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Tapestry Beats Forecasts on Coach's Holiday Cheer
5 Nov
Summary
- Tapestry raised annual forecasts, betting on Coach's holiday appeal.
- Coach sales surged 16%, driven by Gen Z in China and North America.
- Kate Spade sales declined 10%, impacting overall momentum.
- Wealthier US shoppers continue spending on accessible luxury goods.
Tapestry, the parent company of Coach, has increased its annual revenue and profit projections, buoyed by optimism for the upcoming holiday season. The company's strategy centers on capturing sales from younger, affluent consumers drawn to its Coach handbags. This forward-looking guidance comes after Tapestry surpassed first-quarter revenue expectations.
Sales acceleration was particularly notable in China, where revenue grew by an impressive 43%. The Coach brand itself saw a 16% increase in quarterly revenue, with executives attributing this success to sales in North America. Coach's appeal to Gen Z shoppers across North America, China, and Europe has been a key driver, fostered through targeted products and celebrity endorsements.
Despite Coach's strong performance, Tapestry's overall momentum faced some slowdown in its primary market, North America. This was partly due to a sales slump affecting the Kate Spade brand, which reported a 10% decrease in sales compared to the previous year. Nonetheless, Tapestry anticipates fiscal 2027 revenue between $8.5 billion and $8.6 billion, and earnings per share of $8.25 to $8.35.
This positive outlook contrasts with broader challenges in the luxury sector, where competitors like Kering and LVMH face headwinds from geopolitical conflicts and slowing demand. Tapestry's focus on accessible luxury and value proposition, with many items priced between $200 and $500, positions it favorably among consumers who continue to spend on premium goods.
