Good day, and welcome to this Tapestry 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 Andrea Resnick, Global Head of Investor Relations and Corporate Communications.

Good morning, and thank you for joining us. With me today to discuss our quarterly results are Victor Luis, Tapestry's Chief Executive Officer; and Kevin Wills, Tapestry's Chief Financial Officer. Before we begin, we must point out that this conference call will involve certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, including projections for our business in the current or future quarters or fiscal years. Forward-looking statements are not guarantees and our actual results may differ materially from those expressed or implied in the forward-looking statements. Please refer to our quarterly report on Form 10-K, the press release we issued this morning and our other filings with the Securities and Exchange Commission for a complete list of risks and important factors that could impact our future results and performance. Non-GAAP financial measures are included in our comments today in our presentation slides. You may find the corresponding GAAP financial information as well as the related reconciliations on our website, www.tapestry.com/investors, and then viewing the earnings release posted today in the presentation slide. Now let me outline the speakers and topics for this conference call. Victor Luis will provide an overall summary of our first fiscal quarter 2019 results for Tapestry as well as our three brands. Kevin Wills will continue with details on financial and operational results of the quarter and our outlook for FY '19. Following that, we will hold a question-and-answer session, where we will be joined by Todd Kahn, Tapestry's President and Chief Administrative Officer and Joshua Schulman, CEO & Brand President of Coach Brand. Both Eraldo Poletto and Anna Bakst are travelling and could not attend. Following Q&A, we will conclude with some brief summary remarks. I'd now like to turn it over to Victor Luis, Tapestry's CEO.

Good morning. Thank you, Andrea, and welcome, everyone. At the one-year anniversary of our establishing Tapestry as our new corporate identity, our results continue to reflect the benefits of our diversified multi-brand model. Our solid first quarter performance was consistent with our expectations, as we achieved strong increases in sales and operating income, while earnings per share gains were further enhanced by a favorable tax rate. Our teams across Tapestry remain focused on executing our four strategic priorities. First, continuing to harness the power of our multi-brand model. Driven by gross margin expansion, synergy capture was evidenced in the significant operating leverage we achieved in Kate Spade's first quarter results. To that end, we remain on track to achieve run rate synergies from both COGS and SG&A of approximately $100 million to $115 million in fiscal 2019, up from $45 million in fiscal year '18. We've also continued to make progress on building a scalable shared services model, including investments in systems and infrastructure to support our current and future growth initiatives. Earlier this month, after over two years of designing, building and testing, we deployed the first phase of our ERP implementation SAP's S/4HANA, successfully migrating our global finance functions for Tapestry, Coach and Stuart Weitzman with Kate Spade to follow during the third quarter. And as part of our Tapestry culture and core values focused on good corporate citizenship, we issued our annual corporate responsibility report, the first to include both Stuart Weitzman and Kate Spade available on tapestry.com. This report is centered on the progress we've made on our three strategic corporate responsibility pillars; environment and supply chain, community engagement and employee empowerment. We were also delighted to become a signatory to the UN Global Compact earlier this month. Second fueling innovation; across all of our brands…

Thanks Victor and good morning. Victor has just taken you through the highlights 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 '19. Before I begin, please keep in mind, the comments I'm about to make are based on non-GAAP results. Corresponding GAAP results as well as the related reconciliation can be found in the earnings release posted on our website today. In addition, as previously announced, beginning in FY '19, we changed our expense reporting to more closely align with the organizational structure and management of the business. Accordingly, our Q1 results are presented on this basis and our prior year results have been recast for comparability. For more information, please see our earnings release as well as the 8-K filed with the SEC today. Now turning to the financial results for Tapestry; overall, we delivered strong results in the first quarter highlighted by revenue, operating income and EPS growth, reflecting the benefits of our multi-brand model. Total sales rose 7% reported and constant currency basis to approximately $1.4 billion. Touching on performance by brand, we delivered 4% growth at Coach, reflecting positive comparable store sales gains with both North America and international increasing over prior year. At Kate Spade, sales increased 21% on a reported basis or approximately 8% on a pro forma basis assuming we own Kate Spade for the entire quarter of the prior year. Sales were primarily driven by new store distribution and the consolidation of the joint ventures for Mainland China Hong Kong, Macau and Taiwan, partially offset by negative comparable store sales and the strategic pullback in wholesale disposition sales. At Stuart Weitzman, sales were down 1% versus last year as expected as development and delivery delays…

Thank you. At this time, the floor is opened for questions. [Operator Instructions] Our first question comes from line of Bob Drbul of Guggenheim.

Good morning. I was wondering if you could talk about China, what is your exposure to the Chinese consumer across the Tapestry portfolio and how are you feeling about your focus on the Chinese consumer and given was transpiring?

Well, total tapestry Bob, we're more in the mid-to high teens today in terms of sales to Chinese consumers, which compares with some of the traditional luxury brands being as high as 30 a more. So really points to still tremendous opportunity for us and which is one of the reasons we're incredibly excited about the investments we're making in that market across all the brands. As we've pointed in the past, all of the conditions there still point to tremendous opportunity for growth. You've got a very large market, very fast growing middle class. Coach, which is the most mature brand in that market has a 32% unaided awareness, which points to tremendous opportunity still as well for that brand and as well for Stuart Weitzman and Kate Spade, which are doing very well in the early stages there based on our experience of course over the last decade with Coach and have unaided awareness in the 2% to 3% range. And today we've touched 70 cities with our brands, which compares with 160 cities in that market that have a population of a million a more. So just really excited about the opportunity there that consumer in the category there with the Chinese consumer continues to outpace the growth that we're seeing globally overall and some of the current fluctuation that we see are nothing new to what we've seen in the last decade, especially driven by of course exchange rates fluctuations.

Great. And if I could just ask a follow-up, on the Kate Spade business, can you just talk about how you're feeling about in the minus five comp and do you have any concerns on the second half inflection that you've been looking for?

No, look if we take a look at both the fourth quarter and the first quarter and take a look at the two-year stack in brick-and-mortar you'll see that performances has been quite consistent. Obviously there was a little bit of support from the Internet business as we are no longer comping the flash pull back that we had last year. Incredibly pleased with the work that the team has done in driving all of our synergies and of course that's reflected in the 270 Bps gross margin improvement that we saw and as you suggested, we've always talked about the inflection taking place in the second half once we get new product into stores, which we're very excited about. So not only are the internal teens excited about it because they we've already bought it. All of that is heading in Q3, but we're also getting excitement from our wholesale customers, which we've seen in their enthusiasm and as I mentioned in my notes Bob, the capsule that we've launched for a couple of weeks got really nice positive reaction. So overall, very pleased. What we're seeing still today is just consistent performance over the last quarter, which has been impacted by the continued lack of newness until Nicholas collection comes in and potentially a small pull forward in sales in the quarter which was really reflected in the strong and immediate impact that we saw from loyal customers to the tragic news of our founder's passing. So all pointing towards the guidance that we've given.

Great. Thank you very much.

[Operator Instructions] Our next question comes from line of David Schick of Consumer Edge Research.

Hi. Thank you. Good morning. Congrats on the traffic, talking about Coach brand and if you could update us on the traffic was a driver of comp as you said, but update us on the different traction you're seeing in the price strata that's been helpful in the past, thank you.

Sure. I'll let Josh discuss that.

Yeah, in both channels, we have a strategy of good, better, best and what you see in the retail channel is that AUR continue to be down reflective of our deliberate strategy to build the $300 to $500 price bucket, which really started in the spring in the second half of our fiscal '18 and some of the strength of those introduction notably Parker and Charlie continued into the first quarter. In addition, we were really pleased by the introduction of Dreamer, Victor referenced in his opening remarks and that starts really -- the key skew start $4.95 and up from there. So we're feeling really good about our price mix in the retail channel. In the outlet channel, also as Victor mentioned, we were encouraged by the customer response to the edit, where we did see a higher maintained AUR in that particular product. Of course the edit represented a relatively small penetration to the total and so as a result, it didn't have a meaningful impact on the EUR in outlet in a significant way. That said, as you know our gross margin outlet and specifically in North America outlet, it expanded significantly in the first quarter and so we were really pleased with the learnings we've seen on the edit and we are introducing an even broader array of newness with the holiday floor set that launches over the weekend. So we're excited about what we're seeing and we look forward to seeing the customer's reaction to this as we go into the peak of the holiday season.

Thanks so much.

Our next question comes from the line of Irwin Boruchow of Wells Fargo.

Hi. Good morning, everyone. Congrats on a nice quarter. So Victor, so more so for the Coach brand, maybe could you just talk about at a higher level the promotional nature of the North America handbag business in the first quarter, any directional changes good or bad for price or outlet? And then quickly for Kevin, as it relates to the really strong gross margin performance that you just saw in the first quarter, any chance you could piece out how much of that is cost tailwind versus pricing and then how you think about gross margin for the remainder of the year at Coach?

I'll let Josh first discuss the promotional environment and then we'll let Kevin jump in on gross margin, Josh?

Yeah, the promotional environment really didn't change that much from what we've been seeing for most of the calendar year. And as I mentioned, we were able in that environment to deliver significant expansion in our gross margin. So we expanded 250 basis point from the prior year and specifically within there are our North America gross margin did expand significantly from last year as well as our entire North America direct businesses.

And Kevin?

Sure. Good morning. Overall we were very pleased with the gross margin performance for the quarter as we indicated up about 170 basis points. We have not giving specific guidance on a gross margin increase for the year, but reflective in our guidance, we are expecting aggregate gross margin expansion for the year. As Victor mentioned earlier, we feel good about the synergy work we're doing which was reflective in part in the Kate gross margin performance for the quarter.

Thanks.

Our next question comes from -- our next question comes from line of Erinn Murphy of Piper Jaffray.

Great. Thanks. Good morning and nice job. Just a couple for me. Wanted to go back on huge for you guys on tariffs, you said your guidance now assumes the tariffs. Is it assuming they go up to 25% and then I know a lot of your peers that have a much bigger exposure to China production are increasing price. Do you have any plans for price increases in Spring '19? Just trying to understand how you guys see the playing field particularly in your price segment working at we move into '19?

Sure. This is Kevin. I will take the tariff question. As you indicated the 5%, excuse me, the 10% tariff went into effect in the latter part of September increasing to 25% January 1. We have included that in our guidance and it is having a little bit of a headwind for us. But as we indicated in our comments, the good news is our production of China is less than 5%, on handbags and small leather goods. So while a little bit of a headwind, it's certainly not material impact at this point.

And so you're not taking pricing in Spring of '19?

At this moment, we have no such plans. Of course we'll continue to look at what happens should think ship, but at the moment, we have no such plans.

Got it. And if I could just ask a clarification on David's outlet question, can you just reference where AURs are now versus their former peak, thanks?

In terms of AUR by channel, we don't decide those and provide those Erinn, but Joshua, could you add anything?

Nothing more than what I explained about what we're seeing in the pricing trends in general.

Thank you.

Our next question comes from Oliver Chen of Cowen and Company.

Hi. Thank you. Michael B. Jordan announcement is exciting, what are your thoughts in terms of how that will impact your customer profile in which product lines you see the most opportunity and any learnings from prior brand ambassadors that you'll take here? And then briefly on China, what are your thoughts on the Chinese customer shopping as he shops broad and how that may manifest in your traffic profile and also we've seen a little bit of caution on China consumer confidence. So just wondering how that interplay into what you're thinking, great quarter, thanks?

Sure. Thank you. Let me start China and then I'll hand over to Josh on Michael Billion, Jordan and the exciting work that the team is doing there. In terms of China, most of the impact that we see are in much more than a lot of talk that we have heard about Daegu and under border controls, is really based on the experience that we've had over the last decade or so around exchange rates of course and the impact that, that has around traffic flows globally. And of course the appreciation or the appreciation of the dollar and depreciation of the R&D being the most impactful to travel. Overall, we feel really good about the domestic consumer. We're not seeing any negative impacts right now and concerns around their confidence I would say and what's exciting is that I think over the last decade we've seen that whenever there has been the potential for such shocks Oli, the accessible luxury brands have feared well. We may not grow as quickly in the great times compared to traditional luxury, but when there are periods of crisis, we tend to be much more resilient as consumers continue to look for value and I couldn't be more excited about the long-term opportunity for our brands in that market, on Michael B?

So we couldn't be more excited about having Michael B. Jordan as our first global face for the Coach men's business. We've talked before as you know about the importance of men's as a driver for total Coach growth and it's currently about 20% of our business and we see a clear path to $1 billion and beyond. And the collaboration with Michael B. Jordan really started in quite inorganic way because he was already wearing Coach in a lot of his appearances and we saw that he has a truly universal appeal and is really hitting his stride in his career and the types of projects and the types of preps he is getting. I will tell you that a steward and the entire team are so excited to be working with them. I don't know if you saw in social media, they were posting already this weekend shooting their first campaign together. They're already working on a product capsule and so this is really organic energy around him and the values that he represents and the universal appeal that he holds. So we're looking forward to great things from the collaboration.

Thank you. Very helpful. Best regards.

Thanks Oliver.

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

Good morning. Thank you. I wanted to circle back on the Coach comp. Q1 results could benefit from the easier comparison last year. Could you just talk about how you're thinking about in the pace of growth over the remainder of the year and any change that you're expecting in the relative contribution from North America versus international? And then separately, I think Victor at the beginning you talked about how true spending can be volatile, I am wondering are you seeing signs about volatility picking up at all, within your North American source, thanks, and great quarter?

In Q1, we were very pleased with the performance in both North America and international. As we look forward, we believe that we will be able to achieve the low single-digit comps in our guidance and obviously Q1 has the easier compare and as we go into the next quarters and particularly to the holiday period we have no change in our expectation either on the overall comp or on the geographic distribution of that.

Thank you. And mark in terms of the tourists flow, it's pretty consistent over the last few quarters. What we're seeing is Asia performing better overall as the PRC consumer, the Chinese consumer continues to discover those markets from Japan down into Southeast Asia and Australia much more so today than the US or Europe. So pretty consistent trends.

Our next question comes from the line of Al Walvis of Goldman Sachs.

Good morning. And thanks for taking the question. I had a question on Stuart. You reiterated your guidance to achieve profitable sales growth in the second quarter. I was wondering if you could walk us through the changes that we should expect to see in that business from the first quarter to the second quarter that are likely to drive that inflection. I would be interested to understand the holiday strategy at the brand when new innovations are likely to be phased in and then finally whether there any more delivery and development delays or are we past those at this stage?

Sure. Actually very exciting and this upcoming week we begin very much on-time deliveries of our pre-spring products. So we are now fully back on track and on time and all of that product benefits from a lot of the work that the team has done in regards to fit and comfort and fashion. So very excited about that. Of course the read that we have on that product right now is both the orders from wholesale as well of course as our own internal teams buying it for our other stores. So in many ways I would say that we are returning to the core strengths of the brand. From a marketing perspective, you have seen that we've been very focused on one of the brand's strengths for the fall winter season, which of course is boots and booties and very excited with the launch as I mentioned in my notes of our newest category, which is in the sneaker space the SW 612 sneaker, which has been very well received and the team has been in chase mode right now to put back into inventory globally. So I would say that Eraldo and the team of course now focused on execution into the future seasons, but from basically the first week of November we're back to very timely deliveries quality and are on track and have put the issues of the spring behind us.

Thank you. Very helpful and all the best.

Thank you.

And ladies and gentlemen, we have time for one more question. Our question comes from Simeon Siegel of Nomura Instinet.

Thanks. Good morning. Thanks for squeezing me in. Congrats on a strong Coach margin. Sorry if I missed it. Did you say how North America versus international was? And then just with the moving pieces of the license, are there any that are still licensed out geographically to think about, thanks.

Simeon, the second part of your question on distribution buybacks.

Yes.

Yeah the vast majority across all the brands now are complete. So I would not expect anything further in the near-term as we have very much now executed to our strategy of capturing the biggest opportunities, which we mentioned of course being in Asia and with a focus on the Chinese consumer. And then in terms of U.S. and international, I'll let Josh touch on that.

Yes we had said that both US and international were similar to global.

On the comp or the margins?

In terms of comp.

I was just wondering if there was…

And the margins as well. We saw global increases in margins and I specifically mentioned North America Direct and North America outlet. As you remember last year, we were particularly challenged in that channel with mix issues, but we did see it globally, the margin expansion.

Great, thanks a lot guys. Best of luck.

Thank you.

Thank you for joining us today. I'll now turn it back over to Victor for some concluding remarks, Victor?

Thank you, Andrea. Just want to say thank you to all of you joining us as usual and want to close by congratulating all of our Tapestry and brand teams as we celebrate the first anniversary of rebranding. They worked incredibly hard and I could not be prouder of our 20,000 strong team members across of the globe. More importantly we're laying an incredible foundation for a robust business model at the house of strong brands and I could not be more excited by the endless opportunity ahead of us. Thank you.

Thank you, ladies and gentlemen. This does conclude today's call. You may now disconnect and have a wonderful day.