Tapestry Boosts Annual Outlook on Coach Strength

Tapestry, Inc. (TPR), the global house of iconic accessories and lifestyle brands, has reported strong fiscal 2025 second quarter results, driven by the exceptional performance of its Coach brand. The company's strategic focus on operational excellence, customer acquisition, and brand rejuvenation has led to a significant increase in revenue and profitability. In this article, we will explore the key factors contributing to Tapestry's success and the outlook for continued growth.



Coach's Strong Performance Drives Tapestry's Growth

The Coach brand has been a significant driver of Tapestry's overall growth and profitability in the past year. In the fiscal second quarter of 2025, Coach achieved a remarkable 10% revenue increase, contributing to Tapestry's overall 5% revenue growth. This growth was fueled by strong handbag revenue and Average Unit Retail (AUR) gains, driven by broad-based traction across the leathergoods offering (Tapestry, Inc., 2025).

Coach's operational outperformance contributed to a significant gross margin expansion of 280 basis points for Tapestry. The brand's gross margin expansion was 260 basis points, indicating strong operational efficiency and pricing power (Tapestry, Inc., 2025). Additionally, Coach welcomed approximately 1.4 million new customers in North America alone, with over half being Gen Z and Millennials. This demographic success indicates effective brand rejuvenation and a strong connection with younger consumers (Tapestry, Inc., 2025).



Tapestry's Strategic Focus on Operational Excellence and Customer Acquisition

Tapestry's focus on operational excellence and customer acquisition has been instrumental in driving its success. The company has delivered compelling innovation to consumers, highlighted by Coach's strong handbag revenue growth and AUR gains fueled by broad-based traction across the leathergoods offering (Tapestry, Inc. Strategic & Financial Highlights). This approach has been effective, as the Coach brand achieved 10% growth with increasing margins and profitability, reflecting the vibrancy of the brand (Tapestry, Inc. Strategic & Financial Highlights).

Tapestry has also focused on delivering compelling omni-channel experiences, with a focus on driving brand desire, consumer connections, and cultural relevance, powered by a blend of creativity and Tapestry's data and analytics capabilities (Tapestry, Inc. Strategic & Financial Highlights). This approach has resulted in direct-to-consumer sales growth of 4%, including a high-single digit increase in Digital revenue and a low-single digit increase in global brick and mortar sales at strong and increasing profitability across channels (Tapestry, Inc. Strategic & Financial Highlights).

Tapestry's Outlook for Continued Growth

Based on these strong results, Tapestry has raised its fiscal 2025 outlook, now expecting revenue over $6.85 billion (approximately 3% growth) and EPS of $4.85-$4.90 (13-14% growth). The company remains on track to return over $2 billion to shareholders in fiscal 2025 through dividends and share repurchases (Tapestry, Inc. Strategic & Financial Highlights).

Tapestry's focus on operational excellence, customer acquisition, and brand rejuvenation, particularly through the success of the Coach brand, positions the company well for continued growth despite macroeconomic uncertainties. By maintaining its strategic focus and investing in its brands, Tapestry is poised to deliver superior results and create significant value for shareholders.