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Former Coach (TPR) CEO Lew Frankfort isn’t convinced the new tariffs will prompt luxury handbag makers to bring production home.
“If you want to give consumers the best value possible, you really need to make the majority of your products outside of the United States,” Frankfort told Yahoo Finance Executive Editor Brian Sozzi on the Opening Bid Unfiltered podcast (watch the video above; listen below).
While the Trump administration has framed tariffs as a way to bring manufacturing jobs back to the United States, 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 boost the jobs Americans have graduated from. The reality is that many jobs remain 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 will have a major problem in the service industries, in agriculture and 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 more than 78% so far this year and 159% over the past 12 months.
Frankfort, who ran Coach for decades before stepping down in 2014, warned that the current environment requires “careful” decision-making by retailers.
“You have to be thoughtful before passing costs on to consumers,” he said, but noted that companies also can’t put their suppliers out of business by pressuring them to assume all the costs.
He advised retailers to consider developing “entry-level products” that allow “discerning” consumers to purchase more affordable items.
For Tapestry, the tariffs add new nuance 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 rose 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 raise annual earnings from $6.40 to $6.85 per share by FY28, with upside potential closer to $7.50.
