00:00We have rising precious metal prices and tariffs.
00:02They are pressuring jewelry makers, even as high-income consumers keep spending.
00:06And at the same time, retailers are racing to adopt AI.
00:09But Kendra Scott's CEO, Chris Blakeslee, says that the technology should make stores more human, not less.
00:15He joins us now. Chris, great to see you.
00:17Good to be here.
00:18And look, you've set a really interesting intersection with the consumer,
00:21because you have both sort of middle offerings in jewelry.
00:23You have higher end, too.
00:25You're in a lot of different markets here in the United States.
00:28What is your read on this consumer at the moment?
00:31You know, it's been very interesting trying to read it.
00:34As you said, we are an attainable luxury brand.
00:37We do a significant amount of our volume at prices below a $200 price point.
00:41But we also have prices up to $10,000 as well.
00:44And so we do sit at that intersection of consumer.
00:47What we're finding in the lower-end consumer, the lower-income consumer, they're being a bit more discerning.
00:52They're a little less frequent.
00:54But when they're shopping, they're spending more on those transactions.
00:58The other thing that we're seeing, for example, in our stores, every one of our stores has something we call
01:02the Kendra Scott Color Bar.
01:04And you can go in and customize a piece of jewelry, make it very personalized.
01:08Consumers usually go in and do that in groups.
01:11So it's an activity.
01:11It's a form of entertainment.
01:13We're actually finding that Color Bar performance is way over-indexing in our stores,
01:17because that consumer is looking for the blend of shopping, but also an entertainment experience.
01:22At the same time, the fastest-growing segment of our product is fine jewelry.
01:27So the upper-end consumer is doing really well.
01:30I think because of precious metal prices, that consumer is thinking about, I want to buy a beautiful item.
01:35I'm marking a milestone in my life, but I'm also making an investment because this item has a higher value.
01:40I've got a 13-year-old daughter familiar with the Color Bar.
01:43I've seen it down in Soho.
01:45Look, I think there's an association with your brand.
01:47It's Texas-based, very popular in the South for a long time.
01:50As you kind of cast your eyes geographically, look across the country, where do you see opportunities to expand the
01:55brand here?
01:56We have incredible opportunity.
01:58Right now, we have 165 Kendra Scott stores in the U.S.
02:01We have five Yellow Rose by Kendra Scott stores.
02:04So Yellow Rose is our newer brand, about three years old, Western-inspired fashion, multi-category brand, too.
02:09I've got to say, I was at Austin in South Congress.
02:11There was Kendra Scott, then across the street's a massive store.
02:13Across the street's a massive store.
02:15We're going to open another flagship in Fort Worth in October of this year.
02:19Interestingly, in Yellow Rose, less than half of the revenue that we're doing in stores is jewelry.
02:23We're doing revenue in apparel, boots, hats, accessories, leather goods.
02:28But we have the ability to go to probably 300 Kendra Scott stores in the United States.
02:33We're earlier in that analysis in Yellow Rose, but I think Yellow Rose is probably going to be 100 stores
02:38in the U.S.
02:38And what's amazing about our business is we're 24 years old, and we're one of the largest jewelry brands domestically.
02:44But almost all of our business is domestic.
02:47So the opportunity for us to go into Latin America, into Canada, into Western Europe, and other places is really
02:52significant.
02:53Chris, your background itself is very fascinating.
02:55You helped grow aloe into the behemoth that it is, much to the chagrin of Lululemon.
03:00You were at Athleta, too, when Gap was in need of a turnaround.
03:04You come into Kendra Scott to start this year, and I wonder how much you are pursuing at the moment
03:09a strategy shift, much like you did at the other companies you worked for.
03:12Yeah, I'd say I would describe it more as an evolution than a shift.
03:17What Kendra and the team here have built over these 24 years is incredible.
03:20Purpose-driven brand founded on family, fashion, and philanthropy.
03:24Those cultural pillars are still throughout our business.
03:27They're very important, but we're at that place where we want to evolve into this multi-billion-dollar, global, multi
03:33-category brand.
03:35So a lot of the work that I've been doing over the last six months is making sure we have
03:38the right leadership team to take the business into the future.
03:40So we've had some new team members arrive and some changes in our team.
03:45But also, what is that long-range plan, and how does it come together?
03:49We've been spending a lot of time on that.
03:50At the end of August, we're actually going to have a big reveal moment with our board and with Kendra
03:54on a lot of that work so that we can really set that course for the future.
03:57Chris, I was listening as Dani brought you in.
03:59She talked about AI and you trying to preserve the humanness of this industry.
04:04Talk a bit more about that.
04:05What are the applications of AI as you see them here?
04:07Is it to design jewelry?
04:09Is it to boost the customer experience?
04:11How are you thinking about it as somebody in the jewelry business?
04:13A lot of people say, what does AI have to do with jewelry?
04:16Sure.
04:16I think that we like to start with the philosophy around AI.
04:20And our philosophy around it is power, not replace.
04:23And I mentioned those pillars a few moments ago, family, fashion, philanthropy.
04:27In family, Kendra wanted to always make sure that our people could be all in in work and all in
04:33at home because that's what she endeavored to do.
04:35She was raising a family while raising this brand in the early days.
04:38And so I want to use AI to power our people to be more connected to consumers at the point
04:44of making great decisions, not gathering information or spending time on the analysis to make those decisions.
04:50And so we're looking for ways to apply that.
04:52But to your point, where that shows up is all over our business at the moment.
04:56We're using it in design to get faster, to being able to confirm it's the actual design that we want.
05:02We're using it to personalize our digital experiences and our store experiences, to localize our inventory so that when consumers
05:10come into a store, they're seeing the most relevant product for them.
05:13And then, of course, all the back-end functions, inventory optimization, et cetera.
05:18We're excited about its potential, but its potential to make our people better and to give them more balance.
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