Coach Owner Tapestry Lifts Forecasts on Pricier Handbags, Low Tariff Impact
Tapestry on Thursday raised its 2025 revenue and profit forecasts for a third time this year, taking advantage of its limited exposure to the sweeping US tariffs and higher full-price sale of its popular Coach handbags.
Its shares jumped about 10 percent in premarket trading as steady demand for the company's Tabby, Brooklyn and Empire leather handbags among younger shoppers in North America and China helped it beat third-quarter results expectations.
The company's sales benefited from product innovations, a sharp marketing strategy and full-price selling and come despite a downturn in the luxury market that has hurt players such as French luxury groups LVMH and Kering.
'Tapestry, it seems, has found a sweet spot in the luxury food chain ...siphoning off high-end customers now reconsidering whether they really need a five-figure handbag,' said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
Tapestry's price increases boosted margins, which grew 140 basis points in the quarter from last year. Its Empire bags are priced between $250 and $895 on Coach's website, while Tabby's standard shoulder bags sell for $450.
Sales in its biggest North America segment rose 9 percent, while in Europe it surged 32 percent. Coach, which makes up roughly 80 percent of overall sales for Tapestry, saw sales grow 13 percent from last year.
Coach products are made in Vietnam, Cambodia, the Philippines and India with no vendor providing 10 percent or more of total inventory purchases, according to Tapestry's 2024 annual report. It also had limited exposure to China.
Tapestry expects profit of around $5 per share, compared to a prior forecast of $4.85 to $4.90. Annual revenue is projected to be about $6.95 billion, compared to its earlier expectation of more than $6.85 billion.
Net sales for the quarter ended March 29 came in at $1.58 billion, above estimate of $1.53 billion, according to data compiled by LSEG. It earned $1.03 per share, beating estimates of 88 cents.
By Savyata Mishra; Edited by Arun Koyyur
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Tapestry Boosts Annual Outlook on Coach Strength
The Coach-parent now sees revenue of more than $6.85 billion in the current fiscal year, the company said Thursday in a statement.
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