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Former Coach (TPR) CEO Lew Frankfort isn’t convinced that new tariffs will push luxury handbag makers to bring production home.
“If you want to give consumers the best possible value, you really need to make most of your products outside the United States,” Frankfort told Yahoo Finance Executive Editor Brian Sozzi on the Opening Bid Unfiltered podcast (see the video above; listen below).
While the Trump administration has framed tariffs as a way to bring manufacturing jobs back to the US, Frankfort said it’s more complicated. He pointed to a shortage of skilled workers — the kind of craftsmanship that helped build Coach’s early reputation.
“Fifty years ago, we had those skills with our immigrant population,” he said. “Our country depends on new populations to fuel jobs that Americans have graduated from. The reality is that many jobs are remaining unfilled in the United States.”
That shortage is already being felt in other industries. Ford (F) CEO Jim Farley recently told Yahoo Finance that the company has about 6,000 unfilled mechanic positions.
“We’ll have a significant problem in service industries, in farming, in factories, if we don’t find a way to attract immigrants who want to live the American dream,” Frankfort said.
Shares of Tapestry, which owns Coach, are up over 78% year to date and 159% over the past 12 months.
Frankfort, who led Coach for decades before stepping down in 2014, warned that the current environment requires “careful” decision-making by retailers.
“You want to be thoughtful before you pass on costs to consumers,” he said, but noted companies also can’t put their suppliers out of business by pushing them to swallow all the costs.
He advised retailers to consider developing “entry-level products” that allow “discerning” consumers to purchase more affordable items.
For Tapestry, tariffs add a wrinkle to an otherwise strong year.
For its fiscal fourth quarter, Tapestry reported revenue of $1.7 billion, up 8% year over year, slightly beating consensus estimates of $1.67 billion, according to Bloomberg data. Adjusted earnings per share jumped 13% to $1.04, ahead of the $1.01 expected.
Evercore ISI analyst Michael Binetti noted that the company has laid out a “compelling algorithm” to grow annual earnings to $6.40 to $6.85 per share by FY28, with a potential bull case closer to $7.50.
