If brands want to make money from selling well-made bags, the US isn’t the place to produce them, says Coach’s former CEO.
In a podcast interview with Yahoo Finance’s Opening Bid, host Brian Sozzi asked Lew Frankfort, Coach’s chairman emeritus, if it was possible to make good bags and accessories profitably in the US with the Trump administration’s slew of tariffs.
Frankfort said it is possible, but the best value can only be achieved by producing outside the US.
“If you want to give consumers the best possible value, you really need to make most of your products outside the United States, still out of the finest possible materials, supervised by leaders and craftspeople who really understand make,” he added.
He said that despite the tariffs, the US lives in a global economy and will return to it.
“I think the tariffs that are in place today, and threatened for tomorrow, is something that we’re going to live with through this administration, but over time we can only succeed as a global economy,” he said.
Frankfort joined Coach in 1979 and served as its CEO from 1985 to 2014.
Coach, which started as a leather bag shop in New York City in 1941, now produces most of its products in Asia. Tapestry, its parent company, manufactures most of its products in Vietnam, Cambodia, and the Philippines, per its July earnings call.
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Coach saw sales of $1.43 billion in its latest quarter, a 14% increase from the year before, per Tapestry’s earnings report in August.
Tapestry’s stock is up about 158% in the past year.
Some companies are looking at shifting their production facilities to the US to mitigate tariff impact. Executives of French luxury giant LVMH said in an earnings call in April that that there was capacity to increase the production of Louis Vuitton products in the US.
And Apple has pledged to invest $600 billion into US manufacturing over the next four years.
However, others like Kering, the parent company of Gucci and YSL, does not intend to do so. Kering’s CEO, François-Henri Pinault, said in a February earnings call that it “makes no sense” to move production out of Europe.
“Most of our brands we are producing in Italy and in France, and this is part of the promise that we bring through our products, through our heritage, to the consumer,” he said.
Representatives of Coach did not respond to a request for comment from Business Insider.
