do you view as the underlying comp rate at the Coach brand. And then looking into the back half just given the favorable consumer backdrop and some of the reduced promotional intensity you talked about, is there an opportunity to perhaps accelerate the Coach comp from that normalized first half tram line.

Sure, I'll let Josh answer that.

Good morning, you know as you look at Q1 and Q2 you know obviously we had a variety of impacts in Q1 and then a nice inflection points in Q2 but as you spread them out it’s really a low single digit trend that we're seeing in the Coach brand. As we look to Q3 and beyond we're confident in our assortments and we're confident in the strategies that we have to continue driving a low single digit trend in Coach comps.

Your next question comes from the line of Simeon Siegel of Nomura.

So, Victor when you think about the long-term profitability for Kate it’s obviously still early but you're already making operational improvements. Are there any structural differences you see between Kate and Coach that would keep them from reaching Coach EBIT margins over the long term and then just quickly, sorry if I missed the SG&A timing shift into the back half.

I'll ask Kevin in a minute to talk about the SG&A timing shift but in terms of Kate's long term profitability, over the long term Simeon I don't see a reason why it could not be at Coach levels, obviously today with Kate Spade we have a business that is more North America centric, we have a business that's slightly heavier in ready to wear which is really structurally I would say some of the biggest differences but long term as we think about a handbag and accessories focused strategy, obviously global growth and a lot of the work that we are also doing across categories that Coach and Kate together we could see things normalizing to a similar level of profitability.

On the SG&A we did not give specific numbers but we would anticipate majority of that impact being in Q3.

Our last question comes from the line of Scott Krasik of Buckingham Research.

Just a question on the footwear if you could you have it like for two collections now are in the process of the second collection. Just wondering what you have learned and how big we think that can be on a wholesale basis? And then what other types of brand should we index as to like whether Stuart Weitzman could be over a multiple number of years?

I'm going to let Josh jump in here in a moment but as you suggest we are in the very early days learning a tremendous amount especially in terms of what is similar what is different amongst our portfolio of brands the largest of which you mentioned being Stuart Weitzman which is really a different business model given that it's fully or mostly manufactured in Spain where as Coach lumpy. We have leveraged the lot of the lot of the fit technology of course across the Coach brand and now getting into what we could call the second inning of that rollout as I mentioned in my speakers note. So, I'll let Josh jump in, he is working very closely with the teams on the future strategy there.

As Victor said I think we took a very delivered approach with the launch of footwear and so for the first season it was really establishing the codes of the house. And what in internally made Coach shoe has in terms of make and look, and really launched with a couple of key categories. What's hitting the stores now using expanded assortment focused on the direct classification and focused on enhanced rollout of sneakers. We are just opening our wholesale market here in network for the next season. And you will see more merchandising there along the thing good better best lines that we have in bag and introduction of other Coach from bags including the introduction of signature, in footwear again different classifications including cold weather more sport functions et cetera. The other thing we have been delivered on is the distribution strategy. We started off with a tight number of wholesale orders in North America, taking doors down significantly from where the licensee had it. And now we are adding regions too so we will be launching in Europe as well where the brands will be placed in Kurt Geiger which is one of the preeminent footwear multi brand retailers in the UK and all of the best distribution in Europe as well. So, we are playing a long game here but we are excited about the next steps.

And for those of you who haven’t yet had the opportunity and love the footwear category and I know there is one or two of you out there please do visit Stuart Weitzman stores in the months ahead as Giovanni's collection hits because I think you will find a lot of wonderful emotional products.

Thank you. That concludes our Q&A and we’ll now turn it over to Victor Luis for some concluding remarks.

Thank you, Andrea. As is our custom, I just want to thank all of you and just as importantly thank the 20,000 global employees who drive our performance and make what we just announced possible. Our teams are all focused on great execution, bringing innovation to market and ensuring that consumers continue to engage with our great brands and I certainly could not be more excited by the opportunity for our brands and for Tapestry, as we continue to evolve as a house of desirable brands with very dedicated and talented global teams. Thank you.

Thank you for participating in today's conference call. You may now disconnect your lines. And have a wonderful day.